Court Opinion

ID: 9894316
Source: CourtListenerOpinion
Date Created: 2023-11-01 15:00:37.399082+00
Date Added: 2024-06-11T09:09:47.920852
License: Public Domain

22-2836
     SPA 79 D L.P. v. National Credit Union Administration

                             UNITED STATES COURT OF APPEALS
                                 FOR THE SECOND CIRCUIT

                                        SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO
A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS
GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S
LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH
THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY
CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT
REPRESENTED BY COUNSEL.

 1                 At a stated term of the United States Court of Appeals for the Second Circuit,
 2   held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
 3   New York, on the 1st day of November, two thousand twenty-three.
 4
 5   PRESENT:
 6                 AMALYA L. KEARSE,
 7                 SUSAN L. CARNEY,
 8                 MYRNA PÉREZ,
 9                      Circuit Judges.
10
11   ________________________________________
12
13   SPA 79 D L.P.,
14
15                        Plaintiff-Appellant,
16
17                 v.                                                      22-2836
18
19   NATIONAL CREDIT UNION
20   ADMINISTRATION, NATIONAL CREDIT
21   UNION ADMINISTRATION BOARD, AS
22   CONSERVATOR FOR MUNICIPAL CREDIT
23   UNION, MUNICIPAL CREDIT UNION,
24   MICHAEL G. RYAN, IN HIS CAPACITY AS
25   AGENT FOR THE NATIONAL
26   CREDIT UNION ADMINISTRATION BOARD,
27
28                     Defendants-Appellees.
29   _____________________________________
30
 1   FOR PLAINTIFF-APPELLANT:                        Stephan B. Gleich, Lara Pouratian Emouna,
 2                                                   Gleich, Farkas & Emouna LLP,
 3                                                   Great Neck, New York.
 4
 5
 6   FOR DEFENDANTS-APPELLEES:                       Robert W. Schumacher, Rachel G. Balaban, and
 7                                                   Varuni Nelson, Assistant United States
 8                                                   Attorneys, for Breon Peace, United States
 9                                                   Attorney for the Eastern District of New York,
10                                                   Central Islip, New York.
11

12          Appeal from a judgment of the United States District Court for the Eastern District of New

13   York (Gary R. Brown, Judge).

14          UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

15   DECREED that the judgment of the district court is AFFIRMED.

16          Plaintiff SPA 79 D L.P. (“SPA”) appeals from a judgment of the United States District

17   Court for the Eastern District of New York denying plaintiff’s motion for partial summary

18   judgment and granting summary judgment in favor of Defendants in connection with a lease

19   repudiated by Defendant National Credit Union Administration Board (“NCUAB”) in its capacity

20   as conservator for Municipal Credit Union (“MCU”). We assume the parties’ familiarity with the

21   underlying facts, procedural history, and issues on appeal, to which we refer only as necessary to

22   explain our decision to affirm.

23                                         STANDARD OF REVIEW

24          We review an order granting summary judgment de novo, construing all evidence in the

25   light most favorable to the nonmoving party. See Gordon v. Vincent Youmans, Inc., 358 F.2d

26   261, 262 (2d Cir. 1965).

                                                     2
1                                                   DISCUSSION

2       1. Section 1787
3             The Federal Credit Union Act, as amended by the Financial Institutions Reform,

4    Recovery, and Enforcement Act of 1989 (“FIRREA”), enumerates NCUAB’s powers and

 5   responsibilities as a conservator for a failed credit union. See Nat’l Credit Union Admin. Bd. v.

 6   Goldman, Sachs & Co. (“Goldman Sachs”), 775 F.3d 145, 148 (2d Cir. 2014) (citing FIRREA §

 7   1217).

 8            Relevant here is NCUAB’s power to repudiate a failed credit union’s contract. See 12

 9   U.S.C. § 1787(c). Section 1787(c), in relevant part, reads:

10            (c) Provisions relating to contracts entered into before appointment of conservator

11            or liquidating agent

12                   (1) Authority to repudiate contracts

13                   In addition to any other rights a conservator . . . may have, the conservator . . . for

14                   any insured credit union may disaffirm or repudiate any contract or lease—

15                          (A) to which such credit union is a party;

16                          (B) the performance of which the conservator . . ., in the conservator’s . . .

17                          discretion, determines to be burdensome; and

18                          (C) the disaffirmance or repudiation of which the conservator . . .

