Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-19-01798/USCOURTS-ca13-19-01798-0/pdf.json

Nature of Suit Code: 134
Nature of Suit: 
Cause of Action: 

---

United States Court of Appeals 

for the Federal Circuit ______________________

FIRST MORTGAGE CORPORATION,

Plaintiff-Appellant

v.

UNITED STATES,

Defendant-Appellee

______________________

2019-1798

______________________

Appeal from the United States Court of Federal Claims 

in No. 1:18-cv-00228-LKG, Judge Lydia Kay Griggsby.

______________________

Decided: June 12, 2020

______________________

TAMI D. COWDEN, Greenberg Traurig, P.A, Las Vegas, 

NV, for plaintiff-appellant. 

 VINCENT DE PAUL PHILLIPS, JR., Commercial Litigation 

Branch, Civil Division, United States Department of Justice, Washington, DC, for defendant-appellee. Also represented by JOSEPH H. HUNT, ELIZABETH MARIE HOSFORD,

ROBERT EDWARD KIRSCHMAN, JR. 

 ______________________

Before LOURIE, MAYER, and WALLACH, Circuit Judges.

WALLACH, Circuit Judge. 

Case: 19-1798 Document: 42 Page: 1 Filed: 06/12/2020
2 FIRST MORTGAGE CORPORATION v. UNITED STATES

Appellant First Mortgage Corporation (“FMC”) filed a 

breach of contract action against the United States (“Government”) in the U.S. Court of Federal Claims, alleging 

that the Government National Mortgage Association (“Ginnie Mae”) had violated the terms of several guaranty agreements between FMC and Ginnie Mae in connection with 

Ginnie Mae’s mortgage-backed securities (“MBS”) program. J.A. 23–58 (Complaint). The Government moved to 

dismiss FMC’s Complaint pursuant to Rule 12(b)(6) of the 

Rules of the U.S. Court of Federal Claims (“RCFC”). 

J.A. 382–465 (Motion to Dismiss). The Court of Federal 

Claims granted the Government’s motion, concluding that 

FMC’s breach of contract claims were precluded under the 

doctrine of res judicata. See First Mortg. Corp. v. United 

States, 142 Fed. Cl. 164, 176 (2019); J.A. 1 (Judgment). 

FMC appeals. We have jurisdiction pursuant to 28 

U.S.C. § 1295(a)(3). We affirm. 

BACKGROUND

I. Factual Background1

A. Ginnie Mae’s MBS Program 

“[Ginnie Mae] is a corporation wholly owned and controlled by the U.S. Department of Housing and Urban 

1 Because FMC appeals the dismissal of its Complaint for failure to state a claim under RCFC 12(b)(6), the 

facts recited in this Opinion draw on FMC’s Complaint, “as 

well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the [C]omplaint by reference, 

and matters of which a court may take judicial notice.” 

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 

322 (2007); see Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993) (“We 

review here a decision granting a motion to dismiss, and 

Case: 19-1798 Document: 42 Page: 2 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 3

Development (‘HUD’).” J.A. 26; see 12 U.S.C. 

§ 1717(a)(2)(A) (creating Ginnie Mae as “a body corporate 

without capital stock” within HUD). Congress created Ginnie Mae to, inter alia, “provide stability in the secondary 

market for residential mortgages,” 12 U.S.C. § 1716(1), and 

“promote access to mortgage credit . . . by increasing the liquidity of mortgage investments and improving the distribution of investment capital available,” id. § 1716(4); see 

J.A. 29. To this end, Ginnie Mae “is authorized, upon such 

terms and conditions as it may deem appropriate, to guarantee” MBS and administer the MBS program. 12 U.S.C. 

§ 1721(g)(1); see J.A. 23–24. 

Under the MBS program, Ginnie Mae “guarantee[s]

the timely payment of principal of and interest on securities that are based on and backed by a trust or pool composed of mortgages which are insured or guaranteed by

[certain Government agencies].” 24 C.F.R. § 320.1; see 

J.A. 23–24. Approved private lenders originate or acquire 

residential mortgage loans insured or guaranteed by certain Government agencies, pool and securitize those mortgages, and sell the securities to investors in the secondary 

mortgage market. J.A. 23–24, 28; see J.A. 60 (Guaranty 

Agreement) (providing for the “pool[ing] of mortgages securitized by the [i]ssuer and guaranteed by Ginnie Mae”). 

Ginnie Mae guarantees the “timely payment of principal 

and interest on those securities” to investors. J.A. 24. 

“[Ginnie Mae’s] guaranty . . . is backed by the full faith and 

credit of the United States.” 24 C.F.R. § 320.1; see J.A. 60 

(Guaranty Agreement) (providing that “the full faith and 

credit of the United States is pledged to the payment of all 

amounts which may be required to be paid under [an MBS 

program] guaranty by Ginnie Mae”). 

therefore must accept as true all the factual allegations in 

the complaint.”).

