Lexon Insurance Company, Inc. v. Federal Deposit Insurance Corporation
Filing
79
ORDER AND REASONS: IT IS ORDERED that defendant's 55 construed motion for summary judgment is GRANTED with respect to count two of plaintiff's claim relative to repudiation of the Standby Letters of Credit ("SLOCs") (Emphasis ad ded); count three of plaintiff's claim for breach of contract; count four of plaintiff's claim relative to actual and compensatory damages; and count five of plaintiff's claim that SLOCs are not contracts. The amended complaint against FDIC-R is dismissed, as set forth in document. Signed by Judge Ivan L.R. Lemelle on 9/25/2019. (jls)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
LEXON INSURANCE COMPANY, INC.,
CIVIL ACTION
VERSUS
NO. 18-4245
FEDERAL DEPOSIT INSURANCE CORP.,
AS RECEIVER FOR FIRST NBC BANK
SECTION “B”(1)
ORDER & REASONS
Before the Court are defendant Federal Deposit Insurance
Corporation as receiver for First NBC Bank’s (“FDIC-R”) “Motion to
Dismiss for Failure to State a Claim for Relief” (Rec. Doc. 55),
plaintiff
Lexon
Insurance
Company
Incorporated’s
(“Lexon”)
“Amended Complaint” (Rec. Doc. 43) and plaintiff’s “Memorandum in
Opposition to Defendant’s Memorandum in Support of Its Motion to
Dismiss for Failure to State a Claim” (Rec. Doc. 63).
For the reasons discussed below,
IT IS ORDERED that defendant’s construed motion for summary
judgment (Rec. Doc. 55) 1 is GRANTED with respect to count two of
1
Rule 12(b)(6) is designed to test the pleadings. Although defendant has
attached exhibits to their amended complaint, this Court finds that the attached
exhibits are beyond the four-corners of the pleading and has elected to construe
defendant’s motion to dismiss as a motion for summary judgment. “A district
court may, in its discretion, treat a motion to dismiss as a motion for summary
judgment and consider evidence outside of the pleadings.” Beiller v. Atlantic
Specialty Ins. Co., No.16-512, 2016 WL 915424, at *2 (E.D. La. March 10, 2016);
see Fed. R. Civ. P. 12(d); see also Soley v. Star & Herald Co., 390 F.2d 364,
366 (5th Cir. 1968). Here, although plaintiff has attached exhibits to their
complaint, the exhibits are those that are traditionally outside of the
pleadings. As such, this Court will construe defendant’s motion to dismiss for
failure to state a claim as a motion for summary judgment under Rule 56, in
1
plaintiff’s claim relative to repudiation of the Standby Letters
of Credit (“SLOCs”) (Emphasis added); count three of plaintiff’s
claim for breach of contract; count four of plaintiff’s claim
relative to actual and compensatory damages; and count five of
plaintiff’s
claim
that
SLOCs
are
not
contracts.
The
amended
complaint against FDIC-R is dismissed.
FACTS AND PROCEDURAL HISTORY
The facts giving rise to defendant FDIC-R’s current motion
are
detailed
in
this
Court’s
Order
and
Reasons
regarding
defendant’s first motion to dismiss for failure to state a claim.
See Rec. Doc. 34; see also Rec Doc. 21.
In March of 2016, plaintiff Lexon, as surety, executed eight
bonds on behalf of non-party Linder Oil that secured offshore
mineral leases with the United States Department of Interior,
Bureau of Ocean Energy Management (“BOEM”). Rec. Doc. 43 at ¶ 10.
On March 24, 2016, First NBC Bank issued two standby letters of
credit relating to the bonds issued by plaintiff. Id. at ¶ 11-12.
After the SLOCs were issued, First NBC Bank’s financial stability
deteriorated and was subsequently closed by the State of Louisiana.
Id. at ¶ 32. Defendant was appointed receiver for First NBC Bank
on April 28, 2017. Id. On September 28, 2017, 153 days after the
accordance with Rule 12(d). See Jones v. St. Tammany Parish Jail, 4 F. Supp. 2d
606, 610 (E.D. La. 1998) (“When matters outside the pleadings are presented to
and not excluded by the court, a Rule 12(b)(6) motion is converted into a motion
for summary judgment.”).
