State of Nevada v. Countrywide Home Loans Servicing, LP et al

Filing 400

ORDER denying 370 Motion for Relief from Judgment; denying as moot 387 Motion for Leave to File Response. Signed by Chief Judge Robert C. Jones on 7/6/12. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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STATE OF NEVADA ex rel. ROBERT
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EDWARD HAGER and ANDREW J. LUDEL, )
qui tam plaintiffs,
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Plaintiffs,
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v.
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COUNTRYWIDE HOME LOANS
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SERVICING, LP, et al.,
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Defendants.

3:10-cv-419-RCJ-PAL
ORDER

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___________________________________
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Currently before the Court are Plaintiffs’ Motion for Relief from Judgment Pursuant to
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FRCP 60(b)(1) and Request for Indicative Ruling Pursuant to FRCP 62.1 (#370) and the
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FHFA's Motion for Leave to File Response to Plaintiffs’ Notice of Supplemental Authority
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(#387).
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BACKGROUND
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This case involves a qui tam action filed by Robert E. Hager and Andrew Ludel
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(“Plaintiffs”) on behalf of the State of Nevada and all seventeen counties in the State. Plaintiffs
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filed a complaint against more than 40 defendants, most of whom are financial institutions
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I.

Complaint

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On July 9, 2010, Defendants Federal National Mortgage Association (“Fannie Mae”)
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and Intervenor Federal Housing Finance Agency (“FHFA”) filed a petition of removal to this
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Court and attached Plaintiffs’ Third Amended Complaint (“TAC”), the operative complaint.
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(Pet. for Removal (#1) at 1; TAC (#1-1) at 79-89). The TAC, originally filed in the Third Judicial
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District Court in and for the County of Churchill, stated the following. (TAC (#1-1) at 79).

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Plaintiffs sought recovery pursuant to Nevada’s False Claims Act, NRS Chapter 357. (Id. at

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81). Hager, a law student, and Ludel, a person “who ha[d] worked in the mortgage business”

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through research “jointly discovered” that Defendants “were and are making, using and

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causing to be made and used false statements to defraud the State and its Counties of

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required transfer taxes.” (Id.). Defendants were obligated to pay transfer taxes and they were

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jointly and severally liable in their capacities as buyer and seller, pursuant to NRS §

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375.030(2). (Id. at 83). There was no exemption that insulated Defendants from paying

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transfer taxes. (Id.). “Each of the defendants repeatedly filed fraudulent forms indicating no

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transfer tax was owing, or alternatively, filed forms which resulted in the underpayment of the

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transfer tax.” (Id.). By failing to pay the transfer taxes, Defendants defrauded the State of

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Nevada and its counties. (Id.). Plaintiffs brought the action pursuant to NRS § 357.080 for

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violations of NRS § 357.040(1)(g)&(h). (Id.). Defendants “collectively and individually,

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knowingly, intentionally, or with reckless disregard . . . with scienter required by Chapter 357

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made . . . false records and statements to conceal, and avoid and/or decrease their obligations

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to pay transfer taxes.” (Id. at 83-84). The false statements were made in the “State of Nevada

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Declaration of Value” form “in the record of the various County Recorders that Freddie Mac

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and/or defendant Fannie Mae were and are a tax-exempt ‘Government Entity’ or ‘Government

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Agency.’” (Id. at 84).

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The complaint allege[d] that “Defendants ha[d] engaged in thousands of sales and

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transfers of title of real property in the State” and were obligated to pay transfer taxes as

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transferor/seller and or transferee/buyer but completely or partially avoided payment of those

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taxes. (Id.). Several specified Defendants had identified themselves as the foreclosing

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beneficiary on the trustee’s deeds upon sale as the seller (grantor) on the State of Nevada

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Declaration of Value form. (Id. at 84-85). Those Defendants were neither the beneficiary nor

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the seller/grantor but instead acted as agents for the remaining specified Defendants and

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made false statements to avoid or decrease transfer taxes. (Id. at 85). Defendant Fannie Mae

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made false statements in the Declaration of Value forms by intentionally misrepresenting to

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the State that it was a government agency exempt from conveyance or transfer taxes. (Id. at
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86). Plaintiffs alleged that “[d]uring the five years immediately preceding the filing of the

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original complaint, and since that time, each of the defendants did not pay the required

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transfer or conveyance taxes . . . used false representations in order to avoid paying in full

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those required taxes.” (Id.). Plaintiffs sought various monetary damages and liquidated

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penalties. (Id. at 87-89). Plaintiffs alleged that on July 1, 2006, Washoe County’s transfer tax

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rate increased to $1.25 on each $500 value and that Defendants had made false statements

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regarding the amount of transfer tax due in Washoe County. (Id. at 88).