Case: 19-1798 Document: 42 Page: 3 Filed: 06/12/2020
4 FIRST MORTGAGE CORPORATION v. UNITED STATES

B. Ginnie Mae’s Guaranty Agreements with FMC

FMC is a privately held corporation based in California. J.A. 3. From 1975 to 2015, FMC was “an originator 

and servicer of [G]overnment-guaranteed home mortgages 

and an issuer” of MBS in Ginnie Mae’s MBS program. 

J.A. 24; see J.A. 27, 30. As of December 2014, FMC had

serviced more than 31,000 mortgage loans, totaling more 

than $5.1 billion in unpaid principal, with “[m]ost” of those 

mortgages “securitized into [Ginnie Mae-guaranteed] 

[MBS].” J.A. 26. Pursuant to the MBS program, Ginnie 

Mae and FMC “entered into a great many Guaranty Agreements[.]” J.A. 30. The “terms of [these Guaranty Agreements] were prescribed by [Ginnie Mae]” and 

“substantially” the same, with Ginnie Mae’s Issuer Guide 

“at all times . . . an integral and material part of each Guaranty Agreement.” J.A. 30; see J.A. 60–74 (Guaranty Agreement excerpts), 107–254 (Issuer Guide excerpts); see also 

12 U.S.C. § 1721(g)(1) (authorizing Ginnie Mae to guarantee MBS “upon such terms and conditions as it may deem 

appropriate”). 

In exchange for Ginnie Mae’s guaranty, FMC agreed to

“conform with [Ginnie Mae’s] servicing standards, procedures, methods, and practices,” comply with “any applicable requirements contained in [the Ginnie Mae Issuer 

Guide],” and “establish and maintain books, files, and accounting records in accordance with [both].” J.A. 65; see 24 

C.F.R. § 320.3(e) (providing “[e]thics and standards” for 

MBS issuers). The “cash flow from pooled mortgages,” including “principal and interest” payments, were considered 

“[c]ustodial [f]unds” that had to “be deposited and maintained in custodial accounts[.]” J.A. 236. FMC was required to “establish and maintain a Central [Principal & 

Interest] Custodial Account with a commercial bank” or 

other financial institution, to be “used exclusively for funds 

relating to Ginnie Mae MBS program mortgage pools.”

J.A. 67; see J.A. 61. FMC was required to clear collection 

accounts “daily” into a custodial account, such as the

Case: 19-1798 Document: 42 Page: 4 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 5

Central Principal & Interest Custodial Account, “unless 

[FMC] use[d] [an Automated Clearing House] transfer, in 

which case the accounts [had to] be cleared every [fortyeight] hours.” J.A. 68. FMC was also required to “maintain 

delinquency rates” on mortgage pools “below [specified] 

threshold levels.” J.A. 252. To achieve this, FMC was allowed, per the Issuer Guide, “to repurchase a [mortgage] 

from a pool” if the mortgage had been “in a continuous period of default for [ninety] days or more,” then re-pool the 

mortgage and re-sell the security if the default was subsequently cured. J.A. 251–52; see J.A. 160–61 (providing 

mortgage status requirements for pooling).

Under the Guaranty Agreements, FMC would be in 

“[i]mmediate default,” “if Ginnie Mae, in its sole discretion, 

determine[d]” that “[a]ny unauthorized use of Custodial 

Funds” or “[a]ny submission of false reports, statements, or 

data or any act of dishonesty or breach of fiduciary duty to 

Ginnie Mae related to the MBS program” had occurred. 

J.A. 72–73 (Guaranty Agreement Section 10.01). In the 

event of default, “Ginnie Mae [could], in its sole discretion, 

but [was] not required to, confer and negotiate with [FMC]

with respect to remedying and correcting the default.” 

J.A. 73 (Guaranty Agreement Section 10.03). If an agreement was reached, it had to be “placed in written contractual form” as a supplement to the Guaranty Agreement. 

J.A. 73. In the absence of such an agreement, in “any event 

of default,” Ginnie Mae could “automatically effect and 

complete the extinguishment of any redemption, equitable, 

legal, or other right, title, or interest of [FMC] in the 

[pooled] [m]ortgages,” J.A. 73–74 (Guaranty Agreement 

Section 10.04), with all of FMC’s “authority and power . . . 

under [the Guaranty] Agreement, with respect to” any relevant securities and mortgages “automatically terminat[ing] and expir[ing],” J.A. 74 (Guaranty Agreement 

Section 10.05).

Case: 19-1798 Document: 42 Page: 5 Filed: 06/12/2020
6 FIRST MORTGAGE CORPORATION v. UNITED STATES

C. FMC’s Default and Termination

In early 2015, Ginnie Mae “learned of certain actions 

by [FMC] that constitute[d] events of immediate default 

under the terms of the Guaranty Agreements,” and, in 

March 2015, “undertook a compliance review . . . of 

[FMC’s] Ginnie Mae portfolio.” J.A. 367 (Notice of Violation); see J.A. 37. In May 2015, Ginnie Mae served FMC 

with a Notice of Violation, stating that, during the compliance review, Ginnie Mae had “observed numerous instances where borrower payments were not moved to 

Ginnie Mae custodial accounts within [forty-eight] hours of 

receipt” and had found that FMC had “submitted false reports to Ginnie Mae” claiming that “[mortgages] were 

[ninety] days or more delinquent” when FMC “repurchased 

[them] from a pool,” when, in fact, the “loans were not 

properly delinquent,” both in breach of the Guaranty 

Agreements. J.A. 367. 