19                          determines, in the conservator’s . . . discretion, will promote the orderly

20                          administration of the credit union’s affairs.

21                   (2) Timing of repudiation

                                                        3
 1                  The conservator . . . appointed for any insured credit union shall determine

 2                  whether or not to exercise the rights of repudiation under this subsection within a

 3                  reasonable period following such appointment.

 4   Id. § 1787(c)(1)–(2) (emphasis added).

 5      a. The Conservator Acted Within Its Statutory Authority to Repudiate Under Section
 6         1787
 7          As an initial matter, we reject SPA’s contention that NCUAB, as conservator, previously

 8   “affirmed” the lease through MCU’s July 3, 2019 letter. There is no support in the record for

 9   such a contention, and the context and stated purpose of the letter make SPA’s interpretation

10   implausible. By its own terms, the July 3, 2019 letter concerned only the issue of automatic

11   termination, as cited, pursuant to Paragraph 10 of the lease regarding “the recent easement taken

12   by the NY Department of Transportation.” App’x at 39.           The letter itself does not mention

13   Section 1787 or NCUAB, as conservator, and plainly expresses MCU’s wishes to forgo

14   termination pursuant to Paragraph 10 of the lease despite the easement and to maintain “the present

15   terms” of the lease. Id. Therefore, even with all reasonable inferences drawn in favor of the non-

16   movant, there is no semblance of NCUAB’s exercise of any statutory authority pursuant to 12

17   U.S.C. § 1787(c) in this letter.

18          Additionally, we find that NCUAB properly exercised its authority to repudiate the lease

19   pursuant to 12 U.S.C. § 1787(c)(1)(A)–(C). Under 12 U.S.C. § 1787(c)(1)(A)–(C), NCUAB, as

20   conservator, has the authority to repudiate “any” contract of a credit union under its

21   conservatorship upon NCUAB’s determination, in its discretion, that the contract is burdensome,

22   and that repudiation will promote the orderly administration of the credit union’s affairs. See
                                                      4
 1   Goldman Sachs, 775 F.3d at 148. NCUAB did just that based on an analysis suggesting poor

 2   financial performance of MCU by Bancography. 1 App’x at 247-48, 469-537.

 3         b. The Conservator Acted Within a Reasonable Time Period

 4              Having concluded that NCUAB had statutory authority to repudiate the lease, we conclude

 5   in addition that it repudiated within a reasonable time.

 6              Section 1787(c) requires a conservator to determine whether to exercise its rights of

 7   repudiation “within a reasonable period following [the conservator’s] appointment.”                     See

 8   Goldman Sachs, 775 F.3d at 153 (quoting 12 U.S.C. § 1787(c)(2)). Congress did not define what

 9   constitutes a “reasonable period” of time, but instead granted broad discretion to the conservator.

10              NCUAB was appointed as conservator on May 17, 2019, and repudiated the lease in a little

11   over seven months, on December 27, 2019. NCUAB was not only required to decide whether to

12   repudiate the lease but was also required to seek the necessary state regulatory approvals to do so.

13   As detailed by the district court and Defendants, repudiation of the lease occurred within 90 days

14   of receiving the Bancography report that brought to light the burdensome nature of the lease;

15   within 25 days of receiving the required approvals from New York Department of Financial

16   Services to repudiate; and within 10 days of the final approval of the branch closure plan. Indeed,

17   NCUAB’s appointment as conservator for a $4.2 billion federally insured, state-chartered credit

18   union was no small charge, especially considering its unsafe and unsound conditions. The record

19   in no way suggests that NCUAB was dilatory or acted in bad faith. Under these circumstances,

20   NCUAB’s repudiation of the lease a little over seven months after its appointment was within a

     1
         Bancography is a third-party company that provides consulting services to financial institutions.
                                                                 5
1    reasonable period. See BKWSpokane, LLC v. FDIC, 663 F. App’x 524, 526–27 (9th Cir. 2016)

2    (finding timely under FIRREA, in the circumstances there, an FDIC repudiation 206 days after its

 3   appointment as receiver); see also Goldman Sachs, 775 F.3d at 153 (finding that NCUA acted

4    reasonably after repudiating a contract nearly three years after its appointment).

5                                             *       *       *

6           We have considered all of SPA’s remaining arguments and find them to be without merit.

7    Accordingly, we AFFIRM the judgment of the district court.

8

9

10
11                                                 FOR THE COURT:
12                                                 Catherine O’Hagan Wolfe, Clerk of Court

                                                      6