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U.S. Court of Appeals Affirms $12.5 Million Award in Winstar-Related Case.

news | November 21, 2006

On November 16, 2006, the U.S. Court of Appeals for the Federal Circuit affirmed the contract liability of the United States to the firm’s client, the Caroline Hunt Trust Estate (“CHTE”) of Dallas, Texas. The appellate court also affirmed $12.5 million of damages to CHTE, after reducing slightly the original damage award made to CHTE in 2005 by the U.S. Court of Federal Claims (“CFC”). This is a Winstar-related case in which the government vigorously contested both contract liability and damages since suit was filed in 1995.

In the 1970s and 1980s, CHTE owned a large, well-regarded savings association in Dallas, Texas, which was solicited by the government in 1988 to acquire a number of financially troubled institutions as part of the government’s “Southwest Plan.” After a month-long trial in 2003, CFC Senior Judge Merow found that CHTE’s and its subsidiary bank’s various agreements concerning these 1988 acquisitions were part of a larger enforceable contract between CHTE and the government. The government breached that contract in 1989, leading to the failure of CHTE’s savings association in 1990. The damage award was based on the value of CHTE’s contributions made to facilitate the 1988 acquisitions less offsetting benefits received by CHTE. The Federal Circuit affirmed all of these findings by the CFC Trial Court and declared that even though CHTE had not signed the Assistance Agreement executed by its thrift and the FSLIC, CHTE nonetheless exchanged valuable consideration directly with the government and proved its contract party standing and its entitlement to damages for the government’s breach of contract.

Hollingsworth LLP handled this litigation on behalf of CHTE.