Trout Lake attorney bests feds, but judge's award falls short

A shareholders derivative suit was filed by Willner in September 1990, on behalf of the 6,500 shareholders of Benjamin Franklin.

U.S. Claims Court Judge Loren A. Smith awarded damages of $35 million for shareholders of the savings and loan institution in a decision announced on April 1.

Experts for Benjamin Franklin Savings & Loan had testified that the damages were $944 million, while the government experts testified the damages were zero.

"The judge rejected our claim for expectancy damages on grounds it's too speculative," Willner explained. "We have to prove what Ben Franklin with its 88 branches would have been worth had it survived until 1999. There is a difficult measure of proof. The judge said it's clear there are damages, then he said the best he could do was talk of market value back when it was seized."

After the judge's decision, Willner said there was more work to be done.

"I'm happy we won," Willner said. "We established that the government, when it breaks a contract, has to keep its word. But I thought the amount of damages awarded were insufficient. It's a win, but there's more work ahead."

Benjamin Franklin was founded in 1925 in Portland. In 1982, Benjamin Franklin Savings & Loan entered into an agreement with the federal government to take over the ailing Equitable Savings & Loan in return for the government's promise that the negative net worth of Equitable could be treated as the capital asset of goodwill and amortized over 40 years.

But in 1989, Congress changed the law and retroactively eliminated the goodwill, thereby rendering Benjamin Franklin and hundreds of savings and loans around the country insolvent.

At the time of the seizure, the savings and loan had 88 branches in the Pacific Northwest. It had enjoyed a record of 16 consecutive quarters of profit before Congress passed its law.

In 1997, the U.S. Claims Court decided that the specific contract with Benjamin Franklin was broken by the government.

Trial on the amount of damages to be paid by the government started in Portland in January 1999, and was completed in September 1999.

Judge Smith had considered the dollar sum to be awarded since then, and his decision was finally issued on April 1.

Before the process ended, participants had waited 30 months for a decision on the amount of damages.

Willner put the case, which started in 1990, in a personal perspective.

"My hair was brown then -- now it's white," he said.

"Twelve years and we're not done. Both sides will now appeal," Willner added. "September 1990, and it's still going. Twelve years, and I suspect we have two more years to go."

Willner said the case will now go to the U.S. Court of Appeals for the Federal Circuit. He added that this appeal would probably be the last round in the long-running case.

"The appeal (to this court) is a matter of right. A request for review by Supreme Court is discretionary, and they take very few cases," Willner explained.

Willner has been a Trout Lake resident since 1988. He is a partner in the Portland law firm of Willner, U'ren & Hooton, LLP, and is licensed to practice law in Washington and Oregon.