U.S. Bank National Association v. U.S. Small Business Administration
Filing
50
MEMORANDUM OPINION AND ORDER granting 40 Motion to Dismiss for Lack of Jurisdiction; granting 40 Motion for Summary Judgment, and Plaintiff's claims are dismissed without prejudice for lack of subject-matter jurisdiction; and denied as moot 38 Motion for Summary Judgment. Signed by District Judge Halil S. Ozerden on 8/15/17. (RLW)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
U.S. BANK NATIONAL
ASSOCIATION
PLAINTIFF
v.
CIVIL NO.: 1:16cv299-HSO-JCG
UNITED STATES SMALL BUSINESS
ADMINISTRATION
DEFENDANT
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF U.S.
BANK NATIONAL ASSOCIATION’S MOTION [38] FOR SUMMARY
JUDGMENT AND GRANTING DEFENDANT U.S. SMALL BUSINESS
ADMINISTRATION’S MOTION [40] TO DISMISS OR, IN THE
ALTERNATIVE, FOR SUMMARY JUDGMENT
BEFORE THE COURT are the Motion [38] for Summary Judgment filed by
Plaintiff U.S. Bank National Association, as Trustee for Structured Asset Securities
Corporation, Mortgage Pass-through Certificates 2006-EQ1 (“Plaintiff” or “U.S.
Bank”) and the Motion [40] to Dismiss or, in the Alternative, for Summary
Judgment filed by Defendant United States Small Business Administration
(“Defendant” or “SBA”). Both Motions are fully briefed. Having considered the
submissions of the parties and relevant legal authority, the Court is of the opinion
that Defendant’s Motion [40] to Dismiss should be granted and Plaintiff’s claims
should be dismissed for lack of subject-matter jurisdiction. Plaintiff’s Motion [38]
for Summary Judgment should be denied as moot.
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I. BACKGROUND
A.
Factual Background
This dispute centers on the proceeds of a foreclosure sale conducted by
Defendant SBA. On May 3, 2006, Lee Vern Williams and Renee E. Williams (“the
Williamses”) purchased a residence located in D’Iberville, Mississippi (“the Subject
Property”). Am. Compl. [13] at 2. The Williamses borrowed $64,950.00 from
EquiFirst Corporation (“EquiFirst”), Plaintiff U.S. Bank’s predecessor-in-interest, to
finance the purchase. 1 Mem. Supp. U.S. Bank Mot. [39] at 1. According to
Plaintiff, the EquiFirst loan proceeds were applied to pay off an existing first
mortgage lien in favor of Regions Mortgage in the amount of $77,886.84. Id. at 2-3;
Ex. “D” Settlement Statement [13-4]. According to Plaintiff, “[b]y paying off the
existing mortgage in favor of Regions Mortgage, EquiFirst Corporation fully
intended to have a first priority lien against the Subject Property.” Am. Compl. [13]
at 4.
The Williamses executed a Deed of Trust (“the U.S. Bank Deed of Trust”) in
favor of Mortgage Electronic Registration System (“MERS”), as nominee for
EquiFirst, that was recorded in the Office of the Chancery Clerk of Harrison
The Amended Complaint [13] alleges that “[i]n total, Lee Williams and Renee Williams
borrowed $135,708.44 from EquiFirst Corporation. Of the borrowed funds, loan proceeds in
the amount of $77,886.84 were used to pay off a first mortgage lien in favor of Regions
Mortgage.” Am. Compl. [13] at 3. However, elsewhere Plaintiff states that the Williamses
actually borrowed only $64,950.00 from EquiFirst. See Mem. Supp. U.S. Bank Mot. [39] at
3; Pl.’s Resp. [45] at 1; Pl.’s Reply [48] at 3. The loan documents and settlement statement
submitted by Plaintiff indicate that the amount of the EquiFirst loan was $64,950.00. See
Ex. “B” EquiFirst Note [13-2]; Ex. “C” U.S. Bank Deed of Trust [13-3]; Ex. “D” Settlement
Statement [13-4]; Davis Decl. [38-18] at 2.
