Insights & Events

In 2005, the U.S. Court of Federal Claims (“CFC”) issued its decision in the Winstar-related case, Caroline Hunt Trust Estate v. United States, a breach of contract action that was vigorously contested by the government both as to contract liability and as to damages. The case was tried for a full month in the summer of 2003, and post-trial briefing continued thereafter, primarily concerning decisions in other such cases.

The Caroline Hunt Trust Estate (“CHTE”) owned a 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 Federal Home Loan Bank Board’s “Southwest Plan.” Citing ample uncontroverted trial testimony, 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, which the government breached in 1989, leading to the failure of CHTE’s savings association in 1990. The damages award of $14.8 million was based on the value of CHTE’s contributions made to facilitate the 1988 acquisitions less offsetting benefits received by CHTE.

The CFC decision also rejected numerous government defenses, including challenges to the agency’s contracting authority and assertions that the government’s breach was not material whereas the government contended that the plaintiff had allegedly engaged in prior material breaches. The CFC also rejected the legal arguments made by the government against restitutionary recovery to CHTE and accepted CHTE’s expert witness testimony and calculations about the value of CHTE’s capital contributions made as part of the 1988 contract.

Hollingsworth LLP handled this litigation on behalf of CHTE.