Palmer v. Fannie Mae
Filing
60
ORDER granting in part and denying in part 56 Report and Recommendations. For the foregoing reasons, the Court adopts the portion of the R & R dismissingplaintiff's complaint; however, the Court shall grant plaintiff leave to amend her FHA cl aim. Plaintiff shall have thirty days from the date of this Order to file an amended complaint. The Court certifies pursuant to 28 U.S.C. § 1915(a)(3) that ayy appeal from this Order would not be taken in good faith and therefore in forma pauperis status is denied for the purpose of anyappeal. Ordered by Judge Joseph F. Bianco on 9/23/2016. (Bollbach, Jean)cm by chambers to pro se by fcm on 9/23/16
FILE 0
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
IN CLERK'S O~~ICE
U.S. DISTRICT COURT E.D.N.Y.
---------------------------------------------------------------X
*
FELICIA PALMER, formerly known as
FELICIA DUDLEY,
SEP. 23 201&
*
LONG ISLAND OFFICE
Plaintiff,
ORDER
14-CV-4083 (JFB)(AYS)
-againstFANNIE MAE, also known as FEDERAL
NATIONAL MORTGAGE ASSOCIATION,
Defendant.
---------------------------------------------------------------X
JOSEPH F. BIANCO, District Judge:
'
Plaintiff, Felicia Palmer (''plaintiff''), filed this prose action against defendant Fannie
Mae ("Fannie Mae" or "defendant"), alleging that defendant violated the Fair Housing Act (the
"FHA"), Executive Order 11063, and the False Claims Act, and asserting a claim for fraudulent
misrepresentation. Defendant moved to dismiss these claims.
Before the Court is a Report and Recommendation C'R & R") from Magistrate Judge
Shields (ECF No. 56), as well as plaintiff's objections to the R & R (ECF No. 58) and
defendant's response to those objections (ECF No. 59). The R & R recommends that this Court
grant defendant's motion to dismiss in its entirety and deny leave to amend.
For the reasons that follow, having reviewed the entire R & R de novo, the Court adopts
Magistrate Judge Shield's R & R, with the exception of the recommendation that plaintiffbe
denied leave to amend her claim under the FHA
I.
PROCEDURAL HISTORY
Plaintiff filed a complaint in this action on July 1, 2014, asserting that defendant
discriminated against her under the FHA based upon her relationship with her fiance by refusing
to sell her the property at which they were living and to which defendant had obtained title
through a foreclosure sale. Defendant moved to dismiss. On July 28, 2015, this Court granted
defendant's motion because plaintiff could not establish that she was a member of a class entitled
to protection under the FHA based upon her relationship with her fiance. However, the Court
granted plaintiff leave to replead to assert a valid claim under the FHA. Plaintiff filed an
amended complaint on August 25,2015, this time alleging that she was a member of a class
protected by the FHA based upon the fact that she was pregnant and a parent of two children
under the age of eighteen at the time of the conduct in question. The amended complaint also
added three new claims, alleging violation of Executive Order 11063 and the False Claims Act
and fraudulent misrepresentation. Defendant has again moved to dismiss these claims. On April
18,2016, the Court referred the motion to dismiss to Magistrate Judge Shields for a Report and
Recommendation. Magistrate Judge Shields issued the R & Ron August 25,2016,
recommending that plaintiff's complaint be dismissed in its entirety and directing that any
objections to the R & R were due within fourteen days. On September 6, 2016, plaintiff filed her
objections ("objections"), and defendant responded to those objections on September 13, 2016. 1
II.
STANDARD OF REVIEW
A district judge may accept, reject, or modify, in whole or in part, the fmdings and
recommendations of the Magistrate Judge. See DeLuca v. Lord, 858 F. Supp. 1330, 1345
(S.D.N.Y. 1994); Walker v. Hood, 679 F. Supp. 372,374 (S.D.N.Y. 1988). As to those portions
of a report to which no "specific written objection'' is made, the Court may accept the findings
In its response to plaintiff's objections, Fannie Mae argue~ that plaintiff's objections were not timely filed within
the fourteen-day window provided for in the R & R, presumably based on the fact that plaintiff's objections were
not docketed on ECF until September 9, 2016. However, the specific language of the R & R only requires that the
objections be filed in fourteen days, which they were. The time stamp on the objections indicates that they were
filed in the Clerk's Office for the Eastern District of New York on September 6, 2016. Accordingly, the Court does
not find them to be untimely.
