ASSOCIATED MORTGAGE BANKERS INC. v. USA
REPORTED OPINION granting 8 Motion to Dismiss - Rule 12(b)(1) The Clerk is directed to enter judgment. Signed by Judge Zachary N. Somers. (ktm) Service on parties made.
In the United States Court of Federal Claims
No. 20-354 C
(Filed: March 31, 2021)
* * * * * * * * * * * * * * * * ** *
THE UNITED STATES,
* * * * * * * * * * * * * * * * ** *
David Monro Souders, Weiner, Brodsky & Kider, P.C., of Washington, D.C., for plaintiff.
Sheryl Lynn Floyd, Senior Trial Counsel, Commercial Litigation Branch, Civil Division,
Department of Justice, with whom were, Kenneth M. Dintzer, Deputy Director, Robert E.
Kirschman, Jr., Director, and Ethan Davis, Acting Assistant Attorney General, all of
Washington, D.C., for defendant.
OPINION AND ORDER
This case is brought by Associated Mortgage Bankers Inc. (“Plaintiff” or “AMB”), on
behalf of itself and a putative class, against the United States, the U.S. Department of Housing
and Urban Development (“HUD”), and former HUD Secretary Ben Carson “in his official
capacity” for breach of contract and breach of the covenant of good faith and fair dealing. ECF
No. 1 at 1 (“Compl.”). Specifically, Plaintiff contends that HUD breached an indemnification
agreement with Plaintiff (and agreements with other similarly situated lenders) and is thus barred
from enforcing its terms against Plaintiff. The complaint seeks “restitution, disgorgement,
declaratory, and injunctive relief” against the named defendants. Id. at 2.
Before the Court are the government’s separate motions to dismiss pursuant to Rules
12(b)(1) and 12(b)(6) of the Rules of the United States Court of Federal Claims (“RCFC”). The
motions have been briefed, and the Court held oral argument on February 23, 2021. As
explained below, the Court finds that this case is based on substantially the same operative facts
as those in an earlier-filed action that was pending in the United States District Court for the
District of Columbia at the time Plaintiff filed its complaint in this Court. Accordingly, pursuant
to 28 U.S.C. § 1500, the government’s motion to dismiss for lack of subject-matter jurisdiction is
BACKGROUND AND PROCEDURAL HISTORY
A. HUD Mortgage Insurance and Asset Sales
Congress created the Federal Housing Authority (“FHA”) in 1934, which later became
part of HUD’s Office of Housing. Compl. ¶ 8. FHA “provides mortgage insurance on loans
made by FHA-approved lenders throughout the United States and its territories.” Id. ¶ 9.
According to HUD’s website, “FHA mortgage insurance provides lenders with protection against
losses if a property owner defaults on their mortgage. The lenders bear less risk because FHA
will pay a claim to the lender for the unpaid principal balance of a defaulted mortgage.” Id. ¶ 10
(quoting The Federal Housing Administration (FHA), HUD.gov,
https://www.hud.gov/program_offices/housing/fhahistory). “The account from which FHA pays
insurance claims is known as the Mutual Mortgage Insurance Fund (the ‘MMI Fund’).” Id. ¶ 11.
If a loan covered by FHA mortgage insurance defaults, the mortgage holder or servicer
generally will either foreclose on the property or obtain a deed-in-lieu of foreclosure. Id. ¶ 12.
The mortgage holder or servicer will then usually make an insurance claim to FHA for their
losses and convey title to the property to HUD in return. Id. ¶ 13. “HUD will then generally
dispose of any collateral it receives in exchange for paying an insurance claim from the MMI
Fund in order to recoup the losses due to paying the insurance claim.” Id. ¶ 14. FHA can also
accept assignment of the mortgage in exchange for an insurance payout. See 12 U.S.C. §
“In 2002, HUD began exploring a new demonstration program, known as Accelerated
Claim Disposition (‘ACD’), to dispose of collateral it received after paying insurance claims.”
Compl. ¶ 15. Since then, “HUD has operated a number of programs that entail the bulk sale of
notes” to private-sector bidders “and it has identified such programs by a number of names over
time,” including, as most relevant here, the Single Family Loan Sales (“SFLS”) program. Id.
In October 2002, following notice and comment rulemaking, “HUD published a final
‘Notice of FHA Accelerated Claims Disposition Demonstration’ which formally established the
[ACD] demonstration program” (id. ¶ 17), after which HUD would “assess its success and
determine whether to implement the ACD process, on a permanent basis, throughout the
country.” 67 Fed. Reg. 66,038 (Oct. 29, 2002). “With respect to which loans qualified for the
ACD demonstration program, the October 2002 Notice added a requirement that ‘[t]o the
knowledge of the participating mortgagee, the mortgage loan is not subject to an Indemnification
Agreement as of the provisional claim approval date.’” Compl. ¶ 18 (quoting 67 Fed. Reg.
66,041 (Oct. 29, 2002)). In other words, if a loan was subject to an indemnification agreement, it
could not be part of the ACD demonstration program. HUD conducted four sales under the
ACD demonstration program from 2002 to 2005. Id. ¶ 19.
In June 2006, HUD published an advance notice of proposed rulemaking to make the
ACD program “a permanent part of HUD’s single family mortgage insurance programs.” Id. ¶¶
20-23 (quoting 71 Fed. Reg. 32,392 (June 5, 2006)). The notice also provided that “upon
codification” of the ACD program, the regulations “governing the assignment of mortgages to
HUD,” as well as those governing “the disposition of HUD-acquired single family property,”
would be amended to reflect the program’s new requirements, policies, and procedures. Id. ¶ 23
(quoting 71 Fed. Reg. 32,392 (June 5, 2006)). However, “[i]n March 2007, the proposed
rulemaking was withdrawn” and “HUD did not amend the regulations . . . to reflect the impacts
or changes as a result of the ACD demonstration program.” Id. ¶¶ 24-25. Nevertheless, HUD
conducted subsequent bulk sales similar to those completed during the ACD demonstration
program but which “were not subject to notice and comment procedures.” Id. ¶ 32. Relevant to
the instant case is sale number “SFLS 2013-2,” which included the mortgage loan originated by
Plaintiff discussed below. Id. ¶ 49.
The Office of Inspector General at HUD released a report, in July 2017, “finding that
HUD was required to conduct notice and comment rulemaking to implement the
SFLS/[Distressed Asset Stabilization] program, but had failed to do so.” Id. ¶ 26. In response,
HUD stated that the bulk note sales were “guided by a series of well documented procedures
used both internally by staff and externally by stakeholders.” Id. ¶¶ 27 (quoting HUD OIG
Report No. 2017-KC-0006 at 10-11).