Ginnie Mae explained that FMC was, accordingly, in 

default, and that “Ginnie Mae [was] entitled to terminate 

[FMC’s] authority to act as a Ginnie Mae issuer” and to terminate and extinguish “any redemption, equitable, legal or 

other right, title[,] and interest of [FMC] in [Ginnie Maebacked] mortgage pools[.]” J.A. 367; see J.A. 37. Rather 

than immediately terminate FMC from the MBS program, 

Ginnie Mae stated it would “forebear from immediately effectuating the termination and extinguishment” provided 

that FMC responded with a timely written response to the 

Notice of Violation, providing additional information and 

affirming FMC’s “intent to comply with the conditions” as 

set by Ginnie Mae. J.A. 367; see J.A. 37–38. Ginnie Mae 

reserved the right to “tak[e] . . . further remedial action 

against [FMC and its corporate officers],” “including, but 

not limited to, termination” of FMC from the MBS program. J.A. 369. 

FMC timely responded. J.A. 371–76 (FMC Response); 

see J.A. 41–42. FMC expressed its intent to “fully 

Case: 19-1798 Document: 42 Page: 6 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 7

remediate the issues the Notice [of Violation] describe[d]” 

and “to comply fully with [Ginnie Mae’s] conditions . . . in 

the Notice [of Violation]” and Guaranty Agreements. 

J.A. 371. With the assistance of external counsel, FMC undertook an internal investigation and provided the results 

to Ginnie Mae. J.A. 372. FMC noted that it was also “complying with requests from the [U.S.] Securities and Exchange Commission [(‘SEC’)] with respect to the SEC’s 

investigation” into the same conduct. J.A. 372.

In June 2015, Ginnie Mae terminated FMC from its

MBS program. J.A. 378–80 (Extinguishment Letter); see 

J.A. 42. Ginnie Mae explained that, “[s]ince [its Notice of 

Violation], [it] ha[d] engaged in further analysis of the 

events described in [the Notice of Violation], and ha[d] concluded it [would] complete the extinguishment of any redemption, equitable, legal or other right, title and interest 

of [FMC] in the mortgages pooled under each and every 

Guaranty Agreement,” pursuant to 12 U.S.C. § 1721(g) 

“and Sections 10.04 and 10.05 of each Guaranty Agreement.” J.A. 378. 

D. SEC Civil Enforcement Action and 

Consent Agreement

In May 2016, the SEC initiated a civil enforcement action against FMC and its corporate officers in the U.S. District Court for the Central District of California (“District 

Court”). J.A. 427, 440; see J.A. 427–43 (SEC District Court 

Complaint). The SEC alleged that, “[f]rom March 2011 

through March 2015, FMC and [its corporate officers] misled investors” in its Ginnie Mae-guaranteed MBS by 

“falsely claiming to both [Ginnie Mae] and investors that 

certain mortgage loans in [FMC’s] securities were delinquent when, in fact, such loans were current.” J.A. 428. 

The SEC explained that FMC had violated the Guaranty 

Agreements by “improperly exercis[ing]” its repurchase option on loans. J.A. 429. FMC had delayed the transfer of

“full curing [borrower] payments” into a custodial account, 

Case: 19-1798 Document: 42 Page: 7 Filed: 06/12/2020
8 FIRST MORTGAGE CORPORATION v. UNITED STATES

falsely pushing the borrower’s account into delinquency

and eligibility for repurchase. J.A. 429. FMC then applied

the delayed payments to bring the loan current and “back 

into FMC’s inventory,” J.A. 429, to be re-purchased at par, 

re-pooled, and re-sold as an MBS “at market rates, which 

reflected a premium over par[,]” J.A. 435–36; see J.A. 429 

(explaining that “par” is “essentially the remaining principal balance on the loan”). The SEC alleged that FMC accrued “$7.5 million in illicit profits as a result of the 

practice,” J.A. 437, all while FMC was certifying to Ginnie 

Mae that FMC was in compliance with the Guaranty 

Agreements, J.A. 436.

In June 2016, the SEC and FMC entered into a consent 

agreement. J.A. 455–60 (Consent Agreement). FMC, 

“[w]ithout admitting or denying the allegations [in the SEC 

District Court Complaint,] . . . consent[ed] to the entry 

of . . . final [j]udgment” against FMC. J.A. 455; see 

J.A. 462–65 (Final Judgment). FMC agreed to pay $7.5 

million in disgorgement, approximately $500,000 in prejudgment interest, and $3.75 million in civil penalties. 

