McNulty v. Fed. Hous. Fin. Agency, Nat'l Mortg. Ass'n & Fed. Home Loan Mortg. Corp.

• Decision Date: 19 June 2013
• Docket Number: Civil Action No. 3:12–1822.
• Citation: 954 F.Supp.2d 294
• Parties: Evie Rafalko McNULTY, Recorder of Deeds of Lackawanna County, Pennsylvania, Plaintiff v. FEDERAL HOUSING FINANCE AGENCY, as conservator for Federal National Mortgage Association and Federal Home Loan Mortgage Corporation; Federal National Mortgage Association, a federally chartered corporation; and Federal Home Loan Mortgage Corporation, a federally chartered corporation, Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

954 F.Supp.2d 294

Evie Rafalko McNULTY, Recorder of Deeds of Lackawanna County, Pennsylvania, Plaintiff

v.FEDERAL HOUSING FINANCE AGENCY, as conservator for Federal National Mortgage Association and Federal Home Loan Mortgage Corporation; Federal National Mortgage Association, a federally chartered corporation; and Federal Home Loan Mortgage Corporation, a federally chartered corporation, Defendants.

Civil Action No. 3:12–1822.

United States District Court, M.D. Pennsylvania.

June 19, 2013.

Limited on Constitutional Grounds

72 P.S. § 8102–C

Howard J. Sedran, Levin, Fishbein, Sedran & Berman, Ira Neil Richards, Trujillo, Rodriguez & Richards, LLC., Philadelphia, PA, Todd J. O'Malley, O'Malley & Langan P.C., Scranton, PA, for Plaintiff.

MEMORANDUM

MALACHY E. MANNION,¹ District Judge.

Pending before the court is the defendants' motion to dismiss the plaintiff's complaint for failure to state a claim upon which relief can be granted. (Doc. No. 29). Based upon the court's review of the record, the defendants' motion to dismiss will be granted and the plaintiff's request for class certification will be dismissed as moot.

I. PROCEDURAL HISTORY

By way of relevant background, on September 11, 2012, the plaintiff filed the instant proposed class action complaint on behalf of herself and others similarly situated, including the 67 counties, municipalities, state entities and their respective officers throughout the State of Pennsylvania that collect or receive distributions from transfer or similar taxes involving the transfer of real property. Plaintiff seeks to compel defendants the Federal National Mortgage Association, (“Fannie Mae”), and the Federal Home Loan Mortgage Corporation, (“Freddie Mac”), and their conservator, the Federal Housing Finance Agency, (“FHFA”), to pay the realty transfer tax charged upon recording real property transferred in Pennsylvania. (Doc. No. 1). An amended complaint was filed on November 9, 2012. (Doc. No. 8).

On December 20, 2012, the defendants filed the instant motion to dismiss the plaintiff's amended complaint for failure of the plaintiff to state a claim upon which relief can be granted, (Doc. No. 29), along with a brief in support thereof, (Doc. No. 30). On February 1, 2013, the plaintiff filed a brief in opposition to the defendants' motion to dismiss. (Doc. No. 47). The defendants filed a notice of new authority on February 25, 2013, (Doc. No. 50), and a reply brief in support of their motion to dismiss on March 5, 2013, (Doc. No. 52). A second notice of new authority was filed by the defendants on March 28, 2013, (Doc. No. 53), followed by a third on May 9, 2013, (Doc. No. 54), and a fourth on May 28, 2013, (Doc. No. 55).

II. STANDARD OF REVIEW

In deciding the defendants' motion to dismiss, the court must read the complaint in the light most favorable to the plaintiff and all well-pleaded, material allegations in the complaint must be taken as true. Estelle v. Gamble, 429 U.S. 97, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976). However, the court need not accept inferences drawn by the plaintiff if they are unsupported by the facts as set forth in the complaint. See California Pub. Employee Ret. Sys. v. Chubb Corp., 394 F.3d 126, 143 (3d Cir.2004) (citing Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir.1997)). The court also need not accept legal conclusions set forth as factual allegations. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).

A viable complaint must include “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 554, 127 S.Ct. 1955 (rejecting the traditional 12(b)(6) standard set forth in Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). “Factual allegations must be enough to raise a right to relief above the speculative level.” Id. at 555, 127 S.Ct. 1955.See also Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (holding that, while the complaint need not contain detailed factual allegations, it must contain more than a “formulaic recitation of the elements” of a claim and must state a claim that is plausible on its face) (quoting Bell Atlantic Corp. v. Twombly, supra, and providing further guidance on the standard set forth therein).

In deciding the defendants' motion, the court should generally consider only the allegations contained in the complaint, the exhibits attached to the complaint, matters of public record, and “undisputably authentic” documents which the plaintiff has identified as the basis of their claim. See Pension Benefit Guaranty Corp. v. White Consolidated Industries, Inc., 998 F.2d 1192, 1196 (3d Cir.1993).

