Meridian Investments, Inc. v. Federal Home Loan Mortgage Corp.
855 F.3d 573
| 4th Cir. | 2017Background
- Meridian entered a June 1, 2009 Memorandum of Understanding (MOU) with Freddie Mac to purchase Freddie Mac’s $3 billion LIHTC portfolio (Project America) for $3.4 billion; the MOU contained numerous nonbinding provisions but identified specific "Binding Provisions."
- Treasury had a Senior Preferred Stock Purchase Agreement (PSPA) with Freddie Mac (entered while FHFA was conservator) that barred Freddie Mac from transferring assets without Treasury consent; Meridian’s private placement materials warned investors that Treasury consent was required.
- Freddie Mac and Meridian negotiated definitive documentation over several months; FHFA (as conservator) informed Freddie Mac that Treasury would not consent to Project America, and FHFA later advised Freddie Mac it could not sell or transfer the LIHTC portfolio.
- Meridian sued Freddie Mac and FHFA nearly six years later alleging breach of the MOU and related duties; the district court dismissed Meridian’s breach claim (Count II) on statute-of-limitations and contract-formation grounds.
- The district court held Virginia’s five-year statute of limitations barred the suit; it also held the MOU was an unenforceable agreement-to-agree and, alternatively, that conditions precedent (a definitive written agreement and FHFA/Treasury approval) never occurred.
- The Fourth Circuit affirmed: it applied Virginia’s five-year limitation (28 U.S.C. § 2401(a) did not apply because defendants were private parties), and held Meridian failed to plead breach of any binding MOU provision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 28 U.S.C. § 2401(a) six-year statute for suits "against the United States" applies | Meridian: FHFA and Freddie Mac effectively are the United States/ federal instrumentalities, so § 2401(a) governs | Defendants: Freddie Mac is a private corporation and FHFA acting as conservator steps into Freddie Mac’s shoes; this is a private-party suit governed by state law limitations | Held: § 2401(a) does not apply; Virginia’s five-year statute controls, so the claim is time-barred |
| Whether dismissal on statute-of-limitations can be resolved on Rule 12(b)(6) | Meridian: limitations is an affirmative defense not typically resolved on a 12(b)(6) motion | Defendants: here the complaint and attachments establish accrual and timing; dismissal is appropriate | Held: Court may decide on 12(b)(6) when the complaint and incorporated documents show the defense applies |
| Whether the MOU created an enforceable contract or was an unenforceable agreement to agree | Meridian: MOU contained binding obligations (including cooperation to obtain approvals) and Defendants breached those binding provisions | Defendants: MOU was largely nonbinding; only enumerated Binding Provisions were enforceable, and the obligations Meridian relies on were not among them | Held: MOU is an agreement-to-agree; Meridian failed to identify a breached Binding Provision and thus failed to state a breach claim |
| Whether FHFA was required to persuade Treasury to consent to the sale | Meridian: FHFA’s obligation to seek FHFA approval implied a duty to persuade Treasury (whose consent FHFA needed) | Defendants: the MOU did not make that duty part of the Binding Provisions; FHFA had no enforceable duty to secure Treasury consent | Held: No enforceable duty to persuade Treasury; FHFA’s denial letter showed it had sought Treasury’s input and no breach was pleaded |
Key Cases Cited
- Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374 (1995) (test for when a federally created corporation is treated as a government entity based on purpose and control)
- Dep’t of Emp’t v. United States, 385 U.S. 355 (1966) (no simple test for governmental instrumentality; guidance on government closeness)
- Atherton v. FDIC, 519 U.S. 213 (1997) (receiver acting for a failed institution does not necessarily create a federal interest)
- Montgomery Cty. v. Fed. Nat’l Mortg. Ass’n, 740 F.3d 914 (4th Cir. 2014) (conservator stepping into a private entity’s shoes sheds government character)
- Am. Bankers Mortg. Corp. v. Fed. Home Loan Mortg. Corp., 75 F.3d 1401 (9th Cir. 1996) (Freddie Mac is not a government agency for due process purposes)
- Leichling v. Honeywell Int’l, Inc., 842 F.3d 848 (4th Cir. 2016) (statute-of-limitations may be resolved on Rule 12(b)(6) when defense is evident on complaint’s face)
- Anand v. Ocwen Loan Serv., LLC, 754 F.3d 195 (4th Cir. 2014) (courts may consider documents attached to and relied on by the complaint)
- Coleman v. Md. Ct. of App., 626 F.3d 187 (4th Cir. 2010) (conclusory allegations cannot defeat a Rule 12(b)(6) dismissal)
- Bank of U.S. v. Planters’ Bank of Ga., 22 U.S. 904 (1824) (government ownership interest treated like any other shareholder)