Hamilton v. Jp Morgan Chase Bank, National Association

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JAMES GARY HAMILTON,
Plaintiff,
v. Case No. 1:15-cv-00149 (CRC)
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, et al.,
Defendants.
MEMORANDUM OPINION
James Gary Hamilton, who is proceeding pro se, lost his California home to foreclosure
after he fell behind on his mortgage. In this case, the third federal lawsuit he has filed over the
foreclosure, Hamilton has sued four financial institutions with connections to the mortgage. He
seeks cancellation of the foreclosure due to a variety of alleged deficiencies in the sale of the
mortgage; accuses one of the Defendants, US Bank, of violating the Truth in Lending Act
(“TILA”) by failing to notify him of the assignment of the mortgage; brings claims under the
False Claims Act as a relator on behalf of the United States; and seeks to enforce a 2012 consent
decree between the federal government and numerous banks, including two of the Defendants
here, prohibiting a variety of deceptive mortgage-servicing practices. The Defendants have
moved to dismiss Hamilton’s complaint. For the reasons explained below, the Court will grant
their motions.
I. Background
In 1999, Hamilton purchased a home in Rancho Santa Fe, California, with the help of a
$700,000 loan from Downey Savings & Loan Association, F.A., which was secured by a deed of
trust on the property. Compl. ¶¶ 2, 54. Hamilton alleges that the deed of trust was securitized
and sold to a real estate mortgage investment conduit, with Wells Fargo as the Securities
Administrator. Id. ¶ 2. The entire loan was later acquired by US Bank when it purchased
Downey’s assets in receivership. Id. ¶ 2. In 2010, after Hamilton defaulted on the mortgage, his
home was foreclosed and sold to HomeSales, Inc, a wholly owned subsidiary of JPMorgan. Id.
¶¶ 1, 68.
Hamilton brought suit in the U.S. District Court for the Southern District of California
against US Bank and HomeSales, Inc., as well as a variety of other institutions and individuals,
alleging violation of his constitutional rights under 42 U.S.C. § 1983, violation of the Fair Debt
Collection Practices Act, 15 U.S.C. § 1692, and state law claims for quiet title, wrongful
foreclosure, slander of title, and fraudulent inducement. Hamilton v. US Bank, N.A., Case No.
3:11-cv-00977 (S.D. Cal. Nov. 28, 2011). The district court dismissed Hamilton’s federal claims
with prejudice and declined to exercise supplemental jurisdiction over his state law claims. Id.Hamilton now brings an eight-count Complaint in this Court against JPMorgan Chase
Bank, US Bank, HomeSales Inc., and Wells Fargo Bank. Count One seeks cancellation of the
2010 foreclosure, alleges that Defendants lacked standing to foreclose on the property, and
claims that the foreclosure constituted intentional infliction of emotional distress. In Counts Two
through Five, Hamilton seeks to bring claims under the False Claims Act, 31 U.S.C. § 3729, as a
relator on behalf of the United States and on behalf of a class of mortgagors. Count Six seeks to
enforce a Consent Judgment entered into between several banks, including JP Morgan and Wells
Fargo, and the federal government in a prior case in this district. See Consent Judgment, ECF
Nos. 10 and 14, United States v. Bank of America Corp., 12-361 (D.D.C. Apr. 4, 2012)
(“Consent Judgment”). Count Seven alleges that US Bank violated the Truth in Lending Act
(“TILA”), 15 U.S.C. § 1601, by not providing Hamilton with notice of the assignment of his
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mortgage. Compl. ¶ 122. Finally, Count Eight seeks cancellation of various, unspecified
recorded documents associated with the non-judicial foreclosure of the property.
