Soloway v. United States

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No. 16-682
Filed: January 31,2017 JAN 3 | 20t7
* * * * *,* :i *** r. * * *,t * *,t * * * * * * * * * * * * l. **** :1. * l. * * U.S. COURT OF
FEDERAL CLAIMS
11 U.S.C. $ 727 (Discharge of Debtor);
BRUCE SOLOWAY,
12 U.S.C. $ 4617(a) (Housing and Economic
Recovery Act);
Plaintiff, pro se,
28 U.S.C. $ 1491 (Tucker Act Jurisdiction);
Michigan Complied Laws ("MCL")
$ 600.3204 (Forecloswe);
Rules of the United States Court of Federal
THE UNITED STATES,
Claims ("RCFC") 12(b)(l) (Subject
Matter Jwisdiction);
Defendant.
RCFC 56(d) (Facts Unavailable to Non-
Movant in Summary Judgment).
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Bruce Soloway, Fife Lake, Michigan, pro se.
Jessica M. Held, United States Department of Justice, Environment and Natural Resources
Division, Washinglon, D.C., Counsel for the Govemment.
MEMORANDUM OPINION GRANTING THE GOVERNMENT'S
MOTION TO DISMISS
BRADEN,Judge.
I. RELEVANTFACTUALBACKGROUND.'
Bruce Soloway was the owner of 7533 Lund Road SW, Fife Lake, Michigan, 49633 ("the
Property"). compl. fl 5. on December 24,2007, Mr. Soloway refinanced the Property with the
Fediral National Mortgage Association ("Fannie Mae"), through its broker Huntington National
Bank, for $160,000." Compl. tl 19.
I The facts cited herein were derived from the June 9,2016 Complaint ("Compl."), and the
exhibits attached thereto ("P1. Exs, A-J").
?01'{ l,?80 0080 1053 bq'{h
In 2008, the Federal Housing Finance Agency C'FHFA') placed Farurie Mae and the
Federal Home Loan Mortgage Corporation ("Freddie Mac") in conservatorship, pursuant to 12
U.S.C. $ 4617(a).2 Compl. tj 8.
In August 201 l, Mr. Soloway filed for Chapter 7 Bankruptcy in the United States
Bankruptcy Court for the Westem District of Michigan. Compl.fl21. On September 1,2011, the
Mortgage Electronic Registration Systems, Inc., assigned to the Huntington National Bank the
mortgage on the Property. Compl. 'tf 26.
On February 2,2012, the court granted Mr. Soloway a discharge from bankuptcy, under
I 1 U.S.C. 5 727 . Pl. Ex. D. The trustee, Kelly M. Hagan, abandoned the Property to Mr. Soloway,
without distribution. Compl. !f 21 .
On March 19, 2015, Freddie Mac foreclosed on the Property, without notice. Compl. fl 13.
On November 9, 2015, Plaintiff redeemed the Property from Freddie Mac for $118,851.02.
Compl. fl 36.
II. PROCEDURALHISTORY.
On June9,2016,Mr. Soloway ("Plaintiff') filed a Complaint in the United States Court of
Federal Claims, alleging an unlawful taking, under the Fifth Amendment to the United States
Constitution, and a violation of his due process and equal protection rights, under the Fifth and
.|]|'lf
Fourteenth Amendments. Compl. 13, 16.
On September 22,2016, the Govemment filed a Motion To Dismiss, pursuant to RCFC
l2(b)(1) and a Memorandum In Support ("Gov't Mot.").
On October 4,2016, Plaintiff frled a Motion For A Continuance To Permit Discovery,
pursuant to RCFC 56(d), that the court considers a response to the Government's september 22,
)016 Motion To Dismiss ("p1. Resp."). On October28,2016, the Govemment filed an Opposition
2 a6l7(a) provides,
12 U.S.C. g
(a) Appointment of the Agency as conseryator or receiver.
(1) In general. Notwithstanding any other provision of Federal or State law, the
Director may appoint the Agency as conservator or receiver for a regulated
entity in the manner provided under paragraph (2) or (4). All references to the
conservator or receiver under this section are references to the Agency actlng
as conservator or recerver.
