*

The Honorable Denise Page Hood, United States District Judge for the Eastern District of

Michigan, sitting by designation.

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 14a0030p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT _________________

PAUL F. MIK, JR., LEE ANN MIK, and PALS

ENTERPRISES, LLC,

Plaintiffs-Appellants,

v.

FEDERAL HOME LOAN MORTGAGE

CORPORATION,

Defendant-Appellee.

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No. 12-6051

Appeal from the United States District Court

for the Western District of Kentucky at Louisville.

No. 3:12-cv-00273—John G. Heyburn II, District Judge.

Argued: June 19, 2013

Decided and Filed: February 7, 2014 

Before: GIBBONS and STRANCH, Circuit Judges; HOOD, District Judge.*

_________________

COUNSEL

ARGUED: Alan W. Roles, COLEMAN, ROLES & ASSOCIATES, PLLC, Louisville,

Kentucky, for Appellants. Rick D. DeBlasis, LERNER, SAMPSON & ROTHFUSS,

Cincinnati, Ohio, for Appellee. ON BRIEF: Alan W. Roles, Theodore J. Palmer,

COLEMAN, ROLES & ASSOCIATES, PLLC, Louisville, Kentucky, for Appellants.

Rick D. DeBlasis, LERNER, SAMPSON & ROTHFUSS, Cincinnati, Ohio, for

Appellee. Kent Qian, NATIONAL HOUSING LAW PROJECT, San Francisco,

California, C. Matthew Hill, PUBLIC JUSTICE CENTER, Baltimore, Maryland, for

Amici Curiae.

1
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 2

_________________

OPINION

_________________

JULIA SMITH GIBBONS, Circuit Judge. In May 2012, Paul F. Mik, Jr., Lee

Ann Mik, and PALS Enterprises, LLC (collectively, “the Miks”) filed suit against the

Federal Home Loan Mortgage Corporation (“Freddie Mac”), arguing that they were

unlawfully evicted from their rental home after their landlord defaulted on her mortgage

and the property was sold at a foreclosure sale. The district court granted Freddie Mac’s

motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

It interpreted the Miks’ complaint as asserting claims under the Protecting Tenants at

Foreclosure Act of 2009 (“PTFA”), which imposes certain requirements on successors

in interest to foreclosed properties in order to protect tenants. The district court held that

the PTFA does not provide a private right of action and dismissed the complaint. On

appeal, the Miks argue that their claims do not arise under the PTFA and that their

complaint asserts claims for wrongful eviction, denial of due process, and outrageous

infliction of emotional distress under Kentucky law.

We hold that the PTFA does not provide a private right of action. Nonetheless,

the PTFA requires successors in interest to foreclosed properties to provide bona fide

tenants with 90 days’ notice to vacate and to allow them to occupy the premises until the

end of their lease term unless certain conditions are met. The PTFA’s requirements

preempt state laws that provide less protection to tenants. While tenants may not bring

a federal cause of action for violations of the PTFA, they may use such violations to

establish the elements of a state law cause of action. We hold that the Miks have stated

a claim for wrongful eviction but have failed to state claims for denial of due process and

outrageous infliction of emotional distress. Therefore, we reverse in part and affirm in

part.
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 3

I.

The Miks allege the following facts in their complaint, and for purposes of

reviewing the district court’s grant of Freddie Mac’s motion to dismiss, we accept their

allegations as true. See Reilly v. Vadlamudi, 680 F.3d 617, 622 (6th Cir. 2012).

Paul Mik and his wife Lee Ann own and operate PALS Enterprises, LLC

(“PALS”). In October 2010, PALS entered into an agreement with Wanda Meyer giving

PALS a lease with an option to purchase a residence that Meyer owned in Meade

County, Kentucky. Paul and Lee Ann Mik lived in the residence leased by PALS.

Meyer defaulted on her mortgage, and her lender, CITI Mortgage, Inc., initiated

foreclosure proceedings. The Miks were not named as parties in the foreclosure action

either by name or as “unknown tenant(s) or occupant(s).” CITI Mortgage was the

successful bidder at the foreclosure sale on April 20, 2011, and it assigned its bid to

Freddie Mac. The Miks recorded their lease—which they concede was initially

unrecorded—on April 12, 2011, but they did not notify CITI Mortgage of the existence

of their lease until April 28, 2011. The Miks paid rent on April 1, 2011, but they claim

that they did not pay rent thereafter because they did not know to whom rent should be

paid.

In June 2011, the Miks contacted Joe Mai, a paralegal at the law firm that

represented Freddie Mac. They told him that they had a lease with an option to purchase

Meyer’s residence and that they desired to remain in the home. Mai told the Miks that

they could avoid eviction and stay in the residence until July 25, 2011 if they

participated in a relocation assistance program called Cash for Keys, whereby they

would be paid $1,500 to vacate the residence. The Miks signed the agreement, but they

were not paid $1,500 and did not vacate the residence. The Miks were told to contact

Freddie Mac’s agent Sherry Bennett Webb, who would arrange for the property to be

inspected before the Miks were paid. In July 2011, Paul Mik contacted Webb and

informed her that he had a lease with an option to purchase the residence.
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 4

1

A writ of possession is “[a] writ issued to recover the possession of land.” Black’s Law

Dictionary 1750 (9th ed. 2009). Kentucky provides a procedure for obtaining a writ of possession:

The purchaser of land sold under execution and not redeemed, after obtaining a

conveyance therefor may, upon ten (10) days’ notice in writing to the defendant in the

execution, whose lands have been sold, enter a motion on the docket in the circuit court

of the county where the land is situated for a judgment for the possession of the land.

If, upon the hearing of the motion, the court is of the opinion that the purchaser is

entitled to the possession, it shall render a judgment accordingly and award possession,

with costs.

Ky. Rev. Stat. Ann. § 426.260(1) (West 2012).

On June 15, 2011, Freddie Mac obtained a writ of possession1 for the property.

The writ stated that Meyer was to be evicted from the premises, but it did not mention

the Miks. On July 27, 2011, the Miks were informed that they could buy the property

for $190,000 and avoid being evicted if they could demonstrate that they qualified for

a loan by 5 p.m. on Friday, July 29, 2011. On July 28, 2011, deputies from the Meade

County Sheriff’s Department arrived at the residence with a copy of the writ of

possession. Lee Ann Mik explained that Meyer did not live on the property and that the

Miks had not been served with legal documents concerning the eviction. The deputy

said that he would return on Monday to lock the Miks out of the residence.

The Miks contacted Mai, who reiterated that the Miks could avoid eviction only

by showing that they were approved for a $190,000 home loan by 5 p.m. that Friday.