Defendants have moved to dismiss all of the claims, contending that: (1) Hamilton lacks
standing to enforce the Consent Judgment because he was not a party to the underlying action
that produced it; (2) an injunction and cancellation of documents are not causes of action, but
rather remedies, and Hamilton cannot obtain title to the California property because he has failed
to allege a viable, credible, and complete tender of the amounts he borrowed, as required under
California law, see Aguilar v. Bocci, 39 Cal. App. 3d 475, 477 (1974) (establishing that under
California law, a plaintiff may not quiet title without first discharging his debt); (3) Hamilton
cannot bring a False Claims Act claim as a pro se plaintiff; and (4) Hamilton’s TILA claim is
barred by a one-year statute of limitations. Additionally, US Bank moves to transfer venue to the
Southern District of California, where the property is located and all the pertinent events
allegedly took place.
II. Standard of Review
Under Federal Rule of Civil Procedure 12(b)(3), a defendant may move to dismiss a suit
for improper venue. “‘In considering a Rule 12(b)(3) motion, the court accepts the plaintiff’s
well-pled factual allegations regarding venue as true, draws all reasonable inferences from those
allegations in the plaintiff’s favor, and resolves any factual conflicts in the plaintiff’s favor.’”
Hunter v. Johanns, 517 F. Supp. 2d 340, 343 (D.D.C. 2007) (quoting Darby v. Dep’t of Energy,
231 F. Supp. 2d 274, 276 (D.D.C. 2002)). The factual allegations offered by a plaintiff
proceeding pro se are held “to less stringent standards than formal pleadings drafted by lawyers.”
Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 n.2 (D.C. Cir. 2000) (quotations
omitted).
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Under Federal Rule of Civil Procedure 12(b)(6), a court must dismiss a complaint that
fails to state a legally valid claim. The complaint must contain facts “stat[ing] a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim
has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
556, U.S. 662, 678 (2009).
III. Analysis
A. Consent Judgment (Count 6)
In 2012, the federal government, 49 states, and the District of Columbia brought suit
against numerous financial institutions, including JP Morgan and Wells Fargo, alleging that they
had engaged in deceptive and illegal practices in servicing mortgages and foreclosing on houses
before and during the 2008 financial crisis. The United States settled its claims against the banks
with a Consent Judgment, which sets forth, among other things, a list of servicing standards for
future foreclosure proceedings. Consent Judgment Ex. A, Settlement Term Sheet. Hamilton
seeks to enforce these standards against the Defendants here. However, “‘[a] consent decree is
not enforceable directly or in collateral proceedings by those who are not parties to it even
though they were intended to be benefited by it.’” SEC v. Prudential Sec. Inc., 136 F.3d 153,
157 (D.C. Cir. 1998) (quoting Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 750
(1975)). This rule applies with even greater force when the government is a party to the
judgment. See Beckett v. Air Line Pilots Ass’n, 995 F.2d 280, 288 (D.C. Cir. 1993) (“Only the
Government can seek enforcement of its consent decrees . . . [and] even if the Government
intended its consent decree to benefit a third party, that party could not enforce it unless the
decree so provided.” (citations omitted)). Applying these principles, this and several other courts
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in this district have denied mortgagors’ attempts to enforce the Consent Judgment. See, e.g.,
Walsh v. Bank of America, No. 15-cv-00021, 2015 WL 3961160 (D.D.C. June 29, 2015);
McCain v. Bank of Am., 13 F. Supp. 3d 45 (D.D.C. 2014), aff’d sub nom., No. 14-7016, 2015
WL 3372356 (D.C. Cir. May 18, 2015); Selegstrom v. Citibank, N.A., No. 14-1071, 2014 WL
6603202 (D.D.C. Nov. 21, 2014); Ananiev v. Freitas, No. 13-00341, 2014 WL 1400857 (D.D.C.
Apr. 11, 2014); Ghaffari v. Wells Fargo Bank, N.A., 6 F. Supp. 3d 24 (D.D.C. 2013).
Accordingly, Hamilton cannot bring a claim under the Consent Judgment because he was not a
party to it and the judgment does not explicitly permit third parties to enforce it.