B. The Springer Loan, Indemnification Agreement, and 2013 Sale
Plaintiff is an FHA-approved lender that “originates mortgage loans, including mortgages
that are and were eligible for insurance under the [FHA] insurance program administered by
HUD.” Id. ¶ 2. Relevant here, Plaintiff “originated a $505,000 FHA loan . . . secured by a
mortgage on a property in Brooklyn, New York” (“Springer loan”). ECF No. 8 at 8 (“Def.’s
12(b)(1) Mot. to Dismiss”). The Springer loan “closed and was endorsed for FHA insurance in
October 2010. In December 2010, the owner and servicer of the mortgage, J.P. Morgan Chase
Bank, N.A. (Chase), reported a delinquency and, in November 2011, the borrower defaulted.”
Id. (citations omitted).
“In 2012, HUD’s Quality Assurance Division determined that AMB had engaged in
‘non-compliant lending activities’ when it originated the Springer loan, thereby exposing HUD
to an unacceptable level of risk. HUD sent a letter to AMB directing it to sign an
indemnification agreement, which AMB signed in December 2012.” Id. (citations omitted); see
also Compl. ¶ 38. The agreement “obligates AMB to indemnify HUD for all monetary losses
suffered on an FHA-insured loan.” ECF No. 9 at 5 (“Pl.’s Resp. to 12(b)(1)”). In pertinent part,
the Indemnification Agreement provides:
All HUD requirements for servicing and payment of mortgage insurance
premiums will be observed with respect to such mortgages. In the event of a valid
claim for insurance on any of the mortgages covered by this Agreement,
indemnification will be in accordance with paragraph (b), (c), (d), or (e),
whichever applies. HUD’s Investment includes, but is not limited to: the full
amount of the insurance claim actually paid, . . . prorated losses from and
expenses associated with the sale of a note, . . . and any other expenses HUD may
incur in connection with its claim disposition programs regarding FHA insured
mortgages. To the extent HUD recoups any losses (e.g.[,] receipts for the sale of
the property) or there is any discount on the property (e.g., an Officer Next Door
discount), HUD will deduct the amount of the recoupment or discount from
Compl. ¶ 39 (quoting Ex. 3 at 1). Simply put, if HUD suffered a shortfall between what it paid
out on the insurance claim on the defaulted mortgage and what it recovered in selling the note,
Plaintiff was generally responsible under the Indemnification Agreement for making HUD
In 2013, the mortgage’s servicer, Chase, “sought to file an FHA insurance claim on the
defaulted Springer loan by assigning the defaulted loan to HUD, one of several methods for an
insurer to submit an insurance claim to HUD.” Def.’s 12(b)(1) Mot. to Dismiss at 8. Under the
SFLS program, HUD bundles defaulted notes that are assigned to HUD into pools and sells them
at an auction to the highest aggregate bidder. Id. In order to participate in the program, “Chase
entered into a Participating Servicer Agreement with HUD, which provided that loans subject to
an indemnification agreement were ineligible for inclusion with the loans that are bundled and
sold under HUD’s [SFLS] program.” Id. at 8-9; see also Compl. ¶¶ 64-67. Nevertheless, “Chase
included the Springer loan in the pool of notes sold under that program in June 2013.” Id. at 9.
HUD’s sale of the note on the Springer loan recovered $360,531.24. Compl. ¶ 88.
In August 2013, “Chase submitted an FHA insurance claim for $520,979.86 that included
the unpaid principal balance on the Springer loan.” Def.’s 12(b)(1) Mot. to Dismiss at 9; see
also Compl. ¶ 72. Shortly thereafter, HUD paid Chase’s insurance claim in full. Compl. ¶ 75.
“In July 2014, HUD sent AMB a demand notice requesting payment of an alleged debt of
$160,448.62, representing the difference between Chase’s $520,979.86 insurance claim and
HUD’s recovery of $360,531.24 on the sale of the note. Because AMB did not pay the demand,
in October 2014, HUD sent AMB a notice of intent to collect a Treasury offset in the amount of
$160,448.62.” Def.’s 12(b)(1) Mot. to Dismiss at 9 (citations omitted).
C. Appeal of Offset, Subsequent Proceedings, and the Instant Case
“On December 17, 2014, AMB filed a timely agency appeal . . . of HUD’s decision to
seek administrative offset.” Compl. ¶ 116. “After an administrative process that lasted almost
exactly two years, the HUD Administrative Judge issued a Decision and Order on December 16,
2016,” finding “the debt to be legally enforceable against AMB . . . .” Id. ¶¶ 118-119. Plaintiff
appealed HUD’s administrative decision to the United States District Court for the District of
Columbia. Id. ¶ 120. The district court vacated and remanded HUD’s ruling pursuant to the
Supreme Court’s decision in Lucia v. S.E.C., 138 S. Ct. 2044 (2018), on the grounds that the
HUD administrative judge who issued the decision was not properly appointed under the
Constitution. Associated Mortg. Bankers, Inc. v. Carson, No. CV 17-0075 (ESH), 2019 WL
108882, at *9 (D.D.C. Jan. 4, 2019); see also Compl. ¶ 121.
On February 28, 2020, following a second administrative review, a HUD administrative
law judge issued an opinion “finding that AMB was liable to pay its administrative offset debt.”
Def.’s 12(b)(1) Mot. to Dismiss at 9; see also Compl. ¶ 122 (citing ECF No. 1-2 at 19 (“ALJ
Decision”)). The HUJ ALJ determined that HUD did not harm Plaintiff by selling the note
through the SFLS program, nor did it materially breach the Indemnification Agreement. See
ALJ Decision at 8-18.
On March 16, 2020, Plaintiff filed a complaint “on behalf of itself and a class of
similarly-situated mortgage lenders”—once again in the United States District Court for the
District of Columbia—appealing the HUD ALJ’s decision as arbitrary and capricious under the
Administrative Procedure Act (“APA”). See Def.’s 12(b)(1) Mot. to Dismiss, App. A1-A290
(“Pl.’s Dist. Ct. Compl.”). Eleven days later, on March 27, 2020, Plaintiff filed its complaint in
this Court for breach of contract and breach of the covenant of good faith and fair dealing.
Compl. at 1-2. Plaintiff alleges here that HUD “breached the Indemnification Agreement in
numerous ways; accordingly, it is barred from enforcing the contract against AMB.” Id. at 1.
In support of its argument, Plaintiff asserts, in pertinent part, that “[l]oans which are
subject to indemnification agreements are not supposed to be sold as part of the SFLS bulk note
sales” (Id. ¶ 43); the note was not sold by HUD at market value or to maximize value (see id. ¶¶
56-61); due to the Indemnification Agreement on the loan, and the Participating Servicer
Agreement’s definition of “Eligible Mortgage Loans,” Chase’s “claim for insurance was not
valid” (id. ¶ 76) and thus “HUD paid a non-valid claim for insurance in connection with the
Loan” (id. ¶ 78); HUD breached the Indemnification Agreement, which requires Plaintiff to
indemnify HUD “only for losses paid on a ‘valid insurance claim,’” by failing to follow all HUD
servicing requirements, and thus “AMB is not required to indemnify HUD in connection with the
Loan” (id. ¶ 81-82); “HUD breached the Indemnification Agreement when it did not deduct the
amount of the discount resulting from the bulk note sale from what it claims AMB owes under
the Indemnification Agreement” (id. ¶ 94); and the Indemnification Agreement required HUD to
sell the property instead of the note (see id. ¶ 95-100). Plaintiff also takes issue with the HUD
ALJ’s decision, which it asserts “was contrary to the plain language of the Indemnification
Agreement and not based on substantial evidence.” Id. ¶ 127.