2
appointment of defendant as receiver, defendant repudiated the
SLOCs. Id. at ¶ 52. On December 1, 2017, 64 days after the SLOCs
were repudiated, plaintiff requested to draw down the entire amount
secured by the SLOCs. Id. at ¶ 53. At the time of the requested
draw, plaintiff had made no requests to draw on the SLOCs, and no
claims had been made on the bonds by BOEM. See generally Rec. Doc.
43; see also Rec. Doc. 55-1 at 4-5.
On April 25, 2018, Plaintiff filed a four-count complaint
against FDIC, seeking “damages of $9,985,500.00 resulting from the
FDIC’s failure to honor, and improper repudiation of, [the] two
[letters of credit] issued by [First NBC Bank].” Rec. Doc. 1.
Defendant moved to dismiss all claims for failure to state a claim
on
July
2,
2018.
See
Rec.
Doc.
21
at
1.
That
motion
was
subsequently granted by this court, in favor of defendant. See
Rec. Doc. 34. An order was issued on September 7, 2018, dismissing
Lexon’s claim without prejudice to Lexon’s right to bring an
amended complaint within forty (40) days from the order. Id. at 67. 2
Thereafter, on January 18, 2019, Lexon filed an amended fivecount
complaint
against
FDIC,
2
again
seeking
damages
of
The original order setting a 40-day deadline for plaintiff Lexon to file an
amended complaint was extended twice. First, an order was issued on October 2,
2018, extending Lexon’s deadline to file until December 21, 2018. The deadline
was extended a second time by an order dated November 27, 2018, extending
Lexon’s deadline to file until January 21, 2019. See Rec. Docs. 37 & 39.
Plaintiff timely filed their amended complaint within the extended deadlines on
January 18, 2019. See Rec. Doc. 43.
3
$9,985,500.00. See Rec. Doc. 43. The amended complaint alleges
causes of action: (1) under the Federal Tort Claims Act (“FTCA”)
against the United States as a defendant on behalf of the FDIC in
their pre-receivership corporate capacity (“FDIC-C”) 3; (2) for
failure to timely repudiate the SLOCs in violation of 12 U.S.C. §
1821(e); (3) for breach of contract under 12 U.S.C. § 1821(d)(20)
by defendant FDIC-R, in approving the SLOCs in writing; (4) that
plaintiff is entitled to actual and compensatory damages under 12
U.S.C.
§
1821(e);
and
(5)
defendant’s
lack
of
authority
to
repudiate the SLOCs because the SLOCs are not considered contracts.
See id. Defendant FDIC-R moves to dismiss a majority of plaintiff
Lexon’s claims for failure to state a claim. See Rec. Doc. 55.
LAW AND ANALYSIS
Motion for Summary Judgment Standard
Under Rule 56 of the Federal Rules of Civil Procedure, summary
judgment is appropriate when “the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as
a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986) (quoting Fed. R. Civ. P. 56(c)). See also TIG Ins. Co. v.
3 Plaintiff’s claim under the Federal Tort Claims Act is against the FDIC in
their pre-receivership corporate capacity (FDIC-C). That claim is the subject
of a separate motion to dismiss for lack of subject matter jurisdiction. See
Rec. Doc. 70. The instant motion only concerns the FDIC in their capacity as
receiver for First NBC Bank (FDIC-R).
4
Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002). “As to
materiality, the substantive law will identify which facts are
material. Only disputes over facts that might affect the outcome
of the suit under the governing law will properly preclude the
entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986). A genuine issue of material fact exists if
the evidence would allow a reasonable jury to return a verdict for
the non-moving party. Anderson, 477 U.S. at 248. The court should
view all facts and evidence in the light most favorable to the
non-moving party. United Fire & Cas. Co. v. Hixson Bros. Inc., 453
F.3d 283, 285 (5th Cir. 2006). Mere conclusory allegations are
insufficient to defeat summary judgment. Eason v. Thaler, 73 F.3d
1322, 1325 (5th Cir. 1996).
The
movant
must
point
to
“portions
of
‘the
pleadings,
depositions, answers to interrogatories, and admissions on file,
together
with
the
affidavits,
if
any,’
which
it
believes
demonstrate the absence of a genuine issue of material fact.”
