Federal Deposit Insurance v. Frates (44 F. Supp. 2d 1176, 1999)

United States District Court for the Northern District of Oklahoma 1999-03-30

Banks and Banking

Citations

Full opinion text

ORDER

HOLMES, District Judge.

This matter comes before the Court on the Report and Recommendation of the United States Magistrate Judge (Docket # 392) with respect to Plaintiffs First Motion for Summary Judgment (Docket # 178), Plaintiffs Cross-Motion for Summary Judgment (Docket #369), and Defendant Joseph A. Frates’ Second Motion for Summary Judgment on Counts I and II (Docket # 356). Both Plaintiff and Defendant have filed objections to the report and recommendation and have filed responses to the objections.

When a party objects to the report and recommendation of a Magistrate Judge, Rule 72(b) of the Federal Rules of Civil Procedure provides in pertinent part that:

[t]he district judge to whom the case is assigned shall make a de novo determination upon the record, or after additional evidence, of any portion of the magistrate judge’s disposition to which specific written objection has been made in accordance with this rule. The district judge may accept, reject, or modify the recommendation decision, receive further evidence, or recommit the matter to the magistrate judge with instructions.

Fed.R.Civ.P. 72(b).

Based upon a careful review of the Report and Recommendation of the Magistrate Judge, the objections and responses of the parties, and the record, the Court finds that the Report and Recommendation granting Defendant’s Motion for Summary Judgment and denying Plaintiffs Motions for Summary Judgment should be, and is hereby, adopted. Plaintiffs First Motion for Summary Judgment (Docket # 178) and Plaintiffs Cross-Motion for Summary Judgment (Docket # 369) are hereby denied. Defendant Joseph A. Frates’ Second Motion for Summary Judgment on Counts I and II (Docket # 356) is hereby granted.

IT IS SO ORDERED.

REPORT AND RECOMMENDATION

JOYNER, United States Magistrate Judge.

The following motions are now before the Court:

1. “Plaintiffs First Motion for Summary Judgment (Breach of Contract and Warranty Claims),” [Doc. No. 178];

2. “Defendant Joseph A. Frates’ Second Motion for Summary Judgment on Counts I and II,” [Doc. No. 356]; and

3. “Plaintiffs Cross-Motion for Summary Judgment [regarding Mr. Frates’ Second Motion for Summary Judgment on Counts I and II],” [Doc. No. 369].

All of these motions seek summary adjudication of the First and Second Claims For Relief in the Federal Deposit Insurance Corporation’s (“FDIC”) Third Amended Complaint. See Doc. No. 140. The First and Second Claims For Relief state causes of action solely against Defendant Joseph A. Frates. The undersigned has thoroughly reviewed the parties’ briefs and the evidentiary materials submitted. The undersigned offers this report and recommends that Mr. Frates’ motions for summary judgment be GRANTED and the

FDIC’s motions for summary judgment be DENIED.

As to the First Claim for Relief the undersigned finds that Mr. Frates had an enforceable obligation to personally guarantee Equivest Financial Corporation’s (“Equivest”) obligation to contribute additional capital to State Federal Savings and Loan Association (“State”), but that Mr. Frates’ obligation was not triggered because a contribution was not necessary to raise State’s regulatory capital to 5% of State’s total liabilities as of December 30, 1986. As to the Second Claim for Relief, the undersigned finds that even if Mr. Frates in fact promised to indemnify State against any loss suffered in connection with the Sierra Gateway property, that promise is not enforceable through an action at law because Mr. Frates’ promise cannot be validated under either the doctrine of consideration or the doctrine of promissory estoppel.

I. INTRODUCTION

A. Equivest’s Acquisition of State

By the mid-1980’s the savings and loan industry was in serious trouble and on the verge of collapse. Prior to the late 1970’s, savings and loan associations were granting long-term, fixed-rate mortgages at very low interest rates. When interest rates and inflation rose significantly in the early 1980’s, savings and loan associations were forced to increase the interest rates they offered to attract depositors. When the cost of these high interest, short-term deposits overtook the revenues from the low interest, long-term mortgages, many savings and loan associations began losing money at an alarming rate. Approximately 485 thrifts failed between 1981 and 1988. See United States v. Winstar Corp., 518 U.S. 839, 116 S.Ct. 2432, 2440-41, 135 L.Ed.2d 964 (1996).

The thrift industry in Oklahoma was not immune. During the 1980’s, most savings and loan associations in Oklahoma failed or became insolvent. State Federal Savings and Loan Association, located in Tulsa, Oklahoma, was no exception. By the summer of 1986, State was insolvent and it was a candidate for a receivership which would be very costly to the Federal Savings and Loan Insurance Corporation (“FSLIC”).

Realizing that the FSLIC lacked sufficient funds to liquidate the failing thrifts, the Federal Home Loan Bank Board (“FHLBB”) sought to avoid insurance liability by encouraging outside investors to take over failing savings and loan associations like State. Winstar, 116 S.Ct. at 2442. Defendant, Joseph A. Frates, was one such investor. Mr. Frates and others formed Equivest Financial Corporation as a holding company to acquire State. Pursuant to an Acquisition Agreement between State and Equivest, State was to convert from a mutual form of ownership to a stock form of ownership. In exchange for 100% of State’s newly-acquired stock, Equivest was to convey to State real property worth at least $27.4 million (“the Contributed Property”). See Doc. No. 179, Bates #4967-5007. Equivest’s obligation to acquire State was subject to approval of all relevant applications by the FHLBB “without material modification.” Id. at ¶1.1.

On December 30, 1986, when Equivest officially acquired State, Equivest conveyed several parcels of real property to State in exchange for 100% of State’s stock. One of the parcels of property conveyed by Equivest to State is known as the Sierra Gateway property (“Sierra property”) located in Fontana, California. Mr. Frates owned an interest in the Sierra Gateway property which he conveyed to Equivest on December 29,1986.

Equivest operated State from December 30, 1986 to February 16, 1990. On February 16, 1990, the Office of Thrift Supervision (“OTS”) declared State insolvent and appointed the Resolution Trust Company (“RTC”) as State’s receiver

B. The Players

Mr. Frates contributed his interest in the Contributed Property and $1,166,000 to capitalize Equivest. Mr. Frates held 100% of Equivest’s voting/common stock, which he acquired for $1,000,000, and .4% percent of the preferred stock, which he obtained for $166,000. The majority of the preferred stock in Equivest was owned by Mr. Frates’ immediate family — his daughter, son-in-law and sons. See Doe. No. 179, Bates # 5462. Mr. Frates also served as president and chief executive officer for Equivest, until January 10, 1987 when Thorn C. Huffman replaced Mr. Frates as president of Equivest. Mr. Frates continued to serve as chairman of Equivest’s board of directors after January 10, 1987.