On July 17, 2020, the government filed a motion to dismiss pursuant to RCFC 12(b)(1).
Citing 28 U.S.C. § 1500 and related precedent, the government argues that the Court “lacks
jurisdiction to entertain AMB’s complaint because, before filing its complaint in this Court,
AMB filed a lawsuit . . . in the United States District Court for the District of Columbia based on
substantially the same operative fact[s] as those in this case.” 1 Def.’s 12(b)(1) Mot. to Dismiss
at 5. The government asserts that “[e]ach case arises out of the same transactions” (id. at 6), “the
two complaints are virtually identical” (id. at 7), and a comparison of the two “makes it clear that
The government also argued that “because lawsuits against Federal agencies and private parties are
beyond the jurisdiction of this court, the Court must dismiss the complaint against HUD and Secretary Ben Carson.”
Def.’s 12(b)(1) Mot. to Dismiss at 6. The government is, of course, correct in its argument. To the extent that
naming HUD and Secretary Carson in the complaint was more than mere surplusage, the causes of action against
HUD and Secretary Carson are dismissed for lack of jurisdiction. See, e.g., United States v. Sherwood, 312 U.S.
584, 588 (1941) (“[I]f the relief sought is against others than the United States the suit as to them must be ignored as
beyond the jurisdiction of the [Court of Claims].”).
this case is a ‘repackaged suit – one reflecting damage claims that mirror the injunctive APA
claims filed in the district court.’” Id. at 9 (quoting Skokomish Indian Tribe v. United States, 115
Fed. Cl. 116, 127 (2014)).
On August 17, 2020, shortly before Plaintiff filed its opposition to the government’s
motion to dismiss in this Court, Plaintiff’s district court complaint was dismissed in its entirety.
See Associated Mortg. Bankers, Inc. v. Carson, No. 20-CV-00744 (ESH), 2020 WL 4748091
(D.D.C. Aug. 17, 2020). In doing so, the district court analyzed “[w]hether the ALJ was correct
to find that AMB’s debt is past due and legally enforceable,” which the court said “encompasses
at least two sub-issues: (1) whether AMB’s obligation to pay was triggered under the
Indemnification Agreement; and (2) whether HUD materially breached the Agreement such that
AMB was relieved of its duty to indemnify.” Id. at *4. Moreover, the district court assessed
“whether the ALJ was correct to conclude that the sale of the Springer Loan via a note sale,
rather than foreclosure and sale of the property, did not harm AMB.” Id. Addressing each, the
district court concluded “that AMB’s claim that [the HUD ALJ’s] decision was arbitrary and
capricious must be rejected.” Id. It also analyzed whether HUD’s inclusion of the Springer
Loan in the bulk sale amounted to a breach of the covenant of good faith and fair dealing.
Finding no such evidence of a breach, the district court concluded that “the ALJ was correct to
find that HUD’s ‘innocent oversight’ . . . provided no indication of bad faith.” Id. at *7 (quoting
ALJ Decision at 17).
In response, Plaintiff asserts that “[a] claim under the APA is fundamentally different
from a breach of contract claim; accordingly, the government’s assertion that this suit is a
‘repackaged’ APA claim is wrong.” Pl.’s Resp. to 12(b)(1) at 5-6. Noting a 2017 dismissal of
its breach claims from the same district court, 2 Plaintiff argues that its 2020 complaint “only
brought APA claims seeking judicial review of the administrative offset order, and did not
include the class action contractual breach claims. Conversely, the case before this Court only
includes the class action contractual breach claims, and does not seek judicial review of the
administrative offset order under the APA.” 3 Id. at 10.
Plaintiff’s response brief explains:
In January 2017, AMB filed an action in the U.S. District Court for the District of Columbia
which sought judicial review of HUD’s administrative offset order under the Administrative
Procedure Act (“APA”), and also brought a class action against HUD on behalf of itself and other
mortgage lenders for contractual breach claims related to HUD’s improper collection of
indemnification payments to which HUD was not entitled. . . . The District Judge in this earlier
case ruled that AMB had properly stated a claim under the APA for review of the administrative
offset order, but dismissed AMB’s class action contractual breach claims, finding that the District
Court lacked jurisdiction, and that the class action contractual breach claims had to be brought in
the Court of Federal Claims under the Tucker Act. . . . The APA claims seeking review of the
administrative offset order thus continued, while the class action contractual breach claims were
Pl.’s Resp. to 12(b)(1) at 8-9 (citations omitted).
Plaintiff suggests that the 2017 district court dismissal “was an express acknowledgment by the District
Court that the two types of claims—judicial review under the APA versus a class action for money due to breach of
contract—are not the same claim.” Pl.’s Resp. to 12(b)(1) at 12.
Plaintiff also argues that the operative facts in each case are different, since “[t]he critical
facts in the [district court] Case addressed the question of whether AMB allegedly owed a debt to
HUD which was due and payable and will turn focus on the HUD procedures regarding when
and if an administrative offset order should be granted,” while the operative facts here “are those
that go to a straightforward breach of contract analysis as to whether HUD has wrongfully taken
money from AMB and the proposed class of lenders.” Id. at 14. Plaintiff suggests that “since
this is a class action . . . . [t]he facts relevant to these other lenders and which would form the
basis for the class action component of AMB’s case are not a part of the [district court] Case.” 4
Id. Furthermore, Plaintiff takes issue with the scope of review conducted in the HUD ALJ
proceeding, as well as the district court’s review of it under the APA. Referencing contract
interpretation principles, Plaintiff argues that “[n]either the ALJ nor the District Court addressed
these issues for the simple reason that they were not required to do so in order to reach their
determinations that HUD’s conduct was not arbitrary and capricious.” Id. at 17.
