render the USOC a government agent. All corporations act under charters granted by a government, usually by a state. They do not thereby lose their essentially private nature."); Delaigle v. Federal Land Bank of Columbia, 568 F. Supp. 1432, 1439 (S.D. Ga. 1983) (fact that Congress chartered land bank insufficient to make it a government agency).
Moreover, the fact that Freddie Mac is extensively regulated by the federal government also does not transform it into a government actor. To attribute Freddie Mac's decision to terminate Liberty to the federal government, this Court would have to find either that "there is a sufficiently close nexus between the [government] and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the [government] itself," Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351, 42 L. Ed. 2d 477, 95 S. Ct. 449 (1974) (citing Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 176, 92 S. Ct. 1965, 32 L. Ed. 2d 627 (1972)), or that the government "so far insinuated itself into a position of interdependence with [Freddie Mac] that it was a joint participant in the enterprise." Jackson, 419 U.S. at 357-58 (citing Burton v. Wilmington Parking Auth., 365 U.S. 715, 725, 6 L. Ed. 2d 45, 81 S. Ct. 856 (1961)).
In Myron v. Consolidated Rail Corp., 752 F.2d 50, 55 (2d Cir. 1985), the Second Circuit found that Conrail, was not a federal actor. Conrail, like Freddie Mac, is chartered by Congress. It relies heavily on federal funds and the federal government not only regulates it, but also monitors its financial performance. Additionally, the federal government owns 85% of Conrail's preferred stock and six of the thirteen people who sit on its board of directors represent the federal government. Finally, in 1981, Congress passed legislation directing the sale of Conrail's properties, regardless of the wishes of Conrail's management. Id.
Despite the substantial federal involvement in Conrail's affairs, the Myron court held that the federal government had not sufficiently insinuated itself into the affairs of Conrail to be considered a joint participant with the private entity. Given that the federal government is much more involved in Conrail's affairs than with Freddie Mac's, this Court is compelled to conclude that the federal government is not a joint participant with Freddie Mac. See also Anderson v. National Rail Passenger Corp., 754 F.2d 202 (7th Cir. 1984)(Amtrak is not a government agency for purposes of the Fifth Amendment despite congressional charter and 6 out of 9 directors being government officers).
Moreover, plaintiff does not allege that the federal government in any way compelled Freddie Mac's action. Indeed, there is no allegation that any federal employee or official participated in, or even had any prior knowledge of, Freddie Mac's decision to terminate Liberty. Additionally, no federal agency exercises any oversight or regulatory control over the day-to-day decision making of Freddie Mac. Thus, there is not a sufficiently close nexus between Freddie Mac's decision to terminate Liberty and the federal government to treat the termination as government action. See Blum v. Yaretsky, 457 U.S. 991, 1004, 73 L. Ed. 2d 534, 102 S. Ct. 2777 (1982) (Absent a showing that the United States "exercised coercive power or . . . provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the State," a regulated agency's decision does not trigger due process protections.).
Although neither the Supreme Court nor any of the Courts of Appeals have ruled on Freddie Mac's status since the 1989 amendments,
the federal courts have uniformly held that Fannie Mae and the Government National Mortgage Association ("Ginnie Mae"), two closely analogous GSE's are not engaged in state action when they undertake various activities. See e.g., Warren v. Government Nat'l Mortgage Assoc., 611 F.2d 1229, 1233 (8th Cir.)(foreclosure action taken by Ginnie Mae which is wholly owned by the United States is not "so closely linked to federal government regulation that it can in actuality be viewed . . . as the action of the federal government. . . ."), cert. denied, 449 U.S. 847, 66 L. Ed. 2d 57, 101 S. Ct. 133 (1980); Roberts v. Cameron-Brown Co., 556 F.2d 356, 358-60 (5th Cir. 1977); Northrip v. Federal Nat'l Mortgage Assoc., 527 F.2d 23, 30-33 (6th Cir. 1975). See also Federal Nat'l Mortgage Assoc. v. Scott, 548 S.W.2d 545 (Mo. 1977), app. dismissed, 436 U.S. 924, 98 S. Ct. 2816, 56 L. Ed. 2d 766 (1977). But see Samuel T. Isaac & Assoc. v. Federal Nat'l Mortgage Assoc., 647 S.W.2d 495 (Ky. App. 1982) (state intermediate appellate court summarily concluded that Fannie Mae's actions had assumed the character of government action).
