BKWSpokane, LLC v. Federal Deposit Insurance Corp.
663 F. App'x 524
9th Cir.2016Background
- BKWSpokane, LLC owns a commercial building leased under a Master Lease with a failed bank; the FDIC was appointed Receiver and repudiated the Master Lease.
- BKWSpokane sued the FDIC (breach of contract; equitable claims) and Columbia State Bank (breach of contract; equitable claims) after Columbia did not assume the lease.
- The FDIC repudiated the lease 206 days after appointment, after lease-assumption negotiations between BKWSpokane and Columbia broke down.
- The district court granted summary judgment to the FDIC on the breach claim, dismissed BKWSpokane’s equitable claims and its claims against Columbia, denied a motion to compel FDIC in-house counsel communications, and awarded the FDIC attorneys’ fees under the lease.
- BKWSpokane appealed, arguing (1) repudiation was untimely under 12 U.S.C. § 1821(e)(2), (2) equitable and contract claims should survive, (3) certain privileged communications should be produced, and (4) the fee award was improper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of FDIC repudiation under FIRREA § 1821(e)(2) | FDIC unreasonably delayed repudiation (206 days) so repudiation was untimely | FDIC reasonably waited until Columbia’s negotiations failed and the effective date was clear | Repudiation was timely; summary judgment for FDIC affirmed |
| Privilege for FDIC in-house counsel communications | Communications should be produced | Communications are protected by attorney-client privilege (counsel in advisory role) | District court did not abuse discretion; privilege applies |
| Equitable claims vs FDIC (part performance, promissory estoppel, quantum meruit) | Equitable relief available despite FDIC receiver status | FIRREA bars equitable relief against FDIC as receiver under § 1821(j) | Equitable claims barred; dismissal affirmed |
| Claims against Columbia (standing/third-party beneficiary and quasi-contract) | BKWSpokane became a direct beneficiary of PAA by FDIC representations | BKWSpokane is not an intended third-party beneficiary; express contract (Master Lease) bars quasi-contract claims | Claims dismissed with prejudice for lack of standing/quasi-contract barred |
| Attorneys’ fees under lease | Fee award improper because FDIC repudiated the lease | Fee provision applies even when FDIC successfully defends repudiation | Fee award upheld; district court did not abuse discretion |
Key Cases Cited
- Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070 (9th Cir. 2013) (de novo review of cross-motions for summary judgment)
- Hallett v. Morgan, 296 F.3d 732 (9th Cir. 2002) (standards for appellate review of privilege disputes)
- United States v. Chen, 99 F.3d 1495 (9th Cir. 1996) (attorney-client privilege applies to lawyers acting in counseling and planning roles)
- GECCMC 2005-Cl Plummer St. Office Ltd. P’ship v. JPMorgan Chase Bank, Nat’l Ass’n, 671 F.3d 1027 (9th Cir. 2012) (standing and third-party beneficiary analysis under a Purchase and Assumption Agreement)
- Sharpe v. FDIC, 126 F.3d 1147 (9th Cir. 1997) (scope of § 1821(j) bar on equitable relief against FDIC)
- Franklin Fin. v. Resolution Tr. Corp., 53 F.3d 268 (9th Cir. 1995) (attorney-fee provisions enforceable where RTC/FDIC defends repudiation)
- Intri-Plex Techs., Inc. v. Crest Grp., Inc., 499 F.3d 1048 (9th Cir. 2007) (judicial notice of public records in ruling on a motion to dismiss)