On September 11, 2020, following an order of this Court, the government filed its reply
to Plaintiff’s response and, in so doing, raised an additional motion to dismiss pursuant to RCFC
12(b)(6) based on the doctrine of issue preclusion. See ECF No. 11 (“Def.’s 12(b)(6) Mot. to
Dismiss”). 5 The government, first, reiterates its argument that the two complaints are based
upon the same operative facts and that a straightforward application of controlling precedent
demands dismissal for lack of subject-matter jurisdiction. Id. at 8, 14-21. Specifically, the
government argues that “[c]ontrary to AMB’s contention, the differences in the standards of
review applied by the district court and by this Court do not have any bearing on the question of
whether there is a substantial overlap in the operate [sic] facts in the district court case and in this
case” (id. at 18), nor do the differences in legal theories. Id. at 20. Moreover, “[b]ecause AMB’s
complaint is based on issues that were litigated and resolved in [the district court]” (id. at 7), and
“[b]ecause the parties had a full and fair opportunity to litigate all of the issues relating to their
Plaintiff attempts to argue that pleading this case as a class action somehow absolves it of its section 1500
jurisdictional problem in this Court. Plaintiff’s argument is unpersuasive. The Court first notes that, despite
Plaintiff’s suggestions to the contrary, it clearly brought its claims in the district court “on behalf of itself and a class
of similarly-situated mortgage lenders,” just as it does here. See Pl.’s Dist. Ct. Compl. at 1. Assuming, for the sake
of argument, that Plaintiff had not filed on behalf of a putative class in the district court, its putative class
representation here would still make no difference in this Court’s jurisdictional analysis. The Court must first have
subject-matter jurisdiction over the named Plaintiff’s claim before it can proceed to the question of class
certification, or any other merits issues for that matter. See Johns–Manville v. United States, 855 F.2d 1556, 1565
(Fed. Cir. 1988) (“A court may not in any case, even in the interest of justice, extend its jurisdiction where none
exists.”); see also Associated Mortg. Bankers Inc. v. Carson, 279 F. Supp. 3d 58, 64 (D.D.C. 2017) (“[T]he Court
dismisses plaintiff's good-faith-and-fair-dealing claim for it cannot enter declaratory relief, injunctive relief, or
certify a class where it lacks jurisdiction over the claim at issue.”) (citing Khadr v. United States, 529 F.3d 1112,
1115 (D.C. Cir. 2008)).
On August 25, 2020, the then-assigned judge in this case issued an order providing that, in its reply to the
Plaintiff’s 12(b)(1) opposition, the government “shall address the implications of [the district court’s August 17,
2020 dismissal], including a discussion of the doctrine of issue preclusion.” ECF No. 10. Under RCFC 12(g)(2),
parties that have moved for dismissal under RCFC 12 are generally prohibited from making “another motion under
this rule raising a defense or objection that was available to the party but omitted from its earlier motion.” RCFC
12(g)(2). Because the district court had not yet entered judgment against Plaintiff when the government filed its
initial motion to dismiss on July 17, 2020, issue preclusion was not a “defense or objection that was available to” the
government at that time. Accordingly, the Court considers the government’s subsequent motion to dismiss pursuant
to RCFC 12(b)(6) timely and appropriately filed.
rights and responsibilities under the indemnification agreement, the district court’s decision bars
AMB from relitigating the contract issues before this Court” under the doctrine of issue
preclusion. Id. at 8.
In its response brief on October 9, 2020, Plaintiff primarily takes issue with the
government’s argument that it had a full and fair opportunity to litigate its breach of contract
claim in the prior proceedings. See ECF No. 12 at 6 (“Pl.’s Resp. to 12(b)(6)”). Plaintiff argues
that it “was subjected to . . . an abbreviated administrative proceeding conducted with limited
opportunity to conduct discovery, with no ability to cross-examine a previously undisclosed
witness (among other errors), and in front of an employee of the agency whose conduct AMB
was challenging.” Id. Plaintiff further asserts that “[t]he results of this stacked tribunal are made
plain in the ALJ’s decision, from which AMB was further denied any right of meaningful
appeal.” Id. Moreover, Plaintiff argues that issue preclusion is limited when the prior
proceeding was before an administrative agency instead of a court (id. at 7-8), that “neither the
ALJ nor the District Court conducted an analysis of AMB’s breach of contract claims” (id. at
11), HUD “was not acting in a judicial capacity” (id. at 13), and that the procedures afforded
Plaintiff at HUD are insufficient to justify issue preclusion. Id. at 14-22.
In its final brief, the government replies that “(1) the HUD administrative judge, acting in
a judicial capacity, properly granted the parties adequate opportunity to litigate all disputed
issues that AMB seeks to raise in this Court; and (2) AMB had a full and fair opportunity to
challenge the administrative judge’s decisions in the district court. Hence, the doctrine of issue
preclusion bars the Court from considering AMB’s complaint.” ECF No. 15 at 7 (“Def.’s
Following reassignment in January 2021, the Court held oral argument on the pending
motions to dismiss, which are now ripe for review.
A. Legal Standard
RCFC 12(b)(1) and 28 U.S.C. § 1500
Under RCFC 12(b)(1), this Court must dismiss any claim that does not fall within its
subject-matter jurisdiction. AMB “as the plaintiff, bears the burden of establishing the court’s
jurisdiction over its claims by a preponderance of the evidence.” Trusted Integration, Inc. v.
United States, 659 F.3d 1159, 1163 (Fed. Cir. 2011) (citing Reynolds v. Army & Air Force Exch.
Serv., 846 F.2d 746, 748 (Fed. Cir. 1988)). When considering a motion to dismiss for lack of
subject-matter jurisdiction, the Court must accept as true all undisputed factual allegations made
by the non-moving party and draw all reasonable inferences in the light most favorable to that
party. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); see also, e.g., Estes Express Lines v.
United States, 739 F.3d 689, 692 (Fed. Cir. 2004) (“In deciding a motion to dismiss for lack of
subject matter jurisdiction, the court accepts as true all uncontroverted factual allegations in the
complaint, and construes them in the light most favorable to the plaintiff.”).
The United States Court of Federal Claims, like all federal courts, is a court of limited
jurisdiction. Under the Tucker Act, the Court may “render judgment upon any claim against the
United States founded either upon the Constitution, or any Act of Congress or any regulation of
an executive department, or upon any express or implied contract with the United States, or for
liquidated or unliquidated damages in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1). The
Tucker Act “does not, of itself, create a substantive right enforceable against the United
States . . . .” Smith v. United States, 709 F.3d 1114, 1116 (Fed. Cir. 2013) (citing Ferreiro v.
United States, 501 F.3d 1349, 1351 (Fed. Cir. 2007)). Rather, to establish jurisdiction in this
Court, “the plaintiff must identify a separate contract, regulation, statute, or constitutional
provision that provides for money damages against the United States.” Id. Moreover, the
plaintiff “must present a claim for ‘actual, presently due money damages from the United
States.’” Nat’l Air Traffic Controllers Ass’n v. United States, 160 F.3d 714, 716 (Fed. Cir. 1998)
(quoting United States v. King, 395 U.S. 1, 3 (1969)).