Mr. Frates was an active part of the senior management of both State and Equivest, State’s holding company. Upon Equivest’s acquisition of State at the end of 1986, Mr. Frates became the vice-chairman of State’s board of directors. On February 18, 1987, Mr. Frates became State’s chief executive officer and chairman of State’s board of directors. Mr. Frates resigned his CEO and chairman positions on June 30, 1987, but continued to. serve as a member of State’s board of directors until October 31,1989.

Thorn Huffman acted as an advisor and a negotiator on behalf of Equivest and assisted in Equivest’s acquisition of State. Mr. Huffman was a director for Equivest and on January 10, 1987, Mr. Huffman replaced Mr. Frates as president of Equi-vest. Mr. Frates remained as Equivest’s Chairman of the Board. As president of Equivest, Mr. Huffman served as Equi-vest’s liaison to State’s board of directors from early January 1987 to January 1989. Mr. Huffman then became. State’s chief executive officer and chairman of the board. Mr. Huffman resigned from Equi-vest’s board on May 19,1989.

At all relevant times, Max K. Naegler served as a director, officer and general counsel for Equivest. Mr. Naegler also served as vice president and secretary for Equivest. Mr. Naegler conducted the closing of Equivest’s acquisition of State. Mr. Naegler also acted as counsel under the direction of Robert Merrick for various other Frates-related entities. Mr. Frates had entrusted his personal affairs to Mr. Naegler, as a lawyer, and to Robert Merrick, as a business adviser. Doc. No. 371, Frates Deposition, p. 7, In. 22 to p. 8, In. 18; p. 21, In. 25 to p. 22, In. 8; and pp. 163-64.

Robert Merrick was a business associate of Mr. Frates and he was involved in several separate business enterprises with Mr. Frates. Mr. Merrick worked for the “Frates organization” from 1975-1990. A company by the name of Equivest Management. Company was formed to provide centralized management functions for the various Frates organizations. Mr. Merrick was the president of that management company. In effect, Mr. Merrick was something akin to the chief operating officer of the “Frates organization,” which was not one single entity, but a number of different businesses. Pertinent to this case, Mr. Merrick was a shareholder in Equivest and, before the Acquisition Agreement between State and Equivest was closed, he was the principal negotiator on behalf of the Equivest investors with the FHLBB. According to Mr. Huffman, Mr. Merrick was Mr. Frates’ agent, with the authority to negotiate on Mr. Frates’ behalf, bind Mr. Frates personally, and generally conduct Mr. Frates’ business affairs. Doc. No. 371, Huffman Deposition, p. 256, In. 11 to p. 257, In. 7. Mr. Frates testified that he never authorized Mr. Huffman, Mr. Naegler or Mr. Merrick to negotiate with the FHLBB on his behalf. Id. Frates Deposition, p. 34, In. 14-20.

C. The Sierra Property and The Kaiser Litigation

Mr. Frates obtained his interest in the Sierra property through his involvement with a group of investors known as the Frates Group. In 1983, the Frates Group acquired a controlling interest in Kaiser Steel Corporation (“Kaiser”). Mr. Frates served as chairman of Kaiser’s board of directors from February 1984 to April 1985.

In 1985, Kaiser owned the Sierra property. Through a series of exchanges, not relevant here, the Sierra property was divided between the individual investors that made up the Frates Group. Mr. Frates, as a member of the Frates Group, obtained a 1.1844% share of the Sierra property as a tenant in common with the other owners of the Sierra property. It was this interest in the Sierra property which Mr. Frates eventually transferred to Equi-vest.

When Kaiser conveyed the Sierra property in 1985, Kaiser was undergoing a major refinancing. Kaiser eventually found itself in a Chapter 11 bankruptcy in 1987. In March 1987, three months after Equivest had acquired State, Kaiser filed a notice of lis pendens on the Sierra property in connection with an adversary proceeding Kaiser had initiated within its Chapter 11 bankruptcy. Kaiser alleged that the Sierra property transfer was an avoidable preference because the property was transferred for less than adequate consideration and that the transfer occurred when Kaiser was insolvent. The complaint in the adversary proceeding sought, among other things, a judgment voiding the transfer of the Sierra property. In effect, Kaiser was alleging that State did not have valid title to the Sierra property because the grantors (i.e., Mr. Frates and others) to State’s grantor (i.e., Equi-vest) did not have good title. State was eventually named as a party to the adversary proceeding and State entered an appearance to protect its interest in the Sierra property.

D. Summary of the FDIC’s Claims

The pleadings filed in connection with the parties’ motions for summary judgment stand almost three feet tall. The FDIC’s claims can, however, be boiled down to the following:

1. First Claim for Relief — Mr. Frates’ Obligation to Contribute Additional Capital to State Pursuant to The Personal Guaranty Imposed on Him By Condition 7 of FHLBB Resolution 86-1296

The FDIC alleges that:

(1) As a condition of the FHLBB’s approval of State’s application to convert to a stock form and Equivest’s application to acquire control of State, Equivest was required to enter into an agreement with the FSLIC, and that agreement required Equivest

(a) to guarantee that the Contributed Property would be worth at least $27.4 million net after new appraisals, and

(b) to contribute additional capital if the new appraisals showed a net value of less than $27.4 million;

(2) As a condition of the FHLBB’s approval, the FHLBB also required Mr. Frates to enter into an agreement with the FSLIC personally-guaranteeing Equivest’s obligation to contribute additional capital;

(3) Knowing these conditions, Equivest and Mr. Frates consummated the acquisition of State and began operating State;

(4) Mr. Frates has failed and refused to sign the guaranty agreement he agreed he would sign; and

(5) New appraisals show a net value for the Contributed Property of less than $27.4 million.

The FDIC argues that (1) Mr. Frates has violated the FHLBB’s resolutions by failing to contribute additional capital to State, (2) the FDIC can enforce Mr. Frates obligation to give a guaranty, and (3) the measure of damages for Mr. Frates’ violation of the FHLBB’s resolutions should be the difference between $27.4 million and the net value of the Contributed Property as shown by the new appraisals.

2. Second Claim for Relief — Mr. Frates’ Breach Of An Oral Agreement to Indemnify State Against Loss In Connection With the Sierra Property and the Kaiser Litigation

The FDIC alleges that shortly after State learned of the Kaiser litigation and the lis pendens on the Sierra property, Mr. Frates made certain oral representations to State’s board and the FHLBB. The FDIC argues that (1) Mr. Frates orally agreed to indemnify State against any loss State might suffer in connection with the Kaiser litigation; (2) that State suffered losses as a result of the Kaiser litigation; and (3) that Mr. Frates has breached his oral indemnification agreement by failing to compensate State for these losses.

