Glendale Federal Bank, FSB v. United States

United States Court of Appeals for the Federal Circuit · 2004 · Contracts

378 F.3d 1308 (Fed. Cir. 2004)

Updated July 26, 2026

ContractsDamagesReliance damagesGovernment contractsWinstarFIRREAwounded bank damagesactual losses

Facts

FSLIC had entered into regulatory capital contracts with Glendale, and FIRREA and subsequent regulations breached those contracts. On remand after the first damages appeal, Glendale sought reinstatement of $381 million in previously found post-breach "wounded bank" reliance damages and also sought about $527 million in additional claimed out-of-pocket losses from its Florida division. The Government argued the wounded-bank theory was speculative and depended on the same model previously rejected as lost-profits expectancy proof, and also sought a $243 million offset. The trial court awarded the $381 million, denied the additional $527 million for failure of proof, and refused the requested offset.

Issue

Whether the trial court properly awarded Glendale $381 million in reliance or "wounded bank" damages based on the existing record, whether Glendale was entitled to an additional $527 million in claimed Florida operating-loss reliance damages, and whether the Government was entitled to a $243 million offset against the awarded reliance damages.

Rule

In these Winstar cases, reliance damages are recoverable when they are based on real, actual out-of-pocket losses that the thrift would not have incurred but for the contract and its breach, and those losses must be reasonably ascertainable and fully proven. Whether post-breach higher operating costs such as "wounded bank" damages are recoverable is a matter of proof; if the claim is too speculative, it must be denied. Appellate review of such damages findings is for clear error, and absent a compelling showing of clear error the trial court's factual determinations should stand.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeview Thrift in Phoenix entered a regulatory agreement with a federal insurer. After the government later breached that agreement, Lakeview proved at trial through business records and credited testimony that its loss of capital compliance caused it to pay substantially higher deposit interest and insurance-related fees for three years, costs it would not otherwise have incurred.

If the government argues on appeal that these so-called "wounded institution" damages are categorically unavailable because they arise after the breach, how should the appellate court rule?

Explanation. The majority held that reliance damages focus on real costs incurred for capital and services that the thrift would not have incurred but for the contract and its breach. It expressly recognized that damages resulting from the breach may arise before or after the breach, and that higher post-breach business costs can qualify if adequately proven. They are not categorically barred merely because they occurred later.