Federal Deposit Insurance v. August Income Growth Fund 81

Opinion

GATES, J. The parties to the instant appeal, August Income Growth Fund 81 (August), the Federal Deposit Insurance Corporation (FDIC) and Capital Bank of California (Capital Bank), submitted to the superior court for summary adjudication a number of issues relating to the assignment of a lease executed by Valley State Bank. The real property covered by the agreement was owned by August and occupied by the bank as its place of business.

August challenges that portion of the court’s order which permitted the FDIC and Capital Bank to retain possession and control of the leased premises without paying August an outstanding obligation of $93,725.74, or even guaranteeing its payment in full by some specified future date.

[223]Because the matter was presented upon stipulated facts and exhibits, the evidence was not in conflict. It established that on September 28, 1987, the Superintendent of Banks for the State of California (superintendent) took possession of the property and business of Valley State Bank and ordered that it be finally liquidated. (Fin. Code, § 3100.) He immediately “tendered] to the [FDIC] the appointment as receiver of such bank.” (Fin. Code, § 3221.) The FDIC accepted (Fin. Code, § 3222), thereby succeeding to the “powers, rights and privileges” granted to the superintendent with respect to the liquidation of the bank. (Fin. Code, § 3223.)

On that same day, September 28, pursuant to a purchase and assumption agreement and with the approval of the trial court, the FDIC, as receiver, transferred to Capital Bank certain assets, including the Valley State Bank/August lease. (Fin. Code, §§ 3110, 3110.1, 3131.) At the time of the transaction, Valley State Bank owed August $93,725.74 for common area charges, administration fees, general property tax increases and insurance increases which had accrued from 1983 through 1987. Although Capital Bank paid August $9,172.98 as its pro rata share of the various expenses associated with the lease from September 28, 1987, through December 31, 1987, August received no payment for the remaining amounts owed, except in the form of a receiver’s certificate of proof of claim issued by the FDIC as receiver for Valley State Bank.

For reasons it neither justifies nor attempts to explain, the FDIC elects to refer to August, a landlord with a right to repossess its property in the event of a breach by the lessee, as an “unsecured creditor.” From this remarkable premise it then argues that inasmuch as “[a]ll unsecured pre-closing debts of the insolvent bank must ... be satisfied by way of a Receivership Certificate pending liquidation of the assets of the insolvent bank[,]. . . [t]o pay August in currency, prior to the close of the Receivership would violate the legislative scheme embodied in California Financial Code section 3119.5 [relating to the order of priority for expenses and claims of unsecured creditors].” However, the premise being faulty, the conclusion necessarily fails.