The Miks applied for a loan, and the bank notified Mai that the Miks had submitted an

application but that it would take about two weeks to have the property appraised. On

July 31, 2011, Webb informed the Miks that they would be evicted the following day.

Paul Mik again told Webb that he had a lease and that he had not been served with any

court documents.

On August 8, 2011, Paul Mik posted a copy of the lease on the door of the

residence with a note stating: “We are asserting our rights under this lease and object to

entry by anyone.” That day, deputies from the Meade County Sheriff’s Department “set

out” the Miks’ property, removing it from the residence and placing it in the yard. More

than $38,000 of property was damaged or destroyed by rain. In November 2011, the

Miks obtained the loan for which they had applied and purchased the property from

Freddie Mac.
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 5

2

An action for forcible detainer is “a quick and simple legal proceeding for regaining possession

of real property from someone who has wrongfully taken, or refused to surrender, possession.” Black’s

Law Dictionary 719 (9th ed. 2009).

In May 2012, the Miks filed suit against Freddie Mac in federal district court.

The complaint alleged that Freddie Mac “disregarded [Section 702] of the Protecting

Tenants at Foreclosure Act of 2009.” The Miks claimed that they

relied on the provisions of the Protecting Tenants at Foreclosure Act of

2009 to be able to continue to reside in their home until they were given

the notice to vacate required in the statute and until the expiration of the

remaining term of the lease as prescribed in the statute, during which

time the [Miks] anticipated that their loan application would be approved

and they would be able to purchase the subject property from [Freddie

Mac].

Next, the complaint alleged that the Miks “were wrongfully evicted when [Freddie Mac]

failed to follow due process prior to evicting the [Miks] from their home.” More

specifically, it alleged that Freddie Mac evicted the Miks without naming them as parties

to the foreclosure action or bringing a forcible detainer action2

 against them. Finally,

the complaint alleged that Freddie Mac’s actions “were outrageous and inflicted severe

emotional distress upon the [Miks].” Paul Mik claimed that he “has suffered mental

anguish” and Lee Ann Mik stated that she “has experienced severe emotional pain and

suffering for which she has been provided medical treatment.”

Freddie Mac filed a motion to dismiss the Miks’ complaint pursuant to Federal

Rule of Civil Procedure 12(b)(6), arguing that Miks’ claims are premised on the PTFA,

which does not create a private right of action. The district court granted Freddie Mac’s

motion to dismiss. First, it held that the Miks cannot state a claim under the PTFA,

which does not provide an express or implied private right of action. It observed that

while the PTFA may be raised as a defense in a foreclosure action in state court, it does

not provide a basis for recovering damages in federal court. Second, the district court

held that “a reading of the Complaint makes it clear that [the Miks] have asserted only

causes of actions under the Act and not under state law.” Moreover, it noted that a

foreclosure sale extinguishes the rights of tenants under Kentucky law and, therefore,
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 6

tenants must raise a defense of due process or unfair conduct during foreclosure

proceedings, which the Miks did not do. The Miks timely appealed the district court’s

dismissal of their complaint.

II.

“[A]ll civil actions to which [Freddie Mac] is a party shall be deemed to arise

under the laws of the United States, and the district courts of the United States shall have

original jurisdiction of all such actions, without regard to amount or value.” 12 U.S.C.

§ 1452(f); see also 28 U.S.C. § 1331. We have jurisdiction to hear the Miks’ appeal

pursuant to 28 U.S.C. § 1291.

We review de novo a district court’s order granting a motion to dismiss pursuant

to Federal Rule of Civil Procedure 12(b)(6). U.S. Citizens Ass’n v. Sebelius, 705 F.3d

588, 597 (6th Cir. 2013). In so doing, we “construe the complaint in the light most

favorable to the plaintiff[s] and accept all allegations as true.” Keys v. Humana, Inc.,

684 F.3d 605, 608 (6th Cir. 2012).

Federal Rule of Civil Procedure 8(a)(2) requires that a complaint contain only

“a short and plain statement of the claim showing that the pleader is entitled to relief.”

However, a complaint must contain “more than labels and conclusions, and a formulaic

recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555 (2007). “To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, 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). A claim for relief is plausible “when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Id. Plausibility is not the same as probability, but it requires “more than a

sheer possibility that a defendant has acted unlawfully.” Id.
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 7

3

The PTFA originally had a sunset date of December 31, 2012. Protecting Tenants at Foreclosure

Act of 2009, Pub. L. No. 111-22, § 704, 123 Stat. 1632, 1662 (codified at 42 U.S.C. § 1437f note (Supp.

III 2010)). Congress later changed the date to December 31, 2014. Mortgage Reform and Anti-Predatory

Lending Act, Pub. L. No. 111-203, § 1484, 124 Stat. 1376, 2204 (2010) (codified at 42 U.S.C. § 1437f

note (Supp. V 2012)).

4

A bona fide lease or tenancy is defined as follows:

(b) BONA FIDE LEASE OR TENANCY.—For purposes of this section, a lease or

tenancy shall be considered bona fide only if —

(1) the mortgagor or the child, spouse, or parent of the mortgagor

under the contract is not the tenant;

(2) the lease or tenancy was the result of an arms-length transaction;

and

(3) the lease or tenancy requires the receipt of rent that is not

substantially less than fair market rent for the property or the unit’s

rent is reduced or subsidized due to a Federal, State, or local subsidy.

Protecting Tenants at Foreclosure Act of 2009, Pub. L. No. 111-22, § 702, 123 Stat. 1632, 1661 (codified

at 12 U.S.C. § 5220 note (Supp. V. 2012)).

III.

The district court interpreted the Miks’ complaint as asserting only claims under

the PTFA and held that it does not provide a private right of action. The district court

correctly held that the PTFA does not provide the Miks with a federal cause of action,

but it incorrectly held that the Miks’ complaint only asserted claims under the PTFA.

