                         United States Court of Appeals,

                                     Eleventh Circuit.

                                       No. 94-5045.

              Samuel M. McMILLIAN, Jr., Plaintiff-Appellant,

                                              v.

 FEDERAL DEPOSIT INSURANCE CORPORATION, as receiver of Southeast
Bank, N.A. and as de facto ERISA fiduciary of the Southeast Bank,
N.A. Reduction in Force Severance Pay Plan, Defendant-Appellee.

                                      April 25, 1996.

Appeal from the United States District Court for the Southern
District of Florida. (No. 93-273-CIV-KMM), K. Michael Moore, Judge.

Before TJOFLAT, Chief Judge, and KRAVITCH and ANDERSON, Circuit
Judges.

       ANDERSON, Circuit Judge:

       Samuel       M.   McMillian,      Jr.,      appeals      the   district    court's

dismissal of his action for severance pay against the FDIC as

receiver       of    a   failed      bank.         The    district    court    dismissed

McMillian's Worker Adjustment and Retraining Notification ("WARN")

Act    claim    for      lack   of    jurisdiction         pursuant    to   Fed.R.Civ.P.

12(b)(1).       We affirm the district court's disposition of the WARN

Act claim.          With respect to McMillian's Financial Institutions

Reform,       Recovery,     and      Enforcement         Act   ("FIRREA")     claim,   the

district court dismissed the complaint pursuant to Fed.R.Civ.P.

12(b)(6).       This appeal raises two FIRREA issues:                       (1) whether

FIRREA bars the enforcement of severance pay agreements because

they    are    "contingent";            and   (2)        whether   severance     payments

constitute "actual direct compensatory damages" under FIRREA.                          The

district court held that McMillian's claim is barred because his

right to receive severance pay was contingent when the FDIC was
appointed receiver.    We reverse.

                                  I. FACTS

     McMillian was a janitor at Southeast Bank, N.A. ("Southeast")

for nineteen years.     Through Southeast and its parent, Southeast

Banking Corporation, McMillian was a participant in and beneficiary

of various employee benefit plans sponsored, at least in part, by

Southeast.   In particular, he was a participant in Southeast's

Reduction in Force Severance Pay Plan ("Severance Plan"), which

provided, in relevant part:

     In the event of a Participant's termination of employment as
     a result of a Reduction In Force, the Participant shall be
     entitled to receive from [Southeast] a Severance Payment in
     the amount provided in Section 4.2 and the other Severance
     Benefits provided in Section 4.4.

(Southeast Banking Corporation Reduction in Force Severance Pay

Plan § 4.1). Under Section 4.2, participants who had been employed

by Southeast for more than two years were entitled to one week of

severance pay per year of employment.1         The Severance Plan defines

"Reduction in Force" as "the involuntary termination of employment

of a Participant because of the elimination of such Participant's

position with [Southeast or its parent] due to economic or business

conditions, reorganizations of the Company which combine or limit

positions or for other reasons."

     On September 19, 1991, the Office of the Comptroller of the

Currency   declared   Southeast    insolvent    and   appointed   the   FDIC

receiver under 12 U.S.C. § 1821(c).          Within two days thereafter,


     1
      Section 4.4 entitled employees to other severance benefits
such as life, health, and dental insurance if they qualified for
severance pay. These benefits would continue so long as the
terminated employee continued to receive severance pay.
the FDIC terminated McMillian's employment and granted him two

weeks of severance pay.     There is no dispute that McMillian was

terminated as a result of a "reduction in force."

     Claiming that he was entitled to nineteen weeks of severance

pay based on his nineteen years with the bank, McMillian filed a

claim for benefits under the Severance Plan with the FDIC.                 The

FDIC disallowed the claim 2 and McMillian filed suit in the United

States District Court challenging the FDIC's action.                 In his

complaint,   McMillian   alleged   a   claim   under   the   WARN   Act,    29

U.S.C.A. § 2101 et seq., and a claim for damages under FIRREA, 12

U.S.C.A. § 1821(e).

     The magistrate judge submitted a Report and Recommendation

granting the FDIC's motion to dismiss pursuant to Fed.R.Civ.P.

12(b)(1) and 12(b)(6).    The magistrate judge recommended dismissal

on the grounds that:     1) the district court lacked subject matter

jurisdiction over McMillian's WARN Act claim;          and 2) McMillian's

severance pay claim was "contingent" as of the appointment of the

FDIC as receiver and, therefore, not cognizable under FIRREA, 12

U.S.C.A. § 1821(e)(3)(A)(ii)(I).

     With respect to the severance pay claim under FIRREA, the

magistrate judge based his conclusion almost entirely on two cases:

     2
      In its letter rejecting McMillian's claim, the FDIC based
its decision on its conclusion that the Severance Plan was
sponsored by the parent, Southeast Banking Corporation and,
therefore, was not a claim against the subsidiary, Southeast
Bank, receivership estate. Further, with respect to the parent,
the FDIC claimed that the Severance Plan was "eliminated because
of the filing for bankruptcy by Southeast Bank." It appears that
the FDIC abandoned this argument in its motion to dismiss below
and on appeal to this Court. Hence, we assume that Southeast
Bank was the sponsor and that the Severance Plan was not
terminated by the bankruptcy proceedings.
American Nat'l Bank v. FDIC, 710 F.2d 1528, 1540 (11th Cir.1983),

and Office & Professional Employees Int'l Union v. FDIC,                          813

F.Supp. 39, 45 (D.D.C.1993).          From these cases, he reasoned that

the rights and liabilities of Southeast and its creditors were

fixed at the declaration of insolvency. Those claims which had not

accrued as of the appointment of the receiver, the magistrate judge

concluded, are not cognizable under FIRREA.                Because McMillian's

claim for benefits under the Severance Plan was found to be

contingent—i.e., it did not accrue until his termination due to a

Reduction in Force—it was not fixed as of the appointment of the

FDIC and therefore failed.

       After     the   magistrate     judge     submitted     his    Report    and

Recommendation, but before the district court entered its order,

the    D.C.    Circuit    reversed    the     district    court     in   Office    &

Professional      Employees   Int'l     Union.       Office    &     Professional

Employees Int'l Union v. FDIC, 27 F.3d 598 (D.C.Cir.1994) ("OPEIU

").    The district court nonetheless adopted the magistrate judge's

recommendations based on what it considered the binding precedent

of    American    Nat'l   Bank,    supra,   and    Bayshore   Executive       Plaza

Partnership v. FDIC, 750 F.Supp. 507 (S.D.Fla.1990), aff'd on other

grounds, 943 F.2d 1290 (11th Cir.1991).

                                  II. DISCUSSION

A. WARN Act Claim

        McMillian challenges the district court's dismissal of his

WARN Act claim for lack of jurisdiction.                 He essentially argues

that the Severance Plan was drafted to "operate in tandem" with the

WARN Act, and thus incorporated it by reference.
      We review questions of subject matter jurisdiction de novo.

