Winstar Corp. v. U.S., 92-5164

• Decision Date: 30 August 1995
• Docket Number: No. 92-5164,92-5164
• Citation: 64 F.3d 1531
• Parties: WINSTAR CORPORATION, United Federal Savings Bank, Statesman Savings Holding Corp., The Statesman Group, Inc. and American Life and Casualty Insurance Company, and Glendale Federal Bank, FSB, Plaintiffs-Appellees, v. The UNITED STATES, Defendant-Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1531

64 F.3d 1531

64 USLW 2133

WINSTAR CORPORATION, United Federal Savings Bank, Statesman

Savings Holding Corp., The Statesman Group, Inc.

and American Life and Casualty Insurance Company, and Glendale Federal Bank, FSB, Plaintiffs-Appellees, v. The UNITED STATES, Defendant-Appellant.

No. 92-5164.

United States Court of Appeals, Federal Circuit.

Aug. 30, 1995.

Charles J. Cooper, Shaw, Pittman, Potts & Trowbridge, Washington, DC, argued, for plaintiffs-appellees, Winstar Corp., United Federal Sav. Bank, Statesman Sav. Holding Corp., The Statesman Group, Inc., and American Life and Cas. Ins. Co. With him on the brief were Michael A. Carvin, Robert J. Cynkar and Vincent J. Colatriano. Jerry Stouck, Spriggs & Hollingsworth, Washington, DC, argued, for plaintiffs-appellees, Glendale Federal Bank, FSB. With him on the brief were Joe G. Hollingsworth, Donald W. Fowler and Charles J. Fromm.

Douglas Letter, Appellate Litigation Counsel, Dept. of Justice, Washington, DC, argued, for defendant-appellant, U.S. With him on the brief was Frank W. Hunger, Asst. Atty. Gen., Scott R. McIntosh and William Kanter, Attys., Dept. of Justice, Washington, DC, for defendant-appellant, U.S.

William H. Butterfield, McGuire, Woods, Battle & Boothe, Washington, DC, was on the brief for, amicus curiae, The Electronic Industries Ass'n, The Shipbuilders Council of America, Inc. and Litton Industries, Inc.

Clarence T. Kipps, Jr. and Kevin C. Dwyer, Miller & Chevalier, Chartered, Washington, DC, were on the brief, for the amicus curiae, Aerospace Indust. Ass'n of America, Inc. Also on the brief were Professor Emeritus John Cibinic, Jr., The National Law Center, Washington, DC, Kathleen A. Buck, Kirkland & Ellis, Washington, DC, and Mac S. Dunaway and Gary E. Cross, Dunaway & Cross, Washington, DC.

Herbert L. Fenster, McKenna & Cuneo, Washington, DC, was on the brief, for amicus curiae, Chamber of Commerce of U.S. With him on the brief were Tami Lyn Azorsky and Margaret C. Rhodes. Also on the brief was Robin S. Conrad, National Chamber Litigation Center, Inc., Washington, DC, of counsel were Hugo Teufel, III and Mark A. Rowland.

Don S. Willner, Willner & Zabinsky, Portland, OR, was on the brief, for amicus curiae, C. Robert Suess, Leo Sherry, Richard A. Green, Irving Roberts and Foster, Paulsell & Baker, Inc. With him on the brief were Thomas M. Buchanan and Eric W. Bloom, Winston & Strawn, Washington, DC.

Melvin C. Garbow and Peter T. Grossi, Jr., Arnold & Porter, Washington, DC, were on the brief, for amicus curiae, Amwest Sav. Ass'n and The Adam Corp./Group; The Globe Sav. Bank, FSB and Phoenix Capital Group, Inc.; and Old Stone Corp. Of counsel were Peter M. Barnett, Linda B. Coe and Matthew Frumin.

Billie J. Ellis, Jr., Kelly, Hart & Hallman, Fort Worth, TX, was on the brief, for amicus curiae, Keystone Holdings, Inc. and American Sav. Bank, F.A.

Daniel J. Goldberg, Housley, Goldberg & Kantarian, P.C., Washington, DC, was on the brief, for amicus curiae, Coast Federal Bank, Union Federal Sav. Bank of Indianapolis, Union Federal Sav. Bank of Frankton and Union Holding Co., Inc.

John C. Millian, Gibson, Dunn & Crutcher, Washington, DC, was on the brief for Trinity Ventures, Ltd. and Castle Harlan, Inc. With him on the brief were Wesley G. Howell, Jr., Gibson, Dunn & Crutcher, New York City and John K. Bush, Gibson, Dunn & Crutcher, Washington, DC.

Paul Blankenstein and John K. Bush, Gibson, Dunn & Crutcher, Washington, DC, were on the brief, for amicus curiae, Dollar Bank, F.S.B.

Laurence H. Tribe, Cambridge, MA, was on the brief for, amicus curiae, AmBase Corp. and carteret Bancorp, Inc. With him on the brief was Brian Stuart Koukoutchos, Bedford, MA, Harvey Silverglate and Andrew Good, Silverglate & Good, Boston, MA, Wesley G. Howell, Jr., Gibson, Dunn & Crutcher, New York City and John C. Millian, Gibson, Dunn & Crutcher, Washington, DC.

Thomas M. Buchanan and Eric W. Bloom, Winston & Strawn, Washington, DC, were on the brief, for amicus curiae, Franklin Financial Group, Inc., Franklin Federal Sav. Bank, and Charter Federal Sav. Bank.

