22 F.3d 494, *; 1994
1185 AVENUE OF THE AMERICAS ASSOCIATES, Plaintiff-Appellant, v. THE
RESOLUTION TRUST CORPORATION, as receiver of Ensign Federal Savings Bank and
Ensign Bank, F.S.B., Defendant-Appellee.
Docket No. 93-7810
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
22 F.3d 494; 1994
March 10, 1994, Argued
April 26, 1994, Decided
PRIOR HISTORY: [**1] Appeal from a judgment of the District Court
for the Southern District of New York (Martin, J.) granting summary judgment to
defendant Resolution Trust Corporation (RTC) on the ground that the RTC
properly exercised its right to repudiate a lease with plaintiff.
DISPOSITION: Affirmed.
CASE SUMMARY
PROCEDURAL POSTURE: Plaintiff lessor sought review of an order of the
District Court for the Southern District of New York, which granted summary
judgment to defendant receiver. Plaintiff contended that the district court
erred when it decided on a motion for summary judgment that defendant properly
repudiated a lease.
OVERVIEW: The district court granted summary judgment to defendant
receiver after defendant repudiated a lease with plaintiff lessor. The court
affirmed the judgment of the district court. The court held that defendant in
its capacity as a receiver for a failed banking institution had the power to
repudiate contracts within a reasonable time after its appointment as receiver
even where defendant had immediately before served as conservator for the same
institution. The court also held that defendant properly exercised its
repudiation power. The court stated that the design and language of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12
U.S.C.S. § 1821(e) as a whole indicated that congress intended to provide
conservators and receivers with independent powers of repudiation, even where
the receiver had previously served the same institution as conservator. The
court read § 1821 as providing both conservators and receivers with the right
to repudiate. The court also held that the receiver retained its right to
repudiate where the receiver had already served as conservator for the same
institution.
OUTCOME: The court affirmed the decision of the district court, which
granted summary judgment in favor defendant receiver after defendant repudiated
a lease with plaintiff lessor. The court held that defendant in its capacity as
a receiver for a failed banking institution had the power to repudiate
contracts within a reasonable time after its appointment even where defendant
had immediately before served as conservator for the same institution.
CORE TERMS: receiver, conservator, lease, repudiation, repudiate,
reasonable period, appointment, burdensome, summary judgment, deference,
thrift, appointed, acquiring, repudiated, effective, genuine issue of material
fact, trustee in bankruptcy, administer, empowered, ambiguous, entrusted,
ongoing, owe, depository institution, appointed receiver, headquarters,
insolvent, elected, insured, succeed
LexisNexis(R) Headnotes Hide
Headnotes
Banking Law > Federal Acts > Financial Institutions Reform,
Recovery & Enforcement Act
HN1 See Financial Institutions Reform, Recovery, and Enforcement Act of
1989, 12 U.S.C.S. § 1821(e). Shepardize: Restrict By Headnote
Governments > Legislation > Interpretation
HN2 It is axiomatic that the starting point in every case involving
construction of a statute is the language itself. More Like This Headnote
Governments > Legislation > Interpretation
HN3 When a statute is ambiguous, the court generally defers to an
interpretation given by the agency that administers the statute, so long as the
interpretation is reasonable. Where Congress entrusts more than one federal
agency with the administration of a statute, a reviewing court does not owe as
much deference as it may otherwise give if the interpretation is made by a
single agency similarly entrusted with powers of interpretation. More Like This Headnote | Shepardize:
Restrict By Headnote
Banking Law > Federal Acts > Financial Institutions Reform,
Recovery & Enforcement Act
HN4 The court reads 12 U.S.C.S. § 1821 as providing both conservators
and receivers with the right to repudiate contracts within a reasonable period
of time. More Like This Headnote |
Shepardize: Restrict By Headnote
Civil Procedure > Summary Judgment > Summary Judgment Standard
HN5 A party may not defeat a motion for summary judgment merely by
pointing to a potential issue of fact; there must be a genuine issue of
material fact. More Like This Headnote |
Shepardize: Restrict By Headnote
COUNSEL:
RONALD W. MEISTER, New York, New York, (Eaton & Van Winkle, New
York, New York, Robert D. Popper; Wien Malkin & Bettex, New York, New York,
Eli R. Mattioli, of counsel), for Plaintiff-Appellant.
