Bank of Manhattan, N.A. v. Federal Deposit Insurance ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BANK OF MANHATTAN, N.A., No. 12-56737
Plaintiff-Appellee,
D.C. No.
v. 2:10-cv-04614-
GAF-AGR
FEDERAL DEPOSIT INSURANCE
CORPORATION, in its capacity as
Receiver for First Heritage Bank, OPINION
N.A.,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
Gary A. Feess, District Judge, Presiding
Argued and Submitted
August 28, 2014—Pasadena, California
Filed March 4, 2015
Before: Diarmuid F. O’Scannlain, Johnnie B. Rawlinson,
and Jay S. Bybee, Circuit Judges.
Opinion by Judge O’Scannlain;
Dissent by Judge Rawlinson
2 BANK OF MANHATTAN V. FDIC
SUMMARY*
FDIC
The panel affirmed the district court’s summary judgment
in favor of the Bank of Manhattan, N.A. on its breach of
contract claim, and held that the Federal Deposit Insurance
Corporation, in its role of receiver of a closed bank, may not
breach underlying asset contractual obligations without
consequence.
The panel held that the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, 12 U.S.C.
§ 1821(d)(2)(G)(i)(II), did not immunize the FDIC from
breach of pre-receivership contract claims. The panel
concluded that the district court did not err in rejecting the
FDIC’s claimed statutory defense and entering judgment
against the FDIC for its breach of a participation agreement.
Dissenting, Judge Rawlinson would reverse the district
court’s ruling that FIRREA did not preempt Bank of
Manhattan’s claim based on this court’s prior opinion in
Sahni v. American Diversified Partners, 83 F.3d 1054 (9th
Cir. 1996).
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
BANK OF MANHATTAN V. FDIC 3
COUNSEL
J. Scott Watson, Federal Deposit Insurance Corporation,
Arlington, Virginia, argued the cause on behalf of Defendant-
Appellant. Minodora D. Vancea, Federal Deposit Insurance
Corporation, Arlington, Virginia, filed the opening and reply
briefs. With her on the opening brief were Watson, Colleen
J. Boles, and Lawrence H. Richmond, Federal Deposit
Insurance Corporation, Arlington, Virginia. With her on the
reply brief were Boles, Watson, and Kathryn R. Norcross,
Federal Deposit Insurance Corporation, Arlington, Virginia.
Richard W. Esterkin, Morgan, Lewis & Bockius LLP, Los
Angeles, California, argued the cause and filed the brief on
behalf of Plaintiff-Appellee.
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether the Federal Deposit Insurance
Corporation, in its role of receiver of a closed bank, may
breach underlying asset contractual obligations without
consequence.
I
A
In December 2007, Professional Business Bank (“PBB”)
sold to First Heritage Bank, N.A. (“Heritage”) a fifty percent
participation interest in a commercial loan PBB had made to
Al’s Garden Art, Inc. The terms of the PBB-Heritage
4 BANK OF MANHATTAN V. FDIC
Participation Agreement (“Agreement”) imposed two
contractual limitations on Heritage’s interest in the loan.
First, Heritage could not transfer its interest in the loan
without PBB’s prior written consent. Second, the Agreement
granted PBB a right of first refusal, such that it could elect to
repurchase Heritage’s loan interest upon the latter’s receipt
of any bona fide third-party offer.
Within one year of executing its agreement with PBB, the
Office of the Comptroller of the Currency closed Heritage
and appointed the Federal Deposit Insurance Corporation
(“FDIC”) to act as receiver for Heritage’s assets. By
operation of 12 U.S.C. § 1821(d)(2)(A), the FDIC became
successor in interest to all of Heritage’s assets and liabilities.
Six months later, and without first seeking PBB’s consent or
providing PBB with an opportunity to repurchase Heritage’s
interest in the Al’s Garden Art loan, the FDIC sold Heritage’s
interest under the Agreement to Commerce First Financial,
Inc. (“CFF”).
B
Al’s Garden Art defaulted on its loan obligations, and
PBB filed suit in state court seeking to collect on the loan.
Shortly thereafter, CFF brought a breach of contract action
against PBB to enforce the rights it acquired from the FDIC.
In response, PBB counterclaimed against CFF and filed a
third party complaint against the FDIC, alleging that the
FDIC’s failure to satisfy the Agreement’s pre-receivership
contractual provisions constituted breach of contract.
