On August 11, U.S. SDNY granted the FDIC’s motion to dismiss in a breach of contract case alleged by an individual against the FDIC, acting as receiver for a bank. The plaintiff, a real estate investment firm manager, alleged the FDIC breached his right of first refusal on multi-family housing loans after the bank experienced a “wave of defaults” in mid-2020. He purchased 48 defaulted properties and assumed 35 preexisting loans at face value. When the FDIC announced the sale of equity in a joint venture holding the loan portfolio, the plaintiff tried to exercise his right of first refusal, but the FDIC declined it.
The court found that none of the transactions — including the placement of the bank in receivership, transfer of loans to the bank’s temporary bridge bank, or sale of joint venture equity — triggered the plaintiff’s right of first refusal under the loan agreements. The court reasoned that the creation of the bridge bank and the subsequent asset transfers were not sales to bona fide third parties, thus the right of first refusal was not triggered. As a result, the court concluded the FDIC had no obligation to provide notice to the plaintiff as he failed to state a claim for breach of contract.
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