and the Acting General Counsel of the Bank Board jointly submitted two Issue Memoranda to the Bank Board summarizing the alleged facts which composed the statutory grounds for the proposed appointment of FSLIC as Conservator for Mercury and Milam. The Issue Memoranda cited and explained materials in the administrative record the Bank Board staff had compiled concerning the financial condition of the Associations.
The next day, on March 14, 1986, the Bank Board met and by formal resolution consumated its decision to impose a conservatorship on the Associations. The Bank Board staff referred the Bank Board to the materials in the administrative record which demonstrated that statutory grounds to appoint a conservator were met, in that the Associations were insolvent, and had suffered a substantial dissipation of assets due to regulatory violations and unsafe and unsound practices. The Resolutions the Bank Board adopted that day expressly suspended the Undertaking. The administrative hearing scheduled for March 17, 1986, was not held.
The Undertaking and the Stipulation are silent with respect to the Bank Board's power to appoint a conservator. Neither document makes any reference to any of the statutory grounds for appointment of a conservator. The only expression in the documents relating to the Bank Board's enforcement power is in paragraph 5 mentioned above, which provided for injunctive relief for violations of the Undertaking. There is no indication, however, that the Bank Board relied on, or was informed of, any violations of the Undertaking in connection with its decision to appoint a conservator. No such violation has been asserted by the Bank Board.
In his complaint, Haralson alleges that the Bank Board breached its contract with the Associations "[by] appointing a conservator rather than proceeding in accordance with § 407(f)(3), for alleged actions subject to the Stipulation Regarding Interim Undertaking. . . ."
Complaint at 19 (emphasis added). The contract is construed by Haralson to contain a limitation on the Bank Board's enforcement powers prior to an adjudication of the charges set out in the Notice at the scheduled administrative hearing.
In Haralson's memorandum, however, his argument is significantly different. There, Haralson alleges that "by suspending the Interim Undertaking and cancelling the administrative hearing, the defendants breached the terms of the Stipulation." Plaintiffs' Opposition to Defendants' Motion for Partial Summary Judgment at 8-9. Haralson no longer contends that the imposition of a conservator was based on a violation of the Undertaking, as he did in his complaint, where he refers to "actions subject to the Stipulation".
The Bank Board agrees that an injunction would have been the sole remedy for a violation of the terms of the Undertaking, but the Board maintains that their decision to appoint a conservator was not based on a violation of the Undertaking. Rather, it was based on a finding that three separate statutory grounds for appointment of a conservator (insolvency, dissipation of assets, and unsafe and unsound conditions) existed. As construed by the Board, the contract does not impose any restriction on the Bank Board's pre-existing power to appoint a conservator where the appointment is based on the independent existence of the grounds enumerated in the statute.
The question before this Court then, is whether the parties contractually agreed that the Bank Board would relinquish its statutory authority to impose a conservatorship, on any and all grounds whatsoever, until the conclusion of the administrative hearing provided for by the contract. If no such promise was made by the Bank Board, there could have been no breach.
"The judicial task in construing a contract is to give effect to the mutual intentions of the parties." NRM Corp. v. Hercules Inc., 244 U.S. App. D.C. 356, 758 F.2d 676, 681 (D.C. Cir. 1985) (footnote omitted). See also Deauville Corp. v. Federated Department Stores, 756 F.2d 1183 (5th Cir.1985). Intent is considered from an objective standard and is evidenced from the words of the contract itself. The subjective intent of the parties is not controlling.
Both parties concede that the language of this contract is unambiguous. "Where the language of a contract is clear and unambiguous on its face, a court will assume that the meaning ordinarily ascribed to those words reflects the intentions of the parties." NRM Corp., at 681. Accordingly, there is no need for this Court to look to extrinsic evidence of intent to guide the interpretive process. 758 F.2d at 682.
Although there is disagreement between the parties as to the meaning of the contract, it "is not ambiguous simply because the parties disagree on its interpretation." Papago Tribal Utility Authority v. FERC, 232 U.S. App. D.C. 424, 723 F.2d 950, 955 (D.C. Cir.1983). The parties disagreement may stem from a difference in their subjective understanding of what they agreed to. However, even if Haralson subjectively thought that the Bank Board agreed to relinquish its ability to impose a conservator, this Court is compelled to determine what a reasonable person would have intended in entering into this agreement.
Our inquiry begins with an examination of those portions of the language of the contract about which there is a dispute. Paragraph 4 of the Stipulation states as follows:
FSLIC and the Associations stipulate and agree that the attached Undertaking shall remain in effect pending the completion of the administrative proceeding provided for in the Notice, and until such time as the charges specified in the Notice are dismissed by the FSLIC or until the FSLIC shall issue a cease-and-desist order at the completion of the administrative proceeding or the Undertaking otherwise terminates pursuant to paragraph 19 of the Undertaking.
Paragraph 5 of the Stipulation provides: