Unisys Corp. v. Federal Deposit Ins. Corp.

• Decision Date: 30 December 1988
• Docket Number: No. MO-88-CA-117.,MO-88-CA-117.
• Citation: 724 F. Supp. 454
• Parties: UNISYS CORPORATION v. FEDERAL DEPOSIT INSURANCE CORPORATION.
• Court: U.S. District Court — Western District of Texas

724 F. Supp. 454

UNISYS CORPORATION v. FEDERAL DEPOSIT INSURANCE CORPORATION.

No. MO-88-CA-117.

United States District Court, W.D. Texas, Midland-Odessa Division.

December 30, 1988.

Richard C. Guinan, Jr., John L. Hubble, Denten & Guinan, Dallas, Tex., for plaintiff.

Millard O. Anderson, Jr., FDIC, Midland, Tex., Mark Curtis Taylor, Liddell, Sapp, Zivley, Hill & Laboon, Robert J. Clary, Johnson, Bromberg & Leeda, Dallas, Tex., for defendant.

MEMORANDUM OPINION AND ORDER

BUNTON, Chief Judge.

Came on this day to be heard Plaintiff's Motion For Summary Judgment in the above-captioned cause. Defendant responded in a timely manner and filed its Cross-Motion for Summary Judgment. Upon consideration of the Motions, affidavits, exhibits and arguments of the parties, this Court is of the opinion that Plaintiff's Motion should be denied and Defendant's Motion should be granted.

FACTUAL BACKGROUND

In 1979, Eagle Computing Corporation ("Eagle"), as Lessee, and Burroughs Corporation ("Burroughs"), as Lessor, entered into eleven leases for the lease of certain items of computer equipment (collectively, the "Leases"). (Affidavit of Robert E. Hoblit, hereinafter "Hoblit Aff." 1.) Eagle, a wholly-owned subsidiary of the First National Bank of Midland ("FNB Midland"), was merged into FNB Midland on January 1, 1983. (Hoblit Aff., 2.)

At the time of the merger, FNB Midland was a national banking association organized and existing under the laws of the United States with its principal offices being located in Midland, Midland County, Texas. (Hoblit Aff., 3.) The Comptroller of the Currency on October 14, 1983, declared FNB Midland insolvent and, pursuant to 12 U.S.C. §§ 191 and 1821(c), appointed the FDIC as its receiver. (Hoblit Aff., 3.) By virtue of such appointment, FDIC-Receiver acquired all right, title and interest of FNB Midland in the latter's assets, including the Leases. (Hoblit Aff., 3.)

By letter dated February 7, 1984, FDIC-Receiver notified Burroughs that it was disaffirming and terminating each of the Leases effective January 31, 1984. On June 11, 1984, Burroughs submitted its formal proof of claim to FDIC-Receiver, claiming damages resulting from FDIC-Receiver's termination and disaffirmance of the Leases in the amount of $683,379.14, plus accrued interest as of February 1, 1984, in the amount of $50,878.44. (Hoblit Aff., 5.) In a letter dated October 4, 1984, Plaintiff Unisys, as successor to Burroughs, amended its proof of claim to add $24,767.00 in contractual transportation charges plus additional accrued interest. (Hoblit Aff., 6.)

On January 29, 1988, almost four full years after FDIC-Receiver's disaffirmance of the Leases, Plaintiff commenced this action against FDIC-Receiver seeking recovery under the Leases in the amount of $699,401.46, representing the aggregate amount of all rent to become due under each Lease for the post-disaffirmance term of each such Lease, together with interest, attorneys' fees and costs.

In its First Amended Answer, FDIC-Receiver asserted affirmatively that Plaintiff's claims are barred by contractual limitations, that Plaintiff's claims are not provable as against FDIC-Receiver, and that Plaintiff's claims for accelerated rentals constitute unenforceable penalties. FDIC-Receiver now cross-moves for entry of summary judgment in its favor pursuant to Rule 56 of the Federal Rules of Civil Procedure on the ground that there are no genuine issues of material fact, and that Plaintiff is barred as matter of law from recovering as against FDIC-Receiver on the claims set forth in its Complaint.

STANDARD ON MOTION FOR SUMMARY JUDGMENT

The Supreme Court's 1986 trilogy of Summary Judgment cases clarified the test for granting summary judgment. In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986), the Court stated that the trial court must consider the substantive burden of proof imposed on the party making the claim. In the case before this Court, the Plaintiff has the burden with respect to its claims and Defendant has the burden with respect to defenses and claims for affirmative relief it raises.

