Petition for Writ of Certiorari — Neris Montilla, et al., Petitioners v. Federal National Mortgage Association, et al.

APPENDIX

i

APPENDIX

TABLE OF CONTENTS

Appendix A Opinion, Errata Sheet and Judgment

in the United States Court of Appeals

for the First Circuit

(June 8, 2021) . . . . . . . . . . . . . . . . App. 1

Appendix B Memorandum and Order in the

United States District Court for the

District of Rhode Island

(May 26, 2020). . . . . . . . . . . . . . . App. 25

Appendix C Judgment in the United States

District Court for the District of Rhode

Island

(June 9, 2020) . . . . . . . . . . . . . . . App. 35

Appendix D Order Denying Rehearing in the

United States Court of Appeals for the

First Circuit

(August 9, 2021) . . . . . . . . . . . . . App. 37

Appendix E Mandate in the United States Court of

Appeals for the First Circuit

(June 29, 2021) . . . . . . . . . . . . . . App. 39

App. 1

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 20-1673

[Filed June 8, 2021]

____________________________________________

NERIS MONTILLA, on behalf of herself

)

and all others so similarly situated;

)

MICHAEL KYRIAKAKIS, on behalf of himself )

and all others so similarly situated,

)

Plaintiffs, Appellants,

)

)

ROSELIA MONTUFAR, on behalf of herself

)

and all others so similarly situated;

)

RUBEN VELASQUEZ, on behalf of himself

)

and all others so similarly situated,

)

Plaintiffs,

)

)

v.

)

)

FEDERAL NATIONAL MORTGAGE

)

ASSOCIATION; FEDERAL HOUSING

)

FINANCE AGENCY,

)

Defendants, Appellees,

)

)

MR. COOPER, f/k/a Nationstar

)

Mortgage, LLC; SETERUS, INC.;

)

C.I.T. BANK, N.A.,

)

Defendants.

)

____________________________________________ )

App. 2

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF RHODE ISLAND

[Hon. William E. Smith, U.S. District Judge]

Before

Lynch and Kayatta, Circuit Judges,

and Woodcock,* District Judge.

Todd S. Dion for appellants.

Michael A.F. Johnson, with whom Dirk C. Phillips

and Arnold & Porter Kaye Scholer LLP were on brief,

for appellee Federal Housing Finance Authority.

Noah A. Levine, with whom Wilmer Cutler

Pickering Hale & Dorr LLP, Samuel C. Bodurtha, and

Hinshaw & Culbertson LLP were on brief, for appellees

Federal Housing Finance Authority and Federal

National Mortgage Association.

Steven Fischbach for amici curiae Direct Action for

Rights and Equality, National Center for Law and

Economic Justice, National Housing Law Project, and

Virginia Poverty Law Center.

June 8, 2021

LYNCH, Circuit Judge. Plaintiffs-appellants

obtained loans secured by mortgages on their real

property in Rhode Island. These agreements gave their

lenders the right to nonjudicially foreclose on the

mortgages. The loans and mortgages were later sold to

the Federal National Mortgage Association (“Fannie

Mae”) while the Federal Housing Finance Agency

(“FHFA”), a federal agency, was acting as Fannie Mae’s

*

Of the District of Maine, sitting by designation

App. 3

conservator. Appellants defaulted on their loans, and

Fannie Mae, consistent with Rhode Island law,

conducted nonjudicial foreclosure sales of the

mortgaged properties.

Appellants brought suit in federal court alleging

that Fannie Mae and FHFA are government actors and

that the nonjudicial foreclosure sales violated their

Fifth Amendment procedural due process rights. They

appeal from the district court’s holding that Fannie

Mae and FHFA are not subject to their Fifth

Amendment claims and its order dismissing those

claims. See Montilla v. Fed. Hous. Fin. Agency, No.

18-cv-00632, slip op. at 9-11 (D.R.I. May 26, 2020), ECF

No. 40. We affirm.

I. Facts

A. Fannie Mae, Freddie Mac, and FHFA

Fannie Mae and the Federal Home Loan Mortgage

Corporation (“Freddie Mac”) (collectively, the

“government-sponsored enterprises” or “GSEs”) are

“private, publicly traded corporations . . . created by

federal charter to support the development of the

secondary mortgage market.” Town of Johnston v. Fed.

Hous. Fin. Agency, 765 F.3d 80, 82 (1st Cir. 2014); see

12 U.S.C. § 1716b; id. § 1452. Among other activities,

the GSEs buy and sell residential mortgages. See 12

U.S.C. § 1719; id. § 1454.1

1

Appellants’ claims are solely against Fannie Mae. However,

because the issues presented in this case overlap significantly with

those in Sisti v. Fed. Hous. Fin. Agency, 324 F. Supp. 3d 273

(D.R.I. 2018), which involved claims against Freddie Mac in

addition to claims against Fannie Mae, we discuss both entities

App. 4

In July 2008, as the housing market crashed and

the value of the GSEs’ loan portfolios declined,

Congress established FHFA through the Housing and

Economic Recovery Act of 2008 (“HERA”). See 12

U.S.C. § 4511. HERA gave the director of FHFA the

discretionary authority to appoint FHFA as

conservator or receiver for Fannie Mae or Freddie Mac

“for the purpose of reorganizing, rehabilitating, or

winding up the[ir] affairs.” Id. § 4617(a)(2).

In September 2008, FHFA’s director exercised this

authority and placed both entities into conservatorship.

As conservator, FHFA “immediately succeed[ed] to” the

“rights, titles, powers, and privileges” of Fannie Mae,

Freddie Mac, and the entities’ shareholders and boards

of directors. Id. § 4617(b)(2)(A).

HERA also amended the GSEs’ charters to allow the

Secretary of the Treasury to “purchase any obligations

and other securities issued by the corporation[s].” Pub.

L. No. 110–289, 122 Stat. 2654, 2683 (codified at 12

U.S.C. § 1719(g)(1)(A)); id. at 2684-85 (codified at 12

U.S.C. § 1455(l)(1)(A)). Under this authority, Treasury

entered into agreements to infuse capital into Fannie

Mae and Freddie Mac. In exchange, it received $1

billion in senior preferred stock in both entities and

warrants for the purchase of common stock that, if

exercised, would give Treasury 79.9% of the entities’

common stock. Treasury has never exercised these

together. See Faiella v. Fed. Nat’l Mortg. Ass’n, 928 F.3d 141, 149

(1st Cir. 2019) (describing Freddie Mac and Fannie Mae as

“siblings under the skin”). We heard oral argument in this appeal

and in Sisti on the same day.

App. 5

warrants and owns no common stock in either Fannie

Mae or Freddie Mac.

B. Foreclosures on Appellants’ Properties

In 2011, acting as the GSEs’ conservator, FHFA

established the Servicing Alignment Initiative (“SAI”)

to improve loan servicer performance and to limit the

GSEs’ financial losses. Plaintiffs allege that the SAI

“directed [the GSEs’ loan] servicers to use non-judicial

foreclosure procedures when foreclosing on residential

properties in Rhode Island.”

