Excel Willowbrook, L.L.C. v. JP Morgan Chase Bank, National Ass'n
758 F.3d 592
5th Cir.2014Background
- WaMu entered into Leases for undeveloped tracts; WaMu failed on Sept. 25, 2008 and FDIC became receiver.
- FDIC solicited bids; Chase made a $1.8B bid and Purchase & Assumption Agreement (P&A) executed.
- P&A split WaMu’s real estate into Bank Premises and Other Real Estate; Leases fell under Other Real Estate and were assigned to Chase.
- Chase purportedly accepted the Leases and expressly assumed WaMu’s liabilities, including lease obligations.
- FDIC later repudiated the Leases as burdensome, while landlords sued Chase for breach; eight cases consolidated.
- District courts granted landlords summary judgment on assignment/standing and privity theories; damages were set.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are landlords third-party creditors beneficiaries of the P&A? | Landlords are beneficiaries who can enforce Chase’s promise to assume WaMu’s leases. | Landlords lack standing as non-parties and the P&A has no third-party beneficiary intent. | Landlords are not, on narrow facts, third-party beneficiaries. |
| Does the P&A create privity of estate between landlords and Chase? | Complete assignment of Other Real Estate (including Leases) creates privity of estate. | Standing to interpret/enforce the P&A is required; privity cannot be established absent contractual privity. | Yes, privity of estate exists; covenants run with the land. |
| Do the covenants that run with the land run to Chase under privity of estate? | Covenants to pay rent/taxes run with the land and can be enforced by landlords. | Only contractual privity permits enforcement; real covenants may not run without it. | Yes, rent/taxes covenants run with the land and are enforceable against Chase. |
| Should the P&A be interpreted under federal or Texas law? | Federal common law governs government contracts; results should align with that framework. | Texas law controls interpretation; parol evidence issues may vary by state law. | District courts’ outcome likely same under either, but federal law governs interpretation. |
Key Cases Cited
- Interface Kanner, LLC v. JPMorgan Chase Bank, N.A., 704 F.3d 927 (11th Cir.2013) (landlord standing under P&A and privity discussed)
- GECCMC v. JPMorgan Chase Bank, 671 F.3d 1027 (9th Cir.2012) (landlord standing and third-party beneficiary analysis)
- Hillside Metro Associates, LLC v. JPMorgan Chase Bank, N.A., 747 F.3d 44 (2d Cir.2014) (prudential standing to litigate assignment interpretation)
- Great American Insurance Co. v. Gulf Marine Drilling No. 1, 302 F.2d 332 (5th Cir.1962) (standing and contract interpretation principles in government-related cases)