II. FIRST CLAIM FOR RELIEF — Mr. Frates’ Obligation to Contribute Additional Capital to State PursuaNt to The Personal Guaranty Imposed on Him By Condition 7 oe FHLBB Resolution 86-1296

A. Historical Background op the Savings and Loan Industry

1. Statutory and Regulatory Framework Applicable to Federally Chartered and Federally Insured Savings and Loan Associations

After the Great Depression, the federal government began to actively regulate the entire financial services industry, including savings and loan associations. With three major pieces of legislation, the federal government assumed the dominant role in the regulation of the thrift industry. See The Federal Home Loan Bank Act of 1932 (“FHLBA”), 12 U.S.C. §§ 1421-1449; The Home Owners’ Loan Act of 1933 (“HOLA”), 12 U.S.C. §§ 1461-1470; and The National Housing Act of 1934 (“NHA”), 12 U.S.C. §§ 1701-1750g.

The FHLBA established the Federal Home Loan Bank System (“FHLBS”), consisting of twelve regional Federal Home Loan Banks with the Federal Home Loan Bank Board (“FHLBB”) as its administrative head. See 12 C.F.R. § 500.32 (1986). The FHLBB was established by Congress as an independent agency in the executive branch of the government. 12 U.S.C. § 1437(b). The Chairman of the Bank Board was the chief federal regulator of the savings and loan industry. Congress created the FHLBS to rescue the failing, post-depression thrift industry. Congress hoped to achieve this goal by allowing savings and loan associations to become voluntary members of the FHLBS and receive loans, collateralized by their mortgage portfolios, from the Federal Home Loan Bank in their region. A year later, Congress enacted HOLA, which authorized the FHLBB to, among other things, charter and regulate federal savings and loan associations. See 12 C.F.R. § 500.3 (1986). Much of the day-to-day-supervision of savings and loan associations was in fact carried out by employees of the regional Federal Home Loan Banks, pursuant to authority delegated to those employees by the FHLBB. See 12 C.F.R. §§ 500.10 and 501.11 (1986).

A year after HOLA was enacted, Congress enacted the NHA, which established the Federal Savings and Loan Insurance Corporation (“FSLIC”) to insure deposits of federal and state chartered savings and loan associations. The FSLIC was created as a corporate instrumentality of the United States, operating under the direction of and according to the bylaws, rules and regulations established by the FHLBB. 12 U.S.C. §§ 1487(b), 1725(a), 1725(c), and 1730(k)(l). See also 12 C.F.R. § 500.4 (1986). The FHLBB is, therefore, the administrative and supervisory head of the FSLIC. As such, the FHLBB had supervisory authority over FSLIC-insured savings associations, including savings associations chartered under state law.

Under the regulatory regime ultimately-created by Congress, the FHLBB became responsible for administering the FHLBA, HOLA and NHA. 12 C.F.R. § 500.1 (1986). The FHLBB was responsible for (1) chartering, examining and supervising federal savings and loan associations; (2) administering the FSLIC’s deposit insurance responsibilities, including examining and supervising any FSLIC-insured institution, state or federal; and (3) supervising the provision of credit and other services provided by the regional Federal Home Loan Banks. The consolidation of these functions in one agency created potential conflicts of interest which in part led Congress to enact the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”) and restructure the regulatory framework within which the thrift industry operates.

2. Savings and Loan Association Charter Conversions and The Acquisition of Savings and Loan Associations

Initially, HOLA provided for only one form of federal charter — the mutual form. Mutual savings and loan associations have no stockholders. They are operated for the mutual benefit of their depositors and it is the depositors who elect the board of directors. “Nominally the [depositors] own the mutual [association], but it is ownership in name only. [The depositors] cannot sell what they ‘own,’ and if they withdraw savings they receive only the nominal value of the account rather than a portion,, of the mutual’s net worth, which is valuable to them only to the extent it permits the bank to pay higher interest.... Increasing competition among financial institutions has led to pressure to replace the mutual form with a stock form that assigns ownership interests more explicitly and makes them transferable.” Ordower v. Office of Thrift Supervision, 999 F.2d 1183, 1185 (7th Cir.1993).

Congress amended HOLA in 1948 to permit federal mutual associations to convert to stock associations. In a conversion, the mutual association exchanges its mutual charter for a stock charter. The new stock association then issues stock to investors, and the investors become the owners of the association. See Dougherty v. Carver Fed. Sav. Bank, 112 F.3d 613, 615-16 (2nd Cir.1997) (for a historical overview of Congress’ treatment of federal charter conversions).

Prior to FIRREA, the FHLBB regulated and the FSLIC insured savings and loan associations. Banks were separately regulated and they were insured by the FDIC. FIRREA created the Office of Thrift Supervision and abolished the FHLBB and the FSLIC. The OTS was vested with the FHLBB’s power to regulate savings and loan associations and the FDIC assumed the FSLIC’s insurance functions. Thus, FIRREA, consolidated the regulation and insurance of banks and savings and loan associations.

FIRREA’s amendments became effective August 9, 1989. State was declared insolvent and the RTC was appointed as State’s receiver on February 16, 1990. State’s receivership and this litigation occurred after the passage of FIRREA and FIRREA’s new rules have been, applied to State’s receivership and this litigation. See Doc. Nos. 159, 246 and 337. Nevertheless, Equivest acquired State in 1986 before the passage of FIRREA. Consequently, the FHLBB, and not the OTS, was the agency with regulatory authority over State at the time Equivest acquired State. The undersigned will, therefore, evaluate State’s charter conversion and Equivest’s acquisition of State under the pre-FIRREA regulatory framework.

When Equivest acquired State in December 1986, State was a federally chartered depository institution, whose deposits were insured by the FSLIC. Under the law in December 1986, no savings and loan association, whose deposits were insured by the FSLIC, could convert itself from a mutual association to a stock association unless the association filed an application in accordance with the rules and regulations of the FHLBB/FSLIC and obtained approval of the conversion from the FHLBB/FSLIC. 12 U.S.C. §§ 1464(0(2) and 1725(j)(l). Also under the law in December 1986, it was unlawful, except under circumstances not relevant here, for a company that was not already a savings and loan holding company to acquire control of a savings and loan association, whose deposits were insured by the FSLIC, without filing an application and obtaining prior, written approval of the acquisition by the FSLIC. 12 U.S.C. §§ 1730(q) and 1730a(e)(l)(B).

