Hachikian v. F.D.I.C.

• Decision Date: 30 July 1996
• Docket Number: No. 96-1230,96-1230
• Citation: 96 F.3d 502
• Parties: Kenneth V. HACHIKIAN, Plaintiff, Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, Defendant, Appellee. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 502

96 F.3d 502

Kenneth V. HACHIKIAN, Plaintiff, Appellant, v. FEDERAL DEPOSIT INSURANCE CORPORATION, Defendant, Appellee.

No. 96-1230.

United States Court of Appeals, First Circuit.

Heard July 30, 1996.

Decided Sept. 13, 1996.

W. Paul Needham, Boston, MA, with whom Kevin Hensley, West Roxbury, MA and Needham & Warren, Boston, MA, were on brief, for appellant.

Karen A. Caplan, Boston, MA, with whom Ann S. Duross, Richard J. Osterman, Jr., Clark Van Der Velde, Franklin, MA, and Thomas R. Paxman, Boston, MA, were on brief, for appellee.

Before SELYA, Circuit Judge, TORRES ^* and SARIS, ^** District Judges.

SELYA, Circuit Judge.

Plaintiff-appellant Kenneth V. Hachikian seeks to enforce, or in the alternative to obtain damages for the breach of, an oral agreement that he allegedly made with defendant-appellee Federal Deposit Insurance Corporation (FDIC). The district court dashed his hopes by granting the FDIC's motion for summary judgment. The court reasoned that, even if a contract had been formed, it violated the statute of frauds. We affirm, albeit on a different ground.

I. BACKGROUND

Adhering to the familiar praxis, we recite the pertinent facts in the light most favorable to the party who unsuccessfully resisted summary judgment.

In his halcyon days the appellant borrowed liberally from two Massachusetts-based financial institutions: Olympic Bank and Bank Five for Savings. At the times relevant hereto the Olympic debt consisted of (i) a $200,000 promissory note secured by a third mortgage on the appellant's residence, (ii) a $115,000 promissory note secured by a pledge of shares in Chestnut Hill Bank & Trust Co. (the CHBT stock), and (iii) personal guarantees of two business loans which totaled over $3,100,000. The Bank Five debt consisted of (i) a $168,750 loan secured by a fourth mortgage on the appellant's residence, and (ii) a personal guarantee of a business loan having a deficiency balance of approximately $500,000. As luck would have it, both banks foundered. In each instance the FDIC (a government agency operating under federal statutory authority, see, e.g., 12 U.S.C. §§ 1814-1883 (1994)) was appointed as the receiver. It administered the Olympic receivership from its Westborough, Massachusetts consolidated office (WCO) and the Bank Five receivership from its Franklin, Massachusetts consolidated office (FCO).

With the specter of personal bankruptcy looming, the appellant commenced negotiations for the settlement of his debts. His attorney, Michael McLaughlin, wrote several letters to Kathy Callen, a WCO account officer. After months of haggling over possible settlement models, McLaughlin received a telephone call from Callen on June 3, 1993, in which she stated that her agency had approved the appellant's latest proposal. The next day, McLaughlin wrote to Callen outlining the details of the bargain that he believed had just been struck: in exchange for a release of the appellant's indebtedness to both Olympic and Bank Five and the discharge of the third and fourth mortgages that encumbered his residence, the appellant agreed to (i) pay the FDIC $17,500 in cash, (ii) transfer to it the CHBT stock, and (iii) sell his residence and remit the net sale proceeds (estimated to be in excess of $100,000). The FDIC did not respond immediately to McLaughlin's communique, but it later asserted (before any performance took place) that, while it had approved a settlement paradigm, it had never assented to, and Callen had never acquiesced in, the settlement described by McLaughlin. ¹

By October of 1993 the appellant knew that the FDIC refused to abide by the terms that McLaughlin said constituted the agreed settlement. In November, the appellant proposed a new, more circumscribed agreement. This proposal envisioned that the FDIC would discharge the two mortgages that it held on the appellant's residence in return for the net proceeds derived from a sale of that property. The appellant characterized this proposal as being in mitigation of the damages stemming from the FDIC's "breach" of the earlier "settlement agreement."

