Court Opinion

ID: 6936066
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:33:36.639397+00
Date Added: 2024-06-11T16:07:28.337827
License: Public Domain

NIES, Circuit Judge,
dissenting.
Following in banc rehearing, additional briefing, and Chief Judge Archer’s thoughtful opinion, I have reviewed my position in this appeal which is set out at 994 F.2d 797-813. However, I cannot agree that Congress “breached” contracts between the plaintiffs and the “government,” that is, the Bank Board and FSLIC, by enacting FIRREA. The majority’s holding impermissibly fuses “the two characters which the government possesses as a contractor and as a sovereign.” Horowitz v. United States, 267 U.S. 458, 461, 45 S.Ct. 344, 69 L.Ed. 736 (1925). In my view, the plaintiffs can assert only a claim for an alleged taking of their property by the legislation, a claim which remains to be litigated. This is not a mere technicality. The amount of damages for a “taking” by legislation and for breach of contract are significantly different.
Further, I disagree that a breach of contract occurred even accepting that the Bank Board and the FSLIC were contractually bound to recognize supervisory goodwill * and particular amortization periods. While the regulators agreed to allow the thrifts to use their proposed accounting methods, that is as far as any contract with the “government” went. In the case of private parties, the burden of a change in the law is borne by the party on which it falls, unless responsibility is otherwise assigned in the contract. Contracting parties in that situation “gain nothing by having the United States as their defendants.” Id. As delineated in my prior opinion, no clause can be found in the contracts under which the Bank Board and the FSLIC promised to pay if Congress decided to step in and do away with the “purchase method of accounting,” a euphemism for spinning straw into gold, and other accounting gimmicks. In this highly regulated industry, the thrifts did not negotiate contracts that freed them from the risk of a change in regulations.
No one forced the plaintiffs into the acquisitions of failing S & L’s. Each acted volun*1552tarily for the purpose of making money, a legitimate purpose, but not one the public must underwrite. It turned out for some that the bargains they struck were disastrous. That was due to their management’s bad judgment, coupled with their decision to use the optional accounting practices.
I see no reason for reprinting my prior lengthy opinion to make minor editorial changes, e.g., change “we” to “I” throughout. While vacated as a court decision, it remains in the books for anyone to read who may be interested. I will simply incorporate it here by reference.

The "purchase method of accounting,” in some circumstances, may be “generally accepted accounting practice,” but the thrifts could not use that practice to create nonexistent capital as a basis on which they could make loans. The bank regulators had to approve the practice for the thrifts to be able to use this practice for such purposes.