Modzelewski
Modzelewski v. Resolution Trust Corp.
Opinion
Lead Opinion
Kozinski, J.
Starting in the 1970s, MeraBank Savings and Loan offered high level employees “salary continuation agreements,” presumably to secure the most talented managers. Nonetheless, it went the way of many S & Ls this past decade. The Resolution Trust Corporation, as receiver, now refuses to honor the agreements, claiming that the right to payments terminated automatically pursuant to 12 C.F.R. § 563.39 (b)(5) when the RTC took over.
I. Facts
Gene Rice devoted 35 years of service to MeraBank; Ernest Modzelewski gave 28. As executives, they signed agreements providing for 120 monthly installments after certain triggering events: retiremént, death or termination without cause.
MeraBank was declared insolvent in January 1990; the RTC took over as receiver and promptly terminated both Rice and Modze-lewski. Adding injury to insult, it refused to pay them anything under their salary continuation agreements. Rice and Modzelewski brought suit claiming they were entitled to compensatory damages under 12 U.S.C. § 1821 (e)(3) because the RTC had repudiated its obligation under the contract.
The district court granted summary judgment to the RTC and Rice and Modzelewski appeal. 785 F.Supp. 1385…
Concurrence in Part
Thompson, J.
concurring in part and dissenting in part.
Although I concur in Parts I, IIA and IIBii of the majority opinion, I respectfully dissent from Part IIBi. In my view, Rice’s rights under his employment contract had not vested when the RTC took over MeraBank Savings and Loan, and as a result the RTC had the power to terminate his employment contract without liability, including the provision for salary continuation.
Rice’s right to salary continuation payments after termination of his employment was subject to a condition precedent: He had to retire' after age 57 and before he was discharged for cause. That he chose to work beyond age 57 did not eliminate this contingency. So long as he chose to continue working and to receive the benefits of active employment he did so at the risk of discharge for cause prior to his voluntary retirement. His rights were not vested.
The majority gets rid of the vesting problem by erasing it from Rice’s contract when he turned 57. Thereafter, according to the majority, it simply wasn’t in the contract because from then on all Rice had to do was retire and he would be entitled to his salary continuation payments. Of course, that is not what the…