United States Court of Appeals
for the Federal Circuit
__________________________
FIRST ANNAPOLIS BANCORP, INC.,
Plaintiff-Appellee,
v.
UNITED STATES,
Defendant-Appellant.
__________________________
2010-5032
__________________________
Appeal from the United States Court of Federal
Claims in case no. 94-CV-522, Judge Mary Ellen Coster
Williams.
_________________________
Decided: July 11, 2011
_________________________
DALE A. COOTER, Cooter, Mangold, Deckelbaum &
Karas, L.L.P, of Washington, DC, argued for plaintiff-
appellee. Of counsel was KAREN S. KARAS.
KENNETH M. DINTZER, Assistant Director, Commercial
Litigation Branch, Civil Division, United States Depart-
ment of Justice, of Washington, DC, argued for defendant-
appellant. With him on the brief were MICHAEL F. HERTZ,
Deputy Assistant Attorney General, JEANNE E. DAVIDSON,
Director, SCOTT D. AUSTIN and BRIAN A. MIZOGUCHI,
FIRST ANNAPOLIS BANCORP v. US 2
Senior Trial Counsel, and JACOB A. SCHUNK, Trial Attor-
ney. Of counsel was VINCENT D. PHILLIPS, Trial Attorney.
__________________________
Before GAJARSA, DYK, and PROST, Circuit Judges.
GAJARSA, Circuit Judge.
This is a Winstar-related case. The issue before this
court is whether or not a holding company has standing to
pursue damages for breach of contract against the United
States (“Government”). The Government appeals the
final judgment of the United States Court of Federal
Claims (“Claims Court”), which held that First Annapolis
Bancorp, Inc. (“Bancorp”) had standing to sue the Gov-
ernment for breach of contract after the enactment of the
Financial Institutions Reform, Recovery and Enforcement
Act of 1989 (“FIRREA”). First Annapolis Bancorp, Inc. v.
United States, 75 Fed. Cl. 263, 273–74 (2007) (“First
Annapolis I”). Because the Claims Court erred in finding
that Bancorp had standing, we reverse.
BACKGROUND
A.
This case is one of the many Winstar-related cases,
which are now reaching the final stage of litigation. See
United States v. Winstar Corp., 518 U.S. 839 (1996)
(plurality opinon) (“Winstar”). Winstar-related cases
involve claims against the Government following Con-
gress’s enactment of FIRREA, which was passed as part
of the Government’s response to the savings and loan
crisis of the 1980s. Castle v. United States, 301 F.3d 1328,
1332 (Fed. Cir. 2002). The background of the crisis has
been well explained in other cases, see, e.g., Winstar, 518
U.S. at 843–58, so we describe it only briefly here to
provide context for the present case.
3 FIRST ANNAPOLIS BANCORP v. US
In the 1980s, many thrifts (savings and loan associa-
tions) began to fail. Winstar, 518 U.S. at 845. The Fed-
eral Savings and Loan Insurance Corporation (“FSLIC”)
lacked the funds to liquidate all of the failing thrifts. Id.
at 847. Thus, the Federal Home Loan Bank Board
(“FHLBB”), which supervised the FSLIC, encouraged
healthy thrifts to merge with ailing thrifts. Id. at 844,
847. The FHLBB had to provide specific financial incen-
tives to encourage these “supervisory mergers” because
the ailing thrifts’ purchase prices would be greater than
their fair value. Id. at 848–49. The primary incentive
provided to the parties was a promise that these acquisi-
tions would be subject to a particular type of accounting
treatment, “purchase method accounting,” that would
assist the acquiring thrifts in meeting the reserve capital
requirements imposed by federal regulations. Id. at 848.
In an FSLIC-sponsored supervisory merger, an acquiring
thrift could designate the excess of the purchase price
over the fair value of all of the ailing thrift’s identifiable
assets acquired as an intangible asset, called “supervisory
goodwill.” Id. at 848–49. The healthy thrift could count
the supervisory goodwill as regulatory capital in meeting
its federal reserve capital requirements and could amor-
tize the goodwill asset over a long period of time. Id. at
851.
When Congress enacted FIRREA, it completely re-
structured regulation of the federal thrift industry. Id. at
856. The FSLIC was abolished, and the FHLBB was
replaced with the Office of Thrift Supervision (“OTS”). Id.