Congress enacted the PTFA as a temporary measure3 during the mortgage

foreclosure crisis. The PTFA protects tenants who reside in properties that are subject

to foreclosure by imposing certain obligations on successors in interest to foreclosed

properties. The PTFA requires successors in interest to provide bona fide tenants4 with

90 days’ notice to vacate and to allow bona fide tenants to occupy the premises until the

end of their lease term unless certain conditions are met. Protecting Tenants at

Foreclosure Act of 2009, Pub. L. No. 111-22, § 702, 123 Stat. 1632, 1661 (codified at

12 U.S.C. § 5220 note (Supp. V. 2012)). Section 702 states in relevant part:

(a) IN GENERAL.—In the case of any foreclosure on a federally-related

mortgage loan or on any dwelling or residential real property after the

date of enactment of this title, any immediate successor in interest in

such property pursuant to the foreclosure shall assume such interest

subject to—
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 8

(1) the provision, by such successor in interest of a notice

to vacate to any bona fide tenant at least 90 days before

the effective date of such notice; and

(2) the rights of any bona fide tenant, as of the date of

such notice of foreclosure—

(A) under any bona fide lease entered into

before the notice of foreclosure to occupy

the premises until the end of the

remaining term of the lease, except that a

successor in interest may terminate a lease

effective on the date of sale of the unit to

a purchaser who will occupy the unit as a

primary residence, subject to the receipt

by the tenant of the 90 day notice under

paragraph (1); or

(B) without a lease or with a lease

terminable at will under state law, subject

to the receipt by the tenant of the 90 day

notice under subsection (1)[.]

Id.

“A private right of action is the right of an individual to bring suit to remedy or

prevent an injury that results from another party’s actual or threatened violation of a

legal requirement.” Wisniewski v. Rodale, Inc., 510 F.3d 294, 296 (3d Cir. 2007)

(footnote omitted). “[T]he fact that a federal statute has been violated and some person

harmed does not automatically give rise to a private cause of action in favor of that

person.” Cannon v. Univ. of Chicago, 441 U.S. 677, 688 (1979). “[P]rivate rights of

action to enforce federal law must be created by Congress.” Alexander v. Sandoval, 532

U.S. 275, 286 (2001). Congress may create a private right of action expressly or by

implication. Touche Ross & Co. v. Redington, 442 U.S. 560, 575 (1979). “The judicial

task is to interpret the statute Congress has passed to determine whether it displays an

intent to create not just a private right but also a private remedy.” Sandoval, 532 U.S.

at 286.

As many courts have recognized, “[n]othing in the express language of Section

702 contains a provision creating a right of action for violations of the section or
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 9

establishes any remedy when the section is violated.” Gullatt v. Aurora Loan Servs.,

LLC, 1:10-CV-01109, 2010 WL 4070379, at *3 (E.D. Cal. Oct. 18, 2010); see also

Logan v. U.S. Bank Nat’l Ass’n, 722 F.3d 1163, 1171 (9th Cir. 2013); Ingo v. Deutsche

Bank Nat’l Trust Co., No. 2:11-CV-812, 2011 WL 5983340, at *2 (D. Utah Nov. 29,

2011); Zalemba v. HSBC Bank, USA, Nat’l. Ass’n., as Tr. for MHL-200-1, No.

10-CV-1646, 2010 WL 3894577, at *2 (S.D. Cal. Oct. 1, 2010).

We cannot conclude that Congress intended to provide an implied private right

of action. In Cort v. Ash, 422 U.S. 66 (1975), the Supreme Court set forth four factors

for evaluating whether a statute implicitly creates a private right of action: (1) whether

the plaintiff is “one of the class for whose especial benefit the statute was enacted”;

(2) whether there is “any indication of legislative intent, explicit or implicit, either to

create such a remedy or to deny one”; (3) whether it is “consistent with the underlying

purposes of the legislative scheme to imply such a remedy for the plaintiff”; and

(4) whether the cause of action is “one traditionally relegated to state law, in an area

basically the concern of the States, so that it would be inappropriate to infer a cause of

action based solely on federal law.” Id. at 78 (internal quotation marks and citations

omitted). The Court has since clarified that these factors are not entitled to equal weight.

Touche Ross & Co., 442 U.S. at 575. The “central inquiry” is whether Congress

intended to create a private right of action. Id. “‘[U]nless this congressional intent can

be inferred from the language of the statute, the statutory structure, or some other source,

the essential predicate for implication of a private remedy simply does not exist.’”

Thompson v. Thompson, 484 U.S. 174, 179 (1988) (quoting Nw. Airlines, Inc. v. Transp.

Workers Union of Am., AFL-CIO, 451 U.S. 77, 94 (1981)).

The language of the PTFA does not evince an intent to create a private right of

action. “‘The question whether Congress . . . intended to create a private right of action

[is] definitively answered in the negative’ where a ‘statute by its terms grants no private

rights to any identifiable class.’” Gonzaga Univ. v. Doe, 536 U.S. 273, 283-84 (2002)

(quoting Touche Ross & Co., 442 U.S. at 576)). “For a statute to create such private
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 10

5

For example, “Title VI of the Civil Rights Act of 1964 and Title IX of the Education

Amendments of 1972 create individual rights because those statutes are phrased ‘with an unmistakable

focus on the benefited class.’” Gonzaga, 536 U.S. at 284 (quoting Cannon, 441 U.S. at 691) (emphasis

added). Title VI provides that “[n]o person . . . shall, on the ground of race, color, or national origin, be

excluded from participation in, be denied the benefits of, or be subjected to discrimination under any

program or activity receiving Federal financial assistance.” 42 U.S.C. § 2000d (emphasis added). Title

IX provides that “[n]o person . . . shall, on the basis of sex, be excluded from participation in, be denied

the benefits of, or be subjected to discrimination under any education program or activity receiving Federal

financial assistance.” 20 U.S.C. § 1681 (emphasis added).

rights, its text must be ‘phrased in terms of the persons benefited.’”5 Id. at 284 (quoting

Cannon, 441 U.S. at 692 n.13). “Statutes that focus on the person regulated rather than

the individuals protected create ‘no implication of an intent to confer rights on a

particular class of persons.’” Sandoval, 532 U.S. at 289 (quoting California v. Sierra

Club, 451 U.S. 287, 294 (1981)).

The title of the PTFA demonstrates that the Act is meant to protect tenants living

in foreclosed properties. However, the Act does so by regulating the conduct of

successors in interest to foreclosed properties. The Act provides that “any immediate

successor in interest” to a foreclosed property “assume[s] such interest subject to”

certain limitations. PTFA § 702. The successor in interest takes the property “subject

to . . . the provision, by such successor in interest of a notice to vacate to any bona fide

tenant at least 90 days before the effective date of such notice.” Id. The successor in

interest also takes the property “subject to . . . the rights of any bona fide tenant

. . . under any bona fide lease entered into before the notice of foreclosure to occupy the

premises until the end of the remaining term of the lease” unless certain conditions are

met. Id. Thus, “[t]he entire textual focus of Section 702 is to specify the limitations of

the successors in interest’s property rights in the types of foreclosed properties that fall

under the ambit of Section 702.” Gullatt, 2010 WL 4070379, at *4; see also Logan, 722

F.3d at 1171.