The case was removed to the United States District Court
for the Central District of California, where the FDIC filed a
motion to dismiss on the grounds that the Financial
BANK OF MANHATTAN V. FDIC 5
Institutions Reform, Recovery, and Enforcement Act of 1989
(“FIRREA”) preempted PBB’s claims. In its February 18,
2011 order, the district court denied the motion, concluding
that FIRREA does not permit the FDIC to breach contracts
without consequence. As the FDIC conceded breach of
contract in the absence of its statutory defense, the district
court granted PBB’s motion for summary judgment in its
October 4, 2011 order.1 The FDIC timely appealed.2
II
Conceding that its actions otherwise constituted a breach
of the Agreement, the FDIC asserts that FIRREA frees the
agency from complying with any pre-receivership
contractual provisions related to the transfer of a failed
bank’s assets. In relevant part, FIRREA provides that the
FDIC, acting as receiver, may “transfer any asset or liability
of the institution in default . . . without any approval,
assignment, or consent with respect to such transfer.” 12
U.S.C. § 1821(d)(2)(G)(i)(II). The district court held that
section 1821(d)(2)(G)(i)(II) does not immunize the FDIC
from damage claims if it elects to breach pre-receivership
contractual arrangements. We review a district court’s
statutory interpretation de novo. See Miranda v. Anchondo,
684 F.3d 844, 849 (9th Cir. 2012).
1
On May 31, 2012, Bank of Manhattan acquired PBB and was
thereafter substituted in the case.
2
We have jurisdiction pursuant to 28 U.S.C. § 1291.
6 BANK OF MANHATTAN V. FDIC
A
This case does not arise in a precedential vacuum. We
have considered on two prior occasions the scope of authority
granted to the FDIC under 12 U.S.C. § 1821(d). In Sahni v.
American Diversified Partners, we considered whether
section 1821(d) preempted a California state statute requiring
the consent or approval of all general partners prior to a
transfer of the bulk of a partnership’s assets. 83 F.3d 1054,
1059 (9th Cir. 1996). We determined that “[b]ecause
Congress specifically exempted the FDIC from having to
obtain any consent when effectuating the sale or transfer of
receivership assets pursuant to 12 U.S.C. § 1821(d),” state
statutes purporting to require prior approval or consent for
FDIC asset transfers are preempted by FIRREA. Id.
However, as the dispute between the FDIC and Bank of
Manhattan involves contractual rather than statutory transfer
limits, Sahni is inapposite.
More relevant to the FDIC’s section 1821(d) powers in
the private-contract context is our analysis in Sharpe v. FDIC,
126 F.3d 1147 (9th Cir. 1997). In Sharpe, the plaintiffs sued
the FDIC as receiver for breaching a contract executed by
Pioneer Bank, the FDIC’s predecessor in interest, whereby
the Bank agreed to pay the Sharpes a certain sum of money
in exchange for a promissory note and deed of trust. Id. at
1150–51.
The Sharpe Court considered two questions pertinent to
the instant case. First, we assessed whether 12 U.S.C.
§ 1821(j)—which precludes courts from taking “any action
. . . to restrain or affect the exercise of powers or functions of
the [FDIC] as a conservator or receiver”—deprives courts of
jurisdiction over breach of contract claims against the FDIC.
BANK OF MANHATTAN V. FDIC 7
Sharpe, 126 F.3d at 1154–55. Determining that it does not,
we noted that the “statute clearly contemplates that the FDIC
can escape the obligations of contracts” only through the
prescribed mechanism of 12 U.S.C. § 1821(e), which “allows
the FDIC to disaffirm or repudiate any contract it deems
burdensome and pay only compensatory damages.” Id. at
1155. In so concluding, we stated that “FIRREA does not
authorize the breach of contracts” or “preempt state law so as
to abrogate state law contract rights.” Id. As such, the
Sharpe panel determined that courts retain jurisdiction over
equitable claims related to contractual breaches. Id.
The second question the Sharpe Court decided was
whether parties to a contract breached by the FDIC were
properly considered creditors subject to FIRREA’s
administrative claims process. Holding that such parties are
not “creditors” under FIRREA, we reasoned that to rule
otherwise “would effectively preempt state contract law.” Id.
at 1156. We so concluded because FIRREA “does not
indicate that Congress intended to preempt state law so
broadly.” Id.
The Sharpe panel supported its conclusion regarding the
narrow scope of the FDIC’s powers under section 1821(d) by
explicitly adopting the D.C. Circuit’s reasoning in Waterview
Management Co. v. FDIC, 105 F.3d 696 (D.C. Cir. 1997).