Tamiami Partners, Ltd. v. Miccosukee Tribe of Indians,         999 F.2d

503, 506 (11th Cir.1993).       The rule in this circuit is clear:

"FIRREA makes exhaustion of the FDIC's administrative complaint

review process mandatory when the FDIC has been appointed receiver

for a financial institution."        Motorcity of Jacksonville, Ltd. v.

Southeast Bank, 39 F.3d 292, 296 (11th Cir.1994), vacated, 58 F.3d

589 (11th Cir.1995).

     In this case, McMillian has sued the FDIC in its capacity as

receiver of Southeast;   however, he did not file a WARN Act claim,

either implicitly or explicitly, with the FDIC before bringing this

action.   Accordingly, we hold that the district court did not have

jurisdiction of McMillian's WARN Act claim because he failed to

exhaust his administrative remedies as required by FIRREA.

B. Severance Pay Claim

     Under FIRREA, the FDIC has the power to repudiate any contract

to which it is a party, that it determines to be burdensome, and

the repudiation of which will promote the orderly administration of

the institution's affairs. 12 U.S.C.A. § 1821(e)(1). The election

to repudiate a contract must be made within a reasonable time

following   the   appointment   of    the   receiver.   12   U.S.C.A.   §

1821(e)(2).

     Once the FDIC has repudiated, damages are measured by §

1821(e)(3), which provides, in relevant part:

     (A) In general

          Except as otherwise provided in subparagraph (C) and
     paragraphs (4), (5), and (6), the liability of the conservator
     or receiver for the disaffirmance or repudiation of any
     contract pursuant to paragraph (1) shall be—
              (i) limited to actual direct compensatory damages;             and

              (ii) determined as of—

                   (I) the date        of    the   appointment    of   the   ...
                   receiver....

      (B) No liability for other damages

           For purposes of subparagraph (A), the term "actual direct
      compensatory damages" does not include—

              (i) punitive damages;

              (ii) damages for lost profits or opportunity;            or

              (iii) damages for pain and suffering....

      This case squarely confronts the meaning of these sections.

The FDIC presses two grounds of support for the district court's

dismissal of the case:          (1) the severance payments were contingent

at   the    time   FDIC   was    appointed   receiver   because    McMillian's

employment had not yet been terminated—thus, McMillian's claim was

not provable under the pre-FIRREA common law;3            and (2) the relief

for which McMillian prays does not constitute "actual direct

compensatory damages" as contemplated by FIRREA.            We examine these

arguments in turn.

1. Contingent Contract Rights and Provability

          The FDIC strenuously argues that contingent contract rights

do not form a basis for recovery under FIRREA.               This Court has

stated that "[i]t is well settled that the rights and liabilities

      3
      The Severance Plan ostensibly permitted Southeast to
terminate it so long as certain procedures were followed. The
parties have not addressed the relevance of this or the apparent
fact that the Severance Plan was not terminated prior to
McMillian's discharge. Because of the 12(b)(6) posture of this
case, we do not address these issues as they relate either to the
contingency issue or to the value of McMillian's claim, leaving
them for appropriate development in the district court on remand.
of a bank and the bank's debtors and creditors are fixed at the

declaration of the bank's insolvency."            American Nat'l Bank v.

FDIC, 710 F.2d 1528, 1540 (11th Cir.1983) (citing First Empire Bank

v. FDIC, 572 F.2d 1361, 1367-68 (9th Cir.), cert. denied, 439 U.S.

919, 99 S.Ct. 293, 58 L.Ed.2d 265 (1978);        FDIC v. Grella, 553 F.2d

258, 262 (2d Cir.1977);       Kennedy v. Boston-Continental National

Bank, 84 F.2d 592, 597 (1st Cir.1936), cert. [dismissed], 300 U.S.

684, 57 S.Ct. 667, 81 L.Ed. 887 (1937)).         Based on this language,

the FDIC concludes that if a contract is in any way contingent,
i.e., not fixed, as of the date of the appointment of the receiver,

its subsequent breach does not give rise to damages.4

     The   FDIC   contends   that,   at   the   moment   it   was   appointed


     4
      The cases upon which the FDIC relies for its contingency
argument were decided prior to the enactment of FIRREA in 1989.
The parties do not address whether FIRREA has preempted the
common law rules regarding repudiation, but rather, they assume
that their reach is coextensive. Because we conclude that
McMillian's claim is not barred by the pre-FIRREA common law
rules of provability, we need not address whether these rules
continue to apply. See generally, O'Melveny & Myers v. FDIC, ---
U.S. ----, ----, 114 S.Ct. 2048, 2054, 129 L.Ed.2d 67 (1994);
RTC v. Ford Motor Credit Corp., 30 F.3d 1384, 1388 (11th
Cir.1994). We note that there exists some conflict among the
courts which have addressed this issue. Compare Office and
Professional Employees Int'l Union v. FDIC, 27 F.3d 598, 602-03
(D.C.Cir.1993) (assuming sub silentio that the common law
remained intact after the passage of the statute, although not
directly addressing this issue); Hennessy v. FDIC, 58 F.3d 908,
917-18 (3d Cir.1995) (same); and Dababneh v. FDIC, 971 F.2d 428,
433-34 (10th Cir.1992) (reading FIRREA as a codification of
existing federal common law); Bayshore Exec. Plaza Partnership,
750 F.Supp. at 509 n. 5 (same); Credit Life Ins. Co. v. FDIC,
870 F.Supp. 417, 426 (D.N.H.1993); Otte v. FDIC, 990 F.2d 627
(5th Cir.1993) (table) (suggesting that the provability doctrine
should be read into FIRREA through the "actual direct
compensatory damages" language of § 1821(e)(3)); with Nashville
Lodging Co. v. RTC, 59 F.3d 236, 244 (D.C.Cir.1995) (reading
portions of the repudiation section of FIRREA to change common
law); Bank One, TX, N.A. v. Prudential Ins. Co. of America, 878
F.Supp. 943, 947 n. 1 (N.D.Tex.1995) (same).
receiver, McMillian had a right to collect severance pay that was

contingent upon his discharge due to a Reduction in Force.                     As

merely a contingent right, the FDIC posits, McMillian's severance

pay is not recoverable.           We disagree.

     This argument mistakes the common law.                The cases outside the

lease context which require that rights and liabilities must be

fixed upon insolvency simply require that the contract right (as

opposed to a mere expectancy) arose before insolvency and that the

claim    is   not    based   on   a   new,    post-insolvency     contract.    To

understand why the very language quoted by the FDIC in support of

its contingency argument supports McMillian, we must take a step

back and review the origin of these rules.

     The common law cases, i.e., those decided prior to FIRREA,

were based on the National Bank Act, which provided that a receiver

of a failed national bank

     shall make a ratable dividend of the money so paid over to him
     ... on all such claims as may have been proved to his
     satisfaction or adjudicated in a court of competent
     jurisdiction.