1
2
contained therein, as long as the factual and legal bases supporting the findings are not clearly
erroneous. Santana v. United States, 476 F. Supp. 2d 300,302 (S.D.N.Y. 2007); Greene v. WCI
Holdings Corp., 956 F. Supp. 509, 513 (S.D.N.Y. 1997). When "a party submits a timely
objection to a report and recommendation, the district judge will review the parts of the report
and recommendation to which the party objected under a de novo standard of review." Jeffries v.
Verizon, 10-CV-2686 (JFB)(AKT), 2012 WL 4344188, at *1 (E.D.N.Y. Sept. 21, 2012); see also
28 U.S.C. § 636(b)(l)(C) ("A judge of the court shall make a de novo determination of those
portions of the report or specified proposed findings or recommendations to which objection is
made."); Fed. R. Civ. P. 72(b)(3) ("The district judge must determine de novo aoy part of the
magistrate judge's disposition that has been properly objected to. The district judge may accept,
reject, or modify the recommended disposition; receive further evidence; or return the matter to
the magistrate judge with instructions."). Plaintiff has objected to the R & R' s conclusions
regarding each claim. Accordingly, the Court will perform a de novo review of the entire motion
to dismiss.
In reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6),
the Court must accept the factual allegations set forth in the complaint as true and draw all
reasonable inferences in favor of the plaintiff. See Cleveland v. Caplaw Enters., 448 F.3d 518,
521 (2d Cir. 2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005). "In
order to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege a plausible set
of facts sufficient 'to raise a right to relief above the speculative level.'" Operating Local649
Annuity Trust Fundv. Smith Barney Fund Mgmt. LLC, 595 F.3d 86,91 (2d Cir. 2010) (quoting
Bell At/. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). This standard does not require
3
'"heightened fact pleading of specifics, but only enough facts to state a claim to relief that is
plausible on its face." Twombly, 550 U.S. at 570.
The Supreme Court clarified the appropriate pleading standard in Ashcroft v. Iqbal,
setting forth a two-pronged approach for courts deciding a motion to dismiss. 556 U.S. 662
(2009). The Supreme Court instructed district courts to first "identifY[] pleadings that, because
they are no more than conclusions, are not entitled to the assumption of truth." !d. at 679
(explaining that though "legal conclusions can provide the framework of a complaint, they must
be supported by factual allegations"). Second, if a complaint contains "well-pleaded factual
allegations, a court should assume their veracity and then determine whether they plausibly give
rise to an entitlement to relief." !d. 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. The plausibility standard is not akin to a 'probability requirement,'
but it asks for more than a sheer possibility that a defendant has acted unlawfully." ld. at 678
(quoting and citing Twombly, 550 U.S. at 556-57 (internal citation ontitted)).
The Court notes that in adjudicating a Rule 12(b)(6) motion, it is entitled to consider: "(1)
facts alleged in the complaint and documents attached to it or incorporated in it by reference, (2)
documents 'integral' to the complaint and relied upon in it, even if not attached or incorporated
by reference, (3) documents or information contained in defendant's motion papers if plaintiff
has knowledge or possession of the material and relied on it in framing the complaint, (4) public
disclosure documents required by law to be, and that have been, filed with the Securities and
Exchange Commission, and (5) facts of which judicial notice may properly be taken under Rule
201 of the Federal Rules of Evidence." In re Merrill Lynch & Co., 273 F. Supp. 2d 351,356-57
(S.D.N.Y. 2003) (internal citations omitted), aff'd in part and reversed in part on other grounds
4
sub nom. Lente/1 v. Merrill Lynch & Co., 396 F.3d 161 (2d Cir. 2005); see also Cortec Indus.,
Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir. 1991) ("[T]he district court , .. could have
viewed [the documents] on the motion to dismiss because there was undisputed notice to
plaintiffs of their contents and they were integral to plaintiffs' claim."). 2
III,
DISCUSSION
Defendant challenges the R & R on several grounds and contends that her claims are
sufficiently pled to withstand the motion to dismiss. The Court has carefully considered her
objections and reviewed the R & R de novo. As detailed below, the Court concurs with Judge
Shield's conclusion that plaintiff has failed to sufficiently plead the claims alleged in her
amended complaint. Thus, the Court adopts Judge Shield's R & R, with the exception of the
recommendation that plaintiff be denied leave to replead her FHA claim; this Court concludes
that plaintiff should be permitted to replead this claim.
