FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

FAMILY HOME AND FINANCE 

CENTER, INC., a California

Corporation doing business as

Park Place Funding; DAISY J.

PHILLIPS, also known as DJ No. 06-56521 Phillips doing business as All Star

Financial; MARK D.C. No. GALLAGHER,  Plaintiffs-Appellants, CV-05-08752-PA

v. OPINION

FEDERAL HOME LOAN MORTGAGE

CORPORATION, a District of

Columbia Corporation,

Defendant-Appellee. 

Appeal from the United States District Court

for the Central District of California

Percy Anderson, District Judge, Presiding

Argued and Submitted

April 7, 2008—Pasadena, California

Filed May 7, 2008

Before: Alfred T. Goodwin, Andrew J. Kleinfeld, and

Jay S. Bybee, Circuit Judges.

Opinion by Judge Goodwin

5029
COUNSEL

Julian B. Bellenghi, Michael J. Collins, Collins & Bellenghi,

Newport Beach, California, for the plaintiffs-appellants. 

Kelli L. Sager, Davis Wright Tremaine, Los Angeles, California; Graciela M. Rodriguez, King & Spalding, Washington,

D.C., for the defendant-appellee. 

OPINION

GOODWIN, Circuit Judge: 

Family Home and Finance Center, Inc., doing business as

Park Place Funding, along with Daisy J. Phillips and Mark

Gallagher (collectively “Park Place”) appeal the summary

judgment in favor of Federal Home Loan Mortgage Corporation (“Freddie Mac”) on claims against Freddie Mac for intentional interference with contract, unfair competition under

California Business & Professions Code § 17200, and defamation. Park Place also assigns error to the district court’s

denial of its Federal Rule of Civil Procedure 56(f) request to

defer ruling on Freddie Mac’s motion for summary judgment.

5032 FAMILY HOME v. FEDERAL HOME LOAN
The district court had jurisdiction pursuant to 12 U.S.C.

§ 1452(f). We have jurisdiction pursuant to 28 U.S.C. § 1291,

and we affirm. 

I. BACKGROUND

Park Place operates a mortgage broker business initiating

loan applications from prospective borrowers and presenting

the applications to lenders for processing and potential funding. National City Mortgage Company (“National City”), who

is not a party to this appeal, processed and funded many of

Park Place’s loan applications and sold the loans to Freddie

Mac. Freddie Mac in turn would sell Participation Certificates, or interests, in pools of loans to capital market investors, or keep the loans for its own investment. 

In December 2004, a capital market investor notified Freddie Mac that some loans included in its mortgage pools were

prepaying at a faster than normal rate, thus reducing the

investor’s anticipated rate of return. Freddie Mac contacted

National City to look into the pools with rapid prepayment

rates, and both National City and Freddie Mac investigated

the prepayment activity. Park Place had been encouraging its

borrowers to apply for initial loans at a high interest rate, and

then to engage in early refinancing, which resulted in a rising

curve of rapid prepayment. These prepayments violated no

law, and may have been in accordance with National City’s

lending policies. 

National City notified Park Place of its intent to terminate

their mortgage broker contract in March 2005, and terminated

the contract soon thereafter. Also in March 2005, Freddie

Mac began to investigate Park Place’s business practices. In

July 2005, Freddie Mac first notified Park Place of its intent

to put Park Place on the Exclusionary List, a list which identifies entities with whom Freddie Mac will no longer transact

business. Freddie Mac had determined that Park Place’s loans

were not of investment quality. 

FAMILY HOME v. FEDERAL HOME LOAN 5033
Park Place appealed to Freddie Mac’s Exclusionary List

Appeal Committee. That committee denied the appeal, and on

January 31, 2006, Park Place was put on the Exclusionary

List. The List is published only to those lenders who sell or

service loans to Freddie Mac, and the effect of exclusion is to

prohibit excluded entities from participating in business transactions with Freddie Mac. Park Place was effectively denied

access to the principal market for the loans it was writing

because it was placed on the List. 

In March 2006, Park Place filed an amended complaint in

the district court seeking damages for intentional interference

with contract, unfair competition, and defamation. Park Place

alleged that Freddie Mac intentionally interfered with its contract to broker mortgage loans to National City. The district

court granted summary judgment in favor of Freddie Mac on

this claim because Park Place had no admissible evidence that

Freddie Mac influenced or caused National City to terminate

the contract with Park Place, or intended that result. 

Park Place also alleged that by placing it on the Exclusionary List, Freddie Mac engaged in unfair competition and defamation. The district court granted summary judgment against

these claims, for reasons that will be discussed below. 

