Kimbrell v. Federal Housing Finance Agency
Filing
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OPINION & ORDER Entered by Judge Joe Billy McDade on 7/8/2016. Plaintiff's Motion for Application for Temporary Restraining Order and Preliminary Injunction 4 is DENIED. Defendant's Motion to Dismiss 8 is GRANTED. Generally, the Court w ill allow a pro se plaintiff an opportunity tocure the defects in her complaint. However, in this situation, given the nature of the claims, the legal status of the Defendant, and the Plaintiff's history of meritless litigation, no leave to amend the complaint will be extended. Therefore, the Complaint 1 is dismissed with prejudice. CASE TERMINATED. IT IS SO ORDERED. See full written Order. (SL, ilcd)
E-FILED
Friday, 08 July, 2016 10:18:25 AM
Clerk, U.S. District Court, ILCD
IN THE
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
JODY D. KIMBRELL,
Plaintiff,
v.
FEDERAL HOUSING FINANCE
AGENCY,
Defendant.
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Case No. 16-cv-1182
OPINION & ORDER
In 2014, Anna Isaacs and Jody Kimbrell brought a civil action before this
Court in which they sued Defendants Royal Bank of Canada, RBC Capital Markets
Corporation and Anthony J. Giannini for allegedly extending them fraudulent
mortgages for a certain piece of real property. (Doc. 20 at 2, No. 14-cv-1036). That
case was dismissed because the sole basis for the Court’s jurisdiction over the
matter was diversity of citizenship as provided by 28 U.S.C. § 1332, but the
plaintiffs and defendants were not in fact diverse in citizenship. The Court also
noted that the underlying foreclosure state court action was still pending, thus
there were abstention implications that the Court did not fully address because the
lack of diversity jurisdiction was sufficient to dispose of the action.
Jody Kimbrell, pro se, now brings this action against the Federal Housing
Finance Agency (“FHFA”) for claims arising out the agency’s alleged dereliction of
its duties that allowed the defendants from the previous case to fraudulently take
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Ms. Kimbrell’s real property. The Complaint contains the following counts: Count IViolation of and Failing to Follow the Act outlining Defendant’s Purpose Federal
Housing Enterprises Financial Safety and Soundness Act of 1992; Count IIFraudulent Transfer and Seizure Of Property under the Federal Tort Claims Act;
Count III- Fraud in the Concealment in Violation of the 2010 Dodd-Frank Wall
Street Reform and Consumer Protection Act and Fannie Mae's Code of Conduct;
Count IV- Fraud In the Inducement in Violation of Housing Finance Agency
Regulations (12 CFR part 1237) and 12 U.S.C. § 4502; Count V- State Law
Intentional Infliction of Emotional Distress; Count VI- State Law Slander of Title;
and Count VII- State Law Unjust Enrichment. Ms. Kimbrell has also moved the
Court for the extraordinary remedies of a temporary restraining order (“TRO”) and
a preliminary injunction to enjoin the FHFA from operating in a manner
inconsistent with its codified operational directives. The Government has responded
with opposition to the motion for injunctive relief as well as a Rule 12(b)(6) motion
to dismiss the Complaint for failure to state claims for which relief can be granted.
Plaintiff has filed an opposition brief to the Government’s 12(b)(6) motion. For the
reasons given detail below, the Plaintiff’s motion (Doc. 4) is denied and the
Government’s motion (Doc. 8) is granted. The Complaint (Doc. 1) is dismissed.
LEGAL STANDARDS
A temporary restraining order (“TRO”) is an “emergency remedy,” which,
generally speaking, is used to “maintain the status quo until a hearing can be held
on an application for a preliminary injunction.” Crue v. Aiken, 137 F.Supp.2d, 1076,
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1082 (C.D.Ill. 2001). A TRO is therefore a form of preliminary relief used “to
minimize the hardship to the parties pending the ultimate resolution of the
lawsuit.” Platinum Home Mortgage Corp. v. Platinum Financial Group, Inc., 149
F.3d 722, 726 (7th Cir. 1998). In the Seventh Circuit, the standards for a TRO and a
preliminary injunction are functionally identical. Crue, 137 F.Supp.2d at 1082–83.
Federal Rule of Civil Procedure 65 provides for the issuance of a TRO with or
without notice. Notice was given in this case, but no hearing is necessary to hear
the instant motion. In order for a TRO to issue, a party must make a threshold
showing that:(1) it has some likelihood of success on the merits;(2) no adequate
remedy at law exists; and (3) it will suffer irreparable harm in the interim period
prior to final resolution of its claims if the injunction is not granted. Girl Scouts of
Manitou Council, Inc. v. Girl Scouts of U.S.A., Inc., 549 F.3d 1079, 1086 (7th Cir.