Pursuant to FIRREA, thrifts were required to maintain a
set amount of minimum capital, and after a transition
period, supervisory goodwill could no longer be included
as part of the capital account. Id. at 857. As a result,
many of the merged thrifts that had relied on the supervi-
sory goodwill to meet their regulatory capital require-
FIRST ANNAPOLIS BANCORP v. US 4
ments were no longer able to meet those requirements,
and some, such as Winstar, were seized by the Govern-
ment and liquidated. Id. at 858. Winstar and others sued
the Government for breach of contract. Id. This court
found that the Government’s passage of FIRREA
breached the contract with the thrifts. Winstar Corp. v.
United States, 64 F.3d 1531, 1551 (Fed. Cir. 1995) (en
banc). In a plurality opinion, the Supreme Court held
that the Government was liable for breach of contract.
Winstar, 518 U.S. at 860.
B.
To understand the standing issue in this appeal, we
must provide an historical scenario of the interrelatedness
of the various institutions. First Federal Savings & Loan
Association of Annapolis (“First Federal”), a federal
mutual savings and loan association, voluntarily con-
verted into a stock savings bank on July 21, 1988 when
the FLHBB approved the conversion. First Annapolis I,
75 Fed. Cl. at 266, 269. After converting to a stock sav-
ings bank, First Federal merged with First Annapolis
Savings Bank, F.S.B. (“First Annapolis”), a newly formed
federal stock savings bank. Id. at 266. Bancorp is a
savings and loan holding company that was incorporated
on November 20, 1987 under the laws of the State of
Delaware. Id. at 267, 267 n.6. Bancorp was formed “for
the purpose of acquiring the stock of the merged institu-
tions, thereby infusing capital into the converted and
merged thrift.” Id. at 266. The circumstances surround-
ing Bancorp’s creation are central to this appeal.
First Federal posted “net losses for each fiscal year
beginning with the fiscal year [that] ended on September
30, 1981” until March 31, 1988, which impacted First
Federal’s attempt to meet its regulatory capital require-
ments. J.A. 400790. On March 18, 1987, First Federal’s
5 FIRST ANNAPOLIS BANCORP v. US
board of directors (“Board”) decided to obtain outside
capital through a supervisory conversion to increase First
Federal’s net worth by over $5 million. First Annapolis I,
75 Fed. Cl. at 266. To effectuate the conversion, First
Federal submitted an Application for Voluntary Supervi-
sory Stock Conversion 1 (“Conversion Application”) to the
FHLBB on November 5, 1987. Id. In the Conversion
Application, the Board represented that it complied with
the applicable rules and regulations for converting First
Federal into a stock association.
First Federal also submitted a Holding Company Ap-
plication (“HCA”) and a Regulatory Business Plan (“Busi-
ness Plan”) with its Conversion Application. Bancorp,
which did not exist yet, was the applicant listed on the
HCA, which stated that Bancorp would “be incorporated
under the laws of the State of Delaware for the purpose of
acquiring [First Federal] pursuant to its voluntary super-
visory conversion into a stock saving bank.” J.A. 400202;
see First Annapolis I, 75 Fed. Cl. at 267 n.6. Bancorp was
incorporated on November 20, 1987 to acquire First
Annapolis’s stock and infuse capital into First Annapolis.
First Annapolis I, 75 Fed. Cl. at 266, 267 n.6. On May 13,
1988, Bancorp amended the HCA and First Federal
amended the Conversion Application to account for Ban-
corp’s incorporation and to describe how Bancorp would
acquire First Annapolis. Id. at 267 n.6. The amendment
to the HCA explained that Bancorp would sell 12 million
to 15 million shares of its common stock, of which the
1 A voluntary supervisory conversion is where a
single entity acquires all of the stock of a thrift in ex-
change for contributing enough capital to satisfy regula-
tory net worth requirements without first receiving
account holder approval or offering shares on the market.”
1st Home Liquidating Trust v. United States, 581 F.3d
1350, 1353 (Fed. Cir. 2009) (internal quotations and
citations omitted).
FIRST ANNAPOLIS BANCORP v. US 6
proceeds would be used to infuse at least $11 million of
capital into First Annapolis. Id. at 267. Additionally,
First Federal submitted a Plan of Conversion (attached as
Exhibit A to the HCA) that contained a Miscellaneous
clause stating that First Federal would “not loan funds or
otherwise extend credit to any person to purchase shares
of [Bancorp] Stock offered in the Conversion.” J.A.