As far as this Court can tell, the only three district courts to have considered whether Freddie Mac is a governmental actor since FIRREA was enacted all found that Freddie Mac was not a federal actor. In FBMC Fin., Inc. v. Federal Home Loan Mortgage Corp., No. 91 cv. 1226-R (S.D. Cal. Sept. 26, 1991), the court, relying on Myron and Anderson, stated that it could not "find a sufficient nexus between Freddie Mac's actions [terminating a seller/servicer] and the federal government to support the invocation of Fifth Amendment due process analysis." FBMC Financial, at 5. Accord The Mortgage Network, Inc. v. Federal Home Loan Mortgage Assoc., No. CV 93-303 (C.D. Cal. May 11, 1993); American Bankers Mortgage Corp. v. Federal Home Loan Mortgage Assoc., No. 93-cv-1168 (C.D. Cal. May 3, 1993). Because this Court agrees that Freddie Mac is not a federal actor, summary judgment with respect to Liberty's Fifth Amendment claims is granted in favor of defendant.
B. Freddie Mac's Seizure of Liberty's Service Portfolio Was Not State Action
Defendant also seeks summary judgment with respect to Liberty's due process claims brought under 28 U.S.C. § 1983 and the New York State Constitution. In order to state a claim under § 1983, plaintiff must establish that defendant, acting under color of state law, deprived plaintiff of a right protected by the Constitution or laws of the United States. In order to state a claim under the New York State Constitution's due process clause, plaintiff must also establish that defendant was a state actor when it terminated Liberty. Sharrock v. Dell Buick-Cadillac, Inc., 45 N.Y.2d 152, 408 N.Y.S.2d 39, 379 N.E.2d 1169 (Ct. App. 1978). Although the two claims seem to be identical, New York courts have held that "the mere fact that an activity might not constitute State action for the purposes of the Federal Constitution does not perforce necessitate that the same conclusion be reached when that conduct is claimed to be violative of the State Constitution.
Id. 408 N.Y.S.2d at 43. In other words, there is a possibility that Freddie Mac's actions can be deemed state action under the state constitution and private action under the federal Constitution.
In its complaint, plaintiff failed to allege how Freddie Mac can be viewed as a state actor. In oral argument before this Court, plaintiff suggested that defendant employed New York State Uniform Commercial Code provisions to seize its servicing portfolio. Plaintiff now claims that "Liberty's servicing portfolio was transferred not only in violation of various UCC's filed by other third-party lenders under New York law, but with complete disregard as to affording Liberty an opportunity to be heard prior to the deprivation. . . ." Pl. Mem. in Opp. at 9. Although plaintiff failed to specify which provisions were used or violated, even after this Court instructed the parties to brief the issue, it still claims that defendant's use of these unnamed state procedures somehow transformed Freddie Mac from a private actor to a state actor under both the federal and state constitutions.
Freddie Mac argues that it did not act under the U.C.C. or any other state procedure in taking the termination action and seizing plaintiff's servicing portfolio. Rather, it argues that Liberty was terminated as a servicer pursuant to the terms of the contract between the parties. Moreover, Freddie Mac argues that even if it had acted pursuant to Article 9 of the U.C.C., New York courts have held that a creditor repossessing collateral pursuant to Article 9 is not engaged in state action under the federal Constitution.
See Jefferds v. Ellis, 132 A.D.2d 321, 522 N.Y.S.2d 398 (4th Dep't 1987), app. dismissed, 70 N.Y.S.2d 1002, 526 N.Y.S.2d 438, 521 N.E.2d 445 (1987).
Furthermore, plaintiff has not directed this Court to any authority to support its theory that a private entity's use or violation of a U.C.C. provision is sufficient to transform a private actor into a state actor under the state constitution. All plaintiff has done is make vague allegations, unsupported by any facts, that Freddie Mac acted pursuant to or in violation of some state law. Without more, there is no way to determine the degree, if any, of state involvement in Freddie Mac's decision to terminate Liberty. Liberty may not escape summary judgment by making bare and ambiguous allegations and then claiming that issues of material facts exist. See Neustein v. Orbach, 732 F. Supp. 333, 346 (E.D.N.Y. 1990) (A complaint must contain "more than naked improbable unsubstantiated assertions without any specifics."). Accordingly, defendant's motion for summary judgment with respect to the § 1983 claim and the state constitutional violations is granted.
For the above-stated reasons, all claims brought under the Fifth Amendment of the United States Constitution, 28 U.S.C. § 1983 and the due process clause of the New York state constitution are hereby dismissed.
LEONARD D. WEXLER
UNITED STATES DISTRICT JUDGE
Dated: Hauppauge, New York
May 28, 1993