See Sharpe, 126 F.3d at 1156–57. In Waterview, the D.C.
Circuit addressed nearly the same question presented here:
whether section 1821(d)(2)(G)(i)(II) preempts pre-
receivership purchase-option contracts. The Waterview court
held that section 1821(d) does not preempt such contracts
because “[p]re-receivership contracts are properly governed
by section 1821(e), entitled ‘Provisions relating to contracts
entered into before appointment of conservator or receiver,’
8 BANK OF MANHATTAN V. FDIC
which permits repudiation of such contracts and provides for
the payment of damages.” Waterview, 105 F.3d at 700. Put
differently, the D.C. Circuit’s reasoning—which we explicitly
adopted in Sharpe—concluded that section 1821(d) merely
permits the transfer of a failed bank’s assets without prior
approval, while section 1821(e) governs the mechanism by
which such transfers are executed if the disputed assets are
burdened by pre-existing contractual obligations. Id. at 701.
B
The reasoning3 of Sahni, Sharpe, and Waterview is clear:
while section 1821(d)(2)(G)(i)(II) preempts state statutes
requiring prior approval or consent for the transfer of
receivership assets, it does not extend to the sphere of private
contracts. Instead, section 1821(e) governs the FDIC’s
treatment of assets burdened by pre-receivership contractual
limitations. Should the FDIC violate pre-receivership
contracts rather than repudiate them under section 1821(e),
Sharpe and Waterview make clear that section
1821(d)(2)(G)(i)(II) does not afford the agency immunity
from subsequent actions for breach of contract.
To rule otherwise would permit the FDIC to succeed to
powers greater than those held by the insolvent bank, an
implausible result when FIRREA provides that the FDIC, as
receiver, “shall . . . succeed to all rights, titles, powers, and
privileges of the insured depository institution.” 12 U.S.C.
§ 1821(d)(2)(A). It is true that “some provision in the
extensive framework of FIRREA” might, in theory, afford the
3
“Well-reasoned dicta is the law of the circuit.” Enying Li v. Holder,
738 F.3d 1160, 1164 n.2 (9th Cir. 2013) (citing United States v. Johnson,
256 F.3d 895, 914 (9th Cir. 2001) (en banc)).
BANK OF MANHATTAN V. FDIC 9
FDIC as receiver greater powers than those possessed by a
failed financial institution. O’Melveny & Myers v. FDIC,
512 U.S. 79, 86–87 (1994). However, in light of Sahni,
Sharpe, and Waterview, we conclude that section
1821(d)(2)(G)(i)(II) is not such a provision. Therefore, we
agree with the Sharpe panel that FIRREA “does not preempt
state law so as to abrogate state law contract rights,” since “it
cannot be the case that the FDIC is in a better position when
it breaches a contract than when it chooses to repudiate
pursuant to § 1821(e).” Sharpe, 126 F.3d at 1155, 1157.4
C
Despite the clear statement of the Sahni, Sharpe, and
Waterview decisions that “FIRREA does not authorize the
breach of contracts,” Sharpe, 126 F.3d at 1155, the FDIC
argues that subsequent case law has limited those cases such
that the quoted language is no longer good law. Its arguments
are unpersuasive.
4
The dissent is correct in observing that 12 U.S.C. § 1821(e)—which
expressly governs “[p]rovisions relating to contracts entered into before
appointment of conservator or receiver”—limits the FDIC’s liability to
“actual direct compensatory damages,” and specifically precludes
recovery of “damages for lost profits or opportunity.” 12 U.S.C.
§ 1821(e)(3). However, section 1821(e)(3)’s damages limitations are
triggered only when the FDIC properly repudiates pre-receivership
contracts pursuant to section 1821(e)(1). See 12 U.S.C. § 1821(e)(3)(A)
(conditioning section 1821(e)(3)’s protections on “the disaffirmance or
repudiation of any contract pursuant to paragraph (1)”). As the FDIC did
not repudiate the Agreement, section 1821(e)(3) is inapposite.
Furthermore, the FDIC in this case seeks blanket immunity for the
breach of pre-receivership contracts, not a mere limitation on the form or
amount of damages Bank of Manhattan can recover. As such, section
1821(e)(3)’s recovery limitations are immaterial to the case before us.