12 U.S.C.A. § 194 (1988).

         The statute encompassed two related concepts that reappear in

pre-FIRREA cases:       ratability and provability. See, e.g., Citizens

State    Bank   of    Lometa   v.     FDIC,   946   F.2d   408   (5th   Cir.1991);

Hennessy v. FDIC,        58 F.3d 908 (3d Cir.1995).              Of these, only

provability is at issue in this case.5              The National Bank Act did

     5
      The ratable distribution concept directs that "dividends be
declared proportionately upon the amount of all claims as they
stand on the date of insolvency." American Sur. Co. v. Bethlehem
Nat'l Bank, 314 U.S. 314, 417, 62 S.Ct. 226, 228, 86 L.Ed. 241
(1941).
not specify the requirements of a "provable claim."                  "Instead,

Congress intended that the just and equal distribution of an

insolvent bank's assets be effected "through the operation of

familiar equitable doctrines' fashioned by the courts."              Bank One,

TX, N.A. v. Prudential Ins. Co. of America,            878 F.Supp. 943, 954

(N.D.Tex.1995) (quoting Citizens State Bank of Lometa, 946 F.2d at

412; American Sur. Co. v. Bethlehem Nat'l Bank, 314 U.S. 314, 316,

62 S.Ct. 226, 228, 86 L.Ed. 241 (1941)).         Most courts adopted the

so-called "provability test" under which a claim is provable

against the FDIC as receiver if:         (1) it existed before the bank's

insolvency and did not depend on any new contractual obligations

arising thereafter;    (2) liability on the claim was absolute and

certain in amount when suit was filed against the receiver;                and

(3) the claim was made in a timely manner.            See, e.g., Dababneh v.

FDIC, 971 F.2d 428, 434 (10th Cir.1992);          Citizens State Bank of

Lometa v. FDIC, 946 F.2d 408, 412 (5th Cir.1991);                First Empire

Bank v. FDIC, 572 F.2d 1361, 1367-69 (9th Cir.1978).

     Only the first prong is at issue here.            It requires, in part,

that the claim must exist before the bank's insolvency.               A claim

exists   before   insolvency   if   it   is   based    on   a   pre-insolvency

contract which requires payment upon a stated event.              See Citizens



           Ratability obligates the court to focus on the point in
           time that insolvency is declared. [Cit.] A creditor's
           claim that increases after insolvency must be denied,
           because the claim will change the amount of the
           creditor's ratable share. [Cit.] The value of a claim
           is therefore fixed no later than the point of
           insolvency.

     Bank One, TX, N.A. v. Prudential Ins. Co. of America, 878
     F.Supp. 943, 954 (N.D.Tex.1995).
State Bank, 946 F.2d at 415;          OPEIU, 27 F.3d at 601-02;          First

Empire Bank, 572 F.2d at 1368-69 (finding that contingent claims of

which the worth or amount can be determined by recognized methods

of computation at a time consistent with the expeditious settlement

of the estates are provable);         Bank One, TX, 878 F.Supp. at 955.

The fact that certain post-insolvency events affect liability under

a pre-insolvency contract does not necessarily mean that the claim

did not exist before insolvency. See Citizens State Bank, 946 F.2d

at 415;    OPEIU, 27 F.3d at 603.           It is the contract right which

must exist before insolvency, not the fully-matured obligation to

pay.

       Thus, the FDIC's reliance on cases which state that a claim is

only   provable   if    it   exists   before    the   bank's   insolvency   is

misplaced.     This     aspect   of   the    provability   rule   is   plainly

satisfied in this case because the Severance Plan existed before

insolvency.

        The first prong of the provability test also requires that

the claim cannot depend on contracts arising after insolvency,

i.e., "new contracts."       This rule is derived from a line of cases

which generally involve claims for future rent. See, e.g., Kennedy

v. Boston-Continental Nat'l Bank, 84 F.2d 592 (1st Cir.1936), cert.

dismissed, 300 U.S. 684, 57 S.Ct. 667, 81 L.Ed. 887 (1937);

Argonaut Sav. & Loan Ass'n v. FDIC, 392 F.2d 195 (9th Cir.), cert.

denied, 393 U.S. 839, 89 S.Ct. 116, 21 L.Ed.2d 110 (1968);             FDIC v.

Grella, 553 F.2d 258 (2d Cir.1977);          Dababneh v. FDIC, 971 F.2d 428

(10th Cir.1992);       80 Pine, Inc. v. European Am. Bank, 424 F.Supp.

908 (E.D.N.Y.1976);       Executive Office Centers, Inc. v. FDIC,           439
F.Supp. 828 (E.D.La.1977), aff'd, 575 F.2d 879 (5th Cir.1978) (per

curiam).      Since Kennedy, the better reasoned cases simply stand for

the proposition that new contractual obligations created after

insolvency do not give rise to "provable" claims and, as a specific

application of this general rule, claims for future rent are not

provable.

       In Kennedy, the court examined whether a lessor's assignee

could recover liquidated damages under a lease covenant which

provided that such damages did not accrue until the landlord sent

written demand, gave notice, and reentered the property.                 84 F.2d

at 595.       Upon reentry, the agreement provided that the lessee

became liable for liquidated damages.            Id.     The court stated the

rule   that    the   bank's   liability   must    have   accrued   and    become

unconditionally fixed by the time of insolvency.              Id. at 597.     It

held, therefore, that the lessor's assignee could not recover

because his claim was based on a "new contract" which was created

by the affirmative act of reentry.          Id.    Accord Argonaut Savings

and Loan Ass'n v. FDIC, 392 F.2d 195, 197 (9th Cir.), cert. denied,

393 U.S. 839, 89 S.Ct. 116, 21 L.Ed.2d 110 (1968).            In other words,

the assignee could not recover the liquidated damages because his

entitlement to them was created by a post-insolvency contract.

       The FDIC and the cases it cites rely on the statement in

Kennedy that "[i]f nothing is due at the time of insolvency, the

claim should not be allowed, for that would be in violation of the

National Bank Act (12 U.S.C.A. § 194) calling for a ratable

distribution."       Id.   From this, the FDIC gleans that "no reference

whatsoever should be made to post-insolvency events, and that a
claim must be "absolutely' fixed, due, and owing as of the date of

insolvency to be "provable'...."    Citizens State Bank, 946 F.2d at

413 (characterizing the FDIC's argument).

     This statement in Kennedy, however, only applies in the lease

context and is better represented outside this context by the

court's "new contract" theory.6    In First Empire v. FDIC, 572 F.2d

     6
      In Kennedy, the court examined how future lease payments
should be treated in the context of a national bank receivership.
84 F.2d at 597-98. As pointed out by the dissent in that case,
the court could have either followed the bankruptcy rule (under
which future lease payments were not provable) or the equity rule
(under which they were provable). Kennedy, 84 F.2d at 598-99
(Morton, J., dissenting in part).