(2) Discretionary appointment. The Agency may, at the discretion of the
Director, be appointed conservator or receiver for the purpose of reorganizing,
rehabilitating, or winding up the affairs of a regulated entity.
12 u.S.c. $$ a617(aXl)-(2).
To Plaintiff s Motion For Discovery ("Gov't Reply"). On November 7,2016, Plaintiff filed a
Reply ("P1. Sur Reply").
III. DISCUSSION.
A. Jurisdiction.
The United States Court of Federal Claims has jurisdiction under the Tucker Act, 28 U.S.C.
$ 1491, "1o render judgment upon any claim against the United States founded either upon the
constitution, or any Act of Congress or any regulation of an executive department, or upon any
express or implied contract with the United States, or for liquidated or unliquidated damages in
cases not sounding in tort." 28 U.S.C. $ I a91(a)( I ). The Tucker Act, however, is "a jurisdictional
statute; it does not create any substantive right enforceable against the United States for money
damages. . . . [T]he Act merely confers jurisdiction upon [the United States Court of Federal
Claimsl whenever the substantive right exists." UnitedStatesv. Testan,424U.5.392,398 (1976).
To pursue a substantive right under the Tucker Act, a plaintiff must identifr and plead an
independent contractual relationship, constitutional provision, federal statute, and/or executive
agency regulation that provide a substantive right to money damages. See Todd v. United States,
386 F.3d 1091, 1094 (Fed. Cir. 2004) ("[J]urisdiction under the Tucker Act requires the litigant to
identify a substantive right for money damages against the United States separate from the Tucker
Act[.]"); see also Fisher v. United States,402 F.3d 1167,1172 (Fed. Cir. 2005) (en banc) ("The
TuckerAct...doesnotcreateasubstantivecauseofaction;...aplaintiffmustidentifuaseparate
source of substantive law that creates the right to money damages. . . . [T]hat source must be
'money-mandating. "'). Specifically, a plaintiff must demonstrate that the source of substantive
law upon which he relies "can fairly be interpreted as mandating compensation by the Federal
Govemment[.]" Testan, 424 U.S. at 400. And, plaintiff bears the burden of establishing
jurisdiction by a preponderance of the evidence. See Reynolds v. Army & Air Force Exch. Serv.,
846 F.2d 746,748 (Fed. Cir. 1988) ("[O]nce the [trial] court's subject matter jurisdiction [is] put
in question . . . [plaintiffl bears the burden of establishing subject matter jurisdiction by a
preponderance of the evidence.").
B, Standard For Motion To Dismiss, Pursuant To RCFC 12(bxl).
A challenge to the United States Court ofFederal Claims' "general power to adjudicate in
specific areas of substantive law is properly raised by a [Rule] 12(b)(l) motion[.]"
Palmer v. United States, 168 F.3d 1310, l3l3 (Fed. Cir. 1999); see a/so RCFC l2(b)(l) ("Every
defense to a claim for reliefin any pleading must be asserted in the responsive pleading' ' . . But
a party may assert the following defenses by motion: (l) lack of subject-matter jurisdiction[.]").
When considering whether to dismiss an action for lack of subject matter jurisdiction, "a court
must accept as true all undisputed facts asserted in the plaintiff s complaint and draw all reasonable
inferences in favor of the plaintiff." Trusled Integration, Inc. v. United States, 659 F.3d I 159,
I I63 (Fed. Cir. 20l l).
C. Standard Of Review For Pro Se Litigants.
Pro se plaintiffs' pleadings are held to a less stringent standard than those of litigants
represented by counsel. See Haines v. Kerner,404 U.S. 519,520 (1972) (holding thal pro se
complaints, "however inartfully pleaded," are held to "less stringent standards than formal
pleadings drafted by lawyers"). The court traditionally examines the record "to see if [a pro se]
plaintiff has a cause of action somewhere displayed." Ruderer v. United Stdtes,4l2F.2d 1285,
1292 (Ct. Cl. 1969). Nevertheless, while the court may excuse ambiguities in a pro se plaintiff s
complaint, the court "does not excuse [a complaint's] failures." Henke v. United States,60 F.3d
795,799 (Fed. Cir. 1995).
D. Whether The Court Has Jurisdiction To Adjudicate The Claims Alleged In
The June 9, 2016 Complaint.
l. Plaintiffls June 9,2016 Complaint.
