United States Ex Rel. Adams v. Aurora Loan Services, Inc. , 813 F.3d 1259 ( 2016 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA EX REL. No. 14-15031
JAMES R. ADAMS and PUOY K.
PREMSRIRUT, Relators, D.C. No.
Plaintiffs-Appellants, 2:11-cv-00535-
RCJ-PAL
v.
AURORA LOAN SERVICES, INC.; BAC OPINION
HOME LOANS SERVICING, LP; BANK
OF AMERICA, N.A.; J.P. MORGAN
CHASE BANK, N.A., for itself and as
successor by merger to Chase Home
Finance LLC; CITIMORTGAGE INC.;
COUNTRYWIDE HOME LOANS INC.;
EMC MORTGAGE LLC, FKA EMC
Mortgage Corporation; NATIONSTAR
MORTGAGE, LLC; OCWEN LOAN
SERVICING, LLC; ONEWEST BANK,
FSB; PHH MORTGAGE
CORPORATION; U.S. BANK NA;
WELLS FARGO BANK, NA,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, District Judge, Presiding
2 UNITED STATES EX REL. ADAMS V. AURORA LOAN SERVS.
Submitted February 12, 2016*
San Francisco, California
Filed February 22, 2016
Before: Barry G. Silverman and Richard C. Tallman,
Circuit Judges and Robert S. Lasnik,** Senior District
Judge.
Opinion by Judge Silverman
SUMMARY***
False Claims Act
The panel affirmed the district court’s dismissal of an
appeal brought by relators in a False Claims Act suit against
various lenders and loan servicers.
Relators alleged that the Federal National Mortgage
Association (“Fannie Mae”) and the Federal Home Loan
Mortgage Corporation (“Freddie Mac”) were federal
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
**
The Honorable Robert S. Lasnik, Senior District Judge for the U.S.
District Court for the Western District of Washington, sitting by
designation.
***
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES EX REL. ADAMS V. AURORA LOAN SERVS. 3
instrumentalities for purposes of giving rise to liability under
31 U.S.C. § 3729(b)(2)(A)(i) of the Act.
The panel held that a claim presented to Fannie Mae or
Freddie Mac was not presented to an “officer, employee,
or agent” of the United States under 31 U.S.C.
§ 3729(b)(2)(A)(i), because Fannie Mae and Freddie Mac are
private companies, albeit companies sponsored or chartered
by the federal government.
COUNSEL
Sigal Chattah, Las Vegas, Nevada, for Relators/Plaintiffs-
Appellants.
Mark P. Guerrera, Sean C. Griffin, Sidley Austin LLP,
Washington, D.C.; Mark E. Haddad, Douglas A. Axel, Sidley
Austin LLP, Los Angeles, California, for Defendants-
Appellees.
Stuart F. Delery, Assistant Attorney General, Daniel G.
Bogden, United States Attorney, Michael S. Raab and
Melissa N. Patterson, Attorneys, Appellate Staff, United
States Department of Justice, Washington D.C., for Amicus
Curiae United States of America.
4 UNITED STATES EX REL. ADAMS V. AURORA LOAN SERVS.
OPINION
SILVERMAN, Circuit Judge:
The question presented by this appeal is whether the
Federal National Mortgage Association (Fannie Mae) and the
Federal Home Loan Mortgage Corporation (Freddie Mac) are
officers, employees, or agents of the federal government for
purposes of the False Claims Act, 31 U.S.C.
§ 3729(b)(2)(A)(i). Upon de novo review, U.S. ex rel.
Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121, 1126
(9th Cir. 2015) (en banc), we hold they are not.
The relators brought a False Claims Act suit against
various lenders and loan servicers. In a nutshell, the relators
alleged that defendants certified that loans purchased by
Fannie Mae and Freddie Mac were free and clear of certain
home owner association liens and charges when they were
not. The relators alleged that these false certifications were
made to Fannie Mae and Freddie Mac as instrumentalities of
the United States.
As amended in 2009, the False Claims Act includes two
definitions of the sort of “claim” that may give rise to liability
under the statute. The first definition, in 31 U.S.C.
§ 3729(b)(2)(A)(i), requires that a demand or request for
payment be “presented to an officer, employee or agent of the
United States.” Relators allege that Fannie Mae and Freddie
Mac are “federal instrumentalities” for the purposes of
§ 3729(b)(2)(A)(i) of the False Claims Act, either under our
case law or as a result of the government’s conservatorship.
