Marks v. US Social Sec. Admin.

Decision Date02 November 1995
Docket NumberCiv. A. No. 4:95cv0050.
Citation906 F. Supp. 1017
CourtU.S. District Court — Eastern District of Virginia
PartiesLouis A. MARKS, et al., Plaintiffs, v. UNITED STATES SOCIAL SECURITY ADMINISTRATION, et al., Defendants.

COPYRIGHT MATERIAL OMITTED

Louis A. Marks, Jr., Hampton, VA, Pro Se.

Brenda J. Marks, Hampton, VA, Pro Se.

Jeremy S. Thompson, Hampton, VA, Pro Se.

Susan Lynn Watt, United States Attorney's Office, Norfolk, VA, for United States Social Security Administration, John Groover, United States Department of Veterans Affairs.

LaDale Kenneth George, Office of Attorney General of Virginia, Richmond, VA, James Stuart Gilmore, III, Attorney General of Virginia, Richmond, VA, William Henry Hurd, Office of the Attorney General, Richmond, VA, Jane D. Hickey, Office of the Attorney General, Richmond, VA, for Commonwealth of Virginia, Department of Rehabilitative Services, Carolina Longa, Luc Vinh.

Donna J. Hall, Mays & Valentine, Norfolk, VA, Irma W. Merrill, Merrill, James & Merrill, Memphis, TN, for Bank of America, Boatman's National Mortgage Company.

Mary Christine Maggard, Shapiro and Burson, Virginia Beach, VA, for Shapiro and Burson Trading as Professional Foreclosure Corporation, Christine Patterson, Lori-Don MacNamee, Dana Powers.

Thomas Scott Carnes, Sykes, Carnes, Bourdon & Ahern, P.C., Virginia Beach, VA, for Long and Foster Realty, Lynn Therell, Bill Peiffer.

Alan Brody Rashkind, Furniss, Davis, Rashkind & Saunders, Norfolk, VA, for A. Paul Burton.

MEMORANDUM OPINION AND ORDER INTRODUCTION

JACKSON, District Judge.

The matter presented to the Court is Defendants' Motion to Dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(1).1 Plaintiffs, acting pro se, brought this action after the Social Security Administration ("SSA") affirmed its initial denial of Plaintiff Brenda Marks' application for disability benefits. Because this Court lacks subject matter jurisdiction over the action, it GRANTS Defendants' motion. This disposition of the matter renders it unnecessary to decide Plaintiffs' Motion for Imposition of Sanctions.

I. FACTS

The SSA denied Plaintiff Brenda Marks' initial application for disability insurance benefits, (Def.s' Ex. 5), and affirmed its decision on reconsideration. (Def.s' Ex. 8.) Upon Ms. Marks' request for a hearing by an Administrative Law Judge on November 18, 1993, (Def.s' Ex. 9), the Office of Hearings and Appeals notified her that a hearing would be scheduled at a later date because of the volume of pending requests for hearing at that office. (Def.s' Ex. 10.) Before the hearing could be scheduled, the Virginia Department of Rehabilitative Services Disability Determination Service recalled the case and reversed the denial in April 1994. (Def.s' Ex. 11.) Since then, Ms. Marks has received retroactive benefits and regular monthly disability benefits. Thirteen months passed between Ms. Marks' application for benefits and the SSA's granting those benefits.

Plaintiffs claim that the delay in hearing Ms. Marks' claim and the continued denial of benefits resulted in the foreclosure on their property. The property had been conveyed to Mr. Marks, a disabled veteran, on March 15, 1990 by the Secretary of Veterans Affairs, subject to a lien of a Deed of Trust to secure a promissory note to the Secretary.2 (Def.s' Ex.s 1, 2.) National Mortgage Company, which serviced the mortgage, requested foreclosure and the property was consequently sold in September 1994.

On April 27, 1995, Plaintiffs Brenda Marks, her husband Louis Marks, and Ms. Marks' son, Jeremy Thompson, filed this action. Each plaintiff claims $500,000.00 in punitive and compensatory damages. Their claims may be stated as follows:

