Crédit Agricole Corporate & Investment Bank New York Branch v. American Home Mortgage Holdings, Inc.
637 F.3d 246
| 3rd Cir. | 2011Background
- Calyon NY Branch and debtors entered into a 2006 Repurchase Agreement covering about 5,700 mortgage loans with an original balance just under $1.2 billion.
- Sometime before August 1, 2007, the Debtor defaulted and Calyon accelerated the agreement; damages under 11 U.S.C. § 562 are measured as of the earliest of rejection or acceleration, or later if no commercially reasonable determinant exists.
- Four stipulated valuation dates were used: August 1, 2007; September 30, 2007; January 30, 2008; and August 15, 2008, with a constant repurchase price through Sept 30, 2007 and reductions afterward due to payments.
- Debtor argued that a Discounted Cash Flow (DCF) methodology is a commercially reasonable determinant of value on the Acceleration Date, potentially yielding no deficiency.
- Calyon contended that § 562 requires market or sale value as the determinant, and that the market was dysfunctional on the Acceleration Date, so the earliest date with a reasonable market value was August 15, 2008, producing a deficiency claim.
- Bankruptcy Court held § 562 allows any commercially reasonable determinant of value and approved DCF, concluding Calyon had no deficiency and expunged the claims; the Third Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Interpretation of 'commercially reasonable determinants of value' in § 562 | Calyon argued it limits to market value/sales price. | Debtor argued it encompasses any commercially reasonable method, including DCF. | Term allows any commercially reasonable determinant of value. |
| Whether DCF is a commercially reasonable determinant of value for § 562 damages | Calyon contends DCF is not appropriate; only market value matters. | Debtor contends DCF is commercially reasonable and credible. | DCF can be a commercially reasonable determinant of value. |
| Relation between § 559 and § 562 regarding valuation | Argues potential conflict leading to ambiguity. | Argues no conflict; § 559 applies to excess proceeds on liquidation, not damages under § 562. | No conflict; § 562 governs damages with any commercially reasonable determinant. |
Key Cases Cited
- In re Lord Abbett Mut. Funds Fee Litig., 553 F.3d 248 (3d Cir. 2009) (court should give plain-language meaning if Congress's intent plain)
- United States v. Gregg, 226 F.3d 253 (3d Cir. 2000) (statutory text should be given effect as written)
- In re Phila. Newspapers, LLC, 599 F.3d 298 (3d Cir. 2010) (avoid reliance on a single sentence when interpreting statute)
- In re Price, 370 F.3d 362 (3d Cir. 2004) (look to the whole statute, not isolated fragments)
- Kelly v. Robinson, 479 U.S. 36 (U.S. 1986) (look to whole law and the statute's object and policy)
- Conn. Nat'l Bank v. Germain, 503 U.S. 249 (U.S. 1992) (presumption that legislature means what it says)