Goodman v. Resolution Trust Corp.

• Decision Date: 20 August 1993
• Docket Number: No. 92-2563,92-2563
• Citation: 7 F.3d 1123
• Parties: Pens. Plan Guide P 23884L Brenda M. GOODMAN; Jesse S. Weinberg, Plaintiffs-Appellants, and Melvin M. Berger, Defendant-Appellant, v. RESOLUTION TRUST CORPORATION, as Receiver for Yorkridge-Calvert Savings and Loan Association, Defendant-Appellee, and Signet Bank/Maryland, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1123

7 F.3d 1123

Pens. Plan Guide P 23884L

Brenda M. GOODMAN; Jesse S. Weinberg, Plaintiffs-Appellants and Melvin M. Berger, Defendant-Appellant, v. RESOLUTION TRUST CORPORATION, as Receiver for Yorkridge-Calvert Savings and Loan Association Defendant-Appellee and Signet Bank/Maryland, Defendant.

No. 92-2563.

United States Court of Appeals Fourth Circuit.

Argued May 5, 1993.

Decided Aug. 20, 1993.

Lee Baylin, Bregel, Keer, Davis & Dantes, Towson, MD, argued, for plaintiffs-appellants Goodman and Weinberg.

Andrew Jay Graham, Kramon & Graham, P.A., Baltimore, MD, argued (Kathleen A. Birrane, on brief), for defendant-appellant, Berger.

Stephen R. Mysliwiec, Piper & Marbury, Washington, DC, for defendant-appellee.

Before WILKINS and LUTTIG, Circuit Judges, and KISER, Chief District Judge for the Western District of Virginia, sitting by designation.

OPINION

KISER, Chief District Judge:

On October 19, 1990, Brenda M. Goodman ("Goodman") and Jesse S. Weinberg ("Weinberg") brought this action in circuit court for Baltimore County against the Resolution Trust Corporation ("RTC") as Receiver of Yorkridge-Calvert Savings and Loan Association ("Yorkridge") and against Signet Bank of Maryland ("Signet Bank") as Trustee seeking a determination that they were entitled to certain trust fund assets. Yorkridge had executed three trust agreements ("Trust Agreements") on behalf of Weinberg, Goodman, and Melvin M. Berger ("Berger") which provided that Yorkridge ("the Employer") shall be treated as the owner of the trust assets, and that "the Trust Fund shall at all times be subject to the claims of creditors of Employer during both the operation period of the Employer or in the event of Employer's insolvency or bankruptcy." This action was removed to the United States District Court for the District of Columbia, pursuant to 12 U.S.C. § 1441a(l )(1), and was later transferred to the United States District Court for the District of Maryland. On August 14, 1992, Judge Black issued a Memorandum Opinion and Order granting the RTC's motion for summary judgment and denying the motion of Goodman, Weinberg, and Berger for summary judgment. Judge Black held that there were no relevant disputes of material fact, and that the RTC had the right under the terms of the Trust Agreements to recover the trust assets in order to satisfy creditors. Judge Black based his ruling on the fact that (i) Section 3.1 of the Trust Agreement made the trust assets subject to the claims of creditors "at all times"; and (ii) the trust assets were subject to the claims of creditors in particular in the event of the employer's "bankruptcy," a term in section 3.1 of the Trust Agreements which must be read to include the receivership of a failed saving and loan association. Goodman, Weinberg and Berger have appealed. We affirm.

I.

In June 1986, the Yorkridge board of directors (the "Board") terminated an unfunded, non-contributory retirement plan for certain members of Yorkridge's senior management to make Yorkridge more profitable by eliminating the ever-increasing liabilities which were accruing on Yorkridge's financial reports. The Board approved, inter alia, three non-qualified Deferred Compensation Agreements which required Yorkridge to make payments, totalling $811,143, to three trusts between Yorkridge and Signet Bank in the following amounts: Berger $571,930, Goodman $160,687, and Weinberg $78,526. These amounts equalled the present value of the future benefits which would have been payable to each officer under the terminated retirement plan. However, Yorkridge had no legal obligation to make these payments totalling eight hundred thousand dollars because the prior retirement plan could have been terminated at any time. Each of the Deferred Compensation Agreements states that the particular officer would have been entitled to benefits under the prior retirement plan if he or she had retired prior to June 30, 1988; however, neither Berger (age 56) nor Goodman (age 45) had reached retirement age as of that date (Goodman also did not meet the years of service aspect of the former retirement plan). The Deferred Compensation Agreements were not retirement benefits since ten annual payments were to be made to each of the three officers regardless of whether the officers had retired, and without any restrictions on eligibility which would have been imposed by the previous retirement plan.