Celotex, 477 U.S. at 323. If and when the movant carries this
burden, the non-movant must then go beyond the pleadings and
present other evidence to establish a genuine issue. Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). However, “where the non-movant bears the burden of proof
at trial, the movant may merely point to an absence of evidence,
thus shifting to the non-movant the burden of demonstrating by
5
competent summary judgment proof that there is an issue of material
fact warranting trial.” Lindsey v. Sears Roebuck & Co., 16 F.3d
616, 618 (5th Cir. 1994). “This court will not assume in the
absence of any proof that the nonmoving party could or would prove
the necessary facts and will grant summary judgment in any case
where critical evidence is so weak or tenuous on an essential fact
that it could not support a judgment in favor of the [non-movant].”
McCarty v. Hillstone Rest. Grp., 864 F.3d 354, 357 (5th Cir. 2017).
Claim for Contractual Damages and FDIC-R’s Alleged Failure to
Timely Repudiate the SLOCs
Defendant argues that plaintiff has failed to state a claim
for relief in their amended complaint because the damages asserted
by
plaintiff
are
not
representative
of
amounts
“[d]ue
[a]nd
[o]wing.” Rec. Doc. 55-1, at 7. In support, defendant asserts: (1)
the standby letters of credit are contracts for the purposes of 12
U.S.C. § 1821(e); (2) the FDIC-R properly repudiated the SLOCs;
(3) plaintiff failed to show actual and compensatory damages; (4)
and that even in the event that plaintiff obtained funds, plaintiff
would be required to return any funds “to the extent the BOEM does
not make a claim against the bonds.” See id. at 7-9, 11. Plaintiff
argues that damages need not be due and owing because defendant’s
failure to properly repudiate the SLOCs entitles them to “normal
contract law damages.” See Rec. Doc. 63 at 13.
6
When the FDIC is appointed receiver over a failed financial
institution,
Congress
has
expressly
authorized
the
FDIC
to
repudiate: (1) contracts to which the institution is a party; (2)
that the receiver determines to be burdensome; and (3) that in the
receiver’s discretion “promote the orderly administration of the
institution’s affairs.” See 12 U.S.C. § 1821(e)(1). The receiver
must determine whether to repudiate a contract within a reasonable
time following their appointment as receiver. Id. Generally, the
FDIC has “‘broad authority’ to repudiate contracts that were
entered into before its appointment as a receiver.” NCB Mgmt.
Services, Inc. v. F.D.I.C., 843 F. Supp. 2d 62, 68 (D.C.C. 2012)
(citing Nashville Lodging Co. v. Resolution Trust Corp., 59 F.3d
236. 241 (D.C.C. 1995)). 4
A claim for damages resulting from the timely repudiation of
a contract is “limited to actual direct compensatory damages” which
are “determined as of the date of the appointment of the . . .
receiver.” See 12 U.S.C. § 1821(e)(3)(A); see also NCB Mgmt.
Services, Inc., 843 F. Supp. 2d at 68 (stating proper repudiation
of a contract by the FDIC “limits the universe of damages that a
plaintiff can recover.”). Although the FDIC has broad authority to
repudiate a contract, the FDIC must make the determination to
4
The Stand-By Letters of Credit (“SLOCs”) in this case are considered contracts
for purposes of 12 U.S.C. § 1821(e). See Credit Life Ins. Co. v. F.D.I.C., 870
F. Supp. 417, 426 (D.N.H 1993). Plaintiff fails to show cause to change a prior
finding on this point. See Rec. Doc. 34 at 5.
7
repudiate the contract within a reasonable time and adhere to the
guidelines set forth in § 1821(e)(1)&(2). See id. at 68.
If a contract has been repudiated in a timely fashion, then
“a recoverable claim must represent an amount due and owing at the
time of declaration of insolvency.” Citibank (S. Dakota), N.A. v.