In addition, in order for this Court to have jurisdiction, a plaintiff must not run afoul of 28
U.S.C. § 1500, which provides:
The United States Court of Federal Claims shall not have jurisdiction of any claim
for or in respect to which the plaintiff or his assignee has pending in any other
court any suit or process against the United States or any person who, at the time
when the cause of action alleged in such suit or process arose, was, in respect
thereto, acting or professing to act, directly or indirectly under the authority of the
28 U.S.C. § 1500. Section 1500 “was enacted to prevent a claimant from seeking recovery in
district court and the Court of Claims for the same conduct pleaded under different legal
theories.” Trusted Integration, 659 F.3d at 1163. The statute “is more straightforward than its
complex wording suggests. The [Court of Federal Claims] has no jurisdiction over a claim if the
plaintiff has another suit for or in respect to that claim pending against the United States or its
agents.” United States v. Tohono O’Odham Nation, 563 U.S. 307, 311 (2011). Accordingly,
when considering a motion to dismiss under section 1500, this Court must make two inquiries:
“(1) whether there is an earlier-filed ‘suit or process’ pending in another court, and, if so, (2)
whether the claims asserted in the earlier-filed case are ‘for or in respect to’ the same claim(s)
asserted in the later-filed Court of Federal Claims action.” Resource Invs., Inc. v. United States,
785 F.3d 660, 664 (Fed. Cir. 2015) (quoting Brandt v. United States, 710 F.3d 1369, 1374 (Fed.
In terms of the pendency prong, the Supreme Court instructs that the section 1500
analysis, and therefore the jurisdiction of this Court, “‘depends upon the state of things at the
time of the action brought.’” Keene Corp. v. United States, 508 U.S. 200, 207 (1993) (quoting
Mollan v. Torrance, 9 Wheat. 537, 539 (1824) (Marshall, C.J.)). Thus, section 1500 bars this
Court from exercising jurisdiction “over the claim of a plaintiff who, upon filing, has an action
pending in any other court ‘for or in respect to’ the same claim.” Id. at 209 (emphasis added). In
other words, under section 1500, jurisdiction is “dependent on the state of things when the action
is brought, and cannot be rescued by subsequent action of either party or by resolution of the copending litigation.” Cent. Pines Land Co. v. United States, 697 F.3d 1360, 1367 (Fed. Cir. 2012).
In addition, for section 1500 to apply, the two suits must also be “for or in respect to” the
same claim. In Tohono, the Supreme Court held that “[t]wo suits are for or in respect to the
same claim . . . if they are based on substantially the same operative facts, regardless of the relief
sought in each suit,” Tohono, 563 U.S. at 317 (emphasis added), or the legal theories asserted.
Keene, 508 U.S. at 212. “Determining whether two suits are based on substantially the same
operative facts ‘requires a comparison between the claims raised in the Court of Federal Claims
and in the other lawsuit.’” Trusted Integration, 659 F.3d at 1164 (quoting Keene, 508 U.S. at
210). “Importantly, the legal theories underlying the asserted claims are irrelevant to this
inquiry.” Brandt, 710 F.3d at 1374 (citing Trusted Integration, 659 F.3d at 1164). Rather, in
applying section 1500, this Court is to “compare the operative facts asserted at the time the two
complaints were filed.” Cent. Pines, 697 F.3d at 1364.
While not specifically addressing what an operative fact is, the Supreme Court in Tohono
indicated that concentrating on operative facts is “consistent with the doctrine of claim
preclusion, or res judicata, which bars ‘repetitious suits involving the same cause of action’ once
‘a court of competent jurisdiction has entered a final judgment on the merits.’” Tohono, 563
U.S. at 315 (quoting Commissioner v. Sunnen, 333 U.S. 591, 597 (1948)). “Reading § 1500 to
depend on the underlying facts and not also on the relief requested gives effect to the principles
of preclusion law embodied in the statute.” Id. at 316. The Supreme Court further observed that
“[t]he now-accepted test in preclusion law for determining whether two suits involve the same
claim or cause of action depends on factual overlap, barring ‘claims arising from the same
transaction.’” Id. (quoting Kremer v. Chemical Constr. Corp., 456 U.S. 461, 482, n. 22 (1982)).
More recently, the Federal Circuit “explained that ‘[u]nder Tohono, the question is whether the
second Claims Court . . . suit would have been barred by res judicata if it had been brought in
district court’ under ‘res judicata principles as of 1868, when the predecessor to § 1500 was first
enacted.’” Acetris Health, LLC v. United States, 949 F.3d 719, 729 (Fed. Cir. 2020) (quoting
Res. Invs., Inc. v. United States, 785 F.3d 660, 666 (Fed. Cir. 2015) (footnote omitted)). “At that
time, the two tests for res judicata were the ‘act or contract test’ and the ‘evidence test.’” Id.
(citing Trusted Integration, 659 F.3d at 1169). “Under the ‘act or contract test,’ ‘[t]he true
distinction between demands or rights of action which are single and entire, and those which are
several and distinct, is, that the former immediately arise out of one and the same act or contract,
and the latter out of different acts or contracts.’” Id. (quoting Tohono, 563 U.S. at 316 (citation
omitted)). “Under the ‘evidence test,’ two suits involve the same claim if ‘the same evidence
support[s] and establish[es] both the present and the former cause of action.’” Id. (quoting
Tohono, 563 U.S. at 316 (citation omitted)). “If the suits are the ‘same’ under either of these
tests, the Claims Court suit will be barred by section 1500.” Id. (citing Res. Invs., Inc., 785 F.3d
Of course, even if a plaintiff successfully establishes this Court’s jurisdiction, the plaintiff
must still present a valid claim on which the Court can grant relief. RCFC 12(b)(6). “When
considering a motion to dismiss for failure to state a claim upon which relief can be granted
pursuant to Rule 12(b)(6), a court accepts all well-pled facts as true and draws all reasonable
inferences in plaintiff’s favor.” Silver Buckle Mines, Inc. v. United States, 117 Fed. Cl. 786, 791
(2014) (citing Scheuer, 416 U.S. at 236). Granting a motion to dismiss for failure to state a claim
“is appropriate when the facts asserted by the claimant do not entitle him to a legal remedy.”
Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002). Denial of the motion is
warranted when the complaint presents “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 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
A straightforward application of section 1500 to Plaintiff’s complaint necessitates
dismissal for lack of subject-matter jurisdiction. 6 First, it is clear, and Plaintiff does not dispute,
that the first prong of section 1500 is met: whether an earlier-filed action was “pending” in
another court at the time Plaintiff filed its complaint in this Court. Plaintiff filed its district court
complaint on March 16, 2020, which was not dismissed until August 17, 2020. On March 27,
2020, while Plaintiff’s district court case was pending, Plaintiff filed its complaint in this Court.