10 BANK OF MANHATTAN V. FDIC
This Court has revisited the Sharpe decision on several
occasions. However, our subsequent decisions have never
purported to limit the conclusion that section 1821(d)(2)(G)
does not permit the FDIC to breach pre-receivership contracts
without consequence. Rather, these decisions all addressed
subsidiary questions while leaving untouched Sharpe’s
reasoning as to whether FIRREA authorizes the unrestrained
breach of contract. See, e.g., McCarthy v. FDIC, 348 F.3d
1075, 1077–81 (9th Cir. 2003) (addressing whether debtors
are subject to FIRREA’s administrative claim exhaustion
requirements); Battista v. FDIC, 195 F.3d 1113, 1115,
1119–20 (9th Cir. 1999) (considering whether parties to a
repudiated contract were entitled to payment in cash rather
than receiver’s certificates).5 Accordingly, Sharpe’s
conclusion that FIRREA does not permit the FDIC to avoid
liability for the breach of pre-receivership contracts is still
good law.
5
Most recently, we addressed the merits of the Sharpe opinion in
Deutsche Bank National Trust Co. v. FDIC, 744 F.3d 1124 (9th Cir.
2014). The Deutsche Bank panel reviewed a district court order which
held, inter alia, that section 1821(d)(2)(G) “does not permit FDIC to
circumvent its statutory obligation either to honor a failed institution’s
contracts, or to repudiate them and pay damages.” Deutsche Bank Nat.
Trust Co. v. FDIC, 784 F. Supp. 2d 1142, 1151 (C.D. Cal. 2011).
However, while the district court’s section 1821(d)(2)(G) ruling addressed
the same question we decide today, that issue was not presented to us in
the Deutsche Bank appeal. Instead, we confined our analysis to the
specific question certified by the district court for interlocutory appeal,
namely, whether the appellant’s claims “constitute[d] third-tier general
liabilities under 12 U.S.C. § 1821(d)(11)(A)(iii) rather than claims payable
outside the strictures of § 1821(d).” Deutsche Bank, 744 F.3d at 1129.
Accordingly, that decision did not disturb Sharpe’s determination that
FIRREA does not authorize the FDIC to breach pre-receivership contracts
without consequence.
BANK OF MANHATTAN V. FDIC 11
D
Finally, the FDIC advances two novel arguments related
to the viability of pre-receivership contracts in light of
Congress’s passage of FIRREA. First, the agency contends
that because FIRREA predates the Agreement, the written
consent and right of first refusal provisions are invalid and
unenforceable in light of the Supreme Court’s recognition
that “no contract can properly be carried into effect, which
was originally made contrary to the provisions of law.”
Louisville & Nashville R.R. Co. v. Mottley, 219 U.S. 467, 485
(1911) (citation omitted). The FDIC’s argument is premised
upon the contention that the Agreement’s consent and right
of first refusal provisions conflict with § 1821(d)(2)(G)
insofar as they limit the transferability of FDIC receivership
assets. However, the Waterview decision expressly
determined “that there is no conflict between the continued
enforcement of pre-receivership [contracts] and 12 U.S.C.
§ 1821(d)(2)(G)(i)(II).” 105 F.3d at 700. Accordingly, such
argument is unpersuasive.
In a similar vein, the FDIC asserts that because Sahni held
that section 1821(d)(2)(G) preempts state statutes requiring
prior consent or approval, contractual obligations must also
be preempted. In support of its claim, the FDIC cites Norfolk
& Western Railway Co. v. American Train Dispatchers’
Ass’n, 499 U.S. 117 (1991), which reasoned that a “contract
has no legal force apart from the law that acknowledges its
binding character.” Id. at 130. As the Sharpe and Waterview
decisions demonstrate that FIRREA acknowledges the
“binding character” of pre-receivership contracts, our
decision today in no way conflicts with Norfolk.
12 BANK OF MANHATTAN V. FDIC
III
It is undisputed that the FDIC transferred Heritage’s
interest in the Al’s Garden Art loan in contravention of the
Agreement’s consent and right of first refusal provisions. As
section 1821(d)(2)(G)(i)(II) does not immunize the FDIC
from breach of pre-receivership contract claims, we conclude
that the district court did not err in rejecting the FDIC’s
claimed statutory defense and entering judgment against the
FDIC for its breach of the Agreement.
AFFIRMED.
RAWLINSON, Circuit Judge, dissenting:
I respectfully dissent. In my view, our prior opinion in
Sahni v. American Diversified Partners, 83 F.3d 1054 (9th
Cir. 1996) dictates the outcome of this case. Because there is
no principled distinction between preemption of a state
statute and preemption of state common law, I would reverse
the district court’s decision.