2008); Ferrell v. United States Dep’t of Housing and Urban Dev., 186 F.3d 805, 811
(7th Cir. 1999).
Assuming that the moving party establishes these factors, the Court then
“balances the harms” to both of the parties that would result from the TRO using a
“sliding scale” analysis, while additionally considering the effect that granting the
injunction will have on the public. Girl Scouts, 549 F.3d at 1086. If the plaintiff has
made a stronger showing that he will be successful on the merits, the balance of
harms need weigh less heavily in his favor. Roland Machinery Co. v. Dresser
Indust., Inc., 749 F.2d 360, 387 (7th Cir. 1984). However, because the granting of an
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injunction is extraordinary relief, a plaintiff is required to make a “clear showing” of
the above factors. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997).
To survive a motion to dismiss, a plaintiff’s complaint must contain sufficient
detail to give notice of the claim, and the allegations must “plausibly suggest that
the plaintiff has a right to relief, raising that possibility above a ‘speculative level.’”
EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The plausibility standard
requires enough facts “to present a story that holds together,” but does not require a
determination of probability. Swanson v. Citibank, N.A., 614 F.3d 400, 404 (7th Cir.
2010). Though detailed factual allegations are not needed, a “formulaic recitation of
the elements of a cause of action will not do.” Bell Atl. Corp., 550 U.S. at 555.
DISCUSSION
Plaintiff clearly blames the FHFA for turning a blind eye to the alleged
fraudulent misappropriation of her property that she claims occurred through a
pending foreclosure process in Illinois state court. However, she does not adequately
explain how a TRO or injunction will benefit her personally or immediately.
Moreover, as will be explained below, her claims are all either barred by law or seek
relief that is disallowed by law. Therefore, her Complaint must be dismissed.
Count I
As stated above, the first showing that a plaintiff seeking preliminary
injunctive relief must make is that she is likely to succeed on the merits of her suit.
Plaintiff cannot make this showing because her claims are without merit. She has
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sued the FHFA in a civil action. The FHFA is an independent regulatory agency
created by the United States of America to oversee the government sponsored
housing enterprises of Fannie Mae, Freddie Mac and the Federal Home Loan Bank
System. See 12 U.S.C. § 4511. In 2008, the FHFA placed Fannie Mae and Freddie
Mac into conservatorship, which essentially means that the United States’
Department of the Treasury committed to providing financial support to Fannie
Mae and Freddie Mac to enable them to continue to provide liquidity and stability
to the mortgage market.
No provision of any law permits a private individual, such as the Plaintiff, to
sue the FHFA under the circumstances presented in this case. Title 12, Section
4513(c)(2) of the United States Code provides that the Director of the FHFA is
subject to suit by regulated entities only and only for non-monetary relief, unless
otherwise provided by law. Plaintiff is not a regulated entity, as that term is defined
at 12 U.S.C. § 4502(20), and she is clearly seeking compensatory and punitive
damages in this lawsuit, which are expressly forbidden. Not only may Plaintiff not
sue the FHFA for money damages, injunctive relief is foreclosed as well. Title 12,
Section 4617(f) of the United States Code provides that no court may take any
action to restrain or affect the exercise of powers or functions of the FHFA as a
conservator or a receiver. Thus, the statute provides that any purported suit for an
injunction forcing the FHFA to exercise its powers or functions as the conservator of
Fannie Mae or Freddie Mac is doomed from the start.
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No statutory provision related to the FHFA provided by the Plaintiff in her
Complaint (nor researched by this Court) even tangentially speaks about a private
cause of action for a private citizen against the FHFA. This is important because
“[w]hen a federal agency is named as the defendant in an action, the general rule is
that the agency may be sued only if Congress has consented to the action, and the
Government’s waiver of sovereign immunity must be expressed unequivocally in a
statute.” § 3655 Actions Against Federal Agencies and Officers, 14 Fed. Prac. &
Proc. Juris. § 3655 (4th ed.). It is the Plaintiff’s burden to show such waiver and the
Plaintiff has not done so.
Plaintiff is intelligent and understands that no source she has offered
contains an express provision allowing her to sue the FHFA, so she attempts to rely
on the Administrative Procedures Act, 5 U.S.C. § 706, et. seq. (the “APA”), for Count
I. “[A] claim under § 706(1) can proceed only where a plaintiff asserts that an
agency failed to take a discrete agency action that it is required to take.” Norton v.