Peter Frazier, Callen's replacement as the WCO account officer responsible for supervising the appellant's debts, responded to the new proposal by letters dated November 30 and December 21, respectively. The letters stated in substance that while the FDIC agreed to release the third and fourth mortgages on the appellant's residence in exchange for the avails of the anticipated sale, the proceeds would merely be credited to the appellant's account and the excess indebtedness would remain "open and payable in full." Against this contentious backdrop, the FDIC discharged both mortgages in December of 1993; the appellant sold his home; and the FDIC received net sale proceeds of approximately $103,000.

In January of 1994, the appellant's attorney again wrote to the FDIC, reiterating his view that the December transaction was accomplished merely as a means of mitigating the damages caused by the FDIC's repudiation of the earlier (June 1993) pact. He also demanded that the FDIC cancel all the appellant's notes and guarantees. The agency refused to grant a global release. In short order, the appellant sued in federal district court seeking money damages, specific performance, and a declaratory judgment upholding the supposed June 1993 agreement.

The FDIC denied the material allegations of the complaint and moved for brevis disposition. It argued, among other things, that the district court lacked jurisdiction because the appellant had failed to comply with the administrative claims review process; that no agreement came into being in June of 1993 because there had been no meeting of the minds; that, regardless of what Callen may have stated, it never had approved the settlement terms chronicled by McLaughlin; and that, even if an oral contract had been formed, it was unenforceable under the statute of frauds. The district court rejected the FDIC's jurisdictional argument ² but determined that the oral contract violated the statute of frauds, Mass. Gen. L. ch. 259, § 1 (1996), and granted judgment accordingly. See Hachikian v. FDIC, 914 F.Supp. 14, 17 (D.Mass.1996). This appeal ensued.

II. ANALYSIS

The Civil Rules provide that summary judgment may flourish when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). On appeal from the entry of summary judgment we review the district court's decision de novo, construing the record in the light most congenial to the nonmovant and resolving all reasonable inferences in that party's favor. See Maldonado-Denis v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir.1994). We are not wed to the lower court's rationale, but may affirm the entry of summary judgment on any alternate ground made manifest by the record. See Garside v. Osco Drug, Inc., 895 F.2d 46, 48-49 (1st Cir.1990); Polyplastics, Inc., v. Transconex, Inc., 827 F.2d 859, 860-61 (1st Cir.1987).

The statute of frauds question is freighted with com-plexity, see generally Restatement (Second) of Contracts § 147(2) (1979) (explaining that when the duty to perform those "promises in a contract which subject it to the [statute of frauds] ... has been discharged," the statute of frauds "does not prevent enforcement of the remaining promises"), and we need not reach it here. The short answer to the appellant's importunings is that the purported agreement on which the appellant bases his suit never came into being. To be sure, the FDIC approved a potential settlement on June 3, 1993--but the agency's records conclusively demonstrate that the contemplated settlement involved only that portion of the appellant's indebtedness that came under the aegis of the WCO. The appellant has not shown (and, indeed, does not aver) that the FDIC duly authorized a global settlement of his aggregate (i.e., WCO plus FCO) indebtedness. He claims only that a representative of the FDIC--Callen--assured his attorney that such a settlement had been approved by the appropriate plenipotentiaries within the agency. Even assuming, as we must, the accuracy of the appellant's version of Callen's statement, this is simply too porous a foundation on which to posit liability on the part of a government agency.

Dealing with the sovereign brings to bear a special set of rules that are more demanding than those that apply when one deals with a private party. See, e.g., Rock Island, Ark. & La. R.R. Co. v. United States, 254 U.S. 141, 143, 41 S.Ct. 55, 56, 65 L.Ed. 188 (1920) (Holmes, J.) (warning that citizens "must turn square corners when they deal with the Government"). Thus, for example, parties seeking to recover against the United States in an action ex contractu have the burden of demonstrating affirmatively that the agent who purported to bind the government had actual authority to do so. See H. Landau & Co. v. United States, 886 F.2d 322, 324 (Fed.Cir.1989). This rule is dispositive here.

The FDIC's board of directors is permitted by statute to authorize agents and employees to exercise the powers granted to the agency by Congress. See 12 U.S.C. § 1819(a). The FDIC asserts without contradiction that its board passed a resolution concerning the delegation of authority to dispose of corporate assets (like the debts Hachikian owed to failed banks and which were inherited by the FDIC qua receiver), and that this resolution was in effect at all relevant times. By its terms, the resolution delegates authority to a Credit Review Committee (C...