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County, Mississippi, Second Judicial District, at 1:43 p.m. on May 23, 2006, as
Instrument 2006 3778T-J2. Id.; Ex. “C” U.S. Bank Deed of Trust [13-3] at 1. On
May 9, 2014, MERS assigned all of its rights under the U.S. Bank Deed of Trust to
U.S. Bank, as Trustee for Structured Asset Securities Corporation, Mortgage PassThrough Certificates, Series 2006-EQ 1. Am. Compl. [13] at 5; Ex. “H” Corporate
Assignment of Deed of Trust [13-8].
In addition to the EquiFirst mortgage, the Williamses secured a separate
loan from Defendant SBA in the amount of $51,600.00 in order to finance the
purchase of the Subject Property. Am. Compl. [13] at 3. Defendant had initially
agreed to provide the Williamses with $58,000.00 in the form of a SBA disaster loan
for the purpose of repairing or replacing their previous residence and its contents
located at 364 Crawford Street in Biloxi, Mississippi, which was damaged during
Hurricane Katrina in August 2005. Mem. Supp. SBA Mot. [41] at 2-3. However,
the Williamses requested that Defendant allow them to use the disaster loan
proceeds to purchase the Subject Property instead of repairing their damaged Biloxi
residence. Id. at 3.
The SBA approved the Williamses’ request in April 2006, amending the prior
loan agreement and reducing the loan amount to $51,600.00. Id. Defendant
calculated the reduced loan amount as the difference between the purchase price of
the Subject Property, $129,900.00, and the $78,300.00 available to the Williamses,
which the SBA determined to be the sum of $69,300.00 in insurance proceeds and
FEMA funds, plus $9,000.00 in personal funds. Id. According to Defendant, the
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Williamses did not disclose to the SBA that they intended to obtain other financing
for the purchase of the Subject Property, and Defendant had no knowledge of either
the EquiFirst loan or the preexisting Regions Mortgage lien in place at the time of
the sale. Id.; Sarra Decl. [49-1] at 2-3.
The Williamses executed a Deed of Trust (“the SBA Deed of Trust”) on May 3,
2006, granting SBA a lien and security interest in the Subject Property. This Deed
of Trust was recorded in the Office of the Chancery Clerk of Harrison County,
Mississippi, Second Judicial District, on May 23, 2006, as Instrument 2006 3774TJ2 at 1:35 p.m., or eight minutes before the U.S. Bank Deed of Trust was recorded.
Am. Compl. [13] at 4; Ex. “E” SBA Deed of Trust [13-5] at 1. As a result of the order
in which the Deeds of Trust were recorded, Defendant SBA obtained a first priority
lien position ahead of EquiFirst, Plaintiff U.S. Bank’s predecessor-in-interest. Am.
Compl. [13] at 4; see also MISS. CODE ANN. § 89-5-5 (in Mississippi, the priority
positions of deeds of trusts are “governed by the priority in time of the filing of the
several instruments”).
By early 2014, the SBA loan was in default.2 Mem. Supp. SBA Mot. [41] at 6.
After being unable to negotiate a workout plan, Defendant initiated foreclosure
proceedings in November 2014. Id. In December 2014, Defendant appointed
Underwood Law Firm PLLC (“Underwood”) as substitute trustee on the SBA Deed
Renee and Lee Williams passed away, in 2008 and 2012, respectively, prior to the default
on the repayment of the SBA loan. Am. Compl. [13] at 4; Ex. “F” Photograph of Tombstone
[13-6]; Ex. “G” Copy of Obituary [13-7]. Plaintiff alleges that the Williamses also defaulted
on their obligations under the EquiFirst loan, but does not specify when the default
occurred. See Am. Compl. [13] at 5.
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of Trust. Id. at 7. On January 31, 2015, Underwood published a Notice of Sale of
the Subject Property and notified U.S. Bank, as junior lienholder, by letter of the
scheduled foreclosure sale. Id.; Wright Decl. [40-2] at 2-3, 19. The foreclosure sale
took place as scheduled on March 3, 2015. Mem. Supp. SBA Mot. [41] at 7.
