Angel v. United States

1

JOSHUA J. ANGEL, Plaintiff, v. THE UNITED STATES, Defendant.

No. 22-867C

United States Court of Federal Claims

May 12, 2023

RCFC 12(b)(1); RCFC 12(b)(6); Statute of Limitations, 28 U.S.C § 2501; Claim Accrual; Continuing Claim Doctrine; Claims Foreclosed by Binding Precedent

Joshua J. Angel, New York, NY, for plaintiff.

Anthony F. Schiavetti, United States Department of Justice Washington, DC, for defendant.

OPINION AND ORDER

MARGARET M. SWEENEY SENIOR JUDGE

In this suit, plaintiff Joshua J. Angel asserts his own claims and those of a putative class against the United States. His claims are founded on the dividend rights of shareholders of the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac"), or collectively, "the Enterprises." Defendant, relying on Rules 12(b)(1) and 12(b)(6) of the Rules of the United States Court of Federal Claims ("RCFC"), moves to dismiss his claims as untimely and also because some of his claims are foreclosed by binding precedent of the United States Court of Appeals for the Federal Circuit ("Federal Circuit"). See Fairholme Funds, Inc. v. United States, 26 F.4th 1274 (Fed. Cir. 2022), cert. denied, 143 S.Ct. 563, and cert. denied sub nom. Barrett v. United States, 143 S.Ct. 562, and cert. denied sub nom. Owl Creek Asia I, L.P. v. United States, 143 S.Ct. 563, and cert. denied sub nom. Cacciapalle v. United States, 143 S.Ct. 563 (2023). As explained below, the court grants defendant's motion.

I. BACKGROUND

A. Fannie Mae and Freddie Mac Shareholders Stop Receiving Dividends

Mr. Angel, like many other plaintiffs who filed claims in this court, seeks compensation for changes to the benefits of owning stock in Fannie Mae and Freddie Mac that occurred in the context of a government rescue of the Enterprises.^[1] As recounted by the Federal Circuit:

The Enterprises suffered devastating financial losses in 2008 when the national housing market collapsed. In response, Congress enacted the Housing and Economic Recovery Act of 2008 (HERA). HERA created the Federal Housing Finance Agency (FHFA), an independent agency tasked with regulating the Enterprises and (if necessary) stepping in as conservator or receiver. 12 U.S.C. §§ 4511, 4617. HERA also contains a Succession Clause, which states that the FHFA "shall, as conservator or receiver . . . immediately succeed to [ ] all rights, titles, powers, and privileges of the [Enterprises], and of any stockholder . . . with respect to the [Enterprises] and the assets of the [Enterprises]." Id. § 4617(b)(2)(A)(i).

With the consent of the Enterprises' boards of directors, the FHFA's Director placed the Enterprises into conservatorship in September 2008. The FHFA Director then negotiated preferred stock purchase agreements (PSPAs) with the Department of Treasury (Treasury) in which Treasury agreed to allow the Enterprises to draw up to $100 billion in capital in exchange for: (1) senior preferred non-voting stock having quarterly fixed-rate dividends and an initial liquidation preference of $1 billion and (2) warrants to purchase up to 79.9% of the common stock of each Enterprise at a nominal price.

FHFA and Treasury amended the terms of the original PSPAs in the years that followed. . . . [The Third Amendment implemented] a "net worth sweep" under the PSPAs[, which] replaced the fixed-rate dividend formula with a variable one that required the Enterprises to make quarterly payments equal to their entire net worth, minus a small capital reserve amount. The net worth sweep caused the Enterprises to transfer most, if not all, of their equity to Treasury, leaving no residual value that could be distributed to shareholders.

Id. at 1282-83 (alterations in first paragraph in original) (citations to appellate joint appendix omitted). The Third Amendment to the PSPAs was adopted on August 17, 2012. Compl. ¶ 10; accord Collins v. Yellen, 141 S.Ct. 1761, 1773 n.7 (2021). Mr. Angel's claims are founded on his dividend rights, as a holder of Junior Preferred shares in Fannie Mae and Freddie Mac, and on the fact that no dividends were declared or paid to holders of Junior Preferred shares from January 1, 2013, to the date his complaint was filed, August 8, 2022.^[2] Compl. ¶¶ 11, 17-20, 22, 47, 51, 56-57.