KATHLEEN DONELLI,
JUDGES: Before: LUMBARD, FEINBERG, and MINER, Circuit Judges.
OPINIONBY: LUMBARD
OPINION:
[*495] LUMBARD, Circuit Judge:
Plaintiff 1185 Avenue of the Americas Associates ("Lessor")
appeals an order of the District Court for the Southern District of New York
(Martin, Judge) granting summary judgment to defendant Resolution Trust
Corporation ("RTC"), as receiver of Ensign Federal Savings Bank and
Ensign Bank, F.S.B. The district court held (1) that the RTC in its capacity as
a receiver for a failed banking institution has the power to repudiate
contracts within a reasonable period after its appointment as receiver even
where [**2] the RTC immediately before
had served as conservator for the same institution; and (2) that the RTC
properly exercised its repudiation power. We affirm.
I.
Lessor owns an office building at 1185 Avenue of the
On August 30, 1990, the Office of Thrift Supervision ("OTS")
found Old Ensign to be insolvent and appointed the RTC as its receiver. On the
same day, the OTS chartered Ensign Bank, F.S.B. ("New Ensign") and
named the RTC as its conservator. New Ensign assumed all deposits and certain
assets and liabilities of Old Ensign, including the Lease. As conservator of
New Ensign, the RTC decided not to exercise its statutory power to repudiate
the Lease, and used the premises as New Ensign's headquarters.
Almost a year later, on July 19, 1991, the RTC as conservator sold New
Ensign to seven acquiring institutions;
[**3] on the same day, the OTS
declared New Ensign insolvent and named the RTC as its receiver. The sale
agreements gave the acquiring institutions ninety days from the date of sale
to [*496] decide whether they wanted to assume certain
leases held by New Ensign. Chemical Bank, one of the seven acquiring institutions,
acquired much of New Ensign's assets in
On October 18, 1991, the RTC, as receiver for New Ensign, notified
Lessor that it had elected under 12 U.S.C. § 1821(e) to repudiate the Lease
effective February 29, 1992. The RTC found itself unable to vacate by that
date, and it continued to occupy the premises and pay rent until June 30, 1992.
Lessor apparently did not object to this four-month delay.
On September 4, 1992, Lessor initiated this action against the RTC, as
receiver for Old Ensign and New Ensign. Lessor sought (1) a declaration that
the Lease was still in effect because the RTC's repudiation was not effective;
(2) liquidated contract damages in excess of $ 7 million; and (3) damages [**4]
in excess of $ 7 million under an estoppel theory. Both parties moved
for summary judgment. On July 23, 1993, the district court granted summary judgment
to the RTC on all claims, finding that the RTC's repudiation was valid under 12
U.S.C. § 1821(e), and that Lessor failed to state a claim for promissory
estoppel. The court held that the RTC had a reasonable period from its
appointment as receiver on July 19, 1991 to repudiate the Lease, and that the
RTC repudiated the Lease within a reasonable period.
On appeal, Lessor argues: (1) that the RTC had a reasonable period for
repudiation beginning on August 30, 1990 when it was appointed conservator, not
beginning on July 19, 1991 when it was appointed receiver; and (2) that even if
the period began on July 19, 1991, the district court erred in deciding on a
motion for summary judgment that the RTC properly repudiated the Lease within a
reasonable period from that date. We disagree, and affirm the judgment of the
district court.
II.
The RTC's October 18, 1991 repudiation was effective. The RTC's power
of repudiation is supplied by section 212(e) of the Financial Institutions
Reform, Recovery, and Enforcement [**5]
Act of 1989 ("FIRREA"), which provides:
HN1
(1) Authority to repudiate contracts
In addition to any other rights a conservator or receiver may have, the
conservator or receiver for any insured depository institution may disaffirm or
repudiate any contract or lease --
(A) to which such institution is a party;
(B) the performance of which the conservator or receiver, in the
conservator's or receiver's discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which the conservator or
receiver determines, in the conservator's or receiver's discretion, will promote
the orderly administration of the institution's affairs.
