IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-51083

CENTRAL SOUTHWEST TEXAS DEVELOPMENT, L.L.C., 

 Plaintiff - Appellee

v.

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, 

 Defendant - Appellant

FDIC/ WASHINGTON MUTUAL BANK, Federal Deposit Insurance 

Corporation, as Receiver for Washington Mutual Bank, 

 Intervenor - Appellant

Appeal from the United States District Court 

for the Western District of Texas

Before STEWART, Chief Judge, and SOUTHWICK and COSTA, Circuit 

Judges.

GREGG COSTA, Circuit Judge:

This is yet another in a series of cases concerning an obscure but heavily

litigated consequence of the largest bank failure in U.S. history: the fate of 

Washington Mutual’s (WaMu) leases for real estate on which bank branches 

were as yet unbuilt at the time of the company’s collapse. In an earlier case 

addressing this issue, Excel Willowbrook, L.L.C. v. JPMorgan Chase Bank, 

N.A., 758 F.3d 592 (5th Cir. 2014), we held that WaMu’s landlords had 

United States Court of Appeals

Fifth Circuit

FILED

March 2, 2015

Lyle W. Cayce

Clerk

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standing to bring a breach of contract claim against JPMorgan Chase, which 

had been assigned WaMu’s leases by virtue of its agreement to acquire WaMu 

from the Federal Deposit Insurance Corporation (FDIC). In this case, although 

its decision preceded Excel Willowbrook, the district court also ruled in favor 

of the lessor, Central Southwest Texas Development. Appellants—both Chase 

and the FDIC, which intervened in the case and briefed this appeal on Chase’s 

behalf—urge us to distinguish this case from Excel Willowbrook on two 

grounds, either of which would be sufficient for reversal: first, that Central 

lacks prudential standing to sue because prior to WaMu’s failure it neither

owned nor possessed the property it agreed to lease, and therefore was not in 

privity of estate with Chase; and second, that the lease was terminated by 

mutual agreement. Concluding that the first issue was not raised below and 

that there is no reason to disturb the trial court’s finding that no mutual 

termination occurred, we affirm. 

I.

Central and WaMu entered into a lease agreement in November 2007. 

ROA 2123. Central was to construct a WaMu bank branch in Austin, and 

deliver it to WaMu by January 1, 2008, after which WaMu would owe rent to 

Central for the twenty-year term of the lease. ROA 2123. Central did not yet 

have fee simple ownership of the property, but had contracted with Frank 

Bomar to purchase it and had deposited $15,000 in earnest money in escrow. 

ROA 2123, 1786. However, after a number of extensions of the deadline, 

Central had not yet closed on the property at the time of WaMu’s collapse in 

September 2008. ROA 2123–24. Nonetheless, according to the district court’s 

findings, Central “regarded itself as being obligated to purchase the property 

at all times relevant to this case.” Cent. Sw. Tex. Dev., L.L.C. v. JPMorgan 

Chase Bank, N.A., 2012 WL 11937377, at *2 (W.D. Tex. Aug. 21, 2012). 

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WaMu was declared insolvent on September 25, 2008, and the FDIC was 

appointed as its receiver. ROA 2125. That same day, Chase acquired most of 

WaMu’s assets and liabilities under a Purchase and Assumption (P&A) 

Agreement with the FDIC. ROA 2125. The P&A Agreement divided WaMu’s 

real property interests into two categories: “Bank Premises” and “Other Real 

Estate.” ROA 2125. Chase was to acquire all Other Real Estate under the 

P&A Agreement, but it maintained the right to either accept or decline 

assignment of Bank Premises assets within a 90-day period. ROA 2125. If 

Chase declined, the FDIC would then be authorized to repudiate “burdensome” 

leases if doing so would “promote the orderly administration of [WaMu’s] 

affairs.” See 12 U.S.C. § 1821(e)(1)(B)–(C). The lessor of a repudiated lease is 

only entitled to rent accruing before repudiation. 12 U.S.C. § 1821(e)(4)(B).