400231.
On July 8, 1987, First Federal entered into a Supervi-
sory Agreement with the FHLBB. Under the Supervisory
Agreement, First Federal was required “to submit a
business plan detailing how [it] w[ould] increase its level
of capital . . . to meet and maintain minimum regulatory
capital levels.” J.A. 400791. The Business Plan “proposed
that First Federal be converted from a federal mutual
savings and loan association to a stock savings bank” and,
once converted, would “merge with a newly formed federal
stock savings bank, First Annapolis.” First Annapolis I,
75 Fed. Cl. at 266. It also set forth capital benchmarks
that “effectively functioned as a five-year forbearance
with regard to the regulatory capital requirements,
whereby First Annapolis would be in compliance with the
regulatory capital requirements as long as it maintained
capital sufficient to meet the relaxed capital benchmarks.”
Id. at 268.
On July 21, 1988, the FHLBB “approved the volun-
tary conversion of First Federal from a mutual to a fed-
eral stock savings bank, the formation of First Annapolis .
. . (the interim entity) and its merger with First Federal,
and the acquisition of First Annapolis stock by Bancorp”
by issuing two resolutions (“Resolutions”), Resolution Nos.
88-602 and 88-603. Id. at 269. In Resolution No. 88-603,
the FHLBB conditioned the conversion’s approval on: (1)
First Annapolis’s “achieving a ratio of net worth to total
liabilities equal to at least one percent of liability com-
7 FIRST ANNAPOLIS BANCORP v. US
puted on the basis of [generally accepted accounting
principles],” (2) Bancorp’s infusion of “capital in the
amount of $11 million through the purchase of First
Annapolis’[s] common stock,” (3) Bancorp’s stipulation
that “First Annapolis would operate in accordance with
the Business Plan for a period of five years,” (4) Bancorp
and First Annapolis’s execution of “a Regulatory Capital
[Maintenance] and Dividend Agreement [(“RCMDA”)]
with the FSLIC,” (5) First Annapolis’s submission of “an
opinion from an independent certified public accountant
(CPA) describing any intangible assets, including good-
will, arising from the transaction and the method of
amortization of the intangible assets,” and (6) the Board’s
issuance of “a letter to First Annapolis concerning super-
visory forbearances.” Id. at 269–70. In addition, “appli-
cable state and federal laws and regulations as
administered by the [FHLBB] and FSLIC” had to be
complied with to the satisfaction of the supervisory agent
at the Federal Home Loan Bank of Atlanta (“Supervisory
Agent”). J.A. 400526.
The FHLBB also issued three letters to First Annapo-
lis (but not Bancorp) that granted regulatory forbearances
(“Forbearance Letters”). First Annapolis I, 75 Fed. CI. at
270–71. On July 21, 1988, the FHLBB sent a first letter
that allowed First Annapolis to: (1) “make investments in,
and conforming loans to, its service corporation,” which
the FHLBB later revised in a technical amendment to
state “be in compliance with its minimum regulatory
capital requirement” for the purpose of “complying with
the service corporation investment limitations,” and (2)
amortize “the value of any intangible asset” “over a period
not to exceed 25 years.” J.A. 200002, 400517. On August
5, 1988, the FHLBB sent a second letter in response to
First Annapolis’s “inquiry regarding the regulatory capi-
tal obligations of First Federal subsequent to its volun-
FIRST ANNAPOLIS BANCORP v. US 8
tary supervisory conversion” and stated that “it is First
Annapolis’[s] obligation to increase its regulatory capital
in order to achieve each annual benchmark and to achieve
the regulatory capital amount specified (in the Business
Plan) at the end of the fifth year.” J.A. 400533. Finally,
on August 11, 1988, the FHLBB sent a third letter to
First Annapolis, which stated that “supervisory action”
would not be taken “for failure to comply with” regula-
tions related to “presently existing service corporation
investments.” J.A. 200001.
