Beauchamp v. Federal Home Loan Mortgage Corp.
658 F. App'x 202
| 6th Cir. | 2016Background
- Freddie Mac contracted with broker Terry Eibeck to manage and prepare foreclosed properties for resale; contract required detailed "trash-out" procedures (photographing, inventorying, valuing items, and halting removal if items exceeded $300 or were of intrinsic personal value).
- In August 2012, Eibeck emptied a detached garage at a foreclosed unit but mistakenly destroyed personal property belonging to John Beauchamp and Jessica Klingenberg (now Beauchamp), including irreplaceable military items and photographs.
- Discovery showed Eibeck prepared limited photographs and a $175 inventory, failed to list or halt for clearly valuable military items and personal photos, and then had the property removed and destroyed.
- The Beauchamps sued Freddie Mac and Eibeck alleging vicarious liability (agency) and negligent supervision by Freddie Mac; the district court granted summary judgment for Freddie Mac and dismissed claims as to Eibeck for lack of jurisdiction.
- The Sixth Circuit reversed in part: held a reasonable jury could find an agency relationship because Freddie Mac’s contract and incorporated training/guides exercised sufficient right to control Eibeck’s methods; but held Freddie Mac not directly liable for negligent supervision because it had provided training and the correct address—the harm resulted from Eibeck’s failure to follow instructions.
- The court also vacated sealing orders for core contract documents because the district court failed to make the required specific, document-by-document findings to justify sealing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Freddie Mac is vicariously liable for Eibeck’s trash-out (agency vs. independent contractor) | Eibeck was an agent because the contract called him an agent and Freddie Mac exercised control through detailed procedures, training, and incorporated guides | Eibeck was an independent contractor; Freddie Mac only set standards and inspected results, not day-to-day methods | Reversed district court: a jury could find agency because Freddie Mac’s contractual right to control method, manner, and details was sufficient |
| Whether Freddie Mac is directly liable for negligent supervision/training | Freddie Mac negligently supervised and failed to train or give adequate directions, causing the wrong trash-out | Freddie Mac provided training and correct address; Eibeck’s noncompliance—not Freddie Mac’s lack of instruction—caused the loss | Freddie Mac not directly liable: it trained and provided correct instructions; harm resulted from Eibeck’s failure to follow them |
| Whether district court properly sealed contract and incorporated documents | Public presumptively entitled to access; sealing unjustified without specific findings | Sealing resulted from parties’ protective order and counsel’s requests; district court need not make additional findings | Vacated sealing orders: district court abused discretion by failing to make specific, document-by-document findings justifying nondisclosure |
| Standard of review for summary judgment and inferences drawn | N/A (contextual) | N/A | De novo review of summary judgment; view evidence in light most favorable to nonmoving party (supports reversal on agency issue) |
Key Cases Cited
- Mendel v. City of Gibraltar, 727 F.3d 565 (6th Cir.) (standard of review for summary judgment and viewing evidence favorable to nonmovant)
- Nazar v. Branham, 291 S.W.3d 599 (Ky.) (agency v. independent contractor; right to control is critical)
- Phelps v. Louisville Water Co., 103 S.W.3d 46 (Ky.) (definition of agency as consent to act on behalf and subject to control)
- CSX Transp. Inc. v. First Nat’l Bank of Grayson, 14 S.W.3d 563 (Ky. Ct. App.) (contractual labels do not control the legal determination of agency)
- Decker v. Glasscock Trucking Serv., Inc., 397 S.W.2d 773 (Ky.) (the right to control, even if not exercised, determines master-servant status)
- Kentucky Unemployment Ins. Comm’n v. Landmark Cmty. Newspapers of Kentucky, Inc., 91 S.W.3d 575 (Ky.) (agency/contract classification principles)