U. S. ex rel. Szymoniak v. American Home Mortgage Serv
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 0:10-cv-01465-JFA. Copies to all parties and the district court/agency. . [15-1720]
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UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES ex rel. LYNN E. SZYMONIAK,
Plaintiff − Appellant,
STATES OF CALIFORNIA, DELAWARE, FLORIDA, HAWAII, ILLINOIS,
INDIANA, MASSACHUSETTS, MINNESOTA, MONTANA, NEVADA, NEW
HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK, NORTH
CAROLINA, OKLAHOMA, RHODE ISLAND, VIRGINIA, DISTRICT OF
COLUMBIA, AND THE CITIES OF CHICAGO AND NEW YORK, ex rel.
LYNN E. SZYMONIAK,
AMERICAN HOME MORTGAGE SERVICING, INC; SAXON MORTGAGE
SERVICES INC.; LENDER PROCESSING SERVICES INC; DOCX LLC;
BANK OF NEW YORK MELLON CORPORATION; DEUTSCHE BANK
NATIONAL TRUST COMPANY; DEUTSCHE BANK TRUST COMPANY
AMERICAS; HSBC USA NATIONAL ASSOCIATION,
Defendants – Appellees,
CITIMORTGAGE INC, f/k/a Citi Residential Lending Inc., f/k/a AMC Mortgage
Services Inc.; WELLS FARGO HOME MORTGAGE, d/b/a America's Servicing
Company; BANK OF AMERICA CORPORATION, as successor in interest to
Lasalle Bank; CITIBANK NATIONAL ASSOCIATION.; JP MORGAN CHASE
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BANK NATIONAL ASSOCIATION; US BANK NATIONAL ASSOCIATION;
WELLS FARGO BANK NATIONAL ASSOCIATION,
ROGERS TOWNSEND & THOMAS, PC,
Appeal from the United States District Court for the District of South Carolina, at Rock
Hill. Joseph F. Anderson, Jr., Senior District Judge. (0:10−cv−01465−JFA)
Argued: December 9, 2016
Decided: February 16, 2017
Before WILKINSON, NIEMEYER, and DIAZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Christopher P. Kenney, RICHARD A. HARPOOTLIAN, P.A., Columbia,
South Carolina, for Appellant. Mary Gail Gearns, MORGAN, LEWIS & BOCKIUS
LLP, New York, New York; Michael B. Kimberly, MAYER BROWN LLP, Washington,
D.C.; Barbara Van Gelder, DICKSTEIN SHAPIRO LLP, Washington, D.C., for
Appellees. ON BRIEF: Richard A. Harpootlian, RICHARD A. HARPOOTLIAN, P.A.,
Columbia, South Carolina, for Appellant.
Christopher Jackson Allen, COZEN
O’CONNOR, Washington, D.C., Fred O. Goldberg, BERGER SINGERMAN LLP,
Miami, Florida, for Appellees Lender Processing Services, Inc. and DocX, LLC; Alice
W. Parham Casey, WYCHE, P.A., Columbia, South Carolina, for Appellee Bank of New
York Mellon Corporation; Michael S. Kraut, MORGAN, LEWIS & BOCKIUS LLP,
New York, New York, for Appellees Deutsche Bank National Trust Company and
Deutsche Bank Trust Company Americas; Gerard E. Wimberly, Jr., Gabriel Alan
Crowson, New Orleans, Louisiana, Juston Michael O’Brien, MCGLINCHEY
STAFFORD, PLLC, Baton Rouge, Louisiana, Melissa J. Copeland, SCHMIDT &
COPELAND, LLC, Columbia, South Carolina, for Appellee American Home Mortgage
Servicing, Inc.; B. Rush Smith III, Carmen Harper Thomas, NELSON MULLINS RILEY
& SCARBOROUGH LLP, Columbia, South Carolina, Michael O. Ware, MAYER
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BROWN LLP, New York, New York, for Appellee HSBC Bank, USA, National
Unpublished opinions are not binding precedent in this circuit.
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Lynn Szymoniak appeals the district court’s dismissal of her qui tam action
seeking to recover damages and penalties from banks, mortgage-backed securities
trustees, and servicers under the False Claims Act, 31 U.S.C. § 3729 et seq. Because the
district court correctly found that Szymoniak failed to allege any false claims submitted
by the Defendants or facts sufficient to create a reasonable inference that false claims
necessarily were submitted, we affirm.
The False Claims Act (“FCA”) makes liable to the United States “any person
who . . . knowingly presents, or causes to be presented, a false or fraudulent claim for
payment or approval” to the government. 31 U.S.C. § 3729(a). Private persons may act
as relators and bring a civil action for “a violation of section 3729 for the person and for
the United States Government.” Id. § 3730(b).
Because claims under the Act sound in fraud, plaintiffs must satisfy the heightened
pleading requirements of Federal Rule of Civil Procedure 9(b). United States ex rel.
Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 455–56 (4th Cir. 2013). Rule 9(b)
requires that “[i]n alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other
conditions of a person’s mind may be alleged generally.”
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We have interpreted this rule, as applied to FCA claims, to require relators to
allege that defendants either caused specific false claims to be submitted or committed
actions that “necessarily . . . led to the submission of false claims.” Nathan, 707 F.3d at
457 (internal punctuation omitted).
