Court Opinion

ID: 2824708
Source: CourtListenerOpinion
Date Created: 2015-08-11 05:09:16.032388+00
Date Added: 2024-06-11T13:39:26.084352
License: Public Domain

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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