The opinion of the court was delivered by: KENNETH CONBOY
KENNETH CONBOY, DISTRICT JUDGE:
Currently pending before this Court is defendants' motion to dismiss the complaint. For the reasons that follow, defendants' motion is granted in part and denied in part.
Plaintiff Hamilton Holding Company ("Hamilton") owns 100% of plaintiff Ensign Financial Corporation ("Financial"), which in turn owns 100% of the stock of defendant Ensign Bank, FSB ("Ensign Bank"). Complaint PP 13-14. Plaintiffs created Ensign Bank in 1983 to acquire two insolvent savings and loan associations pursuant to an Assistance Agreement with the Federal Savings and Loan Insurance Corporation ("FSLIC") and accompanying resolutions of the Federal Home Loan Bank Board ("FHLBB"). Id. PP 32-48. Prior to August 1989, the FSLIC insured deposits of savings and loan associations and acted under the supervision and approval of the FHLBB. Id. P 15. The FHLBB regulated and supervised federally chartered savings and loan associations and enforced compliance with all applicable regulatory requirements. Id. P 17. In August 1989, Congress passed the Financial Institutions Reform and Recovery Act ("FIRREA") which did away with the FSLIC and designated the Federal Deposit Insurance Corporation ("FDIC") to be the FSLIC's successor. FIRREA also did away with the FHLBB, created the Office of Thrift Supervision ("OTS"), and designated OTS to be the FHLBB's successor. Id. PP 15-17. Defendant T. Timothy Ryan, Jr. is the director of OTS.
B. The Assistance Agreements
Beginning in the late 1970's and continuing into the 1980's, the savings and loan industry experienced a severe financial crisis. Id. P 19. In order to spare the FSLIC the enormous costs of paying insured depositors and liquidating insolvent thrifts, the FSLIC, with the approval of the FHLBB and with the expanded powers Congress gave to it under the Garn-St. Germain Depository Institutions Act of 1982, undertook a program to induce private entrepreneurs, like plaintiffs, to take over ailing thrifts. Id. PP 20-30.
Central to this program was a concept known as "supervisory goodwill," which the FSLIC and the FHLBB used as a substitute for cash assistance for acquiring thrifts. Specifically, the FHLBB determined that acquisitions of insolvent thrifts should be accounted for by the "purchase" method of accounting in accordance with then-applicable generally accepted accounting principles. ("GAAP"). Id. P 24. Under the purchase method of accounting, the book value of the acquired thrifts' assets and liabilities was adjusted to the fair market value at the time of the acquisition. Id. P 25. Any negative net worth resulting from the excess of liabilities the thrifts assumed over the assets the thrifts acquired was offset by an equal and corresponding amount of "goodwill," an asset the thrifts could amortize over a specific period of time. Id. The FHLBB recognized "goodwill" as an asset the thrifts could use to meet federal capital requirements, and the FHLBB permitted acquiring thrifts would have sufficient time to overcome the capital deficits the acquiring thrifts assumed. Id. PP 24, 26.
As part of this program, the FSLIC induced plaintiffs to take over three insolvent thrifts pursuant to two Assistance Agreements explicitly incorporating the concepts discussed above.
In 1983, plaintiffs created Ensign Bank and entered into an Assistance Agreement with, inter alia, the FSLIC, to take over Washington Federal Savings and Loan Association ("Washington") and Community Federal Savings and Loan Association ("Community"). Id. P 32. These banks had an aggregate negative net worth of $ 171 million. Id. PP 34, 37. In approving this acquisition, the FHLBB specifically determined that the cost to the FSLIC of entering into this agreement was substantially less than the cost of liquidating Washington and Community. Id. P 48.
