843 F. Supp. 2d 62
D.D.C.2012Background
- NCB sues FDIC as Advanta's receiver for breach of the Collection Agreement, implied covenant, and claim review; the FDIC moves to dismiss.
- Advanta failed; FDIC as receiver purportedly repudiated contracts under FIRREA after wind-down, with a 90-day termination period.
- FDIC issued formal termination on August 2, 2010 and later purportedly repudiated the contract on October 5, 2010; NCB invoiced for August–October 2010.
- NCB timely performed during termination; FDIC did not pay the August–October invoices, and then disallowed NCB's claim against the receivership estate.
- NCB filed a proof of claim October 19, 2010; FDIC disallowed the claim in March 2011; NCB filed this action April 8, 2011 with three counts.
- Court grants-in-part and denies-in-part FDIC motion: Counts I and II survive; Count III (implied covenant) dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Survival of Counts I and II after FIRREA repudiation | NCB contends Counts I-II allege proper breach and de novo review despite repudiation timing. | FDIC argues repudiation limits damages and may foreclose Counts I-II under FIRREA's framework. | Counts I-II survive for now; damages and repudiation timing require factual development. |
| Viability of Count III, implied covenant claim | NCB seeks remedy for implied covenant based on repudiation. | FDIC argues FIRREA preempts such a claim and repudiation is governed by statute. | Count III dismissed; no independent implied-covenant claim when repudiation is at issue. |
| Scope of damages under FIRREA upon repudiation | Damages should reflect contractual losses given continued performance during wind-down. | Damages limited to actual direct compensatory damages as of appointment date if repudiation is effective. | Damages framework left for later factual development; applicable damages depend on repudiation effectiveness. |
Key Cases Cited
- Wells Fargo Bank, N.A. v. Fed. Deposit Ins. Corp., 310 F.3d 202 (D.C. Cir. 2002) (FIRREA provides broad powers to repudiate contracts; damages limitations apply)
- Office & Prof'l Emps. Int'l Union, Local 2 v. Fed. Deposit Ins. Corp., 27 F.3d 598 (D.C. Cir. 1994) (limits on damages and retroactive effects under FIRREA repudiation)
- Country Club Assocs. Ltd. P'Ship v. Fed. Deposit Ins. Corp., 418 F. Supp. 429 (D.D.C. 1996) (failure to properly repudiate preserves underlying contract obligations)
- Monument Square Assocs., Inc. v. Resolution Trust Corp., 792 F. Supp. 874 (D. Mass. 1991) (context for repudiation timing and effects under receivership)