F.D.I.C., 827 F. Supp. 789, 791 (D.D.C. 1993)(emphasis added). In
Credit Life Ins. Co. v. F.D.I.C., the United States District Court
for the District of New Hampshire held, “If FDIC-Receiver had
authority to [repudiate] the letter of credit, no damages would be
due as long as the triggering event . . . had not occurred prior
to the date the bank was declared insolvent.” Credit life Ins. Co.
v. F.D.I.C., 870 F. Supp. 417, 425-26 (D.N.H. 1993). 5
5
See also Granite Re, Inc. v. Nat’l Credit Union Admin. Bd., No. 1:17-213, 2018
WL 4677911, at *3 (D.N.D. July 9, 2018) (stating “At the time of the NCUAB’s
appointment as conservator for Citizens (June 23, 2017), Granite had not yet
made a draw request on the Letter of Credit. In fact, Granite did not present
its first sight draft on the Letter of Credit until July 3, 2017. Because the
triggering event under the Letter of Credit had not occurred as of the date of
the NCUAB’s appointment as conservator, the Court finds Granite is not entitled
to damages resulting from the repudiation of the Letter of Credit.”)(emphasis
added). Granite is similar to the case at issue; however, Granite deals
specifically with 12 U.S.C. § 1787(c)(3)(A), statute nearly identical in
substance and verbiage to 12 U.S.C. § 1821(e)(3)(A). Compare 12 U.S.C. §
1787(c)(3)(A), with 12 U.S.C. § 1821(e)(3)(A).
12 U.S.C. § 1787(c)(3)(A) deals specifically with the National Credit
Union Administration (“NCUA”) as opposed to the FDIC. Granite analyzes a similar
issue under this different statute that uses the same language, grants the same
power, and imposes the same limitations on the NCUA that are imposed on the
FDIC by § 1821(e)(3)(A). Although this case concerns a different statute, the
Southern District of New York has held that, “[g]iven the ‘materially identical
language in 12 U.S.C. § 1821(e) and 12 U.S.C. § 1787(c), the same reading of §
1821(e) applies to § 1787(c).” See Nat'l Credit Union Admin. Bd. v. Goldman,
Sachs & Co., No. 13 CIV. 6721 DLC, 2014 WL 297518, at *5 (S.D.N.Y. Jan. 28,
2014), aff'd, 775 F.3d 145 (2d Cir. 2014)(citing United States v. Robinson, 702
F.3d 22, 33–34 (2d Cir. 2012)(stating “[W]here Congress has used materially
identical language, it ‘obviously’ intended the same purpose.”). Therefore, the
same interpretation of § 1787(c)(3)(A) in Granite is applicable to the current
interpretation of § 1821(e)(3)(A) in case at issue.
8
If the FDIC does not adhere to the guidelines of § 1821(e)
when repudiating a contract, it results in an improper repudiation.
See id. at 69-70; see also Country Club Assocs. Ltd. V. FDIC, 918
F. Supp. 429, 437 (D.D.C. 1996). Failure to properly repudiate
results “in a continuation of the contractual obligation and the
application of contractual principles to the dispute.” See Country
Club Assocs. Ltd, 918 F. Supp. at 437. Thus, a plaintiff is
entitled to recover all manner of contractual damages if there has
been a failure to repudiate pursuant to § 1821(e). See id.
Whether the FDIC has repudiated a contract within a reasonable
period following its appointment as receiver is a factual inquiry
which,
“necessarily
depends
on
the
surrounding
facts
and
circumstances” of the case. See Bldg. Four Shady Oaks Mgmt., L.P.
v. F.D.I.C., 504 Fed. Appx. 292, 295 (5th Cir. 2012). This factual
inquiry
does
not
concern
only
the
timing
of
repudiation
but
encompasses all “surrounding circumstances” in a determination of
reasonableness. Id. Further, prejudice to the parties may be
considered
in
a
determination
of
whether
repudiation
is
reasonable. Id. (stating that it is less reasonable for the FDIC
to delay the repudiation of a contract when a party will suffer
“great damage as a result” of the repudiation than when the party
will “suffer no damages as a result.”).
9
The Fifth Circuit has held that repudiating a lease agreement,
157 days after the FDIC’s appointment as receiver, was reasonable
when it was apparent that the party suffered no prejudice in the
delay. Bldg. Four Shady Oaks Mgmt., L.P., 504 Fed. Appx. 292, 295.
However, in Central Buffalo Project Corp. v. F.D.I.C., the Western
District of New York held that a “roughly 100-day delay before
repudiation was not within a ‘reasonable time’.” Central Buffalo
Project Corp. v. F.D.I.C., 29 F. Supp. 2d 164, 170 (W.D.N.Y. 1998).
