Fannie Mae-No Politics (FNMA)

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So What does Fairholme want in Sweeney’s Court ? (13-465C)

13-465C FAIRHOLME FUNDS, INC. v. United States…………..Common & Preferred
Court: United States Court of Federal Claims
Proceeding: https://www.courtlistener.com/docket/4198608/fairholme-funds-inc-v-united-states/

On july 9-2013 Fairholme filed a lawsuit in the federal court of claims 4 days prior to their “Fairholme’s 13-1053” case, this case is sealed in secrecy and documents first need to be redacted before they are made public, discovery was allowed and lots of harmful documents were recovered , and after discovery the complaint was amended to hold the conservatorship itself is illegal, on jan-10-2020 the parties will file a joint status report proposing further proceedings and, if appropriate, a schedule for such proceedings.

There are 11 related cases to this Fairholme 13-465C case:
Washington Federal v. United States, No. 13-385C
Cacciapalle v. United States, No. 13-466C
Fisher v. United States, No. 13-608C
Arrowood Indemnity Company v. United States, No. 13-698C
Reid v. United States, No. 14-152C
Rafter v. United States, No. 14-740C
Owl Creek Asia I, L.P. v. United States, No. 18-281C
Akanthos Opportunity Master Fund, L.P. v. United States, No. 18-369C
Appaloosa Investment Limited Partnership I v. United States, No. 18-370C
CSS, LLC v. United States, No. 18-371C
Mason Capital L.P. v. United States, No. 18-529C

First lets look at 13-465C FAIRHOLME v. United States
In their initial prayer for relief they demand only one thing
https://www.courtlistener.com/docket/4198608/fairholme-funds-inc-v-united-states/

PRAYER FOR RELIEF
WHEREFORE, Plaintiffs seek a judgment as follows:
A. Awarding Plaintiffs just compensation under the Fifth Amendment for the
Government’s taking of their property;
B. Awarding Plaintiffs the costs and disbursements of this action, including
reasonable attorneys’ and experts’ fees, costs and expenses; and
C. Granting such other and further relief as the Court deems just and proper.
https://www.courtlistener.com/recap/gov.uscourts.cofc.28224.1.0.pdf

now although this sounds like an easy one, as they only demand “just compensation” the difficulty starts with, what has the government done to plaintiffs, to demand “just compensation”, this can mean 2 things, either the 3th amendment prohibited rehabilitation and therefore ”just compensation” should be awarded, or the conservatorship itself was a taking as the complete rolled out action ending at the 3th amendment forbids the companies to be rehabilitated and since they had 10+years to fix the problem, they neglected a problem and therefore “just compensation” should be awarded for the conservatorship itself, this is a catch-22 as both are not legal, and not according to FHFA statue.
This is of course very worrisome for the government as the conservatorship itself is at stake since not explicitly is mentioned that the “just compensation” is wanted for the 3th amendment

On Jan-2-2014 Judge Sweeney granted Discovery in this case and the discovery was completed in Jan-2018, out of the discovery came some very damaging documents and the documents even needed to be unsealed by Sweeney http://www.fairholmefundsinc.com/Documents/GSEDOCS20160413.pdf
To shed some light on the matter