A. Alleged Fair Housing Act Violation
The Fair Housing Act ("FHA") makes it unlawful "[t]o refuse to sell or rent after the
making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make
unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial
status, or national origin." 42 U.S.C. § 3604(a). Likewise, property owners and their agents may
not "discriminate against any person in the terms, conditions, or privileges of sale or rental of a
dwelling." Id § 3604(b). The FHA defines familial status as:
[O]ne or more individuals (who have not attained the age of 18 years) being
domiciled with (1) a parent or another person having legal custody of such
2
The Court notes that, although claims of housing discrimination under the FHA are evaluated under the three-part
burden-shifting analysis set forth by the Supreme Court in McDonnell Douglas Corporation v. Green, 411 U.S. 792,
93 S. Ct. 1817,36 L. Ed. 2d 668 (1973), see Mitchellv. Sh(Jne, 350 F.3d 39,47 (2d Cir. 2003), at the motion to
dismiss stage, a plaintiff is not obligated to establish a prima facie case of discrimination under McDonnell Douglas.
SeeSwierkiewicz v. Sorema N.A., 534 U.S. 506,510, 122 S. Ct. 992, 152 L. Ed. 2d I (2002) ("The prima facie case
under McDonnell Douglas ... is an evidentiary standard, not a pleading requirement.").
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individual or individuals; or (2) the designee of such parent or other person having
such custody, with the written permission of such parent or other person. The
protections afforded against discrimination on the basis of familial status shall
apply to any person who is pregnant or is in the process of securing legal custody
of any individual who has not attained the age of 18 years.
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u.s.c. § 3605(k).
To establish a prima facie case of discrimination under the FHA, plaintiff must allege
that: ( 1) she is a member of a protected class; (2) she sought and was qualified to rent or
purchase the housing; (3) she was rejected, and (4) the housing opportunity remained available to
other renters or purchasers. Mitchell, 350 F.3d at 47. Further, plaintiff must offer "factual
allegations that support a reasonable inference that defendant[] w[as] motivated by
discriminatory animus," in other words, that defendant took certain actions because of plaintiff's
familial status. Jordan v. Chase Manhattan Bank, 91 F. Supp. 3d 491, 505-06 (S.D.N.Y. 2015).
Plaintiff states that she was pregnant at the time that she was negotiating with Fannie
Mae and that she was living with her two children who were under the age of eighteen. Thus,
she has adequately alleged that she was a member of a class protected by the FHA based upon
her familial status at the time of the events in question. However, this Court agrees with the
conclusion of the R & R that the complaint fails to state a claim for discrimination under the
FHA because nowhere in the complaint does plaintiff actually allege that Fannie Mae
discriminated against her because ofher protected status, nor does she provide any factual basis
for the claim that would allow the Court to assess whether such a claim is plausible. See
Wiltshire v. Dhanraj, 421 F. Supp. 2d 544,552 (E.D.N.Y. 2005) (dismissing complaint because
the plaiotiffs "ha[d] not articulated aoy action taken by [the defendaots] because ofplaiotiffs'
race, color, or national origin").
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Plaintiffs opposition3 does go somewhat further than her complaint by at least making
the allegation that defendants discriminated against her based on familial status; however, it does
so in only conclusory terms. She alleges: defendant "discriminat[ed] against me based on
familial status (a pregnant woman with two minor children under 18 years of age) based on [the]
tenns [and] conditions of the sales price to purchase [the] property." (Pl.'s Opp'n to Mot. to
Dismiss 4.) This kind of pleading that only conclusorily alleges that Fannie Mae was motivated
by a discriminatory intent is insufficient to withstand a motion to dismiss. See, e.g., Wilmer v.
Albany Cty. Soc. Servs., No. 16-CV-905 (NAM)(CFH}, 2016 WL 4398489, at *3 (N.D.N.Y. July
25, 2016) (dismissing FHA claim because plaintiff offered only "bald allegations of
discrimination on the basis of race or gender, without specific evidence to support that the
[defendant's action] ... was motivated by, or caused by, plaintiffs [protected characteristics]"),
report and recommendation adopted, No. 116CV00905NAMCFH, 2016 WL 4386007
(N.D.N.Y. Aug. 17, 2016); Jones v. Cawley, No. 10-CV-0712, 2010 WL 4235400, at *5
(N.D.N.Y. Oct. 21, 2010) (dismissing cause of action for discrimination under the FHA because
the plaintiff failed to offer any factual allegations supporting his claim that the alleged harmful
conduct was related to plaintiffs race); Gorham-DiMaggio v. Countrywide Home Loans, Inc.,
592 F. Supp. 2d 283, 290 (N.D.N.Y. 2008) (plalntiffcould not make out a claim for violation of
[§ 3605] by "offer[ing] only conclusory allegations to demonstrate that discriminatory measures
were implemented because of her disability"), a.ff'd, 421 F. App'x 97 (2d Cir. 2011); Wiltshire,
421 F. Supp. 2d at 555 (E.D.N.Y.2005) ("[A] conclusory allegation that the Plaintiffs
discriminated against the Defendants because they were 'minority buyers' is insufficient to state
3 "Although
a court generally may not look outside the pleadings when reviewing a 12(bX6) motion to dismiss,
because a prose plaintiff's allegations must be construed liberally it is appropriate for a court to consider factual
allegations made in a pro se plaintiff's opposition memorandum, as long as the allegations are consistent with the
complaint." Chukwueze v. NYCERS, 891 F. Supp. 2d 443,448 (S.D.N.Y. 2012).