Chase and the FDIC informed Central that the lease qualified as Bank 

Premises, and that the FDIC would therefore be authorized to repudiate the 

lease if Chase rejected it. ROA 2126; 2274–75. Having determined that Chase 

was unlikely to accept the lease based on the proximity of Chase branches to 

the leased property, Central saw the writing on the wall; a Central executive 

emailed the FDIC, noted that a delay in Chase’s decision whether to accept the 

lease would cause problems for Central, and asked to be “release[d] . . . from 

the Lease obligation in order to pursue other options.” ROA 2126, 1844. 

Central was soon notified by Chase of its rejection of the lease and by the FDIC 

of its repudiation. ROA 2126–27. Central subsequently closed on the property 

with Bomar. ROA 2127. Having failed to find a replacement tenant, Central 

sold the property the same day for $133,704.05 more than the $1,521,789.95 it 

paid. ROA 2127. 

Central later concluded that the lease did not qualify as Bank Premises 

under the P&A Agreement because no banking facilities were occupied (or even 

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built) by the time of WaMu’s failure.1 That means the lease was “Other Real 

Estate” that passed to Chase when it acquired WaMu. See Excel Willowbrook, 

758 F.3d at 595–96 (“[U]nder the plain language of the Agreement, the Leases 

[for banking facilities unoccupied at the time of WaMu’s failure] qualified as 

Other Real Estate assigned outright to Chase.”). 

With this new understanding of the lease’s status, Central filed this 

lawsuit against Chase for breach. Red Br. 5. The FDIC intervened on Chase’s 

side. After Central moved for summary judgment, the district court held that 

the lease was not a Bank Premises lease, and therefore that Chase could not 

decline assignment under the P&A Agreement. ROA 1574. Consistent with 

our later ruling in Excel Willowbrook, the district court also held that this 

assignment created privity of estate between Central and Chase, and therefore 

that Central had standing to assert its interpretation of the P&A Agreement. 

ROA 1574–75. Chase also moved for summary judgment on the ground that 

the email communications between the parties constituted a mutual 

termination of the lease. ROA 2042–43. The district court denied that motion, 

holding that “there is at least a fact issue as to whether Plaintiff’s

communications with the FDIC and Chase constituted a termination or a 

request to terminate.” ROA 2048.

The case proceeded to a bench trial to resolve the remaining issues. The 

district court ruled that Chase’s attempted rejection of the lease was an 

anticipatory breach, entitling Central to contract damages and excusing it from 

further performance. ROA 2130–33. The court then addressed Chase’s

1 The P&A Agreement defined Bank Premises as “the banking houses, drive-in 

banking facilities, and teller facilities (staffed or automated) together with appurtenant 

parking, storage and service facilities and structures connecting remote facilities to banking 

houses, and land on which the foregoing are located, that are owned or leased by [WaMu] and 

that are occupied by [WaMu] as of Bank Closing.” ROA 459. 

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defense that the lease had been terminated by mutual agreement. ROA 2137. 

It found that Chase’s and the FDIC’s communications with Central concerning

the P&A Agreement constituted negligent misrepresentations on which 

Central reasonably relied, noting “it is reasonable to rely when the federal 

agency which oversees the banking industry . . . tells you that your banking

lease may be lawfully rejected” and that Central understood the 

misrepresentation about the effect of the P&A Agreement to be factual in 

nature. Cent. Sw., 2012 WL 11937377, at *9. It also found that “the emails do 

not constitute a request to terminate” but rather “constitute a request for 

Chase to finalize its own rejection of the lease as quickly as possible.” Id. In 

the alternative, the court held that Chase and the FDIC were estopped from 

asserting that Central requested termination of the lease “because their 

misrepresentations induced [Central] to send the emails in question.” Id. at 

*10. The court ultimately awarded Central over $1.3 million in damages,2 plus 

prejudgment interest and attorneys’ fees. ROA 2152–53. Chase and the FDIC 

appealed. 