Below a Summary of some of the redacted documents:
168 http://www.glenbradford.com/wp-content/uploads/2015/06/13-465-0168.pdf
202 http://www.glenbradford.com/wp-content/uploads/2015/07/13-465-0202.pdf
203 http://www.glenbradford.com/wp-content/uploads/2015/07/13-465-0203.pdf
204 http://www.glenbradford.com/wp-content/uploads/2015/07/13-465-0204.pdf
205 http://www.glenbradford.com/wp-content/uploads/2015/07/13-465-0205.pdf
206 http://www.glenbradford.com/wp-content/uploads/2015/07/13-465-0206.pdf
234 http://www.glenbradford.com/wp-content/uploads/2015/08/13-465-0234.pdf
236 http://www.glenbradford.com/wp-content/uploads/2015/08/13-465-0236.pdf
242 http://www.glenbradford.com/wp-content/uploads/2015/09/13-465-0242.pdf
258 http://www.glenbradford.com/wp-content/uploads/2015/11/13-465-0258.pdf
261 http://www.glenbradford.com/wp-content/uploads/2015/11/13-465-0261.pdf
272 http://www.glenbradford.com/wp-content/uploads/2015/12/13-465-0272-4.pdf
297 http://www.glenbradford.com/wp-content/uploads/2016/02/13-465-0297.pdf
301 http://www.glenbradford.com/wp-content/uploads/2016/02/13-465-0301.pdf
389 http://www.glenbradford.com/wp-content/uploads/2017/09/13-465-0389.pdf
404 http://www.glenbradford.com/wp-content/uploads/2018/05/13-465-0404-1.pdf
422 http://www.glenbradford.com/wp-content/uploads/2018/10/13-465-0422.pdf

449 second amended complaint
https://www.courtlistener.com/recap/gov.uscourts.uscfc.28224/gov.uscourts.uscfc.28224.449.0.pdf
“The amended complaints contain some additional details, add claims for illegal exaction, breach of fiduciary duty, and breach of contract, and style various claims as both “direct” and “derivative.”

And

A heavily-redacted presentation from fanniefreddiesecrets.org http://fanniefreddiesecrets.org/wp-content/uploads/2016/08/October-2008-PWC-Freddie-Memo.pdf

And

Susan McFarland http://www.fairholmefundsinc.com/Documents/ExhibitC.pdf


REDACTED
Now if you read between the lines of the redacted pages, it is very clear the board of directors consent, and the financial data supporting the consent (the government claims they have by redacting the documents) is the problem, not sure how the government thinks this is a self-evaporating problem that with solve itself by time, but as we now can conclude there was a problem with the takeover (so plaintiff claims), and now after 12 years this problem, is still the problem.

SEALED INFORMATIOM
Then on May 30, 2014 the government realized the discovery would only harm them and they decided to file a “MOTION for Protective Order”, this gave the government the possibility to seal documents and redact documents for the public, this hide and seek game however has a consequence, eventually after the ruling the documents will need to be unsealed again and be made public, this puts the government in disadvantage, when there is nothing damaging in the documents, the government overstepped because there is nothing to hide from and distortion or obstruction of justice will come into play after the ruling, or the facts in in the documents will justify plaintiffs arguments, and will prove the obstruction of justice so in either case it is a negative for the government prior to settling the case


LAWSUITS FILED AFTER SECOND AMENDED COMPLAINT
quote “In addition to the amended complaints, seven additional plaintiffs recently filed suits in this Court setting forth substantially similar claims.7

7 The Court coordinated the Owl Creek, Akanthos, Appaloosa, CSS, and Mason cases for “discovery, motion practice, case management, case scheduling, and other pretrial proceedings as appropriate” and directed that the briefing schedule will follow the Court’s February 21, 2018 scheduling order. See, e.g., Order, Owl Creek Asia I, L.P. v. United States, No. 18-281 (Fed. Cl. Apr. 24, 2018), ECF No. 9. The remaining two cases have been stayed pending disposition of this motion. See Order, 683 Cap. Partners v. United States, No. 18-711 (Fed. Cl. July 16, 2018), ECF No. 10; Order, Patt v. United States, No. 18-712 (Fed. Cl. July 16, 2018), ECF No. 7.

COUNTS GRANTED AND DENIED
In the latest document (document 449) Sweeney states following claims will proceed and are denied,
The court therefore GRANTS IN PART defendant’s motion to dismiss with respect to the claims plaintiffs label as direct (counts I, IV, VII, and X), and DENIES IN PART the motion with respect to the derivative claims (counts II, III, V, VI, VIII, IX, XI, XII). By no later than Friday, January 10, 2020, the parties shall file a joint status report proposing further proceedings and, if appropriate, a schedule for such proceedings.