          Review of the bankruptcy rules in effect at the time
     Kennedy was decided reveals the limited scope of that
     decision. Prior to the 1934 amendments to the Bankruptcy
     Act of 1898, claims for rent under a lease due after the
     trustee's repudiation were not recoverable. See generally,
     3 Collier on Bankruptcy § 502.02[7] (1979). This treatment
     of leases derived from the traditional theory of rent as
     laid down by Lord Coke: " "Rent is a sum stipulated to be
     paid for the actual use and enjoyment of another's land....
     The actual enjoyment of the land is the consideration for
     the rent which is to be paid.... From this it seems clear,
     that although there be a lease, which may result in a claim
     for rent, which will constitute a debt, yet no debt accrues
     until such enjoyment has been had.' " Clark on Receivers §
     446(b) (19__) (quoting Bordman v. Osborn, 23 Pickering
     (Mass.) 295 (1939)). The Bankruptcy Act, as originally
     drafted, reflected this theory in that "[i]t was held that
     rent to accrue after the filing of the bankruptcy petition
     was incapable of proof as it was not a fixed liability
     absolutely owing but rather a demand contingent upon the
     occurrence of certain events." 3 Collier on Bankruptcy §
     502.02[7] (1979). Although the Bankruptcy Act recognized
     contingent non-lease claims, courts continually stopped
     short of extending the same liberality to claims based on
     breaches of leases. Id. See also Manhattan Properties v.
     Irving Trust Co., 291 U.S. 320, 332-39, 54 S.Ct. 385, 387-89
     [78 L.Ed. 824] (1934). Thus, "[w]hile from a strictly
     logical point of view there should be no need or
     justification to treat leases differently from other
     bilateral contracts, the development of a landlord's rights
     arising from the bankruptcy of his tenant led to so many
     deviations from the general law applicable to contractual
     rights in bankruptcy that leases of real estate were for
1361 (9th Cir.1978), the court examined Kennedy and cases parroting

its language and concluded that

      [a]lthough these cases use broad language, indicating that the
      bank's liability on any claim must have accrued and be
      unconditionally fixed at the date of insolvency, they are, by
      virtue of their dependence on the "new contract' principle,
      distinguishable from cases not dealing with lease options
      exercised after insolvency.     The claims here are based on
      letters of credit that were in existence before insolvency and
      are not dependent on any new contractual obligations arising
      later.

Id. at 1367.   The court properly concluded that Kennedy 's broad

language should be limited to cases involving leases and the loss
of future rent.   Id. at 1368.    It explicitly stated that the rule

should not be extended to other contingent obligations:

      To follow those cases here would amount to extending into new
      areas a rule that now appears to be outmoded, based as it is
      on a bankruptcy rule that today has been repealed in favor of
      the contrary equity rule.

Id.   As to other contracts, the court in      First Empire adopted

Kennedy 's new contract analysis.

      In sum, the "fixed, due and owing" language from Kennedy has


      many years considered sui generis."    3 Collier on Bankruptcy
      § 502.02[7] (1979).

           The court in Kennedy elected to follow the soon-to-be
      outdated bankruptcy rule which precluded recovery of future
      lease payments. First Empire, 572 F.2d at 1367-68. The
      bankruptcy rule on which Kennedy was based was subsequently
      repealed in favor of a broad and liberal provability rule.
      See 11 U.S.C.A. § 101(5); First Empire, 572 F.2d at 1368.
      Nonetheless, in the present bankruptcy code (and, in fact,
      in FIRREA) leases "remain in a category apart from other
      contract claims." First Empire, 572 F.2d at 1368.

            In sum, the court in Kennedy created the "new contract"
      theory which continues to find application in the common law
      provability doctrine. See Dababneh, 971 F.2d at 434;
      Citizens State Bank, 946 F.2d at 412; First Empire Bank,
      572 F.2d at 1367-69. The strict "due and owing" language in
      Kennedy, however, has been confined to claims for future
      rent.
been applied strictly in the context of lease payments on the

grounds that such payments are not provable.       See Dababneh, 971

F.2d at 435.    Courts have uniformly deemed claims for future rent

"unprovable," see id. (citing cases), and FIRREA continues this

distinction by providing separate rules in the lease and non-lease

contexts. Compare 12 U.S.C.A. § 1821(e), with § 1821(e)(3). These

cases are distinguishable simply by virtue of the fact that they

involve claims for future lease payments.     As to other contracts,

however, the strong language in Kennedy simply refers to the common

law rule of provability discussed supra (i.e., claims cannot depend

upon post-insolvency contracts).

     A careful review of the leading cases, particularly those

cited in American Nat'l Bank, 710 F.2d at 1540, reveals strong

support for these general propositions.     In First Empire Bank, the

court confronted the issue of whether standby letters of credit are

provable. The court held that such claims are provable because the

liability was absolute and certain when the suit was filed against

the receiver.   572 F.2d at 1369.   The fact that the standby letters

of credit were to some extent contingent at the time the receiver

was appointed did not destroy their provability.

     In FDIC v. Grella, 553 F.2d 258 (1977), the First Circuit

examined the rights of lessors to collect future rent from the

FDIC.7   The court applied the indisputable rule that lessors have

no rights to collect future rent, i.e., a claim for rent "must be

due and owing at the time of insolvency, [cit.], otherwise it does

     7
      It did so in the context of evaluating whether the FDIC had
standing to bring a declaratory judgment action against the
lessee. Id. at 262.
not constitute a claim against a receiver regardless of what other

rights the obligee may have."              Id. at 262.      This case provides no

support for the theory that the right to collect under an ordinary

contract (i.e., not a lease) against a bank must be fully matured

and payable as of appointment of the receiver.

       In American Nat'l Bank v. FDIC, 710 F.2d 1528 (11th Cir.1983),

we    had   to   decide     which   of     two    parties   was   entitled       to    an

interpleaded sum of money.           In disposing of an argument raised by

the claimant against the FDIC, we stated that "[i]t is well settled

that the rights and liabilities of a bank and the bank's debtors

and    creditors     are    fixed    at     the    declaration      of    the    bank's

insolvency."       Id. at 1540.     Thus, we concluded that any attempt by

the claimant to rely on events subsequent to the bank's closing in

support of its claim to the fund "must fail since the rights of the

parties     were   frozen    ...    when    the    Bank's   doors    were       shut   to

business."       Id. at 1540-41.

       We relied on First Empire, Grella, and Kennedy to support this

proposition.        Those cases, read properly, stand for the "new

contract" theory, i.e., that rights cannot be created anew after

appointment of the receiver.               Indeed, this is how the rule was

applied in American Nat'l Bank in that we rejected attempts by the

claimant to rely on events subsequent to receivership to create new

contractual rights.         In American National Bank, the claimant failed

to    demonstrate     any    pre-insolvency         entitlement      to    the    fund.

Accordingly, its attempts to rely on post-insolvency events to

create new contractual rights were properly rejected by the court.

