Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-17-01015/USCOURTS-ca13-17-01015-0/pdf.json

Parties Involved:
Acadia Insurance Company
Appellee
Admiral Indemnity Company
Appellee
Admiral Insurance Company
Appellee
Berkley Insurance Company
Appellee
Berkley Regional Insurance Company
Appellee
Carolina Casualty Insurance Company
Appellee
Continental Western Insurance Company
Appellee
Fairholme Fund
Appellee
Fairholme Funds, Inc.
Appellee
Midwest Employers Casualty Insurance Company
Appellee
Nautilus Insurance Company
Appellee
Preferred Employers Insurance Company
Appellee
Michael Sammons
Appellant
United States
Appellee

Document Text:

NOTE: This disposition is nonprecedential.

United States Court of Appeals 

for the Federal Circuit ______________________ 

FAIRHOLME FUNDS, INC., THE FAIRHOLME 

FUND, ACADIA INSURANCE COMPANY, ADMIRAL 

INDEMNITY COMPANY, ADMIRAL INSURANCE 

COMPANY, BERKLEY INSURANCE COMPANY, 

BERKLEY REGIONAL INSURANCE COMPANY, 

CAROLINA CASUALTY INSURANCE COMPANY, 

CONTINENTAL WESTERN INSURANCE 

COMPANY, MIDWEST EMPLOYERS CASUALTY 

INSURANCE COMPANY, NAUTILUS INSURANCE 

COMPANY, PREFERRED EMPLOYERS 

INSURANCE COMPANY,

Plaintiffs-Appellees

v.

UNITED STATES,

Defendant-Appellee

v.

MICHAEL SAMMONS,

Movant-Appellant

______________________ 

2017-1015

______________________ 

Appeal from the United States Court of Federal 

Claims in No. 1:13-cv-00465-MMS, Judge Margaret M. 

Sweeney. 

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2 FAIRHOLME FUNDS, INC. v. US

______________________ 

Decided: March 14, 2017

______________________ 

CHARLES J. COOPER, Cooper & Kirk, PLLC, Washington, DC, for plaintiffs-appellees. Also represented by 

BRIAN W. BARNES, HOWARD C. NIELSON, JR., PETER A.

PATTERSON, DAVID THOMPSON. 

KENNETH DINTZER, Commercial Litigation Branch, 

Civil Division, United States Department of Justice, 

Washington, DC, for defendant-appellee. Also represented 

by BENJAMIN C. MIZER, ROBERT E. KIRSCHMAN, JR. 

MICHAEL SAMMONS, San Antonio, TX, pro se.

______________________ 

Before LOURIE, O’MALLEY, and TARANTO, Circuit 

Judges.

PER CURIAM. 

In 2013, preferred-stock shareholders of the Federal 

National Mortgage Association (Fannie Mae) and Federal 

Home Loan Mortgage Corporation (Freddie Mac) sued the 

United States in the Court of Federal Claims, alleging 

that certain actions taken by the United States involving 

the two entities constituted takings without just compensation in violation of the Fifth Amendment. More than 

three years later, Michael Sammons moved to intervene

in the shareholders’ action, as of right, for the limited 

purpose of arguing that the Court of Federal Claims lacks 

jurisdiction over the plaintiffs’ Fifth Amendment claim. 

The Court of Federal Claims denied Mr. Sammons’s 

motion, determining, among other things, that he can

protect his interest through his independent litigation 

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FAIRHOLME FUNDS, INC. v. US 3

and that the motion was untimely. Finding no error in 

those determinations, we affirm.

I 

We have described much of the background of this appeal in our recent non-precedential decision in In re 

United States, No. 2017-1122, 2017 WL 406243 (Fed. Cir. 

Jan. 30, 2017). In July 2008, Congress created the Federal Housing Finance Agency (FHFA) and authorized it to 

place Fannie Mae and Freddie Mac into conservatorship. 