On August 12, 1988, Bancorp and the FSLIC entered
into the RCMDA. The RCMDA defined the terms “Regu-
latory Capital,” “Regulatory Capital Requirement,” and
“Regulatory Capital Deficiency” “as set forth in the Busi-
ness Plan” for five years. J.A. 400537. In the RCMDA,
Bancorp agreed to maintain First Annapolis’s regulatory
capital level as required, including infusing additional
capital if necessary, and to not accept dividends exceeding
fifty percent of First Annapolis’s net income for the fiscal
year without prior written approval from the Supervisory
Agent. In exchange, the FSLIC agreed to approve the
acquisition. The RCMDA also contained a Miscellaneous
Provision that stated: “All references to regulations of the
Board or the FSLIC used in this Agreement shall include
any successor regulation thereto, it being expressly un-
derstood that subsequent amendments to such regula-
tions may be made and that such amendments may
increase or decrease [Bancorp’s] obligation under this
Agreement.” J.A. 400540.
On February 9, 1989, the Supervisory Agent sent
First Annapolis a letter stating that “all conditions prece-
dent ha[d] been met and the Conversion [w]as . . . com-
pleted in accordance with . . . Resolution [No. 88-602]”
with an effective date of August 13, 1988. J.A. 401149.
However, in August 1988, prior to the conversion, First
9 FIRST ANNAPOLIS BANCORP v. US
Federal made $1.6 million in loans for the purpose of
purchasing stock in Bancorp. First Annapolis Bancorp,
Inc. v. United States, 75 Fed. Cl. 280, 283 (2007) (“First
Annapolis II”). The Government did not learn of the loans
until an examination of First Annapolis was conducted in
January 1990. Id. at 284. On April 18, 1990, the OTS
sent First Annapolis a letter regarding the report gener-
ated by the examination. The letter identified the loans
as an “issue[] of supervisory concern” and required First
Annapolis to “remove all loans to stockholders, the pur-
poses of which were to purchase stock in [Bancorp], from
the . . . books without material loss and without reciprocal
lending arrangements with other financial institutions.”
J.A. 300057–58.
After the conversion, First Annapolis improved its fi-
nancial condition and met its first capital benchmark set
forth in the Business Plan on June 30, 1989. First Anna-
polis Bancorp, Inc. v. United States, 89 Fed. Cl. 765, 775–
76 (2009) (“First Annapolis III”). After FIRREA became
effective on August 9, 1989 and the OTS promulgated
regulations on December 7, 1989, however, First Annapo-
lis was prohibited “from treating the supervisory goodwill
as an asset for the purpose of meeting its tangible capital
requirement.” First Annapolis I, 75 Fed. Cl. at 272.
Thus, “First Annapolis was failing both the tangible and
core capital requirements” as of December 31, 1989. Id.
On May 31, 1990, the OTS appointed the Resolution Trust
Corporation (“RTC”) as receiver of First Annapolis. Id.
On June 1, 1990, the RTC took possession of First Anna-
polis. Id.
C.
Bancorp filed the present action in the Claims Court
on August 10, 1994. This appeal is based on three Claims
Court opinions in this case. In First Annapolis I, the
FIRST ANNAPOLIS BANCORP v. US 10
Claims Court held that Bancorp had standing to assert a
breach of contract claim against the Government because
“the Government’s promise ran directly to Bancorp and
Bancorp was ‘an essential participant as a contracting
party,’ obligated to maintain the thrift’s capital.” 75 Fed.
Cl. at 273–74 (quoting Home Sav. of Am., FSB v. United
States, 399 F.3d 1341, 1349 (Fed. Cir. 2005)). On sum-
mary judgment, the Claims Court found that a contract,
including the RCMDA, HCA, Business Plan, Resolutions,
and Forbearance Letters, was formed between Bancorp
and the Government. Id. at 274–78. The court also found
that the risk of regulatory change was not shifted to First
Annapolis until five years after the conversion. Id. at
278–79. Finally, the court found that “the Government
breached its contract with Bancorp when it began to
enforce new minimum capital requirements in accordance
with FIRREA.” Id. at 279. In First Annapolis II, the
Claims Court found that Bancorp did not commit a prior
material breach of the contract by making loans to share-
holders. 75 Fed. Cl. at 282. In First Annapolis III, the
Claims Court found that “the Government committed a
material breach of the contract” because “the Government
agreed to give First Annapolis five years of regulatory
forbearances and FIRREA eliminated those forbearances
after roughly one year of performance—completely depriv-
ing First Annapolis of the benefit of its bargain.” 89 Fed.
