Lundahl v. Gross, 5:18-CV-05090-LLP

• Decision Date: 26 February 2020
• Docket Number: 5:18-CV-05090-LLP
• Parties: HOLLI LUNDAHL, Plaintiff, v. JULIE GROSS, IN HER OFFICIAL AND PERSONAL CAPACITIES AS DIRECTOR FOR THE STATE OF SOUTH DAKOTA OFFICE OF RURAL DEVELOPMENT; STATE OF SOUTH DAKOTA OFFICE OF RURAL DEVELOPMENT, CRAIG STEINLEY, LANCE LOCKWOOD, IN HIS OFFICIAL AND PERSONAL CAPACITIES AS A LOAN SPECIALIST FOR THE STATE OF SOUTH DAKOTA OFFICE OF RURAL DEVELOPMENT; Defendants.
• Court: U.S. District Court — District of South Dakota

HOLLI LUNDAHL, Plaintiff, v. JULIE GROSS, IN HER OFFICIAL AND PERSONAL CAPACITIES AS

DIRECTOR FOR THE STATE OF SOUTH DAKOTA OFFICE OF

RURAL DEVELOPMENT; STATE OF SOUTH DAKOTA OFFICE OF

RURAL DEVELOPMENT, CRAIG STEINLEY, LANCE LOCKWOOD,

IN HIS OFFICIAL AND PERSONAL CAPACITIES AS A LOAN SPECIALIST FOR

THE STATE OF SOUTH DAKOTA OFFICE OF RURAL DEVELOPMENT; Defendants.

5:18-CV-05090-LLP

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA WESTERN DIVISION

February 26, 2020

ORDER GRANTING FEDERAL DEFENDANTS' MOTION TO DISMISS AND GRANTING DEFENDANT CRAIG STEINLEY'S MOTION TO DISMISS

Plaintiff, Holli Lundahl, filed a pro se civil rights lawsuit claiming violations of: (1) the Equal Credit Opportunity Act, (2) section 504 of the Rehabilitation Act of 1973, (3) 42 U.S.C. § 1983, alleging violations of the Fourteenth Amendment Equal Protection Clause, (4) Ex parte Young; and (5) the Fair Housing Act. Doc. 1 at 1.

Defendants, Julie Gross, State of South Dakota Office of Rural Development¹ and Lance Lockwood filed an acknowledgment of service on February 12, 2019. Doc. 30. On April 12, 2019,Gross, Lockwood, and USDA² filed a motion to dismiss and a memorandum in support. Docs. 38 and 39.

On May 7, 2019, 85 days after the federal defendants were served and after they had moved to dismiss, Plaintiff filed a "Corrected Verified First Amended Complaint," Doc. 42. The federal defendants moved to strike Plaintiff's "Corrected Verified First Amended Complaint." Doc. 47. Thereafter, Plaintiff moved for an extension to respond to the federal defendants' motion to strike and their motion to dismiss. Doc. 50. At this time, defendant Craig Steinley had not been served. This Court ordered Plaintiff's response to the federal defendants' motion to dismiss as well as their motion to strike to be filed on or before June 17, 2019. Doc. 51. Plaintiff only responded to the federal defendants' motion to strike. Doc. 53.

Defendant, Craig Steinley was not served until July 5, 2019. Doc. 74. Steinley filed a motion to dismiss and memorandum in support. Docs. 86 and 87. Plaintiff opposes Steinley's motion to dismiss. Doc. 98. Pending before this Court are various motions. See Docs. 38, 46, 47, 63, 70, 73, 75, 76, 79, 86, 92, 99.³

FACTUAL BACKGROUND

Plaintiff alleges that her and her sister, Marti Lundahl, were judicially declared disabled under the Social Security Act. Doc. 1 at 2. In 2017, Plaintiff claims she submitted an application to the local USDA Rural Development Office, which would help the Plaintiff participate in a home loan program. Id. Plaintiff was allegedly told that there were some medical debts that needed to be cleared up in her application, but was encouraged to apply again when the issues were resolved. Id.

In the meantime, Plaintiff and her sister applied to seven banks in South Dakota to obtain a loan but were rejected by each bank. Id. at 3. They then turned to the USDA's section 502 Direct Loan program. Id. Plaintiff claims that defendant Lockwood did not accept some of her grants when he calculated the initial loan eligibility figure. Id. Plaintiff attached all relevant documents to her complaint. See Docs. 1-1 and 1-2. The initial loan certificate of eligibility letter in, (Exhibit 7 of Doc. 1-1) states that "[c]hanges in any qualification variable (property location, real estate taxes, insurance, loan term/rate etc.) may impact the applicant's loan qualification amount." Doc. 1-1 at 25.

Plaintiff believes that Lockwood's failure to accept some of the grants was discriminatory. Doc. 1 at 3. Plaintiff claims that after a professional inspection report was paid for, Lockwood ordered an appraisal to occur in October of 2018. Id. at 5. Plaintiff believes Lockwood was lying when he said he did not have the name of the appraiser at this time. Id. Plaintiff sought different housing assistance grants that were to expire on November 21, 2018. Id. Plaintiff called Lockwood and Gross and "other housing officers in South Dakota and in Washington DC seeking to obtain the name of the appraiser appointed by the USDA to appraise the home - in order to obtain a commitment date before November 21, 2018" so she wouldn't lose her other funding. Id.