Moreover, the statutory structure does not demonstrate an intent to create a

private right of action. During the recent economic crisis, Congress passed the

Emergency Economic Stabilization Act of 2008 (“EESA”), codified at 12 U.S.C.

§§ 5201-61, in order to “provide authority and facilities that the Secretary of the

Treasury can use to restore liquidity and stability to the financial system of the United
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 11

States.” 12 U.S.C. § 5201. The EESA authorized the Treasury Secretary to establish the

Troubled Asset Relief Program (“TARP”), codified at 12 U.S.C. §§ 5211-41, in order

“to purchase, and to make and fund commitments to purchase, troubled assets from any

financial institution.” 12 U.S.C. § 5211. The PTFA is part of TARP. “There is no

specific statement of purpose provided in Section 702 expressing that it was intended to

carry out something different than the general purposes of TARP and EESA— i.e.,

providing the Secretary of the Treasury authority to stabilize the financial system.”

Gullatt, 2010 WL 4070379, at *5.

Congress provided a private right of action against the Secretary for those

harmed by the Secretary’s actions, but it did not provide a private right of action against

individuals or non-governmental entities who violate TARP’s provisions. 12 U.S.C.

§ 5229; see also Gullatt, 2010 WL 4070379, at *5; Pantoja v. Countrywide Home Loans,

Inc., 640 F. Supp. 2d 1177, 1185 (N.D. Cal. 2009). “The express provision of one

method of enforcing a substantive rule suggests that Congress intended to preclude

others.” Sandoval, 532 U.S. at 290. “Because Congress included an express provision

for private enforcement under one section of the Homes Act, it is ‘highly improbable that

Congress absent mindedly forgot to mention an intended private action’ for other

sections of the statute.” Logan, 722 F.3d at 1172 (quoting Transamerica Mortg.

Advisors, Inc. v. Lewis, 444 U.S. 11, 20 (1979)).

Because neither the text nor the statutory structure indicate that Congress

intended to provide a private right of action, our analysis need go no further. Sandoval,

532 U.S. at 316 n.7 (“[T]he interpretive inquiry begins with the text and structure of the

statute and ends once it has become clear that Congress did not provide a cause of

action.”). We hold that the PTFA does not provide an express or implied private right

of action. 

IV.

The district court properly held that the PTFA does not provide the Miks with a

federal cause of action. However, it erred by construing their complaint as stating only

claims based on the PTFA. The complaint alleges that the Miks “were wrongfully
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 12

evicted,” that Freddie Mac “deni[ed them] due process,” and that Freddie Mac’s actions

“were outrageous and inflicted severe emotional distress upon the [Miks].” Therefore,

we must consider whether relief may be granted with respect to these claims.

Before we do so, however, we must address the status of the Miks’ lease

following the foreclosure sale and what Freddie Mac’s obligations were as the successor

in interest to the foreclosed property. Freddie Mac argues that the foreclosure sale

terminated the Miks’ lease and that Freddie Mac properly evicted the Miks pursuant to

a writ of possession, as permitted by Kentucky law. First, we examine relevant

Kentucky law. Second, we consider the effect of the PTFA on the parties’ rights and

obligations.

A.

Freddie Mac cites two sources relied upon by the district court in support of its

argument that the foreclosure sale terminated the Miks’ lease. Neither source is

applicable here.

First, Freddie Mac points to Ky. Rev. Stat. Ann. § 426.574, which provides that

“[a] conveyance made in pursuance of a sale ordered by the court shall pass to the

grantee the title of all the parties to the action or proceeding.” This statute says nothing

about the effect of a foreclosure sale on a lease agreement between the former property

owner and her tenants, particularly where, as here, the tenants were not parties to the

foreclosure action.

Second, Freddie Mac cites Cumberland Lumber Co. v. First & Farmers Bank of

Somerset, Inc., 838 S.W.2d 403 (Ky. Ct. App. 1992), which concerns the status of liens

placed on a property after the commencement of foreclosure proceedings. In

Cumberland Lumber Co., First and Farmers Bank of Somerset, Inc., which held a first

mortgage lien against real property owned by Cumberland Industries Corporation

(“CIC”), filed a complaint against CIC seeking a sale of the property to satisfy CIC’s
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 13

6

A lis pendens is “[a] notice, recorded in the chain of title to real property, required or permitted

in some jurisdictions to warn all persons that certain property is the subject matter of litigation, and that

any interest acquired during the pendency of the suit are subject to its outcome.” Black’s Law Dictionary

1015 (9th ed. 2009).

7

Freddie Mac fails to distinguish a “lease” from a “lien.” A “lien” is “[a] legal right or interest

that a creditor has in another’s property, lasting usu. until a debt or duty that it secures is satisfied.”

Black’s Law Dictionary 1006 (9th ed. 2009). A “lease” is “[a] contract by which a rightful possessor of

real property conveys the right to use and occupy the property in exchange for consideration, usu. rent.”

Id. at 970.

indebtedness. Id. at 404. It also filed a lis pendens notice6 warning others that CIC’s

property was the subject of litigation. Id. The court entered a default judgment against

CIC and ordered the property sold at public auction. Id. The bank purchased the

property and then filed a complaint against Cumberland Lumber Co. and Lowe’s Home

Centers, Inc. Id. These creditors had obtained judgments against CIC and placed liens

on the property after foreclosure proceedings commenced, but failed to intervene in the

foreclosure action. Id. Cumberland Lumber and Lowe’s argued that they had no duty

to intervene in the foreclosure action and that the bank’s failure to include them resulted

in their liens surviving the foreclosure sale. Id. The Kentucky Court of Appeals held

that a plaintiff in a foreclosure action must name lienholders of whom he is aware in his

petition, but that he need not name those who acquire liens after the petition is filed. Id.

at 405. It further held that one who acquires an interest in property—in this case,

Cumberland Lumber and Lowe’s—“whether by purchase, lien or other encumbrance,

after the filing of a lis pendens notice takes that interest subject to the results of the

litigation.” Id. It concluded that the foreclosure sale extinguished Cumberland

Lumber’s and Lowe’s liens. Id. at 406.

While Cumberland Lumber Co. describes the effect of a foreclosure sale on liens

acquired after foreclosure proceedings commence, it says nothing about the effect of a

foreclosure sale on a lease entered into by a property owner and her tenants before

foreclosure on the property.7

 Thus, it does not support Freddie Mac’s argument that the

foreclosure sale terminated the Miks’ lease. Nor does it support Freddie Mac’s argument

that the Miks waived their claims by failing to intervene in the foreclosure action, since
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 14

8

Freddie Mac argues that the Miks failed to intervene in the foreclosure action, despite having

knowledge of the proceedings, and, therefore, they “have waived any and all claims they could have

made.” This is incorrect for two reasons. First, the Miks were not required to intervene in the foreclosure

action. Second, although the Miks’ claims arose from the same facts as the foreclosure action, the Miks

need not assert them in the context of a foreclosure proceeding and can bring them in a separate lawsuit.

