United States District Court, E.D. Louisiana
ORDER & REASONS
the Court are defendant Federal Deposit Insurance Corporation
as receiver for First NBC Bank’s (“FDIC-R”)
“Motion to Dismiss for Failure to State a Claim for
Relief” (Rec. Doc. 55), plaintiff Lexon Insurance
Company Incorporated’s (“Lexon”)
“Amended Complaint” (Rec. Doc. 43) and
plaintiff’s “Memorandum in Opposition to
Defendant’s Memorandum in Support of Its Motion to
Dismiss for Failure to State a Claim” (Rec. Doc. 63).
For the reasons discussed below, IT IS
ORDERED that defendant’s construed motion for
summary judgment (Rec. Doc. 55) is GRANTED with
respect to count two of plaintiff’s claim relative to
repudiation of the Standby Letters of Credit
(“SLOCs”) (Emphasis added); count three of
plaintiff’s claim for breach of contract; count four of
plaintiff’s claim relative to actual and compensatory
damages; and count five of plaintiff’s claim that SLOCs
are not contracts. The amended complaint against FDIC-R is
AND PROCEDURAL HISTORY
facts giving rise to defendant FDIC-R’s current motion
are detailed in this Court’s Order and Reasons
regarding defendant’s first motion to dismiss for
failure to state a claim. See Rec. Doc. 34; see
also Rec Doc. 21.
March of 2016, plaintiff Lexon, as surety, executed eight
bonds on behalf of non-party Linder Oil that secured offshore
mineral leases with the United States Department of Interior,
Bureau of Ocean Energy Management (“BOEM”). Rec.
Doc. 43 at ¶ 10. On March 24, 2016, First NBC Bank
issued two standby letters of credit relating to the bonds
issued by plaintiff. Id. at ¶ 11-12. After the
SLOCs were issued, First NBC Bank’s financial stability
deteriorated and was subsequently closed by the State of
Louisiana. Id. at ¶ 32. Defendant was appointed
receiver for First NBC Bank on April 28, 2017. Id.
On September 28, 2017, 153 days after the appointment of
defendant as receiver, defendant repudiated the SLOCs.
Id. at ¶ 52. On December 1, 2017, 64 days after
the SLOCs were repudiated, plaintiff requested to draw down
the entire amount secured by the SLOCs. Id. at
¶ 53. At the time of the requested draw, plaintiff had
made no requests to draw on the SLOCs, and no claims had been
made on the bonds by BOEM. See generally Rec. Doc.
43; see also Rec. Doc. 55-1 at 4-5.
April 25, 2018, Plaintiff filed a four-count complaint
against FDIC, seeking “damages of $9, 985, 500.00
resulting from the FDIC’s failure to honor, and
improper repudiation of, [the] two [letters of credit] issued
by [First NBC Bank].” Rec. Doc. 1. Defendant moved to
dismiss all claims for failure to state a claim on July 2,
2018. See Rec. Doc. 21 at 1. That motion was
subsequently granted by this court, in favor of defendant.
See Rec. Doc. 34. An order was issued on September
7, 2018, dismissing Lexon’s claim without prejudice to
Lexon’s right to bring an amended complaint within
forty (40) days from the order. Id. at
on January 18, 2019, Lexon filed an amended five-count
complaint against FDIC, again seeking damages of $9, 985,
500.00. See Rec. Doc. 43. The amended complaint
alleges causes of action: (1) under the Federal Tort Claims
Act (“FTCA”) against the United States as a
defendant on behalf of the FDIC in their pre-receivership
corporate capacity (“FDIC-C”); (2) for failure
to timely repudiate the SLOCs in violation of 12 U.S.C.
§ 1821(e); (3) for breach of contract under 12 U.S.C.
§ 1821(d)(20) by defendant FDIC-R, in approving the
SLOCs in writing; (4) that plaintiff is entitled to actual
and compensatory damages under 12 U.S.C. § 1821(e); and
(5) defendant’s lack of authority to repudiate the
SLOCs because the SLOCs are not considered contracts. See
id. Defendant FDIC-R moves to dismiss a majority of
plaintiff Lexon’s claims for failure to state a claim.
See Rec. Doc. 55.
for Summary Judgment Standard
Rule 56 of the Federal Rules of Civil Procedure, summary
judgment is appropriate when “the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of
law.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986) (quoting Fed. R. Civ. P. 56(c)). See also TIG
Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759
(5th Cir. 2002). “As to materiality, the substantive
law will identify which facts are material. Only disputes
over facts that might affect the outcome of the suit under
the governing law will properly preclude the entry of summary
judgment.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A genuine issue of material fact
exists if the evidence would allow a reasonable jury to
return a verdict for the non-moving party. Anderson,
477 U.S. at 248. The court should view all facts and evidence
in the light most favorable to the non-moving party.
United Fire & Cas. Co. v. Hixson Bros. Inc., 453
F.3d 283, 285 (5th Cir. 2006). Mere conclusory allegations
are insufficient to defeat summary judgment. Eason v.
Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996).
movant must point to “portions of ‘the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, ’ which it
believes demonstrate the absence of a genuine issue of
material fact.” Celotex, 477 U.S. at 323. If and when
the movant carries this burden, the non-movant must then go
beyond the pleadings and present other evidence to establish
a genuine issue. Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986). However,
“where the non-movant bears the burden of proof at
trial, the movant may merely point to an absence of evidence,
thus shifting to the non-movant the burden of demonstrating
by competent summary judgment proof that there is an issue of
material fact warranting trial.” Lindsey v. Sears
Roebuck & Co., 16 F.3d 616, 618 (5th Cir. 1994).
“This court will not assume in the absence of any proof
that the nonmoving party could or would prove the necessary
facts and will grant summary judgment in any case where
critical evidence is so weak or tenuous on an essential fact
that it could not support a judgment in favor of the
[non-movant].” McCarty v. Hillstone Rest.
Grp., 864 F.3d 354, 357 (5th Cir. 2017).
for Contractual Damages and FDIC-R’s Alleged Failure to
Timely Repudiate the SLOCs
argues that plaintiff has failed to state a claim for relief
in their amended complaint because the damages asserted by
plaintiff are not representative of amounts “[d]ue
[a]nd [o]wing.” Rec. Doc. 55-1, at 7. In support,
defendant asserts: (1) the standby letters of credit are
contracts for the purposes of 12 U.S.C. § 1821(e); (2)
the FDIC-R properly repudiated the SLOCs; (3) plaintiff
failed to show actual and compensatory damages; (4) and that
even in the event that plaintiff obtained funds, plaintiff
would be required to return any funds “to the extent
the BOEM does not make a claim against the bonds.”
See id. at 7-9, 11. Plaintiff argues that damages
need not be due and owing because defendant’s failure
to properly repudiate the SLOCs entitles them to
“normal contract law damages.” See Rec.
Doc. 63 at 13.
the FDIC is appointed receiver over a failed financial
institution, Congress has expressly authorized the FDIC to
repudiate: (1) contracts to which the institution is a party;
(2) that the receiver determines to be burdensome; and (3)
that in the receiver’s discretion “promote the
orderly administration of the institution’s
affairs.” See 12 U.S.C. § 1821(e)(1). The
receiver must determine whether to repudiate a contract
within a reasonable time following their appointment as
receiver. Id. Generally, the FDIC has
“‘broad authority’ to repudiate contracts
that were entered into before its appointment as a
receiver.” NCB ...