Shupe v. Nationstar Mortgage Llc, et al

MOTION to Dismiss Case

D. Ariz.February 15, 2017

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ELIZABETH STRANGE Acting United States Attorney District of Arizona KATHERINE V. FOSS Assistant U.S. Attorney Arizona State Bar No. 029124 405 W. Congress Street, Suite 4800 Tucson, Arizona 85701-5040 Telephone: (520) 620-7300 Fax: (520) 620-7138 e-mail: Katherine.foss@usdoj.gov Attorneys for Defendant Federal Housing Administration IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Richard Shupe, Plaintiff, vs. NationStar Mortgage, Federal Housing Administration, Defendants. 4:16-CV-00336-JAS-LCK MOTION TO DISMISS THIRD AMENDED COMPLAINT Defendant Federal Housing Administration (FHA), by and through its undersigned attorneys, for the limited purpose of this motion, moves to dismiss Plaintiff’s Third Amended Complaint for lack of service and lack of jurisdiction. As a preliminary point, Plaintiff has failed to serve the FHA in accordance with Fed. R. Civ. P. 4, as his affidavit of service reveals his service to the agency was only to the address of the U.S. Attorney’s Office. [Doc. 36]. More significantly, however, this action should be dismissed for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) because (1) there is no Bivens remedy against a federal agency or an officer acting in their official capacity; (2) Plaintiff failed to exhaust his administrative remedies as is required to waive sovereign immunity under the Federal Torts Claim Act (“FTCA”), 28 U.S.C. § 2671, et seq.; (3) there is no waiver of sovereign immunity for claims of unjust enrichment; and (4) Plaintiff’s claims are barred by the misrepresentation exception to the FTCA. As the Report and Case 4:16-cv-00336-JAS-LCK Document 47 Filed 02/15/17 Page 1 of 7 - 2 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Recommendation granting Nationstar’s motion to dismiss recognized, the underlying facts of this case reveal no claims: Plaintiff is not eligible to cancel MIP, as the $110,000 balance owed on his loan is greater than 78% of the purchase price. [Doc. 45 at 5]. This motion is supported by the Memorandum of Points and Authorities and all papers previously filed in this case. MEMORANDUM OF POINTS AND AUTHORITIES I. STANDARD OF REVIEW The Court may dismiss an action under Rule 12(b)(1) if the Complaint does not allege facts sufficient to establish subject matter jurisdiction on its face or, even if the Complaint establishes jurisdiction on its face, the evidence does not support a finding of jurisdiction. See Thornhill Publishing Co. v. Gen. Tel. & Elec. Corp., 594 F.2d 730, 733 (9th Cir. 1979). In a facial attack on jurisdiction, the Court accepts the allegations of the Complaint as true and construes them in the light most favorable to the nonmoving party. See Jacobson v. Katzer, 609 F. Supp. 2d 925, 930 (N.D. Cal. 2009) (citing Fed’n of African Am. Contractors v. Oakland, 96 F.3d 1204, 1207 (9th Cir. 2009)). Because “[f]ederal courts . . . have only that power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto,” Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986) (citation omitted), the Court presumes the matter lies outside its limited jurisdiction, and the burden is on the party asserting jurisdiction to establish that it exists. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted)). II. SOVEREIGN IMMUNITY AND SUBJECT MATTER JURISDICTION As a sovereign, the United States “is immune from suit unless it has expressly waived such immunity and consented to be sued.” Dunn & Black, P.S. v. United States, 492 F.3d 1084, 1087-88 (9th Cir. 2007) (quoting Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985)). A waiver of sovereign immunity must be explicit and “[w]here a suit has not been consented to by the United States, dismissal of the action is required .... [because] Case 4:16-cv-00336-JAS-LCK Document 47 Filed 02/15/17 Page 2 of 7 - 3 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the existence of such consent is a prerequisite for jurisdiction.” Id., 492 F.3d at 1088; see also Lehman v. Nakshian, 453 U.S. 156, 160 (1981) (the terms of the government’s consent to be sued define the Court’s jurisdiction); United States v. Mitchell, 463 U.S. 206, 212 (1983) (“It is axiomatic that the United States may not be sued without its consent and that the existence of consent is a prerequisite for jurisdiction.”). Additionally, “a waiver of sovereign immunity is to be strictly construed, in terms of its scope, in favor of the sovereign.’” Dunn, 492 F.3d at 1088 (citing