Williams v. Federal National Mortgage Association
Filing
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OPINION AND ORDER that the 11 Motion to Dismiss is GRANTED IN PART. Plaintiff's federal due process claim, asserted in Count II of her Amended Complaint, is DISMISSED. IT IS FURTHER ORDERED that this action is REMANDED to the Superior Court of Cobb County. Signed by Judge William S. Duffey, Jr on 9/24/2013. (anc)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
LESLIE WILLIAMS,
Plaintiff,
v.
1:13-cv-1899-WSD
FEDERAL NATIONAL
MORTGAGE ASSOCIATION,
Defendant.
OPINION AND ORDER
This matter is before the Court on Defendant Federal National Mortgage
Association’s (“Defendant” or “Fannie Mae”) Motion to Dismiss [11] Plaintiff
Leslie Williams’s (“Plaintiff” or “Williams”) Amended Complaint [7].
I.
BACKGROUND
On July 28, 2004, Plaintiff obtained a loan from HomeBanc Mortgage
Corporation (“HomeBanc”), in the amount of $268,900. (Am. Compl. ¶ 8).
Plaintiff executed, in favor of HomeBanc, a Security Deed to real property located
at 341 McCook Circle, Kennesaw, Georgia (the “Property”). (Id. & Ex. B).
On March 15, 2005, HomeBanc assigned its rights under the Security Deed
to J.P. Morgan Chase Bank. (Am. Compl. ¶ 10 & Ex. C). 1
1
The Assignment was executed on March 15, 2005, and was recorded on
On August 13, 2008, J.P. Morgan Chase Bank assigned its rights under the
Security Deed to Chase Home Finance LLC. (Am. Compl. ¶ 12 & Ex. E).
On August 4, 2008, Chase Home Finance LLC assigned its rights under the
Security Deed to Fannie Mae. (Am. Compl. ¶ 11 & Ex. D).2
At some point, IBM Lender Business Process Services, Inc. (“IBM”)
became Plaintiff’s loan servicer. (Am. Compl. ¶ 15).
In 2011, Plaintiff defaulted on her loan obligations. (Id. ¶ 13).
On June 27, 2011, Plaintiff received a Notice of Foreclosure Sale (the
“Notice”) from Johnson & Freeman LLC, stating that Plaintiff had defaulted on her
loan obligations and that Fannie Mae, the holder of Plaintiff’s loan and the
Security Deed, would conduct a foreclosure sale of the Property on the first
Tuesday in August, 2011. (Am. Compl. ¶ 14 & Ex. F). The Notice also states that
Plaintiff can contact IBM “to discuss possible alternatives to foreclosure,” and
provides IBM’s telephone number and address. (Am. Compl. ¶ 15 & Ex. F).
On August 2, 2011, Fannie Mae sold the Property at foreclosure. (Am.
Compl. ¶ 17 & Ex. G).
October 14, 2005. (Am. Compl. Ex. C).
2
The Court notes that the assignment from Chase Home Finance LLC to
Fannie Mae occurred before Chase Home Finance LLC received its assignment of
the Security Deed from J.P. Morgan Chase Bank. In her Amended Complaint,
Plaintiff does not challenge the validity of the assignment to Fannie Mae.
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On August 3, 2012, Plaintiff filed her Complaint [1.1] in the Superior Court
of Cobb County, Georgia, asserting state law claims against Fannie Mae for
“wrongful foreclosure/breach of contract” and violations of O.C.G.A.
§§ 44-14-162.2 and 44-14-162(b). Plaintiff sought compensatory and punitive
damages and attorney’s fees and costs.
On May 7, 2013, Plaintiff filed her Amended Complaint [7]. Plaintiff
asserts that Fannie Mae violated O.C.G.A. § 44-14-162.2 (Count I) and the Due
Process Clause of the Fifth Amendment (Count II). Plaintiff argues that the Notice
was defective under O.C.G.A. § 44-14-162.2 because it only provided the contact
information for IBM and, pursuant to the servicing agreement between Fannie Mae
and IBM, Plaintiff asserts, IBM does not have the authority to negotiate, amend or
modify the terms of Plaintiff’s loan without permission from Fannie Mae and may
do so only within the guidelines set by Fannie Mae. Plaintiff argues also that
Fannie Mae violated her due process rights by foreclosing on the Property without
a hearing. Plaintiff seeks either compensatory damages or reinstatement of her title
to the Property, and attorney’s fees and costs.
On June 6, 2013, Fannie Mae removed the Cobb County action to this Court
based on federal question jurisdiction because Count II of Plaintiff’s Amended
Complaint asserts a claim for violation of the United States Constitution [1].
