FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW
HAMPSHIRE [Hon. Joseph A. DiClerico, Jr., U.S. District
William Christopher Sheridan, with whom Sheridan Law Offices,
was on brief, for appellant.
W. McGarry, with whom Goodwin Procter LLP was on brief, for
Howard, Chief Judge, Torruella and Selya, Circuit Judges.
Merrill doctrine requires a showing of actual
authority as a basis for holding a federal instrumentality
vicariously liable for the acts of its agents. See Fed.
Crop Ins. Co. v. Merrill, 332 U.S.
380, 384 (1947). It follows that such an instrumentality
cannot be held vicariously liable for acts of its agents that
were not actually authorized even if a private principal
could be held liable in the same or similar circumstances
under a theory of apparent authority. See id. The
case at hand arises against this backdrop and presents a
question of first impression at the federal appellate level:
does the protective carapace of the Merrill doctrine
extend to the Federal National Mortgage Association (Fannie
Mae)? Because we answer this question in the affirmative and
likewise conclude that the other arguments advanced by
plaintiff-appellant Ralph Faiella lack force, we affirm the
district court's entry of summary judgment in Fannie
briefly rehearse the relevant facts and travel of the case,
viewing those facts in the light most flattering to the
appellant (the party opposing summary judgment). See
Avery v. Hughes, 661 F.3d 690, 691
(1st Cir. 2011). In 2007, the appellant took out a loan
secured by a first mortgage on his principal residence in
Plaistow, New Hampshire. The lender assigned the mortgage
loan to Fannie Mae, which arranged for it to be serviced by
Green Tree Servicing LLC, now called Ditech Financial LLC
the next eight years, the appellant occasionally failed to
make his monthly mortgage payments. On each occasion, he
worked with an assigned Ditech representative to cure the
default and effect late payment of the arrearage. In the
summer of 2015, the appellant missed yet another payment. He
thereafter received a mortgage statement indicating an
arrearage of $5, 428.61, which included an exhortation that
he contact his assigned representative to bring his account
current. After speaking with the representative, the
appellant mailed Ditech a check covering both the described
arrearage and his anticipated October 2015 mortgage payment.
This check, in the gross amount of $6, 167.21, was mailed to
Ditech on September 17, 2015.
days later, the appellant received a notice of foreclosure on
his home. He immediately wrote to his Ditech representative
to confirm that he had sent a check sufficient to cure the
default. In the same letter, he requested that the
foreclosure be halted. The appellant heard nothing for over a
week. Ditech then returned his check and notified him that
the amount tendered was not correct.
appellant promptly contacted his Ditech representative. She
told him that the problem was that he had submitted a
personal check, not a cashier's check. Relying on this
insight, the appellant sent Ditech a cashier's check in
the same amount. His efforts proved unavailing: the
foreclosure sale proceeded, and Fannie Mae acquired the
mortgaged property at that sale on October 16, 2015. For its
part, Ditech simply returned the cashier's check to the
appellant and instructed him to contact his representative
concerning the amount owed. When the appellant complied, his
representative informed him that she did not know the amount
needed to wipe out the foreclosure and reinstate his loan.
the foreclosure, the appellant apparently retained physical
possession of the premises. He went on the offensive and, in
February of 2016, sued Fannie Mae and Ditech in a New
Hampshire state court. The appellant's complaint prayed
for a declaratory judgment regarding the invalidity of the
foreclosure, asserted a wrongful foreclosure claim, and
sought money damages for economic loss and emotional
distress. The action was removed to the United States
District Court for the District of New Hampshire.
See 28 U.S.C. §§ 1332, 1441. There, the
appellant filed an amended complaint seeking only a
declaratory judgment with respect to the alleged invalidity
of the foreclosure. On its own motion, Ditech was dropped
from the case on the ground that it had not participated in
the foreclosure proceeding.
of 2016, Fannie Mae moved to rescind its foreclosure deed and
reinstate the appellant's mortgage. The appellant opposed
the motion, arguing that this unrequested equitable relief
would prevent him from seeking damages. The district court
denied Fannie Mae's motion and granted the
appellant's oral motion to amend his complaint to
reassert his damages claims.
appellant filed a further amended complaint, replacing his
previous prayer for declaratory relief with a compendium of
damages claims alleging violations of several federal and
state debt collection and consumer protection laws and
regulations. This further amended complaint also included
common-law tort claims for deceit and negligent
misrepresentation.Fannie Mae successfully moved to dismiss
the statutory claims on various grounds. The dismissal of
these claims (which is not an issue here) left only the
appellant's common-law claims alleging that Fannie Mae
was vicariously liable for deceit and negligent
misrepresentation committed by Ditech employees.
season, Fannie Mae answered what remained of the further
amended complaint. Its answer contained, inter alia, an
affirmative defense asserting that, to the extent that the
appellant sought to hold Fannie Mae vicariously liable for
Ditech's actions, any such liability was pretermitted by
the Merrill doctrine. Alternatively, Fannie Mae
asserted that the appellant's claims against it were
barred by the economic-loss doctrine, a common-law principle
recognized in New Hampshire. See, e.g.,
Wyle v. Lees, 33 A.3d 1187, 1190 (N.H. 2011);
Plourde Sand & Gravel v. JGI E.,
Inc., 917 A.2d 1250, 1253 (N.H. 2007).
the course of two status conferences, the parties agreed that
Fannie Mae's affirmative defenses were essentially legal
in nature and were potentially dispositive. In line with this
agreement, the court entered a bifurcated scheduling order,
under which it would address the merits of Fannie Mae's
Merrill doctrine and economic-loss arguments before
dealing with the appellant's damages claims.
Mae moved for summary judgment on the Merrill
doctrine and economic-loss issues. The appellant opposed the
motion. The district court granted summary judgment on the
basis of the Merrill doctrine, holding that Fannie
Mae was a federal instrumentality protected from vicarious
liability for the unauthorized acts of its agents. See
Faiella v. Fed. Nat'l Mortg.
Ass'n, No. 16-CV-088, 2017 WL 6375600, at *6-*8
(D.N.H. Dec. 13, 2017). This timely appeal ensued.