The June 9, 2016 Complaint contains two counts. Count I alleges that the United States
unlawfully took Plaintiffls property in violation of the Fifth Amendment, because Freddie Mac
was acting as a federal agency, when it foreclosed on Plaintiff s property, without "notice" or "due
process," as required by Michigan Compiled Laws ("MCL") $ 600.3204.r Compl. !f 13-14.
'MCL $ 600.3204 states,
(l) A party may foreclose a mortgage by advertisement if all of the following
circumstances exist:
(a) A default in a condition of the mortgage has occurred, by which the power
to sell became operative.
(b) An action or proceeding has not been instituted, at law, to recover the debt
secured by the mortgage or any part of the mortgage or, if an action or
proceeding has been instituted, either the action or proceeding has been
discontinued or an execution on ajudgment rendered in the action or proceeding
has been retumed unsatisfied, in whole or in part.
(c) The mortgage containing the power of sale has been properly recorded.
(d) The party foreclosing the mortgage is either the owner of the indebtedness
or of an interest in the indebtedness secured by the mortgage or the servicing
agent ofthe mortgage.
(2) If a mortgage is given to secure the payment of money by installments, each of
the installments mentioned in the mortgage after the first shall be treated as a
separate and independent mortgage. The mortgage for each ofthe installments may
be foreclosed in the same manner and with the same effect as if a separate mortgage
were given for each subsequent installment. A redemption of a sale by the
mortgigor has the same effect as if the sale for the installment had been made upon
an independent prior mortgage.
(3) If the party foreclosing a mortgage by advertisement is not the original
mortgagee, a record chain of title must exist before the date of sale under section
Count II alleges that Freddie Mac's foreclosure of Plaintiffs property has violated the Due
Process and Equal Protection Clauses of the Fourteenth Amendment, because Freddie Mac "had
no right to prosecute foreclosure against Plaintiff." Compl. t'| 16, i8. Freddie Mac "could not
foreclose [on the property,] because they did not own the mortgage, and as such [had] no authority
!o invoke any jurisdiction anywhere in the land." Compl. 'lf 3 I .
2. The Government's September 22,2016 Motion To Dismiss.
The Government argues that the claim alleged in Count I of the June 9, 20i6 Complaint,
that Freddie Mac wrongfully foreclosed on Plaintiff s property, sounds in tort. Gov't Mot. at 9.
And, the United States Court ofFederal Claims does not have jurisdiction to adjudicate tort claims.
Gov't Mot. at 9 (citing 28 U.S.C. $ 1491(a)(l).
In the Altemative, Count I alleges that Freddie Mac foreclosed on Plaintiff s property in
violation of Michigan and federal law. Gov't Mot. at 9. Claims prcmised on a regulatory or
statutory violation, however, do not state a claim for a taking. Gov't Mot. at9 (cittng Lion Raisins,
Inc. v. United States,416 F.3d 1356, 1369 (Fed. Cir.2005)). Accordingly, Count I fails to state a
valid Fifth Amendment claim against the United States and should be dismissed. Gov't Mot. at 9.
Finally, the court does not have jurisdiction to adjudicate the claim, alleged in Count II that
the United States violated Plaintiff s due process and equal protection rights, under the Fourteenth
Amendment. Gov't Mot. at 10. To pursue a substantive right in the United States Court of Federal
Claims, a plaintiff must identif and plead an independent contractual relationship, constitutional
provision, federal statute, and/or executive agency regulation that provides a substantive right to
money damages. Gov't Mot. at 10. It is well-settled, however, that the Fourteenth Amendment's
Due Process and Equal Protection Clauses are not money-mandating provisions. Gov't Mot. 10-
3, Plaintiff s October 4, 2016 Motion For A Continuance To Permit
Discovery.
Plaintiffresponds that the court should stay the briefrng schedule, pursuant to RCFC 56(d),
to permit jurisdictional discovery. Pl. Resp. at 1. Under RCFC 12(d), a motion to dismiss is
converted into a motion for summary judgment when a court considers facts outside the complaint.
Pl. Resp. at 5. The Govemment's September 22,2016 Motion To Dismiss is based on factual
assertions that go beyond the facts pleaded in the June 9, 2016 Complaint. Pl. Resp. at 4.