Anderson v. Liberty Lobby requires this Court to substantively evaluate the evidence offered by the moving and non-moving party to determine whether the evidence raises a "material" fact question which is "genuine." The Anderson court defined "material" as involving a "dispute over facts which may effect the outcome of the suit under the governing law."

In a second case, the Supreme Court reiterated that where the party moving for summary judgment has established prima facie that there is no genuine issue as to any material fact, the non-moving party must then come forward with "specific facts" showing a genuine issue for trial. It must be "more than simply ... that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348 89 L.Ed.2d 538 (1986).

The third case in the trilogy, Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986), held that where the moving party shows that the opposing party is unable to produce the evidence in support of its case, summary judgment is appropriate. In Celotex Corp., it was not necessary for the motion for summary judgment to be supported by affidavits or other material specifically negating the non-moving party's claim so long as the district court was satisfied that there was an absence of evidence to support it. At that point, the burden shifted to the non-moving party to produce evidence in support of its claims; if it did not produce any, summary judgment was required.

DISCUSSION

PROVABILITY

As this Court has expressly recognized, a claim against the receiver of an insolvent national bank is not provable unless such claim is due and owing at the time of insolvency:

"`While it succeeds to the rights of the creditors of the bank as well as the rights of the corporation in connection with the liquidation of the bank assets and is charged with payment of expenses of administration in enforcement of the obligations of the bank, the receiver is not subject to liability for the provisions of the unexpired term of the lease of the bank premises, and it may take a reasonable time to adopt or reject the same citations omitted. Further, the refusal of an insolvent national bank and its receiver to take possession under a long term lease does not entitle the lessor to damages from the bank or its receiver as lessee citation omitted.'"

FDIC v. Eagle Properties, Ltd., 664 F.Supp. 1027, 1053 (W.D.Tex.1985), quoting: FDIC v. Grella, 553 F.2d 258 (2d Cir.1977); See: Kennedy v. Boston-Continental Nat'l Bank, 84 F.2d 592 (1st Cir. 1936), cert. dismissed, 300 U.S. 684, 57 S.Ct. 667, 81 L.Ed. 887 (1937); Argonaut Savings & Loan Assoc. v. FDIC, 392 F.2d 195, 197 (9th Cir.), cert. denied, 393 U.S. 839, 89 S.Ct. 116, 21 L.Ed.2d 110 (1968); Executive Office Centers, Inc. v. FDIC, 439 F.Supp. 828, 829 (E.D.La.1977), aff'd, 575 F.2d 879 (5th Cir.1978). Indeed, even in First Empire Bank v. FDIC, 572 F.2d 1361 (9th Cir.1978), a case relied upon by Plaintiff, the court specifically recognized that the provability rule destroys any claim for loss of future rent as against FDIC-Receiver. Id. at 1368.

Plaintiff argues in reliance on First Empire Bank, supra, that Kennedy and its progeny were based upon a "remnant of medieval theory" and "outdated bankruptcy rules" and should not be extended to non-real estate lease transactions. Id. at 1368. Plaintiff further argues that although this Court has followed Kennedy progeny in denying the right of offset to the lessor of banking premises of the defunct FNB Midland, this Court should not now extend the provability bar to a personal property lease.

The concept of provability has been applied in the context of national bank receiverships from the very inception of the National Bank Act. Congress has never amended the National Bank Act to eliminate or curtail the provability bar. As recently as 1985, the Fifth Circuit defined the three elements that must be satisfied before a claim is provable in a national bank receivership:

A claim is provable against the FDIC as receiver if (1) it exists before the bank's insolvency and does not depend on any new contractual obligations arising later; (2) liability on the claim is absolute and certain in amount when suit is filed against the receiver; and (3) the claim is made in a timely manner, well before any distribution of the assets of the receivership other than a distribution through a purchase and assumption agreement.

Interfirst Bank Abilene, N.A. v. FDIC, 777 F.2d 1092, 1094-95 (5th Cir.1985).

In Interfirst, the FDIC stipulated that the fraud and gross negligence in the administration of participated loans which served as the basis for Interfirst's claims for breach of contract and recision occurred before Ranchlander was declared insolvent. Id. at 1093. While the claim was provable in Interfirst due to the stipulation on the part of the FDIC, nowhere did the Court even hint that provability is an...