This case involves the once familiar scenario of a failed
bank that has been taken over by the Federal Deposit
Insurance Corporation (FDIC) acting as receiver. Congress
enacted the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA) to facilitate the takeover
of failed banks by the FDIC. See Deutsche Bank Nat’l Trust
Co. v. FDIC, 744 F.3d 1124, 1128 (9th Cir. 2014). By
enacting this legislation, Congress sought to avoid a
prolonged transition period during which bank depositors
were deprived of access to their funds. See id. It was
 BANK OF MANHATTAN V. FDIC 13
Congress’ intent that the FDIC be able “to move quickly and
without undue interruption.” Id. As part of FIRREA,
Congress acted with the intent to impose “a broad limit on the
power of courts to interfere with the FDIC’s efforts.” (citation
and alteration omitted).
In Sahni, the plaintiff sued the FDIC, seeking to rescind
the sale of certain limited partnerships that were sold by the
FDIC as part of the liquidation of a failed bank. See Sahni,
83 F.3d at 1056. Plaintiff asserted that the FDIC’s sale of the
partnerships violated California Corporations Code § 15509,
which specified that consent of all limited partners was
required before disposing of the assets. See id. at 1059. We
held that 12 U.S.C. § 1821(d), a section of the FIRREA
statute, preempted the state statute requiring consent. See id.;
see also 12 U.S. C. § 1821(d)(2)(G)(i)(II) (providing that the
FDIC as receiver may “transfer any asset or liability of the
institution in default (including assets and liabilities
associated with any trust business) without any approval,
assignment, or consent with respect to such transfer”).
In this case, Plaintiff Bank of Manhattan, successor in
interest to Professional Business Bank, seeks to prosecute a
breach of contract action against the FDIC following the
FDIC’s takeover of a failed bank. That failed bank, First
Heritage, had entered into a Loan Purchase Agreement with
Professional Business Bank under which First Heritage
acquired a 50% interest in a loan that Professional Business
Bank made to one of its commercial customers. After
Heritage Bank failed and was placed into FDIC receivership,
FDIC sold the Loan Purchase Agreement as part of its
liquidation of Heritage Bank’s assets. Professional Business
Bank asserted in its action that the FDIC’s sale of the Loan
Purchase Agreement without Professional Business Bank’s
14 BANK OF MANHATTAN V. FDIC
consent breached the Loan Purchase Agreement, which
provided Professional Business Bank rights of consent and
first refusal.
I cannot agree that the FDIC should be liable to
Manhattan Bank for damages when FIRREA expressly
provides that the FDIC may transfer assets without consent as
part of its liquidation of a failed financial institution. See
12 U.S.C. § 1821(d)(2)(G)(i)(II). More particularly, as we
recognized in Battista v. FDIC, 195 F.3d 1113, 1116 (9th Cir.
1999), even when the FDIC has completely repudiated a
contract, damages are limited to “actual direct compensatory
damages” rather than the anticipatory damages represented by
a right of first refusal. See 12 U.S.C. § 1821(e)(3)(B)
(clarifying that the phrase “actual direct compensatory
damages does not include . . . damages for lost profits or
opportunity”).
I am not persuaded by the majority’s reliance on Sharpe
v. FDIC, 126 F.3d 1147 (9th Cir. 1997). Sharpe did not
involve the provision of FIRREA we address in this case, i.e.,
the ability of the FDIC as receiver to transfer assets without
approval. See id. at 1154 (addressing the issue of whether
12 U.S.C. § 1821(j) deprives the court of jurisdiction over
plaintiffs’ claim). In addition, the plaintiffs in Sharpe had,
before the receivership, fully performed their obligations
under the contract with the bank. See id. at 1152 (“Pursuant
to the settlement agreement, the Sharpes delivered a
reconveyance of the debtor’s deed of trust and the debtor’s
promissory note to Pioneer Bank”). Despite the bank’s
obligation to pay the Sharpes $510,000 via a wire transfer
once the documents were delivered, the bank tendered
payment in the form of two cashier’s check, which the FDIC
refused to honor after the bank was seized by bank regulators
BANK OF MANHATTAN V. FDIC 15
on the same day payment was tendered. See id. at 1151–52.