9

Prior to 1976, the Court of Appeals was the highest state court in Kentucky.

it deals with the obligations of lienholders who become aware of foreclosure

proceedings, not tenants.8

The parties do not identify—and our research does not reveal—a Kentucky

statute that outlines the rights and the obligations of successors in interest to foreclosed

properties. However, Kentucky common law provides some guidance. Under Kentucky

common law, the purchaser of property at a foreclosure sale is entitled to possess the

property after the sale is confirmed and may evict tenants who continue to occupy the

property pursuant to a pre-existing lease agreement.

The plaintiff in Castleman v. Belt, 41 Ky. 157, 157 (1841), purchased a house at

a foreclosure sale that was occupied by tenants pursuant to their lease agreement with

the previous owner. The Kentucky Court of Appeals9 made the following observation

regarding the effect of the foreclosure on the lease:

But although neither the antecedent mortgage nor subsequent sale

and conveyance under the decree created any such retrospective privity

between Castleman and the lessees of the mortgagor as would, per se,

imply the relation of landlord and tenant, as between those tenants and

Castleman antecedently to the conveyance of the whole title to him under

the decree; yet, nevertheless, they might have been treated by him, after

the date of the deed, either as trespassers or as occupants, holding at his

will and as his tenants, so long as they afterwards continued to occupy

with his implied permission. He might undoubtedly have evicted them

in an action of ejectment, and then have maintained trespass for mesne

profits, after the date of his deed, had that been the date of his demise.

And we are of the opinion that he had a right to waive the trespass and

sue in assumpsit for use and occupation, for the same intervening period.

Id. at 160 (citations omitted). The court concluded that “[a] mortgagee purchasing under

a decree foreclosing his mortgage, may, after the date of the decree, treat one in

possession under the mortgagor, as tenant or trespasser, and from the time of demanding
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 15

possession or obtaining a conveyance, is entitled to the accruing rents.” Id. Castleman

“had a perfect right to the possession,” and, thus, “whenever he chose to demand the

surrender of it by the mortgagor’s tenants, their retention of possession after such

demand, might be deemed to have been either under him or wrongful as to him.” Id.

Subsequent decisions support the proposition that the successor in interest to

foreclosed property is entitled to possess it, notwithstanding a pre-existing lease

agreement between the foreclosure defendant and her tenants. Ball v. First National

Bank, 80 Ky. 501, 503 (1882), involved a dispute between a mortgagor’s heirs and

creditors as to who was entitled to rents paid by the mortgagor’s tenants following the

mortgagor’s death. Considering who was entitled to rents following the judicial sale of

the property, the Kentucky Court of Appeals stated that the issue “turn[ed] upon the

ownership of the right to the title and the right to the possession.” Id. at 505. It observed

that the purchaser, from the time that the sale was confirmed, was “entitled to a deed and

writ of possession,” and, therefore, was entitled to rents from the date of confirmation.

Id. at 506-07. In Henderson v. Meadows, 160 S.W.2d 588, 589 (Ky. 1942), the

Kentucky Court of Appeals considered an action by Henderson, the purchaser of

property at a foreclosure sale, against the county sheriff, who refused to execute a writ

of possession to evict the Meadowses, the previous owner’s tenants. The court observed

that when Henderson was the successful bidder at the foreclosure sale, he gained certain

rights, including the right to possess the property, and it directed the circuit court to take

steps to place Henderson in possession of the property. Id. at 590-91.

More recently, in Pembroke Road Warehouses, LLC v. Eagle Way AG, LLC,

Nos. 2003-CA-001372, 2003-CA-001373, 2005 WL 2045815, at *1 (Ky. Ct. App. Aug.

26, 2005), the Kentucky Court of Appeals considered three consolidated actions related

to foreclosed property on which warehouses that were leased to Pembroke Road

Warehouses, LLC (“PRW”) were located. On appeal, PRW first argued that the circuit

court erred by holding that its lease was terminated by operation of law when the order

confirming the sale was entered. Id. at *3. The court rejected this argument. Id. PRW

then argued that after its lease ended, it became a holdover tenant, and a forcible detainer
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 16

action was required to remove it from the property. Id. The court said that such an

action was unnecessary because the buyer obtained a writ of possession and Kentucky

law has “long recognized” the writ of possession as a remedy available to the buyer at

a foreclosure sale. Id. It concluded that “PRW had no interest in the property following

the order confirming the sale” and the buyer “had sole right to possess the property” as

of the date that the order and the writ of possession were issued. Id. at *5.

We derive several principles from these cases. First, under Kentucky law, a

purchaser gains title to and the right to possess foreclosed property at the time the sale

is confirmed. See Pembroke Road Warehouses, LLC, 2005 WL 2045815, at *5;

Henderson, 160 S.W.2d at 590-91; Ball, 80 Ky. at 506-07; Castleman, 41 Ky. at 160.

The purchaser may treat persons who occupy the property pursuant to a pre-existing

lease as tenants, in which case he may charge them rent, or as trespassers, in which case

he may evict them. Castleman, 41 Ky. at 160. A purchaser need not file a forcible

detainer action in order to accomplish the eviction and may do so by obtaining a writ of

possession. Pembroke Road Warehouses, LLC, 2005 WL 2045815, at *5. Kentucky law

does not appear to require that tenants be joined in the underlying foreclosure action in

order to be evicted. See Henderson, 160 S.W.2d at 589 (noting that the Meadowses did

not object during the course of the foreclosure action). Furthermore, Kentucky law does

not appear to require that tenants receive notice prior to being evicted pursuant to a writ

of possession. See Ky. Rev. Stat. Ann. § 426.260(1) (West 2012) (requiring that a

purchaser provide ten days’ notice in writing to the foreclosure defendant before filing

a motion for a judgment for the possession of the land, but not requiring notification to

tenants that they must leave the premises).

Under Kentucky law, it appears that the Miks were not entitled to occupy the

property after the foreclosure sale and that Freddie Mac complied with Kentucky law by

obtaining a writ of possession in order to remove them. However, this is not the end of

the matter. We must consider the effect of the PTFA on the parties’ rights and

obligations. 
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 17

10The National Housing Law Project, Public Justice Center, National Low Income Housing

Coalition, and National Law Center on Homelessness and Poverty filed a brief in support of the Miks.