J.A. 464. FMC further agreed to “not take any action or 

make or permit to be made any public statement denying, 

directly or indirectly, any allegation in the [SEC District 

Court] [C]omplaint or creating the impression that the 

[SEC District Court] [C]omplaint is without factual basis” 

and to “not make or permit to be made any public statement to the effect that [FMC] does not admit the allegations of the [SEC District Court] [C]omplaint, or that this 

Consent [Agreement] contains no admission of the allegations, without also stating that [FMC] does not deny the 

allegations.” J.A. 458. The Consent Agreement provided 

that it did not “affect[] [FMC’s] . . . right to take legal or 

factual positions in litigation or other legal proceedings in 

which the [SEC] is not a party.” J.A. 458. In July 2016, 

Case: 19-1798 Document: 42 Page: 8 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 9

the District Court entered this Consent Agreement as its

final judgment. J.A. 462–65 (Final Judgment).2

II. Procedural Background

In February 2018, FMC filed its Complaint in the 

Court of Federal Claims, alleging that Ginnie Mae had

“breached all of several Guaranty Agreements” when it 

wrongfully terminated FMC from its MBS program. 

J.A. 23–24. FMC alleged that Ginnie Mae’s extinguishment and termination of the Guaranty Agreements was

“without proper cause” and, therefore, in breach of the 

Guaranty Agreements, J.A. 25, because FMC “was at all 

times in full compliance with all of its contractual obligations” under the Guaranty Agreements, J.A. 24; see J.A. 39 

(asserting that “[t]he [Notice of Violation] was also remarkable for its utter lack of factual and legal support for the 

accusations it contained”), 40 (“There is no factual or legal 

basis for the events of default alleged in the [Notice of Violation][.]”). FMC “categorically denie[d] violating any requirement in the Guaranty Agreements[.]” J.A. 40. FMC 

alleged that it did not misuse custodial funds, J.A. 39, only 

“repurchas[ed] loans that [were properly in default],” 

J.A. 35, and therefore, did not submit false reports to Ginnie Mae, J.A. 39–40 (alleging that Ginnie Mae’s “claim that 

2 After entry of the Final Judgment, FMC tried to 

bring its breach of contract claims against Ginnie Mae in 

the District Court. See Complaint at 19–23, First Mortg. 

Corp. v. Gov’t Nat’l Mortg. Ass’n, No. 5:17-cv-01225, 2017 

WL 2671224 (C.D. Cal. June 20, 2017) (presenting substantively similar, if not identical, allegations to FMC’s Complaint here). The District Court dismissed these claims 

under Rule 12(b)(1) of the Federal Rules of Civil Procedure, 

for lack of subject matter jurisdiction over contract claims 

against the United States. See First Mortg. Corp. v. Gov’t 

Nat’l Mortg. Ass’n, No. EDC-17-01225-JGB, 2018 WL 

4927795, at *1 (C.D. Cal. Jan. 4, 2018).

Case: 19-1798 Document: 42 Page: 9 Filed: 06/12/2020
10 FIRST MORTGAGE CORPORATION v. UNITED STATES

FMC breached the [Guaranty Agreements] by ‘submitting 

false reports to Ginnie Mae stating that loans were [ninety] 

days or more delinquent when the loans were repurchased’” was “baseless”). FMC asserted that the “United 

States [wa]s,” therefore, “liable to pay damages to FMC.” 

J.A. 57.

The Government moved to dismiss the Complaint under Rule 12(b)(6) of the RCFC. J.A. 388; see J.A. 382–410 

(Motion to Dismiss). The Court of Federal Claims dismissed FMC’s Complaint, concluding that the “[G]overnment has shown that FMC’s breach of contract claims . . . 

are precluded under the doctrine of res judicata, because 

[FMC’s Court of Federal Claims] action is essentially a collateral attack on the [Final] Judgment entered by the [District Court] in the SEC Civil Enforcement Action.” First 

Mortg., 142 Fed. Cl. at 176. 

DISCUSSION 

I. Standard of Review and Legal Standard 

The Court of Federal Claims may dismiss a complaint 

if it fails “to state a claim upon which relief can be granted.” 

RCFC 12(b)(6). “We review the . . . grant of a motion to dismiss for failure to state a claim de novo.” Prairie Cty., 

Mont. v. United States, 782 F.3d 685, 688 (Fed. Cir. 2015)

(citation omitted). To survive a motion to dismiss, the complaint must provide “‘a short and plain statement of the 

claim showing the pleader is entitled to relief,’” Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. 

R. Civ. P. 8(a)(2)), with “sufficient factual matter . . . to 

‘state a claim to relief that is plausible on its face,’” Ashcroft 

v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 

U.S. at 570). “We take all factual allegations in the complaint as true and construe the facts in the light most favorable to the non-moving party.” Jones v. United States, 

846 F.3d 1343, 1351 (Fed. Cir. 2017) (citation omitted). 

Case: 19-1798 Document: 42 Page: 10 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 11

“The doctrine of res judicata involves the related concepts of claim preclusion and issue preclusion.” Phillips/May Corp. v. United States, 524 F.3d 1264, 1267 (Fed. 