Rhode Island permits nonjudicial foreclosures

through a statutory power of sale when that power is

specified in the mortgage contract. See Bucci v.

Lehman Bros. Bank, FSB, 68 A.3d 1069, 1084-85 (R.I.

2013); 34 R.I. Gen. Laws § 34-11-22; id. § 34-27-4. The

GSEs’ standard mortgage agreement, which was used

by the plaintiffs in this case, explicitly gives the lender

a statutory power of sale.

Appellant Neris Montilla executed a mortgage in

July 2008 on a property in Providence. This mortgage

was assigned to Fannie Mae in April 2015 and serviced

by C.I.T. Bank, N.A. (“CIT”). On September 10, 2016,

CIT began nonjudicial foreclosure proceedings under

Rhode Island law against Montilla’s property. The

mortgage was foreclosed on October 14, 2016.

Similarly, appellant Michael Kyriakakis’s mortgage on

his property was assigned to Fannie Mae in May 2016.

The loan servicer conducted a nonjudicial foreclosure

sale in December 2017 and recorded a foreclosure deed

in March 2018.

App. 6

II. Procedural History

Montilla filed a putative class action against Fannie

Mae, FHFA, and CIT on November 19, 2018 in federal

district court in Rhode Island.2 The complaint was

amended in December 2018 to include Kyriakakis’s

claims. It alleged that FHFA and Fannie Mae deprived

Montilla, Kyriakakis, and others similarly situated of

property without “adequate notice and opportunity for

meaningful hearings” in violation of the Fifth

Amendment. The plaintiffs sought “declaratory relief,

injunctive relief, actual, monetary, punitive and

exemplary damages, restitution, an accounting,

attorney’s fees and costs, and all other relief as

provided by law.”

FHFA and Fannie Mae moved to dismiss the case in

February 2019. FHFA argued that it and Fannie Mae

are not government actors for the purposes of the

plaintiffs’ Fifth Amendment claims. Fannie Mae joined

FHFA’s arguments and alternatively argued that, even

if it and FHFA were subject to the Fifth Amendment,

the plaintiffs’ claims failed because there was no due

process violation.

In May 2020, the district court granted FHFA and

Fannie Mae’s motions to dismiss. See Montilla, slip op.

at 1. It held that because FHFA stepped into Fannie

Mae’s shoes as its conservator and its ability to

foreclose was a “contractual right inherited from

Fannie Mae by virtue of its conservatorship,” FHFA

was not acting as the government when it foreclosed on

2

Other plaintiffs and defendants were also named in the suit.

They were later dismissed either voluntarily or by stipulation.

App. 7

the plaintiffs’ mortgages and was not subject to the

plaintiffs’ Fifth Amendment claims. Montilla, slip op.

at 9-10. In so holding, the court disagreed with an

earlier Rhode Island district court’s contrary holding in

Sisti v. Fed. Hous. Fin. Agency, 324 F. Supp. 3d 273,

284 (D.R.I. 2018).

The court, applying Lebron v. Nat’l R.R. Passenger

Corp., 513 U.S. 374 (1995), also held that FHFA’s

conservatorship over Fannie Mae did not make Fannie

Mae a government actor for the purposes of the

plaintiffs’ constitutional claims because the

government does not exercise sufficient control over

Fannie Mae. See Montilla, slip op. at 6-9; see also

Lebron, 513 U.S. at 398-99 (holding that a corporation

is subject to constitutional claims if, among other

things, the government “retains for itself permanent

authority to appoint a majority of the directors of [the]

corporation”). The court again disagreed with Sisti,

which had held that because the “decision to end

[FHFA’s] conservatorship is left entirely to the

discretion of the government,” its control over the GSEs

is “effectively permanent.” Sisti, 324 F. Supp. 3d at

280-81.

Montilla and Kyriakakis timely appealed. FHFA,

Fannie Mae, and Freddie Mac timely appealed the

decision in Sisti which had reached the contrary

result.3 We heard oral argument in these appeals on

May 4, 2021.

3

The Sisti opinion addressed two separate cases: one brought by

Judith Sisti against Freddie Mac and FHFA and another brought

by Cynthia Boss against Fannie Mae and FHFA. Sisti and Boss

were consolidated for oral argument.

App. 8

III. Analysis

We review an order granting a motion to dismiss de

novo. See Sterling Suffolk Racecourse, LLC v. Wynn

Resorts, Ltd., 990 F.3d 31, 35 (1st Cir. 2021). To avoid

dismissal, a plaintiff’s complaint must include factual

allegations sufficient to state a plausible claim to relief.

See Abdisamad v. City of Lewiston, 960 F.3d 56, 59 (1st

Cir. 2020).

A. FHFA, as the GSEs’ Conservator, Is Not a

Government Actor Subject to Appellants’ Due

Process Claims

Adopting the district court’s reasoning in Sisti, 324

F. Supp. 3d at 281-84, appellants argue that because

FHFA is a government agency, any action it takes as

conservator, like directing the GSEs to nonjudicially

foreclose on appellants’ mortgages, is government

action subjecting it to appellants’ constitutional claims.

That analysis is simply wrong and contrary to law. We

hold that, in its role as the GSE’s conservator, FHFA is

not a government actor because it has “stepped into the

shoes” of the private GSEs.

First, it is undisputed that FHFA is a federal

agency that sometimes acts as the government. 12

U.S.C. § 4511(a). But this fact is not dispositive. That

a federal agency exercising a portion of its statutory

powers in one role is a government actor does not as a

matter of law mean that it is a government actor for all

purposes or in all exercises of its statutory powers. See

Faiella v. Fed. Nat’l Mortg. Ass’n, 928 F.3d 141, 148

(1st Cir. 2019). We must determine if FHFA acted as

the government in its role as the GSEs’ conservator.

App. 9

Under HERA’s “succession clause,” when FHFA

became the GSEs’ conservator, it succeeded to “all

rights, titles, powers, and privileges of the regulated

entity, and of any stockholder, officer, or director of

such regulated entity with respect to the regulated

entity and the assets of the regulated entity.” 12 U.S.C.

§ 4617(b)(2)(A). One of these rights was the GSEs’

private contractual right to nonjudicially foreclose on

appellants’ mortgages, which FHFA instructed the

GSEs’ loan servicers to exercise. Appellants do not

allege that FHFA relied on any power other than the

GSEs’ contractual rights in carrying out the

nonjudicial foreclosures.

The Supreme Court has interpreted a succession

clause in the Financial Institutions Reform, Recovery,

and Enforcement Act (“FIRREA”) with nearly identical

language4 to the one in HERA to mean that when a

government agency acts as receiver for an entity, it

“‘steps into the shoes’ of the failed [institution]” and

exercises that entity’s rights. O’Melveny & Myers v.