11To our knowledge, no court has addressed the question of whether the PTFA preempts less

protective state law. Courts have held that the PTFA does not “completely preempt” state law and, thus,

it does not convert a state law claim into an action arising under federal law that may be removed to federal

court. See, e.g., Branch, 2011 WL 2981806, at *1 (holding that the defendant in an unlawful detainer

action could not remove to federal court based on the PTFA); Wells Fargo Bank v. Lapeen, No. C 11-

01932, 2011 WL 2194117, *2-4 (N.D. Cal. June 6, 2011) (same). However, preemption and removal are

“distinct concepts,” and a state law claim may be preempted without necessarily being removable to

federal court. Wright v. Gen. Motors Corp., 262 F.3d 610, 614 (6th Cir. 2001) (internal quotations marks

and citation omitted).

B.

The Miks and amici10 argue that the PTFA’s requirements for successors in

interest preempt conflicting state law. They appear to claim that the PTFA preempts

Kentucky law in two different ways. First, the PTFA provides that successors in interest

must ordinarily allow bona fide tenants to occupy the foreclosed property until the end

of their lease term, and, thus, it preempts Kentucky common law holding that a

foreclosure terminates a tenant’s lease. Second, the PTFA requires successors in interest

to provide bona fide tenants with 90 days’ notice to vacate, and, therefore, it preempts

Kentucky law permitting a successor in interest to take possession of property without

notice—for example, by obtaining a writ of possession and demanding that tenants

surrender possession immediately.

Section 702 provides that “nothing under this section shall affect the

requirements for termination of any federal- or State-subsidized tenancy or of any State

or local law that provides longer time periods or other additional protections for tenants.”

PTFA § 702. Thus, the PTFA, by its own terms, does not preempt state law that

provides greater protections for tenants. PNC Bank, Nat’l Ass’n v. Branch, No. CV 11-

596, 2011 WL 2981806, at *1 (D. Ariz. July 22, 2011) (“[T]he Act specifically allows

State laws that are more favorable to the tenant.”). However, it does preempt state law

that is less protective of tenants, such as the provisions of Kentucky law at issue here.11

The Supremacy Clause provides that “the Laws of the United States . . . shall be

the supreme Law of the Land; and the Judges in every State shall be bound thereby, any

Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” U.S.
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 18

Const. art. VI, cl. 2. “A fundamental principle of the Constitution is that Congress has

the power to preempt state law.” Crosby v. Nat’l Foreign Trade Council, 530 U.S. 363,

372 (2000). Congress may do so “by enacting a statute containing an express

preemption provision.” Arizona v. United States, 132 S. Ct. 2492, 2500-01 (2012).

Courts also will find that Congress has preempted state law in at least two other

circumstances. “First, the States are precluded from regulating conduct in a field that

Congress, acting within its proper authority, has determined must be regulated by its

exclusive governance.” Id. at 2501. “Second, state laws are preempted when they

conflict with federal law.” Id. This includes situations in which “compliance with both

federal and state regulations is a physical impossibility” and those where state law

“stands as an obstacle to the accomplishment and execution of the full purposes and

objectives of Congress.” Id. (internal quotation marks and citations omitted). “[C]ourts

should assume that ‘the historic police powers of the States’ are not superseded ‘unless

that was the clear and manifest purpose of Congress.’” Id. (quoting Rice v. Santa Fe

Elevator Corp., 331 U.S. 218, 230 (1947)).

The Miks and amici allege that Kentucky law presents an obstacle to

accomplishing the PTFA’s purpose. “What is a sufficient obstacle” to warrant

preemption “is a matter of judgment, to be informed by examining the federal statute as

a whole and identifying its purpose and intended effects.” Crosby, 530 U.S. at 373. “‘If

the purpose of the act cannot otherwise be accomplished—if its operation within its

chosen field else must be frustrated and its provisions be refused their natural effect—the

state law must yield to the regulation of Congress within the sphere of its delegated

power.’” Hines v. Davidowitz, 312 U.S. 52, 68 n.20 (1941) (quoting Savage v. Jones,

225 U.S. 501, 533 (1912)). 

“The objective of [the PTFA] is to ensure that tenants receive appropriate notice

of foreclosure and are not abruptly displaced.” Protecting Tenants at Foreclosure:

Notice of Responsibilities Placed on Immediate Successors in Interest Pursuant to

Foreclosure of Residential Property, 74 Fed. Reg. 30,106 (June 24, 2009); see also 155

Cong. Rec. S5111 (daily ed. May 5,2009) (statement of Sen. John Kerry) (observing that
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 19

the PTFA would address “a rampage of sudden evictions of renters” caused by

foreclosures and “help unsuspecting renters from falling victim to foreclosure in which

they played absolutely no part”). In the debates leading up to its passage, sponsors of

the PTFA observed that tenants often had “no idea” that their home was about to be

foreclosed and could “be evicted with absolutely no notice.” Id.; see also id. at S5096

(statement of Sen. Kirsten Gillibrand) (“Families . . . can literally get kicked out on the

street because the landlord has failed to meet his payments or his or her obligations.”).

Senator Kerry observed that “[a] landlord should not be allowed to come in, change the

locks, and force out tenants who were there completely legitimately, with an expectation

that they were coming home to their same old home.” Id. at S5111. They argued that

the PTFA’s restrictions on successors in interest are necessary to protect tenants. Id.

(stating that under the PTFA, “tenants in any federally related mortgage loan or any

dwelling or residential real property with a lease have a right to remain in the unit until

the end of the existing lease”); see also id. at S5097 (statement of Sen. Kirsten

Gillibrand) (“This amendment would allow any tenants in a foreclosed building the right

to live out their lease, providing them with the same protections any other renter would

have.”).

The purpose of the PTFA could not be accomplished if it did not preempt state

laws that set lower standards for successors in interest than the Act requires. Therefore,

the PTFA preempts state law that is less protective of tenants, including the provisions

of Kentucky law at issue here.

C.

Courts recognize that tenants can invoke the PTFA as a defense to an unlawful

detainer action. See, e.g., Blue Mountain Homes, LCC v. Short, No. 2:13-CV-0913,

2013 WL 1966224, at *2 (E.D. Cal. May 10, 2013); Wells Fargo Bank v. Lapeen, No.

C 11-01932, 2011 WL 2194117, at *4 (N.D. Cal. June 6, 2011). Freddie Mac argues

that “the PTFA is regarded as a defensive measure only” and that the Miks are making

“an end-run around the fact that the PTFA does not provide a private right of action” by

bringing state law claims that rest on violations of the Act. To our knowledge, only one
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 20

12Like the PTFA, HAMP also emerged during the financial crisis as part of TARP. Wigod, 673

F.3d at 556.

court has considered whether violations of the PTFA can be used “offensively” to

establish a state law cause of action. See Webb v. Green Tree Srvicing, LLC, No. ELH11-2105, 2011 WL 6141464, at *7 (D. Md. Dec. 9, 2011). We hold that they can.