As to the second prong of the section 1500 analysis, Plaintiff simply cannot overcome the
reality that the instant case shares substantially the same—if not entirely identical—operative
facts to the earlier-filed action in district court. Comparing the conduct pleaded in the two
counts in its complaint in this Court to the second count of its complaint in the district court, it
becomes apparent that each count in this Court involves nearly identical conduct to the second
count of the district court complaint. The only difference between the claims asserted in this
Court and the district court is that Plaintiff asserts in this Court that the conduct led to a breach of
contract and the covenant of good faith and fair dealing, while in district court Plaintiff asserted
that the same conduct violated the APA by being arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law. In both cases, the core conduct alleged was the breach of
the Indemnification Agreement and related regulations. In the district court, this breach was cast
as a violation of the APA; in this Court, it is cast as a straight breach of contract claim.
However, whether brought under the APA or the Tucker Act, Plaintiff’s claim in the district
The Court also notes that the complaint does not appear to allege “actual, presently due money damages
from the United States,” which is a core requirement of the Court’s Tucker Act jurisdiction. It contains no
allegation or factual representation that Plaintiff ever paid the $160,448.62 pursuant to HUD’s demand notice. Nor
is there any allegation that Treasury actually withheld (or offset) the disputed amount. Rather, Plaintiff says only
that “[o]n information and belief, Treasury has or will withhold monies that are owed to AMB as permitted under
the offset statute.” Compl. ¶ 150 (emphasis added). Plaintiff’s prayer for relief seeks a declaration that HUD
violated the Indemnification Agreement (id. ¶ 161(a)) and an enjoinment of HUD’s ability to “collect any
additional funds. . . .” Id. ¶ 161(c)). But Plaintiff’s complaint does not contain a clear allegation that it has a right to
actual, presently due money from the United States. This Court has previously dismissed claims for lack of subjectmatter jurisdiction when such claims merely sought declaratory relief related to, or the cancellation of, an alleged
debt. See, e.g., Summit Power Grp., LLC v. United States, 139 Fed. Cl. 369 (2018). The Federal Circuit has
likewise dismissed claims under the Little Tucker Act that were for what was essentially “debt cancellation,” as
opposed to the refund of money already paid to the federal government. Gonzales & Gonzales Bonds & Ins.
Agency, Inc. v. Dep’t of Homeland Sec., 490 F.3d 940 (Fed. Cir. 2007). Upon questioning at oral argument,
Plaintiff’s counsel represented to the Court that Plaintiff had paid the outstanding debt following the district court’s
August 2020 dismissal. Because the Court dismisses here on section 1500 grounds, it need not address this other
potential Tucker Act jurisdictional defect of Plaintiff’s complaint or whether Plaintiff’s counsel’s representation
during oral argument would affect that analysis.
court and its claim here are substantially the same claim. Both arise out of the “same act or
contract” and rely on the “same evidence.” See Tohono, 563 U.S. at 316.
Indeed, the operative factual overlap is so substantial in this case that not only do the
operative facts in the district court complaint overlap with the operative facts here, but the
prayers for relief in each complaint recite verbatim the same six subparagraphs. 7 Compare
Compl. ¶ 161(a)-(g) with Pl.’s Dist. Ct. Compl. ¶ 245(b)-(h). Although, after Tohono, section
1500 is no longer applied to require both the operative facts and the relief sought to be the same, 8
the complete overlap in the requested relief is nonetheless illustrative of the factual overlap
between the two complaints.
In both the district court and in this Court, Plaintiff requested that the respective court:
District Court Complaint
b. Declare that HUD violated the
Indemnification Agreement that was executed
in connection with the Loan, FHA Case No.
a. Declare that HUD violated the
Indemnification Agreement that was executed
in connection with the Loan, FHA Case No.
c. Enjoin HUD from collecting any additional
funds pursuant to administrative offset and/or
referring the debt to Treasury for collection
b. Enjoin HUD from collecting any additional
funds pursuant to administrative offset and/or
referring the debt to Treasury for collection
d. Certify this matter as a class action
c. Certify this matter as a class action
e. Issue a preliminary injunction restraining
HUD, its officers, employees, agents, or
servants from taking any actions against
AMB, or the Lender Class, with respect to
loans where there was an existing
indemnification agreement in place and HUD
subsequently included the loan in an
d. Issue a preliminary injunction restraining
HUD, its officers, employees, agents, or
servants from taking any actions against
AMB, or the Lender Class, with respect to
loans where there was an existing
indemnification agreement in place and HUD
subsequently included the loan in an
The only difference between the two complaints’ prayers for relief is Plaintiff’s request that the district
court set aside the HUD ALJ’s decision under the APA. See Pl.’s Dist. Ct. Compl. ¶ 245(a). Aside from that single
subparagraph, the two prayers for relief are entirely identical.
Prior to Tohono, the Federal Circuit applied section 1500 such that “[f]or the Court of Federal Claims to
be precluded from hearing a claim under § 1500, the claim pending in another court must arise from the same
operative facts, and must seek the same relief.” Loveladies Harbor, Inc. v. United States, 27 F.3d 1545, 1551 (Fed.
Cir. 1994) (en banc).
f. Return funds improperly collected by HUD e. Return funds improperly collected by HUD
pursuant to indemnification agreements which pursuant to indemnification agreements which
are held in the MMI Fund
are held in the MMI Fund
g. Award AMB its attorney’s fees and
expenses incurred in this action
f. Award AMB its attorney’s fees and
expenses incurred in this action
h. Grant such other relief as the Court deems
just and proper
h. Grant such other relief as the Court deems
just and proper
It is inconceivable that the operative facts necessary to entitle Plaintiff to each identical
request for relief would be different in district court and this Court. For example, the operative
facts the district court would need to examine to “Declare that HUD violated the Indemnification
Agreement that was executed in connection with the Loan, FHA Case No. 374-5838647” are
necessarily that same operative facts that this Court would need to examine in order to issue the
same requested declaration. Whether applying the APA and its arbitrary and capricious standard
or applying a breach of contract analysis under the Tucker Act, the operative facts needed to
determine whether Plaintiff is entitled to a declaration that “HUD violated the Indemnification
Agreement” are the same or substantially the same in both courts. The same is true of the other
six prayers for relief.
With this in mind and because determining whether claims arise from substantially the
same operative facts “requires a comparison between the claims raised in the Court of Federal
Claims and in the other lawsuit,” Keene, 508 U.S. at 210, the Court now turns to the analysis of
the two causes of action pled in this Court versus the Plaintiff’s second cause of action in the
district court. 9
Count I for Breach of Contract is Barred by § 1500
The first count of Plaintiff’s complaint alleges that HUD materially breached the
Indemnification Agreement in five different ways and that these material breaches render the
Indemnification Agreement unenforceable. Plaintiff’s district court complaint contained a count
alleging that this same conduct was arbitrary, capricious, and contrary to law and therefore
violated the APA. Plaintiff argues that “[a] claim under the APA is fundamentally different from
a breach of contract claim” in this Court and accordingly “the government’s assertion that this
suit is a ‘repackaged’ APA claim is wrong.” Pl.’s Resp. to 12(b)(1) at 1-2 (emphasis added).
