Opinion ID: 212039
Heading Depth: 3
Heading Rank: 5

Heading: Cross-Appeal — Authority to Enter into Contracts

Text: 57 The plaintiffs contest the Court of Federal Claims' holding that the contracts involving the four Ohio-insured thrifts were invalid because FSLIC and FHLBB had no authority to allow supervisory goodwill with respect to acquisitions of state-insured thrifts. According to the plaintiffs, the Court of Federal Claims misconstrued the reach of 12 U.S.C. § 1729(f) by concluding that it limited the government's general § 1725(c) authority to promise to allow supervisory goodwill. The plaintiffs assert that the result reached in the present case by the Court of Federal Claims is inconsistent with the Supreme Court's decision in Winstar, because the Winstar Court upheld supervisory goodwill promises to acquiring institutions uninsured by the federal government, even though § 1729(f)(2) only grants such authority for the merger of one insured institution with another. See Winstar, 518 U.S. at 890-91, 116 S.Ct. 2432 (citing § 1729(f)(2)); Winstar v. United States, 64 F.3d 1531, 1537-38 (Fed.Cir.1995) (describing the acquiring institutions). The Supreme Court did so, the plaintiffs say, because the grant of a specific regulatory power does not limit a general grant of authority. 58 The government advocates for affirmance on this issue by contending that FHLBB did not have authority to promise supervisory goodwill for Home's acquisition of four Ohio-insured thrifts. In the government's view, 12 U.S.C. § 1729(f) precluded FHLBB's contracting authority with respect to those thrifts that were not federally insured. The government maintains that the Winstar Court relied on both § 1725(c) and § 1729(f) to find a contract for supervisory goodwill for the acquisition of federally insured institutions, and that reasoning is inapplicable to Home because not all the thrifts Home acquired were federally insured. This is so, the government asserts, because the Supreme Court relied not on § 1729(f)(2), but on § 1729(f)(3), which authorized FSLIC to provide acquirers with such financial assistance as it could provide an insured institution where they were acquiring the assets of an insured institution. The government contends that Home's position would impermissibly use a general statute to control or limit a specific one, because § 1729(f)(3) only enables the government to promise assistance to acquirers of federally insured thrifts. 59 We vacate the Court of Federal Claims' summary judgment ruling that disallowed Ahmanson's claim for damages related to the four Ohio-insured thrifts. FSLIC and FHLBB did have authority to promise supervisory goodwill with respect to these acquisitions. The statutory grants of authority — one general and one specific — overlap rather than conflict, and here FSLIC and FHLBB had the authority to enter into these contractual arrangements under the general provision, § 1725(c). The specific grant of authority in § 1729(f) does not implicitly limit § 1725(c)'s general grant of authority. Accordingly, both can and should be given effect. Morton v. Mancari, 417 U.S. 535, 551, 94 S.Ct. 2474, 41 L.Ed.2d 290 (1974). To do otherwise would essentially nullify the grant of general authority in § 1725(c). That general provision was enacted prior to § 1729(f)(2), and there is no indication that Congress intended to nullify it by passing § 1729(f)(2). See id. at 549-51, 94 S.Ct. 2474. 60 Additionally, the Supreme Court necessarily relied on the general grant of authority under § 1725(c) as authorization for two of the three transactions in Winstar. See 518 U.S. at 890, 116 S.Ct. 2432. These transactions were not otherwise authorized under § 1729(f)(2) because that provision applies only when both parties to a merger are federally insured institutions. See 12 U.S.C. § 1729(f)(2) (repealed 1989) (authorizing the government to guarantee one  insured institution against loss by reason of its merging or consolidating with or assuming the liabilities and purchasing the assets of [another] insured institution (emphases added)). The government's argument that the Supreme Court was actually relying on § 1729(f)(3) is unpersuasive, because the Court directly quoted § 1729(f)(2), not § 1729(f)(3), in holding that FSLIC was authorized to allow supervisory goodwill. See Winstar, 518 U.S. at 890-91, 116 S.Ct. 2432. In fact, the Court did not cite § 1729(f)(3) even once in Winstar. Thus, Winstar unequivocally demonstrates that transactions authorized by § 1725(c) need not also be authorized under § 1729(f)(2). 61 The Court of Federal Claims found that the government made a promise to allow supervisory goodwill with respect to the entire Ohio transaction, even though it held the promise was not binding with respect to the state-insured thrifts because the government lacked authority to make that promise. Home I, 50 Fed. Cl. at 440-41. We have rejected that basis for finding the promise non-binding. However, the government also argued that the agreement over the Ohio-insured thrifts was not binding due to lack of consideration, and the court did not address this argument. Id. at 441. Therefore, the issue of whether there is a binding promise regarding the Ohio-insured thrifts remains pending. We remand the matter to the Court of Federal Claims for further proceedings to determine liability and, if applicable, damages related to the Ohio-insured thrifts.