B. State’s Conversion to A Stook Association and Equivest’s Acquisition of State

On July 31, 1986, State filed an “Application for Voluntary Conversion” with the FHLBB and the FSLIC. See Doc. No. 179, Bates # 5007-5036. State sought to convert itself from the mutual form to the stock form. State communicated about its application with the staff at the Federal Home Loan Bank of Topeka (“Topeka FHLB”), which was the regional Federal Home Loan Bank servicing State. Id. at Bates # 5048-49, 5079-82, 5094-98, 5100-5102, and 5106. The FHLBB, as the operating head of the FSLIC, approved the application, with certain conditions, on December 30, 1986. See FHLBB Resolution 86-1295, Doc. No. 179 as Bates #7963-7967. Of particular relevance to this lawsuit, the FHLBB imposed the following condition on its approval of State’s conversion application:

[Condition 6 of the Conversion Resolution]

The real property invested in State by Equivest shall be initially recorded by State at an aggregate value of not more than the Applicant’s appraisal furnished to the Federal Home Loan Bank of Topeka, (‘Topeka Bank’) (‘original valuation’), subject to revaluation as follows. An appraisal comporting with Memorandum R 41c, shall be made of all properties (‘new appraisal’) within a period of six months, unless extended for up to three months by the [Principal Supervisory Agent] for good cause shown. The appraisal shall be performed by an independent MAI-eertified appraiser selected in the sole discretion of the [Principal Supervisory Agent] and with the concurrence of the [Office of Regulatory Policy, Oversight and Supervision], and paid for by the Topeka Bank, to be reimbursed by Equivest within 30 days of a demand. The contributed real estate shall be revalued to the value established by this new appraisal and any difference between $27.4 million net value and the new appraisal shall be infused by Equi-vest and guaranteed by Frates pursuant to stipulations entered into by Equivest and J.A. Frates under Condition 7 of Board Resolution 86-1296 [i.e., Condition 7 of the Acquisition Resolution.]

Id. at Condition 6 under Supervisory Conversion of State, pp. 2-3.

On July 31, 1986, Equivest filed an application with the FSLIC for permission to acquire control of State. Equivest amended its application once. See Doc. No. 357, Exhibit 3. Equivest also communicated about its application with the staff at the Topeka FHLB. See Doc. No. 179, Bates #5048-49, 5079-82, 5094-98, 5100-5102, and 5106. The FHLBB, as the operating head of the FSLIC, approved Equivest’s application, with certain conditions, on December 30, 1986. See FHLBB Resolution 86-1296, Doc. No. 179 as Bates # 7068-7071. Of particular relevance to this lawsuit, the FHLBB imposed the following condition on its approval of Equivest’s acquisition application: -

[Condition 7 of the Acquisition Resolution]

Within thirty days of the acquisition, Equivest and J.A. Frates, personally, shall stipulate to the [FSLIC] that, if the appraisal required in Condition 6 of ‘Supervisory Conversion of State ’ in Board Resolution No. 86-1295 (‘Condition 6’) [i.e., Condition 6 of the Conversion Resolution], values the contributed real estate at less than a valuation of $27.4 million net, then Equivest will cause to be contributed to State assets, in a form and valued at appraisals approved by the [Principal Supervisory Authority], equal to or greater than the difference between the new appraisal value and $27.4 million net; this contribution shall be guaranteed personally by Mr. Frates to the extent needed to bring State’s regulatory capital to at least 5% of liabilities; and that Equivest and Mr. Frates shall cause the required asset contributions to be made within 80 days of recording any reductions in the value of the contributed properties[.]

Id. at Condition 7, p. 3.

State and Equivest negotiated with the staff at the Topeka FHLB up until December 29, 1986. Early in the day on Tuesday, December 30, 1986, Equivest and State communicated on the phone with the FHLBB’s Office of General Counsel and they were told on the phone what the FHLBB’s Office of General Counsel thought would be in the resolutions passed by the FHLBB. The Conversion and Acquisition Resolutions (i.e., Resolutions 86-1295 and 86-1296) were actually approved by the FHLBB in the afternoon on December 30, 1986. After learning that the FHLBB had approved the conversion and acquisition applications, Equivest and State closed the Acquisition Agreement between themselves in the late afternoon of December 30, 1986 by transferring State’s stock to Equivest and Equivest’s property to State. Equivest and State closed the Acquisition Agreement, operating under the assumption that the resolutions actually passed by the FHLBB contained the terms communicated to them by the FHLBB’s Office of General Counsel. Neither Equivest nor State reviewed the resolutions actually passed by the FHLBB prior to the closing.

Once Equivest and State received copies of the resolutions actually passed by the FHLBB, they began objecting, through Charles W. Petty, regulatory counsel for State and Equivest, to the conditions the FHLBB had imposed on the approval of the conversion and acquisition applications. Essentially, Equivest and State argued that the resolutions actually passed by the FHLBB contained terms which were materially different from those which had been discussed with the staff at the Topeka FHLB and with the staff at the FHLBB’s Office of General Counsel, and that the terms were different from those than had been communicated on the phone to Equivest and State by the Office of General Counsel on the morning of December 30, 1986. Staff at the Topeka FHLB admitted that the resolutions contained terms different from what had been discussed between State, Equivest and the Topeka FHLB staff. The Topeka FHLB staff tried to have the resolutions changed. Ultimately, the FHLBB refused to accept all of the changes recommended by its Office of General Counsel and the Topeka FHLB staff. See Doc. No. 216, Exhibit 15.

State and Equivest wanted the following terms changed:

1. When State filed its conversion application in July 1986, the FHLBB was using Memo R-41b, issued by the FHLBB’s Office of Examinations and Supervision, as the appraisal standard to be used for FSLIC-insured institutions. In September 1986, the FHLBB’s Office of Examinations and Supervision issued Memo R-41c as the new appraisal standard to be used for FSLIC-insured institutions. Memo R-41c became effective in November 1986. When the FHLBB approved State’s conversion application in December 1986, the FHLBB required that the Contributed Property be reappraised using Memo R-41c, not R~41b. See FHLBB Resolution 86-1295, Condition 6. Memo R-41c was withdrawn by the FHLBB and replaced with 12 C.F.R. § 563.17-la, which became effective January 7, 1988. State and Equi-vest argued that R-41b or § 563.17-la, not Memo R-41c, should be used to reappraise the Contributed Property. See Doc. No. 372 for a copy of Memos R-41b and R-41c.

2. When the FHLBB approved Equivest’s acquisition application, it required Equivest to contribute additional capital to the extent reappraisal of the Contributed Property was less than $27.4 million. See FHLBB Resolution 86-1296, Condition 7. State and Equivest argued that Equivest’s obligation to contribute additional capital should be offset by any gain State actually realized from the sale of any of the Contributed Property.

3. When the FHLBB approved State’s conversion application, the FHLBB required Equivest to operate State in accordance with the Business Plan submitted with the application. See FHLBB Resolution 86-1295, Condition 8, and FHLBB Resolution 86-1296, Condition 13. State and Equivest argued that this condition should be removed because it made it impossible to establish to the satisfaction of investors that State was validly existing and in good standing with the FHLBB.