In Central Buffalo Project Corp., the repudiation of a lease
agreement
was
made
181
days
after
the
RTC
was
appointed
as
receiver, and “101 days after the RTC learned that [the bank] would
not be interested in the leases.” Id. at 166. The court cites
testimony from an RTC staff attorney who claimed that when it was
evident the banks were not interested in the leases, “it was a
fairly clear no-brainer that the leases would be repudiated.” Id.
at 169. Therefore, because the RTC, as receiver, knew that the
leases were certain to be repudiated, the delay in repudiation of
101 days was unreasonable. Id. at 170 (stating “[T]here appears to
be no reason why the leases could not have been repudiated at a
much earlier date.”).
Here, a determination whether plaintiff is entitled to actual
direct compensatory damages turns on whether the repudiation of
the SLOCs was reasonable. There is no genuine issue of material
fact as to whether the FDIC repudiated the SLOCs in a timely
10
fashion or whether the plaintiff Lexon suffered prejudice, e.g.
actual direct compensatory damages.
There is neither factual support for a finding of actual
direct (or impending) compensatory damages nor material disputed
facts or circumstances to show an unreasonable repudiation of the
SLOCs. Plaintiff’s amended complaint contains several attachments
and cites deposition testimony from the Post Closing Asset Manager
(“PCAM 1”) who oversaw the credit portion of the receivership of
First NBC Bank, as well as email exchanges between the Lead Post
Closing Asset Manager (“the Lead PCAM”) and PCAM 1. See id. at ¶¶
35-39.
On May 7, 2019, in an email to the Resolution and Closing
Manager (“Supervisor”) the Lead PCAM stated, “There are Letters of
Credit, but they are standby for beneficiaries, not lines for the
company. Those LC’s are being repudiated.” Rec. Doc. 43-12, Exhibit
F, Email from the Lead PCAM to Supervisor, May 7, 2017. Plaintiff
asserts that the Lead PCAM’s email to Supervisor conclusively
establishes that defendant FDIC-R had made the determination to
repudiate the letters as early as May 7, 2017. However, in PCAM
1’s deposition testimony, PCAM 1 notes that the FDIC-R had not
decided that the SLOCs were going to be repudiated. Deposition
Transcript of PCAM 1, at 80. PCAM 1 provides that the email
produced by the Lead PCAM was merely, “something [the Lead PCAM]
felt as though we were seriously considering.” Id. at 79. When
11
PCAM 1 was asked whether this was a determination by the FDIC-R
that the SLOCs were in fact being repudiated, PCAM 1 replied “No
. . . there was no case . . . anything that we do to get
authorization [for repudiation] takes a case. No case had been
approved, so no decision had been made.” 6 Id. at 80. Further, PCAM
1 stated “[the Lead PCAM’s comment] is a comment that would have
been outside [the] process 7 and would have been . . . [the Lead
PCAM’s] interpretation of the actions we were taking, not . . .
the action plan that was in place.” Id. at 82 (emphasis added).
Thus, the Lead PCAM’s informal comment in the email sent to his
supervisor is not a conclusive decision by the FDIC-R to repudiate
but a mere presumption that repudiation was forthcoming.
This
purportedly
shows
that
defendant
was
aware
of
the
allegedly imminent repudiation for 149 days before they finally
repudiated. Id. at ¶ 35–36. 8 However, even if defendant FDIC-R
reviewed the SLOCs as burdensome and noted the possibility of a
repudiation, that alone does not arise to the level of a conclusive
decision to repudiate the SLOCs by the FDIC-R. We cannot pick and
6 The process in which the PCAMs made decisions is as follows: PCAM 1 (Credit)
and PCAM 2 (Operations) would periodically give recommendations to the Lead
PCAM, who in turn “put together . . . the whole report, and then sent it back
to [PCAM 2] and [PCAM 1] for review before [the PCAMs] would submit it.” These
reports were then submitted to the Resolution and Closing Manager
(“Supervisor”), supervisor to PCAM 1, PCAM 2, and the Lead PCAM.
7 See supra n. 6.
8 Attached to plaintiff’s amended complaint is deposition testimony from PCAM
1. In his testimony, PCAM 1 stated “[referring to May 2, 2017 FDIC letter]’
with the research we had done, we felt that – the FDIC felt it was burdensome.”