Cir. 2008). “[I]ssue preclusion operates only as to issues 

actually litigated, whereas claim preclusion may operate 

between the parties simply by virtue of the final judgment.” 

Young Engn’rs, Inc. v. U.S. Int’l Trade Comm’n, 721 F.2d 

1305, 1314 (Fed. Cir. 1983). Claim preclusion “foreclose[es] 

any litigation of matters that . . . should have been advanced in an earlier suit.” Phillips/May Corp., 524 F.3d at

1267 (internal quotation marks and citation omitted). “A 

final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or 

could have been raised in that action.” Federated Dep’t 

Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981) (citing Commissioner v. Sunnen, 333 U.S. 591, 597 (1948) and Cromwell v. Cty. of Sac, 94 U.S. 351, 352–53 (1877)). 

Generally, claim preclusion applies where: “(1) the 

parties are identical or in privity; (2) the first suit proceeded to a final judgment on the merits; and (3) the second 

claim is based on the same set of transactional facts as the 

first.” Ammex, Inc. v. United States, 334 F.3d 1052, 1055 

(Fed. Cir. 2003) (citing Parklane Hosiery Co. v. Shore, 439 

U.S. 322, 326 n.5 (1979)). However, “somewhat different 

rules” apply to the third factor in cases of “defendant preclusion.” Nasalok Coating Corp. v. Nylok Corp., 522 

F.3d 1320, 1324 (Fed. Cir. 2008). “A defendant is precluded 

only if (1) the claim or defense asserted in the second action 

was a compulsory counterclaim that the defendant failed 

to assert in the first action, or (2) the claim or defense represents what is essentially a collateral attack on the first 

judgment.” Id. (citing Baker v. Gold Seal Liquors, Inc., 417 

U.S. 467, 469 n.1 (1974)).

Case: 19-1798 Document: 42 Page: 11 Filed: 06/12/2020
12 FIRST MORTGAGE CORPORATION v. UNITED STATES

II. The Court of Federal Claims Properly Dismissed 

FMC’s Complaint 

The Court of Federal Claims dismissed FMC’s Complaint, concluding that “[b]ecause the parties . . . are identical to, or in privity with, the parties to the SEC Civil 

Enforcement Action, the SEC Civil Enforcement Action 

proceeded to a final judgment on the merits, and [the Court 

of Federal Claims action] and the SEC Civil Enforcement 

Action are based on the same set of transactional facts,” 

FMC was barred “from litigating its breach of contract 

claims” against Ginnie Mae “under the doctrine of res judicata[.]” First Mortg., 142 Fed. Cl. at 176. On appeal, FMC 

argues that the Court of Federal Claims erred in dismissing its Complaint because “the elements of claim preclusion 

have not been met.” Appellant’s Br. 12. Specifically, FMC 

argues that “the SEC and Ginnie Mae are not in privity,” 

and that its Complaint does not arise from the same set of 

transactional facts for the purposes of defendant preclusion, because FMC’s “claims are not a collateral attack on 

the [Final] Judgment.” Id. at 17.3 We disagree with FMC. 

3 FMC does not directly contest that the Final Judgment was a final judgment on the merits. See generally 

Appellant’s Br.; see also Ammex, Inc., 334 F.3d at 1055 (requiring, inter alia, that “the first suit proceeded to a final 

judgment on the merits”). However, it does, in arguing that 

its Complaint is not a collateral attack on the Final Judgment, attempt to undermine the Consent Agreement and 

Final Judgment as “the product of pragmatic decisions” not 

“factual finding[s].” Appellant’s Br. 24–25. To the extent 

FMC challenges the Final Judgment as not a final judgment, its arguments are without merit. See Ford-Clifton v. 

Dep’t of Veterans Affairs, 661 F.3d 655, 660 (Fed. Cir. 2011)

(providing that, for claim preclusion, “consent judgments 

entered pursuant to settlement agreements have the same 

Case: 19-1798 Document: 42 Page: 12 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 13

First, the SEC and Ginnie Mae are in privity for the 

purposes of precluding FMC’s breach of contract claims.

“There is privity between officers of the same government,” 

for the purposes of claim preclusion, if “in the earlier litigation the representative of the United States had authority to represent its interests in a final adjudication of the 

issue in controversy.” Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 402–03 (1940); see Grasty v. U.S. Patent 

& Trademark Office, 211 F. App’x 952, 954 (Fed. Cir. 2007)

(applying Sunshine Anthracite to claim preclusion); United 

States v. Alky Enterprises, Inc., 969 F.2d 1309, 1314–15 

(1st Cir. 1992) (applying Sunshine Anthracite to claim preclusion); Schrader v. United States, 75 Fed. Cl. 242, 249 

(2007) (“For purposes of res judicata, the United States is 

in privity with its authorized officials.”). It is uncontested 

that the SEC and Ginnie Mae are both officers and representative of the United States. See 12 U.S.C. 

§ 1717(a)(2)(A) (creating Ginnie Mae); 15 U.S.C. § 78d (establishing the SEC); see generally Appellant’s Br. The SEC 

has the authority to represent the United States in civil 

enforcement actions, including that brought against FMC. 

