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FIRST BANK NATL. ASSN. v. FDIC

April 20, 1995

FIRST BANK NATIONAL ASSOCIATION, Trustee
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, Receiver for Meritor Savings Bank



The opinion of the court was delivered by: HARVEY BARTLE, III

 Bartle, J.

 April , 1995

 Plaintiff, First Bank National Association, Trustee ("First Bank"), brought this action for breach of contract against the defendant, the Federal Deposit Insurance Corporation ("FDIC"), pursuant to the Federal Deposit Insurance Act, 12 U.S.C. § 1811 et seq., as amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). First Bank alleges that the FDIC, as receiver for Meritor Savings Bank ("Meritor"), is liable for sums due under a sublease of the landmark PSFS building Meritor once occupied at 12 South 12th Street, Philadelphia, Pennsylvania (the "PSFS building"). Jurisdiction arises pursuant to 12 U.S.C. §§ 1819(b)(2)(A) and 1821(d)(6).

 The case was tried before the court without a jury on April 5 and 6, 1995. The following constitutes this court's findings of fact and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure.

 Meritor, the owner of the PSFS building, entered into a complex series of lease and sublease agreements with First Bank and various other entities *fn1" during the 1980's. Meritor apparently made these agreements as part of an arrangement to obtain loans. As a result of this series of agreements, First Bank became Meritor's landlord with respect to the PSFS building. The sublease was to run until December 31, 2006, with options to renew the sublease until December 31, 2036.

 The Secretary of Banking of the Commonwealth of Pennsylvania declared Meritor to be in an unsafe and unsound condition on December 11, 1992. On the same day, the FDIC was appointed Meritor's receiver. On March 31, 1993, the FDIC disaffirmed Meritor's sublease of the PSFS building pursuant to 12 U.S.C. § 1821(e)(1). From the date of the FDIC's appointment as receiver until the date of the disaffirmance, the FDIC was bound by the terms of the sublease. § 1821(e)(4).

 Paragraph 4(a) of the sublease between First Bank and Meritor required Meritor to "pay to [First Bank] in lawful money of the United States as fixed rent for the Premises" the amount of $ 1,806,000 per quarter. Paragraph 6(a)(i) committed Meritor to pay "all taxes, assessments, governmental or quasi-governmental levies, fees, water and sewer rents and charges, and all other governmental charges" imposed during the term of the sublease. Pursuant to Paragraph 6(b) of the sublease, Meritor was also obligated to

 
comply with and cause the Premises to comply with (i) all laws, ordinances and regulations, and other governmental rules, orders and determinations now or hereafter enacted, made or issued, whether or not presently contemplated ....

 Paragraph 9(a) of the sublease required Meritor, at its own expense, to

 
maintain all parts of the Premises in good repair and condition except for ordinary wear and tear and ... [to] take all action and ... make all structural and non-structural, foreseen and unforeseen and ordinary and extraordinary changes and repairs which may be required to keep all parts of the Premises in good repair and condition ....

 Pursuant to § 1821(e)(4)(B), First Bank, as lessor, is "entitled to contractual rent" from the FDIC "accruing before ... the disaffirmance [of the lease] ... becomes effective." In this case, as noted above, the FDIC disaffirmed the lease as of March 31, 1993. *fn2" First Bank claims that the FDIC is liable under § 1821(e)(4)(B) for

 (1) $ 1,404,666.67 in unpaid "fixed quarterly rent" for the period October 1, 1992 through December 11, 1992;

 
(2) $ 224,119.68 in property taxes for the period January 1, 1993 through March 31, 1993;
 
(3) $ 285,000 for modification of the building to comply with the Americans with ...

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