In an analogous case, the Seventh Circuit explained why a violation of federal

law can support a state law claim, even when—or, perhaps, especially when—there is

no private right of action under a federal statute. In Wigod v. Wells Fargo Bank, N.A.,

673 F.3d 547, 544 (7th Cir. 2012), Lori Wigod sued Wells Fargo Bank, her home

mortgage servicer, for refusing to modify her loan pursuant to the federal Home

Affordable Mortgage Program (“HAMP”),12 asserting violations of Illinois law under

common-law contract and tort theories. The district court dismissed the complaint,

reasoning that Wigod’s claims were based on Wells Fargo’s obligations under HAMP,

which does not provide a private right of action. Id. at 555. The Seventh Circuit held

that Wigod adequately pled four claims under Illinois law. Id. at 560-576. It then

rejected Wells Fargo’s argument that federal law preempted those claims, including

Wells Fargo’s “novel theory” that Wigod’s claims were displaced “because they attempt

an ‘end-run’ on the lack of a private right of action under HAMP itself.” Id. at 576. The

court observed that “[t]he absence of a private right of action from a federal statute

provides no reason to dismiss a claim under a state law just because it refers to or

incorporates some element of the federal law.” Id. at 581. “To find otherwise would

require adopting the novel presumption that where Congress provides no remedy under

federal law, state law may not afford one in its stead.” Id.

In order to demonstrate “the novelty of Wells Fargo’s argument,” the court

pointed to:

the many cases in which the Supreme Court has confronted issues of

subject matter jurisdiction presented by state common-law claims that

incorporate federal standards of conduct, without so much as a peep

about whether state law may do so without being preempted. See, e.g.,

Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 21

U.S. 308, 312 (2005) (quiet title action brought under state law “turn [ed]

on substantial question[] of federal law” because “the interpretation of

the notice statute in the federal tax law” was an “essential element of

[plaintiff’s] quiet title claim”); Merrell Dow Pharmaceuticals, Inc. v.

Thompson, 478 U.S. 804, 805-07 (1986) (violation of federal labeling

requirements in the Federal Food, Drug, and Cosmetic Act created a

rebuttable presumption of negligence and proximate cause under state

tort law); Moore v. Chesapeake & Ohio Ry., 291 U.S. 205, 214-15 (1934)

(Kentucky worker’s compensation statute provided that employer

railroad’s violation of Federal Safety Appliance Acts would constitute

negligence per se under state law).

Id. at 581-82 (parallel citations omitted). It observed that although these cases

considered “whether the presence of a federal issue in a state-created cause of action

gives rise to federal question jurisdiction under 28 U.S.C. § 1331,” none of the cases

“even suggested that the absence of a private right of action under a federal statute

would prevent state law from providing a cause of action based in whole or in part on

violations of the federal law.” Id. at 582. It concluded that “a state-law claim’s

incorporation of federal law has never been regarded as disabling, whether the federal

law has a private right of action or not.” Id. at 582. See also College Loan Corp. v.

SLM Corp., 396 F.3d 588, 595-99 (4th Cir. 2005) (holding that the plaintiff could use

violations of the federal Higher Education Act of 1965 to establish its state law claims

and observing that “the availability of a state law claim is even more important in an area

where no federal private right of action exists”).

As amici argue, the PTFA targets the problem of successors in interest who do

not follow state law eviction procedures and simply lock tenants out of their homes. See

155 Cong. Rec. S511 (daily ed. May 5, 2009) (statement of Sen. John Kerry) (“A

landlord should not be allowed to come in, change the locks, and force out tenants who

were there completely legitimately, with an expectation that they were coming home to

their same old home.”). In cases where successors in interest do not initiate judicial

proceedings, tenants have no opportunity to raise the PTFA as a defense. Thus, they

must be permitted to use available state law causes of action, such as wrongful eviction,

to enforce the PTFA’s protections. We agree with amici’s statement that “[t]he PTFA

would be rendered virtually meaningless if the foreclosure sale purchaser could ignore
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 22

its protections with impunity, bypass judicial process and evict any tenant without notice

or court process.” Thus, we reject Freddie Mac’s argument that the Miks cannot use

violations of the PTFA to establish their state law claims.

V.

With these principles in mind, we now turn to the Miks’ specific claims.

A.

First, the complaint alleges that the Miks “were wrongfully evicted when

[Freddie Mac] failed to follow due process prior to evicting the [Miks] from their home.”

 “To evict a tenant is to deprive him of the possession of the leased premises or

disturb him in their beneficial enjoyment so as to cause the tenant to abandon the

premises.” Estes v. Gatliff, 163 S.W.2d 273, 276 (Ky. 1942). Kentucky recognizes a

tort claim for wrongful eviction:

“Where a tenant is wrongfully evicted by his landlord or by persons for

whose acts the landlord is responsible, he may maintain therefor an

action of tort against the landlord and may recover as general damages

the actual or rental value of the unexpired term less the rent

reserved, * * * and in addition, therto [sic], compensation for whatever

other loss results * * * which can be ascertained with a reasonable degree

of certainty and can properly be said to have been the natural or usual

result of the breach and reasonably to have been within the

contemplation of both parties as the probable result of a breach.”

Kearns v. Sparks, 296 S.W.2d 731, 732 (Ky. 1956) (quoting 32 Am. Jur., Landlord &

Tenant § 265); see also Batson v. Clark, 980 S.W.2d 566, 576-77 (Ky. Ct. App. 1998)

(acknowledging that a wrongful eviction may also be characterized as a breach of

contract claim). A landlord can be held liable for wrongful eviction even if he did not

engage in an “intentional wrongful act.” Kearns, 296 S.W.2d at 732-33.

The Miks allege that they occupied Meyer’s home pursuant to a valid lease

agreement. They assert that under the PTFA, they had a right to remain in the home

after the foreclosure sale, that Freddie Mac did not allow them to stay for the duration
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 23

13Freddie Mac is a corporation chartered by Congress. 12 U.S.C. § 1452; see also Cnty. of

Oakland v Fed. Hous. Fin. Agency, 716 F.3d 935, 937 (6th Cir. 2013).

of their lease, and that Freddie Mac evicted them without providing 90 days’ notice.