GRANTED
COUNT II
Just Compensation Under the Fifth Amendment
for the Taking of Private Property for Public Use
(Derivative Claim on Behalf of Fannie Mae by Plaintiff Barrett)

COUNT III
Just Compensation Under the Fifth Amendment
for the Taking of Private Property for Public Use
(Derivative Claim on Behalf of Freddie Mac by Plaintiff Barrett)


COUNT V
Illegal Exaction Under the Fifth Amendment
(Alternative Derivative Claim on Behalf of Fannie Mae by Plaintiff Barrett)

COUNT VI
Illegal Exaction Under the Fifth Amendment
(Alternative Derivative Claim on Behalf of Freddie Mac by Plaintiff Barrett)

Count VIII
Breach of Fiduciary Duty
(Derivative Claim on Behalf of Fannie Mae by Plaintiff Barrett)

Count IX
Breach of Fiduciary Duty
(Derivative Claim on Behalf of Freddie Mac by Plaintiff Barrett)

COUNT XI
Breach of Implied-in-Fact Contract Between the United States and the Companies
(Derivative Claim on Behalf of Fannie Mae by Plaintiff Barrett)

COUNT XII
Breach of Implied-in-Fact Contract Between the United States and the Companies
(Derivative Claim on Behalf of Freddie Mac by Plaintiff Barrett)

DENIED

COUNT I
Just Compensation Under the Fifth Amendment
for the Taking of Private Property for Public Use
(Direct Claim by all Plaintiffs)

COUNT IV
Illegal Exaction Under the Fifth Amendment
(Alternative Direct Claim by All Plaintiffs)

Count VII
Breach of Fiduciary Duty
(Direct Claim by All Plaintiffs)

COUNT X
Breach of Implied-in-Fact Contract Between the United States and the Companies
(Direct Claim by All Plaintiffs)
http://www.glenbradford.com/wp-content/uploads/2018/10/13-465-0422.pdf


The Direct Claims could not be granted because the court has no jurisdiction over it
Following Derivative claims will proceed:
1) Just Compensation Under the Fifth Amendment
2) Illegal Exaction Under the Fifth Amendment
3) Breach of Fiduciary Duty
4) Breach of Implied-in-Fact Contract Between the United States and the Companies

1) For claim one “The just compensation” it not specified as to what action violated the 5th amendment, the conservatorship itself, or the 3th amendment in the SPSPA only, maybe this is somewhere in the redacted documents or maybe fairholme did this by intent, but sure this results in TOLLING, so future litigation can have standing because the rest of the world only received redacted documents
2) The Illegal exaction is indeed a wrongful act, as it prevents plaintiffs from recovering
3) The breach of fiduciary duty comes from doing the opposite as Treasury and FHFA should have done (conserve and preserve v. siphoning of all profits in perpetually)

4) The Breach of Implied-in-Fact contract is also NEW in the second amended complaint and makes the conservatorship itself impossible, while we currently do not know what the demands of the Implied-in-Fact contract are, it doesn’t matter from a legal point of view, the BOD represents the interest of shareholders and they have a “duty of candor” that does not allow a verbal Implied-in-Fact contract, this problem is something the government cannot overcome, and will eventually lead to unwinding the conservatorship itself, and because this claim is now made in the second amended complaint in 13-465C, it is now in the public territory, that the takeover of FHFA is illegal, as the BOD cannot step into an Implied-in-Fact contract, because of their “duty of candor”
Link to implied-in-fact contract: https://www.law.cornell.edu/wex/contract_implied_in_fact
Link to BOD duty: https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-quick-guide-03-board-directors-duties-liabilities.pdf

So that is where we stand today, on Friday, January 10, 2020, the parties shall file a joint status report proposing further proceedings and, if appropriate…., a schedule for such proceedings.