Winkal Management, LLC v. Federal Deposit Insurance Corporation
Civil Action No. 2010-0083
| D.D.C. | Dec 13, 2017Background
- Winkal Management leased commercial space to WaMu in a 10-year lease (Dec. 17, 2007). Lease required landlord work (roof, HVAC, parking) and made tenant (WaMu) responsible for ongoing maintenance and returning the premises in as-good condition at termination; maintenance obligations were characterized in the lease as "additional rent."
- Winkal performed Landlord's Work (~$130,633). WaMu began substantial Tenant's Work (planned ~$547,170) and demolition; Metro Construction was paid >$200,000 but stopped work after WaMu entered receivership. WaMu never opened the branch.
- FDIC appointed receiver for WaMu (Sept. 25, 2008), surrendered the premises to Winkal (Jan. 2009), and repudiated the lease under FIRREA §1821(e). The premises were in a state of demolition/repair when returned.
- Winkal submitted a Proof of Claim seeking unpaid rent, reimbursement for Landlord's Work, and damages to correct Tenant-caused demolition (total ~$427,499). FDIC paid unpaid rent ($55,655.33) but denied the Landlord's Work and demolition/restore claims.
- Winkal sued the FDIC. Cross-motions for summary judgment followed. The court: (1) grants FDIC summary judgment on Winkal's Landlord's-Work (reliance) claim; (2) holds FDIC liable under FIRREA's "unpaid rent" provision for repair/restore costs but denies summary judgment as to the precise damages amount; (3) grants FDIC summary judgment on Winkal's claim to complete WaMu's unfinished Tenant's Work for failure to exhaust administratively.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Recoverability of Landlord's Work (reliance damages) under FIRREA | Winkal: Landlord's out-of-pocket costs to prepare premises are "actual direct compensatory damages" under §1821(e)(3)(A) and thus recoverable. | FDIC: FIRREA's lease-specific provision §1821(e)(4) limits damages for leases to those in (e)(4)(B); reliance costs are not covered. | Court: Denied recovery; (e)(4)(A) restricts lease repudiation liability to (e)(4)(B) categories; FDIC entitled to summary judgment. |
| Recoverability of repair/restore costs as "unpaid rent" under §1821(e)(4)(B)(iii) | Winkal: Lease made maintenance/repair an "additional rent" obligation; FDIC (as WaMu) must pay unpaid rent for repair/restore costs incurred to return premises to usable condition. | FDIC: Such obligations had not "accrued" at receivership; unpaid-rent exception should not apply. | Court: Held for Winkal on liability—repair/restore costs that are obligations of tenant-as-additional-rent are recoverable; rejected FDIC accrual argument. Damages amount left open. |
| Scope of recoverable damages for repair/restore | Winkal: Seeks specific amounts paid by Winkal (~$101,047) and by successor tenant (~$86,353) as repair/restore. | FDIC: Disputes some items and contends some costs may be upgrades, Tenant's Work, or otherwise not chargeable as unpaid rent. | Court: Liability established but outstanding factual disputes exist about which expenses are repairs (recoverable) versus upgrades/Tenant's Work (not recoverable); denies damages SJ without prejudice. |
| Claim for completing WaMu's unfinished Tenant's Work | Winkal: Seeks cost to complete Tenant's Work (~$153,078) as unpaid rent or as actual compensatory damages. | FDIC: Claim was not presented in Winkal's administrative Proof of Claim; failure to exhaust bars judicial claim. Also argues expectation damages barred by FIRREA. | Court: Grants FDIC SJ on this claim for failure to exhaust administrative remedies; claim not administratively presented. |
Key Cases Cited
- Qi v. FDIC, 755 F. Supp. 2d 195 (D.D.C. 2010) (interpreting scope of unpaid rent under §1821(e)(4)(B) and examining lease obligations as consideration for occupancy)
- MCI Communications Services, Inc. v. FDIC, 808 F. Supp. 2d 24 (D.D.C. 2011) (FIRREA governs repudiation damages rather than ordinary contract remedies)
- Nashville Lodging Co. v. Resolution Trust Corp., 59 F.3d 236 (D.C. Cir. 1995) (reliance damages fall within "actual direct compensatory damages")
- First Bank Nat'l Ass'n v. FDIC, 79 F.3d 362 (3d Cir. 1996) (unpaid rent can include non-periodic obligations like repair/maintenance assumed as consideration)
- FDIC v. Mahoney, 141 F.3d 913 (9th Cir. 1998) (§1821(e)(4) governs leases and limits lessor recovery)
- Office & Professional Employees Int'l Union, Local 2 v. FDIC, 27 F.3d 598 (D.C. Cir. 1994) (contractual rights can accrue for purposes of receivership claims; FIRREA exhaustion requirement is jurisdictional)
- Westberg v. FDIC, 741 F.3d 1301 (D.C. Cir. 2014) (administrative proof-of-claim exhaustion is required before judicial review under FIRREA)
- Unisys Finance Corp. v. Resolution Trust Corp., 979 F.2d 609 (7th Cir. 1992) (subsection (e)(4)(A) curtails lessor damage recovery except as provided in (e)(4)(B))