No Cure by Removal: Second Circuit Applies Derivative Jurisdiction to FIRREA Removals When State Courts Lack Subject-Matter Jurisdiction

Case: Panos v. Federal Deposit Insurance Corporation, No. 25-354 (2d Cir. Oct. 30, 2025) (summary order)

Panel: Circuit Judges Denny Chin and Myrna Pérez (Judge Alison J. Nathan did not participate pursuant to 2d Cir. IOP E(b))

Disposition: Affirmed (on alternative grounds)

Note: The court issued a summary order, which under Second Circuit Local Rule 32.1.1 does not have precedential effect. Even so, the order provides a clear and instructive roadmap on how FIRREA’s jurisdictional provisions interact with the doctrine of derivative jurisdiction in removed cases.

Introduction

This case sits at the intersection of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the FDIC’s special removal authority, and the little-understood doctrine of derivative jurisdiction. Plaintiff-Appellants George Panos and Evangelos Thomato, co-executors of the Estate of Petros Sarantakos, sued the FDIC (as Receiver of Signature Bank) and Signature Bridge Bank, N.A. over claims that, as framed by the parties, would require “payment from the assets of” a failed bank now in receivership—precisely the kind of claim that triggers FIRREA’s jurisdictional and administrative claims regime.

Procedurally, the plaintiffs commenced in New York state court, the FDIC removed to the Southern District of New York under 12 U.S.C. § 1819(b)(2)(B), and the district court (Rochon, J.) dismissed for lack of subject-matter jurisdiction, crediting the FDIC’s argument that the plaintiffs failed to comply with the exhaustion-and-timing requirements of 12 U.S.C. § 1821(d)(6)(A). On appeal, the Second Circuit affirmed—but on an alternative, more fundamental jurisdictional ground: because FIRREA’s jurisdiction-stripping clause, § 1821(d)(13)(D), deprived the state court of subject-matter jurisdiction altogether, the federal court acquired none upon removal under § 1819(b)(2)(B) due to the derivative jurisdiction doctrine. The panel thus held that removal could not cure the original jurisdictional defect, even though the Southern District of New York would have had jurisdiction if the action had been filed there in the first instance after proper exhaustion.

The key issues addressed include:

Whether FIRREA’s jurisdiction-stripping provision, § 1821(d)(13)(D), bars all courts from hearing claims seeking payment from a failed bank’s assets unless the claimant first completes FIRREA’s administrative process.
Whether § 1821(d)(6)(A), which allows suit in only two designated federal districts after exhaustion, functions as the sole jurisdictional “hook.”
Whether, when a plaintiff files such a case in state court, the doctrine of derivative jurisdiction prevents a federal court from exercising jurisdiction after removal under § 1819(b)(2)(B).
Whether Congress’s abrogation of derivative jurisdiction in 28 U.S.C. § 1441(f) applies to removals under FIRREA’s special removal provision (it does not).

Summary of the Opinion

The Second Circuit affirmed the district court’s dismissal for lack of subject-matter jurisdiction, but not on the ground the district court emphasized. The district court focused on the timing/exhaustion requirements of § 1821(d)(6)(A). The Second Circuit, invoking its independent obligation to assure jurisdiction (Arbaugh v. Y & H Corp.), identified a more basic defect: FIRREA’s § 1821(d)(13)(D) strips “any court” of jurisdiction over claims seeking “payment from … the assets of” a bank in FDIC receivership “except as otherwise provided in this subsection” (§ 1821(d)).

Because the suit plainly fell within § 1821(d)(13)(D), the only route to judicial review was § 1821(d)(6)(A), which authorizes suit (post-exhaustion) exclusively in either (1) the federal district court where the failed institution’s principal place of business is located or (2) the U.S. District Court for the District of Columbia. A state court, therefore, has no jurisdiction over such a claim—at any time. And when a state court lacks subject-matter jurisdiction, a federal court acquires none upon removal, unless Congress has abrogated the derivative jurisdiction doctrine for that removal path. Congress abrogated derivative jurisdiction in § 1441(f) for removals “under this section,” but the FDIC removed here under § 1819(b)(2)(B), not § 1441. As a result, derivative jurisdiction barred federal jurisdiction following removal, and dismissal was required regardless of whether the plaintiffs complied with § 1821(d)(6)(A).