II.

“The standard of review for a bench trial is well established: findings of 

fact are reviewed for clear error and legal issues are reviewed de novo.” One 

Beacon Ins. Co. v. Crowley Marine Servs., Inc., 648 F.3d 258, 262 (5th Cir. 

2011). The district court’s grant of summary judgment is also reviewed de 

novo. Noble Energy, Inc. v. Bituminous Cas. Co., 529 F.3d 642, 645 (5th Cir. 

2008). 

2 The district court calculated the award by subtracting the “fair rental value” from 

the rent due under the lease, determining the present value of that amount, and reducing 

the resulting value by Central’s profit from the sale of the property. ROA 2146, 2149.

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A.

We begin with the FDIC’s argument that Central lacks prudential 

standing to assert its interpretation of the P&A Agreement. The contours of 

this issue are particularly well-defined by our recent decision in Excel 

Willowbrook. As in this case, in Excel Willowbrook Chase and the FDIC 

disputed WaMu’s landlords’ prudential standing to assert an interpretation of 

the P&A Agreement, to which they were not parties.3 758 F.3d at 596. We 

first addressed the argument that the landlords had standing as third-party 

beneficiaries of the P&A Agreement. Id. at 596–99. “In the interest of 

maintaining uniformity in the construction and enforcement of federal 

contracts,” an issue governed by federal common law, we followed our sister 

circuits and held that the presumption against third-party beneficiary status 

under government contracts decided the question in Chase’s favor. Id. 

We nonetheless found standing on an alternative ground: that “the P&A 

Agreement accomplished a complete, present conveyance of the Leases that . . . 

creates privity of estate with Chase and gives the Landlords the legal right to 

enforce the Leases against Chase.” Id. at 599. Privity of estate allows a 

landlord to hold its original tenant’s assignees contractually liable under the 

lease despite the lack of contractual privity. Id. We rejected the FDIC’s 

position (and disagreed with the Eleventh Circuit’s holding) that the landlords 

had to establish standing to interpret the P&A Agreement before the landlords 

could establish privity of estate, noting that “a landlord always needs to prove 

the content of the conveyance between the original tenant and the subsequent 

tenant in order to establish privity of estate with the latter.” Id. at 603

3 Eight similar suits were consolidated in the Excel Willowbrook appeal. 758 F.3d at 

596.

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(emphasis in original) (discussing Interface Kanner, LLC v. JPMorgan Chase 

Bank, N.A., 704 F.3d 927, 933 (11th Cir.), cert. denied, 134 S. Ct. 175 (2013)). 

Observing that this holding would not interfere with the FDIC’s ability to 

administer failed banks because the agency, by assigning the leases to Chase, 

chose not to exercise its repudiation authority, we affirmed the district court’s 

ruling in favor of the landlords. Id. Other federal courts of appeal, addressing 

similar cases, have reached a different conclusion. See Hillside Metro Assocs., 

LLC v. JPMorgan Chase Bank, N.A., 747 F.3d 44, 50 n.5 (2d Cir. 2014); 

Interface Kanner, 704 F.3d at 933; see also GECCMC 2005-C1 Plummer St. 

Office Ltd. P’ship v. JPMorgan Chase Bank, N.A., 671 F.3d 1027 (9th Cir. 2012)

(ruling in favor of Chase without addressing privity of estate).

The FDIC attempts to avoid Excel Willowbrook by arguing that Central 

has a weaker case for privity than those plaintiffs because Central “was never 

in possession of the lot covered by the Lease at any time before the FDIC 

repudiated the Lease.” FDIC Br. 22–23. Its argument against Central’s 

standing to sue thus turns on its characterization of Central’s contract with 

Bomar to purchase the property as a mere option contract that gave Central 

no possessory interest. 