       Finally, in Dababneh v. FDIC, 971 F.2d 428 (10th Cir.1992),
the Tenth Circuit examined the now-familiar question of whether

future rents are "provable" under the pre-FIRREA common law. After

repeating the oft-cited rule from Kennedy that rent must be due and

owing at insolvency, and the rule from First Empire that claims for

rent cannot depend upon "new contracts" arising after insolvency,

the court held that future rents were not recoverable.     Id. at 435

("The federal courts have uniformly adopted Kennedy 's common law

rule barring as "unprovable' claims for future rent against the

receiver of an insolvent bank.").    As with the other lease cases

cited by the FDIC, Dababneh creates a rule which applies to claims

for future rent, but falls flat with respect to other claims,

which, although contingent, existed when the FDIC was appointed

receiver.     Cf. First Empire Bank, 572 F.2d at 1367 (finding that

the lease cases, "by virtue of their dependence on the "new

contract' principle, [are] distinguishable from cases not dealing

with lease options exercised after insolvency");       Dababneh, 971

F.2d at 435 (finding that First Empire is distinguishable from the

lease cases and "inapplicable by its own stated exception").

         Thus, the FDIC's reliance on the common-law provability

doctrine and on our language in American Nat'l Bank to support its

contingency argument is misplaced.     The provability doctrine, in

relevant part, simply demands that claims must exist before the

bank's insolvency (even if contingent) and that new contractual
                                          8
obligations    cannot arise thereafter.       The   pre-FIRREA   cases


     8
      In addition, the provability doctrine has been applied in a
different and special way to claims for future rent. As
discussed, these cases are distinguishable simply by virtue of
the fact that they involve future rent.
uniformly   state    that   rights    and   liabilities     are   fixed    upon

appointment   of    the   receiver   and    that   claims   based   upon   new

contracts are not "provable."        These rules are consistent with the

policy underlying their creation:            ratability and provability.

These cases do not support the proposition that any contingency

destroys provability.       See FDIC v. Liberty Nat'l Bank & Trust Co.,

806 F.2d 961, 965 (10th Cir.1986) ("Nothing in § 194 or the

opinions cited ... requires us to hold that a bank's obligation to

pay a fixed amount of money upon the occurrence of a specified

event is rendered entirely null and void if the bank's insolvency

intervenes before the triggering event occurs."). To the contrary,

the cases permit claims which arise pre-insolvency to survive and

only preclude claims based on new, post-insolvency contracts.               As

the Supreme Court put it over a century ago:

     The business of the bank must stop when insolvency is
     declared. [Cit.] No new debt can be made after that. The
     only claims the [receiver] can recognize in the settlement
     [of] the affairs of the bank are those which are shown by
     proof satisfactory to him or by the adjudication of a
     competent court to have had their origin in something done
     before the insolvency.

White v. Knox, 111 U.S. 784, 787, 4 S.Ct. 686, 687, 28 L.Ed. 603

(1884).

     Here, at the time the FDIC was appointed receiver, McMillian

was party to a contract with Southeast which entitled him to

severance pay.      This right was contingent, of course, on his

discharge as a result of a "Reduction in Force."            This contingency

did not destroy McMillian's contract rights.                The policies of

ratability and provability are amply satisfied in this case.                At

the time the FDIC was appointed receiver, it could have simply
reviewed the bank records to determine that McMillian had a right

to severance pay that would become payable upon his termination.

Knowledge of this contingent right allowed it to plan accordingly.

       The contract rights which gave rise to McMillian's claim were

created before the FDIC was appointed receiver.                  The fact that

these rights were contingent at that time is of no moment.                    "The

employees had a right to severance pay as of the date of the

appointment—albeit       a   contingent    one—and    that     right   should    be

treated essentially the same as the right to accrued vacation pay

or health benefits."         OPEIU, 27 F.3d 598, 601 (D.C.Cir.1994).             It

would make no sense to limit recovery under FIRREA to only those

contracts in which all contingencies had been eliminated prior to

appointment of the receiver.          All contracts are to some extent

contingent until both parties have performed or breached.                       The

FDIC's interpretation would permit recovery only when a contract

had been breached before receivership—a result clearly contrary to

the plain language of the statute, Congress' intent, and the common

law.    Indeed, it would mean that things like health benefits and

pension benefits would not be recoverable.

       Our   conclusion      is   supported     by    OPEIU,     27    F.3d     598

(D.C.Cir.1994).          Accord   Monrad   v.   FDIC,    62    F.3d    1169   (9th

Cir.1995);     Citizens State Bank of Lometa v. FDIC, 946 F.2d 408

(5th Cir.1991);     and Bank One, TX, N.A. v. Prudential Ins. Co. of

Amer., 878 F.Supp. 943 (N.D.Tex.1995). OPEIU involved facts almost

identical    to   this    case.     Plaintiffs       claimed    entitlement      to

severance pay under a collective bargaining agreement that was

repudiated by the FDIC after it was appointed receiver.                 The FDIC
interposed the same contingency argument it presses on this Court.

The court held that the contingent nature of these contracts did

not render them unrecoverable on the grounds that they had not yet

"accrued."     OPEIU, 27 F.3d at 601.9   Instead, the court held that

severance benefits should be treated the same as standby letters of

credit in that they are provable even though the bank's obligation

is still contingent as of the date of insolvency.      Id. at 602-03

(citing Citizens State Bank of Lometa v. FDIC, 946 F.2d 408, 415

(5th Cir.1991);    FDIC v. Liberty Nat'l Bank & Trust Co., 806 F.2d

961 (10th Cir.1986);    First Empire Bank-New York v. FDIC, 572 F.2d

1361 (9th Cir.), cert. denied, 439 U.S. 919, 99 S.Ct. 293, 58

L.Ed.2d 265 (1978)).     See also Monrad v. FDIC, 62 F.3d 1169, 1174

(9th Cir.1995) (concluding that, among the alternatives,        OPEIU

offers the better-reasoned approach to the severance pay issue);

Bank One, TX, N.A. v. Prudential Ins. Co. of America, 878 F.Supp.

943, 955, 958 (N.D.Tex.1995) (holding that the FDIC is liable for

contingent claims so long as those claims arose before insolvency

and did not rely on new contractual obligations created after

insolvency).

     As the D.C. Circuit later explained:

     To show that the claim had "accrued,' it was enough that if
     the bank had remained solvent and had unilaterally repudiated

     9
      See also Monrad v. FDIC, 62 F.3d 1169, 1174 (9th Cir.1995)
("[T]he fact that the actual termination date post-dates the
appointment of the receiver is insufficient to defeat an
otherwise valid claim to severance pay."); Citizens State Bank
of Lometa v. FDIC, 946 F.2d 408, 415 (5th Cir.1991) ("That
liability [under standby letters of credit] was actually
triggered ... shortly [after insolvency] cannot be said to
completely eradicate the contractual liability which originated
from standby letters of credit pre-dating [the bank's]
insolvency.").
     the severance obligations, the employees could have sued
     successfully in court for the value of those benefits.... In
     short, the question of whether the employees' rights were
     sufficiently vested on the relevant date (and their claims
     sufficiently provable) turned on whether the insolvent bank's
     promise was "binding and enforceable under contract law' at
     that time.

Nashville Lodging Co. v. RTC,       59 F.3d 236, 244 (D.C.Cir.1995)

(citing OPEIU, 27 F.3d at 602).