B. Fannie Mae and Freddie Mac Shareholders File Numerous Suits

As noted by the Federal Circuit, "[s]hareholders launched a series of challenges to the net worth sweep that have worked their way through several fora, including the [United States Court of Appeals for the District of Columbia Circuit ("D.C. Circuit")] and the [United States] Supreme Court." Fairholme, 26 F.4th at 1283. In addition, "[p]arallel to these unsuccessful attempts to undo the net worth sweep, shareholders filed complaints with the [United States Court of Federal Claims ("Court of Federal Claims")]." Id. Many of the suits in this court were filed in 2013 or 2014, within six years of the Enterprises entering the conservatorships. See, e.g., Wash. Fed. v. United States, 149 Fed.Cl. 281, 287, 297 (2020) (dismissing suit, filed in 2013, for compensation based on the conservatorships imposed by the FHFA), aff'd, 26 F.4th 1253 (Fed. Cir. 2022); Cacciapalle v. United States, 148 Fed.Cl. 745, 754, 781 (2020) (dismissing suit, filed in 2013, for compensation based on the net worth sweep), aff'd sub nom. Fairholme, 26 F.4th at 1274. A second wave of suits was filed when almost six years had passed since the net worth sweep was implemented. See, e.g., Owl Creek Asia I, L.P. v. United States, 148 Fed.Cl. 614, 622, 646 (2020) (dismissing suit, filed in 2018, for compensation based on the net worth sweep), aff'd sub nom. Fairholme, 26 F.4th at 1274. In the appeals before it, the Federal Circuit ruled that shareholder claims based on the net worth sweep could not proceed in this court. See Fairholme, 26 F.4th at 1282 (resolving eight appeals of decisions of this court in one opinion).

C. Mr. Angel Files His First Two Suits Related to His Fannie Mae and Freddie Mac Stock

In 2018, proceeding pro se, Mr. Angel filed suit in the United States District Court for the District of Columbia ("District Court"), alleging that the Third Amendment was a breach of contract and a breach of the implied covenant of good faith and fair dealing. See Angel v. Fed. Home Loan Mortg. Corp., No. CV 18-1142, 2019 WL 1060805, at *1-2 (D.D.C. Mar. 6, 2019) (noting that Mr. Angel brought claims for breach of contract, breach of the implied covenant, and tortious interference, but abandoned the third claim), aff'd, 815 Fed.Appx. 566 (D.C. Cir. 2020). The District Court dismissed Mr. Angel's claims related to the net worth sweep as untimely because they were barred under state law by statutes of limitation that require that suits be filed within either three or five years of the accrual of the claim. Id. at *2-7. After the District Court dismissed his case, it also denied his motion for leave to amend his complaint. Angel v. Fed. Home Loan Mortg. Corp., No. CV 18-1142, 2019 WL 11320986, at *1 (D.D.C. May 24, 2019), aff'd, 815 Fed.Appx. at 566. The D.C. Circuit affirmed both of those opinions in a single, unpublished decision. See Angel, 815 Fed.Appx. at 569-70 (holding that "[t]here are no other facts consistent with Angel's complaint that would make his claims, which accrued upon the adoption of the Third Amendment in 2012, timely"). That decision issued on April 24, 2020.

Less than two months later, again proceeding pro se, Mr. Angel filed a suit in this court. As in the District Court, he alleged that the implementation of the net worth sweep was a breach of contract and a breach of the implied covenant of good faith and fair dealing. Compl. ¶¶ 10-17, 40, 50-51, 55, Angel v. United States, No. 20-737C (Fed. Cl. June 12, 2020). On August 4, 2022, Mr. Angel, who was no longer proceeding pro se but as an attorney admitted to the bar of this court, voluntarily dismissed the action.

D. Mr. Angel Files His Third Suit Based on the Same Underlying Facts

Four days after voluntarily dismissing the earlier suit filed in this court, Mr. Angel filed his current complaint. The complaint is not a model of clarity but generally restates the facts that were alleged in his prior suits and revises the language describing his theories of recovery. He sets forth three causes of action.

1. Breach of Contract - Count I

The title of Count I of the complaint is "Quarterly Breaches of Contract." Compl. 13. The underlying contract is described by Mr. Angel as an "Implicit Guaranty," where "Treasury implicitly guaranteed Fannie Mae[] and Freddie Mac Junior Preferred dividends." Id. ¶¶ 44-45; see also id. ¶ 46 (asserting the existence of "Junior Preferred shareholder contract rights"). Mr. Angel describes the contract breach as "Treasury's quarterly actions preventing the [Enterprises'] board[s] of directors from complying with their obligations under the [Certificates of Designation of shares in the Enterprises] and the Implicit Guaranty . . . ." Id. ¶ 46. Mr. Angel further alleges that "[s]uch quarterly Treasury actions beginning January 1, 2013, caused Fannie Mae Junior Preferred shares to suffer damages for contractual breach of approximately $20 billion to date." ^[3] Id. ¶ 47.

Mr Angel does not explain the nature of the contract underlying "Junior Preferred shareholder contract rights," id. ¶ 46, or adequately identify the contract provision that has been breached, see RCFC 9(k) ("In pleading a claim founded on a contract or treaty, a party must identify the substantive provisions of the contract or treaty on which the party relies."). However, his brief responding to the government's motion to dismiss includes two relevant clarifications. First, Mr. Angel argues that the contract...