Cl. at 768. Thus, the court found that Bancorp was
“entitled to recover the $13,665,907 in contributed capital
as money-back restitution damages.” Id.
The Government appeals the Claims Court’s deci-
sions, raising four specific issues: (1) whether the court
erred in finding that Bancorp had standing to sue the
Government for breach of contract, (2) whether the court
erred in finding that the risk of regulatory change was not
shifted to First Annapolis during the first five years of its
11 FIRST ANNAPOLIS BANCORP v. US
operation, (3) whether the court erred in finding that
Bancorp’s shareholder loans were not a prior material
breach of the contract, and (4) whether the court erred in
finding that the Government’s breach of contract was
material. We have jurisdiction over the final judgment of
the Claims Court pursuant to 28 U.S.C. § 1295(a)(3).
DISCUSSION
This court reviews the Court of Federal Claims’ grant
of summary judgment de novo. Winstar, 64 F.3d at 1539
(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986)). Whether a plaintiff has standing to bring suit is
also a question of law, reviewed without deference. S.
Cal. Fed. Sav. & Loan Ass’n v. United States, 422 F.3d
1319, 1328 (Fed. Cir. 2005) (citing Consol. Edison Co. v.
Richardson, 233 F.3d 1376, 1379 (Fed. Cir. 2000)). Stand-
ing is a threshold jurisdictional issue that implicates
Article III of the Constitution. Steel Co. v. Citizens for a
Better Env’t, 523 U.S. 83, 102 (1998); S. Cal., 422 F.3d at
1328 (citing Castle v. United States, 301 F.3d 1328, 1337
(Fed. Cir. 2002)).
A plaintiff must be in privity with the United States
to have standing to sue the sovereign on a contract claim.
Anderson v. United States, 344 F.3d 1343, 1351 (Fed. Cir.
2003). Privity “takes on even greater significance” in
Winstar-related cases, S. Cal., 422 F.3d at 1328, because
generally the Government “consents to be sued only by
those with whom it has privity of contract,” Erickson Air
Crane Co. of Wash. v. United States, 731 F.2d 810, 813
(Fed. Cir. 1984). The lack of privity impacts the lack of
waiver of sovereign immunity, which is available pursu-
ant to the Tucker Act. See United States v. Mitchell, 463
U.S. 206, 212 (1983) (“[T]he existence of [the Govern-
ment’s] consent is a prerequisite for jurisdiction. . . . [B]y
giving the Court of Claims jurisdiction over specified
FIRST ANNAPOLIS BANCORP v. US 12
types of claims against the United States, the Tucker Act
constitutes a waiver of sovereign immunity with respect
to those claims.”). The existence or non-existence of a
contract is a mixed question of law and fact. S. Cal., 422
F.3d at 1328 (citing Castle, 301 F.3d at 1336). Contract
interpretation is a question of law, reviewed de novo. Id.
The Government contends that Bancorp does not have
standing to sue the Government for breach of contract.
For the reasons stated, we agree.
“[A] corporation is generally considered to be a sepa-
rate legal entity from its shareholder.” S. Cal., 422 F.3d
at 1331 (citation omitted). Thus, a shareholder, whether
an individual or a holding company, “generally does not
have standing to assert a breach of contract claim on
behalf of the corporation.” Fed. Deposit Ins. Corp. v.
United States, 342 F.3d 1313, 1319 (Fed. Cir. 2003)
