Opinion ID: 1267906
Heading Depth: 3
Heading Rank: 7

Heading: Distribution Net of Receivership Deficit

Text: The government argues that the Court of Federal Claims exceeded its authority in ordering that the damages be paid net of any receivership claims and thus outside the statutory distribution scheme as advanced by the government in 12 U.S.C. ง 1821(d)(11). Dismissal of Intervenors' Complaint, 73 Fed.Cl. at 531 (final order); Amended Final Order, 98 A.F.T.R.2d at XXXX-XXXX, 2006 WL 3930812. Section 1821(d) establishes the priority of distribution of funds held by the receiver for an insured institution. Subparagraph (11) of that provision, titled Depositor preference, gives preference first to the receiver's expenses, then to depositors and creditors of the institution, and then to the shareholders. [10] The government maintains that this requires that the FDIC as receiver must recover its asserted receivership deficit with priority over any other distribution. The question is whether the Court of Federal Claims had authority to issue this judgment, or whether the court is barred from including in its judgment any order relating to the further disposition of the amount awarded as damages. The court explained: The Government caused Meritor to be forced into receivership which it would otherwise not have been forced into and it is well settled that a breaching party has to put the party in the same position as it would have been but for the breach. Therefore, the Government is liable for any receivership deficit. Amended Final Order, 98 A.F.T.R.2d at XXXX-XXXX, 2006 WL 3930812. It is noteworthy that the damages award was obtained in litigation brought by the bank's shareholders when the FDIC refused to act. The court concluded that the receivership deficit, insofar as accrued by the FDIC as breaching party, is not to be charged against the damages awarded for the breach. We agree that the trial court acted within its discretion, in declining to impose on the shareholders the costs incurred by the breaching party. We affirm the ruling of the Court of Federal Claims that the FDIC's asserted charges for administering the bank after its seizure shall not be charged to the damages award, for these charges were the consequence of the FDIC's breach. This ruling did not restrain or affect the exercise of powers or functions of the [FDIC] as a conservator or a receiver, 12 U.S.C. ง 1821(j), but is directed at assuring the integrity of the judgment for breach of contract. The FDIC, having refused to act or participate in this action on behalf of Meritor, does not have standing to object to the judgment of the Court of Federal Claims on this appeal. [11]