     Our conclusion also finds strong support in an amendment to

the Federal Deposit Insurance Act governing "golden parachute"
                                    10
contracts.     12 U.S.C.A. § 1828(k).    This legislation, enacted one

     10
          12 U.S.C.A. § 1828(k) provides, in relevant part:

             (k) Authority to regulate or prohibit certain forms of
             benefits to institution-affiliated parties

                  (1) Golden parachutes and indemnification payments

                  The Corporation may prohibit or limit, by
                  regulation or order, any golden parachute payment
                  or indemnification payment.

                  (2) Factors to be taken into account

                  The Corporation shall prescribe, by regulation,
                  the factors to be considered by the Corporation in
                  taking any action pursuant to paragraph (1) which
                  may include such factors as the following:

                  (A) Whether there is a reasonable basis to believe
                  that the institution-affiliated party has
                  committed any fraudulent act or omission, breach
                  of trust or fiduciary duty, or insider abuse with
                  regard to the depository institution or depository
                  institution holding company that has had a
                  material affect on the financial condition of the
                  institution.

                  (B) Whether there is a reasonable basis to believe
                  that the institution-affiliated party is
                  substantially responsible for the insolvency of
                  the depository institution or depository
                  institution holding company, the appointment of a
                  conservator or receiver for the depository
                  institution, or the depository institution's
                  troubled condition (as defined in the regulations
prescribed pursuant to section 1831i(f) of this
title).

(C) Whether there is a reasonable basis to believe
that the institution-affiliated party has
materially violated any applicable Federal or
State banking law or regulation that has had a
material affect on the financial condition of the
institution.

(E) Whether the institution-affiliated party was
in a position of managerial or fiduciary
responsibility.

(F) The length of time the party was affiliated
with the insured depository institution or
depository institution holding company and the
degree to which—

(i) the payment reasonably reflects compensation
earned over the period of employment; and

(ii) the compensation involved represents a
reasonable payment for services rendered.

(4) Golden parachute payment defined

For purposes of this subsection—

(A) In general

The term "golden parachute payment" means any
payment (or any agreement to make any payment) in
the nature of compensation by any insured
depository institution or depository institution
holding company for the benefit of any
institution-affiliated party pursuant to an
obligation of such institution or holding company
that——

(i) is contingent on the termination of such
party's affiliation with the institution or
holding company; and—

(ii) is received on or after the date on which—

(I) the insured depository institution or
depository institution holding company, or any
insured depository institution subsidiary of such
holding company, is insolvent;

(II) any conservator or receiver is appointed for
year after the enactment of FIRREA, empowers the FDIC to promulgate

regulations   disallowing   certain   severance   payments   defined   as

"golden parachute payments." It is clear from the golden parachute



                such institution;

                (III) the institution's appropriate Federal
                banking agency determines that the insured
                depository institution is in a troubled condition
                (as defined in the regulations prescribed pursuant
                to section 1831i(f) of this title);

                (IV) the insured depository institution has been
                assigned a composite rating by the appropriate
                Federal banking agency or the Corporation of 4 or
                5 under the Uniform Financial Institutions Rating
                System; or

                (V) the insured depository institution is subject
                to a proceeding initiated by the Corporation to
                terminate or suspend deposit insurance for such
                institution.

                (B) Certain payments in contemplation of an event

                Any payment which would be a golden parachute
                payment but for the fact that such payment was
                made before the date referred to in subparagraph
                (A)(ii) shall be treated as a golden parachute
                payment if the payment was made in contemplation
                of the occurrence of an event described in any
                subclause of such subparagraph.

                (C) Certain payments not included

                The term "golden parachute payment" shall not
                include—

                (i) any payment made pursuant to a retirement plan
                which is qualified (or is intended to be
                qualified) under section 401 of Title 26 or other
                nondiscriminatory benefit plan;

                (ii) any payment made pursuant to a bona fide
                deferred compensation plan or arrangement which
                the Board determines, by regulation or order, to
                be permissible; or

                (iii) any payment made by reason of the death or
                disability of an institution-affiliated party.
amendment that Congress expressly contemplated that some severance

payments will be permissible notwithstanding the fact that payment

is "contingent on the termination of such parties' affiliation with

the institution."        12 U.S.C. § 1828(k)(4)(A)(i). 11          If the FDIC's

contingency argument were valid, the golden parachute provision

would be wholly unnecessary, because all such contingent payments

would be impermissible.

      Our conclusion is inconsistent with the recent Third Circuit

decision in Hennessy v. FDIC, 58 F.3d 908 (3d Cir.1995), and so we

pause to explain our differences.           In Hennessy, former employees

and managers of Meritor Savings Bank ("Meritor") sought to recover,

inter alia, severance pay under a separation pay plan.               Id. at 912-

13.   Under the plan, eligible employees were entitled to severance

pay based on their experience and salary.                Id. at 913.       These

benefits were triggered by involuntary termination as a result of

"lack       of    work,      job     elimination,        reorganization        or

reduction-in-force." Id. After Meritor was declared insolvent and

the FDIC was appointed receiver, the FDIC repudiated the severance

plan.      Id. at 914.

        The court in Hennessy adopted the rule from American Nat'l

Bank, 710 F.2d at 1540, that rights and liabilities of a bank and

its   debtors    and     creditors   are   fixed   as   of   the   date   of   the

declaration of a bank's insolvency.          Hennessy, 58 F.3d at 918.         In


      11
      We are not persuaded otherwise by the footnote to the
supplementary information preceding the proposed regulations
which reads: "Claims for certain benefits may not be provable or
constitute "actual direct compensatory damages' ... if the
institution is placed in receivership. This regulation does not
provide otherwise." 60 Fed.Reg. 16,069, 16,077 n. 13 (1995).
addition, it applied the language from Kennedy, that a claim must

have accrued and become unconditionally fixed on or before the

bank's     insolvency.     Id.   Applying    these   rules   to   severance

payments, the court concluded that because the severance benefits

had not "vested" prior to the FDIC's appointment as receiver, they

had not "accrued" and were, therefore, unrecoverable.          Id.   Accord

FDIC v. Coleman, 611 So.2d 1300 (Fla.App. 4 Dist.1992).

      Insofar as the court relied on the rule we enunciated in

American Nat'l Bank, it misconstrued the meaning of that case. The

rule that rights and liabilities are fixed at insolvency, as

discussed supra, does not preclude liability for contracts which

are   to   some   extent   contingent   at   insolvency.     Instead,   the

common-law rule of provability (of which the rule in American Nat'l

Bank is a restatement) precludes liability for claims which did not

exist prior to insolvency and for claims which depend on new

contractual obligations created after insolvency.            To the extent

the court in Hennessy relied on Kennedy, it applied rules that

belong exclusively in the lease context or misapplied the rules

embodying the "new contract theory."

      The FDIC also relies on Bayshore Exec. Plaza Partnership v.

FDIC, 750 F.Supp. 507 (S.D.Fla.1990), aff'd on other grounds, 943

F.2d 1290 (11th Cir.1991), to support its contingency argument.