(“Karnes”) (citing First Hartford Corp. v. United States,
194 F.3d 1279, 1289 (Fed. Cir. 1999)). Further, share-
holders are not allowed “to rely on their involvement in
the negotiation process or their role in funding a transac-
tion to alter their chosen legal status.” S. Cal., 422 F.3d
at 1332 (citations omitted). As a result, the Claims Court
correctly determined that “Bancorp must establish that it
has a direct claim against the Government, separate and
apart from its status as a shareholder.” First Annapolis I,
75 Fed. Cl. at 274 (citation omitted).
The Claims Court found that Bancorp had “standing
because the Government’s promise ran directly to Ban-
corp.” Id. The court analogized the present case to Home
Savings, 399 F.3d 1341, in which this court found that a
holding company was in privity of contract with the
Government and had standing to sue. First Annapolis I,
75 Fed. Cl. at 273. Although Bancorp was a signatory
only to the RCMDA and the amendments to the HCA, the
13 FIRST ANNAPOLIS BANCORP v. US
court noted that “Bancorp as the holding company of First
Annapolis and as the ‘acquiror’ under the express terms of
the RCMDA was referenced in FHLBB Resolution 88-603
and the Forbearance Letter dated July 21, 1988.” Id. at
274. The court found “the sine qua non of this transaction
was Bancorp’s promise to infuse $11 million of capital into
First Annapolis and to undertake a significant continuing
obligation, i.e., ensuring that First Annapolis would meet
its capital requirements during contract performance” in
exchange for “the Government promis[ing] Bancorp that it
would approve the acquisition of control of First Annapo-
lis by Bancorp.” Id.
In Home Savings, this court found a narrow exception
to the general rule that shareholders lack standing. 399
F.3d at 1349–50. The court found that H.F. Ahmanson &
Co. (“Ahmanson”), a holding company, was in privity of
contract with the Government because it was a party to a
larger transaction also involving the FSLIC, FHLBB, and
Home Savings of America, FSB (“Home”), a wholly-owned
subsidiary of Ahmanson. Id. at 1344, 1349. The transac-
tion included “reciprocal promises that were part of the
overall bargain . . . [with] the [G]overnment,” in which
“Ahmanson promised it would maintain Home’s net
worth; in exchange, the [G]overnment promised to provide
financial assistance by promising certain accounting
treatment for goodwill.” Id. at 1349. Thus, this court
found that the Government’s promise ran “directly to
Ahmanson” and Ahmanson was “in privity of contract and
consequently ha[d] standing to seek damages.” Id. Addi-
tionally, the court found that “Ahmanson [w]as the offeror
that initiated the negotiations that ultimately led to the
agreement.” Id. In distinguishing other cases where this
court found that shareholders did not have standing, the
court found that “Ahmanson was not only a shareholder,
but an essential participant as a contracting party” be-
FIRST ANNAPOLIS BANCORP v. US 14
cause it “negotiated for approval of Home’s acquisitions”
and was “recognized [by the FHLBB] as obligating itself,
as part of that acquisition, to maintain Home[’s] . . . net
worth.” Id. at 1349–50 (internal quotation omitted).
In this case, the Claims Court found that “Bancorp,
like the plaintiff in Home Savings, was not only the sole
shareholder of First Annapolis, it was actually the ac-
quiror of the thrift. It was Bancorp which purchased all
of the outstanding shares of First Annapolis, and contrib-
uted sufficient capital to First Annapolis for the merger
and acquisition to go forward.” First Annapolis I, 75 Fed.
Cl. at 273. While Bancorp, like Ahmanson, was the
acquiror of the thrift, critical differences distinguish the
present case from Home Savings.
First, “Ahmanson sought federal assistance to miti-
gate the liabilities its subsidiary, Home, was assuming by
taking over these thrifts,” “initiated the negotiations that
ultimately led to the agreement,” and “negotiated for
approval of Home’s acquisitions.” Home Savings, 399
F.3d at 1345, 1349–50. In this case, First Federal, not
Bancorp, initiated the negotiations and negotiated with
the Government. It was First Federal that entered into
the Supervisory Agreement with the Government to avoid
enforcement proceedings, “decided to infuse outside
capital through a modified conversion or a modified
supervisory conversion,” submitted the Conversion Appli-
cation and HCA to the FHLBB and FSLIC, and approved
the Business Plan. First Annapolis I, 75 Fed. Cl. at 266.
Thus, it was First Federal, not Bancorp, that was like
Ahmanson and sought assistance to save the thrift.
Second, Ahmanson was able to initiate negotiations
with the Government because it was established before
the negotiations began. See Home Savings, 399 F.3d at
1345. On the contrary, Bancorp was not even in existence
15 FIRST ANNAPOLIS BANCORP v. US
at the time First Federal decided to infuse capital on
March 18, 1987 or when First Federal submitted the
Conversion Application and HCA on November 5, 1987.
Bancorp was not incorporated until November 20, 1987,
more than two weeks after the Conversion Application
and HCA were submitted. First Annapolis I, 75 Fed. Cl.
at 267 n.6. Thus, not only did Bancorp not initiate nego-
tiations or negotiate with the Government, it did not exist
at the time the negotiations began.