See 12 U.S.C. §§ 4617(b)(2)(A), 4617(b)(2)(B)(i). Congress 

also authorized the Department of the Treasury to purchase obligations and securities issued by Fannie Mae 

and Freddie Mac. See 12 U.S.C. § 1445(1)(1)(A). In 

September 2008, FHFA placed Fannie Mae and Freddie 

Mac into conservatorship, and FHFA, as conservator, 

entered into certain agreements with Treasury. Under 

the agreements, Treasury committed to provide up to 

$100 billion to each of Fannie Mae and Freddie Mac, and 

in return, Treasury received $1 billion in senior preferred 

stock from each company, a 10% dividend on the amount 

that was invested, and a warrant to purchase 79.9% of the 

companies’ common stock. In 2012, FHFA and Treasury 

amended the purchase agreements to replace Treasury’s 

10% dividend entitlement with an entitlement to 100% of 

Fannie Mae and Freddie Mac’s profits.

In 2013, Fairholme Funds, Inc., and other owners of 

Fannie Mae and Freddie Mac preferred stock sued the 

United States in the Court of Federal Claims, alleging 

that the 2012 amendment of the purchase agreements 

constituted a Fifth Amendment taking of private property 

without just compensation. See Complaint, Fairholme 

Funds, Inc. v. United States, No. 13-465C (Fed. Cl. July 9, 

2013), ECF No. 1. Since then, the government has moved 

to dismiss the action for lack of subject-matter jurisdiction 

and failure to state a claim. Motion to Dismiss, Fairholme Funds, No. 13-465C (Fed. Cl. Dec. 9, 2013), ECF 

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4 FAIRHOLME FUNDS, INC. v. US

No. 20. The parties have conducted discovery related to 

the court’s jurisdiction and the merits of the case. See In 

re United States, No. 2017-1122.

On September 16, 2016, Mr. Sammons filed, and on 

September 30, 2016, he was authorized to file, a motion to 

intervene as of right in the action under Court of Federal 

Claims Rule 24(a). He alleged that, like the plaintiffs, he 

owns Fannie Mae and Freddie Mac preferred stock. He

stated that the purpose of his intervention was to challenge the Court of Federal Claims’ jurisdiction to hear the 

asserted Fifth Amendment claim. He argued that, because the Court of Federal Claims is an Article I court, 

not an Article III court, it is barred from hearing the 

constitutional claim. Although 28 U.S.C. § 1491 authorizes the Court of Federal Claims to hear takings claims, Mr. 

Sammons contended that the Constitution prohibits that 

result. See Motion to Intervene, Fairholme Funds, No. 

13-465C (Fed. Cl. Sept. 16, 2016), ECF No. 337.

The Court of Federal Claims denied intervention on 

September 30, 2016. Order, Fairholme Funds, No. 13-

465C (Fed. Cl. Sept. 30, 2016), ECF No. 338 (“Order”). 

The court stated the statutory basis for its jurisdiction 

over takings claims and cited numerous cases recognizing

that jurisdiction, at least as a statutory matter. But it did 

not analyze Mr. Sammons’s constitutional contention, 

which invoked Stern v. Marshall, 564 U.S. 462 (2011), and 

other decisions, that only an Article III court may hear 

takings claims. Order 2–5. The court then concluded that 

Mr. Sammons had not met Rule 24(a)’s requirements for 

intervention. Among other things, the court reasoned 

that Mr. Sammons had failed to establish that the denial 

of his motion would impair his ability to protect his own 

interests, because he could file his own suit on his takings 

claim. Id. at 8. The court also determined that Mr. 

Sammons’s motion was untimely. The court explained 

that more than three years had passed since Mr. Sammons was aware, or should have been aware, of his rights;

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FAIRHOLME FUNDS, INC. v. US 5

that the existing parties would be more prejudiced if the 

motion were granted than Mr. Sammons would be prejudiced if the motion were denied; and that there were no 

unusual circumstances favoring the granting of the motion. Id. at 8–9.

