Leaming et al v. Stonegage Mortgage
ORDER AND REASONS granting 3 MOTION to Dismiss; all of plaintiffs' claims are DISMISSED WITHOUT PREJUDICE for lack of subject-matter jurisdiction. Signed by Judge Lance M Africk on 9/20/2016.(blg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
SUSANNAH A. LEAMING ET AL.
ORDER AND REASONS
Defendant has filed a motion 1 to dismiss pursuant to Rules 12(b)(1) and
12(b)(6) of the Federal Rules of Civil Procedure. Pro se plaintiffs oppose defendant’s
Because this Court lacks subject-matter jurisdiction over this lawsuit,
defendant’s Rule 12(b)(1) motion is granted. 2 The Court does not reach defendant’s
Rule 12(b)(6) arguments.
STANDARD OF LAW
Rule 12(b)(1) requires dismissal if a district court lacks jurisdiction over the
subject matter of a plaintiff’s claim.
When a Rule 12(b)(1) motion is filed in
conjunction with other Rule 12 motions, subject-matter jurisdiction must be decided
first because “the court must find jurisdiction before determining the validity of a
claim.” Patin v. Thoroughbred Power Boats Inc., 294 F.3d 640, 646 n.11 (5th Cir.
2002). “The standard of Rule 12(b)(1), ‘while similar to the standard of Rule 12(b)(6),
permits the court to consider a broader range of materials in resolving the motion.’”
R. Doc. No. 3.
Plaintiffs have also filed a motion to stay the sale of the property at issue. R. Doc.
No. 5. Because the Court grants defendant’s motion to dismiss, it does not reach
plaintiffs’ motion to stay.
Berry v. Nat’l Labor Relations Bd., No. 15-6490, 2016 WL 1571994, at *2 (E.D. La.
Apr. 19, 2016) (citation omitted). The Fifth Circuit has explained that courts may
dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1) on any one of
three different bases: (1) the complaint alone; (2) the complaint supplemented by
undisputed facts in the record; or (3) the complaint supplemented by undisputed facts
plus the court’s resolution of disputed facts. Id.
A case is properly dismissed under Rule 12(b)(1) “for lack of subject-matter
jurisdiction when the court lacks the statutory or constitutional power to adjudicate
the case.” Krim v. pcOrder.com, Inc., 402 F.3d 489, 494 (5th Cir. 2005) (citations
omitted). A party seeking to invoke federal court jurisdiction must present an actual
case or controversy. See U.S. CONST. Art. 3 § 2; Flast v. Cohen, 392 U.S. 83, 95
(1968). Standing is an “essential and unchanging part of the case-or-controversy
requirement of Article III,” and it is not subject to waiver. Joint Heirs Fellowship
Church v. Akin, 629 F. App’x 627, 629 (5th Cir. 2015) (citation omitted). “[S]tanding
is . . . determined as of the commencement of the suit.” In re Isbell Records, Inc., 774
F.3d 859, 869–70 (5th Cir. 2014). Plaintiffs have the burden of establishing standing.
See Akin, 629 F. App’x at 629.
Dismissals for lack of jurisdiction “are not considered adjudications on the
merits and ordinarily do not, and should not, preclude a party from later litigating
the same claim, provided that the specific defect has been corrected.” Blanchard
1986, Ltd. v. Park Plantation, LLC, 553 F.3d 405, 409 n.15 (5th Cir. 2008).
This lawsuit should be dismissed for lack of subject-matter jurisdiction because
plaintiffs have initiated bankruptcy proceedings and only the bankruptcy trustee has
the right to initiate legal actions on behalf of the bankruptcy debtors. Plaintiffs do
not dispute that they initiated a voluntary Chapter 13 bankruptcy proceeding on
April 26, 2016—before this lawsuit was filed on June 6, 2016. 3 However, broadly
construed, their opposition does challenge whether their claims fall within the
The filing of a bankruptcy petition creates an estate that is comprised of,
among other things, “all legal or equitable interests of the debtor in property as of the
commencement of the case.” 11 U.S.C. § 541(a)(1). “The phrase ‘all legal or equitable
interests of the debtor in property’ has been construed broadly, and includes ‘rights
of action’ such as claims based on state or federal law.” In re Seven Seas Petroleum,
Inc., 522 F.3d 575, 584 (5th Cir. 2008) (citations omitted). “If a claim belongs to the
estate, then the bankruptcy trustee has exclusive standing to assert it.” Id.
Procedurally, “[w]hether a specific cause of action belongs to a bankruptcy
estate is . . . a matter of law that [the Court] decides by reference to the facial
allegations in the complaint.” Id. at 583. On the merits, whether a particular claim
belongs to the bankruptcy estate depends on whether under applicable law the debtor
could have raised the claim prior to the commencement of the case. Id. at 584.
See R. Doc. No. 1.
“If a cause of action alleges only indirect harm to a creditor (i.e., an injury
which derives from harm to the debtor), and the debtor could have raised a claim for
its direct injury under the applicable law, then the cause of action belongs to the
estate.” Id. “Conversely, if the cause of action does not explicitly or implicitly allege
harm to the debtor, then the cause of action could not have been asserted by the
debtor as of the commencement of the case, and thus is not property of the estate.”
The claims asserted in plaintiffs’ complaint plainly belong to the bankruptcy
estate. As best the Court can decipher, plaintiffs claim that defendant violated the
Fraud Enforcement and Recovery Act of 2009 (“FERA”), Pub. L. No. 111–21, § 4, 123
Stat. 1617, the Real Estate Settlement Procedures Act of 1974 (“RESPA”), § 2 et seq.,
12 U.S.C. § 2601 et seq., and the Truth in Lending Act (“TILA”), § 125(b), 15 U.S.C. §
1635(b). 4 Plaintiffs attempt to assert a cause of action under these statutes in order
to rescind the mortgage and promissory note on their home. If plaintiffs had not
declared bankruptcy, they clearly would have standing to pursue these claims.
Accordingly, these causes of action belong to the bankruptcy estate.
Although the bankruptcy court dismissed 5 the bankruptcy lawsuit on August
10, 2016, “standing is . . . determined as of the commencement of the suit.” In re Isbell
Records, 774 F.3d at 869–70. Even if plaintiffs now have standing to bring these
Plaintiffs also claim that they are bringing a claim pursuant to 18 U.S.C. § 1005,
but that is a criminal statute which outlaws bank fraud, and hence it is inapplicable
5 In re Ethan H. Leaming et al., No. 16-10970, R. Doc. No. 25 (E.D. La. Bankr.).
claims, they did not have standing when this lawsuit was filed on June 6, 2016. It
must therefore be dismissed. See Summit Office Park, Inc. v. U.S. Steel Corp., 639
F.2d 1278, 1282 (5th Cir. 1981) (“[W]here a plaintiff never had standing to assert a
claim against the defendants, it does not have standing to amend the complaint and
control the litigation by substituting new plaintiffs, a new class, and a new cause of
action.”); Epic Sporting Goods, Inc. v. Fungoman LLC, No. 09-1981, 2011 WL 588496,
at *4 (W.D. La. Feb. 10, 2011) (“[Plaintiff] lacked . . . standing under Article III of the
Constitution . . . at the inception of this lawsuit, and such a defect . . . can be cured
neither by a subsequent assignment nor a subsequent amendment of the pleadings.”).
For the foregoing reasons,
IT IS ORDERED that defendant’s motion to dismiss is GRANTED and that
all of plaintiffs’ claims are DISMISSED WITHOUT PREJUDICE for lack of
New Orleans, Louisiana, September 20, 2016.
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE
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