ACKERMAN, District Judge:
This matter comes before the court on the motions of plaintiff Malcolm Marsa ("Marsa") and defendant Resolution Trust Corporation ("RTC")
for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the following reasons, Marsa's motion is granted and the RTC's motion is denied.
I. Factual Background
The following facts are undisputed.
Plaintiff Marsa is the former President and Chairman/Chief Executive Officer of Metrobank for Savings F.S.B. ("Metrobank F.S.B.") and Metrobank Financial Group, Inc. ("Metrobank Financial") ("collectively Metrobank"). Marsa resigned from Metrobank on May 10, 1990 pursuant to a "Settlement Agreement and Release" ("Settlement Agreement") executed by the parties that same date.
At the time of his resignation, the terms of Marsa's employment with Metrobank were governed by an employment agreement, dated January 1, 1988 ("Employment Agreement"). The initial term of the Employment Agreement was to end December 31, 1992, at which time it was to be automatically renewed to December 1994. The Employment Agreement provided for a base salary of $ 270,000, plus fringe benefits. Including benefits, Marsa's total yearly earnings were approximately $ 400,000.
In 1989 and 1990, Metrobank suffered considerable losses. Specifically, the 1989 and 1990 Annual Reports for Metrobank Financial show a net income loss for the year ending December 31, 1989 of $ 20,493,000 and a net income loss for the year ending December 31, 1990 of $ 8,330,000. According to the Settlement Agreement, these losses prompted Metrobank to downsize its operations. As a result of the downsizing, Marsa's services were no longer needed and the parties entered into the Settlement Agreement, terminating Marsa's relationship with Metrobank.
According to the Settlement Agreement, Marsa had a claim under the Employment Agreement for approximately $ 1.8 million (four and one-half years remaining under the Employment Agreement x $ 400,000 per year) plus fringe benefits. Pursuant to the Settlement Agreement, the parties agreed to the following:
1) Marsa immediately resigned as an officer, director and employee of Metrobank and its subsidiaries;
2) The Employment Agreement was terminated and Marsa waived all future salary and benefits thereunder;
3) Marsa agreed to receive immediately, upon execution of the Settlement Agreement, a lump sum payment of $ 250,000, and an annual fee of $ 100,000, payable in monthly installments over the succeeding 4 years starting in 1991 and continuing to 1994. In addition, Marsa agreed to sign over all insurance benefits to Metrobank;
4) Marsa agreed that, upon the reasonable request of Metrobank, he would cooperate with Metrobank in connection with any matters pertaining to the business of Metrobank and/or in connection with any litigation against Metrobank; and
5) Marsa agreed to release Metrobank from any claims and rights against Metrobank, including any claims arising under the Employment Agreement.
The settlement Agreement also provided as follows:
In the event any party fails to comply with or breaches any of its obligations under this Settlement Agreement, the other party shall have the right to bring an action against the defaulting party for enforcement of its or his obligations thereunder, and for direct and actual damages caused by such default.
Settlement Agreement at 3, P 6.
On June 14, 1991, thirteen months after the Settlement Agreement was executed, the Board of Directors of Metrobank F.S.B., by resolution, consented to the appointment of a conservator or receiver. On June 27, 1991, the Office of Thrift Supervision ("OTS") appointed the RTC as Receiver for Metrobank F.S.B. pursuant to Order No. 91-394 on the basis that the "OLD THRIFT [Metrobank F.S.B.] is in an unsafe and unsound condition to transact business due to having substantially insufficient capital, in that OLD THRIFT has tangible capital of only .8% and is failing all of its capital requirements." See Order No. 91-394. Pursuant to that same order, the OTS appointed the RTC as Conservator for Metrobank Federal Savings and Loan Association, the new thrift that was taking over the assets of Metrobank F.S.B. In addition, James P. Allen ("Allen") was appointed Managing Agent for Metrobank F.S.B.