But we need not address whether Central’s contract to purchase the 

property was an option contract, or whether an option contract would deprive 

Central of privity of estate with Chase, because this defense was never raised 

in the district court. See State Indus. Prods. Corp. v. Beta Tech. Inc., 575 F.3d 

450, 456 (5th Cir. 2009) (“Under our general rule, arguments not raised before 

the district court are waived and will not be considered on appeal unless the 

party can demonstrate ‘extraordinary circumstances.’”). Appellants maintain 

that they raised the defense sufficiently, pointing to their statement in the 

district court that Central did not own the property, and therefore could not 

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have leased what it did not possess. FDIC Reply Br. 4; ROA 1712–13. This 

argument, however, was advanced to show that Chase had the right to 

unilaterally rescind the lease under a provision that allowed WaMu to

terminate if Central had not obtained fee title to the property by a certain date. 

ROA 1712–13. That is a different issue than the FDIC’s contention on appeal 

that Central’s lack of title to the property deprives the company of privity of 

estate with Chase. Although we recognize that there is no bright-line rule for 

determining whether a matter was raised below, United States v. Brown, 561 

F.3d 420, 435 n.12 (5th Cir. 2009), we find that the arguments in the district 

court were insufficient to put the court and Central on notice of the defense 

that the FDIC has raised on appeal. See Dallas Gas Partners, L.P. v. Prospect 

Energy Corp., 733 F.3d 148, 157 (5th Cir. 2013) (noting that a party must 

“press” an issue “to such a degree that the district court has an opportunity to 

rule on it”); see also Kelly v. Foti, 77 F.3d 819, 823 (5th Cir. 1996) (“The raising 

party must present the issue so that it places the opposing party and the court 

on notice that a new issue is being raised.” (quoting Portis v. First Nat’l Bank, 

34 F.3d 325, 331 (5th Cir. 1995)). In order to address the defense now, we 

would be forced to analyze it “without the benefit of a full record or lower court 

determination.” See New Orleans Depot Servs., Inc. v. Dir., Office of Worker’s 

Comp. Programs, 718 F.3d 384, 387–88 (5th Cir. 2013) (quoting 19 JAMES W.

MOORE ET AL., MOORE’S FEDERAL PRACTICE § 205.05[1], at 205–57 (3d ed. 

2011)). 

Furthermore, the forfeiture inquiry, like other aspects of this case, is 

aided by Excel Willowbrook. There, Chase and the FDIC asserted a similar 

exception to privity of estate but focused on the lack of possession on the other 

side of the landlord-tenant relationship, arguing that “privity of estate cannot 

come into existence unless the assignee tenant [Chase] actually takes 

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possession of the underlying property.” Excel Willowbrook, 758 F.3d at 601 

(emphasis in original). We held, however, that the argument was forfeited for 

failure to raise it in the district court (as well as in the briefs on appeal), even

though the general issue of privity of estate was contested below. Id. 

We may excuse forfeiture when the new issue is “a pure question of law 

and a miscarriage of justice would result from our failure to consider it.” State 

Indus., 575 F.3d at 456. That is not the case here. Although the FDIC contends 

that failure to consider its defense would be a miscarriage of justice because 

the district court’s decision was “patently erroneous in light of controlling 

precedent,” see AG Acceptance Corp. v. Veigel, 564 F.3d 695, 701 (5th Cir. 2009), 

Texas law does not provide a straightforward answer to whether this is an 

option contract.4 Nor does Texas law directly address whether an option 

contract would preclude privity.5 It is also far from clear whether the interests 

4 To determine whether an earnest money real estate contract is an option contract or 

a contract of sale, Texas courts examine a number of factors. The “primary test” is “whether 

the contract imposes a mandatory obligation upon the seller to accept a sum stipulated as 

liquidated damages in lieu of the purchaser’s further liability.” Chambers Cnty. v. TSP Dev., 

Ltd., 63 S.W.3d 835, 838 (Tex. App.—Houston [14th Dist.] 2001, pet. denied). Absent such a 

provision, the agreement is typically a contract of sale. City of Harlingen v. Obra Homes, 

Inc., 2005 WL 74121, at *6 (Tex. App.—Corpus Christi Jan. 13, 2005, no pet.). Courts also 

ask “whether the language of the contract is prospective,” “whether time is of the essence,” 

and “whether the language of the contract itself conveys to the party seeking standing any 

rights to possess or enjoy the property.” Id.