The FSLIC's only tangible contributions to this transaction were $ 7.4 million in cash, and $ 18 million note, and an agreement to indemnify up to $ 12 million of liabilities. Id. P 50. FHLBB promised that $ 24 million in cash and notes that Hamilton and FDIC were going to provide Ensign bank "would be credited to Ensign Bank's net worth." Complaint Ex. C at p. 2. However, the principal inducement to plaintiffs was the FSLIC's and the FHLBB's promises that the FHLBB would recognize, for regulatory purposes, the $ 171 million of goodwill created by the acquisition, and that the FHLBB would permit the plaintiffs to amortize this asset over 35 years. Id. PP 51, 53.
Thus, the FSLIC promised that "any computations made for the purposes of . . . reports to [the FHLBB] . . . during the term of the Agreement" would be governed by GAAP, as in effect in the savings and loan industry and as modified by the FSLIC on September 1, 1982 and "as further modified by any resolution or action of the [FHLBB]" taken at the same time as the FHLBB's approval of the transaction. Complaint Ex. B § 11.
The "resolution or action" referred to by the parties was a forbearance agreement between the FHLBB and the plaintiffs, containing, among other things, the FHLBB's promise that "for purposes of reporting to the [FHLBB], the value of any intangible assets [i.e., supervisory goodwill] resulting from the accounting of the transaction in accordance with the purchase method of accounting may be amortized over a period not to exceed 35 years by the straight line method." Complaint Ex. C at p. 2.
In return for this promise, plaintiffs agreed to contribute to Ensign Bank $ 5 million in cash; and $ 6 million promissory note; and the stock of two subsidiaries worth $ 11 million. Id. P 49. (In 1987, Hamilton substituted for the stock of these subsidiaries and another company later acquired by Ensign Bank, a promissory note of $ 15.2 million, of which $ 13.4 million was attributable to the stock of the two subsidiaries Hamilton contributed in 1983. Id.). Plaintiffs also agreed to assume the liabilities of the insolvent thrifts and to maintain Ensign Bank's net worth at specified levels. Id.
In negotiating these agreements, plaintiff Hamilton specifically conditioned its participation in the transaction on the FSLIC's and the FHLBB's agreement to accept the goodwill for regulatory purposes and to amortize the goodwill over a 35 year period. Id. PP 40, 57. Hamilton would not have entered the agreement but for these promises. Id. P 57.
In 1987, the plaintiffs, Ensign Bank and, inter alia, the FSLIC entered into a second Assistance Agreement to take over another insolvent thrift, Fort Lee Savings and Loan Association ("Ft. Lee"). This thrift had a negative net worth of $ 32 million. Id. P 63. The FSLIC put in only $ 12 million in cash; the principal contribution, once again, was the FSLIC's and the FHLBB's promise to recognize $ 20 million in supervisory goodwill for regulatory purposes and permit the goodwill's amortization over 25 years. Id. PP 67, 75; Complaint Ex. D § 17; Complaint Ex. F at p. 2. Plaintiffs' bid on Ft. Lee was expressly conditioned on the FSLIC's and FHLBB's promises regarding supervisory goodwill. Without these promises, Ft. Lee would have been insolvent and would have had a negative net worth of $ 20 million. Id. P 68. Plaintiffs would not have agreed to take over Ft. Lee on this basis. Id.
From 1983 until the enactment of FIRREA, the FSLIC and the FHLBB recognized their obligations to accept goodwill for regulatory purposes. Id. PP 61, 83. Plaintiffs and Ensign Bank diligently performed their part of the bargain at the same time, notwithstanding the very substantial burden of amortizing good will as an annual charge against earnings. Ensign bank was sufficiently profitable to pay nearly $ 5 million on an $ 18 million FSLIC note.
Nevertheless, plaintiffs never received any income from Ensign Bank. Id. PP 60, 82.