Hamilton nevertheless contends that he can enforce the Consent Judgment as a relator on
behalf of the government. Not so. A party may not proceed as a relator unless represented by
counsel. E.g., U.S. ex rel. Fisher v. Network Software Assocs., 377 F. Supp. 2d 195, 196
(D.D.C. 2005) (citing Rockefeller v. Westinghouse Elec. Co., 274 F. Supp. 2d 10, 12 (D.D.C.
2003)). Hamilton is proceeding pro se. Hamilton also maintains that a 177-year-old Supreme
Court case, Mayor of Georgetown v. Alexandria Canal Co., 37 U.S. 91 (1838), permits the Court
to exercise its equitable jurisdiction to enforce a consent decree to prevent irreparable harm. He
relies on a passage from that case stating that “in cases of public nuisance, . . . [equity
jurisdiction] may be exercised in those cases in which there is imminent danger of irreparable
mischief, before the tardiness of the law could reach it.” Id. at 92 (emphasis added). A claim of
nuisance, however, involves an “unreasonable interference” with either “public rights,” such as
health and safety, or the “private use of land.” Restatement (Second) of Torts §§ 821B(1), 821D
(1979). Nuisance-like activity might include, for example, “indecent conduct or a rubbish heap
or the smoking chimney of a factory.” Id. § 821A Comment b.1. The doctrine has no
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application to this case. Hamilton may not sue to enforce the Consent Judgment on his own
behalf or as a private attorney general. Accordingly, Count Six will be dismissed.
B. Venue
Requiring that cases be brought in the proper venue ensures that a district with some
interest in the dispute or nexus to the parties adjudicates the plaintiff’s claims. Venue is proper
in the district where (1) a defendant resides; (2) the events giving rise to the suit occurred; or (3)
if venue would not be proper in any district for those reasons, wherever the defendants are
subject to personal jurisdiction. 28 U.S.C. § 1391(b). Under certain circumstances, a court may
exercise pendent venue based on a claim that is related to a claim properly brought in that court,
but it may not exercise pendent venue based on a claim that has been dismissed. Cameron v.
Thornburgh, 983 F.2d 253, 257 (D.C. Cir. 1993). Here, although venue might arguably have
been proper in this district as to the Consent Judgment, that claim will be dismissed. See
McCain, 13 F. Supp. 3d at 54 (finding improper venue as to remaining claims after dismissing
claim based on the Consent Judgment) (collecting cases). The remaining claims all involve the
mortgage on Hamilton’s former property. The events surrounding his claims did not occur in the
District of Columbia, nor has he alleged that any of the Defendants are residents of the District of
Columbia. Additionally, because venue would be proper in the Southern District of California,
the remaining claims cannot be brought under the third prong of Section 1391(b). Accordingly,
Hamilton cannot bring his remaining claims in this Court.
When venue is improper, the district court must dismiss the suit or, if it is in the interest
of justice, transfer the case to a district in which the case could have been brought. 28 U.S.C. §
1406(a). Dismissal, instead of transfer, is appropriate when the plaintiff’s claims suffer from
significant substantive deficiencies. Simpkins v. District of Columbia, 108 F.3d 366, 371 (D.C.
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Cir. 1997). Whether to dismiss or transfer the case is committed to the sound discretion of the
district court. Naartex Consulting Corp. v. Watt, 722 F.2d 779, 789 (D.C. Cir. 1983). The Court
will first determine what claims may be barred by the doctrine of res judicata before determining
whether other claims should be transferred to the Southern District of California.