12
choose some factual scenarios but must consider all material facts
and circumstances that occurred up to the point of repudiation.
In addition to the foregoing, defendant FDIC-R engaged in
several settlement attempts with non-party Linder Oil and other
acts short of repudiating the SLOCs during the 153-day period
between
the
FIDC-R’s
appointment
as
receiver
and
subsequent
repudiation. See Deposition Transcript of PCAM 1, at 49-50 (stating
“[the FDIC-R] [was] trying to work with [Linder Oil] to see what,
what we could come up with. Again, we had a hundred plus million
dollars at risk.”) Defendant also paid approximately $100,000 for
the completion of an oil reserves report “[t]o try and get a good
estimate as far as what the value of the oil and gas properties
[were]”
to
attempt
to
procure
a
settlement
of
outstanding
obligations. Id. at 133-35. Only after defendant had meetings where
settlement options were explored, and conducted research regarding
the oil reserves, which all failed to obtain substitute lending,
did defendant FDIC-R repudiate the SLOCs. See id. at 75-76, 133,
179-181. No admissible material has been presented by plaintiff to
refute
defendant’s
financing
and
pre-repudiation
valuate
bank
assets
attempts
and
to
debts
seek
and
other
related
complexities in those acts. Additionally, while the impact upon
these proceedings is unknown, there are other judicially noticed
13
complexities allegedly involving the subject Bank and some of its
top officials. 9
There is no material factual support of prejudice, e.g.
compensatory damages, from the repudiation of the SLOCs or any
assumed delay.
Damages resulting from repudiation must be “actual
direct compensatory damages . . . determined from the date of the
appointment
of
the
[FDIC-R].”
12
U.S.C.
§
1821(e)(3)(A).
In
plaintiff’s Proof of Claim, filed on December 1, 2017, plaintiff
stated that “BOEM has not made any claims against the Bonds to the
date hereof. But such claims are anticipated by Lexon.” Rec. Doc.
1-11 at 7. 10 The record does not show admissible material evidence
in support of that alleged anticipatory action.
Thus, because no
claims or admissible evidence of a threat of same have been made
on the Bonds, there has been no “triggering event” to entitle
plaintiff to actual direct compensatory damages, similar to Credit
9 See as examples: Academy Place, LLC, et al. v. First NBC Bank, et al., CA#1810881 (EDLA 2019) (Rec. Doc. 24-1, p. 2,” At all times during the alleged
transactions up until the date on which the FDIC seized the assets of FNBC,
Ryan held the position of President and CEO of the FNBC…The United States
Attorney's Office for the Eastern District of Louisiana is conducting a pending,
ongoing and active grand jury investigation of FNBC and the activities of Ryan
while President and CEO of the bank. The federal grand jury is examining
activities of the FNBC and Ryan…”); USA v. Charity, CR#19-90 (EDLA 2019) (Rec.
Docs. 1 & 21); USA v. St. Angelo, CR#19-55 (EDLA 2019) (Rec. Docs. 1 & 28);
First NBC Bank’s former top lawyer charged with defrauding New Orleans bank,
NOLA(March22,2019),https://www.nola.com/news/business/article_9e2ca8e8-59445dbe-9c4e-5c0946d89f57.html (stating that First NBC Bank’s General Counsel “is
accused of conspiring with two former top First NBC officials to defraud the
bank: President and CEO. . . and former Chief Credit Officer…” and “…, though
the charging documents make clear that the two are targets of the federal
probe.”).
10 Plaintiff references its Proof of Claim in its Amended Complaint. See Rec.
Doc. 43 at ¶ 55.
14
Life Ins. Co. and Granite. In Credit Life Ins. Co., the court held
“no damages [were] due as long as the triggering event . . . had
not occurred prior to the date the bank [being] declared insolvent.
See Credit life Ins. Co., 870 F. Supp. at 425-26. Similarly, in
Granite, the court held that because the “triggering-event” had
not occurred prior to the date of the National Credit Union
Administration Board’s (“NCUA”) appointment as conservator, that
plaintiff had suffered no actual direct compensatory damages.