III. DISCUSSION

A. Class Action Certification

As an initial matter, the plaintiff alleges in the amended complaint that she brings the instant action on behalf of herself and as a class action pursuant to the provisions of Rules 23(a), (b)(2), and (b)(3) of the Federal Rules of Civil Procedure. As such, she provides allegations relating to numerosity, commonality and predominance, typicality, adequacy of representation, declaratory and injunctive relief, and superiority. She requests as relief that the court declare that the instant action may be maintained as a class action and certify the class.

Pursuant to Fed.R.Civ.P. 23(c)(1), “[a]t an early practicable time after a person sues or is sued as a class representative, the court must determine by order whether to certify the action as a class action.” Middle District of Pennsylvania Rules of Court provide, in relevant part, “[w]ithin ninety (90) days after filing of a complaint in a class action, unless this period is extended on motion for good cause appearing, the plaintiff shall move for a determination under subdivision (c)(1) of Fed.R.Civ.P. 23, as to whether the case is to be maintained as a class action.” L.R. 23.3.

In the instant action, contrary to L.R. 23.3, the plaintiff has not moved for a determination under Fed.R.Civ.P. 23(c)(1) as to whether this case is to be maintained as a class action. Regardless, absent prejudice to the plaintiff, the court is free to decide a defendant's dispositive motion in a putative class action before taking up the issue of class certification. See, e.g., Kehoe v. Fidelity Federal Bank & Trust, 421 F.3d 1209, 1211 n. 1 (11th Cir.2005)(finding no error in the court's decision to decide dispositive motion prior to addressing the plaintiff's motion for class certification); Curtin v. United Airlines, Inc., 275 F.3d 88, 92–93 (D.C.Cir.2001) (holding that “where ... the plaintiffs' claims can be readily resolved on summary judgment, where the defendant seeks an early disposition of those claims, and where the plaintiffs are not prejudiced thereby, a district court does not abuse its discretion by resolving the merits before considering the question of class certification”); Mira v. Nuclear Measurements Corp., 107 F.3d 466, 474–76 (7th Cir.1997) (deciding dispositive motion prior to ruling on class certification was an appropriate way to deal with meritless litigation). See also Cowen v. Bank United of Tex., FSB, 70 F.3d 937, 941–42 (7th Cir.1995); Wright v. Schock, 742 F.2d 541, 543–44 (9th Cir.1984); Mais v. Gulf Coast Collection Bureau, Inc., 2013 WL 1899616 (S.D.Fla. May 08, 2013) (citing Telfair v. First Union Mortg. Corp., 216 F.3d 1333, 1343 (11th Cir.2000); Santana v. Deluxe Corp., 12 F.Supp.2d 162, 179 (D.Mass.1998); Ramirez v. DeCoster, 194 F.R.D. 348, 355 (D.Me.2000). The discretion of the court to determine dispositive motions prior to class certification is supported by the Advisory Committee Notes to the 2003 amendments to Rule 23 which expressly recognize “the many valid reasons that may justify deferring the initial certification decision,” including the possibility that “[t]he party opposing the class may prefer to win dismissal or summary judgment as to the individual plaintiffs without certification and without binding the class that might have been certified.”

Here, there is no prejudice to the plaintiff or the putative class members which is apparent from ruling on the defendants' motion to dismiss prior to ruling on the issue of class certification. Moreover, the plaintiff has neither moved for class action certification pursuant to L.R. 23.3, nor has she objected in her response to the defendants' motion to dismiss to having the motion decided before consideration of whether to certify the class. As such, in the interest of efficiency and economy, the court will rule on the defendants' motion to dismiss without first making a determination with respect to class certification ².

B. Defendants' Motion to Dismiss

By way of factual background, defendant Fannie Mae is a corporation which was chartered by Congress in 1938 in order to “establish secondary market facilities for residential mortgages,” to “provide stability in the secondary market for residential mortgages,” and to “promote access to mortgage credit throughout the Nation.” 12 U.S.C. § 1716.

Defendant Freddie Mac is a corporation which was chartered by Congress in 1970 for substantially the same purposes as Fannie Mae, including to “provide ongoing assistance to the secondary market for residential mortgages,” to strengthen and support “mortgages on housing for low-and moderate-income families” by “increasing the liquidity” of the market, and “to promote access to mortgage credit throughout the Nation.” Id. § 1451.

Defendant FHFA is an independent federal agency created under the Housing and Economic Recovery Act of 2008, Pub. L. No. 110–289, 122 Stat. 2654,codified in part at

12 U.S.C. § 4617, et seq. In September of 2008, the Director of FHFA placed Fannie Mae and Freddie Mac into conservatorships “for the purpose of reorganizing, rehabilitating, or winding up [their] affairs ...” 12 U.S.C. § 4617(a)(2). As conservator, the FHFA assumed the...