The “primary” first consideration counsels against a finding that Cenral had an option 

contract. Although the contract between Central and Bomar was amended to release the 

earnest money to Bomar, it does not appear that it foreclosed Bomar’s ability to seek other 

relief, because it also provided that “[a]ll terms and provisions . . . that have not been 

specifically modified . . . remain in full force and effect.” ROA 1801. The other three factors, 

however, point in the direction of an option contract. Given these conflicting indications, it 

is not obvious how Texas courts would characterize the contract.

5 The FDIC cites cases for the proposition that an option contract does not pass title 

to the optionee, see, e.g., Lefevere v. Sears, 629 S.W.2d 768, 770 (Tex. App.—El Paso 1981, no 

writ), but Central cites cases for the proposition that an option contract gives the optionee an 

equitable interest in the land, see, e.g., Goswami v. Metro. Sav. & Loan Ass’n, 751 S.W.2d 

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of justice favor excusing the forfeiture in order to allow Chase to avoid the 

obligations it would have had but for Central’s lack of possession. Cf. Lorino 

v. Crawford Packing Co., 142 Tex. 51, 62 (1943) (holding that tenants are 

generally estopped from contesting landlords’ title). And although an 

intervening, precedential decision in a related case might warrant greater 

flexibility in allowing a party to raise new issues in response to that ruling, 

Excel Willowbrook relied on the same privity analysis that Central argued in 

the district court and that the court adopted. ROA 145–46. 

We therefore do not address the FDIC’s defense that Central lacks 

privity with Chase as the result of its failure to possess the property in 

question. 

B.

We thus turn to the district court’s bench trial ruling in Central’s favor 

on the merits. The FDIC’s argument for reversal is that the lease was 

terminated by the mutual agreement of the parties, and therefore that it was 

error to hold Chase liable for breach. FDIC Br. 26–28. The argument focuses

on an email exchange in which a Central executive emailed an FDIC 

representative, stating that “[w]e have been told that Chase will not be making 

any decisions on which WaMu Leases Chase plans to accept or reject until Mid 

to Late December” and that the delay was posing a risk to the company. ROA 

1846. He asked that “that WaMu and/or Chase release my group from the 

Lease obligation . . . . with in [sic] the next week or so.” Id. 

The FDIC disputes the district court’s finding that Central was the 

victim of a negligent misrepresentation concerning Chase’s authority to decline 

487, 489 (Tex. 1988). None of this authority squarely addresses whether an optionee lacks 

privity of estate with the assignee of its lease.

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the lease under the P&A Agreement. The FDIC draws an analogy to the Texas 

law of fraud, under which a statement about the legal effect of a document is 

typically considered an opinion, and therefore does not usually support an 

action for fraud. See Fina Supply, Inc. v. Abilene Nat’l Bank, 726 S.W.2d 537, 

540 (Tex. 1987). The district court, however, found an exception because the 

statements about the effect of the P&A Agreement were “understood . . . to be 

factual in nature” and because “it is reasonable to rely when the federal agency 

which oversees the banking industry, and has just taken over one of the 

nation’s largest banks, tells you that your banking lease may be lawfully

rejected by both it and the new tenant.” Cent. Sw., 2012 WL 11937377, at *9

(citing Fina Supply, 726 S.W.2d at 540).6

Once again, however, we need not address the substance of the FDIC’s 

argument. Whether the statements about the P&A Agreement amounted to 

negligent misrepresentations is beside the point if an alternate holding of the 

district court stands. Distinct from its determination that Central was the 

victim of a negligent misrepresentation, the court also held:

Taking together O’Farrell’s testimony at trial, and the email 

communications as a whole, the Court finds the emails do not 

constitute a request to terminate. Rather, they constitute a request 

for Chase to finalize its own rejection of the lease as quickly as 

possible, so that [Central] could proceed to mitigate by finding a 

new tenant, or selling the property. 

