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Wilmington Trust, NA v. Adson

United States District Court, E.D. Pennsylvania

June 15, 2018

WILMINGTON TRUST, NA, Successor Trustee to Citibank, N.A., Trustee, in Trust for Registered Hodlers of Bear Stearns Asset Backed Securities 2007-SD2, Asset-Backed Certificates, Series 2007-SD2, Plaintiff,
ANGELO ADSON, and STACEY L. JULYE, Defendants/Third Party Plaintiffs,


          DuBois, J.


         This case arises out of Angelo Adson and Stacey L. Julye's (“borrowers”) default on their mortgage on a residential property. Wilmington Trust, N.A, successor mortgagee, brought a foreclosure action against borrowers. Borrowers thereafter filed a Third Party Complaint against Dr. Ben Carson in his capacity as Secretary of the United States Department of Housing and Urban Development (“HUD”). In the Third Party Complaint, borrowers bring claims against HUD for breach of contract, fraud, and breach of the covenant of good faith and fair dealing for not providing Fair Housing Administration insurance on the mortgage. Presently before the Court is HUD's Motion to Dismiss the Third Party Complaint. For the reasons that follow, the Motion is granted.


         The facts as alleged in borrowers' Third Party Complaint are as follows. On July 19, 2000, borrowers obtained a home mortgage loan from Hansen Mortgage Services, Inc. in the amount of $147, 682. Third Party Compl. ¶¶ 22, 23. Borrowers allege that they contracted with HUD for Federal Housing Administration (“FHA”) mortgage insurance and paid monthly premiums to HUD. Third Party Compl. ¶¶ 23, 24.

         On March 12, 2015, Wilmington Trust, NA. (“Wilmington Trust”), the successor mortgagee, filed a Complaint in the Court of Common Pleas of Delaware County alleging that borrowers defaulted on their mortgage. Third Party Compl. ¶ 41; Notice of Removal ¶ 1. On June 26, 2015, the Court of Common Pleas entered a default judgment against borrowers. Third Party Compl. ¶ 49. On December 5, 2015, the Delaware County Sheriff posted a Notice of Sheriff Sale on borrowers' property, scheduling the sale for January 15, 2016. The Court of Common Pleas postponed the sale on January 15, 2016, and thereafter stayed the sale on May 23, 2016. Third Party Compl. ¶¶ 53, 58. Borrowers allege that Wilmington Trust did not provide loss mitigation measures required for FHA insured mortgages. Third Party Compl. ¶ 42.

         Borrowers filed the Third Party Complaint on April 12, 2017, against Dr. Ben Carson in his capacity as HUD Secretary. That Complaint asserts the following claims: breach of contract (Count 1); common law fraud (Count 2); and breach of the covenant of good faith and fair dealing (Count 3). In each count, borrowers seek repayment of the mortgage loan amount of $197, 682; attorney's fees of $150, 000; $500 court costs; and punitive damages.

         Pursuant to 28 U.S.C. § 1442(a)(1), which allows civil actions commenced in state court against the United States, its agencies, or it officers, to be removed to the United States District Court for the district in which the action is pending, HUD filed a Notice of Removal on May 22, 2017. HUD thereafter filed a Motion to Dismiss the Third Party Complaint and borrowers filed their Response. The Motion is thus ripe for review.

         HUD presents the following arguments in its Motion to Dismiss the Third Party Complaint. HUD first contends that this Court lacks jurisdiction over these claims because (1) the borrowers lack standing to asserts claims against HUD; (2) the National Housing Act, 12 U.S.C. §1701, et. seq. (“NHA”) precludes judicial review of loss mitigation decisions; and (3) this Court lacks jurisdiction on the grounds of sovereign immunity and the Tucker Act. Second, HUD argues that the borrowers fail to state a claim upon which relief can be granted because (1) borrowers fail to allege an enforceable contract; (2) even if there were an enforceable contract, borrowers fail to allege a contract between FHA and borrowers; (3) without a valid contract, there is no claim for breach of the covenant of good faith and fair dealing; (4) borrowers fail to plead a fraud claim because they do not allege any representations made by HUD; and (5) borrowers' Third Party Complaint is untimely pursuant to Pennsylvania Rule of Civil Procedure 2253(a)(1), Pennsylvania's two-year statute of limitations for fraud claims, and Pennsylvania's four-year statute of limitations for contract claims.


         Federal Rule of Civil Procedure 12(b)(1) provides that a court may dismiss a complaint for “lack of jurisdiction over the subject matter” of a case. The plaintiff has the burden of establishing subject matter jurisdiction. See Carpet Group Int'l v. Oriental Rug Imp. Ass'n, 227 F.3d 62, 69 (3d Cir. 2000) (citing Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)). “Without jurisdiction the court cannot proceed at all in any case.Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998) (citation omitted).

         Two types of challenges to a court's jurisdiction may be made under Rule 12(b)(1). In re Horizon Healthcare Servs. Data Breach Litig., 846 F.3d 625, 632 (3d Cir. 2017). A facial attack under Rule 12(b)(1) “challenges subject matter jurisdiction without disputing the facts alleged in the complaint, and it requires the court to 'consider the allegations of the complaint as true.'” Davis v. Wells Fargo, 824 F.3d 333, 346 (3d Cir. 2016) (quoting Petruska v. Gannon Univ., 462 F.3d 294, 302 n.3 (3d Cir. 2006)). In a facial attack, the court applies the same standard as under Rule 12(b)(6). Horizon Healthcare Servs., 846 F.3d at 633. In a factual attack, however, a court may “weigh and consider evidence outside the pleadings.” Davis, 824 F.3d at 346. In a factual attack, the court “is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case” and “the plaintiff will have the burden of proof that jurisdiction does in fact exist.” Id. (quoting Mortensen, 549 F.2d at 891). “In short, no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.” Mortensen, 549 F.2d at 891. HUD's sovereign immunity challenge, which is the basis of the Court's decision to grant HUD's Motion to Dismiss, is a facial challenge.


         The Court agrees with HUD that the Court does not have jurisdiction over these claims based on sovereign immunity and the Tucker Act, 28 U.S.C. §§ 1346, 1491. The Court does not ...

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