Mr. Sammons appeals. The shareholders and the 

government—who neither briefed the issue in the Court of 

Federal Claims nor challenged that court’s jurisdiction on 

Mr. Sammons’s constitutional grounds, see Order 1–2 

n.2—defend the denial of intervention as of right. We 

have jurisdiction under 28 U.S.C. § 1295(a)(3).

II

Rule 24(a) provides, in relevant part: “On timely motion, the court must permit anyone to intervene who . . . 

claims an interest relating to the property or transaction 

that is the subject of the action, and is so situated that 

disposing of the action may as a practical matter impair 

or impede the movant’s ability to protect its interest, 

unless existing parties adequately represent that interest.” R. Ct. Fed. Cl. 24(a)(2). Under intervention rules 

materially identical to the Court of Federal Claims rule, 

the denial of a motion to intervene for untimeliness is 

reviewed for abuse of discretion. See NAACP v. New 

York, 413 U.S. 345, 365 (1973); Belton Indus., Inc. v. 

United States, 6 F.3d 756, 760 (Fed. Cir. 1993). In a nonprecedential decision, we have followed the same approach for the Court of Federal Claims. Doe v. United 

States, 44 F. App’x 499, 501 (Fed. Cir. 2002). We have not 

decided which standard of review applies to the denial of 

a motion to intervene on other grounds. See Wolfsen 

Land & Cattle Co. v. Pac. Coast Fed’n of Fisherman’s 

Ass’ns, 695 F.3d 1310, 1314 (Fed. Cir. 2012). In this case, 

the standard does not affect our decision.

Here, denial of intervention would not “as a practical 

matter impair or impede [Mr. Sammons’s] ability to 

protect his interest.” R. Ct. Fed. Cl. 24(a)(2). Mr. SamCase: 17-1015 Document: 28-2 Page: 5 Filed: 03/14/2017
6 FAIRHOLME FUNDS, INC. v. US

mons, if denied intervention, would not be bound as a 

party to any result reached in the present case. He is also

free to file his own action asserting his own takings claim

as a basis for his own relief. And in that action, he may 

litigate his contention that the Constitution entitles him 

to an Article III forum for his takings claim.

Indeed, Mr. Sammons has filed such an action in district court, seeking $900,000 in damages. Sammons v. 

United States, No. 5:16-cv-1054-FB (W.D. Tex. Oct. 21, 

2016), ECF No. 1. In that action, he immediately moved 

for a declaration that, despite the $10,000 limit on district 

courts’ jurisdiction over such claims, 28 U.S.C. 

§ 1346(a)(2)(a)(2), the Constitution entitles him to an 

Article III forum. ECF No. 3 (Oct. 21, 2016). The government opposed Mr. Sammons’s motion and also moved 

to dismiss, ECF No. 15 (Jan. 9, 2017); Mr. Sammons 

replied and responded, ECF No. 16 (Jan. 9, 2017); ECF 

No. 21 (Jan. 18, 2017); and the government replied, ECF 

No. 29 (Feb. 1, 2017).1 A Magistrate Judge has now 

issued a report and recommendation, which rejects Mr. 

Sammons’s argument based on Stern v. Marshall and 

other authorities discussing Article I courts and concludes 

that the case should be dismissed for lack of jurisdiction 

under Federal Rule of Civil Procedure 12(b)(1). ECF No. 

30 (Feb. 7, 2017). Mr. Sammons has filed an objection 

with the district court pursuant to Federal Rule of Civil

Procedure 72, ECF No. 31 (Feb. 7, 2017); and the govern1 Mr. Sammons furnished to the Magistrate Judge 

a lengthy law review article addressing the issue he 

raised regarding an entitlement to an Article III court for 

a takings claim. See Michael P. Goodman, Taking Back 

Takings Claims: Why Congress Giving Just Compensation 

Jurisdiction to the Court of Federal Claims Is Unconstitutional, 60 Vill. L. Rev. 83 (2015). He has supplied a prepublication version of that article to this court as well.

