The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge
Plaintiff The Benjamin Franklin Shareholders Litigation Fund ("the Litigation Fund") brings this suit against the Federal Deposit Insurance Corporation ("FDIC") in its capacity as receiver for the Benjamin Franklin Savings & Loan Association ("Ben. Franklin"), in order to challenge the FDIC's decision not to pay interest on an approved receivership claim. Currently pending before the Court are the parties' cross-motions for summary judgment. Upon consideration of the motions, the responses and replies thereto, the applicable law, and the entire record, the Court determines that plaintiff is not entitled to interest on its receivership claim. Therefore, for the reasons stated herein, defendant's motion for summary judgment is GRANTED and plaintiff's motion for summary judgment is DENIED.
The Litigation Fund was created in 1990 shortly after Ben. Franklin was placed in receivership. The FDIC, created by Congress in 1933 as a body corporate and authorized by statute to act in several different capacities, currently serves as the receiver for Ben. Franklin. Since its creation, the Litigation Fund has served as the repository of cash contributions made by Ben. Franklin shareholders to fund litigation brought on behalf of Ben. Franklin and its shareholders. Approximately 4200 shareholders of Ben. Franklin contributed money to the Litigation Fund between 1990 and May 2006, which contributions totaled $3,067,159.77 as of May 24, 2006. Don S. Willner, an attorney who practices law in the states of Oregon and Washington, has been the sole trustee of the BFS Litigation Fund since its inception. Willner has also served as the attorney of record in shareholder derivative actions and motions filed on behalf of Ben. Franklin in federal courts.
On July 17, 2002, the Untied States filed suit in this Court against the FDIC, as the Ben. Franklin receiver, seeking more than $1 billion in damages for alleged taxes and penalties. Compl., United States v. FDIC, No. 02-1427-EGS (D.D.C. 2002). Between 2002 and 2005, representatives of the FDIC, the Tax Division of the U.S. Department of Justice, the IRS, and several attorneys representing Ben. Franklin shareholders, including Willner, worked together in an effort to reach a settlement concerning the alleged tax liability of the Ben. Franklin receivership. During this negotiation process, the Tax Case was stayed by the Court. Order, No. 02-1427-EGS (D.D.C. Apr. 22, 2003).
On November 8, 2004, Willner wrote a letter to the FDIC setting out points of agreement that had been reached between the FDIC and Willner in his capacity as the attorney of record in the Ben. Franklin shareholder derivative litigation. The letter agreement stated that it memorialized certain understandings "relative to our mutual efforts to settle outstanding lawsuits," including the tax case. In his reply dated November 9, 2004, the FDIC's Senior Counsel Robert G. Clark concurred with Willner's November 8, 2004 letter.
The letter agreement set out the procedure that would be followed to make distributions from the receivership surplus. The distributions were to include an agreed upon tax payment to the IRS and the payment of "reasonable fees and expenses of shareholders' counsel and consultants" related to their work on the tax issues. As relevant to this case, the distributions would also include:
A distribution to the Benj. Franklin Shareholders Litigation Fund [ ] to reimburse all contributions to that fund. (This is approximately $3 million of contributions by about 4,200 shareholders . . . .)
This matter will be handled as a claim and will be determined through the receivership process. The Litigation Fund will submit its claim in the near future. Interest will be determined under the applicable provisions of the receivership priority system.
In accordance with the agreement, the Litigation Fund filed its receivership claim in 2005 for a reimbursement of all shareholder contributions made to the Fund and for interest on that amount. This agreement was further memorialized in the notice of proposed settlement that was distributed to the Ben. Franklin shareholders. Notice to Shareholders, Pl.'s App. at 22-28. The notice proposed a settlement with the IRS in the amount of $50 million and additional distributions from the receivership.
As of the spring of 2006, the Ben. Franklin receivership reported a surplus in the amount of approximately $94 million. On May 2, 2006, following a fairness hearing advertised to the Ben. Franklin shareholders, this Court approved the settlement of the alleged tax liability for a payment of $50 million to the IRS, leaving an approximately $44 million surplus in the receivership. See Order, United States v. FDIC, No. 02-1427-EGS (D.D.C. May 2, 2006). By letter dated May 24, 2006, the FDIC, in its capacity as the Ben. Franklin receiver, allowed the Litigation Fund's claim for the principal amount of all shareholder contributions made to the Fund in the amount of $3,067,159.77 and sent a check in that amount to the Litigation Fund's Trustee. By letter dated May 11, 2006, the FDIC disallowed the Litigation Fund's claim for interest on the $3,067,159.77 of principal, stating "No interest is due on the Fund's claim because the most appropriate characterization of the Fund's claim is as an administrative claim and, as such, no interest is authorized under the applicable priority of claim, formerly 12 CFR § 569c-11, now found at 12 CFR § 360.3."
Plaintiff timely filed suit in this Court on June 2, 2006, claiming that the FDIC wrongly declined to pay interest on plaintiff's claim, and seeking an order directing the FDIC to pay the requested interest. After a brief amount of discovery, both parties filed motions for summary judgment.
Summary judgment should be granted only if the moving party has shown that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Waterhouse v. District of Columbia, 298 F.3d 989, 991 (D.C. Cir. 2002). In determining whether a genuine issue of material fact exists, the Court must view all facts in the light most favorable to the non-moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The non-moving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by ...