Bank of Manhattan, N.A. v. Fed. Deposit Ins. Corp., No. 12-56737 (9th Cir. 2015)
Annotate this CaseThe Federal Deposit Insurance Corporation (“FDIC”) was appointed to act as receiver for the assets of First Heritage Bank, N.A. (“Heritage”). Heritage had previously purchased, pursuant to an agreement (“Agreement”), interest in a commercial loan that Professional Business Bank (“PBB”) had made to Al’s Garden Art, Inc. The FDIC subsequently sold Heritage’s interest under the Agreement to Commerce First Financial, Inc. (“CFF”). When Al’s Garden Art defaulted on its loan obligations, PBB sued to collect on the loan. CFF then brought a breach of contract action against PBB. PBB 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 FDIC moved to dismiss on the grounds that the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) preempted PBB’s claims. The district court denied the motion and granted summary judgment for PBB. The Ninth Circuit affirmed, holding that the FDIC, in its role of receiver of a closed bank, may not breach underlying asset contractual obligations without consequence.
Court Description: 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). BANK OF MANHATTAN V. FDIC 3
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