Dep’t of the Army v. Blue Fox, Inc., 525 U.S. 255, 261 (1999). Thus, an action against the United States must be dismissed unless the plaintiff establishes that the action falls within an unequivocal waiver of sovereign immunity. See id. (citing Cunningham v. United States, 786 F.2d 1445, 1446 (9th Cir. 1986)). An action against an officer of the United States in his or her official capacity or against an agency of the United States is considered an action against the United States. See Balser v. Dep’t of Justice, 327 F.3d 903, 907 (9th Cir. 2003). III. ARGUMENT A. There is No Bivens Claim Against a Federal Agency or Agency Employee Acting in His Official Capacity. No Bivens claim is available against a federal agency. F.D.I.C. v. Meyer, 510 U.S. 471, 484 (1994). There are no individuals named in this action, and even if Plaintiff wished to name Julian Castro, head of FHA, it would not affect this analysis. As the Ninth Circuit explained, “This is because a Bivens suit against a defendant in his or her official capacity would merely be another way of pleading an action against the United States, which would be barred by the doctrine of sovereign immunity.” Consejo de Desarrollo Economico de Mexicali, A.C. v. United States, 482 F.3d 1157, 1173 (9th Cir. 2007). Additionally, to the extent Plaintiff is claiming discrimination, Plaintiff does not identify any protected class to which he belongs, or how HUD’s policy harms that protected class. Count I must be dismissed for lack of jurisdiction. B. Plaintiff Has Failed to Exhaust His Administrative Remedies, As Is Required to Invoke a Waiver of Sovereign Immunity Under the FTCA. Case 4:16-cv-00336-JAS-LCK Document 47 Filed 02/15/17 Page 3 of 7 - 4 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Although Plaintiff’s Count II does not specifically identify any action of the FHA as negligent, assuming arguendo he meant to plead it against the FHA, the plain face of Plaintiff’s Third Amended Complaint reveals that he failed to exhaust the administrative remedies as required by the FTCA. The FTCA is a limited waiver of sovereign immunity and is the exclusive remedy for claims sounding in tort against the United States for the acts of its employees within the scope of their employment. See 28 U.S.C. § 2679(a); Brady v. United States, 211 F.3d 499, 503 (9th Cir. 2000); see also Mann v. U.S., No. CV- 11-8018-PCT-LOA, 2012 WL 2131933, *4 (D. Ariz. June 12, 2012) (citing 28 U.S.C. § 2679(b)(1); U.S. v. Smith, 499 U.S. 160, 161-62 (1991)). The FTCA requires administrative exhaustion as a prerequisite to a court action. See Brady, 211 F.3d at 502. As provided in the FTCA, “An action shall not be instituted upon a claim against the United States . . . unless the claimant shall have first presented the claim to the appropriate federal agency and his claim shall have been finally denied by the agency. …” Id. (quoting 28 U.S.C. § 2675(a)). “Because the requirement is jurisdictional, ‘it must be strictly adhered to.’’ Id. at 502 (quoting Jerves v. U.S., 966 F.2d 517, 521 (9th Cir. 1992)); see also McNeil v. United States, 508 U.S. 106, 113 (1993) (holding that unrepresented litigants are also required to comply with the procedural requirements under the FTCA). The Complaint does not allege that Plaintiff has submitted and pursued administrative tort claims to final agency decision with respect to the matters alleged in the Complaint, and the FHA has no record of the same as well. Because Plaintiff does not establish that he has exhausted his administrative remedies, the claims must be dismissed for lack of subject matter jurisdiction. C. There Is No Waiver of Sovereign Immunity for Plaintiff’s Unjust Enrichment Claim. The Supreme Court has held on multiple occasions that there is no waiver of sovereign immunity for “claims on contracts implied in law,” which encompasses claims for unjust enrichment. See Hercules Inc. v. United States, 516 U.S. 417, 423 (1996); Alabama v. United States, 282 U.S. 502 (1931); United States v. Minnesota Mut. Inv. Co., Case 4:16-cv-00336-JAS-LCK Document 47 Filed 02/15/17 Page 4 of 7 - 5 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 271U.S. 212 (1926); Sutton v. United States, 256 U.S. 575, 581 (1921). Further, the FTCA does not contain a waiver of sovereign immunity for equitable claims. Westbay Steel, Inc. v. United States, 970 F.2d 648, 651 (9th Cir. 1992). As a result, this claim must be dismissed for lack of subject matter jurisdiction. D. Plaintiff’s Claim under the Arizona Consumer Fraud Act Is Also Barred by the