Court Opinion

ID: 2659774
Source: CourtListenerOpinion
Date Created: 2014-04-03 03:40:14.293812+00
Date Added: 2024-06-11T09:16:22.592968
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

ANTHONY GHAFFARI,

       Plaintiff,
               v.                                         Civil Action No. 13-115 (JEB)
WELLS FARGO BANK. N.A., et al.,

       Defendants.

                                 MEMORANDUM OPINION

       Pro se Plaintiff Anthony Ghaffari filed this suit against Wells Fargo Bank, the Federal

Home Loan Mortgage Association, and the law firm of Phelan Hallinan, LLP. He asserts several

federal causes of action that arise from a foreclosure proceeding that is being concurrently

litigated in the Pennsylvania Court of Common Pleas for Centre County. Given that Phelan’s

motion to dismiss has been granted and Plaintiff has voluntarily dismissed all claims against

Freddie Mac, Wells Fargo is the only remaining Defendant in the case, and it now moves to

dismiss.

       Plaintiff’s causes of action against Wells Fargo include a claim for enforcement of the

2012 National Mortgage Consent Judgment entered into between the Government and Wells

Fargo in United States v. Bank of America, No. 12–361 (D.D.C.). Defendant argues that such a

claim should be dismissed on the ground that Plaintiff lacks standing to sue for violations of the

Consent Judgment. Wells Fargo is correct. As a result, venue is no longer proper here since its

only basis was this Court’s original jurisdiction over all claims relating to the Consent Judgment.

The Court, therefore, will dismiss the Consent Judgment claim and transfer the remainder of the

case to the Middle District of Pennsylvania.

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I.     Background

       Plaintiff's suit originates from foreclosure proceedings in Pennsylvania. Although the

Court need not resolve any property questions for purposes of this Motion, some detail helps to

inform the ultimate decision. The factual allegations set forth in the Amended Complaint are as

follows: In January 2012, Plaintiff fell behind on his mortgage payments to Wells Fargo. See

Am. Compl. at 6. He contacted a loan-service officer at the bank, who informed him that in

order to qualify for a loan modification, Plaintiff needed to remain at least 90 days in arrears. Id.

Although he remained in arrears for 90 days and provided the loan specialist with all of the

information she had requested, in March 2012 he was nevertheless informed that he was not

eligible for a loan modification. Id. The specialist then told him that his file had been sent to

Wells Fargo’s attorney, Phelan Hallinan, LLP, for foreclosure proceedings. Id. at 7. Plaintiff

tried unsuccessfully to speak with Phelan and other representatives of Wells Fargo to avoid these

proceedings. Id. at 7-8. Phelan, nevertheless, filed a foreclosure action on behalf of Wells Fargo

against Plaintiff in the Centre County Court of Common Pleas in central Pennsylvania. Id. at 9.

       This frustrating treatment galvanized Plaintiff to bring this suit. He alleges six distinct

causes of action against Wells Fargo: (1) The bank violated several terms of a National Mortgage

Consent Judgment issued in 2012, see id. at 11-15; (2) Wells Fargo “failed to offer or make

Plaintiff aware of counseling offered by the U.S. Department of Housing and Urban

Development” in violation of 12 U.S.C. § 1701x(c)(5), see id. at 15; (3) Wells Fargo failed to

comply with a pooling-and-servicing agreement entitled “Wells Fargo Mortgage Back Securities

2007-6 Trust” that Plaintiff asserts was incorporated into his mortgage, see id. at 16; (4) The

bank violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, as a “debt collector,” see

id. at 16; (5) Wells Fargo violated the Office of the Comptroller of Currency Consent Agreement

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#2013-132, see id. at 17; and (6) Wells Fargo failed to comply with the Equal Credit Opportunity

Act, 15 U.S.C. § 1691. See id. at 19.

       Ghaffari had originally alleged two different but related causes of action against

Defendant Phelan, which acted as Wells Fargo's counsel in the concurrent state-court foreclosure

action against Plaintiff. See Compl. at 7-9. In April 2013, this Court granted Phelan’s motion to

dismiss for lack of personal jurisdiction. See Ghaffari v. Wells Fargo Bank, N.A., 937 F. Supp.

2d 1 (D.D.C. 2013). After Plaintiff filed an Amended Complaint in July 2013 against the

remaining Defendants, Fannie Mae and Wells Fargo, they filed a joint Motion to Dismiss. See

ECF No. 45. A month later, in September 2013, Plaintiff voluntarily dismissed all claims against

Fannie Mae. See ECF No. 48. The pending Motion to Dismiss now pertains only to Wells

Fargo, the sole remaining Defendant.

