OCTOBER TERM, 1995
Syllabus
certiorari to the united states court of appeals for the federal circuit
No. 95-865. Argued April 24, 1996—Decided July 1, 1996
Realizing that the Federal Savings and Loan Insurance Corporation (FSLIC) lacked the funds to liquidate all of the failing thrifts during the savings and loan crisis of the 1980's, the Federal Home Loan Bank Board (Bank Board) encouraged healthy thrifts and outside investors to take over ailing thrifts in a series of "supervisory mergers." As inducement, the Bank Board agreed to permit acquiring entities to designate the excess of the purchase price over the fair value of identifiable assets as an intangible asset referred to as supervisory goodwill, and to count such goodwill and certain capital credits toward the capital reserve requirements imposed by federal regulations. Congress's subsequent passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) forbade thrifts to count goodwill and capital credits in computing the required reserves. Respondents are three thrifts created by way of supervisory mergers. Two of them were seized and liquidated by federal regulators for failure to meet FIRREA's capital requirements, and the third avoided seizure through a private recapitalization. Believing that the Bank Board and FSLIC had promised that they could count supervisory goodwill toward regulatory capital requirements, respondents each filed suit against the United States in the Court of Federal Claims, seeking damages for, inter alia, breach of contract. In granting each respondent summary judgment, the court held that the Government had breached its contractual obligations and rejected the Government's "unmistakability defense"—that surrenders of sovereign authority, such as the promise to refrain from regulatory changes, must appear in unmistakable terms in a contract in order to be enforceable, see Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U. S. 41, 52—and its "sovereign act" defense—that a "public and general" sovereign act, such as FIRREA's alteration of capital reserve requirements, could not trigger contractual liability, see Horowitz v. United States, 267 U. S. 458, 461. The cases were consolidated, and the en banc Federal Circuit ultimately affirmed.
Held: The judgment is affirmed, and the case is remanded.
64 F. 3d 1531, affirmed and remanded.
Justice Souter, joined by Justice Stevens, Justice O'Connor, and Justice Breyer, concluded in Parts II, III, IV, and IV-C that
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