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II.

Dismissal Order

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On September 16, 2011, this Court issued an order granting Defendants’ motions to

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dismiss and their respective joinders in their entirety as to all claims without leave to amend.

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(Order (#349) at 12). This Court found that Fannie Mae was not a federal instrumentality for

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taxation purposes. (Id. at 5). However, the Court found that, while under conservatorship with

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the Federal Housing Finance Agency (“FHFA”), Fannie Mae was statutorily exempt from taxes,

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penalties, and fines to the same extent that the FHFA was. (Id. at 8). The Court dismissed

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the TAC in its entirety because Plaintiffs had failed to plead their False Claims Act claims with

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Fed. R. Civ. P. 9(b) particularity. (Id. at 10). The Court dismissed the TAC without leave to

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amend because it found that Plaintiffs did not have direct and independent information of the

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contents in the State of Nevada Declaration of Value forms because none of the Plaintiffs had

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filled out the forms. (Id. at 11). The Court found that Plaintiffs were not original sources of

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information and dismissed for lack of statutory jurisdiction pursuant to NRS § 357.100(1). (Id.

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at 10-11). The Court found that, pursuant to NRS § 357.130(2) the Attorney General was the

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only person permitted to bring a lawsuit under Nevada’s False Claims Act based on the

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allegations in the TAC. (Id. at 11). The Court dismissed the qui tam action with prejudice.

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(Id.).

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On September 19, 2011, the Clerk of the Court entered judgment in this case.

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(Judgment (#352)). On October 17, 2011, Plaintiffs filed a notice of appeal. (Notice of Appeal

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(#361)). The pending motions now follow.

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DISCUSSION

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I.

Plaintiffs’ Motion for Relief from Judgment Pursuant to FRCP 60(b)(1) and
Request for Indicative Ruling Pursuant to FRCP 62.1 (#370)

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Plaintiffs seek an indicative ruling from this Court that it would grant their Rule 60(b)(1)
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motion if the Ninth Circuit were to remand for that purpose. (Mot. for Relief (#370) at 2).
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Plaintiffs believe that this Court made a clear mistake of law when it stated that “while under
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conservatorship with the FHFA, [Fannie Mae] is statutorily exempt from taxes, penalties, and
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fines to the same extent that the FHFA is.” (Id. at 4).
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FHFA and Fannie Mae filed an opposition and Plaintiffs filed a reply. (Opp’n to Mot. for
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Relief (#371) ; Reply to Mot. for Relief (#374)).
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Federal Rule of Civil Procedure 62.1 provides that when the district court lacks authority
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to grant a motion for relief because of a pending appeal, the district court may defer
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considering the motion, deny the motion, or “state either that it would grant the motion if the
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court of appeals remands for that purpose or that the motion raises a substantial issue.” Fed.
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R. Civ. P. 62.1(a)(1)-(3). If the district court states that it would grant the motion or that the
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motion raises a substantial issue, the movant must notify the circuit clerk and, upon remand,
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the district court “may decide the motion if the court of appeals remands for that purpose.”
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Fed. R. Civ. P. 62.1(b), (c).
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In this case, the Court denies the motion for an indicative ruling (#370) and let Plaintiffs
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raise this issue before the Ninth Circuit. Even if this Court were to address Plaintiffs’ proposed
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Rule 60(b) motion, the Court’s dismissal with prejudice would not change because the Court
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found that it lacked statutory jurisdiction over the action regardless of whether Fannie Mae was
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statutorily exempt from taxes. As such, the Court denies the motion (#370).
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II.

FHFA’s Motion for Leave to File Response to Plaintiffs’ Notice of Supplemental
Authority (#387)

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On March 27, 2012, Plaintiffs filed a notice of supplemental authority in support of their

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motion for an indicative ruling. (See Notice of Supp. Authority (#386)). FHFA and Fannie Mae

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now move for leave to file a response to Plaintiff’s notice of supplemental authority. (Mot. for

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Leave (#387)). The Court denies the motion for leave as moot (#387) because the Court
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denies the motion for an indicative ruling as discussed above.
CONCLUSION

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For the foregoing reasons, IT IS ORDERED that Plaintiffs’ Motion for Relief from

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Judgment Pursuant to FRCP 60(b)(1) and Request for Indicative Ruling Pursuant to FRCP

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62.1 (#370) is DENIED.

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IT IS FURTHER ORDERED that the FHFA's Motion for Leave to File Response to
Plaintiffs’ Notice of Supplemental Authority (#387) is DENIED as moot.

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DATED: This 6th daydayJuly, 2012.
_____ of of June, 2012.

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_________________________________
United States District Judge

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