Underwood accepted the highest bid of $49,042.00, which was sufficient to satisfy
the SBA loan in full and resulted in excess proceeds of $1,486.93. Id. at 8.
B.
Procedural History
Plaintiff initiated this litigation by filing a Complaint [1-1] on July 11, 2016,
in the Chancery Court of Harrison County, Mississippi, alleging that “[b]ecause the
aforesaid Deeds of Trust were recorded out of order, the SBA erroneously obtained a
first priority lien against the Subject Property,” and that SBA was unjustly
enriched by receipt of the sale proceeds from the foreclosure. Compl. [1-1] at 8.
Defendant removed the case to this Court on August 12, 2016, pursuant to 42
U.S.C. § 1442(a)(1). Not. of Removal [1] at 2.
Plaintiff subsequently filed an Amended Complaint [13] on December 2,
2016, which asserts claims for unjust enrichment, declaratory judgment, equitable
subrogation, negligence, and equitable estoppel. Am. Compl. [13] at 6-11. Plaintiff
seeks a monetary award in the amount of the $49,042.00 Defendant received from
the foreclosure sale and a declaratory judgment that the U.S. Bank Deed of Trust
enjoys a first lien position under the doctrine of equitable subrogation. See id. at 7.
In its Motion [38] for Summary Judgment, Plaintiff urges the Court to apply
the doctrine of equitable subrogation, under which Plaintiff’s later-filed lien might
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be substituted into the primary lienholder position ahead of Defendant’s lien. Mem.
Supp. U.S. Bank Mot. [39] at 7. Plaintiff maintains that “[p]rior to the loan closing,
EquiFirst instructed its closing agent that it required a good, valid, recorded, first
deed of trust to secure the loan” and that the SBA Deed of Trust was erroneously
recorded before the U.S. Bank Deed of Trust. Id. at 2. Plaintiff seeks a judgment as
a matter of law that it is entitled to the foreclosure sale proceeds in the amount of
$49,042.00. Id. at 9.
Defendant’s Motion [40] to Dismiss or, in the Alternative, for Summary
Judgment, raises sovereign immunity as a defense to all claims asserted against it.
Mot. [40] at 1-2. Plaintiff apparently does not contest Defendant’s argument that
the Court lacks subject-matter jurisdiction over its negligence claim on grounds that
Plaintiff did not present a written claim for damages to Defendant as required by
the Federal Tort Claims Act (“FTCA”), 28 U.S.C. §§ 1346(b), 2671-2680. See Pl.’s
Resp. to Req. for Adm. [40-4] at 2.
Defendant argues that the remaining claims for unjust enrichment, equitable
subrogation, equitable estoppel, and declaratory judgment are subject to dismissal
because they do not fall within any waiver of sovereign immunity, depriving this
Court of subject-matter jurisdiction. Mem. Supp. SBA Mot. [41] at 2. Alternatively,
Defendant seeks summary judgment as to Plaintiff’s remaining claims on the theory
that there is no genuine dispute as to any material fact and Defendant is entitled to
judgment as a matter of law. Id.
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II. DISCUSSION
A.
Legal Standard
Defendant’s argument that Plaintiff’s claims should be dismissed on
sovereign immunity grounds is a challenge to the Court’s subject-matter jurisdiction
that is evaluated under Federal Rule of Civil Procedure 12(b)(1). Willoughby v.
United States, 730 F.3d 476, 479 (5th Cir. 2013). The parties’ positions that there
are no genuine issues of material fact to be tried and that each is entitled to
judgment as a matter of law are analyzed under Federal Rule of Civil Procedure 56.
See FED. R. CIV. P. 56. Because the Court decides the jurisdictional challenge on
sovereign immunity grounds, it need not reach the merits of the parties’ summary
judgment arguments. Willoughby, 730 F.3d at 479.
Under Federal Rule of Civil Procedure 12(b)(1), “[a] case is properly
dismissed for lack of subject[-]matter jurisdiction when the court lacks the statutory
or constitutional power to adjudicate the case.” Home Builders Ass’n of Miss., Inc. v.