The Trust Agreements were set up as grantor or "rabbi" trusts. The initial payment to these trusts is not taxable to the employee, and income generated by the trusts is taxable to the employer rather than to the employee. See Priv.Ltr.Rul. 811307 (December 31, 1980). Each Trust Agreement states that it is "intended to be a grantor trust with the result that the Employer shall be treated as the owner of all the corpus and income of said trust under Section 671 through 679 of the Internal Revenue Code of 1954, as amended from time to time." Trust Agreement p B.

As of September 30, 1989, Yorkridge had a negative net worth (i.e. negative "tangible capital") of $12.1 million. Yorkridge had incurred operation losses of $4.5 million in the twelve-month period ending September 30, 1989. It incurred another net operation loss of $451,000 in October 1989 and a similar operating loss in November 1989. The Office of Thrift Supervision ("OTS") projected that Yorkridge would fail to meet its tangible capital requirement of $10.1 million, as of December 7, 1989, by over 100%, or approximately $22.1 million.

On December 15, 1989, the OTS, pursuant to 12 U.S.C. § 1464(d), issued an order placing Yorkridge in receivership and appointing the RTC as Receiver. The OTS order was based upon a finding by OTS that Yorkridge was in an "unsafe and unsound condition to transact business in that it has substantially insufficient capital and otherwise," and that Yorkridge "has incurred and is likely to incur losses that will deplete all or substantially all of its capital and there is no reasonable prospect for [Yorkridge's] capital to be replenished without Federal assistance." The OTS Order further stated that Yorkridge was "insolvent on a tangible capital basis," that Yorkridge had incurred "a pattern of consistent losses," and that "there is evidence of imprudent management or business behavior."

On December 15, 1989, the RTC was appointed as Receiver of Yorkridge, and the directors of OTS approved the incorporation of a new, federally-charted mutual association, Yorkridge-Calvert Federal Saving Association ("Yorkridge Federal") pursuant to FIRREA, 12 U.S.C. § 1821(d)(2)(G)(i). On December 15, 1989, all of the assets and certain liabilities of Yorkridge were transferred to the new Yorkridge Federal pursuant to a "Purchase and Assumption Agreement." The OTS placed Yorkridge Federal into conservatorship and appointed the RTC as its Conservator. As of December 15, 1990, Yorkridge was not able to pay its debts as they matured. Yorkridge Federal voluntarily paid $289,382.38 in claims again Yorkridge from December 1989 through October 1990.

By letter dated June 12, 1990, the Receiver notified Signet Bank that Yorkridge was insolvent and demanded the assets of the three trust funds at issue be paid to the Receiver pursuant to section 3 of the Trust Agreements and pursuant to 12 U.S.C. § 1821(d)(2)(E). The Receiver and Signet Bank agreed that Signet Bank would continue to hold the trust assets pending the resolution of this matter by the court.

In September 1990, Yorkridge Federal was placed into receivership. Its insured deposits and certain of its assets, which Yorkridge Federal had obtained from Yorkridge pursuant to the Purchase and Assumption Agreement, were transferred to Household Bank. The RTC, on behalf of Yorkridge Federal, made a $295,564,330.48 payment to Household Bank in connection with this transfer. Thereafter, Yorkridge Federal ceased all operations in September 1991.

Yorkridge Federal owes the RTC $238,365,248.11. Yorkridge Federal is also obligated to pay the creditors of Yorkridge, who had received a Receiver's certificate, a pro rata dividend based on the Receiver's estimate of Yorkridge's liquidation value. The assets of Yorkridge Federal are less than its liabilities. As of December 1991, Yorkridge Federal had assets with a book value of $210,442,000 and a projected market value of $137,300,000.

II.

We review a district court's grant of summary judgment de novo, employing the same standard applied by the district court. Temkin v. Frederick County Comm'rs, 945 F.2d 716, 718-19 (4th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1172, 117 L.Ed.2d 417 (1992). In cases of contract interpretation, we have stated:

A court faces a conceptually difficult task in deciding whether to grant summary judgment on a matter of contract interpretation. Only an unambiguous writing justifies summary judgment without resort to extrinsic evidence, and no writing is unambiguous if "susceptible to two reasonable interpretations." American Fidelity & Casualty Co. v. London & Edinburgh Ins. Co., 354 F.2d 214, 216 (1965). The first step for a court asked to grant summary judgment based on a contract's interpretation is, therefore, to determine whether, as a matter of law, the contract is ambiguous or unambiguous on its face. If a court properly determines that the contract is unambiguous on the dispositive issue, it may then properly interpret the contract as a matter of law and grant summary judgment because no interpretive facts are in genuine issue. Even where a court, however, determines as a matter of law that the contract is ambiguous, it may yet examine evidence extrinsic to the contract that is included in the summary judgment materials, and, if the evidence is, as a matter of law, dispositive of the interpretative issue, grant summary judgment on that basis. See Jaftex Corp. v. Aetna Casualty and Surety Co., 617 F.2d 1062, 1063 (4th Cir.1980). If, however, resort to...