4. When the FHLBB approved Equi-vest’s acquisition application, the FHLBB required. that Equivest agree to maintain State’s regulatory capital at a level equal to the greater of 5% of State’s total liabilities or a level consistent with that required by 12 C.F.R. § 563.13(b). If State’s regulatory capital fell below these requirements, Equivest was re- ' quired to infuse sufficient additional capital to achieve compliance. See FHLBB Resolution 86-1296, Condition 5. State and Equivest argued that the 5% minimum set forth in Condition 5 should be 3%.

See, e.g., Doc. No. 217, Exhibit 63 (a copy of a January 19,1988 letter to the FHLBB from Charles W. Petty, regulatory counsel for State and Equivest).

On April 4, 1989, the FHLBB acted on Equivest’s and State’s requests for modification of the December 30, 1986 resolutions. The FHLBB passed Resolution 89-1307 — the Amending Resolution. See Doc. No. 179, Bates # 5808-5815. The Amending Resolution resolved State’s and Equi-vest’s requests as follows:

1.The FHLBB attached an appraisal standard to the resolution and required that the attached appraisal standard be used to re-appraise the Contributed Property. The appraisal standard attached to the Amending Resolution is substantially similar to Memorandum R-41b used by the FHLBB.

2. With certain conditions, the FHLBB granted the request to offset Equi-vest’s obligation to contribute additional capital with gains realized from the sale of any of the Contributed Property. One such condition was that Mr. Frates guarantee Equivest’s obligation to maintain State’s regulatory capital at the greater of 5% of total liabilities or the minimum regulatory capital requirements. This is the first time Mr. Frates had been asked to guarantee Equivest’s obligation to maintain State’s net worth, as opposed to Equivest’s obligation to contribute additional capital if new appraisals showed a value for the Contributed Property of less than $27.4 million net. The obligation was conditional. If Equivest wanted to use the gains received by State from the sale of the Contributed Property, Mr. Frates was going to have to guarantee Equivest’s obligation to maintain State’s net worth.

3. The FHLBB approved State’s and Equivest’s requested change regarding the operation of State in accordance with the Business Plan attached to the original application.

4. The FHLBB denied the request to change State’s minimum regulatory capital from 5% to 3% of State’s total liabilities.

The FHLBB also substituted the following for Condition 6 in the original Conversion Resolution (i.e., Resolution 86-1295):

The real property invested in State by Equivest shall be initially recorded by State at an aggregate value of not more than the Applicant’s appraisal furnished to the Federal Home Loan Bank of Topeka, (‘Topeka Bank’) (‘original valuation’), subject to revaluation as follows. An appraisal comporting with guidelines specified by the [FHLBB], shall be made of all properties (‘new appraisal’) within a period of six months, unless extended for up to three months by the [Principal Supervisory Agent] for good cause shown. The appraisal shall be performed by an independent MAI-cer-tifíed appraiser selected in the sole discretion of the [Principal Supervisory Agent] and with the concurrence of the Office of Regulatory Activities, and paid for by the Topeka Bank, to be reimbursed by Equivest within 30 days of a demand. The contributed real estate shall be revalued to the value established by this new appraisal and any difference between $27.4 million net value and the new appraisal shall be infused by Equivest and guaranteed by J.A. Frates pursuant to stipulations entered into by Equivest and J.A. Frates under Condition 7 of Board Resolution No. 86 — 1296[.]

The only difference between this Condition and Condition 6 in the original Conversion Resolution is the appraisal standard to be used to re-appraise the Contributed Property. In the original Conversion Resolution, the FHLBB referred to Memo R-41c. In the Amending Resolution, the reference to Memo R-41c is replaced with “guidelines specified by the [FHLBB],” and appraisal guidelines were attached by the FHLBB to the Amending Resolution.

C. Mr. Frates Cannot Attack the FHLBB’s Resolutions.

Mr. Frates admits that he offered to personally guarantee Equivest’s obligation to contribute additional capital if new appraisals of the Contributed Property showed a value of less than $27.4 million net. Mr. Frates argues, however, that he is not bound by the FHLBB’s resolutions requiring him to guarantee Equivest’s obligation because the FHLBB imposed conditions on its approval of State’s conversion and Equivest’s acquisition applications which were different from those conditions which were expected based on State’s and Equivest’s negotiations with the Topeka FHLB and the FHLBB Office of General Counsel. As Mr. Frates puts it, “the FHLBB reneged on its agreements respecting the conditions of approval of the State Federal and Equivest applications to acquire control of State Federal.” See Doc. No. 216, Exhibit 16, ¶ 4. See also Doc. No. 179, Bates # 5080-82, 5094-98, 5108-5110, 5265-73 and 5344-5346 (all establishing that Mr. Frates was offering in some form to enter into an agreement guaranteeing Equivest’s obligation to contribute additional capital). Essentially, Mr. Frates argues that he never entered into a guaranty agreement because he and the FHLBB failed to agree on the material terms of such a contract.

Mr. Frates has offered this Court no authority which holds that the representations made to State and Equivest by either the staff at the Topeka FHLB or the staff at the FHLBB’s Office of General Counsel could in any way bind the FHLBB. Nothing in the statutes or regulations characterize the FHLBB as a figure head that simply ratifies an agreement reached between staff and an applicant. Rather, the FHLBB is to make an independent evaluation of the record as a whole and decide for itself whether or not to approve an application. When the FHLBB approves an acquisition application, the FHLBB is authorized to “unilaterally” impose any condition it feels is warranted by the facts, even a condition which had never been raised by the parties or discussed with FHLBB staff. Absent some express delegation of authority, the staffs role is limited to processing an application, gathering any additional information needed to make a decision on the application, offering advice to applicants, and making a recommendation to the FHLBB. See, e.g., 12 C.F.R. §§ 500.17, 501.10 and 501.11 (1986). See also 12 C.F.R. § 563b.20(b) (1986) (indicating that the authority to authorize a voluntary, supervisory conversion is within the sole discretion of the FHLBB).

The FHLBB’s approval of the conversion and acquisition applications did not automatically obligate Equivest and State to close the Acquisition Agreement, which required a swap of State’s stock for Equi-vest’s real property. Rather, the FHLBB’s approval of the applications simply permitted Equivest and State to close the Acquisition Agreement if they so chose. See Equivest Financial Corp. v. FHLBB, Nos. 89-5190 and 89-9560, 1992 WL 14550, at *2 (10th Cir. Jan. 27, 1992) (Seth, J., dissenting). Equivest was not required to fulfill its obligations under the Acquisition Agreement if the FHLBB approved the applications on terms materially different from the terms contained in the applications. See Doc. No. 179, Bates #4967-5007. If the FHLBB approved the applications on materially different terms, Equivest and State were permitted to walk away and refuse to close the Acquisition Agreement between themselves. Equivest and State did not walk away. Instead, they closed the Acquisition Agreement.