Park Place attributes any deficit in its evidence to the denial

of its request under Fed. R. Civ. P. 56(f) to defer ruling on

summary judgment. Park Place’s request alleged that Freddie

Mac had engaged in dilatory tactics preventing it from obtaining relevant evidence. The district court denied the request

because Park Place failed to articulate the specific facts it

hoped to elicit, and did not show how such facts would defeat

summary judgment. Also, the district court denied the request

because Park Place failed to file timely motions to compel

discovery or extend the discovery cutoff date. 

5034 FAMILY HOME v. FEDERAL HOME LOAN
II. DISCUSSION

A. Intentional Interference with Contract 

[1] Under California law, a claim for intentional interference with contract requires: (1) a valid contract between

plaintiff and a third party; (2) defendant’s knowledge of the

contract; (3) defendant’s intentional acts designed to induce

breach or disruption of the contract; (4) actual breach or disruption; and (5) resulting damage. Pac. Gas & Elec. Co. v.

Bear Stearns & Co., 791 P.2d 587, 589-90 (Cal. 1990). We

agree with the district court that Park Place’s claim fails

because there was no admissible evidence that Freddie Mac

influenced or caused National City to terminate its mortgage

broker contract with Park Place, intentionally or otherwise. 

[2] Park Place contends that the testimony of its president,

Mark Gallagher, proved that Freddie Mac influenced National

City to terminate the contract. Gallagher testified only that a

National City employee had told him that Freddie Mac and

National City would shut Park Place down. That testimony,

which may have been admissible hearsay to show National

City’s state of mind, does not connect Freddie Mac in any

way to National City’s decision. The district court correctly

inferred that, at best, the testimony suggests that National City

may have colluded with Freddie Mac to stop handling Park

Place business. But the statement does not shed any light on

the intentions of Freddie Mac. 

[3] Park Place also contends that circumstantial evidence

precludes summary judgment. The circumstantial evidence

tended to prove that Park Place had been a profitable mortgage broker for National City, which no one denied, and that

National City may have been reluctant to terminate its contract with Park Place. The evidence also showed that Freddie

Mac may have known about Park Place’s rapid refinancing

strategy before National City terminated the contract. Even if,

as Park Place seems to allege, Freddie Mac was negligent in

FAMILY HOME v. FEDERAL HOME LOAN 5035
its tardy discovery that it was dealing in problematic loans,

evidence of negligence is not proof of intentional interference

by Freddie Mac with Park Place’s contract. A necessary element of Park Place’s claim is proof that Freddie Mac’s action

was designed to accomplish interference. This evidence

proved only that Freddie Mac would no longer buy a product

it could not sell to its customers. It proved nothing about

interference with the originators of those products. 

B. Unfair Competition 

[4] Whether a business practice constitutes unfair competition under Cal. Bus. & Prof. Code § 17200 “involves an

examination of [that practice’s] impact on its alleged victim,

balanced against the reasons, justifications and motives of the

alleged wrongdoer.” People v. Duz-Mor Diagnostic Lab.,

Inc., 68 Cal. App. 4th 654, 662 (Ct. App. 1998). The district

court concluded that Freddie Mac’s placement of Park Place

on its Exclusionary List did not constitute unfair competition

because Freddie Mac had a legitimate business reason for

placing Park Place on the List. Park Place failed to offer any

evidence to create a material question of fact about the marketability of its debt. 

Park Place argues that summary judgment was inappropriate because disputes exist as to: (1) whether its repetitive refinancing strategy caused the harm suffered by Freddie Mac;

(2) whether its loans were inappropriate for inclusion in Freddie Mac’s mortgage pools; and (3) whether Freddie Mac put

Park Place on the Exclusionary List in contravention of the

List’s purpose. 

[5] First, there is no dispute that Park Place’s repetitive

refinancing strategy caused Freddie Mac to lose money on

Park Place loans. In fact, Freddie Mac lost approximately $3

million as a result of the rapid prepayment of loans in its

mortgage pools and own investment portfolio. Even if Park

Place is correct in asserting that National City and Freddie

5036 FAMILY HOME v. FEDERAL HOME LOAN
Mac are also to blame for losses suffered by capital market

investors, Park Place remains responsible for the nonmarketable quality of the loans it produced. Second, there is

no dispute that Park Place loans, which prepaid at a faster

than normal rate, were inappropriate for inclusion in Freddie

Mac’s mortgage pools. Loans with rapid prepayment rates

resulted in losses to capital market investors, and Freddie

Mac’s customers did not wish to invest in such loans. In the

debt market, packaged loans are a product offered for sale. If

potential buyers do not want to buy the product, Freddie Mac

is under no obligation to order more of it. Like dog food, if

dogs won’t eat it, the store won’t buy it. 