S. Utah Wilderness All., 542 U.S. 55, 64 (2004). The APA precludes broad
programmatic attacks. Id. “General deficiencies in compliance ... lack the specificity
requisite for agency action.” Id. at 66. Plaintiff cites 12 U.S.C. § 4501 as a source of
the FHFA’s affirmative duties with which it must comply but that section is nothing
more than congressional findings that support the enactment of the statute;1 it does
not contain specific tasks or directives that the agency must undertake or follow.
Plaintiff also cites 15 U.S.C. §§ 45 and 56, but those statutes apply to the Federal
Trade Commission, not the FHFA. They have no application here.
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Furthermore, Plaintiff does not identify any actual discrete agency action
that the FHFA allegedly took against her anywhere in her Complaint. Instead, she
argues that the FHFA failed to investigate her complaint about Freddie Mac/Fannie
Mae and this was a violation of the FHFA’s general duty to protect the public. Not
following the agency’s general duty is not the type of action that will sustain a
citizen suit against a federal agency. A plaintiff must allege the government actor
violated a specific directive found in a statute. In other words, the plaintiff must
identify in her complaint a precise action or failure to act that is specifically
required by law. Norton, 542 U.S. at 64. There are no allegations that satisfy this
requirement in the Complaint. Therefore, Plaintiff has no likelihood of succeeding
on this claim.
Counts II, III and IV
As for Counts II through IV of the Complaint, Plaintiff’s claims are equally
deficient. In Count II, Plaintiff alleges that the FHFA ignored Fannie Mae’s
fraudulent foreclosure of her property and thus committed a tort against her. (Doc.
1 at 22). She claims in Counts III and IV that the FHFA committed fraud against
her under various acts and regulations. All three of these claims are actually tort
claims of fraud that are only potentially actionable against the Government through
the Federal Tort Claims Act (the “FTCA”).2
As an initial matter, several cases hold that when the FHFA steps into its
role as the conservator of Freddie Mac or Fannie Mae, the agency acts as a private
Plaintiff does not specifically invoke the FTCA in Counts III and IV but it is clear
from the substance of her allegations that these are tort claims of fraud.
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corporation and not a government actor and an FTCA claim cannot be maintained
against it. See, e.g., Dias v. Fed. Nat. Mortgage Ass’n, 990 F. Supp. 2d 1042, 1061-62
(D. Haw. 2013). One cannot plausibly maintain a tort claim under the FTCA
against an entity for actions taken in a non-governmental role. But even if Plaintiff
can overcome this hurdle, more hurdles remain.
The FTCA waives the United States’ sovereign immunity for damages
“caused by the negligent or wrongful act or omission” of federal employees acting
within the scope of their employment where the United States, “if a private person,”
would have been liable to the plaintiff under state law. 28 U.S.C. § 1346(b). The
waiver of sovereign immunity is not absolute, as Congress has excluded certain
claims from the FTCA such as “[a]ny claim ... based upon the exercise or
performance or the failure to exercise or perform a discretionary function or duty on
the part of a federal agency or an employee of the Government ...” 28 U.S.C. §
2680(a). This subsection, known as the discretionary function exception, protects
the United States from liability when an activity is properly “classified as an
exercise of discretion,” even if the government employee abuses his discretion.
Collins v. United States, 564 F.3d 833, 839 (7th Cir. 2009).
The exception “marks the boundary between Congress’ willingness to impose
tort liability upon the United States and its desire to protect certain governmental
activities from exposure to suit by private individuals.” United States v. Varig
Airlines, 467 U.S. 797, 808 (1984). Its purpose is to “prevent judicial secondguessing of legislative and administrative decisions grounded in social, economic,
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and political policy through the medium of an action in tort.” United States v.
Gaubert, 499 U.S. 315, 322–23 (1991).
For conduct to qualify for the discretionary function exception, it must meet
two criteria. First, the conduct must involve “an element of judgment or choice.”
Berkovitz v. United States, 486 U.S. 531, 536 (1988). Conduct that is specifically
proscribed by “federal statute, regulation, or policy” is not conduct that involves an
element of judgment or choice because “the employee has no rightful option but to
adhere to the directive.” Id. Second, the conduct must be “susceptible to policy
analysis.” Gaubert, 499 U.S. at 325. If certain action is discretionary, a Plaintiff
“must allege facts which would support a finding that the challenged actions are not
the kind of conduct that can be said to be grounded in ... policy.” Id. at 324–25.
