Glendale Federal v. United States
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Glendale Federal v. United States | |
Court | Court of Appeals for the Federal Circuit |
---|---|
Citation | 378 F.3d 1308 |
Date decided | August 9, 2004 |
Followed | United States v. Winstar |
Facts
In response to the savings & loan crisis of the 1980s (S&L crisis), the US federal government asked strong banks to take over the failing ones. In return, the government would lax the minimum capital requirements of the rescuing banks.
As the financial scene improved in the US, the minimum capital requirements of banks was upped over a decade later.
- Glendale Federal Bank, FSB = "Glendale" = plaintiff = forced to pay higher interest & insurance fees because to comply with higher minimum capital requirements
- the United States government = "United States" = defendant
Procedural History
Glendale & similarly-situated banks sued the federal government in federal claims court in Washington DC. This resulted in United States v. Winstar (1996).
Glendale asked for expectancy damages for lost profits.
Glendale lost because the federal court decided that expectation damages were too speculative.
There were 2 trial to determine the amount of monetary damages. Glendale asked for "wounded-bank reliance damages" because Glendale had to pay more (1) interest & (2) insurance fees after it had taken on the failing S&Ls. Glendale also asked for $527 million in reliance damages for actual out-of-pocket losses.Issues
Are reliance damages supportable when the damages are based on actual, proven losses that would never have been incurred but for the contract & its subsequent breach?
Holding
Yes. Reliance damages are supportable when the damages are based on actual, proven losses that would never have been incurred but for the contract & its subsequent breach.
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