(2) Timing of repudiation
The conservator or receiver appointed for any insured depository
institution . . . shall determine whether or not to exercise the rights of
repudiation under this subsection within a reasonable period following such
appointment.
12 U.S.C. § 1821(e) (Supp. IV
1992).
Lessor asserts that the "reasonable period" for repudiation
begins when the RTC is first appointed as conservator or receiver, and that the
October 18 repudiation [**6] -- which came almost fourteen months after
the RTC's appointment as conservator -- was untimely. The RTC submits that §
1812(e) gives the conservator and receiver independent rights of repudiation
and separate "reasonable periods" in which to make the decision. See
Resolution Trust Corp. v. CedarMinn Bldg. Ltd. Partnership, 956 F.2d 1446,
1450-55 (8th Cir.) (upholding the RTC's view), cert. denied, 121 L. Ed. 2d 56,
113 S. Ct. 94 (1992). Consequently, the repudiation period was renewed when the
RTC was appointed receiver on July 19, 1991. We agree.
"HN2It is axiomatic that 'the starting point in every case
involving construction of a statute is the language itself.'" Landreth
Timber Co. v. Landreth, 471 U.S. 681, 685, 85 L. Ed. 2d 692, 105 S. Ct. 2297
(1985) (quoting [*497] Blue Chip Stamps v. Manor Drug Stores, 421
U.S. 723, 756, 44 L. Ed. 2d 539, 95 S. Ct. 1917 (1975) (Powell, J.,
concurring)). The language of § 1821(e), however, is ambiguous.
HN3When a statute is ambiguous, we generally defer to [**7]
an interpretation given by the agency that administers the statute, so
long as the interpretation is reasonable. See Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 842-45, 81 L. Ed. 2d 694, 104 S.
Ct. 2778 (1984). The RTC therefore argues that we must limit our inquiry to
whether its construction is reasonable. There is, however, an exception to the
Chevron rule: "Where . . . Congress has entrusted more than one federal
agency with the administration of a statute . . . a reviewing court does not .
. . owe as much deference as it might otherwise give if the interpretation were
made by a single agency similarly entrusted with powers of
interpretation." Lieberman v. FTC, 771 F.2d 32, 37 (2d Cir. 1985). Cf.
Wachtel v. Office of Thrift Supervision, 299 U.S. App. D.C. 193, 982 F.2d 581,
585 (D.C. Cir. 1993) (according no deference to agency where more than one
agency was charged with administering statute). But cf. CedarMinn at 1451
(according full Chevron deference to the RTC without noting that other agencies
[**8] had similar power to administer statute).
Because FIRREA is administered by several agencies in addition to the RTC, see
Wachtel at 585, we do not owe full Chevron deference to the RTC's
interpretation. We therefore turn to the question of which interpretation is
most reasonable.
The design and language of FIRREA as a whole indicate that Congress
intended to provide conservators and receivers with independent powers of
repudiation, even where the receiver previously served the same institution as
conservator. Congress did not use the phrase "conservator or
receiver" loosely. Throughout FIRREA, Congress used "conservator or
receiver" where it granted rights to both conservators and receivers, and
it used "conservator" or "receiver" individually where it
granted rights to the RTC in only one capacity. See CedarMinn at 1451-52 n.8,
n.9 (gathering examples throughout FIRREA). HN4We therefore read § 1821 as
providing both conservators and receivers with the right to repudiate.
We still must determine whether a receiver retains its right to repudiate
in instances where the receiver has already served as conservator for the same
institution. We believe that it does. Congress was [**9] aware when it enacted FIRREA that receivers
of failed institutions frequently succeed conservators. See CedarMinn at
1454-55. We find no reason to assume that when Congress explicitly granted
repudiation power to receivers, they implicitly excluded receivers that already
served as conservators.