Plaintiff’s argument, however, ignores the Supreme Court’s instruction as to the test that guides
this Court’s section 1500 analysis.
The Supreme Court in Tohono was clear: “[t]wo suits are for or in respect to the same
claim, precluding jurisdiction in the [Court of Federal Claims], if they are based on substantially
Count I of Plaintiff’s district court complaint—alleging that HUD violated the APA by failing to
promulgate rules governing the SFLS program through notice and comment rulemaking—is not relevant to the
section 1500 analysis in this Court.
the same operative facts, regardless of the relief sought in each suit.” 10 Tohono, 563 U.S. at 317.
In other words, in applying section 1500 to this case, the question is not whether Plaintiff sought
relief under the APA in district court and relief under the Tucker Act for breach of contract in
this Court. Rather, the question is what facts were essential to prove Plaintiff’s district court
APA claim and what facts are essential to prove Plaintiff’s Tucker Act claim in this Court. If the
essential facts for the APA claim and the Tucker Act claim are substantially the same, Plaintiff’s
complaint before this Court must be dismissed. Contrary to Plaintiff’s assertion, the fact that its
district court action proceeded under the APA, while the instant action proceeds under the
Tucker Act, is irrelevant to this inquiry. Trusted Integration, 659 F.3d at 1166 (observing that it
is “clear that the legal theories asserted before the district court and the CFC are irrelevant to
whether the claims arise from substantially the same operative facts”).
Rendering judgment on Plaintiff’s complaint under the APA required the district court to
determine what the same terms of the same Indemnification Agreement required (or prohibited)
of the same party—HUD—that this Court would be required to examine to render judgment on
Plaintiff’s Tucker Act breach of contract claim. The district court determined, and this Court
would likewise need to determine, whether HUD violated its duties under the terms of the
Indemnification Agreement and the regulatory scheme surrounding that agreement. Such a
determination rests not just on substantially the same operative facts but, in fact, on entirely
identical operative facts—namely, the language in the agreement, HUD’s actions (or inactions)
that allegedly breached the agreement, HUD’s actions (or inactions) that allegedly violated HUD
policies and procedures and therefore constituted a breach, and the language in the mortgage
servicer’s Participating Servicer Agreement, which HUD allegedly also breached. Moreover, if
the Court determined that these breaches did occur, it would need to look at the same operative
facts the district court already looked at to determine whether the breaches were material and
whether Plaintiff was actually harmed as a result of those breaches.
Count I of Plaintiff’s complaint in this Court alleges that “HUD materially breached the
Indemnification Agreement by . . . [s]elling the Note in a bulk note sale . . . .” Compl. ¶ 153(a).
This Court would not need to expend much energy determining how to factually analyze that
claim, as the allegations in Count II of Plaintiff’s district court complaint, in fact, give the Court
the roadmap: HUD “did not have the legal authority to sell the Loan as part of the SFLS
program. . . failed to exclude the Loan from the SFLS contrary to its own requirements. . . [and]
willfully or recklessly disregarded its own policies and procedures by allowing loans with
indemnification agreements to be included in the SFLS.” Pl.’s Dist. Ct. Compl. ¶¶ 239-241.
Furthermore, Plaintiff alleges in this Court that HUD breached the agreement by
“[p]aying an invalid claim and then requiring AMB to perform by reimbursing HUD for the
entire amount of the invalid claim . . . [f]ailing to comply with the requirement of the
indemnification agreement that all HUD requirements for servicing will be observed . . . [f]ailing
to properly discount or prorate the amount sought by HUD as indemnification . . . [and]
[i]mproperly utilizing subsection 1.d) of the indemnification agreement to dispose of the
collateral because at the time the Indemnification Agreement was executed, the claim for the
As discussed above, in this case Plaintiff’s claims are not only based on the same operative facts but also
seek the same relief.
Loan was not ‘pending,’ nor had it been ‘paid.’” Compl. ¶¶ 153(b)-(e) (emphasis added).
Similarly, in Count II in the district court, Plaintiff alleges that the “Indemnification Agreement
does not require AMB to indemnify HUD for the invalid claim in this case; because it did not
properly discount the alleged amount AMB owes as required under the Indemnification
Agreement; and because HUD acted contrary to the requirements of the Indemnification
Agreement which excused AMB’s obligations to pay.” Pl.’s Dist. Ct. Compl. ¶ 242 (emphasis
All of these allegations require analysis of the same contract, the same actions and
transactions, and would necessarily call upon the same evidence. Moreover, both complaints
assert extensive and almost entirely verbatim allegations regarding:
How the bulk sales are contrary to HUD’s regulations governing note sales (compare
Compl. ¶¶ 29-37 with Pl.’s Dist. Ct. Compl. ¶¶ 60-69);
The specific requirements under AMB’s Indemnification Agreement with HUD
(compare Compl. ¶¶ 38-42 with Pl.’s Dist. Ct. Compl. ¶¶ 74-78);
the sale of the note underlying the loan (compare Compl. ¶¶ 43-55 with Pl.’s Dist. Ct.
Compl. ¶¶ 79-93);
How the note was not sold at market value or to maximize value (compare Compl. ¶¶ 5661 with Pl.’s Dist. Ct. Compl. ¶¶ 106-111, 114);
Insurance claims for SFLS mortgages and Chase’s PSA (compare Compl. ¶¶ 62-68 with
Pl.’s Dist. Ct. Compl. ¶¶ 116-122);
Chase’s insurance claim on the loan (compare Compl. ¶¶ 69-82 with Pl.’s Dist. Ct.
Compl. ¶¶ 123-135);
HUD’s sale of the note at a “discount” (compare Compl. ¶¶ 83-94 with Pl.’s Dist. Ct.
Compl. ¶¶ 136-147); and
HUD’s requirement to sell the property instead of the note (compare Compl. ¶¶ 95-100
with Pl.’s Dist. Ct. Compl. ¶¶ 148-153).
These are “not mere background facts; they are critical to plaintiffs’ claims in both actions.” See
Cent. Pines Land Co., 697 F.3d at 1365. Nothing revealed at oral argument dissuades the Court
from that conclusion.
Taken together, there is “neither a temporal nor categorical distinction between
[Plaintiff’s] claims here and those against the United States” in district court. See Skokomish
Indian Tribe, 115 Fed. Cl. at 130. In objecting to the enforceability of the indemnification
agreement in both forums, it was Plaintiff that made “substantially the same operative facts”
relevant to both forums. The Court cannot see how Plaintiff’s breach of contract claim here, in
comparison with Count II of its complaint in district court challenging the same actions by HUD
under the APA, is anything other than “carving up a single transaction into overlapping pieces.”
