Court Opinion

ID: 9007079
Source: CourtListenerOpinion
Date Created: 2022-11-27 13:39:15.050584+00
Date Added: 2024-06-11T17:11:19.233599
License: Public Domain

CONTIE, Senior Circuit Judge,
concurring.
I agree with the majority opinion except for Section II, B. In Section II, B, the majority states that the district court did not have jurisdiction because the enforcement of the stipulation agreement is committed to agency discretion and, therefore, falls within the exception to the APA’s waiver of sovereign immunity, 5 U.S.C. § 701(a). I disagree.
Plaintiff, United Liberty Life, is arguing that OTS and FDIC must uphold the stipulation agreement because it constitutes an enforceable contract of which it is a third-party beneficiary. Section 401(g) of FIR-REA states:
(1) EXISTING RIGHTS, DUTIES, AND OBLIGATIONS NOT AFFECTED.—
Subsection (a) shall not affect the validity of any right, duty, or obligation of the United States, the Federal Home Loan Bank Board, or any other person, which—
(A) arises under or pursuant to the Federal Home Loan Bank Act, the Home Owners’ Loan Act of 1933, or any other provision of law applicable with respect to such Board (other than title IV of the National Housing Act); and
(B) existed on the day before the date of the enactment of this Act.
12 U.S.C. § 401(g). FIRREA thus provides that existing rights, duties and obligations between a bank and the FHLBB 1 are not affected by the passage of FIRREA and indicates that it is not within the discretion of OTS or FDIC to fail to uphold the prior obligations of the FHLBB. I believe the issue in the present case in regard to OTS and FDIC is (1) whether the stipulation agreement is a valid contract and (2) if so, whether it constitutes a prior obligation of the FHLBB which must be upheld by OTS. For this reason, I believe the district court had jurisdiction to determine whether the stipulation agreement constituted an enforceable contract.
I concur with the majority’s dismissal of the claims against OTS and FDIC because I agree with the district court’s determination on the merits that summary judgment should be granted to OTS and FDIC. The district court found, as a matter of law, that the stipulation agreement is not a contract, but the satisfaction of a condition set forth in the FHLBB’s resolution approving the application of AZP (Pinnacle West’s predecessor) to acquire MeraBank.2 While United Liberty insists that the stipulation agreement constitutes a contract between *1332Pinnacle West and OTS, plaintiff cites no authority to support this view. Several courts have examined the issue of whether a capital maintenance commitment given by a holding company of a savings and loan constitutes a valid contract. In In re Conner Corporation, 1990 WL 124052 (Bankr.E.D.N.Y. July 9, 1990), a failed savings and loan association brought suit against its holding company alleging that the holding company breached a contract with FHLBB to maintain the net worth of the savings and loan at a specified level. The bankruptcy court noted that the FHLBB resolution approving the savings and loan association’s application for deposit insurance contained a condition subsequent requiring a capital maintenance commitment from the holding company of the savings and loan. The Conner court stated what is axiomatic in the law of contracts: that a contract is the result of an offer and an acceptance resulting in a meeting of the minds of the parties supported by a mutual exchange of appropriate consideration. The Conner court held that the capital maintenance commitment given by the holding company failed to satisfy these requirements and, therefore, did not create an agreement between the parties:
The series of resolutions and the conduct of the parties does not give rise to a contract between Conner [the holding company] and FHLBB_ The intention of FHLBB was to require Conner to submit to the jurisdiction and regulatory powers of FHLBB. Likewise, Conner’s resolution to file the necessary application and to maintain Cardinal’s net worth was never intended by Conner to be an “offer” or “acceptance” so as to give rise to a contract between the parties.
Id. at 8-9. The Conner Court further found that even if the parties intended to create a contract, no contract was formed because of a lack of consideration:
There was no consideration from FHLBB to Conner or Cardinal to support Conner’s “agreement” to maintain Cardinal’s net worth. Such “agreement” was merely a part of the process of applying for federal insurance on the deposits in the subsidiary. FHLBB was doing what it was required to do under the law and its regulations. Likewise, Conner was simply complying with the regulatory requirements of FHLBB.... A promise to perform an act which promisor is already bound to perform is insufficient consideration for a promise by the other party.
Id. (citations omitted).
In Resolution Trust Corp. v. Tetco, Inc., 758 F.Supp. 1159 (W.D.Tex.1990), the district court held that a holding company’s stipulation to maintain the net worth of a savings and loan association did not constitute a valid contract. The Tetco court found that no meeting of the minds occurred with respect to the essential nature of the transaction and ruled that the net worth «ndition in the FHLBB resolution was not a contract, but a statement setting forth a regulatory condition with which the holding company complied in its subsequent stipulation. Its commitment to abide by the regulation was not “bargained for” consideration that would support a contract. Id. at 1162.
I believe the reasoning of these cases applies in the present case. AZP, predecessor in interest to Pinnacle West, sought to acquire MeraBank and, to that end, undertook to comply with the federal regulations governing the acquisition. The FHLBB approved the acquisition subject to AZP’s fulfillment of certain conditions contained in the FHLBB resolution. _ One condition was the execution of a stipulation by AZP to maintain the capital level of MeraBank in accordance with applicable federal regulations and to infuse MeraBank with capital as necessary to achieve such compliance. The obvious intention of AZP was to acquire control of MeraBank; the FHLBB intended to ensure that the acquisition was governed by the appropriate federal regulations. In complying with the regulatory agency’s conditions, AZP did not make an offer nor did it accept an offer from FHLBB. There was not a meeting of the minds between the parties as contemplated by the principles of contract formation. The capital maintenance condition contained in the FHLBB resolution was a legal requirement AZP undertook to perform— *1333the stipulation thus had no underlying consideration. Furthermore, the stipulation stated that it was provided solely for the benefit of the federal regulators and could not be enforced by any other party. For these reasons, I believe the district court correctly found that the stipulation agreement does not constitute a contract and, accordingly, plaintiff may not maintain a breach of contract claim premised upon it. I thus concur in the majority’s conclusion that the claims against OTS and FDIC should be dismissed. I believe, however, that the district court had jurisdiction to hear the claims and properly dismissed them on the merits.

. The Federal Home Loan Bank Board, which was the predecessor of OTS.
Pinnacle West applied to the FHLBB for permission to acquire Merabank. The agency granted Pinnacle West permission to acquire the savings and loan on December 6, 1986, subject to the condition that Pinnacle West stipulate that it would maintain the savings and loan’s capital at the minimum level required by federal regulation. Pinnacle West complied with the stipulation and acquired MeraBank.

. The Resolution mandates "[t]hat AZP shall stipulate to the corporation that as long as it controls MeraBank, AZP will cause the net worth of MeraBank to be maintained at a level consistent with that required by Section 563.13 of the Insurance Regulations ... and, as necessary, will infuse sufficient additional equity capital. ...”