II.    Legal Standard

       While Defendant’s Motion to Dismiss the first cause of action invokes the legal standards

for dismissal under Federal Rule of Civil Procedure 12(b)(6), the appropriate standard is found in

Rule 12(b)(1) because standing falls within the sphere of subject-matter jurisdiction.

       In evaluating the Motion, the Court must “treat the complaint's factual allegations as true

. . . and must grant plaintiff ‘the benefit of all inferences that can be derived from the facts

alleged.’” Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting

Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979)) (internal citation omitted); see also

Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005). This standard

governs the Court’s consideration of motions under both Rules 12(b)(1) and 12(b)(6). See

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (“In passing on a motion to dismiss, whether on

the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action,

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the allegations of the complaint should be construed favorably to the pleader.”); Walker v. Jones,

733 F.2d 923, 925-26 (D.C. Cir. 1984) (same). The Court need not accept as true, however, “‘a

legal conclusion couched as a factual allegation,’” nor an inference unsupported by the facts set

forth in the Complaint. Trudeau v. FTC, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v.

Allain, 478 U.S. 265, 286 (1986)).

       To survive a motion to dismiss under Rule 12(b)(1), Plaintiff bears the burden of proving

that the Court has subject-matter jurisdiction to hear his claims. See Lujan v. Defenders of

Wildlife, 504 U.S. 555, 561 (1992); U.S. Ecology, Inc. v. U.S. Dep’t of Interior, 231 F.3d 20, 24

(D.C. Cir. 2000). A court has an “affirmative obligation to ensure that it is acting within the

scope of its jurisdictional authority.” Grand Lodge of Fraternal Order of Police v. Ashcroft, 185

F. Supp. 2d 9, 13 (D.D.C. 2001). For this reason, “‘the [p]laintiff’s factual allegations in the

complaint . . . will bear closer scrutiny in resolving a 12(b)(1) motion’ than in resolving a

12(b)(6) motion for failure to state a claim.” Id. at 13-14 (quoting 5A Charles A. Wright &

Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed. 1987) (alteration in original)).

Additionally, unlike with a motion to dismiss under Rule 12(b)(6), the Court “may consider

materials outside the pleadings in deciding whether to grant a motion to dismiss for lack of

jurisdiction.” Jerome Stevens Pharms., 402 F.3d at 1253; see also Venetian Casino Resort,

L.L.C. v. EEOC, 409 F.3d 359, 366 (D.C. Cir. 2005); Herbert v. Nat’l Academy of Sciences, 974

F.2d 192, 197 (D.C. Cir. 1992).

       When presented with a motion to dismiss for improper venue under Rule 12(b)(3), 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.” James v. Verizon Servs. Corp., 639 F. Supp. 2d 9, 11 (D.D.C.

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2009). “Because it is the plaintiff's obligation to institute the action in a permissible forum, the

plaintiff usually bears the burden of establishing that venue is proper.” Freeman v. Fallin, 254 F.

Supp. 2d 52, 56 (D.D.C. 2003); Federal Practice and Procedure § 3826, at 258 (“[W]hen an

objection has been raised, the burden is on the plaintiff to establish that the district he or she has

chosen is a proper venue.”). “To prevail on a motion to dismiss for improper venue, the

defendant must present facts that will defeat the plaintiff’s assertion of venue.” Khalil v. L-3

Commc'ns Titan Grp., 656 F. Supp. 2d 134, 135 (D.D.C. 2009) (internal citation omitted).

Unless there are “pertinent factual disputes to resolve, a challenge to venue presents a pure

question of law.” Williams v. GEICO Corp., 792 F. Supp. 2d 58, 62 (D.D.C. 2011).

III.   Analysis

       The Court initially considers Defendant’s Motion as it relates to Plaintiff’s claim for

violations of the National Mortgage Consent Judgment; the Court then will address the

remaining venue issue.

       A. Subject-Matter Jurisdiction

       Defendant first contends that Plaintiff may not assert a claim for alleged violations of the

National Mortgage Consent Judgment because the Consent Judgment does not contemplate

enforcement by third-party beneficiaries. As a result, Plaintiff lacks standing, thereby depriving

the Court of subject-matter jurisdiction.

       Article III of the Constitution limits the power of the federal judiciary to the resolution of

“Cases” and “Controversies.” U.S. Const. art. III, § 2; see also Allen v. Wright, 468 U.S. 737,

750 (1984) (discussing case-or-controversy requirement). Because “standing is an essential and

unchanging part of the case-or-controversy requirement of Article III,” Lujan, 504 U.S. at 560,

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finding that a plaintiff has standing is a necessary “predicate to any exercise of [the Court’s]

jurisdiction.” Fla. Audubon Soc’y v. Bentsen, 94 F.3d 658, 663 (D.C. Cir. 1996).