C. FIRREA and the OTS' Repudiation of the Agreements
FIRREA, which as noted above was passed by Congress in August 1989, created new capital standards for thrifts under which goodwill was to be phased out over three years and would not be accepted as capital for regulatory purposes. Id. PP 87-88. OTS interpreted FIRREA's capital standards to require OTS to repudiate the promises made by the FSLIC and the FHLBB regarding the recognition of supervisory goodwill for regulatory purposes. As a result, Ensign Bank was transformed from a thrift in full compliance with all federal regulatory requirements into a thrift hopelessly out of compliance with the new capital standards. Id. PP 93-111.
Plaintiffs assert the OTS refused to exercise its discretionary authority, said to be available pursuant to FIRREA, to grant Ensign Bank exceptions and exemptions from the new capital standards. Id. PP 106-107. OTS also rejected a capital plan submitted by Ensign Bank which included an offer by plaintiffs to infuse additional assets worth $ 100 million in an effort to save the bank, contingent on a satisfactory resolution of the claims arising out of the repudiation of the promises made to plaintiffs. Id. P 106. As a result, Ensign bank was subjected to severe restrictions on its lending activities, causing its financial condition to deteriorate substantially and rapidly. Id. PP 98, 103. Nevertheless, plaintiffs continued their efforts to negotiate a plan with the FDIC to recapitalize and revitalize Ensign Bank. Id. PP 107-110.
On August 31, 1990, in the midst of those efforts, and without any prior warning to plaintiffs, Ensign Bank was seized by OTS and placed under a receiver appointed to liquidate the bank. Id. PP 107-111. OTS thereby effectively completed the destruction of plaintiffs' bargain with the FSLIC and the FHLBB.
Plaintiff's complaint contains five causes of action, denominated as counts in the plaintiffs' pleadings. In count I plaintiffs claim that "in prohibiting Ensign Bank from using the supervisory goodwill and tangible financial assistance in the manner contemplated by the 1983 and 1987 Assistance Agreements and related Agreements, the Director [of OTS] acted beyond the authority conferred upon him by FIRREA." Complaint P 115. Plaintiffs also maintain in count I that "if FIRREA [is] construed to authorize such actions, FIRREA and the conduct of the Director thereunder  constitute a deprivation of property without due process of law in violation of the fifth amendment of the Constitution." Complaint P 115. In count II plaintiffs claim that they are entitled to relief because defendants failed to give plaintiffs the consideration for which plaintiffs bargained. Moreover, plaintiffs maintain that the purpose of the contract has been frustrated. Complaint PP 116-121. In count III plaintiffs assert that they are entitled to relief because defendants' actions constitute a breach of contract. Complaint PP 122-124. In count IV plaintiffs maintain that "the [OTS] director's refusal to recognize the supervisory goodwill and the tangible financial assistance under the 1983 and 1987 Agreements is an inequitable and unconscionable repudiation of the central promises and assurances intended by FHLBB and FSLIC to induce plaintiffs to enter into the 1983 and 1987 Assistance Agreements and related agreements." Complaint P 131. In Count V plaintiffs contend that "by excluding supervisory goodwill and the tangible financial assistance from FSLIC and Hamilton for purposes of calculating compliance with federal capital requirements, the Director [of OTS] has effected an unlawful taking of these contract rights within the meaning of the Fifth Amendment to the United States Constitution." Id. P 134.
Plaintiffs seek a judgment that rescinds the 1983 and 1987 Assistance Agreements and all related agreements, and restores to plaintiffs all the benefits the plaintiffs conferred on the defendants as a result of the 1983 and 1987 Assistance Agreements. Additionally, plaintiffs want the court to declare that they have no obligation to pay the $ 3 million outstanding on the $ 6 million note Hamilton gave as part of the 1983 Assistance Agreement, and that this note is unenforceable. Furthermore, the plaintiffs want the Court to declare that they have no obligation to pay $ 13.4 million of the $ 15.2 million note Hamilton gave to Ensign Bank, and that this note, as well, is unenforceable. Finally, plaintiffs ask for such other and further relief, including costs and reasonable attorneys' fees, that are just and proper. Complaint (Prayer for Relief) at pp. 56-57.