Third, the Home Savings transaction included Assis-
tance Agreements that “contained clauses that integrated
FHLBB resolutions and letters issued contemporaneously
with the agreements.” 399 F.3d at 1345. This court found
that the FHLBB resolutions in Home Savings were “uni-
fied” with the Assistance Agreements because “the inte-
gration clauses defined the ‘Entire Agreement’ as
including not just the Assistance Agreements themselves
but also the related resolutions issued by FHLBB.” Id. at
1349. Thus, Ahmanson was a “party to the larger trans-
action[].” Id. However, there is no Assistance Agreement
in this case, and no “larger transaction” existed to which
Bancorp could be a party. Accordingly, unlike Ahmanson,
Bancorp is merely a shareholder and not “an essential
participant as a contracting party.” Home Sav., 399 F.3d
at 1349.
Bancorp’s position is similar to that of some of the
plaintiffs in Southern California. In Southern California,
this court found that individual plaintiff shareholders did
not have standing to sue on behalf of the corporation
because they were not in privity of contract with the
Government. 422 F.3d at 1328–33. The shareholders
entered into a Regulatory Capital Maintenance Agree-
ment (“RCMA”) with the FSLIC, but were not parties to
the Assistance Agreement, the “primary document gov-
erning the transaction,” or recipients of a forbearance
FIRST ANNAPOLIS BANCORP v. US 16
letter from the FHLBB. Id. at 1325–26. This court found
that the RCMA was not integrated into the Assistance
Agreement and was “a separate contract that involve[d]
additional parties and distinct promises.” Id. at 1330.
The court rejected the argument that “a party to one
contract can be deemed a party to a related contract
simply because the separate contracts constitute compo-
nents of one transaction.” Id. Although the shareholders
of the holding company “initiated the conversion and
acquisition processes prior to incorporating [the holding
company],” “negotiated directly with the [G]overnment in
arranging the transaction,” and “suppl[ied] the money
used to rehabilitate [the thrift],” the court found that
“these roles of negotiator and shareholder do not bring the
Individual Plaintiffs into privity of contract with the
[G]overnment in regards to the Assistance Agreement” to
which they were not parties. Id. at 1331.
Similarly, Bancorp was a signatory to the RCMDA,
but was not the recipient of the FHLBB’s Forbearance
Letters. The Government’s goodwill promises were con-
tained in the Forbearance Letters, not the RCMDA. The
RCMDA merely obligated Bancorp to maintain First
Annapolis’s regulatory capital level in exchange for the
Government’s approval of the acquisition—which the
Government gave when it issued the Resolutions. In Cain
v. United States, this court found that the FHLBB’s
“regulatory approval of the proposed conversion” was
“nothing more than [its] performance of its regulatory
function,” which “‘does not create contractual obligations’”
because “‘[s]omething more is necessary.’” 350 F.3d 1309,
1315 (Fed. Cir. 2003) (quoting D & N Bank v. United
States, 331 F.3d 1374, 1378–79 (Fed. Cir. 2003)). Further,
it is irrelevant whether “the regulators . . . were aware
that [Bancorp] w[as] supplying the money that would be
used to rehabilitate [First Annapolis]” because “[n]either
17 FIRST ANNAPOLIS BANCORP v. US
that knowledge, the supplying of the new capital, or
[Bancorp’s] position as [a] stockholder[]” transforms
Bancorp into a party that contracted with the Govern-
ment. Karnes, 342 F.3d at 1319. Finally, unlike the
shareholders in Southern California, Bancorp was not the
initiator or negotiator of the transaction, as discussed
above. See S. Cal., 422 F.3d at 1331.
For the foregoing reasons, we conclude that Bancorp
does not have standing to pursue damages for breach of
contract against the Government. Because the Claims
Court erred in finding that Bancorp had standing, we
reverse. Thus, we need not consider the Government’s
other appeal grounds, namely whether the risk of regula-
tory change was shifted to First Annapolis during the first
five years of its operation, whether Bancorp’s shareholder
loans were a prior material breach of the contract, and
whether the Government’s breach of contract was mate-
rial.
CONCLUSION
Because Bancorp is a shareholder that did not initiate
or negotiate a contract with the Government and was not
in privity with the Government, we hold that Bancorp
does not have standing to sue the Government for breach
of contract and reverse the Claims Court’s decision.
REVERSED
No costs.