J.A. 427–43 (SEC District Court Complaint); see 15 U.S.C. 

§ 77t (giving the SEC the authority to investigate and bring 

civil enforcement actions in district court for “any acts or 

practices which constitute or will constitute a violation of 

[the Federal securities laws]”). The SEC has the authority 

to represent the United States in settlements resolving 

those civil enforcement actions, including the Consent 

Agreement negotiated with FMC and the resulting Final 

Judgment. J.A. 455–60 (Consent Agreement), 462–65 (Final Judgment); see 15 U.S.C. § 77s (enumerating the “[s]pecial powers of [the SEC],” including the “authority . . . to 

make, amend, and rescind such rules and regulations as 

may be necessary”); 17 C.F.R. § 202.5(f) (explaining that 

effect as judgments after a trial on the merits” (citation 

omitted)).

Case: 19-1798 Document: 42 Page: 13 Filed: 06/12/2020
14 FIRST MORTGAGE CORPORATION v. UNITED STATES

the SEC has the authority to resolve SEC “investigations, 

civil lawsuits, and administrative proceedings” through 

settlement with respondents). The SEC, therefore, “represent[ed] the United States” on the “issue in controversy”—

whether FMC breached the Guaranty Agreements, precipitating Ginnie Mae’s extinguishment and termination of 

FMC’s rights. Sunshine Anthracite, 310 U.S. at 403; see 

J.A. 428 (claiming that FMC “misled investors . . . by 

falsely claiming to both [Ginnie Mae] and investors that 

certain mortgage loans in these securities were delinquent 

when, in fact, such loans were current”), 429 (claiming that 

FMC had “improperly exercised . . . [the Ginnie Mae Guaranty Agreements] [r]epurchase [o]ption”). Accordingly, the 

Court of Federal Claims properly concluded that the SEC 

and Ginnie Mae are in privity for the purposes of claim preclusion.

Second, FMC’s claims constitute a collateral attack on 

the Final Judgment. A claim is a “collateral attack” on a 

final judgment where “successful prosecution of the second 

action would nullify the initial judgment or would impair 

rights established in the initial action.” Nasalok, 522 F.3d 

at 1324 (internal quotation marks and citation omitted). In 

its District Court Complaint, the SEC alleged that FMC 

“improperly exercised” its repurchase option under the 

Guaranty Agreements, J.A. 429, and falsely certified to 

Ginnie Mae that it was in compliance with the Guaranty 

Agreements, thereby perpetrating a fraud on its investors 

and Ginnie Mae and making “$7.5 million in illicit profits 

as a result[,]” J.A. 436–37 (SEC District Court Complaint).

In the Consent Agreement, FMC agreed to “not take any 

action or make or permit to be made any public statement 

denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is 

without factual basis.” J.A. 458. The Final Judgment, incorporating the Consent Agreement, made FMC “liable for 

disgorgement of [$7.5 million], representing profits gained 

as a result of the conduct alleged in the [SEC District 

Case: 19-1798 Document: 42 Page: 14 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 15

Court] Complaint[.]” J.A. 464–65. Nonetheless, in its 

Complaint here, FMC contended that Ginnie Mae, “without proper cause, breached [the Guaranty Agreements]” 

when it extinguished and terminated FMC, J.A. 25, because FMC “was at all times in full compliance with all of 

its contractual obligations” under the Guaranty Agreements, J.A. 24. FMC alleged that it did not misuse custodial funds, J.A. 39, and only “repurchas[ed] loans that 

[were properly in default],” J.A. 34. See J.A. 39 (asserting 

that “[t]he [Notice of Violation] was also remarkable for its 

utter lack of factual and legal support for the accusations 

it contained”), 39–40 (“Equally baseless was [Ginnie Mae’s] 

claim that FMC breached the [Guaranty Agreements] by 

‘submitting false reports to Ginnie Mae stating that loans 

were [ninety] days or more delinquent when the loans were 

repurchased[.]’”), 40 (“There is no factual or legal basis for 

the events of default alleged in the [Notice of Violation][.]”), 

40 (“FMC categorically denies violating any requirement in 

the Guaranty Agreements[.]”). That is, FMC’s Complaint 

seeks to dispute the facts laid out in the SEC District Court 

Complaint and, thereby, “impair rights established” by, if 

not “nullify,” the Consent Agreement and Final Judgment. 

Nasalok, 522 F.3d at 1324 (internal quotation marks and 

citation omitted). “[A] defense that could have been interposed cannot later be used to attack the judgment of the 

first action.” Id. at 1328 (citation omitted). Accordingly, 

the Court of Federal Claims properly concluded that FMC’s 

complaint was a collateral attack on the Final Judgment.

