Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-15031/USCOURTS-ca9-14-15031-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA EX REL.

JAMES R. ADAMS and PUOY K.

PREMSRIRUT, Relators,

Plaintiffs-Appellants,

v.

AURORA LOAN SERVICES, INC.; BAC

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.

No. 14-15031

D.C. No.

2:11-cv-00535-

RCJ-PAL

OPINION

Appeal from the United States District Court

for the District of Nevada

Robert Clive Jones, District Judge, Presiding

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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.

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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/PlaintiffsAppellants.

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 DefendantsAppellees.

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.

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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

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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 withinCongress’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. § 4617

abrogating 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).

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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

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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 nongovernmental 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.

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