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Shane v. United States

December 01, 1998


Before Rich, Newman, and Lourie, Circuit Judges.

The opinion of the court was delivered by: Lourie, Circuit Judge.

Appealed from: United States Court of Federal Claims Judge John P. Wiese

Leonard Shane and other former shareholders of Mercury Savings appeal from the decision of the United States Court of Federal Claims dismissing their breach of contract action against the United States for failure to file their claim within six years after their claim first accrued as required by 28 U.S.C. § 2501 (1994). See Plaintiffs in Winstar-Related Cases v. United States, 37 Fed. Cl. 174 (1997). In Ariadne Financial Services Pty. Ltd. v. United States, 133 F.3d 874 (Fed. Cir.), cert. denied, 119 S. Ct. 67 (1998), we affirmed the trial court's dismissal of another plaintiff's claim. Because we conclude that the facts relating to Plaintiff-Appellants Shane et al. are materially indistinguishable from those in Ariadne, we affirm the court's dismissal.


Shane et al. are former shareholders in Mercury Savings and constitute several of the numerous plaintiffs involved in the Winstar series of cases. In United States v. Winstar Corp., 518 U.S. 839 (1996), the Supreme Court affirmed a decision of this court holding the United States liable to three savings and loan institutions for breach of contract stemming from Congress's enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Pub. L. No. 101-73, 103 Stat. 183 (1989) (codified as amended in various sections of 12 U.S.C.). The Court ruled that the United States had entered into contracts permitting the institutions to use particular accounting methods in their acquisition of certain failing savings and loan associations, *fn1 that Congress's adoption of new capital requirements in FIRREA abrogated the Government's commitment, and that the Government was therefore liable in damages. See Winstar, 518 U.S. at 843.

The three Winstar plaintiffs were thereafter joined by over 120 other claimants, including Shane and Ariadne, who similarly sought to recover contract damages from the United States under the Winstar holding. All Winstar-related cases were made subject to special case-management procedures, pursuant to which the parties agreed to resolve certain common issues, including the issue raised here-the government's statute of limitations defense. See 28 U.S.C. § 2501 (1994) ("Every claim of which the United States Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed within six years after such claim first accrues.").

In Winstar-Related Cases, the Court of Federal Claims held that the Winstar plaintiffs' claims accrued within the meaning of section 2501 either when FIRREA's implementing regulations put the new capital requirements into effect on December 7, 1989, *fn2 or when the Office of Thrift Supervision (OTS) published a Thrift Bulletin on January 9, 1990, reminding thrifts that FIRREA eliminated previously granted forbearances and that it was applying FIRREA's new capital standards to all thrifts, including those with forbearance agreements. *fn3 See Winstar-Related Cases, 37 Fed. Cl. at 185. The court reasoned that the regulations themselves prohibited the thrifts from including millions of dollars worth of supervisory goodwill that their agreements expressly allowed them to include as capital. See id. The court rejected the government's argument that the plaintiffs' claims accrued when FIRREA was enacted on August 9, 1989, see id. at 184; it also rejected the plaintiffs' argument that their claims did not accrue until the government enforced FIRREA sanctions against the individual thrifts. See id. at 185. The court thus denied the government's motion to dismiss the suits brought by those plaintiffs who filed claims within six years of the date of the regulatory enactment, but granted the motion to dismiss the suits brought by Shane and Ariadne, who filed suit more than six years after the publication date of the OTS bulletin. *fn4

Both Ariadne and Shane appealed the dismissals to this court, but Shane's appeal was stayed pending the outcome of Ariadne's appeal. We affirmed the Court of Federal Claims' decision to dismiss Ariadne's suit. See Ariadne, 133 F.3d at 876. We found no clear error in the court's determination that Ariadne, as a stockholder in Southern California Savings & Loan (SoCal), the thrift at issue in that case, should have known that SoCal had lost the use of supervisory goodwill as an asset and that its claim had therefore accrued more than six years before Ariadne filed its breach of contract claim on April 16, 1996. See id. at 878. We noted that "SoCal itself was sufficiently certain that it had lost the use of supervisory goodwill that it filed a capital restoration plan on March 2, 1990." Id. We held that the government's liability was fixed when it refused to allow use of supervisory goodwill as it had promised, although we did not determine precisely which act-the enactment of the statutory prohibition on the use of supervisory goodwill, the promulgation of regulations enforcing this prohibition, or the issuance of a notice of intent to apply the regulations to thrifts (the Thrift Bulletin)-constituted the government's repudiation and thus the critical date for statute of limitations purposes. See id. at 879- 80. Nevertheless, we concluded that Ariadne knew or should have known through any of these three government actions that SoCal had lost its supervisory goodwill asset by the time SoCal submitted its OTS capital restoration plan on March 2, 1990. See id. at 880. Accordingly, because Ariadne filed suit more than six years after this date, we concluded that its suit was barred by 28 U.S.C. § 2501. See id. We lifted the stay of Shane's appeal after the Ariadne decision issued and we now consider its merit. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3) (1994).


Since we are bound by our precedent in Ariadne, the only issue before us is whether that case controls the Disposition of Shane's appeal. Shane does not attempt to distinguish the circumstances of this case from those in Ariadne. Instead, Shane et al. vigorously maintain that their claim did not accrue until the government rejected Mercury's capital restoration plan on February 22, 1990, because until then any damages they suffered as shareholders were not "cognizable," but speculative and therefore uncompensable.

The government submits that Ariadne permits no result other than affirmance of the Court of Federal Claims's dismissal of Shane's claim because, regardless which of the three specific governmental acts constituted the breach of contract with Mercury Savings, Shane et al. filed suit more than six years after all three dates, and thus, like Ariadne, they knew or should have known that the thrift in which they held stock lost its supervisory goodwill asset by the time that the thrift submitted its capital restoration plan to OTS on January 15, 1990.

We agree with the government that this case is governed by Ariadne. We considered and rejected Shane's argument in Ariadne. Specifically, we rejected the contention that Ariadne's claim did not accrue until the government took individualized action against SoCal. In Ariadne we concluded that Ariadne's claim accrued before the government imposed restrictions on SoCal's business activities because any of the government's actions asserted to be a breach damaged SoCal (and hence Ariadne) by depriving SoCal of its supervisory goodwill asset. SoCal's filing of its capital restoration plan merely evidenced its knowledge of that damage. See Ariadne, 133 F.3d at 878. Ariadne therefore requires us to conclude similarly that Shane's claim for breach of contract accrued when the government repudiated its forbearance agreement with Mercury, which repudiation occurred by means of each of the three government actions-the enactment of FIRREA, the promulgation of implementing regulations, or the publication of the bulletin reminding thrifts with forbearance agreements that OTS was applying the regulations to them-all of which occurred prior to the date on which Mercury submitted its capital plan on January 15, 1990, and more than six years before Shane et al. filed their breach of contract claim.

Even stronger authority than Ariadne for our reaching this result is the Winstar case itself. In Winstar, the Supreme Court clearly stated that the government became liable for breach of contract when the law changed, not when it seized thrifts for regulatory noncompliance. Specifically, the Court stated:

"When the law as to capital requirements changed, . . . the Government was unable to perform its promise and, therefore became liable for breach. We accept the Federal Circuit's Conclusion that the Government breached these contracts when, pursuant to the new regulatory capital requirements imposed by FIRREA, . . . the federal regulatory agencies limited the use of supervisory goodwill and capital credits in calculating respondent's net worth. . . . In the case of Winstar and Statesman, the Government exacerbated its ...

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