Opinion ID: 212039
Heading Depth: 2
Heading Rank: 2

Heading: Relevant Transactions

Text: 6 Home acquired a total of seventeen thrifts in the four transactions at issue in this appeal. An Assistance Agreement signed by FSLIC and Home accompanied each transaction. Home I, 50 Fed. Cl. at 430-33. The Florida/Missouri and Illinois/Texas Assistance Agreements contained clauses that integrated FHLBB resolutions and letters issued contemporaneously with the agreements. Id. at 430-32. The Century and Ohio Assistance Agreements also integrated specific FHLBB resolutions addressed to the respective transactions. 3 Id. at 432-33. 7 For each transaction, Ahmanson sought federal assistance to mitigate the liabilities its subsidiary, Home, was assuming by taking over these thrifts. In response, FHLBB stated in the Florida/Missouri and Illinois/Texas Resolutions that Home could count supervisory goodwill from each transaction toward its reserve capital requirement. Id. at 431-32. FHLBB also issued net worth deficiency forbearances contemporaneously with the Century and Ohio transactions stating that FSLIC would not take action against Home for failing to meet reserve capital requirements as a result of Home's assumption of liabilities in those transactions. Id. at 432-34. Later the government enacted the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), which breached various agreements by the government to allow thrifts to count supervisory goodwill. See Winstar, 518 U.S. at 856-68, 116 S.Ct. 2432. 8 Alleging such a breach, Home and Ahmanson brought suit in the Court of Federal Claims. The court found the government liable with respect to all the transactions except the acquisition of four state-insured thrifts that were included in the Ohio transaction. For those acquisitions, the Court of Federal Claims held that FHLBB was not authorized to promise to allow Home and Ahmanson to count supervisory goodwill because these institutions were not insured by FSLIC. In particular, the Court of Federal Claims held, 12 U.S.C. § 1725(c)'s general authorization to make contracts does not apply to contracts regarding supervisory goodwill because such contracts are specifically covered under 12 U.S.C. § 1729(f). Home I, 50 Fed. Cl. at 441-42. 9 In ruling on the government's motion for summary judgment on the standing issue, the Court of Federal Claims rejected the government's contention that Ahmanson did not have standing to sue because it was not in privity of contract. The government had argued that only Home was a party to the contract, and that Home did not suffer any damages because only Ahmanson had to raise capital as a result of the breach. The court acknowledged that only Home, and not Ahmanson, signed the Assistance Agreements, which had a sole benefit clause limiting their applicability to third parties. The court concluded, however, that in each merger the Assistance Agreement was a part of a larger transaction to which Ahmanson was a party. It based this conclusion on Ahmanson's initiation of the negotiation process by seeking FHLBB approval of Home's acquisitions and its promise to maintain the net worth of Home above regulatory minimums. Home II, 51 Fed. Cl. at 497-99. Thus, according to the Court of Federal Claims, Ahmanson and the government had made a mutual agreement to support Home in its takeover of failing thrifts. Id. at 499. 10 At the damages stage, the government argued that Generally Accepted Accounting Principles (GAAP), requiring a shortened amortization period, applied with respect to the Century and Ohio transactions, 4 but the Court of Federal Claims found that FHLBB promised to allow a forty-year supervisory goodwill amortization period. Home III, 57 Fed. Cl. at 702-06. In calculating damages, the Court of Federal Claims awarded Ahmanson the costs of replacing the lost supervisory goodwill with cash through various financings and retention of earnings. Id. at 709-28. However, to offset the incidental benefit the plaintiffs derived from obtaining tangible capital to replace intangible supervisory goodwill, the court discounted the damages by the rate paid on an intermediate-term Treasury bond. Id. at 722-24. The resulting award of $80,936,000 was grossed up to $134,045,000 to compensate for the taxes Ahmanson's present parent company, Washington Mutual, would pay on the award. Id. at 730-31.