[6] Third, Park Place contends, conflating its unfair competition claim with its defamation claim, that the Exclusionary

List is a “fraud list,” it did not commit fraud, and thus listing

Park Place is defamatory. Freddie Mac, however, lists, after

notice and an opportunity to appeal, not only entities whose

business practices may be fraudulent, but also entities whose

practices are not necessarily fraudulent, but “may seriously

and adversely affect Freddie Mac’s programs or business

interests.” This evidence was uncontradicted. Furthermore,

the utility of the Exclusionary List to Freddie Mac significantly outweighed the impact upon Park Place — that it was

denied access to a market that didn’t want to buy its loans. 

C. Defamation 

[7] California state law explains that defamation “involves

the intentional publication of a statement of fact that is false,

unprivileged, and has a natural tendency to injure or which

causes special damage.” Smith v. Maldonado, 72 Cal. App.

4th 637, 645 (Ct. App. 1999). The Common Interest Privilege

may protect the publication if, absent malice, “the communicator and the recipient have a common interest and the communication is of a kind reasonably calculated to protect or

further that interest.” Williams v. Taylor, 129 Cal. App. 3d

745, 751 (Ct. App. 1982). 

FAMILY HOME v. FEDERAL HOME LOAN 5037
[8] The district court granted summary judgment in favor

of Freddie Mac because Park Place could not prove malice to

defeat the Common Interest Privilege. We agree that there

was no showing of malice. The evidence shows that Freddie

Mac, after investigation, put Park Place on the Exclusionary

List to prevent its further purchase of loans that were not of

investment quality. There is no evidence that Freddie Mac

acted with hatred or ill will towards Park Place, or with reckless disregard for the publication’s truth. Evidence of any

such motive would have constituted malice. See Noel v. River

Hills Wilsons, Inc., 113 Cal. App. 4th 1363, 1370 (Ct. App.

2003) (defining the malice necessary to defeat the Common

Interest Privilege). 

[9] Park Place argues that the Common Interest Privilege

does not apply, but presents no evidence to show why it

should not apply here. Freddie Mac publishes the Exclusionary List only to its lenders, with whom it shares a business

relationship and common interest in dealing with investment

quality loans. Moreover, Park Place offers no cogent reason

why truth is not a complete defense. Park Place simply

repeats its assertion that the publication by Freddie Mac was

false because the Exclusionary List is a “fraud list,” and it did

not commit any fraud. The evidence in the record as noted,

however, proves that the List was created with a legitimate

business purpose to exclude those who may have committed

fraud or who deal with loans not of investment quality. Thus,

placement of Park Place on the Exclusionary List for reasons

other than fraud was not a false statement of fact by Freddie

Mac. 

D. Fed. R. Civ. P. 56(f) Request

[10] Under Fed. R. Civ. P. 56(f), a trial court may order a

continuance on a motion for summary judgment if the party

requesting a continuance submits affidavits showing that,

without Rule 56 assistance, it cannot present facts necessary

to justify its claims. The requesting party must show: (1) it

5038 FAMILY HOME v. FEDERAL HOME LOAN
has set forth in affidavit form the specific facts it hopes to

elicit from further discovery; (2) the facts sought exist; and

(3) the sought-after facts are essential to oppose summary

judgment. Cal. on behalf of Cal. Dep’t of Toxic Substances

Control v. Campbell, 138 F.3d 772, 779 (9th Cir. 1998). Failure to comply with these requirements “is a proper ground for

denying discovery and proceeding to summary judgment.” Id.

(quoting Brae Transp., Inc. v. Coopers & Lybrand, 790 F.2d

1439, 1443 (9th Cir. 1986)). 

[11] Park Place sought evidence of the criteria used to place

entities on the Exclusionary List, as well as the entities placed

on the Exclusionary List and the reasons for exclusion. The

district court properly concluded that the evidence sought is

only “generically relevant,” and that Park Place failed to show

how the evidence is “essential” to oppose summary judgment.

Because Park Place did not satisfy the requirements of Fed.

R. Civ. P. 56(f), we cannot say that the district court abused

its discretion in denying Park Place’s request to defer ruling

on summary judgment. 

Park Place also contends that the district court abused its

discretion when it concluded that, even if Park Place had satisfied the Rule 56(f) requirements, it was not entitled to additional discovery because it failed to file timely motions to

compel and extend discovery. See Mackey v. Pioneer Nat’l

Bank, 867 F.2d 520, 524 (9th Cir. 1989) (explaining that a

moving party is not entitled to additional discovery under Fed.

R. Civ. P. 56(f) “if it fails diligently to pursue discovery

before summary judgment”). We need not reach Park Place’s

alternative assignment of error because we agree that Park

Place failed to satisfy the requirements of Fed. R. Civ. P.

56(f). 

AFFIRMED. 

FAMILY HOME v. FEDERAL HOME LOAN 5039