It was in this context, completed performance of a contract,
that we allowed plaintiffs’ claims to proceed. Nothing in the
holding or reasoning of Sharpe supports the notion of judicial
interference with the transfer of assets as expressly permitted
by 12 U.S.C. § 1821(d)(2)(G)(i)(II). And nothing in the
holding or reasoning of Sharpe calls into question the
provision of 12 U.S.C. § 1821(e)(3)(B) precluding the award
of damages for lost profits or opportunity, such as the right of
first refusal at issue in this case. Indeed, we have repeatedly
emphasized the limited holding of Sharpe. See Battista,
195 F.3d at 1119 (distinguishing Sharpe); see also McCarthy
v. FDIC, 348 F.3d 1075, 1078, 1081 (9th Cir. 2003)
(describing Sharpe as an “unusual case” “arising out of a
breach of contract fully performed by the aggrieved party but
not repudiated by the receiver”); 1077 (characterizing Sharpe
as arising in a “different context [ ] and . . . not controlling”);
Deutsche Bank, 744 F.3d at 1135 (“Given that we have
limited Sharpe’s reach even in the administrative exhaustion
context, it would be illogical for us to expand Sharpe to more
substantive provisions, such as 12 U.S.C. § 1821(d)(11), that
were not at issue or addressed in Sharpe. . . .”) (citations
omitted); 1137 (limiting Sharpe to its particular facts). It is
particularly telling that the decision in Sharpe did not even
attempt to distinguish Sahni.
Similarly, the case from the D.C. Circuit cited in Sharpe,
Waterview Mgmt Co. v. FDIC, 105 F.3d 696 (D.C. Cir. 1977)
does not grapple with our decision in Sahni. Rather, it
relegates our precedent to a footnote suggesting that the
partnership status of the bank’s interest is determinative. See
id. at 700 n.3. Neither does Waterview Mgmt. account for the
limitation in 12 U.S.C. § 1821(e)(3)(B) precluding liability
for lost profits or opportunity.
16 BANK OF MANHATTAN V. FDIC
Because Sahni is inconsistent with the majority’s holding,
and because neither Sharpe nor Waterview Mgt. addresses the
rationale of Sahni or the prohibition on damages for lost
opportunities set forth in 12 U.S.C. § 1821(e)(3)(B), the
majority’s reliance on this trilogy of cases as representing a
clear statement limiting FIRREA’s preemption is simply not
compelling. Rather, we have consistently taken a contrary
view, acknowledging the broad powers conferred upon the
FDIC in FIRREA and the corresponding limited reach of
courts in this arena. See Sharpe, 126 F.3d at 1154; see also
McCarthy, 348 F.3d at 1079 (“[T]he § 1821(d) jurisdictional
bar is not limited to claims by creditors but extends to all
claims and actions against, and actions seeking a
determination of rights with respect to, the assets of failed
financial institutions for which the FDIC serves as receiver,
including debtors’ claims”); Deutsche Bank, 744 F.3d at 1128
(“Congress granted the FDIC broad powers in conserving
and disposing of the assets of the failed institution. To enable
the FDIC to move quickly and without undue interruption to
preserve and consolidate the assets of the failed institution,
Congress enacted a broad limit on the power of courts to
interfere with the FDIC’s efforts.) (citation and alteration
omitted) (emphases added).
Finally and significantly, allowing option holders to sue
the FDIC for damages due to lost opportunities is at cross
purposes with the heart of FIRREA. See United States v.
Banks, 506 F.3d 756, 763 (9th Cir. 2007) (interpreting a
statute in the context of its purpose). It is well known that
“Congress’ core purposes in enacting FIRREA [were] to
ensure that the assets of a failed institution are distributed
fairly and promptly among those with valid claims against the
institution, and to expeditiously wind up the affairs of failed
banks.” McCarthy, 348 F.3d at 1079; see also Deutsche
BANK OF MANHATTAN V. FDIC 17
Bank, 744 F.3d at 1128 (noting Congress’ intent that the
FDIC be able “to move quickly and without undue
interruption”). Allowing breach of contracts actions to
proceed against the FDIC outside the strictures of FIRREA
would bring the windup of the affairs of failed banks to a
screeching halt, pending the outcome of litigation. This result
is the very antithesis of the limitation on court involvement
contemplated by Congress. See Deutsche Bank, 744 F.3d at
1128.
In sum, because no principled basis exists upon which to
distinguish our precedent as set forth in Sahni, because
Sharpe is a unique case that is limited to its particular facts,
because FIRREA does not countenance damages actions for
lost opportunities, and because allowing a breach of contract
action against the FDIC would be contrary to Congress’
purpose in enacting FIRREA, I would reverse the district
court’s ruling that FIRREA did not preempt Bank of
Manhattan’s claim. I respectfully dissent.