Misrepresentation Exception to the FTCA. Plaintiff’s claims are also barred by the misrepresentation exception to the FTCA. 28 U.S.C.A. § 2680(h) excludes liability under the FTCA for “[a]ny claim arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights . . .” As the Ninth Circuit held in Frigard v. United States, 862 F.2d 201, 202 (9th Cir. 1988), “[c]ourts have interpreted this exception to bar claims arising from commercial decisions based on false or inadequate information provided by the government.”) It does not matter that Plaintiff couches his claims in terms of the Arizona Consumer Fraud Act and negligence. The Supreme Court explained in United States v. Neustadt, 366 U.S. 696, 706-07 (1961), To say . . . that a claim arises out of ‘negligence,’ rather than ‘misrepresentation,’ when the loss suffered by the injured party is caused by the breach of a ‘specific duty’ owed by the Government to him, i.e., the duty to use due care in obtaining and communicating information upon which that party may reasonably be expected to rely in the conduct of his economic affairs, is only to state the traditional and commonly understood legal definition of the tort of ‘negligent misrepresentation,’ as is clearly, if not conclusively, shown by the authorities set forth in the margin, and which there is every reason to believe Congress had in mind when it placed the word ‘misrepresentation’ before the word ‘deceit’ in s 2680(h). See also Moon v. Takisaki, 501 F.2d 389, 390 (9th Cir. 1974) (affirming dismissal of Washington Consumer Protection Act claim where claim arose out of misrepresentation); Life Partners Inc. v. United States, 650 F.3d 1026, 1032 (5th Cir. 2011) (“The FTCA's misrepresentation exception is broad: it bars any claim arising out of a misrepresentation- even if the conduct underlying the claim may also constitute a tort not barred by section Case 4:16-cv-00336-JAS-LCK Document 47 Filed 02/15/17 Page 5 of 7 - 6 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2680(h).”); Mill Creek Grp., Inc. v. F.D.I.C., 136 F. Supp. 2d 36, 44 (D. Conn. 2001) (dismissing claims for, inter alia, breach of the covenant of good faith and fair dealing, negligent misrepresentation, detrimental reliance, and fraud under the New Jersey Consumer Fraud Act based on the misrepresentation exception). In addition, amendment would be futile-Plaintiff has no way of pleading this claim that does not come afoul of these exclusions. “[A] plaintiff cannot circumvent the exclusions in the FTCA by ‘simple expedient drafting’ where in reality the United States is immunized against the claim.” Smalls v. Emanuel, 840 F. Supp. 2d 23, 34 (D.D.C. 2012); see also Hall v. United States, 274 F.2d 69, 71 (10th Cir. 1959) (“We must then look beyond the literal meaning of the language to ascertain the real cause of complaint.”) Accordingly, this claim should be dismissed, as there is no waiver of sovereign immunity, and thus no subject matter jurisdiction. E. Plaintiff Fails to State a Claim Upon Which Relief Can Be Granted. As Defendant Nationstar briefed fully, and as the Report and Recommendation stated, Plaintiff’s claims all rest upon his belief that he is not required to pay mortgage insurance premiums. As the HUD Letters judicially noticed in this case reveal, “FHA will determine when a borrower has reached the 78% loan to value ratio based on the lower of the sales price or appraised value at origination. New appraised values will not be considered.” HUD Letter 2000-38, judicially noticed at Doc. 45 at 4, available at https://portal.hud.gov/hudportal/documents/huddoc?id=DOC_13062.doc. Plaintiff alleges that he still owes $110,000 [Doc. 32 at 4], which is greater than 78% of the $125,000 sales price. [Doc. 20, Exh. 3]. Plaintiff can identify no reason why he should not be held to the terms of his loan. Plaintiff’s case should be dismissed without leave to amend. IV. CONCLUSION For the foregoing reasons, this Court should dismiss Plaintiff’s case in full without leave to amend. Respectfully submitted this 15th day of February, 2017. Case 4:16-cv-00336-JAS-LCK Document 47 Filed 02/15/17 Page 6 of 7 - 7 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ELIZABETH STRANGE Acting United States Attorney District of Arizona s/ Katherine V. Foss KATHERINE V. FOSS Assistant U.S. Attorney Copy of the foregoing served by first class mail this 15th day of February, 2017, to: Richard Shupe 3657 S. Double Echo Rd. Tucson, AZ 85735 Plaintiff Pro Se s/ P. Vavra /Motion to Dismiss Case 4:16-cv-00336-JAS-LCK Document 47 Filed 02/15/17 Page 7 of 7