FDIC, 512 U.S. 79, 86 (1994). Other circuits have

interpreted HERA to mean that when acting as the

GSEs’ conservator and exercising their rights, FHFA

steps into the GSEs’ shoes. See Herron v. Fed. Nat’l

Mortg. Ass’n, 861 F.3d 160, 169 (D.C. Cir. 2017)

4

The language at issue in O’Melveny said that if the FDIC

becomes a conservator or receiver of an insured depository

institution, it succeeds to “all rights, titles, powers, and privileges

of the insured depository institution, and of any stockholder,

member, accountholder, depositor, officer, or director of such

institution with respect to the institution and the assets of the

institution.” 12 U.S.C. § 1821(d)(2)(A)(i); see also Perry Cap. LLC

v. Mnuchin, 864 F.3d 591, 622 (D.C. Cir. 2017) (describing HERA’s

language as “nearly identical” to FIRREA’s).

App. 10

(holding that when FHFA “step[ped] into Fannie Mae’s

private shoes,” it became a private actor); Meridian

Invs., Inc. v. Fed’l Home Loan Mortg. Corp., 855 F.3d

573, 579 (4th Cir. 2017) (“[T]hough FHFA is a federal

agency, as conservator it steps into Freddie Mac’s

shoes, shedding its government character and also

becoming a private party.”); see also U.S. ex rel. Adams

v. Aurora Loan Servs., Inc., 813 F.3d 1259, 1261 (9th

Cir. 2016) (holding that FHFA’s conservatorship

“places [it] in the shoes of Fannie Mae and Freddie

Mac, and gives the FHFA their rights and duties”). We

agree that, after stepping into the GSEs’ shoes under

HERA and exercising their private contractual rights

to nonjudicially foreclose on appellants’ properties,

FHFA did not act as the government.

Appellants, again relying on Sisti, argue that

O’Melveny is inapplicable here because it involved a

government agency acting as receiver, not as a

conservator. See Sisti, 324 F. Supp. 3d at 282-83. We

disagree. O’Melveny was decided based on what the

statute’s “language appears to indicate.” 512 U.S. at 86.

Section 4617(b)(2)(A) says that FHFA succeeds to the

GSE’s rights when it acts “as conservator or receiver”

(emphasis added). Similarly, the statute at issue in

O’Melveny says that the FDIC succeeds to the rights of

failed depository institutions when it acts “as

conservator or receiver.” 12 U.S.C. § 1821(d)(2)(A)

(emphasis added). There is no reason O’Melveny’s

textual logic does not apply to both conservators and

receivers.5

5

Assuming dubitante there was some basis for contention,

O’Melveny was decided on § 1821(d)(2)(A)(i)’s text and not, as

appellants argue, on the basis of a receiver’s fiduciary duties.

App. 11

Appellants’ final argument is that another Supreme

Court case, FDIC v. Meyer, 510 U.S. 471 (1994),

controls this case and requires a finding in their favor.

Neither contention is accurate. Meyer concerned

whether a plaintiff could bring a Bivens claim against

the Federal Savings and Loan Insurance Corporation

(“FSLIC”), a federal agency acting as receiver for a

failed bank.6See 510 U.S. at 473-75; see generally

Bivens v. Six Unknown Named Agents of Fed. Bureau

of Narcotics, 403 U.S. 388 (1971). The Court in Meyer

held: (1) that the “sue-and-be-sued” clause in FSLIC’s

organic statute waived FSLIC’s sovereign immunity;

and (2) that a plaintiff cannot bring a Bivens claim

against a federal agency like FSLIC. Meyer, 510 U.S.

at 483-84. Focusing on the “sue-and-be-sued” holding,

appellants’ argument proceeds as follows: (1) FSLIC

was a federal agency acting as receiver; (2) the plaintiff

brought a constitutional claim against FSLIC for

actions it took as receiver; (3) a federal court could not

hear the case if FSLIC had sovereign immunity; (4)

only government actors can have (and waive) sovereign

immunity; (5) Meyer held that FSLIC waived sovereign

immunity through its “sue-and-be-sued” clause; so

(6) by deciding the sovereign immunity issue, the Court

must have thought that FSLIC is a government actor

potentially liable for a constitutional tort when it acts

as receiver. Applying that logic here, they say that

FHFA, as a government agency, must be acting as the

There is no basis in O’Melveny to conclude that the fiduciary

duties of the FDIC as receiver affected its holding.

6

In Meyer, the FDIC was substituted for FSLIC and made

arguments on FSLIC’s behalf after FIRREA abolished FSLIC. Id.

at 474.

App. 12

government when it acts as the GSEs’ conservators.

See Sisti, 324 F. Supp. 3d at 281-82.

Appellants misread Meyer. Meyer decided a

threshold jurisdictional question.7See 510 U.S. at 475

(explaining that sovereign immunity is “jurisdictional

in nature”). It held that FSLIC, through its

“sue-and-be-sued” clause, waived any right it may have

had to argue that a federal court does not have the

power to address the merits of the plaintiff’s claim. Id.

at 479; see also Steel Co. v. Citizens for a Better Env’t,

523 U.S. 83, 89 (1998) (distinguishing between “the

absence of a valid . . . cause of action” and

“subject-matter jurisdiction, i.e., the courts’ statutory

or constitutional power to adjudicate the case”). Meyer

never addressed the merits of the plaintiff’s claim,

including the argument that his claim must fail

because FSLIC was not acting as the government. See

id. at 486 n.12 (“[W]e do not reach the merits of

[Meyer’s] due process claim.”). Indeed, FDIC never

made such an argument to the Supreme Court and the

Court had no reason to reach it.

Properly viewing Meyer’s “sue-and-be-sue” holding

as jurisdictional, Meyer did not decide that a federal

agency is a government actor whenever it acts as a

receiver or conservator. Such a categorical reading of

7

Meyer does raise the issue of whether we have subject matter

jurisdiction to decide appellants’ claims against FHFA. HERA

contains no “sue-and-be-sued” clause applicable to FHFA. But

because FHFA has “stepped into the shoes” of the GSEs when

acting as their conservator, it has also succeeded to their

“sue-and-be-sued” clauses, see 12 U.S.C. § 1723a(a) (Fannie Mae);

id. § 1452(c)(7) (Freddie Mac), and we have jurisdiction over claims

against FHFA based on its actions as conservator.

App. 13

Meyer is inconsistent with post-Meyer Supreme Court

cases, including O’Melveny, decided only four months

later, making clear that an agency acting as receiver is

not necessarily the government for all purposes. See

O’Melveny, 512 U.S. at 85 (“[T]he FDIC is not the

United States, and even if it were we would be begging

the question to assume that it was asserting its own

rights rather than, as receiver, the rights of [the failed

bank].”); Atherton v. FDIC, 519 U.S. 213, 225 (1997)

(“[A]s in O’Melveny, the FDIC is acting only as a

receiver of a failed institution; it is not pursuing the

interest of the Federal Government . . . .” (emphasis

added)). It is also inconsistent with post-Meyer case

law from other circuits holding that an agency is not

necessarily the government when it acts as a

conservator or receiver. See Collins v. Mnuchin, 938

F.3d 553, 590 (5th Cir. 2019 (en banc), cert. granted,

141 S. Ct. 193 (2020) (“Whether an agency exercises

government power as conservator or receiver ‘depends

on the context of the claim.’” (quoting Slattery v.