Equivest claims that it was misled into closing the Acquisition Agreement with State because the FHLBB’s Office of General Counsel led Equivest and State to believe that the FHLBB had, or was going to, approve the applications without material modification of the terms contained in the applications. Equivest and State also allege that shortly after closing the Acquisition Agreement, they learned that they had been misled and that the FHLBB’s approvals did in fact materially modify the terms contained in the applications. Equi-vest alleges that it was further misled by post-closing statements from FHLBB staff that the FHLBB’s resolutions would be corrected.

Equivest tried to get the FHLBB to voluntarily modify the conditions it imposed on approval of the conversion and acquisition applications. Equivest also filed a lawsuit in this Court and in the Tenth Circuit seeking a declaratory judgment that no contract existed between Equivest and the FHLBB or between Equivest and State. Equivest also sought to rescind/void the closing of the Acquisition Agreement by returning all parties to their respective positions as of December 30, 1986. The action in this Court was dismissed for lack of subject matter jurisdiction and the action in the Tenth Circuit was dismissed as untimely. Equivest Financial Corp. v. FHLBB, Nos. 89-5190 and 89-9560, 1992 WL 14550 (10th Cir. Jan. 27,1992).

Equivest was unable to get the FHLBB to modify its resolutions to Equivest’s satisfaction and Equivest was unable to get this Court or the Tenth Circuit to rescind/void the closing of the Acquisition Agreement. Equivest did close the Acquisition Agreement and Equivest did acquire control of and operate State. Having done so, Equivest is required to comply with the conditions imposed by the FHLBB when the FHLBB approved Equivest’s application to acquire control of State. Equivest, 1992 WL 14550, at *2 (Seth, J., dissenting). Consequently, the undersigned finds that Equivest is bound by the conditions of approval established by the FHLBB in its Conversion, Acquisition, and Amending Resolutions.

One of the conditions imposed on Equi-vest by the FHLBB’s resolutions was that the Contributed Property be reappraised and that Equivest contribute additional capital if the new appraisals showed a net value for the Contributed Property of less than $27.4 million. The FDIC argues that new appraisals have been done and that they show a net value for the Contributed Property of less than $27.4 million and that Equivest has failed to contribute additional capital. The FHLBB’s resolutions also require Mr. Frates to guarantee Equi-vest’s obligation to contribute additional capital. The question presented by this lawsuit is whether Mr. Fates is bound by the FHLBB’s resolutions, and whether the FDIC can enforce the terms of those resolutions.

Mr. Frates was not a direct party to the Acquisition Agreement between Equivest and State and he was not a direct party to the applications filed with the FHLBB. Nevertheless, Mr. Frates was a very important player in the overall scheme of things. Equivest was a newly formed company without a track record in the thrift industry and Equivest was trying to acquire a thrift. Equivest’s viability and Equivest’s ability to keep State adequately capitalized was of paramount importance to the FHLBB. Mr. Frates helped capitalize Equivest by contributing his interest in the Contributed Property and $1,166,-000. As a result, Mr. Frates owned all of Equivest’s voting stock. Mr. Frates was also to serve as the chairman of Equivest’s board of directors. It was also contemplated that Mr. Frates himself would eventually take an active role at State and he eventually became State’s CEO and chairman of State’s board of directors. Mr. Frates described himself to the FHLBB as a recognized industrialist, businessman and financier, and at the time he had a healthy net worth. See Doc. No. 179, Bates # 7056-61. Given this background, it is completely understandable that the FHLBB would look to Mr. Frates to ensure that Equivest could meet its obligation to adequately capitalize State. Mr. Frates was aware that the FHLBB was looking to him to guarantee Equivest’s obligation and as Mr. Frates admits, he stood ready to enter into a guaranty under certain conditions. Therefore, it certainly could have come as no surprise to Mr. Frates that the FHLBB approved Equi-vest’s acquisition application on the condition that Mr. Frates personally guarantee Equivest’s obligation to adequately capitalize State.

1. This Court Lacks Subject Matter Jurisdiction to Entertain Mr. Frates’ Objections to the FHLBB’s Resolutions.

Mr. Frates objects to the terms of the guaranty that the FHLBB’s resolutions ultimately imposed on him and the restrictions the FHLBB’s resolutions imposed on Equivest’s operation of State. That is, Mr. Frates objects to the FHLBB’s resolutions. This Court does not, however, have subject matter jurisdiction to entertain an attack by Mr. Frates against the FHLBB’s resolutions.

Any person aggrieved by a final action of the FHLBB or the FSLIC approving or disapproving an acquisition application may obtain review of the final action by filing a petition for review "with a United States court of appeals. 12 U.S.C. § 1730a(k). Any person aggrieved by a final action of the FHLBB or the FSLIC approving or disapproving a charter conversion application may also obtain review of the final action by filing a petition for review with a United States court of appeals. 12 U.S.C. §§ 1464(0(4) and 1725(j)(2).

Following are the relevant provisions for charter conversion applications:

Any aggrieved person may obtain review of a final action of the [FHLBB] or the [FSLIC] which approves, with or without conditions, or disapproves a plan of conversion from the mutual to the stock form, only by complying with the provisions of subsection (k) of section 408 of the National Housing Act [12 U.S.C. § 1730a(k) ] within the time limit and in the manner therein prescribed, which provisions shall apply in all respects as if the final action were an order the review of which is therein provided for, except that such time limit shall commence upon publication of notice of such final action in the Federal Register or upon the giving of such general notice of final action as is required by or approved under regulations of the [FSLIC], whichever is later.

12 U.S.C. § 1464(i)(4) (emphasis added).

Any aggrieved person may obtain review of a final action of the [FHLBB] or the [FSLIC] which approves, with or without conditions, or disapproves a plan of conversion pursuant to this subsection only by complying with the provisions of subsection (k) of section 1730a of this title within the time limit and in the manner therein prescribed, which provisions shall apply in all respects as if the final action were an order the review of which is therein provided for, except that such time limit shall commence upon publication of notice of such final action in the Federal Register or upon the giving of such general notice of such final action as is required by or approved under regulations of the [FSLIC], whichever is later.

12 U.S.C. § 1725(j)(2) (emphasis added).

Section 1730a(k) is incorporated by reference into both § 1464(i)(4) and § 1725(j)(2), which provide for review of final actions by the FHLBB or the FSLIC on conversion applications. Section 1730a(k) is also the section directly applicable to final actions under § 1730a(e)(l)(B), which is the subsection under which the FSLIC or the FHLBB, as the FSLIC’s administrative and supervisory head, takes final action on acquisition applications. Thus, § 1730a(k) provides the method through which an aggrieved person may obtain review of a final action by the FHLBB or the FSLIC on a conversion and/or an acquisition application.

