Bank of Manhattan, N.A. v. Federal Deposit Insurance

Opinion by Judge O’SCANNLAIN; Dissent by Judge RAWLINSON.

OPINION

We must decide whether the Federal Deposit Insurance Corporation, in its role *1134 of receiver of a closed bank, may breach underlying asset contractual obligations without consequence.

I

A

In December 2007, Professional Business Bank (“PBB”) sold to First Heritage Bank, N.A. (“Heritage”) a fifty percent participation interest in a commercial loan PBB had made to Al’s Garden Art, Inc. The terms of the PBB-Heritage Participation Agreement (“Agreement”) imposed two contractual limitations on Heritage’s interest in the loan. First, Heritage could not transfer its interest in the loan without PBB’.s prior written consent. Second, the Agreement granted PBB a right of first refusal, such that it could elect to repurchase Heritage’s loan interest upon the latter’s receipt of any bona fide third-party offer.

Within one year of executing its agreement with PBB, the Office of the Comptroller of the Currency closed Heritage and appointed the Federal Deposit Insurance Corporation (“FDIC”) to act as receiver for Heritage’s assets. By operation of 12 U.S.C. § 1821 (d)(2)(A), the FDIC became successor in interest to all of…

dissenting:

I respectfully dissent. In my view, our prior opinion in Sahni v. American Diversified Partners, 83 F.3d 1054 (9th Cir. 1996) dictates the outcome of this case. Because there is no principled distinction between preemption of a state statute and preemption of state common law, I would reverse the district court’s decision.

This case involves the once familiar scenario of a failed bank that has been taken over by the Federal Deposit Insurance Corporation (FDIC) acting as receiver. Congress enacted the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) to facilitate the takeover of failed banks by the FDIC. See Deutsche Bank Nat’l Trust Co. v. FDIC, 744 F.3d 1124, 1128 (9th Cir.2014). By enacting this legislation, Congress sought to avoid a prolonged transition period during which bank depositors were deprived of access to their funds. See id. It was Congress’ intent that the FDIC be able “to move quickly and without undue interruption.” Id. As part of FIRREA, Congress acted with the intent to impose “a broad limit on the power of courts to interfere with the FDIC’s efforts.” (citation and alteration omitted).

In Sahni , the plaintiff sued…

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BANK OF MANHATTAN, N.A., No. 12-56737 Plaintiff-Appellee, D.C. No. v. 2:10-cv-04614-

GAF-AGR

FEDERAL DEPOSIT INSURANCE

CORPORATION, in its capacity as Receiver for First Heritage Bank, OPINION

N.A.,

Defendant-Appellant.

Appeal from the United States District Court for the Central District of California Gary A. Feess, District Judge, Presiding

Argued and Submitted August 28, 2014—Pasadena, California

Filed March 4, 2015

Before: Diarmuid F. O’Scannlain, Johnnie B. Rawlinson, and Jay S. Bybee, Circuit Judges.

Opinion by Judge O’Scannlain; Dissent by Judge Rawlinson SUMMARY*

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…