United States, 583 F.3d 800, 827 (Fed. Cir. 2009),

vacated then reinstated as modified on reh’g en banc,

635 F.3d 1298 (Fed. Cir. 2011)); United States v.

Heffner, 85 F.3d 435, 439 (9th Cir. 1996) (“The

[federally-owned Resolution Trust Corporation] in its

corporate character as receiver is not the federal

sovereign . . . .”); United States v. Ely, 142 F.3d 1113,

1121 (9th Cir. 1997) (“Meyer did not purport to

determine the status of the FDIC when . . . taking over

a failed bank as receiver . . . .”). Here, FHFA is not

acting as the government in its capacity as the GSEs’

conservator. Appellants’ constitutional claims against

it fail for that reason.

App. 14

B. Fannie Mae and Freddie Mac Are Not Government

Actors Subject to Appellants’ Due Process Claims

Appellants next argue that Fannie Mae and Freddie

Mac are themselves government actors. In Lebron, the

Supreme Court articulated a three-part test to

determine when a private corporation is a government

actor for purposes of certain constitutional claims

against it. It held that if “[1] the Government creates a

corporation by special law, [2] for the furtherance of

governmental objectives, and [3] retains for itself

permanent authority to appoint a majority of the

directors of that corporation,” then the corporation’s

actions “are subject to the constraints of the

Constitution.” Lebron, 513 U.S. at 376, 399. The

parties do not dispute that the first two prongs of the

Lebron test are satisfied. Appellants also do not

dispute that, pre-conservatorship, the GSEs were

private actors not subject to their claims. See Am.

Bankers Mortg. Corp. v. Fed’l Home Loan Mortg. Corp.,

75 F.3d 1401, 1406 (9th Cir. 1996) (applying Lebron

before FHFA’s conservatorship began to hold that

“Freddie Mac is not a government agency subject to the

Fifth Amendment’s Due Process Clause”). The issue

before us is whether, through FHFA’s conservatorship

over the GSEs, the government has “retain[ed] for itself

permanent authority” over Fannie Mae and Freddie

Mac. Lebron, 513 U.S. at 399.

We hold that FHFA’s temporary conservatorship

over the GSEs does not constitute permanent

authority. FHFA controls the GSEs for the limited

purpose of “reorganizing, rehabilitating, or winding up

the[ir] affairs.” 12 U.S.C. § 4617(a)(2); see also id.

App. 15

§ 4617(b)(2)(D)(i) (authorizing FHFA, as conservator, to

take actions “necessary to put the regulated entity in a

sound and solvent condition”). The statutory language

confirms, as other courts have held, that a

conservatorship has “an inherently temporary

purpose.” Herron, 861 F.3d at 169 (quoting Rubin v.

Fed. Nat’l Mortg. Ass’n, 587 F. App’x 273, 275 (6th Cir.

2014)); see also Kerpen v. Metro. Wash. Airports Auth.,

907 F.3d 152, 158 (4th Cir. 2018) (“Temporary control -as when the federal government steps in as a

conservator -- is not sufficient [under Lebron].”);

Sprauve v. W. Indian Co. Ltd., 799 F.3d 226, 233 n.8

(3d Cir. 2015) (noting that control is temporary “where

the Government is acting as a conservator”). Given the

conservatorship’s limited purpose, Congress is not

required to assign a definite endpoint to FHFA’s

conservatorship to make the government’s control

temporary. See Herron, 861 F.3d at 169. Similarly,

appellants’ argument that the conservatorship has

“continued to exist well past its intended purpose” fails.

The housing and mortgage financial markets are highly

complex, as are the various indicators of their financial

health, so the fact that FHFA has maintained the

conservatorship for almost thirteen years does not

mean that the government’s control is permanent.

Appellants have failed to plead a plausible claim,

particularly in light of indications that the government

is working to eventually bring the conservatorship to

an end.8

8

In their briefing to us, appellants called our attention to news

articles discussing amendments to certain agreements governing

FHFA’s conservatorship. See Kelsey Ramirez, FHFA: GSEs Can’t

Exit Conservatorship on Retained Earnings, HousingWire

App. 16

The fact that Treasury owns senior preferred stock

in the GSEs and warrants that, if exercised, would give

it 79.9% of the GSEs’ common stock does not change

the analysis. Lebron says that “a private corporation

whose stock comes into federal ownership” can still be

“in the temporary control of the Government.” 513 U.S.

at 398. Here, neither HERA nor Treasury’s agreements

with the GSEs require the government to permanently

retain its interest in them.

Appellants’ main argument is that FHFA’s

conservatorship over the GSEs is temporary in name

(January 15, 2021), https://www.housingwire.com/articles/fhfagses-cant-exit-conservatorship-on-retained-earnings/; Joe Light,

Trump Clears Fannie-Freddie Capital Boost, Leaves Fates to

Biden, Bloomberg (January 14, 2021), https://www.bloomberg.com

/news/articles/2021-01-14/trump-clears-fannie- freddie-capital-boost

-leaves-fates-to-biden. We take judicial notice of the fact that, on

January 14, 2021, Treasury and FHFA amended Treasury’s

Preferred Stock Purchase Agreements with Fannie Mae and

Freddie Mac. The amendments added language saying that

“Treasury . . . [has] begun work to establish a timeline and process

to terminate the conservatorship and raise capital” and that

“Treasury . . . endeavor[s] to transmit a proposal that details this

work to both Houses of Congress on or prior to September 30,

2021.” See Letter Agreement between Treasury and Fannie Mae

(Jan. 14, 2021), https://home.treasury.gov/system/files/136/Executed

-Letter-Agreement-for-Fannie-Mae.pdf; Letter Agreement between

Treasury and Freddie Mac (Jan. 14, 2021), https://home.treasury.

gov/system/files/136/Executed-Letter-Agreement-for-Freddie%20

Mac.pdf; see also Fed. R. Evid. 201 (permitting a court to take

judicial notice of an adjudicative fact sua sponte “at any stage of

the proceeding”); Butler v. Balolia, 736 F.3d 609, 611 (1st Cir.

2013) (stating that, when reviewing an order granting a motion to

dismiss for failure to state a claim, this court may consider “facts

susceptible to judicial notice” (quoting Haley v. City of Bos., 657

F.3d 39, 46 (1st Cir. 2011))).