Lloyd N. Cutler, Wilmer, Cutler & Pickering, Washington, DC, was on the brief, for Timothy K. Irvine, Gen. Counsel, Franklin Federal Bancorp, Austin, TX, was on the brief, for amicus curiae, Franklin Federal Bancorp.

amicus curiae, The Long Island Sav. Bank, FSB and The Long Island Sav. Bank of Centerach FSB. With him on the brief were William B. Richardson, Jr., Michael S. Helfer and Lydia R. Pulley. Also on the brief were Michael J. Chepiga and Eric S. Kobrick, Simpson, Thacher & Bartlett, New York City. Russell E. Brooks, Milbank, Tweed, Hadley & McCloy, New York City, for amicus curiae, The Long Island Sav. Bank, FSB.

Before ARCHER, Chief Judge, ^* and RICH, NIES, NEWMAN, MAYER, MICHEL, PLAGER, LOURIE, CLEVENGER, RADER, and SCHALL, Circuit Judges. ^**

Opinion for the court filed by Chief Judge ARCHER, in which Circuit Judges RICH, NEWMAN, MAYER, MICHEL, PLAGER, CLEVENGER, RADER, and SCHALL join. Dissenting opinions filed by Circuit Judges NIES, and LOURIE.

ARCHER, Chief Judge.

The United States appeals the decisions ¹ of the United States Court of Federal Claims ² granting plaintiffs Winstar Corporation and United Federal Savings Bank, No. 90-8C, plaintiffs Statesman Savings Holding Corporation, the Statesman Group Incorporated and American Life and Casualty Company, No. 90-773C, and plaintiff Glendale Federal Bank, No. 90-772C, summary judgment on the liability portion of their breach of contract claims against the United States. The cases were consolidated for purposes of this interlocutory appeal. We affirm.

I

In its Winstar decisions, the Court of Federal Claims found that an implied-in-fact contract existed between the government and Winstar and that the government breached this contract when Congress enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub.L. No. 101-73, 103 Stat. 183 (codified in relevant part at 12 U.S.C. Sec. 1464). Similarly, in the Statesman decision the Court of Federal Claims found that plaintiffs Statesman Savings Holding Corporation, the Statesman Group Incorporated and the American Life and Casualty Insurance Company (together "Statesman") and plaintiff Glendale Federal Bank ("Glendale") had express contracts with the government and citing its Winstar decision, found that these contracts were breached by the enactment of FIRREA.

The Court of Federal Claims certified its decisions in these three related cases for interlocutory appeal pursuant to 28 U.S.C. Sec. 1292(b) after determining that the decisions involved controlling questions of law as to which there is substantial ground for difference of opinion and that an immediate appeal may materially advance the termination of these and other related cases. We granted the appeal. 979 F.2d 216 (Fed.Cir.1992). After an initial split panel decision of this Court reversed the Court of Federal Claims, 994 F.2d 797 (Fed.Cir.1993), we vacated the panel opinion and agreed with the plaintiffs' suggestion to consider these cases in banc.

II

A. During the Great Depression of the 1930s, 40 percent of the nation's $20 billion in home mortgages went into default, 1700 of Among the regulatory requirements promulgated and enforced by the agencies were capital requirements, which were minimum reserves of capital that a thrift had to maintain. Failure to comply with minimum regulatory capital requirements had severe repercussions for a thrift. The agencies had a variety of measures that could be taken against noncomplying thrifts. In the most serious cases, the government could seize the thrift and place it into receivership where it might later be sold or liquidated. This drastic remedy was rarely necessary, however, because of the relative health of the thrift industry until the thrift crisis of the late 1970s and early 1980s.

the approximately 12,000 thrift institutions failed, and depositors in these thrifts lost $200 million. H.R.Rep. No. 54(I), 101st Cong., 1st Sess. 292 (1989), reprinted in 1989 U.S.C.C.A.N. 86, 88-89 (House Report). Congress took several measures in response. First, Congress created the Federal Home Loan Bank Board (Bank Board) to channel funds to thrifts in order to prevent foreclosures and to allow thrifts to make loans on residences. House Report at 292, 1989 U.S.C.C.A.N. at 88; see Federal Home Loan Bank Act, Pub.L. No. 72-304, 47 Stat. 725 (1932) (codified as amended at 12 U.S.C. Secs. 1421-1449 (1988)). Next, Congress added the Home Owners' Loan Act, which authorized the Bank Board to charter and regulate federal savings and loan associations. Pub.L. No. 73-43, 48 Stat. 128 (1933) (codified as amended at 12 U.S.C. Secs. 1461-1468 (1988)). Then, to further restore public confidence in thrift institutions, Congress in the National Housing Act of 1934 provided federal deposit insurance for depositors. Pub.L. No. 73-479, 48 Stat. 1246 (1934) (codified as amended at 12 U.S.C. Secs. 1701-1750g (1988)). This act also established the Federal Savings and Loan Insurance Corporation (FSLIC), an agency under the Bank Board's authority that regulated all federally insured thrifts.

In the late 1970s and early 1980s high interest rates resulted in sharply higher costs of funds for thrifts. The thrifts' main assets were long-term, fixed-rate mortgages taken during times of lower interest rates. As a result, the revenues produced by these mortgages were exceeded by the rapidly rising costs of attracting short-term deposits. Thrifts that were locked into long-term low interest rate loans simply could not meet their deposit obligations. This interest rate mismatch was one of the principal causes of numerous thrift failures. Eighty-one thrifts failed in 1981, 252 in 1982, and 102 in 1983. House Report at 296, 1989 U.S.C.C.A.N. at 92.

With all of these bank failures and the likelihood of more occurring, the FSLIC faced deposit insurance liabilities that...