The opinion of the court was delivered by: THOMAS F. HOGAN
On March 26, 1993, this court conducted a hearing to consider whether, as a matter of law, the Financial Institutions Reform and Recovery Act ("FIRREA") protects the Federal Deposit Insurance corporation ("FDIC") from liability for damages caused by repudiation of a non-compete provision.
Based on the arguments and authorities presented by the parties in their briefs and during the hearing, the court found that the non-compete provision could have value prior to repudiation and that the FDIC could be held liable for damages as a result. Accordingly, the court granted plaintiff's motion for partial summary judgment and denied defendants' motion. This Opinion memorializes this court's March 26, 1993 bench ruling.
Citibank (South Dakota), N.A. ("Citibank"), brings this case against the FDIC in its capacity as the appointed receiver for Bank of New England, N.A., The Connecticut Bank and Trust Company, N.A., and Maine National Bank (collectively referred to as the "BNE" Banks).
It is undisputed that Citibank requested the four year non-compete provision as a condition to the sale. FDIC notes, however, that a monetary value was never assigned to the provision. Citibank never recorded the provision as a separate asset on its books, despite its own internal accounting practices requiring that "any intangible assets that can be identified and valued be allocated a separate portion of the purchase price."
On January 6, 1991, the Comptroller of the Currency declared the BNE banks insolvent and named the FDIC as receiver. In preparation for sale of the BNE Banks' assets, the FDIC repudiated the Agreement pursuant to 12 U.S.C. § 1821 (e)(1). Less than one month later, the FDIC announced the sale of the BNE Banks to Fleet/Norstar Financial Corporation ("Fleet") without the encumbrance of the non-compete provision. Citibank, believing it was entitled to compensation for the value of the repudiated non-compete provision, filed timely proof of its claims with the FDIC. The FDIC disallowed the claims on January 3, 1992. Citibank now brings suit, pursuant to 12 U.S.C. § 1821(d)(6), for a judicial determination of its claims.
Federal Rule of Civil Procedure 56(c) permits a court to grant summary judgment when the evidence in the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The moving party bears the burden of showing that there is no genuine issue of material fact
or that the opposing party has failed to make a showing sufficient to establish the existence of an element essential to that party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). When the moving party has carried its burden, the burden shifts to the nonmoving party to "come forward with 'specific facts showing that there is a genuine issue for trial."' Matsushita Elec. Industrial Co. v. Zenith Radio, 475 U.S. 574, 587 (citations omitted) (emphasis in original). The nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Id. at 586. In reviewing the evidence, a court must draw all reasonable inferences in favor of the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Then, only when "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party," Matsushita, 475 U.S. at 587, is summary judgment appropriate.
B. Measure of Damages under FIRREA
FIRREA gives the receiver of a failed bank the right to repudiate any contract or lease:
12 U.S.C. § 1821 (e)(1). Section 1821 (e)(3) lessens the impact of repudiation by allowing certain damage claims against receiver. While actual compensatory damages are permitted, punitive, exemplary and lost profits damages are specifically excluded. § 1821 ...