On June 28, 1991, the RTC disaffirmed, in writing, both the Employment Agreement and the Settlement Agreement, relying on 12 U.S.C. § 1821(e)(1). Since the disaffirmance, Marsa has not received any monthly installments due under the Settlement Agreement. Accordingly, Marsa commenced this action in April 1991, seeking to recover the $ 400,000 he claims is still due him under the Settlement Agreement, as well as attorneys' fees and costs.
The Financial Institutions Reform and Recovery Enforcement Act of 1989 ("FIRREA"), and the regulations promulgated thereunder, confer broad powers on receivers and conservators of failed depository institutions, Gross v. Bell Sav. Bank, 974 F.2d 403, 407 (3d Cir. 1992), including the power to terminate contracts to which the failed institution is a party. The RTC relies on two sources for its disaffirmance of the Settlement Agreement between Marsa and Metrobank: 12 U.S.C. § 1821(e) and 12 C.F.R. § 563.39.
Marsa argues that the RTC did not have authority to repudiate the Settlement Agreement under either 12 U.S.C. § 1821(e) or 12 C.F.R. § 563.39 because his rights to payment under the agreement had vested. The RTC, in turn, argues that it was indeed authorized to repudiate the settlement Agreement pursuant to both 12 U.S.C. § 1821(e) and 12 C.F.R. § 563.39 and that Marsa's rights had not vested under the agreement.
Inasmuch as the issues raised by these arguments present questions of statutory and contract interpretation, this matter appears ripe for disposition on summary judgment.
A. Standard for Summary Judgment
Summary judgment may be granted only if the pleadings, supporting papers, affidavits, and admissions on file, when viewed with all inferences in favor of the nonmoving party, demonstrate that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); see Todaro v. Bowman, 872 F.2d 43, 46 (3d Cir. 1989); Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir.), cert. dism'd, 483 U.S. 1052 (1987). Put differently, "summary judgment may be granted if the movant shows that there exists no genuine issues of material fact that would permit a reasonable jury to find for the nonmoving party." Miller v. Indiana Hospital, 843 F.2d 139, 143 (3d Cir.), cert. denied, 488 U.S. 870, 102 L. Ed. 2d 147, 109 S. Ct. 178 (1988). An issue is "genuine" if a reasonable jury could possibly hold in the nonmovant's favor with regard to that issue. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). A fact is material if it influences the outcome under the governing law. Id. at 248.
Within the framework set out above, the moving party essentially bears two burdens. First, there is the burden of production, of making a prima facie showing that it is entitled to summary judgment. This may be done either by demonstrating that there is no genuine issue of fact and that as a matter of law; the moving party must prevail, or by demonstrating that the nonmoving party has not shown facts relating to an essential element of the issue for which it bears the burden. Once either showing is made, this burden shifts to the nonmoving party who must demonstrate facts supporting each element for which it bears the burden as well as establish the existence of genuine issues of material fact. Second, there is the burden of persuasion. This burden is a stringent one which always remains with the moving party. If there remains any doubt as to whether a trial is necessary, summary judgment should not be granted. See Celotex Corp. v. Catrett, 477 U.S. 317, 330-33, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); Advisory Committee's Notes on Fed. R. Civ. P. 56(e), 1963 Amendment; see generally C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure § 2727 (2d ed. 1983).
B. 12 C.F.R. § 563.39
Under 12 C.F.R. § 563.39(b)(5),
all obligations under employment contracts between an insured institution and its employees are terminated by operation of law when the receiver determines that the institution is in an unsafe or unsound condition.
See Rush v. Federal Deposit Ins. Corp., 747 F. Supp. 575, 577 (N.D. Cal. 1990). Rights that have already vested, however, will not be affected by termination of the contract. Id. ("Under Section 563.39(b)(5), rights that have vested prior to the regulation's triggering events are not terminated."). The regulation provides in relevant part:
All obligations under the [employment] contract shall be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the institution . . . by the Director or his or her designee . . . when the association is determined by the Director to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be affected by such action.