First Annapolis Bancorp, Inc. v. United States
2011 U.S. App. LEXIS 14148
| Fed. Cir. | 2011Background
- This is a Winstar-related case concerning standing to sue for breach of contract against the United States under FIRREA.
- Bancorp, a holding company of First Annapolis, funded capital for First Annapolis in a prior supervisory conversion.
- Bancorp and First Annapolis entered into agreements (RCMDA, HCA, Business Plan, Resolutions, Forbearance Letters) conditioned on regulatory approvals and capital maintenance.
- FIRREA redirected regulatory capital treatment, ultimately eliminating supervisory goodwill as regulatory capital and leading to First Annapolis’ downfall.
- Claims Court held Bancorp had standing; Government appealed, arguing Bancorp lacked privity and standing.
- The Federal Circuit reversed, holding Bancorp did not have standing to pursue damages for breach of contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Bancorp and privity give Bancorp standing? | Bancorp was the acquiror and promisor; government promise ran directly to Bancorp. | Shareholders generally lack standing; Bancorp failed privity and was not an essential contracting party. | Bancorp lacks standing |
| Was the risk of regulatory change shifted to First Annapolis during the first five years? | Risks were transferred via agreements; Bancorp ensured capital to meet requirements. | No privity or integrated promises; risk not contractually shifted to Bancorp alone. | Not reached; reversed on standing precludes ruling |
| Were Bancorp's shareholder loans a prior material breach of the contract? | Loans to shareholders were within contract performance and did not breach. | Loans indicated misalignment with promised capital maintenance and could be breach. | Not reached; reversed on standing precludes ruling |
| Was the Government's breach of contract material? | Breach deprived First Annapolis of bargained-for forbearances. | Materiality of breach dependent on privity and standing. | Not reached; reversed on standing precludes ruling |
Key Cases Cited
- Home Sav. of Am., FSB v. United States, 399 F.3d 1341 (Fed. Cir. 2005) (holding company standing where directly party to broader transaction)
- Southern California Federal Sav. & Loan Ass'n v. United States, 422 F.3d 1319 (Fed. Cir. 2005) (no standing for shareholders where not privity to main agreement)
- Cain v. United States, 350 F.3d 1309 (Fed. Cir. 2003) (regulatory approvals alone do not create contractual obligations)
- D. & N. Bank v. United States, 331 F.3d 1374 (Fed. Cir. 2003) (regulatory action lacking necessary contract element)
- First Hartford Corp. v. United States, 194 F.3d 1279 (Fed. Cir. 1999) (standing and privity considerations in government contract claims)
- S. Cal. Fed. Sav. & Loan Ass'n v. United States, 422 F.3d 1319 (Fed. Cir. 2005) (privity and contractual connection crucial for standing in Winstar cases)
- Winstar Corp. v. United States, 64 F.3d 1531 (Fed. Cir. 1995) (contractual breach liability extending to changes in regulatory treatment)