City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998) (quotation omitted). When the
Court’s subject-matter jurisdiction is challenged, the party asserting jurisdiction
bears the burden of establishing it. King v. U.S. Dep’t of Veterans Affairs, 728 F.3d
410, 413 (5th Cir. 2013). The Court has the power to dismiss a complaint for lack of
subject-matter jurisdiction on any one of three bases: “(1) the complaint alone; (2)
the complaint supplemented by undisputed facts evidenced in the record; or (3) the
complaint supplemented by undisputed facts plus the court’s resolution of disputed
facts.” Id. (quoting Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001)).
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B.
Analysis
1. Plaintiff’s negligence claim will be dismissed under Rule 12(b)(1) for failure to
exhaust administrative remedies.
The United States is immune from suit unless it has waived its sovereign
immunity and consented to be sued. United States v. Sherwood, 312 U.S. 584, 586
(1941). Congress has enacted a limited waiver of immunity in the FTCA, which
provides the exclusive civil remedy for actions to recover money damages for
personal injury, death, or loss of property caused by negligent acts or omissions of
government employees acting within the scope of their federal employment. 28
U.S.C. § 2679(b)(1).
The FTCA subjects the United States to tort liability if a private person
would be liable for the same act in accordance with the law of the place where the
act occurred. 28 U.S.C. § 1346(b). The “law of the place,” as the phrase is used in §
1346(b), “refers exclusively to state law.” Brown v. United States, 653 F.2d 196, 201
(5th Cir. 1981); see also Robin v. United States, No. CIV. A. 04-2230, 2006 WL
2038169, at *1 (E.D. La. July 17, 2006), aff’d, 233 F. App’x 350 (5th Cir. 2007) (“It is
a well-settled general principle that the tort liability of the United States is, in
actions under the [FTCA], governed by the law of the state where the tortious
conduct took place.”).
The FTCA’s waiver of sovereign immunity is strictly construed in favor of the
sovereign, and is subject to a number of exceptions enumerated in 28 U.S.C. § 2680.
Life Partners Inc. v. United States, 650 F.3d 1026, 1031-32 (5th Cir. 2011). If a
listed exception to the waiver of sovereign immunity applies to a claim, a federal
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agency may not be sued on that claim. See, e.g., Kosak v. United States, 465 U.S.
848, 849 (1984); In re FEMA Trailer Formaldehyde Prod. Liab. Litig. (Louisiana
Plaintiffs), 713 F.3d 807, 810 (5th Cir. 2013); Metro. Life Ins. Co. v. Atkins, 225 F.3d
510, 512 (5th Cir. 2000). Moreover, 28 U.S.C. § 2675(a) contains a procedural
requirement that a plaintiff must have first presented his claim for damages to the
appropriate federal agency before filing a lawsuit. This procedural requirement is a
jurisdictional prerequisite to suit under the FTCA. See, e.g., Flory v. United States,
138 F.3d 157, 159 (5th Cir. 1998); Cook v. United States, 978 F.2d 164, 166 (5th Cir.
1992).
Plaintiff does not contest that it did not present Defendant with a written
claim for money damages before filing suit. See Pl.’s Resp. to Req. for Admissions
[40-4] at 2; Mem. Supp. SBA Mot. [41] at 8. Because Plaintiff did not satisfy the
presentment requirement of 28 U.S.C. § 2675(a), the Court lacks subject-matter
jurisdiction over its negligence claim set forth in Count IV of the Amended
Complaint [13]. McAfee v. 5th Circuit Judges, 884 F.2d 221, 223 (5th Cir. 1989).
Plaintiff’s negligence claim is therefore subject to dismissal under Rule 12(b)(1). See
Barber v. United States, 642 F. App’x 411, 413 (5th Cir. 2016) (affirming dismissal
of claim for failure to satisfy the FTCA’s presentment requirement before filing
suit).
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2. Plaintiff’s remaining claims will be dismissed under Rule 12(b)(1) for lack of
subject-matter jurisdiction.
a. The Court lacks jurisdiction to consider Plaintiff’s equitable
subrogation and declaratory judgment claims.