Relators make no argument that the second definition of
“claim,” found in § 3729(b)(2)(A)(ii), applies. To the extent
the district court broadly held that claims made to Freddie
UNITED STATES EX REL. ADAMS V. AURORA LOAN SERVS. 5
Mac and Fannie Mae could never be “claims” within the
FCA’s definition of that term, the district court was mistaken.
A properly pled claim under § 3729(b)(2)(A)(ii) could give
rise to FCA liability, but not as alleged in the three amended
complaints pled here.
The district court properly held that a claim presented to
Fannie Mae or Freddie Mac is not presented to an “officer,
employee or agent” of the United States. And that’s because
Fannie Mae and Freddie Mac are private companies, albeit
companies sponsored or chartered by the federal government.
12 U.S.C. § 1716b (Fannie Mae is a “Government-sponsored
private corporation”); 12 U.S.C. § 1452 (Freddie Mac is “a
body corporate under the direction of a Board of Directors”
elected annually by the voting common stockholders). See
also Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374, 392
(1995) (charter disclaimer of government entity status
dispositive for matters within Congress’s control); U.S. ex rel.
Totten v. Bombardier Corp., 380 F.3d 488, 492 (D.C. Cir.
2004) (False Claims Act coverage is a matter within
Congress’s control), cert. denied, 544 U.S. 1032 (2005). The
United States filed a helpful and well-reasoned amicus brief
agreeing with this conclusion.1
Our prior decision in Rust v. Johnson, 597 F.2d 174(1979), where we held that Fannie Mae was a federal
instrumentality for state/city tax purposes, does not change
1
We also agree with the government that provisions in 12 U.S.C. § 4617abrogating federal status for “limited-life regulated entities” are
inapplicable in this case, because there is no receivership in place, only a
conservatorship. Compare 12 U.S.C. § 4617(b)(2)(D) with
§ 4617(b)(2)(E–F) (creation of limited-life regulated entity authorized by
receiver but not conservator).
6 UNITED STATES EX REL. ADAMS V. AURORA LOAN SERVS.
the result, because Rust does not address Fannie Mae or
Freddie Mac’s status under the False Claims Act. As we have
previously held, just because an entity is considered a federal
instrumentality for one purpose does not mean that the same
entity is a federal instrumentality for another purpose. Kuntz
v. Lamar Corp., 385 F.3d 1177, 1185 (9th Cir. 2004). Fannie
Mae’s federal instrumentality status for state tax purposes
doesn’t answer whether Fannie Mae and Freddie Mac are also
government entities for False Claims Act purposes. See
Lewis v. United States, 680 F.2d 1239, 1242–43 (9th Cir.
1982).
Nor does the Federal Housing Finance Agency’s
conservatorship transform Fannie Mae and Freddie Mac into
federal instrumentalities. We agree that the FHFA has “all
the rights, titles, powers and privileges of” Fannie Mae and
Freddie Mac. Cty of Sonoma v. Fed. Hous. Fin. Agency,
710 F.3d 987, 993 (9th Cir. 2013) (quoting 12 U.S.C.
§ 4617(b)(2)(A)(i)). However, this places FHFA in the shoes
of Fannie Mae and Freddie Mac, and gives the FHFA their
rights and duties, not the other way around.
Relators’ further reliance on Lebron v. National Raliroad
Passenger Corp., 513 U.S. 374, in support of their
conservatorship argument does not change our view. In
Lebron, the Supreme Court held that Amtrak was a part of the
federal government for purposes of the First Amendment
because, among other things, the government retained for
itself permanent authority to appoint a majority of the
corporation’s directors. Lebron, 513 U.S. at 400. Even
assuming that Lebron outlines the correct analytical
framework for False Claims Act purposes, relators’ argument
still fails, because relators do not allege that the
conservatorship represents the federal government’s retention
UNITED STATES EX REL. ADAMS V. AURORA LOAN SERVS. 7
of permanent authority to control Fannie Mae and Freddie
Mac.
We express no opinion about whether the relators could
state a claim under 31 U.S.C. § 3729(b)(2)(A)(ii), which
defines a claim as a request or demand made upon non-
governmental third parties under certain conditions, because
relators raised no argument on that point in the district court,
nor here on appeal – not even after this possibility was
pointed out in the government’s amicus brief. See Indep.
Towers of Wash. v. Washington, 350 F.3d 925, 929 (9th Cir.
2003).
Likewise, relators do not contend that they should have
been granted leave to file a fourth amended complaint. Their
argument is solely that Fannie Mae and Freddie Mac are
agencies or instrumentalities of the federal government for
purposes of 31 U.S.C. § 3729(b)(2)(A)(i). As we have
explained, they are not.
The judgment of the district court is AFFIRMED.