Granite, 2018 WL 4677911, at *4. Plaintiff has suffered no actual
damages regarding the SLOCs because no funds have been claimed by
BOEM. The triggering event under the SLOCS—BOEM making a claim
against the Bonds—never occurred and thus plaintiff has suffered
no actual direct compensatory damages to date by the repudiation
of the SLOCs, as required by 12 U.S.C. § 1821(e)(3)(A). Further,
damages
for
which
plaintiff
alleges
entitlement
are
merely
“speculative,” as no event triggering the right to receive funds
under the Bonds has occurred. 11 See Rec. Doc. 34 at 6.
Defendant has shown there is no genuine issue of material
fact as to whether the SLOCs were repudiated within a reasonable
time or whether plaintiff has alleged compensable damages under §
11
Even if Lexon had demanded payment from First NBC Bank before the repudiation,
which would constitute a triggering event, the SLOCs appear to obligate Lexon
to return any sums received, to the extent those funds exceed Lexon’s losses
under the bonds. See Rec. Doc. 43, Exhibit B, at ¶ 4 (stating “Your acceptance
of this Credit will constitute your agreement to repay to us funds paid to you
hereunder to the extent that such funds exceed the total of your loss, cost and
expense
(including
unpaid
premium(s)
under
the
mentioned
bonds(s),
undertaking(s), agreements(s), or instruments(s)).).
15
1821(e)(3)(A). Defendant is entitled to a judgment as a matter of
law.
Breach of Contract Claim
Defendant argues that the FDIC-R never approved the SLOCs in
writing, as alleged by plaintiff in their amended complaint. See
Rec. Doc. 55 at 15; see also Rec. Doc. 43 at ¶¶ 73-81. Specifically,
defendant asserts that the FDIC-R could not have renewed the SLOCs
because the renewal took place “if at all” before the FDIC-R was
appointed receiver on April 28, 2017. See Rec. Doc. 55-1 at 15.
The roles of the FDIC-C and FDIC-R are distinct. See Credit
Life Ins. Co., 870 F. Supp. at 421 (“FDIC-Corporate and FDICReceiver are distinct entities.”) In Hartford Casualty Ins. Co. v.
F.D.I.C., the 5th Circuit held “under the dual capacities doctrine,
the FDIC-C may not be held liable for acts committed by the FDICR, i.e., the FDIC acting in one capacity is not subject to defenses
or claims based on its acts in other capacities.” Hartford Cas.
Ins. Co. v. F.D.I.C., 21 F.3d 696, 706 (5th Cir. 1994).
This motion deals specifically with defendant FDIC in its
capacity as receiver, i.e. FDIC-R. Rec. Doc. 55 at 1. The SLOCs,
by their terms, were set to expire on March 24, 2017, but would
automatically renew for one year unless First NBC Bank gave sixty
(60) days
written
notice
of
non-renewal,
prior
to
the
SLOCs
expiration date. Rec. Doc. 43 at ¶¶ 14-15; Rec. Doc. 43, Exhibit
B, Letter of Credit at 1 (stating “This Letter of Credit shall be
16
automatically renewed for additional periods of one year from the
present or each future expiration date unless we have notified you
in writing, not less than sixty (60) days before such date . .
.”). Thus, the automatic renewal of the SLOCs took place when the
FDIC-C failed to provide timely written notice of non-renewal to
plaintiff Lexon by January 23, 2017. Rec. Doc. 43 at ¶¶ 14-15, 26.
The deadline to provide timely notice of non-renewal fell on
January 23, 2017, well before the FDIC-R was appointed receiver of
First NBC Bank on April 28, 2017. Id. at ¶ 32. Therefore, Count
three of the amended complaint is not a viable claim because the
FDIC-R had not yet been appointed when the FDIC-C failed to provide
written
notice
to
plaintiff
on
or
before
January
23,
2017,
resulting in automatic renewal of the SLOCs.
Plaintiff’s amended claims remain conclusory and repetitive,
failing to show material factual support for their contentions.
Considering all admissible evidence from all parties, Defendant
FDIC-R’s construed motion for summary judgment (Rec. Doc. 55)
adequately shows that there is no genuine issue of material fact.
Accordingly, the amended claims against FDIC-R are dismissed.
New Orleans, Louisiana this 25th day of September, 2019
__________________________________
SENIOR UNITED STATES DISTRICT JUDGE
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