Plaintiff contends that under the doctrine of equitable subrogation, the U.S.
Bank Deed of Trust should be granted first priority by virtue of EquiFirst’s loan
proceeds having been used to pay off the Regions Mortgage’s earlier first position
lien on the Subject Property.3 Equitable subrogation is a state-law “doctrine
whereby a court may circumvent the race-notice principles and substitute a laterfiled lien into the primary lien holder position on a tract of real estate, such that the
substitute creditor ‘succeeds to the rights of the other in relation to the debt or
claim, and its rights, remedies, or securities.’” Cmty. Trust Bank of Miss. v. First
Nat’l Bank of Clarksdale, 150 So. 3d 683, 687 (Miss. 2014) (quoting First Nat’l Bank
of Jackson v. Huff, 441 So. 2d 1317, 1319 (Miss. 1983)).
Defendant argues that Plaintiff has not identified any waiver of sovereign
immunity that would permit Plaintiff to bring these claims. Mem. Supp. SBA Mot.
Count II of the Amended Complaint [13] “seeks a declaratory judgment that by virtue of
the doctrine of equitable subrogation the [U.S. Bank] Deed of Trust held by the Plaintiff
should be in a first lien position.” Am. Compl. [13] at 7. Plaintiff further “seeks a
declaratory judgment that the foreclosure of the SBA Deed of Trust was a foreclosure of a
subordinate deed of trust subject to the lien of the [U.S. Bank] Deed of Trust” and “that it is
entitled to the sale proceeds received by SBA upon the foreclosure of the SBA Deed of
Trust.” Id. at 7-8. The Court views Plaintiff’s declaratory judgment claim as an extension
of its claim for equitable subrogation in Count III of the Amended Complaint [13] and will
address jurisdiction over both claims together. See In re B-727 Aircraft Serial No. 21010,
272 F.3d 264, 270 (5th Cir. 2001) (noting that “the Declaratory Judgment Act, 28 U.S.C. §
2201 et seq., does not provide a federal court with an independent basis for exercising
subject-matter jurisdiction”); U.S. Bank Nat’l Ass’n v. State Bank & Trust Co., 45 F. Supp.
3d 582, 591 n.4 (S.D. Miss. 2014) (treating a claim for declaratory judgment as a disguised
equitable subrogation claim).
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[41] at 13. Defendant suggests that a waiver for equitable subrogation claims might
be found under certain circumstances in 28 U.S.C. § 2410, which provides that the
United States is subject to suit where “the United States has or claims a mortgage
or other lien.” 28 U.S.C. § 2410(a). However, Defendant contends that § 2410 is
inapplicable here because the SBA no longer had a mortgage on the Subject
Property at the time Plaintiff initiated the present suit. See Mem. Supp. SBA Mot.
[41] at 13-14; Def.’s Reply [49] at 9-10.
The Fifth Circuit has explained that Ҥ 2410 was specifically passed to waive
the sovereign immunity of the United States so that private parties could get the
government into court when necessary to quiet title or resolve priority of liens or
mortgages.” Hussain v. Boston Old Colony Ins. Co., 311 F.3d 623, 629 (5th Cir.
2002). This waiver of immunity in § 2410 “must be narrowly construed to comport
precisely with congressional intent.” Id.
In conformity with this strict construction, [the Fifth Circuit has] found
at least three instances in which waiver of sovereign immunity does not
exist under § 2410(a). There is no waiver (1) when a taxpayer seeks to
challenge the validity of any underlying tax assessment, (2) when the
government is claiming a title interest in property rather than a lien
interest, or (3) when the government no longer has a mortgage on, or
other security right in, the property in dispute.
Id. at 629-630 (citations omitted); see also Koehler v. United States, 153 F.3d
263, 267 (5th Cir. 1998) (holding that a plaintiff “may maintain a suit under §
2410(a) only if at the time she files suit the government had a mortgage or
other lien on the property that is the basis of the [plaintiff’s] action”).
