Lemaster v. United States
| Decision Date | 22 February 2021 |
| Docket Number | Case No. 20-cv-0600 (SRN/DTS) |
| Court | U.S. District Court — District of Minnesota |
| Parties | Valerie LEMASTER, Plaintiff, v. UNITED STATES of America, Defendant. |
Valerie LeMaster, P.O. Box No. 138, Lonsdale, MN 55046, Pro Se.
Ann M. Bildtsen, Assistant United States Attorney, United States Attorney's Office, 300 South 4th Street, Suite 600, Minneapolis, MN 55415, for Defendant.
This matter is before the Court on Defendant United States of America's Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) [Doc. No. 10]. Based on a review of the files, submissions, and proceedings herein, and for the reasons below, the Court GRANTS the motion.
In 2015, the Consumer Financial Protection Bureau ("CFPB") and Federal Trade Commission ("FTC") brought a civil enforcement action against Green Tree Servicing, LLC, a mortgage servicing business ("Green Tree"), alleging numerous violations of consumer financial laws, among others. Shortly after filing the action, the parties resolved the dispute by way of a "Stipulated Order for Permanent Injunction and Monetary Judgment" ("Consent Order"), which, inter alia , required Green Tree to pay the CFPB certain redress funds. Plaintiff Valerie LeMaster brings this action under the Federal Tort Claims Act ("FTCA") alleging that she was a victim of Green Tree's activities as a mortgage servicer that led to the enforcement action, that the CFPB owes her a fiduciary duty with respect to these redress funds, and that it breached its duty by failing to comply with the terms of the Consent Order.
In response, the United States contends that the CFPB owes LeMaster no such duty and that, in administering the Consent Order and overseeing the distribution of redress funds, it was performing a discretionary function. As such, the United States contends, the activities LeMaster challenges in this action fit within the discretionary function exception to the FTCA's waiver of sovereign immunity, depriving the Court of subject matter jurisdiction over her claim. For this reason, the United States moves to dismiss LeMaster's claim under Rule 12(b)(1). Alternatively, the United States moves to dismiss her claim under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.
In January 2000, LeMaster purchased her family home. (Compl. [Doc. No. 1] ¶ 14.) On May 1, 2013, Green Tree purchased the servicing rights to her mortgage from Bank of America. (Id. ¶¶ 20-21.) Subsequently, LeMaster alleges that Green Tree engaged in a variety of unlawful conduct, such as failing to honor a loan modification she obtained through Bank of America. (See id. ¶¶ 18-41.) On January 7, 2014, LeMaster's home was sold at a sheriff's foreclosure sale. (Id. ¶¶ 32, 36, 39.)1
On April 21, 2015, the FTC and CFPB brought a civil enforcement action against Green Tree, alleging violations of various consumer financial laws involving its mortgage-servicing business. (See Compl., Ex. 2 at 1-43.) The parties resolved the action through a Consent Order. On April 23, 2015, this Court entered the Consent Order, executed by the FTC, CFPB, and Green Tree. Under the Consent Order, Green Tree agreed to: (1) pay $48 million to the CFPB for consumer redress; (2) pay $15 million as a civil monetary penalty; and (3) abide by a detailed framework of injunctive provisions. With respect to the redress funds, the Consent Order provides that:
All money paid to the [CFPB] pursuant to this Section shall be deposited into a fund or funds administered by the [CFPB] or its agent in accordance with applicable statutes and regulations to be used for consumer redress, including but not limited to refund of moneys, restitution, or other monetary relief, and for any attendant expenses for the administration of such redress.
(Id. § I(C), at 53.) The Consent Order further provides that:
If the [CFPB], in consultation with the [FTC], decides that redress to consumers is wholly or partially impracticable or otherwise inappropriate or funds remain after redress is completed, the [CFPB] may apply any remaining money for such other relief (including consumer information remedies) as it determines to be reasonably related to [Green Tree's] practices alleged in the Complaint. Any funds not used for such relief are to be deposited to the U.S. Treasury as disgorgement. [Green Tree] has no right to challenge any actions the [CFPB], the [FTC], or their representatives may take pursuant to this Paragraph.