In short: even if the plaintiffs had exhausted, and even though the Southern District of New York is one of the two federal courts where a post-exhaustion suit could have been filed originally, removal could not cure the state court’s lack of subject-matter jurisdiction. The Second Circuit therefore affirmed on this alternative ground and expressly declined to resolve the briefed dispute concerning § 1821(d)(6)(A)’s 60-day timing window.

Analysis

Precedents and Authorities Cited

Arbaugh v. Y & H Corp., 546 U.S. 500 (2006): Reinforces that courts have an independent obligation to assure subject-matter jurisdiction, allowing the Second Circuit to affirm on unbriefed but dispositive jurisdictional grounds.
Resolution Trust Corp. v. Elman, 949 F.2d 624 (2d Cir. 1991): Recognizes that, read together, § 1821(d)(13)(D) and § 1821(d)(6) make FIRREA exhaustion a jurisdictional prerequisite—“no court shall have jurisdiction” before exhaustion.
Carlyle Towers Condo. Ass’n v. FDIC, 170 F.3d 301 (2d Cir. 1999): Confirms that FIRREA’s exhaustion is jurisdictional and that “subsection” in § 1821(d)(13)(D) refers to the entirety of § 1821(d), making § 1821(d)(6)(A) the relevant jurisdictional “hook.”
Lloyd v. FDIC, 22 F.3d 335 (1st Cir. 1994): Applying the canon that specific provisions control over general ones, the panel emphasized that § 1821(d)(13)(D)’s specific jurisdictional bar outweighs FIRREA’s general jurisdictional grant in § 1819(b)(2)(A).
PT United Can Co. v. Crown Cork & Seal Co., 138 F.3d 65 (2d Cir. 1998), citing Freeman v. Bee Machine Co., 319 U.S. 448 (1943): Articulates the doctrine of derivative jurisdiction: if the state court lacked subject-matter jurisdiction, the federal court acquires none upon removal, even where the federal court would have had original jurisdiction.
28 U.S.C. § 1441(f): Congress abrogated derivative jurisdiction, but only for actions “removed under this section” (i.e., § 1441). The abrogation does not cover removals under specialized statutes such as § 1819(b)(2)(B).
Lopez v. Sentrillon Corp., 749 F.3d 347 (5th Cir. 2014) (as revised Apr. 28, 2014) and Ricci v. Salzman, 976 F.3d 768 (7th Cir. 2020): Post-2002 amendment cases reading § 1441(f)’s abrogation as limited to removals under § 1441, supporting the conclusion that derivative jurisdiction persists in other removal contexts.
North Dakota v. Fredericks, 940 F.2d 333 (8th Cir. 1991) and Edwards v. DOJ, 43 F.3d 312 (7th Cir. 1994): Earlier split concerning the extent of derivative jurisdiction, which the 2002 amendment to § 1441(f) clarified by limiting abrogation to removals under § 1441.
Kellogg v. Nichols, 149 F.4th 155 (2d Cir. 2025): Standard of review for Rule 12(b)(1) and 12(b)(6) dismissals; de novo for legal conclusions, clear error for jurisdictional fact-finding when the motion is fact-based.

Legal Reasoning

FIRREA’s layered jurisdictional scheme. FIRREA contains a general federal jurisdiction grant for cases involving the FDIC: “all suits of a civil nature at common law or in equity to which the [FDIC] shall be a party shall be deemed to arise under the laws of the United States.” 12 U.S.C. § 1819(b)(2)(A). But FIRREA also includes a specific jurisdiction-stripping provision: “no court shall have jurisdiction over” claims seeking “payment from … the assets of” a depository institution in FDIC receivership, “except as otherwise provided in this subsection” (§ 1821(d)). 12 U.S.C. § 1821(d)(13)(D). Applying the canon that a specific provision controls over a general one, the panel, consistent with Lloyd and Second Circuit precedent, treats § 1821(d)(13)(D) as limiting the general jurisdiction in § 1819(b)(2)(A).
Exhaustion as the gateway; narrow forum authorization. Section 1821(d)(6)(A) is the principal “exception” that restores jurisdiction after administrative exhaustion. It permits the claimant to file suit within a specified period in exactly two federal venues: (i) the district where the failed institution’s principal place of business is located; or (ii) the U.S. District Court for D.C. The panel emphasizes that “jurisdiction only vests” in those two district courts, underscoring that state courts have no role at all in adjudicating these claims and that even federal courts outside those two designated districts lack jurisdiction to hear the case arising out of FIRREA’s receivership claims process.
The state court had no subject-matter jurisdiction. Because the plaintiffs’ claims concededly involved “payment from … the assets of” Signature Bank while in receivership, § 1821(d)(13)(D) applied in full force. No state court could exercise subject-matter jurisdiction over such claims at any stage. Thus, the New York state court where plaintiffs commenced suit lacked jurisdiction.
Derivative jurisdiction defeats removal under § 1819(b)(2)(B). Under the derivative jurisdiction doctrine (Freeman; PT United), when a state court lacks subject-matter jurisdiction, a federal court acquires none upon removal. Congress abrogated this doctrine in § 1441(f), but only for cases “removed under this section.” The FDIC did not remove under § 1441; it removed under § 1819(b)(2)(B), FIRREA’s special removal provision. Therefore, the abrogation does not apply, and derivative jurisdiction remains a barrier.
Result: federal court also lacked jurisdiction post-removal. Even though the Southern District of New York is one of the two federal courts authorized by § 1821(d)(6)(A) to hear a properly exhausted FIRREA claim, the choice to start in state court was fatal to federal jurisdiction on removal under § 1819(b)(2)(B). The Second Circuit thus affirmed dismissal without reaching the disputed question whether plaintiffs did or did not satisfy § 1821(d)(6)(A)’s timing window (a question the district court resolved against plaintiffs).