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Plaintiff argues that the Court retains jurisdiction under § 2410 over its
equitable subrogation claim because Defendant could not have properly foreclosed
its lien, such that Defendant’s lien remains in place subject to Plaintiff’s rights as
first priority lienholder. Pl.’s Resp. [45] at 8-9; Pl.’s Reply [48] at 7. Under
Plaintiff’s circular reasoning, jurisdiction exists to resolve Plaintiff’s equitable
subrogation claim only if the Court applies the principles of equitable subrogation to
conclude that Defendant’s interest in the Subject Property has not actually been
extinguished.
The plaintiff in Koehler advanced a similar argument that, because the
government failed to comply with statutory notice requirements before disposing of
property at a tax lien sale, the deed issued to the purchasers was ineffective to
convey title and the government still retained a lien on the property. Koehler, 153
F.3d at 267. The Fifth Circuit rejected this reasoning:
Although facially appealing, this argument misses the effect of
sovereign immunity. At its core, sovereign immunity deprives the courts
of jurisdiction irrespective of the merits of the underlying claim. If the
specific terms of the statute are not met, the federal courts have no
jurisdiction to address the merits of the plaintiff’s claim. Were we to
accept [the plaintiff’s] argument, we would first have to find for her on
the merits and then reason backwards to find a waiver of sovereign
immunity. Because sovereign immunity is jurisdictional and, therefore,
deprives this court of the ability to hear the merits of the claim
altogether, such reasoning is inherently flawed. In the end, because the
plain and unambiguous terms of § 2410(a) have not been met—i.e., the
government no longer claims an interest in the property—§ 2410(a) does
not confer subject matter jurisdiction irrespective of how meritorious
[the plaintiff’s] claims may be.
Id.; see also Echols v. United States, 368 F. App’x 595, 598 (5th Cir. 2010) (holding
that a foreclosure sale extinguished the government’s lien on property such that
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immunity was not waived under § 2410, regardless of whether there were
procedural defects in the foreclosure sale).
Construing § 2410’s waiver of immunity strictly, as it must, the Court agrees
that Defendant’s lien on the Subject Property was extinguished by the full
satisfaction of the SBA loan from the proceeds of the foreclosure sale, and that §
2410 does not operate to create jurisdiction under these circumstances.
Accordingly, Plaintiff’s equitable subrogation claim for damages and its declaratory
judgment claim should be dismissed for lack of subject-matter jurisdiction.
b. Plaintiff’s unjust enrichment claim will be dismissed pursuant to Rule
12(b)(1).
Under Mississippi law, unjust enrichment is an equitable cause of action that
arises under a quasi-contract or implied in law contract theory. See, e.g., Ellis v.
Anderson Tully Co., 727 So. 2d 716, 719 (Miss. 1998); 1704 21st Ave., Ltd. v. City of
Gulfport, 988 So. 2d 412, 416 (Miss. Ct. App. 2008). The FTCA’s limited waiver of
immunity for the negligent acts of federal employees does not apply to quasicontractual actions for unjust enrichment. See F.D.I.C. v. Meyer, 510 U.S. 471, 477
(1994) (holding that a claim is only actionable under the FTCA if it alleges the
elements outlined in § 1346(b)). Furthermore, for the same reasons that 28 U.S.C. §
2410 does not supply a waiver of sovereign immunity for Plaintiff’s equitable
subrogation claim, the statute likewise does not provide the necessary waiver for
Plaintiff to proceed with its unjust enrichment claim.
Although the Tucker Act, 28 U.S.C. § 1346(a)(2), waives sovereign immunity
for implied contract claims, the Court of Federal Claims has exclusive jurisdiction
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over Tucker Act claims exceeding $10,000.00. 28 U.S.C. § 1346(a)(2); see also
Persyn v. United States, 935 F.2d 69, 72 (5th Cir. 1991). The Court finds that it also
lacks jurisdiction under § 1346(a)(2) because Plaintiff seeks to recover more than
$10,000.00 in damages on its unjust enrichment claim. See Am. Compl. [13] at 7;
Strong v. Dep’t of Army, 414 F. Supp. 2d 625, 630 (S.D. Miss. 2005) (finding no
jurisdiction over breach of contract and due process claims when the damages likely
exceeded $10,000.00).
