parties. First National Bank v Unisys Finance Corp., 779 F. Supp. 85 (ND Ill 1991). In First National Bank, Unisys brought an action against the RTC to recover future payments from a repudiated lease agreement with Concordia. Id at 85-86. Unisys argued that it held a perfected security interest in the pledged securities which could not be defeated by the RTC's repudiation of the lease. Judge Grady held that FIRREA allows the receiver to repudiate secured leases and preclude payment of future damages from the security. Judge Grady reasoned as follows:
"The securities were pledged 'to secure the payment and performance of all of [Concordia's] obligations under the lease. . . .' Complaint (91 C 1884), Exhibit "B". When RTC repudiated the lease on August 23, 1990, it had performed all of its lease obligations up to that point. Had RTC been in default at the time it exercised its power to disaffirm the lease, the security agreement would have provided for payment of any arrearage. As it stands, however, there was no default to secure. Plaintiff's interpretation of § 1821(e)(11) would permit the recovery of future rent payments in contravention of the express limitation of damages in § 1821(e)(4)(B).
First National Bank, 779 F. Supp. at 87 . This court agrees with Judge Grady's reasoning. To adopt LB Credit's interpretation of section 1821(e)(11) and permit recovery of the pledged collateral to satisfy future rent payments would nullify section 1821(e)(4)(B), which limits damages to rent payments accrued prior to repudiation and prohibits recovery of damages under any acceleration clause or other penalty provision of the lease. Section 1821(e)(11) protects a creditor's security interest, but only to the extent a creditor has a claim under FIRREA. Plaintiff's interpretation of section 1821(e)(11) ignores the policy behind the Act and "the unprecedented costs of dealing with the hundreds of insolvent thrifts and the orderly disposition of the assets of these failed institutions." H Rep No 101-54(I), 101st Cong, 1st Sess 308 (1989).
Plaintiff argues that First National Bank does not control this case because the decision failed to address the constitutional issues arising from retroactive application of FIRREA. Plaintiff argues that retroactive application of FIRREA constitutes a taking of private property for public use without just compensation and due process in violation of the Fifth Amendment. In support of this argument, plaintiff attempts to analogize this case to decisions which held that retroactive application of the Bankruptcy Code violated the Fifth Amendment. See Louisville Joint Stock Land Bank v Radford, 295 U.S. 555, 79 L. Ed. 1593, 55 S. Ct. 854 (1935), rehearing denied 296 U.S. 661, 80 L. Ed. 471, 56 S. Ct. 82 (1936); United States v Security Industrial Bank, 459 U.S. 70, 74 L. Ed. 2d 235, 103 S. Ct. 407 (1982), affirming Rodrock v Security Industrial Bank, 642 F.2d 1193 (10th Cir 1981).
The court finds these arguments unpersuasive. The Seventh Circuit and other circuits have consistently applied FIRREA retroactively. See Greenberg v Comptroller of the Currency, 938 F.2d 8, 11 (2nd Cir 1991); Federal Deposit Ins. Corp. v Wright, 942 F.2d 1089, 1095 (7th Cir 1991); North Arkansas Medical Center v Barrett, 962 F.2d 780 (8th Cir 1992). The Supreme Court established a presumption of retroactivity for legislative enactments and instructed courts "to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary." Bradley v Richmond School Board, 416 U.S. 696, 711 94 S. Ct. 2006, 2016, 40 L. Ed. 2d 476 (1974). The court adopts the Wright court's retroactivity analysis in this case. In Wright, the Seventh Circuit determined that a "retroactive application of FIRREA would further congressional intent." The Seventh Circuit found nothing in the legislative history or in the statute itself to indicate that FIRREA should not be applied retroactively. Id In fact, the court determined that a retroactive application would not result in manifest injustice but assist in "dealing with the mounting bank failures in this country." Id at 1096.
The bankruptcy cases cited by LB Credit to show that the RTC's repudiation of the lease was an unconstitutional taking are distinguishable. These cases involved government interference with security interests for money that had already been loaned. In Louisville Joint Stock Land Bank, supra, the bank obtained a mortgage to secure repayment of a loan. The Supreme Court determined that retroactive application of the bankruptcy statute, which would have taken away the bank's mortgage rights, resulted in an unconstitutional taking of property. In Security Industrial Bank, supra, creditors had loaned a debtor money and had obtained and perfected a lien on the debtor's household furnishings and appliances. The Supreme Court affirmed the Tenth Circuit's holding that retroactive application of the Bankruptcy Reform Act of 1978, which invalidated such liens acquired prior to the enactment date, violated the takings clause of the Fifth Amendment. In the present case, the RTC was not in debt to LB Credit. No rent was in arrearage when the RTC repudiated the lease. Had any back rent been owed to LB Credit prior to the lease's repudiation, plaintiff would have had a claim under FIRREA, which could have been satisfied from the pledged securities. The RTC has not interfered with LB Credit's interest in the pledged securities. It is the claim which defines the extent of the security interest; because LB Credit has no claim, LB Credit has no interest. When the RTC repudiated the lease, LB Credit lost its right to future payments under the lease. LB Credit has presented no authority that the loss of future profits constitutes an unconstitutional taking. The Supreme Court has held that the disruption of private expectations does not constitute a taking. Penn Centr. Transp. Co. v New York City, 438 U.S. 104, 131, 57 L. Ed. 2d 631, 98 S. Ct. 2646 (1978); Omnia Commercial Co. v United States, 261 U.S. 502, 67 L. Ed. 773, 43 S. Ct. 437 (1923) (no compensation for consequential damages); Foster v United States, 2 Cl. Ct. 426, 445 n 7 (1983) (the general rule is that there is no compensation for frustrated contracts or the loss of future income). The RTC's repudiation of the lease pursuant to section 1821(e)(1) of FIRREA does not constitute a taking of private property for public use without just compensation or due process in violation of the Fifth Amendment. Defendant's motion for summary judgment is granted.
ORDERED: Defendant's motion for summary judgment is granted. The Clerk is ordered to enter judgment for defendant and against plaintiff on a separate document pursuant to FRCP 58.
George W. Lindberg
United States District Judge
Date: Aug 10, 1992