Its reliance is misplaced, however, as Bayshore involved a lessor's

attempt to recover rent that had accrued one year after the bank's

declaration of insolvency. The court simply applied the hoary rule

that rights and liabilities are frozen at insolvency, American

Nat'l Bank, 710 F.2d at 1540, and the interpretation most courts
have given this rule in the lease context to conclude that the FDIC

was not liable for the post-insolvency rent.            See, e.g., FDIC v.

Grella, 553 F.2d 258 (2d Cir.1977).

       Thus, we hold that the common law provability rules, if they

continue to apply, do not bar the enforcement of McMillian's

Severance Plan.

2. "Actual Direct Compensatory Damages"

       We address next the second ground proffered by the FDIC in

support of the district court's opinion.            The FDIC contends that

even   if   McMillian's   severance   pay    is    provable,   it   does   not

constitute "actual direct compensatory damages" within the meaning

of 12 U.S.C.A. § 1821(e)(3). Instead, it argues that the Severance

Plan provides for a kind of liquidated damages, i.e., the plan is

intended to liquidate the damages resulting from the termination of

an employee.

       We face a split among the circuits on this question.           The FDIC

urges that we adopt the reasoning of Howell v. FDIC, 986 F.2d 569

(1st Cir.1993).     There, the First Circuit held that severance

payments are not "actual direct compensatory damages" because they

are "at best an estimate of likely harm made at a time when only

prediction is possible."      Id. at 573.         Thus, the court concluded

that severance payments are equivalent to liquidated damages or

even penalties (when the damages are quite large).              Id.    In its

view, employees would have no way of proving actual damages at the

time of termination because they could prove neither employment

opportunities foregone nor the possibility that they might mitigate

damages by finding new employment.          Id.     Therefore, according to
the court in Howell, severance pay protects employees from their

inability to prove actual damages by liquidating the liability.12
Id.   See also Hennessy v. FDIC,         58 F.3d 908, 921 (3d Cir.1995)

(following Howell with little or no analysis);            Westport Bank &

Trust Corp. v. Geraghty, 865 F.Supp. 83, 86 (D.Conn.1994) (citing

Howell, 986 F.2d at 573) ("Courts have found that damages resulting

from the repudiation of a severance package are not "actual direct

compensatory damages' within the meaning of § 1821 because they are

analogous to liquidated damages."); Lanigan v. RTC, No. 91 C 7216,

1993 WL 792085 (N.D.Ill. March 31, 1993) (following Howell ).             The

courts following Howell generally conclude that because severance

payments are in the nature of liquidated damages, they are not

actual damages and thus do not fall within the "actual direct

compensatory damages" contemplated by § 1821(e)(3).

      By contrast, at least two circuits have found that severance

payments comprise "actual direct compensatory damages." See, e.g.,

Monrad v. FDIC, 62 F.3d 1169 (9th Cir.1995);           OPEIU, 27 F.3d 598

(D.C.Cir.1994).     In OPEIU, the D.C. Circuit addressed and rejected

the   Howell   court's    characterization   of    severance   payments   as

liquidated     damages.     The   D.C.   Circuit   pointed   to   a   logical

inconsistency in the Howell opinion.         Although the employees were

at will employees, the Howell court treated the severance pay as


      12
      As further support for its conclusion, Howell relied on
what it guessed Congress intended by "actual direct compensatory
damages": "It is fair to guess that Congress, faced with
mountainous bank failures, determined to pare back damages claims
founded on repudiated contracts." Id. at 572. The court
concluded that Congress simply intended to disallow claims it
deemed "less worthy" and, accordingly, it is reasonable that they
intended to exclude severance pay. Id.
liquidated damages—i.e., "an approximation of the employee's future

salary for an agreed term."          27 F.3d at 604.       However, because the

employment was at will, the termination of employment was not a

breach     of   any    contract     and,   therefore,       it     was   logically

inconsistent to treat the severance pay as liquidated damages for

termination of the employment.

     Rather than liquidated damages for termination of employment,

the D.C. Circuit viewed severance pay as part of the employee's

compensation package.         Id. at 603 ("An employer's promise to make

severance payments is part of the consideration of the employment

contract.").13     Likewise, in Monrad, the Ninth Circuit considered

the analysis in Howell and Hennessy, rejected it, and concluded

that the D.C. Circuit's opinion in OPEIU was better reasoned.

         In this case, it appears that McMillian's employment was at

will, not for a term of years.         As pointed out by the D.C. Circuit

in OPEIU, the termination of McMillian's employment did not, by

itself, breach a contract, and thus, the termination logically

could     not   give   rise   to    liquidated     damages.      As in      OPEIU,

McMillian's     severance     pay   appears   to    have    been    part   of   his

compensation      package.      McMillian     and   other     employees    became


     13
      The FDIC attempts to distinguish OPEIU on the grounds that
the severance benefits in that case were part of compensation
under a collective bargaining agreement. This attempt to
distinguish OPEIU misses the D.C. Circuit's point. OPEIU found
that severance pay merely modifies the at will employment
relationship between the parties by providing employees an
entitlement upon termination where there would otherwise be none.
See Monrad, 62 F.3d at 1174 ("[OPEIU ] construed severance pay
agreements as enforceable modifications of at will employment;
whether the payment plan was provided in a specific collective
bargaining agreement appears to be irrelevant to its analysis.").
eligible for severance pay after two years of employment and the

amount of severance pay to which they were entitled increased with

seniority.     The   increase    of    benefits   based   on    seniority   is

inconsistent with the concept of liquidated damages.             The years of

employment would not be relevant to an estimation of the damages

which an employee might incur as a result of being terminated.

Instead, the fact that severance pay increases with seniority

supports McMillian's position that it was part of his compensation.

Cf. Nolde Bros., Inc. v. Log. No. 358, Bak. & Conf. Wkrs. U., 430

U.S. 243, 248 n. 4, 97 S.Ct. 1067, 1070 n. 4, 51 L.Ed.2d 300 (1977)

("The fact that the amount of severance pay to which an employee is

entitled under the ... agreement varies according to the length of

his employment and the amount of his salary ... supports the ...

position    that   severance    pay   was   nothing   more     than   deferred

compensation.").     An increase in benefits based on seniority is a

common    practice   in   developing    the   structure   of    compensation

packages.    Like the D.C. Circuit in OPEIU, we believe McMillian's

severance pay was part of his compensation package—i.e., "part of

the consideration of the employment," OPEIU, 27 F.3d at 603—similar

to health and pension benefits.14

     14
      The FDIC argues that the language of the Severance
Agreement indicates that the severance pay is liquidated damages.
The FDIC relies upon the following language:

            The purpose of the [Severance] Plan is to financially
            assist qualifying employees, who become unemployed as
            result of a Reduction in Force, through a period of
            readjustment while they seek new employment by
            providing them with severance benefits.