 

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FAIRHOLME FUNDS, INC. v. US 7

ment has responded, ECF No. 32 (Feb. 17, 2017). It 

appears that, after Mr. Sammons replies, the issue will be 

ripe for decision.

We agree with the Court of Federal Claims that Mr. 

Sammons has not shown why denial of intervention in the 

present matter would impair or impede his ability to 

protect his interest in the property or transaction that is 

the subject of this case. Order 8. From all that appears, 

he may fully litigate, in the Texas case, his claim of entitlement to an Article III forum for his takings claim. He 

may litigate his takings claim in that case if he prevails 

on his argument that he is entitled to keep his case there. 

And if he does not prevail on that argument, he may have 

his takings claim adjudicated in the Court of Federal 

Claims, whether by filing his own action there or by 

including himself within what he has asserted is at least 

one class action in that court covering his claim. See R. 

Ct. Fed. Cl. 23(c)(2)(B)(v).

We also see no reversible error in the Court of Federal 

Claims’ determination that Mr. Sammons’s intervention 

motion was not “timely,” as required by Rule 24. In 

deciding whether a motion is timely, a court may consider 

(1) “the length of time during which the would-be intervenor[] actually knew or reasonably should have known of 

[his] rights,” (2) “whether the prejudice to the rights of 

existing parties by allowing intervention outweighs the 

prejudice to the would-be intervenor[] by denying intervention,” and (3) the “existence of unusual circumstances 

militating either for or against a determination that the 

application is timely.” Doe, 44 F. App’x at 501; Belton, 6 

F.3d at 762. The Court of Federal Claims properly considered those factors.

The court found that Mr. Sammons had filed his motion to intervene more than three years after the shareholders filed their complaint—the time at which Mr. 

Sammons was or should have been aware of the right to 

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8 FAIRHOLME FUNDS, INC. v. US

relief that he now claims. Order 8–9. As just explained, 

the court found, too, that Mr. Sammons would not be 

prejudiced by denying intervention in this case. Id. at 8. 

The court further found that, because of the passage of 

time, the action had progressed “too far down the discovery track to be disrupted by a motion for intervention.” 

Id. at 9. Although no answer has been filed in this case, 

discovery has proceeded, the docket has expanded to more 

than 350 entries, and the parties’ privilege disputes have 

spilled over into this court. See In re United States, No. 

2017-1122. Finally, the court concluded that there were 

no unusual circumstances that would affect the determination of untimeliness. Order 9. We see no legal error or 

other abuse of discretion in that analysis.2

We therefore find no reversible error in the denial of 

intervention in this case. We do not here address Mr. 

Sammons’s constitutional argument against the jurisdiction of the Court of Federal Claims. See Defenders of 

Wildlife v. Perciasepe, 714 F.3d 1317, 1327–29 (D.C. Cir. 

2013) (upon denying intervention, refusing to address 

challenge to trial court’s subject matter jurisdiction). 

That argument, to the extent it is a jurisdictional one,

must be addressed by the Court of Federal Claims and (if 

there is an appeal) by this court even if Mr. Sammons is 

not a party and even if no party makes the argument he 

makes.

2 Mr. Sammons moved to intervene only as of right 

under Rule 24(a), and the Court of Federal Claims accordingly did not separately address whether he qualified for 

permissive intervention under Rule 24(b). No Rule 24(b) 

issue is before us. But because Mr. Sammons now invokes Rule 24(b), we note that untimeliness, which the 

Court of Federal Claims has found, bars permissive 

intervention as well as intervention as of right. See R. Ct. 

Fed. Cl. 24(b)(1), (3).

 

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FAIRHOLME FUNDS, INC. v. US 9

CONCLUSION

For the foregoing reasons, we affirm the order of the 

Court of Federal Claims denying intervention. 

AFFIRMED

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