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Angel v. Federal Home Loan Mortgage Corp.

United States District Court, District of Columbia

March 6, 2019

JOSHUA J. ANGEL, Plaintiff,
v.
FEDERAL HOME LOAN MORTGAGE CORPORATION, et al., Defendants.

          MEMORANDUM OPINION

          Royce C. Lamberth United States District Judge

         Joshua J. Angel, a holder of preferred stock in both the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac." and together with Fannie Mae, the "Companies"), brings the present action as a pro se litigant. Mr. Angel asserts causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, and tortious interference against the Companies and their respective individual directors as of August 17, 2012. along with the Federal Housing Finance Agency ("FHFA"), as a nominal defendant.[1] See generally Compl., ECF No. 1. All defendants moved jointly to dismiss the Complaint in its entirety. Mot. Dismiss. ECF No. 11. Because Mr. Angel's claims are time-barred, their motion will be GRANTED. Additionally, in evaluating defendants' motion, the Court considered Mr. Angel's arguments in his proposed surreply attached to his Motion for Leave to File Surreply Brief. PL's Proposed Surreply, ECF No. 21-1. Accordingly, that motion [ECF No. 21] will be GRANTED, and the Court directs the Clerk to place the proposed surreply on the docket.

         I. BACKGROUND

         Not much in the way of background is required to resolve the present motion.[2]During the Great Recession of 2008, Congress passed the Housing and Economic Recovery Act of 2008 ("HERA"). creating the FHFA as regulator of the Companies. Compl. ¶ 36. ECF No. 1. Pursuant to the authority given under HERA. Fannie Mae and Freddie Mac were placed into conservatorship with the FHFA taking over control of the Companies as conservator. Id.

         This case is one in a multitude of actions brought by shareholders of the Companies seeking recovery for damages incurred in connection with an agreement between the FHFA, as conservator for the Companies, and the Treasury Department on August 17, 2012. Id. ¶ 1: see also Fairholme Funds, Inc. v. Fed. Hous. Fin. Agency. No. 1:13-cv-1053 (RCL): ArrowoodIndem. Co.. No. 1:13-cv-1439 (RCL): In re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action litigs., No. 1:13-mc-1288 (D.D.C. Feb. 1, 2018). Pursuant to that agreement-the third amendment of the September 6, 2008 senior preferred stock purchase agreement (the ''Third Amendment")-each company would pay Treasury a quarterly dividend equal to 100% of each company's net worth that exceeded a capital buffer of S3 billion, with that buffer decreasing annually down to zero by 2018. Id. ¶¶ 62-64.

         On May 21, 2018, over five and a half years after the Companies entered into the Third Amendment. Mr. Angel filed suit before this Court. In Count I of the Complaint, Mr. Angel claims that by entering into the Third Amendment, "the Defendants breached the Companies)/]

         obligations to Plaintiff to receive dividends on his Junior Preferred shares." Id., ¶ 108. In Count II, Mr. Angel claims that by entering into the Third Amendment "and operating in compliance with its terms[.] the Defendants effectively deprived Plaintiff of any possibility of ever again receiving dividends, and thus breached the implied covenant of good faith and fair dealing inherent in the Certificates of Designation for the Fannie Mae [] and Freddie Mac Junior Preferred stock." Id. ¶ 120, Lastly, Mr. Angel asserts tortious interference by defendants with the "Government Guarantee" of "full and timely payment of declared dividends to Junior Preferred Shareholders." Opp. Mot. Dismiss 32, ECF No. 17.

         Defendants move to dismiss the Complaint in its entirety because, inter alia, Mr. Angel's claims are time-barred. Memo. Supp. Mot. Dismiss 10-12, ECF 11-1. In Mr. Angel's surreply, he concedes his cause of action for tortious interference and "seeks to dismiss this claim." PL's Proposed Surreply 8, ECF No. 21-1. The Court obliges. That claim will be dismissed, and the Court considers only the claims for breach of contract and breach of the implied covenant.

         II. LEGAL STANDARD

         To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."7 Ashcroft v. IqbaL 556 U.S. 662, 678 (2009) (quoting Bell All. Corp. v. Tuvmbly, 550 U.S. 544, 570 (2007)). Defendants may raise a statute of limitations defense in a motion to dismiss "when the facts that give rise to the defense are clear from the face of the complaint." See Smith-Haynie v. District of Columbia* 155 F.3d 575, 578 (D.C. Cir. 1998).

         III. DISCUSSION

         A. Mr. Angel failed to file this suit within the limitations period.

         Mr. Angel asserts only state law causes of action-breach of contract and breach of the implied covenant. Although chartered under federal law, the Companies enacted bylaws in which they each elected to follow a chosen state's law. Fairholme Funds. 2018 WL 4680197. at *2. Freddie Mac chose Virginia law7, while Fannie Mae selected the law of the State of Delaware. Id. Accordingly, Mr. Angel alleges his causes of action against Freddie Mac and its directors under Virginia Law and his causes of action against Fannie Mae and its directors under Delaware lawr, See Compl. ¶¶ 101, 116. ECF No. 1. And it is those states' respective statutes of limitations that apply. SeeByers v. Burleson. 713 F.2d 856, 859 n.4.

         In Virginia, the statute of limitations for breach of a contract "which is in writing and signed by the party to be charged thereby" is five years.[3] Va. Code § 8.01-246(2). For claims for breach of the implied covenant, a three-year statute of limitations applies. Corinthian Morfg. Corp. v. ChoicePoint Precision Maktg. o. 1:07-cv-832 (JCC), 2008 WL 2776991, *3 (E.D. Va. July 14. 2008); see also Harbour Gate Owners' Ass'n. Inc. v. Berg, 348 S.E.2d 252, 257 ...


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