The opinion of the court was delivered by: THOMAS F. HOGAN
MEMORANDUM OPINION ON MOTION FOR RECONSIDERATION
On April 14, 1993, this Court issued a Memorandum Opinion ("Mem." or "April 14 Opinion") holding that, as a matter of law, the Financial Institutions Reform Recovery and Enforcement Act ("FIRREA") does not protect the Federal Deposit Insurance Corporation ("FDIC") from liability for actual direct compensatory damages caused by repudiation of a non-compete provision. In that Opinion, 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." Mem. at 1. The Court also held that under 12 U.S.C. § 1821(e)(3)(A)(ii), damages caused by the repudiation are measured on the date the receiver was appointed, not on the date of repudiation. Mem. at 5. Consequently, the Court granted plaintiff's motion for summary judgment and denied defendants' motion.
The FDIC has moved for reconsideration of the April 14 Opinion. The parties have extensively briefed the motion
and presented oral argument to the Court. For the reasons set forth below, the Court will grant in part and deny in part the motion for reconsideration.
A. Summary of the Relevant Facts
Most of the facts underlying this Opinion are set forth in the April 14 Opinion. Those most pertinent to the Court's decision today, however, are summarized below.
Citibank (South Dakota) N.A. ("Citibank") seeks damages allegedly arising from the FDIC's disaffirmance of an agreement between Citibank and 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"). By means of the agreement, entitled Credit Card Portfolio Purchase and Sale Agreement ("the Agreement" or "Citibank Agreement"), Citibank purchased certain assets and assumed certain liabilities associated with the credit card businesses of each of the BNE Banks. Citibank claims that part (approximately $ 28 million) of the $ 180 million premium it paid for this agreement represents a payment for contractual rights, including a four-year covenant preventing the BNE Banks from soliciting credit card business from former BNE cardholders. Mem. at 2; Agreement § 14, at 29-31. Unlike other sections of the Agreement, however, the non-compete provision does not explicitly bind purchasers of specific assets from the BNE Banks. Cf. Agreement § 9.8. Nevertheless, the Agreement does provide in Section 38, captioned "Successors," that "this Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns." Agreement at 43. The Agreement does not explicitly define the terms "successors" and "permitted assigns."
On January 6, 1991, approximately one year after the Agreement, the Comptroller of the Currency declared the BNE Banks insolvent and named the FDIC as a separate receiver for each of them. The FDIC as Receiver transferred certain assets and liabilities -- but not the Citibank Agreement -- to Bridge Banks. Less than one month later, the FDIC announced the sale of certain of the BNE Banks' assets and liabilities to Fleet/Norstar Financial Corporation ("Fleet") without the encumbrance of the non-compete provision. Mem. at 3. On March 27, 1991, in preparation for sale of the BNE Banks' assets, the FDIC formally repudiated the Agreement pursuant to 12 U.S.C. § 1821(e)(1). Fleet has subjected Citibank to competition for credit card business. FDIC Recon. Mem. at 2.
B. Grounds Asserted By FDIC For Reconsideration
The April 14 Opinion held that
the non-compete provision was a valuable contractual right that was fully paid for and operative prior to the date the BNE Banks declared their insolvency. Prior to the date of receivership, Citibank had an unqualified right to expect that the BNE Banks and all other successors in interest to the BNE Banks would perform their obligations under the non-compete provision.
The FDIC claims that "in concluding that the non-compete provision had value as of the date the BNE Banks failed, the Court apparently assumed that the Bridge Banks and Fleet were 'successors in interest' to the BNE Banks, and would have been bound by the Non-Compete Provision if the Agreement had not been repudiated." FDIC Recon. Mem. at 3. According to the FDIC, the Court based this assumption on the erroneous impression that the receivers, as a factual matter, transferred all of the assets of the BNE Banks and that the BNE Banks were sold as a "going concern." Id. at 4-10. The FDIC asserts that "this assumption is inconsistent with the stipulated facts and applicable law" and that, as a consequence, the Opinion "is erroneous and should be vacated." Id. at 3.
The FDIC also asserts that the Opinion erroneously concludes, as a legal matter, that the non-compete provision binds all other successors in interest to the BNE Banks, including transferees of assets and liabilities other than the Agreement itself. In contrast to Citibank, the FDIC asserts that the "Successors and Assigns" provision (Section 38) does not obligate the FDIC to pass on the non-compete obligation to the Bridge Banks. The FDIC interprets the phrase "successors and permitted assigns" as being "limited to successors and assigns of the Agreement, not to anyone who purchased assets or assumed liabilities (other than the Agreement itself) of the BNE Banks." FDIC RSS at 4. The FDIC states that it is the "final successor" to the Agreement and that it has continued to honor the non-compete obligation. Id. It maintains that because it was not obligated to transfer the Agreement to the Fleet Banks under § 1821(d)(2)(G)(i)(II), see Payne v. Security Savings & Loan Ass'n, F.A., 924 F.2d 109, 111 (7th Cir. 1991), the Fleet Banks were free to compete with Citibank. ...