Opinion ID: 544366
Heading Depth: 2
Heading Rank: 2

Heading: The Acquisition Agreement

Text: 21 Rather than liquidate Old Freedom, the FSLIC elected to effect a purchase and assumption agreement with New Freedom. Since the FSLIC inherited Old Freedom's liabilities, recorded and unrecorded, to legitimate claimants, these liabilities could have been passed on to New Freedom through the Acquisition Agreement. In fact, in section two of the Acquisition Agreement, New Freedom stated that it expressly assumed and agreed to pay, perform, and discharge all of Old Freedom's liabilities, including but not limited to the liabilities shown on Old Freedom's books and records at the time that the FSLIC took possession of Old Freedom, excluding any obligations under compensation or employment contracts between Old Freedom and its employees, officers or directors. R1-34, Exh. B at 4-5. 8 However, New Freedom excepted from its definition of liability any obligation of [Old Freedom] to its stockholders for or in connection with their stock holdings, emphasizing that it did not assume by virtue of this Agreement any such obligations to the stockholders. Id. at 5. 22 We cannot escape our conviction that section two of the Acquisition Agreement disposes of appellants' claims against New Freedom. Section 14 of the Acquisition Agreement provides that [t]o the extent that federal law does not control, this Agreement and the rights and obligations under it shall be governed by the law of the State of Florida. Id. at 12. As there exists no federal law of construction of contracts, our interpretation of the language of the Agreement is therefore controlled by Florida law. Where the facts are undisputed, as in this case, the construction of a contract is a question of law. Smith v. State Farm Mut. Auto. Ins. Co., 231 So.2d 193, 194 (Fla.1970). Under Florida law, when the terms of a contract are unambiguous, the Court is bound to give the language therein its plain and ordinary meaning. Quesada v. Director, Federal Emergency Mgmt. Agency, 577 F.Supp. 695, 697 (S.D.Fla.1983), aff'd, 753 F.2d 1011 (11th Cir.1985). While appellants have posited that section two of the Acquisition Agreement refers only to those claims based upon or in connection with stock ownership rights such as dividend and liquidation rights, R1-46-4, the plain language of the Agreement simply excludes any obligation of Old Freedom to its stockholders related to their stock holdings from the liabilities assumed by New Freedom. Clearly the suit from which this appeal arose constitutes an Old Freedom shareholder dispute with Old Freedom regarding stock holdings, exactly what the Agreement between New Freedom and the FSLIC expressly excepted from their transaction. 23 Interpreting the Agreement employing the ordinary meaning of the words used is also the most reasonable construction of section two. When a bank becomes insolvent, there are likely to be disgruntled shareholders who have lost much invested money and who may seek to recoup at least a portion of their loss from whatever assets remain. Undoubtedly very few, if any, banks would enter into purchase and assumption agreements with a federal receiver if the successor banks had to assume the latent claims of unknown magnitude of shareholders like appellants. Construing section two as barring any liability on New Freedom's part for stockholders' claims against Old Freedom regarding their stock seems to us to be the only agreement into which New Freedom would have entered. The interpretation submitted by appellants, by contrast, would be, as one court has termed it,  'unusual, inequitable, and such as reasonable men would not likely enter into.'  Wilkin v. Citizens Nat'l Bank, 298 Ill.App. 38, 18 N.E.2d 251, 256 (1938) (quoting Ouska v. Pearson, 291 Ill.App. 6, 9 N.E.2d 69, 71 (1937)). We hold that as a matter of law, under the terms of the Acquisition Agreement between the FSLIC and New Freedom, New Freedom is free of any liability to Old Freedom stockholders for any claims related to their stock holdings. The district court therefore correctly entered summary judgment in favor of New Freedom. 24 This opinion, of course, does not address appellants' allegations against the other defendants named in appellants' complaint. Those claims remain pending in the district court. 25 For the foregoing reasons, we AFFIRM the judgment of the district court.