This interpretation of § 1821(e) provides conservators and receivers with
the ability to use their repudiation power without compromising their distinct
roles. A conservator of a failed thrift is empowered to take action to restore
the thrift to a solvent position and "to carry on the business of the
institution." 12 U.S.C. § 1821(d)(2)(D) (Supp. IV 1992). The conservator
often will need the failed thrift's premises to operate the institution as an
ongoing business. In contrast, a receiver is empowered to liquidate and wind up
the institution's affairs. 12 U.S.C. § 1821(d)(2)(E) (Supp. IV 1992). The
receiver may find no use for the lease that has been essential to the
conservator's ability to operate the business. As the Eighth Circuit noted:
The requirement that [the] RTC make the repudiation decision once and
[**10] for all shortly after its first
appointment as conservator would put [the] RTC in the untenable position of
trying to operate the business as an ongoing concern with one hand, while at
the same time calculating the lease repudiation issue as if it were shutting the
business down.
CedarMinn at 1454.
Finally, we note that Chapter 3 of the Bankruptcy Code provides a
helpful analogy. Like a conservator or receiver of a failed thrift, a trustee
in bankruptcy has the power to "assume or reject any executory contract or
unexpired lease of the debtor" within a limited time period (sixty days)
following appointment. 11 U.S.C. § 365(a) & (d) (1988). Like the RTC, a
trustee in bankruptcy may wear more than one hat. The trustee may first be
appointed as a Chapter 11 trustee, which is analogous to a conservator. The
Chapter 11 trustee eventually may be replaced by a Chapter 7 trustee, which is
analogous [*498] to a receiver. As often happens when the RTC
succeeds itself in a new role, the Chapter 7 trustee may be appointed after the
initial repudiation period has lapsed. Nonetheless, courts have held that the
Chapter 7 trustee has a new sixty-day period to
[**11] decide whether to accept
or reject contracts and leases. See In re Tompkins, 95 Bankr. 722, 724 (Bankr.
9th Cir. 1989); In re Joyner, 74 Bankr. 618, 621 (Bankr. M.D. Ga. 1987); In re
Butcher Shop & Deli, Inc., 45 Bankr. 239, 240 (Bankr. S.D. Fla. 1984). Cf.
International Trade Admin. v. Rensselaer Polytechnic Inst., 936 F.2d 744, 748
n.1 (2d Cir. 1991) (deciding case without "exploring this open
issue").
Lessor argues that providing receivers with a separate repudiation
right will effectively eliminate the reasonable period requirement. Lessor
asserts that the RTC will seek a change in its title whenever it wants a new
chance to repudiate a contract or lease. However, there is no evidence of any
abuse here.
We therefore hold that the RTC has a reasonable period for repudiation
following its appointment as receiver, even though it had previously acted as
conservator for the same institution.
III.
The RTC repudiated within a reasonable time following its appointment
as receiver on July 19, 1991. There is no genuine issue of fact as to whether
the ninety-day delay until [**12]
October 18 was reasonable. It is undisputed that the sale agreements
gave each acquiring institution the option to assume certain leases within
ninety days of the acquisition. It was not unreasonable for the RTC to have
waited until the end of that period to notify leasing and contracting parties
of the decision to repudiate.
Lessor argues that even if the repudiation was timely, the RTC did not
comply with § 1821(e)(1)(B), which states that a receiver or conservator can
repudiate only those leases that it determines to be burdensome. Specifically,
Lessor argues that the RTC has not submitted evidence demonstrating that it
made the requisite finding that the lease was burdensome. We are not persuaded.
First, there is no requirement that the conservator or receiver make a formal
finding that a lease or contract is burdensome. Second, it can hardly be said
that it was not reasonable for the RTC to find that it would be burdensome for
it to assume a $ 7 million obligation to pay rent on premises for which it no
longer had use, at a time when the real estate market was declining. Third, whether
the lease is burdensome is to be decided at the discretion of the conservator
or receiver. [**13] 12 U.S.C. § 1821(e)(1)(B).
Finally, Lessor lists a series of unanswered factual questions, and
contends that summary judgment is not proper where there are unresolved
questions of fact. This argument is meritless. Lessor's laundry list presents
no genuine issue of material fact. HN5A party "may not defeat a motion for
summary judgment merely by pointing to a potential issue of fact; there must be
a genuine issue of material fact." City of
We have considered all of Lessor's remaining arguments and find them
without merit. Affirmed.