        The National Mortgage Consent Judgment is the result of settlements between

government entities and major mortgagees, including Wells Fargo, for alleged misconduct in

home-mortgage practices. See No. 12-361, ECF No. 14 (Consent Judgment). Wells Fargo, for

its part, agreed to pay over $5 billion in the Consent Judgment, without admitting any fault, in

exchange for the release of certain liabilities related to, inter alia, unfair and deceptive consumer

practices with respect to loan servicing, origination of loans, and foreclosure practices. See id.,

Exh. F (Federal Release) & Exh. G (State Release).

        Plaintiff asserts that he has standing to seek relief for alleged violations of the Consent

Judgment because he is a “third-party beneficiary to the consent [judgment].” Opp. at 9.

Unfortunately for Ghaffari, “this circuit has opted for a bright line rule . . . that third parties to

government consent decrees cannot enforce those decrees absent an explicit stipulation by the

government to that effect.” SEC v. Prudential Sec. Inc.,136 F.3d 153, 158 (D.C. Cir. 1998)

(internal citation omitted). In this case, the Consent Judgment specifically states that

enforcement actions may be brought by a “Party to this Consent Judgment or the Monitoring

Committee.” See Consent Judgment, Exh. E (Enforcement Terms) at E-15. Since Plaintiff is not

a party and the Consent Judgment does not expressly provide for third-party enforcement, he

does not have standing to enforce its terms. See Rafferty v. NYNEX Corp., 60 F.3d 844, 849

(D.C. Cir. 1995) (“Unless a government consent decree stipulates that it may be enforced by a

third party beneficiary, only the parties to the decree can seek enforcement of it.”); 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; therefore, even if the Government intended its consent decree

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to benefit a third party, that party could not enforce it unless the decree so provided.”) (internal

citation omitted).

        In response, Plaintiff cites two cases, Miree v. DeKalb County, 433 U.S. 25 (1977), and

Ayala v. Boston Housing Authority, 536 N.E. 2d 1082 (Mass. 1989), superseded by statute as

recognized in Barnes v. Metro. Hous. Assistance Program, 679 N.E. 2d 545, 549 (1997), neither

of which deals with government consent judgments. See Opp. at 10. In Miree, survivors of

deceased passengers of an aircraft crash, the assignee of the jet-aircraft owner, and a burn victim

brought a breach-of-contract claim as third-party beneficiaries of a contract between DeKalb

County, Georgia, and the Federal Aviation Administration. See 433 U.S. at 25. Yet this contract

had nothing to do with a government consent judgment, and the Supreme Court, in any event,

never decided whether the plaintiffs in fact had standing as third-party beneficiaries. See id. at

33. Similarly, no government consent judgment appears in Ayala, where tenants of low-income

housing claimed to be third-party beneficiaries of a contract between the Boston Housing

Authority and the United States Department of Housing and Urban Development. See 536 N.E.

2d at 700. As the Court is bound by the bright-line rule this Circuit has established for

government consent judgments, see Prudential Sec. Inc.,136 F.3d at 158, these cases are

factually inapposite.

       Plaintiff also refers to Title IV of the Consent Judgment, entitled “Claims and Other

Actions Exempted from Release,” as support for his enforcement claim. See Opp. at 9. This

title states that claims asserted by third parties, including individual mortgage-loan borrowers,

are specifically reserved notwithstanding any other term of the Judgment. See State Release at

G-10. This means only that claims by individual borrowers, such as Plaintiff, are excluded from

the Consent Judgment. In other words, such borrowers may still bring suits against Wells Fargo,

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as Ghaffari has done here in his remaining counts, but not as third-party beneficiaries to the

Consent Judgment.

       Plaintiff, accordingly, has no standing to bring the first cause of action in his Complaint.

       B. Venue

       Having dismissed Count I, the Court must next consider whether venue remains proper in

the District of Columbia. The ordinary rule is that “venue must be established as to each

separate cause of action.” Beattie v. United States, 756 F.2d 91, 100 (D.C. Cir. 1984), abrogated

on other grounds by Smith v. United States, 507 U.S. 197 (1993). A district court, nevertheless,

has discretion in deciding whether to apply the principle of pendent venue to remaining causes of

action in a suit where one principal cause of action is the basis for venue. Id. at 103; Reuber v.