App. 17

but permanent in practice. They say that we should

focus on the practical reality of the government’s

control over the GSEs because the “permanent

authority” prong of the Lebron test was qualified by the

Supreme Court’s decision in Department of

Transportation v. Association of American Railroads,

575 U.S. 43 (2015).

Both Lebron and American Railroads involved

whether the National Railroad Passenger Corporation

(commonly known as Amtrak) is a government entity

for certain purposes. Lebron held that Amtrak “is part

of the Government for purposes of the First

Amendment.” 513 U.S. at 399. American Railroads held

that Amtrak “acted as a governmental entity for

purposes of the Constitution’s separation of powers

provisions.” 575 U.S. at 54. At issue in American

Railroads was whether Congress’s directive that

Amtrak “is not a department, agency, or

instrumentality of the United States Government,” 49

U.S.C. § 24301(a)(3), precluded Congress from giving it

joint authority with the Federal Railroad

Administration to issue “metrics and standards”

governing passenger railroad services. American

Railroads, 575 U.S. at 45. The Court found that

Lebron provided “necessary instruction” on whether

Congress’s “disclaimer of Amtrak’s governmental

status” meant that it could not be a federal actor. Id. at

54-55. It held that the “practical reality of federal

control and supervision prevail[ed]” over Congress’s

directive. Id. at 55.

Appellants read American Railroads’s “practical

reality” language to say that the degree of control the

App. 18

government actually exercises over an entity informs

whether its control is permanent. They argue that

because FHFA has all the powers of the GSEs’ boards

of directors, see 12 U.S.C. § 4617(b)(2)(A), and has

discretion to determine when the conservatorship will

end, 12 U.S.C. § 4617(a)(2), it permanently controls the

GSEs. See also Sisti, 324 F. Supp. 3d at 280 (“The

practical reality here is that the government effectively

controls Fannie Mae and Freddie Mac permanently.”)

This argument fails. American Railroads did not

alter Lebron’s requirement that the government retain

“permanent authority” over an entity for it to be

governmental. American Railroads says nothing about

Lebron’s “permanent authority” requirement, and the

Supreme Court “does not normally overturn, or so

dramatically limit, earlier authority sub silentio.”

Shalala v. Ill. Council on Long Term Care, Inc., 529

U.S. 1, 18 (2000). Indeed, American Railroads had no

reason to address whether the federal government

retained “permanent authority” over Amtrak. The

Court had already held in Lebron that it did. See 513

U.S. at 399; Herron, 861 F.3d at 168 (“Because the

government’s permanent control over Amtrak was

already established in Lebron, the Court had no

occasion to revisit that question in [American

Railroads].”).

Appellants next argue, again relying on Sisti, that

12 U.S.C. § 4617(a)(2), which authorized FHFA’s

conservatorship “for the purpose of reorganizing,

rehabilitating, or winding up the affairs [of the GSEs],”

should be ignored. They say that, like the statute at

issue in American Railroads, it is a disclaimer of

App. 19

governmental status entitled to no deference. Sisti, 324

F. Supp. 3d at 280. We disagree that Section 4617(a)(2)

can be properly read as a disclaimer or that its

statutory command can be bypassed. Section 4617(a)(2)

confirms that FHFA’s conservatorship has a temporary

purpose. It is directly relevant to whether FHFA

exercises “permanent authority” over the GSEs.

Finally, amici for appellants argue9 that Lebron’s

three-part test is not the only relevant precedent. They

say that whether FHFA’s conservatorship over the

GSEs constitutes federal government action must be

analyzed under a series of other state action theories,

specifically the “coercive power” theory, the “joint

participation” theory, the “entwinement” theory, and

the “government control” theory. See Brentwood Acad.

v. Tenn. Secondary Sch. Athletic Ass’n, 531 U.S. 288,

296-97 (2001) (discussing these theories). All of these

theories attempt to determine whether “there is such

a ‘close nexus between the State and the challenged

action’ that seemingly private behavior ‘may be fairly

treated as that of the State itself.’” Id. at 295 (quoting

Jackson v. Metro. Edison Co., 419 U.S. 345, 351

(1974)); id. (holding that “state action may be found if,

though only if” such a “close nexus” exists). As the

Supreme Court has stated, “a host of facts . . . bear on

the fairness of” attributing private action to the

government. Id. at 296. Here, because we have held

9

Appellants never made this argument, and we ordinarily do not

consider arguments not made by the parties. Molina v. INS, 981

F.2d 14, 20 (1st Cir. 1992) (“Normally, we would not consider . . .

separate issues [raised by amici] . . . not raised by the parties in

the case.”). However, Boss and Sisti made similar arguments in

their briefs to us.

App. 20

that FHFA10 acted privately and not as the government

in its role as the GSEs’ conservator, we do not need to

address whether FHFA’s private actions on behalf of

the private GSEs constituted state action.

IV. Conclusion

Affirmed.

10

FHFA is the only relevant government entity, as the appellants

do not argue that Treasury directed or was involved in any of the

alleged constitutional violations at issue in this appeal. See Blum

v. Yaretsky, 457 U.S. 991, 1004 (1982) (stating that the “close

nexus” requirement ensures that “constitutional standards are

invoked only when it can be said that the State is responsible for

the specific conduct of which the plaintiff complains” (second

emphasis added)); Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40,

51 (1999).

App. 21

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 20-1673

____________________________________________

NERIS MONTILLA, on behalf of herself

)

and all others so similarly situated;

)

MICHAEL KYRIAKAKIS, on behalf of himself )

and all others so similarly situated,

)

Plaintiffs, Appellants,

)

)

ROSELIA MONTUFAR, on behalf of herself

)

and all others so similarly situated;

)

RUBEN VELASQUEZ, on behalf of himself

)

and all others so similarly situated,

)

Plaintiffs,

)

)

v.

)

)

FEDERAL NATIONAL MORTGAGE

)

ASSOCIATION; FEDERAL HOUSING

)

FINANCE AGENCY,

)

Defendants, Appellees,

)

)

MR. COOPER, f/k/a Nationstar

)

Mortgage, LLC; SETERUS, INC.;

)

C.I.T. BANK, N.A.,

)

Defendants.

)

____________________________________________ )

ERRATA SHEET

The opinion of this Court, issued on June 8, 2021, is

amended as follows:

App. 22

On page 14, line 10, replace “sue-and-be-sue” with

“sue-and-be-sued”.

App. 23

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 20-1673

[Filed June 8, 2021]

____________________________________________

NERIS MONTILLA, on behalf of herself

)

and all others so similarly situated;

)

MICHAEL KYRIAKAKIS, on behalf of himself )

and all others so similarly situated,

)

Plaintiffs, Appellants,

)

)

ROSELIA MONTUFAR, on behalf of herself

)

and all others so similarly situated;

)

RUBEN VELASQUEZ, on behalf of himself

)

and all others so similarly situated,

)

Plaintiffs,

)

)

v.

)

)

FEDERAL NATIONAL MORTGAGE

)

ASSOCIATION; FEDERAL HOUSING

)

FINANCE AGENCY,

)

Defendants, Appellees,

)

)

MR. COOPER, f/k/a Nationstar

)

Mortgage, LLC; SETERUS, INC.;

)

C.I.T. BANK, N.A.,

)

Defendants.