Moreover, the Consent Order imposes certain requirements on Green Tree regarding consumer information. Specifically, it "permanently restrained and enjoined" Green Tree "from failing to provide sufficient consumer information to enable the [CFPB] to efficiently administer consumer redress." (Id. § XV, at 94.) Further, it provides that, "[i]f a representative of the [CFPB] requests in writing any information relating to redress, [Green Tree] must provide it, in the form prescribed by the [CFPB], within 21 days." (Id. ) This Section does not require the CFPB to request any information from Green Tree. (See id. )
The Consent Order also imposes certain compliance monitoring requirements on Green Tree. Specifically, it requires Green Tree to provide compliance reports and certain discovery if the CFPB or FTC requests them. (Id. § XX, at 105-06.) It does not require the CFPB to request any compliance reports or discovery. (See id. ) Further, the Consent Order preserves consumers’ rights to sue Green Tree. (Id. § I(E), at 53-54.) Finally, this Court retained jurisdiction over this matter "for purposes of construction, modification, and enforcement of this Order." (Id. § XXI, at 107.)
In this action, LeMaster only alleges that she is entitled to redress funds. (Compl. ¶¶ 89-109.) She does not allege she is entitled to civil monetary penalty funds. (Pl.’s Mem. in Opp'n to Def.’s Mot. to Dismiss ("Pl.’s Opp'n") [Doc. No. 22] at 5; see Compl. ¶¶ 89-109.) According to LeMaster, the CFPB received the $48,000,000 in redress funds on April 30, 2015, and deposited them into a "Legal or Equitable Fund" at the Department of Treasury. (Id. ¶¶ 47-48.) She alleges that the CFPB has admitted that these funds are "fiduciary funds." (Id. ¶ 50.)
LeMaster alleges that the CFPB contracted with Epiq Services, Inc. ("Epiq") to disburse the redress funds and that such disbursals began on September 1, 2016. (Id. ¶ 51.) Indeed, LeMaster points to a webpage from the CFPB's website providing that the CFPB "contracted with Epiq ... to administer payments for this case and to answer questions from consumers on [its] behalf," and that consumers for whom Green Tree serviced mortgages "may be able to receive compensation when funds are distributed." (Id. , Ex. 3 at 59.)
On May 4, 2015, LeMaster alleges she filed a formal complaint with the CFPB explaining why she thought she was entitled to redress funds. (Compl. ¶ 52.) She alleges she never received a response regarding this complaint, although a CFPB representative repeatedly told her that its investigation "was in progress." (Id. ¶¶ 53-56.) LeMaster also attempted to contact Epiq, but Epiq told her that it could not consider her for redress funds because Green Tree did not identify her as having been served during the qualifying period. (Id. ¶ 57.)
On March 5, 2017, LeMaster filed another formal complaint with the CFPB. (Id. ¶¶ 58-59.) She alleges that the CFPB failed to respond but told her over the phone that its investigation "was in progress." (Id. ¶¶ 60-61.) She alleges that she contacted Epiq as well, and Epiq refused to consider her for redress funds for the same reason it refused to do so the first time. (Id. ¶ 62.) The CFPB allegedly closed the Green Tree redress fund on March 31, 2019. (Id. ¶ 86.)
On November 14, 2017, LeMaster sued the CFPB, Ditech Financial LLC (f/k/a Green Tree), and the Federal National Mortgage Association, alleging that the CFPB "breached its fiduciary duty" to her under the Consent Order in several ways. On August 3, 2018, Chief Judge Tunheim dismissed LeMaster's claims against the CFPB for lack of subject matter jurisdiction based on standing. See LeMaster v. Ditech Fin. LLC , No. 17-cv-5101 (JRT/DTS), 2018 WL 3696605, at *2 (D. Minn. Aug. 3, 2018). Specifically, the court found that there was "nothing in the Consent Order that amounts to a stipulation—explicit or otherwise—by the government permitting third-party enforcement of the Consent Order," and consequently, LeMaster lacked standing, requiring dismissal of her claims to enforce the Consent Order. Id. On November 1, 2019, the Eighth Circuit affirmed the district court's ruling as to the CFPB. See LeMaster v. Ditech Fin. LLC , 782 F. App'x 519 (8th Cir. 2019) (per curiam) (unpublished).2
On February 26, 2020, LeMaster filed this FTCA action against the United States, alleging a "breach of fiduciary duty in tort related to the [CFPB's] failed compliance with its obligations" under the Consent Order. (Compl. ¶ 1.)3 Specifically, she alleges that the CFPB knew that Green Tree serviced her mortgage during the relevant time period but refused "to allow [her the] opportunity to apply for the redress funds." (Id. ¶¶ 82-85, 104.) She alleges that the CFPB was required to monitor Green Tree's compliance with the terms of the Consent Order, but that it failed to do so, as evidenced by her formal complaints and "thousands" of others. (Id. ¶¶ 64-71, 105.) She also alleges that the CFPB failed to ensure that all relevant consumers received redress funds, failed to properly...
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