Impact and Forward-Looking Implications

1) A sharp warning against state-court filings in FIRREA receivership matters. Claimants whose suits would involve “payment from … the assets of” a failed bank in FDIC receivership cannot invoke state court jurisdiction. This order underscores that such filings are not merely premature—they are jurisdictionally void. Removal under FIRREA’s § 1819(b)(2)(B) cannot salvage the case; derivative jurisdiction will require dismissal.

2) The filing forum and sequence are jurisdictional, not merely venue choices. The panel reads § 1821(d)(6)(A)’s forum language as jurisdictional vesting, not just a venue preference. That means the only courts that may hear post-exhaustion claims are the U.S. District Court for the District of Columbia or the federal district where the failed institution had its principal place of business. Starting anywhere else, especially in state court, risks dismissal with potentially irreversible timing consequences.

3) Removal strategy matters: § 1819 vs. § 1441. Congress has abrogated derivative jurisdiction only for cases removed “under” § 1441. When the FDIC removes under § 1819(b)(2)(B), derivative jurisdiction still applies. The order highlights a strategic consideration: in a case that otherwise could qualify for removal under § 1441, removing under § 1441 (rather than § 1819) may avoid derivative-jurisdiction pitfalls. That said, even removing under § 1441 cannot manufacture jurisdiction where FIRREA’s exhaustion and forum-allocation rules are not satisfied. Put differently, § 1441(f) may eliminate the derivative-jurisdiction defect, but it does not cure noncompliance with § 1821(d)(13)(D) and § 1821(d)(6)(A).

4) Timing traps and the 60-day window (unresolved here). The district court held the plaintiffs missed § 1821(d)(6)(A)’s deadline; the Second Circuit expressly declined to decide that issue. Nevertheless, practitioners must recognize that many courts treat FIRREA’s timing and exhaustion requirements as jurisdictional. A misstep in forum selection (state court) followed by dismissal on derivative jurisdiction grounds could run out the clock on the 60-day window to file in a proper federal forum after claim disallowance, leaving claimants without recourse. This order amplifies that risk by shutting down the notion that a state-court filing can be “fixed” later via removal under § 1819.

5) Judicial economy and threshold screening. District courts confronted with removed FIRREA receivership cases that originated in state court may resolve them swiftly on derivative-jurisdiction grounds without engaging the (often complex) administrative exhaustion record. Appellate courts can, and will, affirm on that alternative ground given their nondiscretionary obligation to ensure jurisdiction (Arbaugh).