)

____________________________________________ )

JUDGMENT

App. 24

This cause came on to be heard on appeal from the

United States District Court for the District of Rhode

Island and was argued by counsel.

Upon consideration whereof, it is now here ordered,

adjudged and decreed as follows: the district court’s

judgment is affirmed.

By the Court:

Maria R. Hamilton, Clerk

cc: Dirk Phillips, Michael A.F. Johnson, Samuel Craig

Bodurtha, Alexandra G. Watson, Jeffrey Lewis Levy,

Raymond A. Garcia, Julia Strickland, Joseph A.

Farside, Krystle Guillory Tadesse, Todd Steven Dion,

Noah A. Levine, Steven Fishbach

App. 25

APPENDIX B

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

C.A. No. 18-632 WES

[Filed May 26, 2020]

___________________________________

NERIS MONTILLA, et al.,

)

)

Plaintiffs,

)

)

v.

)

)

)

FEDERAL NATIONAL MORTGAGE )

ASSOCIATION, et al.,

)

)

Defendants.

)

___________________________________ )

MEMORANDUM AND ORDER

WILLIAM E. SMITH, District Judge.

Before the Court is Defendant Federal Housing

Finance Agency’s (“FHFA”) and Federal National

Mortgage Association’s (“Fannie Mae”) Motions to

Dismiss, ECF Nos. 20, 22. For the reasons set forth

below, both Motions are GRANTED.

I.

Background

This dispute involves a putative class action

against Defendants FHFA, Fannie Mae, and C.I.T.

Bank, N.A. (“C.I.T.”)(collectively, “Defendants”) for

App. 26

alleged wrongful foreclosure of Plaintiffs Neris

Montilla’s and Michael Kyriakakis’s properties.1 Am.

Compl. ¶ 1, ECF No. 4. The relevant facts, as detailed

in the Amended Complaint, are as follows.

On July 24, 2008, Montilla executed a mortgage in

favor of Financial Freedom Senior Funding

Corporation on a property in Providence to secure a

promissory note in the amount of $427,500. Id. ¶ 53.

That mortgage was later assigned to Mortgage

Electronic Registration Systems, Inc. (“MERS”) in

2009, and then ultimately assigned to its current

holder, Fannie Mae, on April 20, 2015. Id. ¶ 54-55. On

September 10, 2016, following Plaintiff’s alleged

default, C.I.T., in its capacity as servicer of the loan for

Fannie Mae, sent Montilla a “Notice of Intent to

Foreclose and Mortgagee’s Foreclosure Sale” (“Montilla

Foreclosure Notice”) noting a scheduled sale date of

October 14, 2016. Id. ¶ 56. C.I.T. conducted a

foreclosure sale on that date, at which time the

property was sold to Fannie Mae for $160,000. Id. ¶ 57.

1

The Amended Complaint initially named two other plaintiffs —

Ruben Velasquez and Roselia Montufar — and two other

defendants — Seterus, Inc. and Mr. Cooper (formerly known as

“Nationstar Mortgage, LLC”). See Am. Compl. ¶¶ 15, 19, 21.

Plaintiffs Velasquez and Montufar voluntarily dismissed all of

their claims in the action. See Notice of Voluntary Dismissal as to

Seterus, Inc., ECF No. 33; Notice of Voluntary Dismissal, ECF No.

34. Seterus, Inc.’s alleged wrongdoings relate only to those two

Plaintiffs, so it was dismissed from the action entirely. See Am.

Compl. ¶¶ 66-67. Defendant Mr. Cooper was also voluntarily

dismissed from the case. See Notice of Voluntary Dismissal as to

Nationstar Mortgage, LLC, ECF No. 39.

App. 27

Separately, in April of 2013, Kyriakakis executed a

mortgage on his Cranston, Rhode Island property in

favor of One West Bank, FSB as Lender and MERS as

mortgagee to secure a promissory note in the amount

of $239,750. Id. ¶ 73-74. The mortgage was assigned to

Nationstar Mortgage, LLC (now known as “Mr.

Cooper”), and later to Fannie Mae. Id. ¶ 75-76.

Following assignment to Fannie Mae, Mr. Cooper

remained the servicer of the mortgage. Id. ¶ 76. In that

capacity, Mr. Cooper sent a Notice of Intent to

Foreclose and Mortgagee’s Foreclosure Sale

(“Kyriakakis Foreclosure Notice”) to Kyriakakis on

November 21, 2017. Id. ¶ 77. The property was sold to

mortgagee Fannie Mae at a foreclosure sale on

December 26, 2017 for $216,885.13. Id. ¶ 78.

Plaintiffs filed a complaint in this Court on

November 19, 2018 and subsequently amended their

complaint on December 7, 2018. See Compl., ECF No.

1; see also Am. Compl. Both Plaintiffs, individually and

on behalf of others similarly situated, allege that

Defendants violated the Due Process Clause of the

Fifth Amendment insofar as they conducted the

foreclosure proceedings “without first providing

adequate notice, a meaningful hearing prior to the

deprivation of property, and an opportunity to recover

adequate damages.” Am. Compl. ¶¶ 58, 79. Defendants

Fannie Mae and FHFA filed the instant Motions to

Dismiss on February 19, 2019. See FHFA’s Mot. to

Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6), ECF No.

20; see also Fannie Mae’s Mot. to Dismiss, ECF No. 22.

Defendant C.I.T. joins both Motions. See Notice by

C.I.T. Bank, N.A. 1, ECF No. 23.

App. 28

II.

Legal Standard

When reviewing a motion to dismiss, the Court

must “accept the well-pleaded facts as true, viewing

factual allegations in the light most favorable to the

plaintiff.” Rederford v. U.S. Airways, Inc., 589 F.3d 30,

35 (1st Cir. 2009). “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 Bell Atl. Corp. v. Twombly, 550

U.S. 544, 570 (2007)).

III.

Discussion

Defendants argue that Fannie Mae and FHFA (and

C.I.T., as an agent of those entities) are not

government actors for purposes of Plaintiffs’ Fifth

Amendment due process claims.2 Mem. of Law in Supp.

of Def. FHFA’s Mot. to Dismiss Under Fed. R. Civ. P.

12(b)(6) (“FHFA’s Mot. to Dismiss”) 5, ECF No. 21; see

Mem. in Supp. of Mot. to Dismiss of Def. Fannie Mae

10, ECF No. 22-1 (joining FHFA’s government actor

argument). Plaintiffs, primarily relying on Chief Judge

McConnell’s decision in Sisti v. Federal Housing

Finance Agency, 324 F. Supp. 3d 273 (D.R.I. 2018),

contend that both entities are government actors and

therefore subject to these constitutional claims. Mem.

2

Defendants further aver that even if Fannie Mae and FHFA

could be considered government actors, Plaintiffs’ due process

claims fail on the merits. Mem. in Supp. of Mot. to Dismiss of Def.

Fannie Mae 1, ECF No. 22-1. The Court need not reach this

alternative argument because, as discussed infra, it agrees that

Fannie Mae, FHFA, and C.I.T as Fannie Mae’s agent are not

government actors for purposes of Plaintiffs’ constitutional claims.