Finally, the Court notes that Plaintiff’s Response [45] filed in opposition to
Defendant’s Motion [40] addresses subject-matter jurisdiction only with respect to
its equitable subrogation claim. See Pl.’s Resp. [45] at 8-9. Plaintiff has not
presented any argument as to why its remaining claims are not subject to dismissal
on jurisdictional grounds. See id.; Def.’s Reply [49] at 1-2. Accordingly, the Court
finds that Plaintiff’s unjust enrichment claim should be dismissed under Rule
12(b)(1) for lack of subject-matter jurisdiction.
c. Plaintiff’s equitable estoppel claim will be dismissed for lack of
jurisdiction under Rule 12(b)(1).
As discussed in the preceding sections, neither the FTCA nor 28 U.S.C. §
2410 provides Plaintiff with a waiver of sovereign immunity sufficient to proceed
with its claims against Defendant. The Court finds that Plaintiff’s equitable
estoppel claim in Count V of the Amended Complaint [13] should be dismissed
under Rule 12(b)(1) for lack of subject-matter jurisdiction.4
Because sovereign immunity bars this suit, the Court does not reach the issue of whether
Plaintiff can maintain an action for equitable estoppel against the United States. However,
the Court notes that “equitable estoppel is rarely valid against the government.” Linkous v.
4
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III. CONCLUSION
The Court finds that Plaintiff’s claims are barred by sovereign immunity and
should be dismissed for lack of subject-matter jurisdiction. Because the dismissal of
claims for lack of subject-matter jurisdiction is under Federal Rule of Civil
Procedure 12(b)(1), dismissal is without prejudice. See, e.g., Warnock v. Pecos Cty.,
88 F.3d 341, 343 (5th Cir. 1996); Cross v. United States, No. 5:06-cv-36-DCB-MTP,
2007 WL 763926, at *2 (S.D. Miss. Feb. 12, 2007); Ezell v. Dep’t of the Army, No.
5:16-cv-938, 2017 WL 2671091, at *4 (W.D. Tex. Jun. 20, 2017); Colonial Cty. Mut.
Ins. Co. v. United States, No. 15-cv-917-XR, 2015 WL 7454698, at *3 (W.D. Tex.
Nov. 23, 2015).
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion [40]
to Dismiss or, in the Alternative, for Summary Judgment filed by Defendant United
States Small Business Administration is GRANTED and Plaintiff’s claims are
DISMISSED WITHOUT PREJUDICE for lack of subject-matter jurisdiction.
IT IS, FURTHER, ORDERED AND ADJUDGED that the Motion [38] for
Summary Judgment filed by Plaintiff U.S. Bank National Association, as Trustee
United States, 142 F.3d 271, 277 (5th Cir. 1998); see also Office of Pers. Mgmt. v. Richmond,
496 U.S. 414, 422 (1990) (finding that the Supreme Court has “reversed every finding of
estoppel [it] ha[s] reviewed”). Even if jurisdiction were present, it does not appear in this
case that Plaintiff has established the following necessary elements of equitable estoppel
against Defendant: (1) affirmative misconduct by the government; (2) that the government
was aware of the relevant facts; (3) that the government intended its act or omission to be
acted upon; (4) that the party asserting estoppel had no knowledge of the facts; and (5) that
they reasonably relied on the government’s conduct and as a result of its reliance, suffered
substantial injury. United States v. Bloom, 112 F.3d 200, 205 (5th Cir. 1997); Linkous, 142
F.3d at 277-78.
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for Structured Asset Securities Corporation, Mortgage Pass-through Certificates
2006-EQ1, is DENIED AS MOOT.
SO ORDERED AND ADJUDGED, this the 15th day of August, 2017.
s/ Halil Suleyman Ozerden
HALIL SULEYMAN OZERDEN
UNITED STATES DISTRICT JUDGE
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