On November 14, 2018, Plaintiff received the name of the appraiser, defendant Craig Steinley. Id. Plaintiff claims she called Steinley repeatedly on November 15th and 16th. Id. Steinley allegedly called Plaintiff back on November 19, 2018 and said he would have his report done on the morning of November 21, 2018. Id. Plaintiff claims Steinley did not perform when he said he would and Plaintiff sued him in state court. Id. at 6.

The Funding Commitment and Notification of Loan Closing letter is dated November 30, 2018 (Doc. 1-1 at 27) and indicated that the approved rate for the Section 502 Direct Loan was approved for $107, 904.00 "subject to a down payment of $72,096.00" Id. Plaintiff alleges that because she sued Steinley, Lockwood dropped her funding amount from $126,500 to 107,904.00. Id.; see Doc. 1-1 at 25, 27. When Plaintiff confronted Lockwood on the change in the amount she alleges that Lockwood responded that the change was due to a miscalculation of property taxes. Id. at 7. Plaintiff believes this was the second act of discrimination. Id. at 6-7. Plaintiff asserts that these actions have caused her and her sister to come up with an extra $18,000 to secure the home. Id. She claims Lockwood "reported to HOLLI that he would not close the escrow and secure the remaining two grants until HOLLI necessarily obtained the $18,000+ additional extorted funds." Id. at 7. Plaintiff states that she obtained the extra money from a third party and claims that Lockwood made himself unavailable to her. Id. at 7.

The USDA sent Plaintiff a letter on December 7, 2018, which indicated that an administrative review was conducted on her file due to her ambiguous and conflicting information in her application documents. Doc. 1-1 at 29. The letter states "[t]he Agency will not issue loan closing instructions until it has reviewed the above information and is satisfied that each co-applicant has been forthcoming with full, complete and supportable information verifying your assets, debts, income and repayment ability, among other regulatory criteria." Id. at 30. The letterhas been redacted in some areas, but it shows that the information the USDA is requesting is a list of pending lawsuits (amount in dispute or requested relief), complete information of Plaintiff's credit report, any judgments that are outstanding against Plaintiff or her sister, any involvement in businesses (managerial, ownership, or membership), and confirming that Plaintiff has filed tax returns in the last three years. Id.

Plaintiff claims she responded on December 9, 2018 and

assert[ed] that neither her or Marti had any pending money judgments against them in any of their self[-]initiated civil lawsuits, that Holli and Marti's litigation activities were not material to their present poor status and qualifying for the referenced section 502 direct loan, that the property was not at risk for being attached for any [of] Holli or Marti's litigation activities because the title to the property was to be in the name of the Lundahl-Telford Trust, a special needs trust organized under the laws of the Social Security Administration for SSI funded households[.]

Doc. 1 at 8-9.

The USDA's letter states that if Plaintiff does not respond with the proper material in 15 days, Plaintiff's application will be withdrawn, but she can still reapply. Doc. 1-1 at 30. Later, the seller of the home that Plaintiff and her sister were trying to secure allegedly backed out of the sale because he had two mortgages to pay. Doc. 1 at 8. Plaintiff blames this on Gross and Lockwood for failure to close the sale. Id. Now, Plaintiff "believes that GROSS will then intentionally deplete the funding amounts to another borrower to put it beyond HOLLI and MARTI's reach." Doc. 1 at 9. Plaintiff requests an immediate injunction, proper funding of $138,000, a penalty of $110,000 for failing to close the escrow, and other remedies. Id. at 11-12.

LEGAL STANDARD

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly,550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (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." Id. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Inferences are construed in favor of the non-moving party. Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir. 2012) (citing Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 595 (8th Cir. 2009)).

Pro se complaints, "'however inartfully pleaded,' [are] held to 'less stringent standards than formal pleadings drafted by lawyers.'" Estelle v. Gamble, 429 U.S. 97, 106, 97 S. Ct. 285, 50 L. Ed. 2d 251 (1976) (quoting Haines v. Kerner, 404 U.S. 519, 520, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972)). Civil rights and pro se complaints must be liberally construed. Erickson v. Pardus, 551 U.S. 89, 94, 127 S. Ct. 2197, 167 L. Ed. 2d 1081 (2007) (citation omitted); Bediako v. Stein Mart, Inc., 354 F.3d 835, 839 (8th Cir. 2004). Even with this standard, a pro se complaint must "allege sufficient facts to support the claims advanced." Stone v. Harry, 364 F.3d 912, 914 (8th Cir. 2004). The court is not required to "supply additional facts, nor will [it] construct a legal theory . . . that assumes facts that have not been pleaded." Id. (citing Dunn v. White, 880 F.2d 1188, 1197 (10th Cir. 1989)). A complaint "does not need detailed factual allegations . . . [but]...