They contend that they were injured as a result of this eviction. The facts alleged by the

Miks are plausible and support a claim for the tort of wrongful eviction. Therefore, we

reverse the district court’s dismissal of the Miks’ complaint with respect to this claim.

B.

The complaint also alleges that Freddie Mac “failed to follow due process prior

to evicting [the Miks] from their home” by “disregard[ing]” the PTFA and by “failing

to obtain a Forcible Detainer and name [the Miks] as parties” to the foreclosure action.

On appeal, the Miks elaborate on their claim. First, they argue that Freddie Mac violated

Kentucky civil procedure by failing to join them in the foreclosure action, either as

named or unknown defendants, and by failing to constructively serve them with process.

Second, they argue that Freddie Mac violated their federal constitutional rights by failing

to provide them with proper notice before evicting them.

To the extent that the Miks seek to bring a claim for violations of Kentucky civil

procedure, they fail to state a claim upon which relief can be granted. The Miks do not

identify—and our research does not reveal—a cause of action for violations of Kentucky

civil procedure. Moreover, Freddie Mac was not a party to the foreclosure action and

cannot be held responsible for any procedural defects in the proceedings.

To the extent that the Miks seek to bring a claim for violations of their due

process rights under the Fifth Amendment to the United States Constitution, they fail to

state a claim upon which relief can be granted because Freddie Mac is not a government

actor who can be held liable for constitutional violations. In Lebron v. National

Railroad Passenger Corp., 513 U.S. 374 (1995), the Supreme Court established a

framework for determining when a government-sponsored corporation13 is a government

actor for constitutional purposes. It held that “where . . . the Government creates a

corporation by special law, for the furtherance of governmental objectives, and retains
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 24

for itself permanent authority to appoint a majority of the directors of that corporation,

the corporation is part of the Government for purposes of the First Amendment.” Id.

at 399. Under the Lebron framework, Freddie Mac is not a government actor who can

be held liable for violations of the Fifth Amendment’s Due Process Clause. See, e.g.,

Am. Bankers Mortg. Corp. v. Fed. Home Loan Mortg. Corp., 75 F.3d 1401, 1406-09 (9th

Cir. 1996) (reasoning that Freddie Mac was created by federal law to serve the public

by increasing the availability of mortgages but that the government does not control the

operation of Freddie Mac through its appointees); see also Syriani v. Freddie Mac

Multiclass Certificates, Series 3365, No. CV 12-3035, 2012 WL 6200251, at *4 (C.D.

Cal. July 10, 2012) (holding that Freddie Mac is not a government actor even though the

Federal Housing Finance Agency (“FHFA”) became Freddie Mac’s conservator in

2008).

Therefore, we affirm the district court’s dismissal of the Miks’ complaint with

respect to this claim.

C.

Finally, the complaint alleges that Freddie Mac’s conduct was “outrageous and

inflicted severe emotional distress upon the [Miks].”

The Kentucky Supreme Court recognized the tort of outrageous infliction of

emotional distress in Craft v. Rice, 671 S.W.2d 247, 251 (1984). The elements of the

claim are:

1. The wrongdoer’s conduct must be intentional or reckless;

2. The conduct must be outrageous and intolerable in that it offends

against the generally accepted standards of decency and morality;

3. There must be a causal connection between the wrongdoer’s conduct

and the emotional distress; and

4. The emotional distress must be severe.

Kroger Co. v. Willgruber, 920 S.W.2d 61, 65 (Ky. 1996). 
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 25

“The standards for this tort are strict.” Mineer v. Williams, 82 F. Supp. 2d 702,

706 (E.D. Ky. 2000). “[A] plaintiff alleges facts sufficient to support a finding of

intentional or reckless infliction of emotional distress by alleging that the defendant has

engaged in conduct which has been . . . ‘so outrageous in character, and so extreme in

degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious,

and utterly intolerable in a civilized community.’” Id. (quoting Restatement (Second)

of Torts § 46 cmt. d (1965)). A claim will not lie where a defendant’s conduct, though

“unfortunate, . . . was not the kind of indecent and immoral behavior that would

engender the ire, rather than the mere disapproval, of a civilized community.” Lynch v.

McFarland, 893 F. Supp. 707, 708 (W.D. Ky. 1995), rev’d on other grounds, 111 F.3d

131 (6th Cir. 1997) (unpublished table decision).

Kentucky courts have found plaintiffs’ proof of outrageous conduct sufficient to

support a claim in cases where the defendants: 

(1) harassed the plaintiff by keeping her under surveillance at work and

home, telling her over the CB radio that he would put her husband in jail

and driving so as to force her vehicle into an opposing lane of traffic;

(2) intentionally failed to warn the plaintiff for a period of five months

that defendant’s building, in which plaintiff was engaged in the removal

of pipes and ducts, contained asbestos; (3) engaged in a plan of attempted

fraud, deceit, slander, and interference with contractual rights, all

carefully orchestrated in an attempt to bring [plaintiff] to his knees;

(4) committed same-sex sexual harassment in the form of frequent

incidents of lewd name calling coupled with multiple unsolicited and

unwanted requests for homosexual sex; (5) was a Catholic priest who

used his relationship [as marriage counselor for] the [plaintiff] husband

and the wife to obtain a sexual affair with the wife; (6) agreed to care for

plaintiff’s long-time companion-animals, two registered Appaloosa

horses, and then immediately sold them for slaughter; and (7) subjected

plaintiff to nearly daily racial indignities for approximately seven years.

Stringer v. Wal-Mart Stores, Inc., 151 S.W.3d 781, 789-90 (Ky. 2004) (internal

quotation marks and citations omitted).

The conduct alleged by the Miks is not sufficiently “extreme” or “atrocious” to

be considered outrageous. Freddie Mac’s alleged conduct was certainly “unfortunate”
No. 12-6051 Mik, et al.v. Fed. Home Loan Mortg. Corp. Page 26

and likely violated the PTFA. Nonetheless, the procedure that Freddie Mac followed to

evict the Miks generally conformed to Kentucky law prior to the passage of the PTFA,

providing support for the conclusion that Freddie Mac’s alleged conduct was not

“atrocious” and, in fact, was considered acceptable prior to recent changes in the law.

Therefore, we affirm the district court’s dismissal of the Miks’ complaint with respect

to this claim.

VI.

For these reasons, we reverse the district court’s dismissal of the Miks’ complaint

with respect to the Miks’ claim for wrongful eviction. We affirm the district court’s

dismissal of the Miks’ claims for denial of due process and outrageous infliction of

emotional distress.