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On June 13, 2013, Fannie Mae moved to dismiss Plaintiff’s Amended
Complaint for failure to state a claim.
II.
DISCUSSION
A.
Defendant’s Motion to Dismiss
1.
Legal Standard
On a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of
Civil Procedure, the Court must “assume that the factual allegations in the
complaint are true and give the plaintiff[] the benefit of reasonable factual
inferences.” Wooten v. Quicken Loans, Inc., 626 F.3d 1187, 1196 (11th Cir.
2010). Although reasonable inferences are made in the plaintiff’s favor,
“‘unwarranted deductions of fact’ are not admitted as true.” Aldana v. Del Monte
Fresh Produce, N.A., 416 F.3d 1242, 1248 (11th Cir. 2005) (quoting S. Fla. Water
Mgmt. Dist. v. Montalvo, 84 F.3d 402, 408 n.10 (1996)). The Court is not required
to accept conclusory allegations and legal conclusions as true. See Am. Dental
Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010) (construing Ashcroft
v. Iqbal, 556 U.S. 662 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)).
“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.’”
Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570)). Mere “labels and
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conclusions” are insufficient. Twombly, 550 U.S. at 555. “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.”
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). This requires more than
the “mere possibility of misconduct.” Am. Dental, 605 F.3d at 1290 (quoting
Iqbal, 556 U.S. at 679). The well-pled allegations must “nudge[] their claims
across the line from conceivable to plausible.” Id. at 1289 (quoting Twombly, 550
U.S. at 570).
2.
Analysis
Defendant argues that Plaintiff’s federal due process claim in Count II of
the Amended Complaint should be dismissed because Fannie Mae is not a
government actor and thus the Due Process Clause does not apply to it. Plaintiff
does not oppose, or otherwise respond to, Defendant’s argument. In her
Response, Plaintiff merely states that she “withdraws Count II (Violation of Due
Process).” [13 at 1]. Failure to respond to an opposing party’s argument results in
abandonment of the claim. See Bute v. Schuller Int’l, Inc., 998 F. Supp. 1473,
1477 (N.D.Ga. 1998) (“Because plaintiff has failed to respond to this argument or
otherwise address this claim, the Court deems it abandoned.”); see also LR 7.1(B),
NDGa (“Failure to file a response shall indicate that there is no opposition to the
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motion.”). Plaintiff has abandoned her federal due process claim and this claim is
required to be dismissed.3, 4
B.
Exercise of Supplemental Jurisdiction
Plaintiff’s federal due process claim, now dismissed, was the only claim in
this action over which the Court had original subject matter jurisdiction. The
3
Even if the Court reached the merits of Defendant’s argument, Count II
would be required to be dismissed because Plaintiff fails to allege any facts to
support her conclusory allegation that Fannie Mae is a government actor and courts
have consistently found that Fannie Mae is not a government actor for purposes of
a constitutional claim. See Public Util. Comm’n v. Pollak, 343 U.S. 451, 461
(1952) (Fifth Amendment restricts only the government and not private persons);
Lebron v. Nat’l Passenger R.R. Corp., 513 U.S. 374, 400 (1995) (corporation is
part of the government for purposes of a constitutional claim where “the
[g]overnment creates a corporation by special law, for the furtherance of
governmental objectives, and retains for itself permanent authority to appoint a
majority of the directors of that corporation”); Roberts v. Cameron-Brown Co.,
556 F.2d 356, 359 (5th Cir. 1977) (Fannie Mae is not a government actor subject to
Fifth Amendment due process requirements in conducting non-judicial foreclosure
sale, including because: in 1968, Congress specifically dissociated Fannie Mae
from its previous government ownership and transferred it to private ownership;
Fannie Mae maintains the capital structure of a privately-owned corporation; and
because “although the regulating statutes impose certain obligations on [Fannie
Mae], the federal government and [Fannie Mae] have not become so
interdependent as to make its actions the actions of the federal government”);
Herron v. Fannie Mae, 857 F. Supp. 2d 87 (D.D.C. 2012) (dismissing
constitutional claim against Fannie Mae because it is not a government actor and
finding that Fannie Mae was not converted into a government entity when it was
placed into conservatorship by 2008 act authorizing Federal Housing Finance
Agency to act as its conservator).
4
Because the Court declines to exercise supplemental jurisdiction over the
remaining claims in this action, the Court does not consider Defendant’s arguments
for dismissal of Plaintiff’s remaining claims.