6 Fina Supply states that “[a] party having superior knowledge, who takes advantage 

of another’s ignorance of the law to deceive him by studied concealment or misrepresentation, 

can be held responsible for this conduct,” and that “misrepresentations involving a point of 

law will be considered misrepresentations of fact if they were intended and understood as 

such.” 726 S.W.2d at 540. That case dealt with an intentional fraud claim; Central has not 

cited any authority applying the same exceptions when negligent misrepresentation of the 

legal effect of a document is asserted.

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Cent. Sw., 2012 WL 11937377, at *8–9 (emphasis added) (“Chase’s [mutual 

termination] arguments fail both factually and as a matter of law.”). If the 

district court was correct that no termination occurred,7 then it does not matter 

whether statements about the P&A Agreement amounted to 

misrepresentations that could void the termination.

We agree with the district court’s finding that Central’s emails did not 

seek a termination of the lease. The FDIC makes much of the district court’s 

statement that Central “wanted out of [the lease] like a person in a burning 

house.” ROA 2355. Central, however, sought to be released from the lease 

according to its incorrect understanding of the terms of the P&A Agreement 

and the FDIC’s repudiation authority—it never sought a contractual 

rescission. See Tex. Gas Utilities Co. v. Barrett, 460 S.W.2d 409, 414 (Tex. 

1970) (“[P]arties may rescind their contract by mutual agreement and thereby 

discharge themselves from their respective duties. The mutual release of the 

rights of the parties is regarded as a sufficient consideration for the 

agreement.”). The same email requesting that Chase “release [Central] from 

the Lease obligation” notes that “[w]e have been told that Chase will not be 

making any decisions on which WaMu Leases Chase plans to accept or reject 

until Mid to Late December” and explains the problems that this delay was 

7 Although the FDIC disputes whether this finding was clear in the record, our review 

convinces us that it was, based on the portions quoted above. The confusion on this point 

may be due to the fact that the district court’s negligent misrepresentation analysis preceded 

its ruling that Central never requested to terminate the lease, which in turn preceded its 

holding that the opposing parties were estopped from arguing termination after inducing 

Central’s request through misrepresentations. ROA 2137–40. We believe it did so because 

its analysis of the FDIC’s misrepresentation informed its resolution of both of those 

questions. With regard to its holding that no termination occurred, though, the court’s legal 

conclusion about negligent misrepresentation was immaterial—it merely used the FDIC’s 

misrepresentation to help make clear why Central’s email, read in context, should not be 

interpreted as a request to terminate the lease, as we discuss below.

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causing for Central. ROA 1844. The district court did not err in concluding

that Central was referring to Chase’s supposed 90-day option to accept or reject 

the lease. Central was operating according to its misunderstanding that the 

lease was for Bank Premises under the P&A Agreement, and was thus 

requesting that Chase and the FDIC speed up the rejection and repudiation 

process that Central had been told they were authorized to perform. And this 

is exactly what Appellants did in response—Chase made it known that it 

intended to reject the lease in November, and the FDIC subsequently “put the 

repudiation process on a fast track.” ROA 1843. As the district court noted in 

denying summary judgment, the “FDIC’s subsequent putative treatment of the 

lease provides further confirmation: having received Chase’s notice that it did 

not wish to assume the Lease, FDIC attempted to use its statutory authority 

to ‘disaffirm’ the lease—an act which would have been futile and redundant if” 

the lease had already been terminated. ROA 2046. In light of the language of 

the email and the surrounding circumstances, we find no error in the district 

court’s finding that the email did not amount to a request to mutually rescind

the lease. 

We therefore AFFIRM the district court’s judgment in favor of Central.

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