1. In Count I, Plaintiffs name (1) the SSA; (2) John Groover, manager of the Hampton Administration office; (3) the Virginia Department of Rehabilitative Services ("the Department"); and (4) two employees of the Department, Dr. Longa and Dr. Vinh. They claim that these Defendants are responsible for the improper disposal of Brenda Marks' medical records, which they claim included an erroneous diagnosis on initial review and on reconsideration and which was improperly sealed while her request for a hearing was pending.
2. Plaintiffs claim that the events set forth in Count I resulted in Plaintiffs' financial loss, leading to wrongful foreclosure on Louis Marks' property by Defendants National Mortgage, Shapiro, and Burson, and that the United States Department of Veterans Affairs failed to intervene in this matter on Plaintiffs' behalf.
3. Plaintiffs claim that National Mortgage, Shapiro, Burson, MacNamee, Patterson, Powers, Long & Foster, Therell, Peiffer, Bank of America (as current deeded owners of the property), and the United States Department of Veterans Affairs conspired to prevent Plaintiffs from regaining title of the property, and seized and damaged Plaintiffs' personal and real property in the process of claiming the property.
4. Plaintiffs claim that the Defendants named in Count III misrepresented items to court officials, altered legal documents, and authorized unnecessary work and expenses.
II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(1) provides for the defense of lack of jurisdiction over subject matter. A motion to dismiss for lack of subject matter jurisdiction may attack the complaint on its face or the truth of the underlying jurisdictional allegations contained in the complaint. The nonmovant has the burden to allege and prove such jurisdiction. Lane v. David P. Jacobson & Co., Ltd., 880 F.Supp. 1091, 1094 (E.D.Va.1995) (citing Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982)). This Court must weigh the evidence before it to establish its jurisdiction: "A court asked to dismiss for lack of jurisdiction may resolve factual disputes to determine the proper disposition of the motion." Thigpen v. United States, 800 F.2d 393, 396 (4th Cir.1986).

III. DISCUSSION

Federal jurisdiction hinges on Claim I, which addresses the SSA's denial of disability benefits. Claims II, III, and IV, which concern ramifications of this denial, are state law tort claims concerning the foreclosure.3 Because this Court would only have supplemental jurisdiction over these claims, 28 U.S.C. § 1367 (1988), the Court turns to the issue of whether it has jurisdiction over Claim I.

A. Suit Pursuant to 42 U.S.C. § 405(g)

Judicial review of the SSA's rulings is governed by 42 U.S.C. § 405(g) (1988). The two prerequisites for district courts to have jurisdiction over a claim are (1) the nonwaivable requirement that the claim for benefits was presented to the Secretary, and (2) the waivable requirement of exhaustion of administrative remedies. Heckler v. Day, 467 U.S. 104, 111 n. 14, 104 S.Ct. 2249, 2253 n. 14, 81 L.Ed.2d 88 (1984). Administrative remedies include a hearing by the Secretary, a de novo hearing before an administrative law judge, and an appeal to the SSA Appeals Council. See 42 U.S.C. § 421(d) (1988), 20 C.F.R. § 404.900 (1995). Plaintiffs have not exhausted administrative remedies in the instant case.

1. Exhaustion of Administrative Remedies

The following circumstances comprise an exception to the exhaustion requirement under 42 U.S.C. § 405(g):4 (1) plaintiffs' claims are collateral to their claim of benefits; (2) irreparable injury will follow; and (3) exhaustion will otherwise be futile. Bowen v. City of New York, 476 U.S. 467, 483, 106 S.Ct. 2022, 2031-2032, 90 L.Ed.2d 462 (1986).

Plaintiffs' claim fails the first prong of the City of New York test. The Supreme Court has held that claims are not collateral when claimant sues in district court for a

mere deviation from the applicable regulations in his particular administrative proceedings. In the normal course, such individual errors are fully correctable upon subsequent administrative review since the claimant on appeal will alert the agency to the alleged deviation. ... Our holding ... does not suggest that exhaustion is to be excused whenever a claimant alleges an irregularity in the agency proceedings. ... The exhaustion requirement may be waived where the District Court finds a systemwide, unrevealed policy that was inconsistent in critically important ways with established regulations.

Bowen v. City of New York, 476 U.S. 467, 484-85, 106 S.Ct. 2022, 2032-33, 90 L.Ed.2d 462 (1986).

In Goodnight v. Shalala, 837 F.Supp. 1564 (D.Utah 1993), the court found claims to be collateral where plaintiffs did not challenge a specific disability determination but relief from a procedure that they claimed unfairly treated many similarly situated applicants. See id. at 1569.

Here, Plaintiff's claim is not collateral. Plaintiffs assert that they do not seek review of the original denial of disability benefits, which has been reversed.5 Instead, Plaintiffs claim that the SSA's negligent handling of Ms. Marks' disability benefits claim, specifically the delay in process and an erroneous diagnosis, led to the family's financial loss and accompanying emotional distress.

The essence of Plaintiffs' claim is a challenge to the SSA's decision to deny benefits to Ms. Marks. (See Pl.s' Mem. in Support of Response to Mot. to Dismiss at 2.) Illustrative of this underlying interest is the money damages Plaintiffs seek, rather than equitable relief. Cf. Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir.1993) (rejecting 12(b)(1) motion where plaintiffs sought declaratory and injunctive relief pursuant to the Social Security Act). Plaintiffs cannot clothe their frustration with the SSA's decision in their case in the guise of a collateral claim. (See Pl.s' Mem. in Support of Response to Mot. to Dismiss, at 3.) Because Plaintiffs allege an irregularity in the agency proceedings in the instant case, their claim falls precisely within the Supreme Court's holding that rejected waiver of the exhaustion requirement.

B. Damages and Other Grounds for Suit

Even if the Court finds that Plaintiffs' complaint...

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