Building Four Shady Oaks Management L.P. v. Federal Deposit Insurance
504 F. App'x 292
5th Cir.2012Background
- FDIC, as receiver of Guaranty Bank, repudiated a long-term commercial lease with Building Four.
- Guaranty Bank occupied 3,740 square feet in Southlake, TX under a ten-year lease starting May 15, 2008.
- FDIC repudiated the lease effective March 31, 2010, after notifying Building Four on January 25, 2010.
- Building Four sued for breach of contract, seeking rent and expenses; FDIC argued delay was reasonable given market conditions and lack of prejudice to Building Four.
- District court dismissed after finding no prejudice to Building Four from the delay; trial court balanced delay with circumstances to conclude repudiation was reasonable.
- Appellate review assesses whether prejudice is a relevant factor and whether the district court’s factual findings are clearly erroneous.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prejudice can be considered under §1821(e)(2). | Building Four argues prejudice is not a factor. | FDIC contends prejudice is not required but may be considered. | Prejudice may be considered in determining reasonableness. |
| Whether lack of prejudice post-repudiation affects reasonableness at repudiation. | Prejudice after repudiation should not influence timing. | Post-repudiation outcomes illuminate prejudicial impact at repudiation. | Prejudice evidence after repudiation may inform the contemporaneous prejudice at repudiation. |
| Whether prejudice is a prerequisite to a finding of unreasonableness. | Prejudice is necessary before finding unreasonableness. | Unreasonableness can be shown by multiple factors, prejudice not prerequisite. | Prejudice is not a prerequisite; other factors can establish unreasonableness. |
Key Cases Cited
- Travelers Ins. Co. v. Liljeberg Enters., Inc., 38 F.3d 1404 (5th Cir. 1994) (reasonableness depends on case-specific facts and circumstances)
- CedarMinn Bldg. Ltd. P'ship v. Resolution Trust Corp., 956 F.2d 1446 (8th Cir. 1992) (timeframe for reasonableness depends on circumstances; prejudice noted in determining reasonableness)
- N.H. Assoc. Ltd. P'ship v. FDIC, 978 F. Supp. 650 (D. Md. 1997) (noting lack of prejudice may bear on reasonableness considerations)
- Alford v. United States, 709 F.2d 418 (5th Cir. 1983) (reasonableness of timing depends on surrounding circumstances)
- Klamath Strategic Inv. Fund v. United States, 568 F.3d 537 (5th Cir. 2009) (standard of review for factual findings is clear error; legal conclusions de novo)