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remaining claims in this action involve only state law causes of action, over which
the Court may, but is not required to, exercise supplemental jurisdiction. See
28 U.S.C. § 1367(a) (conferring district courts with supplemental jurisdiction over
“claims that are so related to claims in the action within [the court’s] original
jurisdiction that they form part of the same case or controversy”).
The exercise of supplemental jurisdiction is discretionary. See 28 U.S.C.
§ 1367(c); United Mines Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966). A
district court may decline to exercise supplemental jurisdiction over a claim if
(1) the claim raises a novel or complex issue of State law,
(2) the claim substantially predominates over the claim or claims over
which the district court has original jurisdiction,
(3) the district court has dismissed all claims over which it has
original jurisdiction, or
(4) in exceptional circumstances, there are other compelling reasons
for declining jurisdiction.
28 U.S.C. § 1367(c). In making this determination, the district court should
consider the factors articulated by the Supreme Court in Gibbs: judicial economy,
convenience, fairness to the parties, and whether all the claims would be expected
to be tried together. Palmer v. Hosp. Auth., 22 F.3d 1559, 1569 (11th Cir. 1994)
(citing Gibbs, 383 U.S. at 725–26).
The Court has discretion to decline to exercise jurisdiction over this case
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because, in dismissing the federal due process claim, the Court “has dismissed all
claims over which it has original jurisdiction” and the remaining state law claims
“substantially predominate” over the now-dismissed federal claim. See 28 U.S.C.
§ 1367(c)(2)–(3); see also Parker v. Scrap Metal Processors, Inc., 468 F.3d 733,
744 (11th Cir. 2006) (explaining that a “federal court will find substantial
predominance when it appears that a state claim constitutes the real body of a case”
(internal quotation omitted)); Cook ex rel. Estate of Tessier v. Sheriff of Monroe
Cnty., 402 F.3d 1092, 1123 (11th Cir. 2005) (explaining that when “no basis for
original federal jurisdiction presently exists, the district court has the discretion to
decline to exercise supplemental jurisdiction”).
In considering the relevant Gibbs factors, the Court finds that judicial
economy favors declining to exercise supplemental jurisdiction. The Court has not
expended considerable resources at this stage of litigation. See Carnegie-Mellon
Univ. v. Cohill, 484 U.S. 343, 351 n.7 (1988) (“[I]n the usual case in which all
federal-law claims are eliminated before trial, the balance of factors to be
considered under the pendent jurisdiction doctrine—judicial economy,
convenience, fairness, and comity—will point toward declining to exercise
jurisdiction over the remaining state-law claims.”); Lake Cnty. v. NRG/Recovery
Grp., Inc., 144 F. Supp. 2d 1316, 1319 (M.D. Fla. 2001) (remanding where the
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federal court had not expended a significant amount of judicial labor). Judicial
economy also favors the resolution in state court of state law disputes between instate defendants. See Gibbs, 383 U.S. at 726 (“Needless decisions of state law
should be avoided both as a matter of comity and to promote justice between
parties, by procuring for them a surer-footed reading of applicable law.”); see also
Baggett v. First Nat’l Bank, 117 F.3d 1342, 1353 (11th Cir. 1997) (“State courts,
not federal courts, should be the final arbiters of state law.”); Hudson v. Cent. Ga.
Health Servs., No. 5:04-cv-301, 2005 WL 4145745, at *10 (M.D. Ga. Jan 13,
2005) (“[I]t is preferable for the courts of Georgia to make rulings on issues of
Georgia law rather than to have federal courts do so, even when those federal
courts are in Georgia.”).; cf. Pintando v. Miami-Dade Hous. Agency, 501 F.3d
1241, 1243–44 (11th Cir. 2007) (holding that, in non-removed cases, district court
must dismiss a federal question case if the plaintiff later drops its federal claims).
The convenience and fairness factors do not compel the Court to exercise its
supplemental jurisdiction. The parties are not inconvenienced by being required to
litigate in the Superior Court of Cobb County, and there is no indication that
requiring them to litigate in state court is unfair to either party. Applying the
factors in Gibbs, the Court declines to exercise supplemental jurisdiction over the
remaining state law claims, and remand is appropriate. See Cook, 402 F.3d at
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1123 (“Because this case was originally filed in state court and removed to federal
court pursuant to 28 U.S.C. § 1441, if the district court declines to continue to
exercise supplemental jurisdiction, [the] remaining claim[s] should be remanded to
state court.”).
III.
CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss [11] is
GRANTED IN PART. Plaintiff’s federal due process claim, asserted in Count II
of her Amended Complaint, is DISMISSED.
IT IS FURTHER ORDERED that this action is REMANDED to the
Superior Court of Cobb County.
SO ORDERED this 24th day of September, 2013.
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