Plaintiff has not made any allegations that the FHFA engaged in specific
conduct proscribed by “federal statute, regulation, or policy.” She attached to her
Complaint correspondence with the FHFA that shows she submitted a complaint to
the FHFA’s Office of the Inspector General (“OIG”) regarding the alleged fraudulent
transfer of her property via the Fannie Mae instituted foreclosure. (Doc. 1-3). The
OIG investigated her complaint and in its discretion concluded that the complaint
was unfounded. (Doc. 1-3). So first, Plaintiff can hardly credibly claim the FHFA
ignored her complaint and did nothing. Second, Plaintiff has not alleged anything in
her Complaint that remotely conveys that the investigation of her complaint and
the result were not within the sound discretion of the FHFA. Thus, her claim is
barred by the discretionary function exception to the FTCA.
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Plaintiff’s fraud claims in Counts II, III and IV are also barred by another
exception to FTCA liability found at 28 U.S.C. § 2860(h). That provision disallows
FTCA claims predicated on libel, slander, misrepresentation, deceit, or interference
with contract rights, and other intentional torts not applicable here. Fraud claims
are barred by the FTCA’s statutory exception for acts or omissions involving
misrepresentation and deceit. Omegbu v. United States, 475 F. App’x 628, 629 (7th
Cir. 2012). Thus, the applicable statutory law demonstrates Plaintiff’s claims have
no merit and cannot serve as a basis for monetary or injunctive relief.
Counts V, VI, and VIII: Purported State Law Claims
Count V contains a claim of intentional infliction of emotional distress. Count
VI contains a claim of slander of title and Count VII contains a claim of unjust
enrichment with a request to quiet title. Although these claims arise under Illinois
state law, they are torts and are only potentially actionable against the FHFA
through the Federal Torts Claims Act. Section 1346, Title 28 of the United States
Code provides in relevant part that the “district courts... shall have exclusive
jurisdiction of civil actions on claims against the United States, for money damages,
. . . for injury or loss of property, ... caused by the negligent or wrongful act or
omission of any employee of the Government while acting within the scope of his
office or employment, under circumstances where the United States, if a private
person, would be liable to the claimant in accordance with the law of the place
where the act or omission occurred.” Thus, this is not a situation where the Court
can decline to exercise supplemental jurisdiction provided by 28 U.S.C. § 1367 over
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state law claims. Instead, the Court will adjudicate the claims as they are only
actionable against the FHFA under the FTCA. Unfortunately for Plaintiff, these
claims are also without merit or not otherwise actionable in this Court.
Plaintiff’s intentional infliction of emotional distress (“IIED”) claim and
unjust enrichment claim, Counts V and VII, are based on Defendant’s alleged
fraudulent conduct discussed in other Counts. (Doc. 1 at 25-27). As such, they
clearly arise out of several of the torts listed in 28 U.S.C. § 2680(h)—
misrepresentation, deceit, or interference with contract rights. Since her IIED and
unjust enrichment claims arise out of tortious conduct exempted from redress under
the FTCA, her IIED and unjust enrichment claims are similarly not redressable and
therefore not actionable before this Court.
The same is true for Count VI, which alleges slander of title. In Illinois, the
“act of maliciously recording a document which casts a cloud upon another's title to
real estate is actionable as slander of title.” Whildin v. Kovacs, 403 N.E.2d 694, 695
(1980). It is an intentional tort. Id. Again, the FTCA expressly disallows claims
against the United States predicated on libel, slander, misrepresentation, deceit, or
interference with contract rights. As such Plaintiff’s slander of title claim is
foreclosed and is without merit.
The Court has been notified that the property at the heart of this matter has
recently been sold to a third party. The Court expresses its sympathy for the
Plaintiff. However, it is clear that suing the FHFA under the theories presented in
the Complaint was not an appropriate method to forestall the sale of the property.
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CONCLUSION
Plaintiff’s Motion for Application for Temporary Restraining Order and
Preliminary Injunction (Doc. 4) is DENIED. Defendant’s Motion to Dismiss (Doc. 8)
is GRANTED. Generally, the Court will allow a pro se plaintiff an opportunity to
cure the defects in her complaint. However, in this situation, given the nature of the
claims, the legal status of the Defendant, and the Plaintiff’s history of meritless
litigation,3 no leave to amend the complaint will be extended. Therefore, the
Complaint (Doc. 1) is dismissed with prejudice. CASE TERMINATED.
IT IS SO ORDERED.
Entered this 8th day of July, 2016.
s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge
Plaintiff has brought three other meritless federal actions alleging fraud
surrounding the foreclosure of the property at issue in this action. (See Isaacs v.
Royal Bank of Canada et. al., No. 14-cv-1036 (C.D. Ill., J. McDade); Isaacs v. Royal
Bank of Canada et. al., No. 14-cv-1138, (C.D. Ill., J. Shadid); Kimbrell v. Federal
National Mortgage Association et. al., No. 15-cv-1218, (C.D. Ill., J. Darrow).
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