Sunday, December 1, 2013

Glendale Federal Bank, FSB v. United States case brief

Glendale Federal Bank, FSB v. United States case brief summary
378 F.3d 1308 (Fed. Cir. 2004)

In a breach of contracts case, appellant government appealed the award by the United States Court of Federal Claims to appellee bank of $ 381 million in "wounded bank" damages. The bank cross-appealed the trial court's denial of another $ 527.5 million in reliance damages.


  • The trial court had held that the Federal Savings and Loan Insurance Corporation had entered into regulatory capital contracts with three savings and loan "thrifts" and that the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the regulations imposed thereafter, had breached those contracts. 
  • The government noted that the bank-invented notion of "wounded bank" damages was basically the increase in the cost of funds the bank allegedly incurred as a result of its having been wounded by the government's breach. 
  • Those losses were said to have occurred because three years after, and as a result of, the breach, the bank fell out of capital compliance; depositors and others became nervous about placing funds with it; the bank was required to pay more interest to attract depositors; and it was required to pay higher fees for deposit insurance. 
  • The appellate court found that reliance damages in this case were appropriate. 
  • Additionally, the appellate court found that the award of reliance damages in the amount of $ 381 million was appropriate. 
  • Furthermore, the denial of the bank's claim for additional damages was also appropriate.

The appellate court affirmed the trial court's judgment.

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