Lynn Szymoniak is a lawyer who, in 2008, defaulted on her payments on a
mortgage loan for her home in Florida. While challenging the foreclosure of her home,
Szymoniak claims that she discovered that several trustees and servicers of mortgagebacked-securities trusts—pooled mortgages which can be sold as investments—forged or
lied about mortgage assignment documents and therefore lacked legal ownership over the
mortgages they claimed to own.
In June 2010, Szymoniak filed suit in the U.S. District Court for the District of
South Carolina as a relator under the False Claims Act. The complaint was filed under
seal to allow the United States sixty days to intervene. Over the course of three years, the
United States requested and obtained eight deadline extensions. After the United States
informed the court that it did not intend to intervene, Szymoniak’s complaint was
unsealed. In her third amended complaint, filed February 3, 2014, Szymoniak named
American Home Mortgage Servicing, Inc.; Saxon Mortgage
Services, Inc.; Lender Processing Services, Inc.; DocX, LLC; CitiMortgage, Inc.; Wells
Fargo Home Mortgage doing business as America’s Servicing Company; Bank of
America Corporation; The Bank of New York Mellon Corporation; CitiBank, N.A.;
Deutsche Bank National Trust Company; Deutsche Bank Trust Company Americas;
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HSBC USA, N.A.; J.P. Morgan Chase Bank, N.A.; U.S. Bank, N.A.; and Wells Fargo
Bank, N.A. (collectively, “Defendants”).
Szymoniak alleged that the Defendants defrauded the United States by:
1) charging the government, as an investor in mortgage-backed-securities trusts
containing fraudulent assignments, for trustee and custodial services; 2) selling to the
government securities in mortgage-backed-securities trusts whose values were impaired
due to missing or forged assignments; 3) using false assignments to apply for payments
from the Department of Housing and Urban Development under the Federal Housing
Administration’s mortgage insurance program; and 4) charging the government for the
filing of falsified documents when foreclosing on federally insured mortgages.
Because Szymoniak based her complaint in part upon public disclosures and
lacked independent knowledge of Defendants’ actions prior to March 23, 2010, the
district court dismissed allegations related to false claims submitted before that date.
Szymoniak later sought and received voluntary dismissal of her first and second
claims against all Defendants. She also dismissed from the suit all but the following nine
parties: American Home Mortgage Servicing, Inc.; Saxon Mortgage Services, Inc.;
Lender Processing Services, Inc.; DocX, LLC; The Bank of New York Mellon
Corporation; Deutsche Bank National Trust Company; Deutsche Bank Trust Company
Americas; HSBC USA, N.A.; and U.S Bank, N.A. (collectively, “remaining
The remaining Defendants moved to dismiss the complaint for failure to state a
claim upon which relief can be granted. Citing Nathan, the district court considered
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whether Szymoniak alleged the submission of specific false claims or facts creating a
reasonable inference that false claims necessarily were submitted.
Drawing all inferences in favor of Szymoniak, the district court found that, while
her complaint “allege[d] an elaborate scheme,” it did “not provide facts to show that this
scheme actually resulted in the submission of specific false claims,” and neither did the
allegations create “a reasonable inference that false claims necessarily were submitted.”
J.A. 710–11. The district court granted in full all remaining Defendants’ motions to
dismiss except U.S. Bank’s motion, which was granted in part and denied in part because
Szymoniak provided facts alleging that U.S. Bank charged the Department of Housing
and Urban Development for the costs of filing fraudulent documents. After Szymoniak
and U.S. Bank settled, the district court dismissed U.S. Bank as a party.
appeals the district court’s dismissal of the other remaining Defendants.
We review de novo the district court’s order of dismissal for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6). Nathan, 707 F.3d at 455 (citing
Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999)).
Szymoniak claims that the district court applied the wrong standard—that the
court, rather than allowing her to allege a scheme necessarily resulting in the submission
of false claims, misread Nathan to require her to identify individual false claims. The
correct standard from Nathan, Szymoniak argues, requires relators to identify no more
than the “who, what, where, when, and how of a fraud.” Appellant’s Br. at 26.
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Szymoniak further contends that her allegation of an “elaborate scheme to create
fraudulent foreclosure documents” meets this standard. Id. at 27–28 (internal quotation
She also argues that, in the alternative, if Nathan did require the
identification of specific false claims, “that decision should be reconsidered and
overruled.” Id. at 34.
Having thoroughly reviewed the record and considered the parties’ briefs and
arguments, we conclude that it is Szymoniak, not the district court, who misreads Nathan.
The district court’s thorough order properly applied Nathan’s rule requiring an FCA
relator to identify specific false claims or allege a scheme that necessarily resulted in the
submission of false claims. We decline Szymoniak’s invitation to revisit Nathan. World
Fuel Servs. Trading v. Hebei Prince Shipping Co., 783 F.3d 507, 523–24 (4th Cir. 2015)
(quoting Scotts Co. v. United Indus. Corp., 315 F.3d 264, 271 n.2 (4th Cir. 2002)) (“[A]
panel of this court cannot overrule, explicitly or implicitly, the precedent set by a prior
panel of this court. Only the Supreme Court or this court sitting en banc can do that.”).
Accordingly, we affirm on the reasoning of the district court.
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