Section 1730a(k) provides as follows:

Any party aggrieved by an order of the [FSLIC] under this section may obtain a review of such order by filing in the court of appeals of the United States for the circuit in which the principal office of such party is located, or in the United States Court of Appeals for the District of Columbia Circuit, within thirty days after the date of service of such order, a written petition praying that the order of the [FSLIC] be modified, terminated, or set aside. A copy of such petition shall be forthwith transmitted by the by the clerk of the court to the [FSLIC], and thereupon the [FSLIC] shall file in the court the record in the proceedings, as provided in section 2112 of Title 28. Upon the filing of such petition, such court shall have jurisdiction, which upon the filing of the record shall be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the [FSLIC]. Review of such proceedings shall be had as provided for in chapter 7 of Title 5 [ — the APA]. The judgment and decree of the court shall be final, except that the same shall be subject to review by the Supreme Court upon certiorari as provided in section 1254 of Title 28.

12 U.S.C. § 1730a(k) (emphasis added).

Mr. Frates is a person aggrieved by a final action of the FHLBB. Black’s defines an aggrieved person/party as a person who has been denied a personal, pecuniary or property right or against whom a burden or obligation has been imposed. Black’s Lazo Dictionary 65 (6th ed.1990). The FHLBB’s resolutions certainly attempt to impose a burden or obligation against Mr. Frates in the form of a personal guaranty. Mr. Frates seeks to “modify, terminate, or set aside, in whole or in part,” those portions of the . FHLBB’s resolutions that impose a personal guaranty on him. Sections 1464(0(4), 1725(j)(2) and 1730a(k) establish that the exclusive means for Mr. Frates to obtain the relief he seeks is by filing a petition for review with a United States court of appeals. See, e.g., Harr v. Prudential Federal Savings and Loan Association, 557 F.2d 751 (10th Cir.1977); and Equivest Financial Corp. v. FHLBB, Nos. 89-5190 and 89-9560, 1992 WL 14550 (10th Cir. Jan.27, 1992).

Equivest and State both sued the FHLBB in 1989. See Equivest Financial Corp. v. FHLBB, No. 89-CV-409-C (N.D.Okla. May 15, 1989). Both this Court and the Tenth Circuit found that Equi-vest’s and State’s arguments, no matter how articulated, were collateral attacks on the FHLBB’s resolutions. As such, the only recourse available to Equivest and State was to file an appeal with a United States court of appeals. See Equivest Financial Corp. v. FHLBB, No. 89-CV-409-C (N.D.Okla. May 15,1989); and Equivest, 1992 WL 14550 at *1. The arguments advanced by Mr. Frates in this case are not materially different from those advanced by Equivest and State in 1989. If this Court were to grant the relief Mr. Frates seeks, the Court would necessarily nullify the FHLBB’s resolutions. As the Tenth Circuit held in Equivest, “this type of request can only be brought in the appropriate United States Court of Appeals.” Equivest, 1992 WL 14550, at *1. The undersigned finds himself bound by this Court’s prior ruling and by the Tenth Circuit’s holding in Equivest.

In Harr, Prudential Federal Savings and Loan Association (“Prudential”) was a mutual savings and loan association. Prudential filed an application to convert from a mutual association to a stock association and the FHLBB passed a resolution approving the .conversion application. Prudential’s depositors then sued Prudential in federal district court, arguing that the conversion was part of a conspiracy by Prudential’s directors to benefit themselves and Prudential’s officers, that the conversion plan was unfair and misleading, that the proxy materials prepared to offer Prudential’s stock for sale were so deceptive that they violated Rule 10b-5 of the Securities and Exchange Commission, and that certain FHLBB regulations had been ignored during the conversion application process. The district judge dismissed the case for lack of subject matter jurisdiction. The Tenth Circuit affirmed, holding that for a court to grant the depositors the relief they sought (damages and an injunction) the FHLBB’s approval of the conversion would first have to be set aside. The depositor’s claims were, therefore, attacks on the FHLBB’s resolution approving the conversion and the depositors’ only recourse was to file a petition for review with a United States court of-appeals pursuant to 12 U.S.C. § 1730a(k). Citing Whitney National Bank in Jefferson Parish v. Bank of New Orleans, 379 U.S. 411, 85 S.Ct. 551, 13 L.Ed.2d 386 (1965), the Tenth Circuit concluded by holding that “[wjhen Congress has prescribed a particular method of review, that procedure is exclusive.” Harr, 557 F.2d at 754.

Mr. Frates’ position is not materially different from the depositors in Harr. For this Court to grant the relief Mr. Frates seeks, the FHLBB’s resolutions would first have to be set aside or ignored at least in part. Congress has determined that claims which in any way result in the modification or termination of a final FHLBB resolution must be brought in a United State court of appeals. “By specifying that appeals under section 1730a(K) were to be filed in the Courts of Appeals, Congress expected to prevent conflicting rulings and duplicative proceedings that inevitably would result from permitting collateral attack of [FHLBB] orders in the various district courts.... ” Harr, 557 F.2d at 754 (citing Fort Worth National Corp. v. FSLIC, 469 F.2d 47 (5th Cir.1972)). While the result might be harsh in certain cases, it is a result Congress has mandated and the fact remains that Mr. Frates could have filed, but chose not to, a protective appeal with the Tenth Circuit. This Court lacks subject matter jurisdiction to entertain Mr. Frates’ attacks on the FHLBB’s resolutions and absent an order from a court of appeals modifying, terminating or setting aside the FHLBB’s resolutions, Mr. Frates is bound by the FHLBB’s resolutions.

In Equivest, the Tenth Circuit held that this Court lacked subject matter jurisdiction over Equivest’s claims because the claims were in fact collateral attacks on the FHLBB’s resolutions. The parties have spilt a great deal of ink arguing about whether the Tenth Circuit’s decision in Equivest is preclusive of the issues raised by Mr. Frates. The FDIC argues that the Equivest decision is entitled to preclusive effect because Mr. Frates was in privity with Equivest when Equivest filed suit and because Equivest’s and Mr. Frates’ interests were identical. Mr. Frates argues that he was never in privity with Equivest and that his and Equivest’s interests were in fact diverse. The Court need not resolve this issue. Either Mr. Frates was in privity with Equivest and he is bound by the Tenth Circuit’s decision that this Court lacks subject matter jurisdiction, or Mr. Frates was not in privity with Equivest and the same rule applied by the Tenth Circuit in Equivest applies in this case. Sections 1464(i)(4), 1725(j)(2) and 1730a(k) of Title 12 of the United States Code prevent this Court from exercising subject matter jurisdiction over the types of attacks Mr. Frates seeks to lodge against the FHLBB’s resolutions.