Tohono, 563 U.S. at 315. Accordingly, Count I of Plaintiff’s complaint must be dismissed for
lack of subject-matter jurisdiction under section 1500.
Count II for Breach of the Covenant of Good Faith and Fair Dealing is Barred by
Assessing the merits of Count II of Plaintiff’s complaint would require this Court to
examine the same operative facts as those outlined above for Count I. Count II alleges HUD
breached the covenant of good faith and fair dealing “by failing to screen the list of loans
provided by the servicers to remove those loans with an indemnification agreement . . . [and] by
conducting bulk note sales when it lacked the statutory and regulatory authority to do so.”
Compl. ¶¶ 159-160. As with Count I of Plaintiff’s complaint, the Court finds that Count II
contains nearly verbatim factual allegations of HUD’s lack of legal authority and failure to
screen loans that are found in Plaintiff’s district court complaint. See Pl.’s Dist. Ct. Compl. ¶¶
239-241. Indeed, the district court, in reviewing Plaintiff’s complaint and allegations that HUD
violated its own policies and procedures, considered this argument under the heading: “Breach of
the Covenant of Good Faith and Fair Dealing.” Associated Mortg. Bankers, Inc., No. 20-CV00744 (ESH), 2020 WL 4748091 at *7. The district court determined that the “ALJ’s conclusion
that HUD’s actions did not breach the Indemnification Agreement’s implied covenant of good
faith and fair dealing is supported by substantial evidence,” and “the ALJ was correct to find that
HUD’s ‘innocent oversight,’ which caused no harm to AMB, provided no indication of bad
faith.” Id. (citations omitted).
While the district court’s opinion on this issue in and of itself is not conclusive for
purposes of section 1500, there can be no question that the operative facts presented by Plaintiff
in support of Count II in this Court and those presented by Plaintiff in the district court in support
of its APA claim substantially overlap: the district court literally considered whether HUD
breached the covenant of good faith and fair dealing. Accordingly, Count II of Plaintiff’s
complaint is dismissed for lack of subject-matter jurisdiction under section 1500.
As noted above, the Court does not need to reach a conclusion on the question of issue
preclusion given the necessity of dismissal for lack of subject matter jurisdiction under section
1500. Nevertheless, given how closely related the analysis under section 1500 and the analysis
for issue preclusion are, a short review of the issue raised by the government’s 12(b)(6) motion is
illustrative of why its 12(b)(1) motion must be granted. See Trusted Integration, 659 F.3d at
1164 (“The Supreme Court noted that, by focusing only on the operative facts, its holding was
generally consistent with the doctrine of res judicata, and, therefore gave ‘effect to the principles
of preclusion law embodied in [§ 1500].’”) (quoting Tohono, 563 U.S. at 316).
When considering whether issue preclusion applies, the Federal Circuit instructs this
Court to first ask whether “the issue is identical to the one decided in the first action,” and, if so,
whether the “issue was actually litigated in the first action.” In re Freeman, 30 F.3d 1459, 1465
(Fed. Cir. 1994). On these questions, the Court generally concurs with the government: “the
issues that were raised and adjudicated administratively and in the district court case are identical
to the issues that AMB has raised in this case.” Def.’s 12(b)(6) Mot. to Dismiss at 23. Plaintiff’s
objections—namely, that the “ALJ did not conduct an analysis of whether there was a breach of
contract” and “[t]he District Court similarly did not independently analyze what the contract
meant”—are unavailing. Pl.’s Resp. to 12(b)(6) at 9. The HUD ALJ, in noting that Plaintiff
itself “argue[d] that HUD breached the Indemnification Agreement in five different ways,”
analyzed each and concluded that HUD “did not materially breach the Indemnification
Agreement.” ALJ Decision at 12-17.
In determining whether the HUD ALJ was correct, the district court analyzed “whether
AMB’s obligation to pay was triggered under the Indemnification Agreement; and (2) whether
HUD materially breached the Agreement such that AMB was relieved of its duty to indemnify.”
Associated Mortg. Bankers, Inc., No. 20-CV-00744 (ESH), 2020 WL 4748091 at *4. Finding
the obligation legally triggered, and finding no such breach, the district court dismissed
Plaintiff’s complaint. Plaintiff may be displeased with these outcomes, but that displeasure does
not mean it is entitled to a third bite at the apple in this Court.
The Court also generally concurs with the government on the remaining two questions
that establish preclusive effect. See Freeman, 30 F.3d at 1465 (holding that the third and fourth
prongs of the test for issue preclusion are “resolution of the issue was essential to a final
judgment in the first action” and “plaintiff had a full and fair opportunity to litigate the issue in
the first action”). Resolution of the very same issues Plaintiff raises here was essential to the
decisions of both the HUD ALJ and the district court. For the HUD ALJ to determine whether
the debt was legally enforceable against Plaintiff, it had to examine whether the Indemnification
Agreement created a legally binding obligation on Plaintiff to reimburse HUD and, if so, whether
a breach occurred that would obviate that obligation. See ALJ Decision at 7-18. Plaintiff,
nevertheless, repeats its objection that “neither the ALJ nor the District Court conducted an
analysis of AMB’s breach of contract claim.” Pl.’s Resp. to 12(b)(6) at 11. Even if this Court
accepts that assertion as true, it has no bearing on whether the issues—not claims—that the HUD
ALJ and district court analyzed were essential to a final judgment in those proceedings. On that
question, Plaintiff provides no convincing argument, instead focusing on its alleged lack of a
“full and fair opportunity to litigate its breach of contract claim” and attacking the “cribbed
procedures” of “a biased tribunal . . . .” Id. at 12.
Finally, aside from what mostly appear as general objections to administrative review
under the APA, the Court finds nothing in the briefing before it to indicate that Plaintiff has been
denied a full and fair opportunity to litigate the very same issues it raises in the instant case. The
Supreme Court has held that re-litigation of issues is warranted only “if there is reason to doubt
the quality, extensiveness, or fairness of procedures followed in the prior litigation.” Freeman
30 F.3d at 1467 (citing Montana v. United States, 440 U.S. 147, 164 & n. 11 (1979)). The Court
would, necessarily, more fully examine this question if it had jurisdiction over Plaintiff’s
complaint; however, as with the rest of the issue preclusion analysis, the Court only briefly
examines this prong as further reinforcement of its conclusion with regard to section 1500.
Although sufficient evidence favors preclusion, the Court refrains from deciding the issue
here other than to note that for the same reasons the facts favor preclusion, the facts necessitate
dismissal under section 1500.
For the forgoing reasons, the Court lacks jurisdiction over Plaintiff’s complaint.
Accordingly, the government’s Motion to Dismiss pursuant to RCFC 12(b)(1) and 28 U.S.C. §
1500 is GRANTED. The Clerk is DIRECTED to enter judgment accordingly.
IT IS SO ORDERED.
s/ Zachary N. Somers
ZACHARY N. SOMERS
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?