C. Remaining Claims
1. Res Judicata (Counts 1 and 8)
Res judicata bars litigation of claims the plaintiff has already brought or that he could
have raised in a prior action between the same parties or their privies. See Allen v. McCurry,
449 U.S. 90, 94 (1980) (citing Cromwell v. County of Sac, 94 U.S. 351, 352 (1876)) (“[A] final
judgment on the merits of an action precludes the parties or their privies from relitigating issues
that were or could have been raised in that action.”). The District Court for the Southern District
of California has already adjudicated federal claims brought by Hamilton against US Bank and
HomeSales. It first dismissed with prejudice Hamilton’s constitutional claims and claims for
violations of the federal Fair Debt Collection Practices Act, Hamilton v. US Bank, N.A., Case
No. 3:11-cv-00977 (S.D. Cal. Nov. 28, 2011), neither of which is at issue here. After dismissing
the federal claims, the Court declined to exercise supplemental jurisdiction over Hamilton’s state
law claims for quiet title, wrongful foreclosure, slander of title, and fraudulent inducement. Id. at
*2. “[D]ismissal of pendant state law claims operates as a dismissal without prejudice.” Miller
v. U.S. Dep’t of Agri., 126 F. App’x 417, 418 (9th Cir. 2005). Because a “dismissal without
prejudice does not determine the merits” of the claim, it does not have res judicata effect. Shin
v. Portals Confederation Corp., 728 A.2d 615, 618 (D.C. 1999) (quotations removed). If the
Court transferred these two Counts, both alleging state law claims for wrongful foreclosure, the
District Court for the Southern District of California would very likely again decline to exercise
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pendent jurisdiction. As a result, rather than transfer the claims, the Court will dismiss Counts
One and Eight without prejudice, thereby leaving Hamilton to pursue any state law remedies he
may have in California state court.
2. False Claims Act (Counts 2, 3, 4, and 5)
Hamilton asserts four separate causes of action under the False Claims Act. However, he
did not follow the procedures necessary to bring an action as a relator under the Act. Among
other requirements, the relator must be represented by counsel. McCain, 13 F. Supp. 3d at 57.
Because the “real party in interest in such a case is the United States,” the need for adequate
legal representation of the government’s claims is essential. U.S. ex rel. Fisher, 377 F. Supp. 2d
at 196. Hamilton is proceeding pro se. His claims ex relatione must therefore be dismissed.
3. Truth in Lending Act Violations (Count 7)
Hamilton alleges that US Bank violated TILA Section 1641g because it did not disclose
the identity of the current noteholder. 15 U.S.C. § 1641(g). The statute of limitations for TILA
violations—with some exceptions not relevant here—is one year. Id. § 1640(e). According to
Hamilton’s securitization audit, Compl. Ex. D, his loan was last transferred in 2004.
Additionally, US Bank claims to have acquired an interest in Hamilton’s mortgage in 2008 when
the original lender was placed in receivership. US Bank Mot. to Dismiss at 12. As previously
mentioned, Hamilton lost title to his house in 2010 when it was foreclosed. Hamilton, Case No.
3:11-cv-00977-DMS-RBB. Under any possible transfer date, Count Seven is therefore barred by
TILA’s one-year statute of limitations.
4. Intentional Infliction of Emotional Distress
Hamilton additionally contends in Count One that the foreclosure on his mortgage
constituted intentional infliction of emotional distress by the Defendants. Even construing this
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allegation liberally as a separate claim, it is no more viable than the others. To make a claim of
intentional infliction of emotional distress, California law requires “‘(1) extreme and outrageous
conduct by the defendant with the intention of causing, or reckless disregard of the probability of
causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and
(3) actual and proximate causation of the emotional distress by the defendant’s outrageous
conduct . . . .’” Christensen v. Superior Court, 54 Cal.3d 868, 903 (1991) (citing Davidson v.
City of Westminster, 32 Cal.3d 197, 209 (1982)). For “[c]onduct to be outrageous [it] must be
so extreme as to exceed all bounds of that usually tolerated in a civilized community.” Id.Hamilton’s allegations do not meet this standard. Accordingly, Hamilton’s claim of intentional
infliction of emotional distress will be dismissed.
IV. Conclusion
For the foregoing reasons, the Court will grant the Defendants’ motions to dismiss and
deny US Bank, National Association’s Motion to Transfer as moot. An Order accompanies this
Memorandum Opinion.
CHRISTOPHER R. COOPER
United States District Judge
Date: August 4, 2015
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