FMC’s counterarguments are unpersuasive. First, 

FMC argues that the SEC and Ginnie Mae are not in privity because privity requires that “‘precisely the same legal 

right’” be at issue in the first and second actions. Appellant’s Br. 20 (quoting Jones v. SEC, 115 F.3d 1173, 1180 

(4th Cir. 1997)). This argument confuses claim preclusion 

with issue preclusion. Compare Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1362 (Fed. Cir. 2000) (providing 

that claim preclusion “bar[s] a second suit raising claims 

Case: 19-1798 Document: 42 Page: 15 Filed: 06/12/2020
16 FIRST MORTGAGE CORPORATION v. UNITED STATES

based on the same set of transactional facts”), with Masco 

Corp. v. United States, 303 F.3d 1316, 1329 (Fed. Cir. 2002)

(providing that issue preclusion bars “relitigation in a second suit of issues actually litigated and determined in [a] 

first suit”). Through this confusion, FMC misapprehends 

what our privity analysis requires. See Jefferson Sch. of 

Soc. Sci. v. Subversive Activities Control Bd., 331 F.2d 76, 

83 (D.C. Cir. 1963) (explaining that sharing “precisely the 

same legal right” is “sufficient” but not necessary to establish privity). “Identity of parties is not a mere matter of 

form, but of substance.” Sunshine Anthracite, 310 U.S. at

402 (quoting Chicago, R. I. & P. Ry. Co. v. Schendel, 270 

U.S. 611, 620 (1926)). “Identity” does not mean that the 

SEC and Ginnie Mae must be “precisely identical,” id., but 

that their “interests in a given lawsuit” are “aligned,” 

Jones, 115 F.3d at 1181 (citation omitted); see Sunshine 

Anthracite, 310 U.S. at 403 (“Where a suit binds the United 

States, it binds its subordinate officials.”); Jones, 115 F.3d 

at 1179–81 (declining to find privity between the SEC and 

a “private, nonprofit” professional organization, because 

they “represent[ed] distinct interests” and possessed distinct “legal rights”).4 As discussed above, the SEC had 

identity, and therefore privity, with the United States.

4 FMC also argues that FMC is not precluded from 

bringing its breach of contract claims against Ginnie Mae 

because, while the Consent Agreement “prohibit[s] . . . 

FMC [from] taking a position contrary to the allegations in 

the SEC complaint,” it “expressly exempt[s] any litigation 

to which the SEC is not a party” and “the SEC is not a party 

to the current litigation[.]” Appellant’s Br. 12. This argument is misplaced. The SEC negotiates Consent Agreements on behalf of the United States. See 15 U.S.C. § 77t; 

17 C.F.R. § 202.5(d), (f) (providing for the negotiation of no 

contest consent agreements in civil enforcement actions, 

but not criminal proceedings). FMC cannot now file suit 

Case: 19-1798 Document: 42 Page: 16 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 17

Second, FMC argues that the SEC and Ginnie Mae are 

not in privity because the SEC “has not been granted the 

authority to represent the interests of other government 

agencies as contracting parties, or to defend against claims 

of breach of contract by such parties.” Appellant’s Br. 19.

This argument is misplaced. Privity asks “whether or not” 

the SEC “had [the] authority to represent [the United 

States’] interests in a final adjudication of the issue in controversy”—not whether the SEC has the authority to represent Ginnie Mae in court. Sunshine Anthracite, 310 U.S.

at 403; see Facchiano Const. Co. v. U.S. Dep’t of Labor, 987 

F.2d 206, 211 (3d Cir. 1993) (explaining that, for privity, 

we “look to the authority” the agency had “to bind the government in a final adjudication”). Here, the SEC had such 

authority. See 15 U.S.C. § 77t(d)(1) (providing the SEC 

with authority to “bring an action in a United States district court to seek . . . a civil penalty to be paid by the person who committed [a] violation [of Federal securities 

law]”).5

against the United States to avoid the consequences of its 

Consent Agreement with the United States—the SEC “represented the United States in [the Consent Agreement and 

Final Judgment] and the delegation of that power to the 

Commission was valid, as we have said. That suit therefore bound the United States, as well as the appellant.” 

Sunshine Anthracite, 310 U.S. at 402–03.

5 FMC asserts that the Court of Federal Claims “ignored many cases which held that the SEC and the ‘United 

States’ were deemed not to be in privity[.]” Appellant’s 

Br. 19 n.2. However, the cases FMC cites, see id. at 21–23 

(collecting cases), support only the unexceptional proposition that SEC civil enforcement actions do not preclude the 

United States from pursuing criminal sanctions for the 

same misconduct. Compare, e.g., United States v. Wanland, 830 F.3d 947, 957 (9th Cir. 2016) (concluding that the 

Case: 19-1798 Document: 42 Page: 17 Filed: 06/12/2020
18 FIRST MORTGAGE CORPORATION v. UNITED STATES

Last, FMC argues that “[t]he District Court erred in 

concluding that FMC’s [Complaint] [was] a collateral attack” on the Final Judgment, Appellant’s Br. 23, because 

“[t]he only context in which the [Final] Judgment could be 

vacated would be in an action raised in the [District 

Court],” id. at 24. FMC’s argument is without merit.