Specifically, the Govemment states that Freddie Mac is not acting on behalf of the United States
for the purposes of establishing jurisdiction under the Tucker Act. Pl. Resp. at 7. For this reason,
the court should consider the September 22, 2016 Motion To Dismiss as a motion for summary
judgment. Pl. Resp. at 6.
3216 evidencing the assignment of the mortgage to the party foreclosing the
mortgage.
MCL $ 600.3204.
If a nonmovant shows by affrdavit or declaration that it cannot present facts essential to
justifu its opposition of a summary judgment motion, the court may allow discovery. Pl. Resp. at
6 (citing RCFC 56(d)(2)). In response to the September 22,2016 Motion To Dismiss, Plaintiff
has filed a declaration stating that he "cannot adequately respond to [the] factual allegations ofthe
Government without the opportunity to conduct discovery." Pl. Resp. at Ex. K fl 7. Accordingly,
the court should grant Plaintiff time to take discovery. Pl. Resp. at 6.
4, The Government's October 28,2016 Response To Plaintiff s October
4, 2016 Motion.
The Govemment responds that "[c]onversion of a 12(bX1) motion to dismiss into a
summary judgment motion is not provided for by [RCFC 12(d)]." Gov't Reply at 6 (quoting N.
Hartland, L.L.C. v. United States,78 Fed. Cl. 172, l'78 (2007), aff'd,309 F' App'x 389 (Fed. Cir.
2009)). Instead, "the requirement set forth in RCFC 12(d) . . . that motions to dismiss must be
treated as motions for summary judgment . . . [is] limited to motions to dismiss under
RCFC I2(bX6) and RCFC 12(bXc)." Gov't Resp. at 6 (quoting N Hartland, L L.C.,78 Fed. Cl. at
178). Therefore, the court should not consider the Govemment's September 22,2016 Motion To
Dismiss, pursuant to RCFC 12(bX1), as a motion for summary judgment' Accordingly, RCFC
56(d), permitting a nonmovant to conduct discovery before responding to a motion for summary
judgment, does not apply in this case. Gov't Reply at 6.
The Govemment adds that, while a court may allow discovery when a motion to dismiss
challenges jurisdictional facts alleged in the complaint, a "party is not entitled to jurisdictional
discovery if the record shows that the requested discovery is not likely to produce the facts needed
to withstand a Rule l2(b)(1) motion." Gov't Resp. at 5. The court should deny Plaintiff s October
4, 2016 Motion, because there are no jurisdictional facts in dispute and discovery is not necessary
to resolve the legal sufficiency of Plaintiffs claims. Gov't Reply at 6.
5, PlaintiffNovember 7, 2016 Reply To The Government's October 28,
s
2016 Response.
Plaintiff replies that the court should grant the October 4, 2016 Motion For Continuance,
because there are jurisdictional facts in dispute and discovery is necessary to resolve the legal
sufficiency ofthe claims alleged in the June 9,2016 complaint. Pl. Sur Reply fl 28. Specifically,
Plaintiff is entitled to discovery to determine whether Freddie Mac was a govemment actor, under
the circumstances. Pl. Sur Reply fl 40.
6. The Court's Resolution.
a, Whether The Court Has Jurisdiction To Adjudicate The Claims
Alleged In The June 9, 2016 Complaint.
i. The Court Does Not Have Jurisdiction To Adjudicate
The Claims Alleged In Count I Of The June 9' 2016
Complaint.
"[l]n determining the existence and grounds for a court's jurisdiction we look to the true
nature of the action instead of merely relying on the plaintilFs characterization of the case."
Doe v. United States, 372 F.3d 1308, 1315 (Fed. Cir. 2004). Although Count I alleges "an unlawful
Govemment taking of Plaintiffs real property," that claim is not based on the Takings Clause of
the Fifth Amendment. The United States Court of Appeals for the Federal Circuit has held that a
"claim premised on a regulatory [or statutory] violation does not state a claim for a Iaking." Lion
Raisins. Inc.v. {lnited states,416 F.3d 1356, 1369(Fed. Cir.2005). In this case, the claim alleged
in Count I, i.e., thaL the Govemment unlawfully took Plaintiff s property, is premised on the
allegation that Freddie Mac foreclosed on Plaintiffs property, without notice or due process, as
required by MCL $ 600.3204. Compl. fl 13. Because these claims are premised on statutory
violations, Count I does not state a claim for a taking under the Fifth Amendment.
