MBIA Insurance Corp. v. Federal Deposit Insurance, 816 F. Supp. 2d 81

Background

MBIA Insurance Corporation sued FDIC seeking damages related to IndyMac Bank’s securitization deals and alleged post-appointment breaches of contract under Insurance Agreements and PSAs.
IndyMac issued mortgage-backed securities in 2006–2007; MBIA insured those transactions and seeks indemnification for losses from borrower defaults and claims by investors.
FDIC acted as conservator and then receiver for IndyMac Bank/IndyMac Federal, transferring assets under a pass-through receivership and entering a Purchase & Assumption Agreement.
The FDIC’s No Value Determination (Nov. 12, 2009) concluded IndyMac’s assets were insufficient to pay general unsecured creditors, effectively freezing damages claims for those creditors.
MBIA amended its complaint (Feb. 8, 2010) to press eight claims (Counts I–VIII), arguing the conservator/receiver’s approvals and repudiations entitled its damages to administrative priority under FIRREA.
The Court dismissed Counts I–V and VIII as seeking non-priority damages, and Counts VI–VII as barred by FIRREA’s judicial limitations, resulting in overall dismissal of the action.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Are MBIA’s damages administrative expenses under FIRREA?	MBIA contends the FDIC-approved contracts qualify as administrative expenses under §1821(d)(20).	MBIA’s claims are not administrative expenses because there was no FDIC- executed/approved contract or post-approval repudiation to trigger priority.	MBIA's damages are not administrative expenses; Counts I–V and VIII dismissed.
Does §1821(d)(20) require FDIC to have executed or approved contracts to grant priority?	FDIC’s assumption through the P&A Agreement amounts to approval of contracts under §1821(d)(20).	No express execution or approval occurred; mere non-repudiation does not equal approval.	Contracts were not executed or approved; priority not conferred.
Do repudiation damages fall within administrative priority under §1821(e)?	Repudiation-related damages should be treated as administrative expenses if tied to the PSAs.	Repudiation damages are not entitled to administrative priority and are general unsecured claims.	Repudiation damages are not administrative expenses; Count VIII not priority.
Are Counts VI–VII (APA and declaratory relief) barred by §1821(j)?	MBIA seeks relief challenging the No Value Determination and repudiation schedule.	Section 1821(j) precludes equitable relief against the FDIC Receiver/Conservator unless exception for statutory overreach.	Counts VI–VII barred; no injunctive/declaratory relief available.
Does §1821(d)(10)(B) bar claims against FDIC Corporate for payment of proved claims?	FDIC Corporate should be liable for MBIA’s proved claims as an administrative expense.	§1821(d)(10)(B) bars actions against FDIC Corporate for payment on proved claims.	Count VI against FDIC Corporate dismissed; §1821(d)(10)(B) applies.

Key Cases Cited

Griffin v. Oceanic Contractors, Inc., 458 U.S. 564 (1982) (plain language governs statutory interpretation; context matters)
K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (1988) (look to statutory language and overall design)
Wells Fargo Bank, N.A. v. FDIC, 367 F.3d 953 (D.C. Cir. 2004) (depositor protection priority in FIRREA context)
Freeman v. FDIC, 56 F.3d 1394 (D.C. Cir. 1995) (section 1821(j) bars equitable relief against FDIC Receiver)
National Trust for Historic Preservation in the United States v. FDIC, 995 F.2d 238 (D.C. Cir. 1993) (section 1821(j) precludes injunctive relief against the FDIC as receiver)
Battista v. FDIC, 195 F.3d 1113 (9th Cir. 1999) (repudiated contracts damages not entitled to same priority as administrative claims)
Deutsche Bank National Trust Co. v. FDIC, 784 F. Supp. 2d 1142 (C.D. Cal. 2011) (post-receivership breach claims; priority under §1821(d)(11))
Landwehr v. FDIC, 734 F. Supp. 2d 161 (D.D.C. 2010) (prudential mootness considerations in FIRREA context)