Claim preclusion does not require identity of venue, only 

identity of underlying facts. See Jet, 223 F.3d at 1362 (explaining that claim preclusion “bars a second suit raising 

claims based on the same set of transactional facts”).

Claim preclusion prevents “parties or their privies from 

“[Internal Revenue Service (‘IRS’)] in a bankruptcy action 

and the United States government in a criminal action are 

not in privity,” given the “different roles” and “purposes” of 

“the IRS and the United States government in criminal 

prosecutions); United States v. Ledee, 772 F.3d 21, 30 (1st 

Cir. 2014) (providing that settlement with a U.S. bankruptcy trustee that made “no reference” to criminal charges 

did not “estop the [Department of Justice (‘DOJ’)] from subsequently filing criminal charges”); United States v. Hickey, 

367 F.3d 888, 893 (9th Cir. 2004) (explaining that the SEC 

and DOJ “[were] not the same party” for purposes of collateral estoppel in criminal proceedings brought by the DOJ, 

because the SEC, in its civil enforcement capacity, “was not 

acting as ‘the federal sovereign vindicating the criminal 

law of the United States’” (citation omitted)), with 15 

U.S.C. § 77t(b) (providing that the SEC “may transmit such 

evidence as may be available concerning such acts or practices to the Attorney General who may, in his [or her] discretion, institute the necessary criminal proceedings”); 17 

C.F.R. § 202.5(f) (explaining that “the disposition of any . . . 

matter [in a civil action brought by the SEC] may not, expressly or impliedly, extend to any criminal charges that 

have been, or may be, brought against any such person” 

because the SEC does not have the “authority or responsibility,” which are “vested in the [DOJ]”).

Case: 19-1798 Document: 42 Page: 18 Filed: 06/12/2020
FIRST MORTGAGE CORPORATION v. UNITED STATES 19

relitigating issues that were or could have been raised in 

[an earlier] action.” Ammex, 334 F.3d at 1055 (citing Federated Dep’t Stores, 452 U.S. at 398). FMC could have contested its breach and default of the Guaranty Agreements 

before the District Court. See Fed. R. Civ. P. 12(b) (providing that “[e]very defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is 

required”), 13 (providing for the filing of “[c]ounterclaims 

and [c]ross claims”). It chose instead to enter the Consent 

Agreement with the SEC. J.A. 459 (Consent Agreement) 

(providing that “[FMC] agrees that the [SEC] may present 

the Final Judgment to the [District] Court for signature 

and entry without further notice”). It cannot now take back 

that choice. See Parklane Hosiery, 439 U.S. at 326 (“[R]es 

judicata[] has the dual purpose of protecting litigants from 

the burden of relitigating an identical issue with the same 

party or his privy and of promoting judicial economy by

preventing needless litigation.”). Accordingly, the Court of 

Federal Claims properly dismissed FMC’s precluded Complaint for failure to state a claim on which relief can be 

granted.

CONCLUSION 

We have considered FMC’s remaining arguments and 

find them unpersuasive.6 Accordingly, the Judgment of the 

U.S. Court of Federal Claims is 

6 FMC argues that “even if . . . claim preclusion applied” to FMC’s breach of contract claims stemming from 

the Guaranty Agreements, “no such defense could exist” 

against FMC’s claim that Ginnie Mae “breached the Cure 

Agreement” purportedly created when FMC responded to 

Ginnie Mae’s Notice of Violation. Appellant’s Br. 25. This 

argument is without basis. The Guaranty Agreements 

gave Ginnie Mae the “sole discretion” whether to “confer 

and negotiate” with FMC in the event of FMC’s default. 

Case: 19-1798 Document: 42 Page: 19 Filed: 06/12/2020
20 FIRST MORTGAGE CORPORATION v. UNITED STATES

AFFIRMED

J.A. 73. The Notice of Violation expressly provided that 

Ginnie Mae reserved the right to terminate FMC and extinguish its interests regardless of whether FMC responded to the Notice of Violation. J.A. 369 (providing that 

Ginnie Mae reserved the right to “tak[e] further remedial 

action against [FMC and its corporate officers],” “including 

but not limited to[] termination” of FMC from the MBS program). Accordingly, there was no “Cure Agreement.” See 

United States v. Armour & Co., 402 U.S. 673, 682 (1971)

(“[An] instrument must be construed as it is written[.]”). 

The Court of Federal Claims, therefore, did not err in declining to consider any putative “Cure Agreement.” See 

Rocky Mountain Helium, LLC v. United States, 841 F.3d 

1320, 1326 (Fed. Cir. 2016) (“[It is] well settled that when 

a disparity exists between the written instrument annexed 

to the pleadings and the allegations in the pleadings, the 

terms of the written instrument will control, particularly 

when it is the instrument being relied upon by the party 

who made it an exhibit.” (internal quotation marks and citation omitted)); see also Iqbal, 556 U.S. at 678 (to survive 

a motion to dismiss, the complaint must “‘state a claim to 

relief that is plausible on its face’” (quoting Twombly, 550 

U.S. at 570)). 

Case: 19-1798 Document: 42 Page: 20 Filed: 06/12/2020