D. The FDIC May Enforce the FHLBB’s Resolutions

1. The Undersigned’s Prior Order— Focusing the Dispute

The FDIC has argued that the guaranty obligation imposed on Mr. Frates by the Acquisition Resolution is enforceable as a contract. Mr. Frates has vehemently disagreed, arguing that no meeting of the minds ever occurred between himself and the FHLBB. After reviewing the briefs, the undersigned determined that a contract analysis was not appropriate for this case. The undersigned informed the parties that this Report and Recommendation would analyze Mr. Frates’ obligations as emanating from an administrative order, not a contract with the FHLBB.

According to Mr. Frates, the undersigned’s decision not to treat the FHLBB’s resolutions as contracts should end the matter and summary judgment should be granted in his favor because he has established that there is no contract, as alleged by the FDIC. In other words, Mr. Frates argues that the Court should ignore the fact that the obligations in the Acquisition Resolution are enforceable as an administrative order because the FDIC’s First Claim for Relief is titled “Breach of Contract” and not “Failure to Comply With an Administrative Order.” However, Mr. Frates himself ignores the fact that the FDIC’s First Claim for Relief has always been bottomed on the allegation that condition 7 of the Acquisition Resolution imposes an obligation on Mr. Frates to contribute additional capital to State because the Contributed Property was reappraised at less than $27.4 million. The Federal Rules of Civil Procedure also do not require a pleader to plead a specific legal theory. Fed.R.Civ.P. 8; Blazer v. Black, 196 F.2d 139, 144 (10th Cir.1952). Rather Rule 8(a) only requires that a pleader set forth facts which entitle him to relief under any legal theory. See also Fed. R.Civ.P. 8(f) (requiring the Court to construe the FDIC’s Third Amended Complaint so “as to do substantial justice”). The undersigned finds, therefore, that the consideration of a legal theory not advanced by either party does not present “pleading” problems under the Federal Rules of Civil Procedure.

The Tenth Circuit has also reasoned that courts should decide cases on the merits using the correct legal principles as determined by the court regardless of the previous positions taken by the parties. Any public policy against allowing parties to advance new or inconsistent legal positions, as opposed to factual positions, can be vindicated through avenues that do not discourage the determination of cases on their merits (e.g., sanctions). See United States v. 49.01 Acres of Land, 802 F.2d 387, 390 (10th Cir.1986); Osborn v. Durant Bank & Trust Co., 24 F.3d 1199 (10th Cir.1994); and RTC v. Gregor, 872 F.Supp. 1140, 1153 (E.D.N.Y.1994).

Finding that a contract analysis was not appropriate in this case, the undersigned ordered the parties to brief the following issues: (1) Does the FDIC have standing to enforce the FHLBB’s resolutions as administrative orders; and (2) What is the statute of limitations, if any, applicable to such an enforcement action. See Doc. No. 382. Unlike the “shift” in Evans v. McDonald’s Corp., 936 F.2d 1087 (10th Cir.1991), this “shift” in legal theories will not require any additional discovery and there is no trial date set for this case. Thus, Mr. Frates will not be prejudiced in maintaining his defense on the merits.

2. The FHLBB’s Resolutions are Administrative Orders, Not Contracts

Mr. Frates’ obligation to guarantee the value of the Contributed Property emanates from, and is contained in, a resolution duly passed and adopted by the FHLBB. The FHLBB’s resolutions are in fact administrative orders. See, e.g., 5 U.S.C. §§ 551(6), 551(7) and 701(b)(2). Administrative orders are to be complied with not because there is any meeting of the minds between the agency and the party to be bound, but because Congress has delegated certain authority to the agency and the agency’s actions have the force of law. See, e.g., Mistretta v. United States, 488 U.S. 361, 372-75, 109 S.Ct. 647, 102 L.Ed.2d 714 (1989) (approving of Congress’ broad delegation of authority even when another branch of the government is involved). For example, someone might file an application with the Environmental Protection Agency (“EPA”) for permission to operate a waste water treatment plant. If the EPA approves the application with certain effluent restrictions, the party operating the plant is required to comply with the effluent restriction in the EPA’s order, not because the party operating the plant and the EPA reached a meeting of the minds, but because the EPA’s order has the force of law as a delegation of authority from Congress. In this case, Mr. Frates is required to comply with the FHLBB’s resolutions not because he reached a meeting of the minds with the members of the FHLBB, but rather because Congress has delegated to the FHLBB the power to regulate and ensure the financial integrity of the nation’s thrift industry. As a direct exercise of that authority, the FHLBB entered an administrative order requiring Mr. Frates to give a personal guaranty to the FSLIC. The FHLBB’s order has the force of law as surely as if it had been enacted directly by Congress. See, e.g., RTC v. Tetco, Inc., 758 F.Supp. 1159, 1162 (W.D.Tex.1990) and State of Minnesota v. Bergeron, 290 Minn. 351, 187 N.W.2d 680 (1971) (both recognizing that traditional contract principles do not apply in the administrative/regulatory context).

Properly characterized, what the FDIC seeks to do in its First Claim for Relief is enforce an administrative order, not a contract, issued by the FHLBB. With the FDIC’s First Claim for Relief in proper perspective, the standing and statute of limitations issues in this case come into focus. Does the FDIC have standing to seek enforcement of an administrative order issued by the FHLBB? If the FDIC has standing to seek enforcement of the FHLBB’s administrative orders, is such an enforcement action barred by the statute of limitations?

The FDIC is present in this lawsuit in two separate capacities. FIRREA transferred the assets and liabilities of the FSLIC to the FSLIC Resolution Fund and appointed the FDIC as manager of the fund. Thus, the FDIC has succeeded to all of the FSLIC’s rights and obligations. See RTC v. FSLIC, 25 F.3d 1493 (10th Cir.1994). The FDIC is, therefore, standing before the Court in the FSLIC’s shoes. The FDIC is also here as State’s receiver. Pursuant to 12 U.S.C. § 1821(d)(2)(A)(i ), the FDIC steps into the shoes of a failed, federally insured depository institution and thereby obtains those rights of the institution which existed prior to receivership. O’Melveny & Myers v. FDIC, 512 U.S. 79, 114 S.Ct. 2048, 2054, 129 L.Ed.2d 67 (1994). Thus, as State’s receiver, the FDIC has succeeded to all claims held by State. The FDIC is, therefore, also standing before the Court in State’s shoes. May the FDIC, as either the FSLIC or State, enforce the FHLBB’s administrative orders?

3. Enforcement of the FHLBB’s Administrative Orders by the FDIC as the FSLIC

a. The FSLIC’s Right to Enforce the Resolutions

Mr. Frates’ obligation to guarantee Equivest’s obligation to contribute additional capital to State is imposed by Condition 7 of the FHLBB’s Acquisition Resolution. Doc. No. 179, Bates #7068-7071. The Acquisition Resolution approved Equi-vest’s application to acquire control of State. Pursuant to the NHA, applic