     We reject the FDIC's argument. The quoted language does not
     purport to estimate damages; indeed, as we have noted, the
     termination was not a breach of contract and thus triggered
     Our task is the interpretation of the statutory term "actual

direct compensatory damages."    We note that there is no relevant

legislative history; the parties have cited none, and we have been

able to find none.      See Howell, 986 F.2d at 572.      Thus, our

analysis relies upon the plain meaning of the statutory language.

It is also informed, however, by two statutory provisions—i.e., the

express statutory exclusion of punitive damages, lost profits and

damages for pain and suffering, 12 U.S.C.A. § 1821(e)(3)(B);       and

the inference of congressional intent arising from the golden

parachute amendment.    See supra note 10.

      We begin with the plain meaning of the phrase.   See Perrin v.

United States, 444 U.S. 37, 42-43, 100 S.Ct. 311, 314, 62 L.Ed.2d

199 (1979) ("A fundamental canon of statutory construction is that,

unless otherwise defined, words will be interpreted as taking their

ordinary,   contemporary common meaning.");     United    States    v.

McLymont, 45 F.3d 400, 401 (11th Cir.), cert. denied, --- U.S. ----

, 115 S.Ct. 1723, 131 L.Ed.2d 581 (1995) ("[T]he plain meaning of

this statute controls unless the language is ambiguous or leads to

absurd results.").     "Compensatory damages" are defined as those

damages that "will compensate the injured party for the injury

sustained, and nothing more;     such as will simply make good or

replace the loss caused by the wrong or injury."         Black's Law



     no damages. A purpose to tide an employee over a period of
     readjustment would not seem to have much relevance to the
     issue of whether the payments are liquidated damages or part
     of the compensation package. For example, a pension plan is
     similarly intended to tide employees over the period of
     their retirement, yet, pension plans are clearly part of the
     compensation package and not liquidated damages for the
     termination of employment.
Dictionary (6th Ed.1991).          "Actual damages," roughly synonymous

with compensatory damages, are defined as "[r]eal, substantial and

just     damages,    or   the   amount     awarded      to    a   complainant    in

compensation for his actual and real loss or injury, as opposed ...

to "nominal' damages [and] "punitive' damages."                   Id.15   Finally,

"[d]irect damages are such as follow immediately upon the act

done."      Id.   Thus, "actual direct compensatory damages" appear to

include those damages, flowing directly from the repudiation, which

make one whole, as opposed to those which go farther by including

future contingencies such as lost profits and opportunities or

damages based on speculation.            See OPEIU, 27 F.3d at 602;        RTC v.

Management, Inc., 25 F.3d 627, 632 (8th Cir.1994) (holding that

neither penalties designed to dissuade a party from breaching nor

liquidated damages are compensable under FIRREA).

        We believe McMillian's damages fall within the plain meaning

of the terms "actual," "direct," and "compensatory" damages.                    The

precise     nature   of   the   injury    for   which    he   seeks   damages    is

clarified by viewing McMillian's severance pay as part of his

compensation package.       McMillian's injury was his being discharged

without receiving the compensation due him under the terms of the

Severance Plan.      A significant flaw in the FDIC's view of this case

is its mischaracterization of the act triggering potential damages

and the injury for which potential damages may be appropriate. The

triggering act is not merely the discharge of McMillian, but more


       15
      According to Corpus Juris Secundum, " "Compensatory
damages' and "actual damages' are synonymous terms ... and
include[ ] all damages other than punitive or exemplary damages."
25 C.J.S. Damages § 2 (1966).
precisely, the discharge without paying McMillian the compensation

due him. The relevant injury for which there are potential damages

is McMillian's having been discharged without payment of the

compensation due him.        Such injury is analogous to discharging an

employee without giving him his last paycheck;                  i.e., without

paying him compensation already earned.            Contrary to the FDIC's

characterization, the relevant injury is not the difficulty and

perhaps   inability     of   McMillian    to   obtain   new    and    equivalent

employment.     Instead, to compensate McMillian for having been

discharged    without   the    payments   agreed   upon,      the    appropriate

damages would be measured by the agreed-upon payments.                    It is

through these payments that McMillian is made whole.                 The damages

are clearly compensatory;       the loss caused by the injury is simply

replaced.    The dollar amount he would receive is the actual amount

due, and his damages flow directly from FDIC's repudiation (i.e.,

its refusal to honor the severance pay obligations).                   Thus, an

award to McMillian would fall well within the term "actual direct

compensatory damages."

     The statutory language in 12 U.S.C.A. § 1821(e)(3)(B) provides

some support for our conclusion.          As noted supra, § 1821(e)(3)(B)

expressly provides that the phrase does not include punitive

damages, lost profits or damages for pain and suffering.                Although

it is probable that the listing in the statutory provision is not

exclusive, it provides some support for our conclusion in this

case;     McMillian's severance payments are not at all like the

listed exclusions.      The damages here are clearly not in the nature

of   punitive   damages.        Rather,    the   damages      would    precisely
compensate     McMillian        for     not    having     been    paid   the    amounts

previously     agreed      to    be     part       of   his   compensation     package.

Similarly, such damages are clearly not in the nature of profits or

damages for pain and suffering.

     Our conclusion also derives strong support from the golden

parachute amendment.            See supra note 10.              It is clear from the

provisions of this amendment that Congress contemplated that some

severance payments would fall within the phrase "actual direct

compensatory damages."           Otherwise, the golden parachute amendment

would be wholly unnecessary because the FDIC would already be

protected    (i.e.,       by    the    "actual      direct    compensatory     damages"

provision)    from    liability         for    paying     any    severance   payments.

Moreover, the golden parachute amendment provides strong support

for the proposition that the particular Severance Plan in this case

was of the kind which Congress intended for the FDIC to honor.                      The

statute expressly indicates that Congress intended that qualified

retirement plans and "other nondiscriminatory benefit plan[s]" are

permissible.    12 U.S.C.A. § 1828(k)(4)(C)(i).                   Also permissible is

"any payment made pursuant to a bona fide deferred compensation

plan or arrangement which the Board determines, by regulation or

order, to be permissible."              12 U.S.C.A. § 1828(k)(4)(C)(ii).            The

Severance    Plan    in    this       case    is    apparently    nondiscriminatory,

applying to all employees with over two years of service, and

providing for increase in benefits according to years of service.

Indeed, the FDIC's proposed regulations expressly contemplate the

permissibility of nondiscriminatory severance pay plans like the

instant plan.        60 Fed.Reg. 16069, 16070 (to be codified at 12
C.F.R. Pt. 359.1(f)(2)(4)) (proposed March 29, 1995).16

     For the foregoing reasons, we reject the FDIC's argument that

McMillian's severance payments do not qualify as "actual direct

compensatory damages."   The judgment of the district court cannot

be affirmed on this theory.

                             III. CONCLUSION

     Accordingly, the decision of the district court is reversed

and the case is remanded for proceedings consistent with this

opinion.

     REVERSED and REMANDED.

                         .     .    .    .     .



                         .     .    .    .     .




     16
      We also note that § 1828(k) and the proposed regulations
suggest several considerations which might lead to disallowance
of severance payments. These considerations are not relevant to
our disposition of this case.
