Bank of Manhattan, N.A. v. Fed. Deposit Ins. Corp.
The Federal Deposit Insurance Corporation (“FDIC”) was appointed to act as receiver for the assets of First Heritage Bank, N.A. (“Heritage”). Heritage had previously purchased, pursuant to an agreement (“Agreement”), interest in a commercial loan that Professional Business Bank (“PBB”) had made to Al’s Garden Art, Inc. The FDIC subsequently sold Heritage’s interest under the Agreement to Commerce First Financial, Inc. (“CFF”). When Al’s Garden Art defaulted on its loan obligations, PBB sued to collect on the loan. CFF then brought a breach of contract action against PBB. PBB filed a third party complaint against the FDIC, alleging that the FDIC’s failure to satisfy the Agreement’s pre-receivership contractual provisions constituted breach of contract. The FDIC moved to dismiss on the grounds that the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) preempted PBB’s claims. The district court denied the motion and granted summary judgment for PBB. The Ninth Circuit affirmed, holding that the FDIC, in its role of receiver of a closed bank, may not breach underlying asset contractual obligations without consequence. View "Bank of Manhattan, N.A. v. Fed. Deposit Ins. Corp." on Justia Law