United States, 750 F.2d 1039, 1048 (D.C. Cir. 1984), abrogated on other grounds by Kauffman

v. Anglo-Am. Sch. of Sofia, 28 F.3d 1223 (D.C. Cir. 1994). Pendent venue, however, cannot be

used to allow a cause of action “to hang from [another] cause of action that ha[s] become moot,

and [where] appellant [cannot] fit his claim under the general venue provisions for federal

question cases set out in 28 U.S.C. § 1391(b).” Cameron v. Thornburgh, 983 F.2d 253, 257

(D.C. Cir. 1993) (transferring venue when sole count providing venue dismissed); see also

Beattie, 756 F.2d at 104 (holding that only because parties were properly before district court on

one claim was it proper to give other claims pendent venue).

       For venue in the District of Columbia, Plaintiff relies on the Consent Judgment, which

provides that the “Servicer’s obligations under this Consent Judgment shall be enforceable solely

in the U.S. District Court for the District of Columbia.” Enforcement Terms at E-14-15; see also

Am. Compl. at 3. Yet, given the dismissal of Count I, such reliance is now improper. The Court

must thus assess whether any other basis for venue exists for the remaining causes of action.

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Under 28 U.S.C. § 1391(b), a civil action may be brought in: (1) a district where a defendant

resides; (2) a district in which a substantial part of the events giving rising to the claim occurred;

or (3) if there is no district where the action may be brought, any district where a defendant is

subject to the court’s personal jurisdiction.

       Looking at the first prong, Defendant correctly asserts that it is not a resident of the

District of Columbia for purposes of this case. Pursuant to 28 U.S.C. § 1391(c)(2), a corporate

defendant is deemed to reside “in any judicial district in which such defendant is subject to the

court’s personal jurisdiction with respect to the civil action in question.” In the District of

Columbia, to establish personal jurisdiction over a foreign corporation, a court must first

“examine whether jurisdiction is applicable under the state’s long-arm statute” before

“determin[ing] whether a finding of jurisdiction satisfies the constitutional requirements of due

process.” GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1347 (D.C. Cir. 2000).

       Since Wells Fargo’s actions that give rise to this suit did not occur in the District of

Columbia, the only relevant statutory basis for the exercise of personal jurisdiction over it here is

D.C. Code § 13-334(a), establishing “general” personal jurisdiction over foreign corporations.

Plaintiff, however, may not invoke § 13-334(a) unless the corporation was served within the

District of Columbia. See Gorman v. Ameritrade Holding Corp., 293 F.3d 506, 514 (D.C. Cir.

2002) (“Where the basis for obtaining jurisdiction over a foreign corporation is § 13–334(a) . . . a

plaintiff who serves the corporation by mail outside the District is ‘foreclosed from benefitting

from [the statute's] jurisdictional protection.’”) (quoting Everett v. Nissan Motor Corp., 628 A.2d

106, 108 (D.C. 1993)). Because Plaintiff failed to serve Defendant in the District of Columbia,

see ECF No. 10 (return-of-service affidavit), Wells Fargo is not deemed to reside here in this

case for venue pursuant to 28 U.S.C. § 1391(b)(1).

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        As to the second prong, Defendant also correctly asserts that none of the events that form

the basis of Plaintiff’s Complaint occurred in the District of Columbia. Plaintiff’s suit arises

solely from foreclosure proceedings in Pennsylvania. Aside from the enforcement claim based

on the Consent Judgment, which was found not to be viable, Plaintiff makes no other allegations

in his Complaint or Opposition that relate to the District of Columbia.

        When venue is improper, the Court must dismiss the suit or, “if it be in the interest of

justice, transfer [it] to any district or division in which it could have been brought.” 28 U.S.C. §

1406(a). Although the decision to transfer or dismiss is committed to the sound discretion of the

district court, the interest of justice generally requires transferring a case to the appropriate

judicial district in lieu of dismissal. See Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466-67 (1962).

Here, the Court believes that the interests of justice require that this case be transferred to a court

with proper venue. As Plaintiff’s suit could have been brought in the Middle District of

Pennsylvania under 28 U.S.C. § 1391(b)(2), that is where this case will be transferred.

IV. Conclusion

        For the foregoing reasons, the Court will grant Defendant’s Motion to Dismiss as to

Count I and transfer what remains of the case to the Middle District of Pennsylvania. A separate

Order consistent with this Opinion will be issued this day.

                                                        /s/ James E. Boasberg
                                                        JAMES E. BOASBERG
                                                        United States District Judge
Date: November 19, 2013

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