App. 29

of Law in Supp. of Pls.’ Opp’n to Def. FHFA’s Mot. to

Dismiss for Failure to State a Claim (“Pls.’ Opp’n to

FHFA’s Mot. to Dismiss”) 3-4, ECF No. 30.

Fannie Mae is a government-sponsored enterprise

created by Congress in the wake of the Great

Depression to provide support for the residential

mortgage market. See Jacobs v. Fed. Hous. Fin.

Agency, 908 F.3d 884, 887 (3d Cir. 2018). Despite its

birth by federal charter, Fannie Mae is a private,

publicly traded corporation. See Town of Johnston v.

Fed. Hous. Fin. Agency, 765 F.3d 80, 82 (1st Cir. 2014).

In 2008, Congress passed the Housing and Economic

Recovery Act, creating the FHFA and empowering it to

act as conservator of Fannie Mae “for the purpose of

reorganizing, rehabilitating, or winding up [] affairs”,

which right it exercised in September 2008. Id.; see 12

U.S.C. § 4617(a)(2); 12 U.S.C. § 4511; see also Am.

Compl. ¶ 23-25. As conservator, FHFA succeeded to “all

rights, titles, powers, and privileges” of Fannie Mae

and its stockholders, board of directors, and officers.

See 12 U.S.C. § 4617(b)(2)(A).

Because a defendant cannot be held liable under the

Fifth Amendment unless it is deemed a federal actor,

Martinez-Rivera v. Sanchez Ramos, 498 F.3d 3, 8-9 (1st

Cir. 2007), the Court must determine whether Fannie

Mae and FHFA are government actors for purposes of

Plaintiffs’ constitutional claims.

A. Fannie Mae’s Status as a Government Actor

To determine whether Fannie Mae is a government

actor, the Court looks to the tripartite test in Lebron v.

National Railroad Passenger Corp., 513 U.S. 374

App. 30

(1995). Lebron instructs that a corporation “is part of

the Government” for purposes of constitutional claims

where “[(1)] the Government creates a corporation by

special law, [(2)] for the furtherance of governmental

objectives, and [(3)] retains for itself permanent

authority to appoint a majority of the directors of that

corporation.” Lebron, 513 U.S. at 399. In Department

of Transportation v. Association of American Railroads,

575 U.S. 43, 55 (2015), the Supreme Court reaffirmed

Lebron, adding that the “practical reality of federal

control and supervision prevails over Congress’

disclaimer of . . . governmental status.” Because there

is no dispute that the first two factors have been met,

the Court need only resolve the third question of the

Lebron test here, and answer whether the federal

government exercises permanent control over Fannie

Mae.

Plaintiffs argue that FHFA’s indefinite

conservatorship amounts to permanent control over

Fannie Mae. See Pls.’ Opp’n to FHFA’s Mot. to Dismiss

5-6. In support of this argument, Plaintiffs rely on

Chief Judge McConnell’s reasoning in Sisti, where he

concluded that “[t]he practical reality . . . is that the

government effectively controls Fannie Mae and

Freddie Mac permanently” because the government

appoints the members of Fannie Mae’s boards of

directors, exercises total operational control, owns all

of Fannie Mae’s senior preferred stock, and warrants to

purchase a majority of the common stock. Sisti, 324

F. Supp. 3d at 280; see Pls.’ Opp’n to FHFA’s Mot. to

Dismiss 8-10. The court also found it to be critical that

“the decision to end the conservatorship is left entirely

App. 31

to the discretion of the government”. Sisti, 324 F. Supp.

3d at 280.

The majority of courts to consider this question have

taken the opposite position - that Fannie Mae is not a

government actor for purposes of constitutional claims.

See, e.g., Rubin v. Fannie Mae, 587 F. App’x 273, 275

(6th Cir. 2014) (holding that “following FHFA’s

conservatorship, Fannie Mae is not a state actor” and

recognizing that every district court up to that point

had reached the same conclusion); see also Dean v.

Crosscountry Mortg., Inc., No. 4:18-CV-705, 2019 WL

6271042, at *3 (E.D. Tex. Nov. 25, 2019)(“[O]ther

courts carefully have considered, and rejected [the]

argument that the conservatorship of Fannie Mae and

Freddie Mac in 2008 transformed those entities into

government actors.”) (internal citation omitted);

FHFA’s Mot. to Dismiss Ex. A (listing cases), ECF No.

21-1. In Herron v. Fannie Mae, 861 F.3d 160, 169 (D.C.

Cir. 2017), the D.C. Circuit Court of Appeals, affirming

the district court’s ruling, examined the statute

empowering FHFA to become Fannie Mae’s

conservator, finding that “the purpose of the

conservatorship is to restore Fannie Mae to a stable

condition”, which is “an inherently temporary

purpose”.3 Herron, 861 F.3d at 169 (quoting Rubin, 587

3

Chief Judge McConnell rejected this line of reasoning in Sisti v.

Fannie Mae, finding that the enabling statute acts as a

Congressional disclaimer of the government’s permanent control

of Fannie Mae, and as such it could not be relied upon to determine

that the government exercised temporary control. 324 F. Supp. 3d

274, 280 (D.R.I. 2018). Rather, he concluded that, despite not being

an explicit statutory disclaimer of government control, the

statute’s “language still has the same effect — under Lebron,

‘permanent’ government control is required, and here Congress is

App. 32

Fed. Appx. at 275); see 12 U.S.C. § 4617(a) & (b)(2)(D).

The court concluded, “[t]hus, the government’s

indefinite but temporary control does not transform

Fannie Mae into a government actor.” Herron, 861 F.3d

at 169. While the Court finds Judge McConnell’s

analysis in Sisti to be well-reasoned and sensible, it

ultimately sides with the majority of courts to have

considered the issue. Although the “conservatorship

authorized the government to exercise substantial

control over Fannie Mae, ‘that control is

temporary . . . .’”4 Herron, 861 F.3d at 169 (quoting

Meridian Invs. v. Fed. Home Loan Mortg. Corp., 855

F.3d 573, 579 (4th Cir. 2017)); see also Herron v.

Fannie Mae, 857 F. Supp. 2d 87, 96 (D.D.C. 2012)

(“Because conservatorship is by nature temporary, the

government has not acceded to permanent control over

the entity and Fannie Mae remains a private

corporation.”). Accordingly, because the government

does not exercise permanent control over Fannie Mae,

it is not a government actor for purposes of Plaintiffs’

constitutional challenge.

B. FHFA’s Status as a Government Actor

As for the FHFA, there is no question that it is a

government agency. See 12 U.S.C. § 4511. Defendants

contend, however, that the FHFA is not subject to

disclaiming permanent control.” Id. (quoting Lebron, 513 U.S. at

400).