Complex Concepts Simplified

FIRREA. The Financial Institutions Reform, Recovery, and Enforcement Act governs how claims against failed banks are handled when the FDIC is appointed as receiver. It creates an administrative process for claimants to seek payment from the bank’s assets and restricts judicial review until that process is complete.
FDIC as Receiver. When a bank fails, the FDIC steps in as receiver to marshal assets and resolve claims. Claims seeking “payment from” those assets must go through the FDIC’s administrative process before a court can review them.
Jurisdiction-Stripping (12 U.S.C. § 1821(d)(13)(D)). This provision says “no court shall have jurisdiction” over claims involving payment from the assets of a bank in receivership, unless FIRREA’s own subsection (§ 1821(d)) “otherwise provides.” It is a powerful gatekeeper.
Exhaustion and Forum (12 U.S.C. § 1821(d)(6)(A)). If the FDIC disallows a claim (or fails to act timely), the claimant has a short window to file suit to challenge that determination. Crucially, the lawsuit may be filed only in (i) the federal district where the bank had its principal place of business or (ii) the U.S. District Court for D.C. This is not just a matter of convenience; it’s a jurisdictional vesting rule.
Derivative Jurisdiction. A removal doctrine: if the state court had no subject-matter jurisdiction over a case, then the federal court acquires none upon removal. Congress abrogated this doctrine for removals under the general removal statute (28 U.S.C. § 1441(f)), but the abrogation does not extend to removals under other statutes, such as FIRREA’s § 1819(b)(2)(B).
Specific vs. General Statutes. When a specific statute (here, § 1821(d)(13)(D)) conflicts with a general one (e.g., § 1819(b)(2)(A)), courts apply the specific statute. That’s why § 1821(d)(13)(D)’s jurisdictional bar controls over FIRREA’s general federal-question grant for FDIC litigation.

Practical Guidance for Litigants and Counsel

Never start in state court when your claim involves payment from the assets of a failed bank in FDIC receivership. A state court categorically lacks jurisdiction under § 1821(d)(13)(D), and removal under § 1819(b)(2)(B) will not cure that defect due to derivative jurisdiction.
Exhaust first. Complete FIRREA’s administrative claims process with the FDIC. Keep meticulous records of the filing date, any disallowance, and the date of notice, because those trigger the short filing window.
File in the right federal forum, and fast. If you intend to challenge the FDIC’s disallowance, file within the statutory window in the U.S. District Court for the District of Columbia or the district where the failed institution had its principal place of business (for Signature Bank, the Southern District of New York). Treat the forum requirement as jurisdictional.
Be mindful of removal path. If a case mistakenly begins in state court, consider that removal under § 1441 (where available) may avoid the derivative jurisdiction bar. But this is not a panacea: if exhaustion is incomplete or the statutory window has closed, jurisdiction may still be lacking.
Anticipate timing defenses. The interplay between administrative timelines and judicial filing windows can be outcome-determinative. Build a litigation timeline from day one.

Why This Order Matters

Although nonprecedential, the order offers a crisp synthesis of FIRREA’s jurisdictional architecture and the vitality of derivative jurisdiction outside § 1441 removals. Three distinct points stand out:

Absolute state-court bar for FDIC receivership asset-payment claims. The order treats § 1821(d)(13)(D) as a categorical jurisdictional bar in state court, regardless of exhaustion status or merits.
Exclusive federal fora post-exhaustion. Jurisdiction “vests” only in the two federal courts designated in § 1821(d)(6)(A), reinforcing that forum selection in FIRREA matters is jurisdictional, not a waivable venue issue.
Derivative jurisdiction survives outside § 1441. Removal under FIRREA (§ 1819) does not benefit from § 1441(f)’s abrogation of derivative jurisdiction. Practitioners must plan their removal strategy accordingly and, more importantly, file in the proper court to begin with.

Conclusion

Panos v. FDIC underscores a simple but pivotal rule: in FIRREA receivership cases seeking payment from a failed bank’s assets, state courts are closed for business. The only path to judicial review runs through FIRREA’s administrative process and culminates in a narrowly defined federal forum—either the District of Columbia or the district where the failed bank had its principal place of business. Starting in state court cannot be “fixed” by removal under FIRREA’s § 1819; derivative jurisdiction prevents the federal forum from acquiring subject-matter power over a case that began in a court with none.

For claimants and counsel, the order is a procedural compass: exhaust first; file fast; file only in the right federal court. For courts, it offers a clean threshold disposition when confronted with FIRREA cases removed from state court. And for policymakers and academics, it highlights the continued significance of derivative jurisdiction in specialized removal contexts and its practical consequences for the administration of claims against failed financial institutions.

Key takeaways:

Section 1821(d)(13)(D) strips jurisdiction from all courts unless § 1821(d) “otherwise provides.”
Section 1821(d)(6)(A) is the exclusive jurisdictional hook following exhaustion and limits suits to two specified federal courts.
Derivative jurisdiction bars federal jurisdiction after removal under § 1819(b)(2)(B) when the state court lacked subject-matter jurisdiction; § 1441(f)’s abrogation of derivative jurisdiction does not apply.
Removal under § 1819(b)(2)(B) cannot cure a state-court jurisdictional defect; file correctly, or risk dismissal and blown deadlines.