In addition, the claims alleged in Count I are based on violations of Michigan law and
constitutional due process. Compl.tl 13 ("This is an action that Plaintiff brings for relief due to an
unlawful Govemmental taking of Plaintiffs real property by way of Defendant Freddie Mac having
foreclosed [on Plaintiff s property] . . . on March 19,2015 without notice as required by MCL [$]
600.3204 and without due process[.]"). As a matter of law, claims founded on state law, however,
are "outside the scope of the limited jurisdiction of the [United States] Court of Federal Claims."
sourlers v. s.c. Pub. serv. Auth.,497 F.3d 1303, 1307 (Fed. Cir. 2007). And, the court does not
have j urisdiction to adjudicate claims based on the Due Process Clause ofthe Fifth and Fourteenth
Amendments, because those provisions are not money-mandating. See LeBlanc v. United States,
50 F.3d 1025, 1028 (Fed. Cir. 1995) ("[Plaintiffs complaint included counts alleging violation of
his rights under the Due Process Clauses of the Fifth and Fourteenth Amendments, the Equal
Protection Clause ofthe Fourteenth Amendment, and the doctrine of separation ofpowers' None
of these is a sufficient basis for jurisdiction because they do not mandate payment of money by
the govemment.").
For these reasons, the court has determined that it does not have jurisdiction to adjudicate
the claims alleged in Count I of the June 9,2016 Complaint
ii. The Court Does Not Have Jurisdiction To Adjudicate
The Claims Alleged In Count II Of The June 9' 2016
Complaint,
Count II of the June 9, 2016 Complaint alleges that "[t]he Sheriffs sale of the Plaintiffs
property to Freddie Mac constituted a violation ofthe [Fourteenth] [A]mendment [d]ue process of
iaw ani equal protection under the law." Compl. $ 16. But, the United States Court of Federal
Claims does not have jurisdiction to adjudicate claims based on either the Due Process or Equal
protection Clauses ofthe Fourteenth Amendment, because those constitutional provisions are not
money-mandatin g. See LeBlanc,50 F.3d at 1028. Therefore, the court has determined that it does
not hive jurisdiction to adjudicate the claims alleged in Count II ofthe June 9, 2016 Complaint.
b. Whether Plaintiff Is Entitled To Jurisdictional Discovery'
..[W]hen a motion to dismiss challenges a jurisdictional fact alleged in a complaint, a court
may allow di.cou"ry in order to resolve the factual dispute." Clear Creek Cmty. Servs. Dist. v.
(Jn-ited States, t 00 Fed. Cl. 78, 8l (201 i ). The court, however, "may deny jurisdictional discovery
when it is clear that further discovery would not demonstrate facts sufficient to constitute a basis
for jurisdiction[. f" Nuance Communications, Inc. v. Abbyy Sofrware House,626F .3d 1222,1235-
36 (Fed. Cir.2010). In this case, Plaintiffargues that discovery is required to establish that Freddie
Mac acted as the United States. But, even if Freddie Mac acted as the United States, the court does
not have jurisdiction to adjudicate any ofthe claims alleged in the June 9,2016 Complaint, because
those claims are based on violations of state law and do not identiff any money-mandating statue
or constitutional provision. Therefore, the court has determined that Plaintiff is not entitled to
jurisdictional discovery.
IV. CONCLUSION.
The United States Court of Federal Claims does not have jurisdiction to adjudicate the
claims alleged in either Count I or Count II of the June 9, 2016 Complaint, because the alleged
claims are based on violations of state law and do not identifr any money-mandating statute or
constitutional provision. Accordingly, the Govemment's September 22,2016 Motion To Dismiss
is granted. See RCFC l2(bx1). The PlaintifPs October 4,2016 Motion For A Continuance To
Permit Jurisdictional Discovery is denied. Accordingly, the Clerk of Court is directed to dismiss
the June 9, 2016 Complaint.
IT IS SO ORDERED.