4

Indeed, there are signs that FHFA’s conservatorship may soon

end. See Fairholme Funds, Inc v. United States, 147 Fed. Cl. 1,

19-21, 33 (Fed. Cl. 2019) (taking judicial notice of statements by

the Secretary of the U.S. Treasury and FHFA Director suggesting

they are “committed to ending the conservatorships”).

App. 33

Plaintiffs’ Fifth Amendment claims because it assumes

Fannie Mae’s private status while acting as its

conservator. See FHFA’s Mot. to Dismiss 15-21. This is

so, Defendants argue, because “as Conservator, FHFA

does not perform any function unique to the federal

government when it exercises powers inherited from

[Fannie Mae].” Id. at 16. Plaintiffs respond against to

say that the “practical reality” is that the FHFA is a

government actor. See Pls.’ Opp’n to FHFA’s Mot. to

Dismiss 7-8 (citing Ass’n of Am. R.R., 575 U.S. at 55).

Furthermore, relying on Sisti, Plaintiffs challenge

Defendant’s contention that the FHFA, as conservator,

takes on Fannie Mae’s private status. Id. at 12-15.

On this question, too, the Court sides with the

majority of courts to have found that the FHFA is not

a government actor in its capacity as conservator to

Fannie Mae. See, e.g., Herron, 861 F.3d at 169; see also

Parra v. Fed. Nat’l Mortg. Ass’n, No. CV 13-4031 FMO

(SHx), 2013 WL 5638824, at *3 (C.D. Cal. Oct. 16,

2013) (“[T]he FHFA, which took over as Fannie Mae’s

conservator, also does not qualify as a government

actor.”). Here, the FHFA’s power to foreclose is a

contractual right inherited from Fannie Mae by virtue

of its conservatorship. See 12 U.S.C.

§ 4617(b)(2)(A)(“The Agency shall, as conservator or

receiver, and by operation of law, immediately succeed

to – all rights, titles, powers, and privileges of the

regulated entity.”). When acting as conservator, the

FHFA “steps into [Fannie Mae’s] shoes, shedding its

government character and also becoming a private

party.” Meridian Invs., Inc., 855 F.3d at 579; see

Herron, 861 F.3d at 169 (“[W]hile the FHFA’s status

changed, the status of Fannie Mae, as the ‘shoes’ into

App. 34

which FHFA stepped, did not.”); see also O’Melveny &

Meyers v. F.D.I.C, 512 U.S. 79, 86 (1994) (finding that

similar statutory language “appears to indicate that

the FDIC as receiver ‘steps into the shoes’ of the failed

[entity]” for purposes of state tort claims)(internal

citations omitted). Accordingly, because the FHFA is

similarly not subject to Plaintiffs’ Fifth Amendment

claims, those claims cannot proceed.

IV.

Conclusion

For the foregoing reasons, Defendants’ Motions to

Dismiss, ECF Nos. 20 and 22, are GRANTED.

IT IS SO ORDERED.

s/_____________________________

William E. Smith

District Judge

Date: May 26, 2020

App. 35

APPENDIX C

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF RHODE ISLAND

C.A. No. 18-632 WES

[Filed June 9, 2020]

___________________________________

NERIS MONTILLA, et al.,

)

)

Plaintiffs,

)

)

v.

)

)

)

FEDERAL NATIONAL MORTGAGE )

ASSOCIATION, et al.,

)

)

Defendants.

)

___________________________________ )

JUDGMENT

[ ] Jury Verdict. This action came before the Court for

a trial by jury. The issues have been tried and the jury

has rendered its verdict.

[ X ] Decision by the Court. This action came to trial or

hearing before the Court. The issues have been tried or

heard and a decision has been rendered.

IT IS ORDERED AND ADJUDGED:

Judgment hereby enters pursuant to the

Memorandum and Order entered on May 26th, 2020

by this Court.

App. 36

Enter:

/s/ Ryan H. Jackson

Deputy Clerk

Dated: June 9th, 2020

App. 37

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 20-1673

[Filed August 9, 2021]

____________________________________________

NERIS MONTILLA, on behalf of herself

)

and all others so similarly situated;

)

MICHAEL KYRIAKAKIS, on behalf of himself )

and all others so similarly situated,

)

Plaintiffs, Appellants,

)

)

ROSELIA MONTUFAR, on behalf of herself

)

and all others so similarly situated;

)

RUBEN VELASQUEZ, on behalf of himself

)

and all others so similarly situated,

)

Plaintiffs,

)

)

v.

)

)

FEDERAL NATIONAL MORTGAGE

)

ASSOCIATION; FEDERAL HOUSING

)

FINANCE AGENCY,

)

Defendants, Appellees,

)

)

MR. COOPER, f/k/a Nationstar

)

Mortgage, LLC; SETERUS, INC.;

)

C.I.T. BANK, N.A.,

)

Defendants.

)

____________________________________________ )

App. 38

Before

Lynch and Kayatta, Circuit Judges,

and Woodcock,* District Judge.

ORDER OF COURT

Construing plaintiffs-appellants Neris Montilla and

Michael Kyriakakis’ petition for rehearing and

rehearing en banc as a motion to recall mandate, the

motion is denied.

By the Court:

Maria R. Hamilton, Clerk

cc:

Dirk Phillips

Michael A.F. Johnson

Samuel Craig Bodurtha

Alexandra G. Watson

Jeffrey Lewis Levy

Raymond A. Garcia

Julia Strickland

Joseph A. Farside Jr.

Krystle Guillory Tadesse

Todd Steven Dion

Noah A. Levine

Steven Fischbach

*

Of the District of Maine, sitting by designation

App. 39

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

No. 20-1673

[Filed June 29, 2021]

____________________________________________

NERIS MONTILLA, on behalf of herself

)

and all others so similarly situated;

)

MICHAEL KYRIAKAKIS, on behalf of himself )

and all others so similarly situated,

)

Plaintiffs, Appellants,

)

)

ROSELIA MONTUFAR, on behalf of herself

)

and all others so similarly situated;

)

RUBEN VELASQUEZ, on behalf of himself

)

and all others so similarly situated,

)

Plaintiffs,

)

)

v.

)

)

FEDERAL NATIONAL MORTGAGE

)

ASSOCIATION; FEDERAL HOUSING

)

FINANCE AGENCY,

)

Defendants, Appellees,

)

)

MR. COOPER, f/k/a Nationstar

)

Mortgage, LLC; SETERUS, INC.;

)

C.I.T. BANK, N.A.,

)

Defendants.

)

____________________________________________ )

App. 40

MANDATE

In accordance with the judgment of June 8, 2021,

and pursuant to Federal Rule of Appellate Procedure

41(a), this constitutes the formal mandate of this

Court.

By the Court:

Maria R. Hamilton, Clerk

cc:

Samuel Craig Bodurtha, Todd Steven Dion, Joseph A.

Farside Jr., Steven Fischbach, Raymond A. Garcia,

Krystle Guillory Tadesse, Michael A.F. Johnson, Noah

A. Levine, Jeffrey Lewis Levy, Dirk Phillips, Julia

Strickland, Alexandra G. Watson