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a cause of action under the FHA."). Because plaintiff does nothing to connect her familial status
to defendant's allegedly wrongful refusal to sell her the home other than point out that she was
pregnant and a parent of minor children at the time defendant rejected her purchase offer, 4 the
Court concurs with the R & R's conclusion that plaintiff has failed to state a claim for violation
of the FHA.
B. Alleged Violation of Executive Order 11063
Executive Order 11063 provides that "the granting of Federal assistance for ... housing
and related facilities from which Americans are excluded because of their race, color, creed, or
national origin is unfair, unjust, and inconsistent with the public policy of the United States as
manifested in its Constitution and laws," and therefore orders the that "all departments and
agencies in the executive branch of the Federal Government" must:
[T]ake all action necessary and appropriate to prevent discrimination because of
race, color, creed, or national origin (a) in the sale, leasing, rental, or other
disposition of residential property and related facilities [], or in the use or
occupancy thereof, if such property and related facilities are ... (ii) provided in
whole or in part with the aid of loans, advances, grants, or contributions hereafter
agreed to be made by the Federal Government.
Exec. Order No. 11,063,27 Fed. Reg. 11,527 (1962).
The R & R recommends that this claim be dismissed because plaintiff failed to allege that
any of the financing to purchase the property at issue was obtained through federal funds. (R &
Rat 9-10.) Although the Court agrees that this claim must be dismissed on that grom1d, it also
concludes that dismissal is warranted for the separate reason that the Executive Order plainly
only prohibits discrimination on the basis of"race, color, creed, or national origin." Nowhere in
4
Plaintiff's opposition references a newspaper article concerning maternity-related mortgage discrimination;
however, the article discusses only the conduct of lenders and mortgage insurers and makes no reference to Fannie
Mae, and thus, it appears inapposite to the instant case. (Opp'n 6.) In any event, plaintiff does not explain how the
alleged practices referenced in the article relate to her situation.
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her complaint does plaintiff allege that she was discriminated against based on her membership
in any of these protected classes. Accordingly, she has failed to state a claim for violation of
Executive Order 11063.
C. Alleged False Claims Act Violations
The R & R correctly concluded that plaintiff's False Claims Act cause of action must be
dismissed. The law in this Circuit is clear that pro se litigants may not pursue qui tam actions
under the False Clalms Act. US. ex rei. Mergen/ S.ervs. v. Flaherty, 540 F.3d 89, 93 (2d Cir.
2008). As plaintiff is not represented, she cannot maintain a claim under the Act.
In her opposition and her objections, she cites a provision of the Act that states that qui
tam actions '1nay be dismissed only if the court and the Attorney General give written consent to
the dismissal and their reasons for consenting" and argues that the Court lacks authority to
dismiss her False Claims Act claim because she has never seen any evidence that the Attorney
General has consented to the dismissal of her claim. This argument fails. The Second Circuit
has explained that this provision applies "only in cases where a plaintiff seeks voluntary
dismissal of a claim or action brought under the False Claims Act, and not where the court orders
dismissal." Flaherty, 540 F.3d at 91 (citing Minotti v. Lensink, 895 F.2d 100, 103 (2d Cir.
1990)). The latter scenario applies here, and therefore the Court is not barred from dismissing
plaintiff's complaint without the approval of the Attorney General.
D. Claim for Fraudulent Misrepresentation
Under 28 U.S.C. § 1367, which governs a federal court's exercise of supplemental
jurisdiction, "[t]he district court may decline to exercise supplemental jurisdiction over a claim ..
. [if] the district court has dismissed all claims over which it has original jurisdiction." 28 U.S.C.
§ 1367(c)(3); see Spiegel v. Schulmann, 604 F.3d 72,78 (2d Cir. 2010). Indeed, "in the usnal
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case in which all federal-law claims are eliminated before trial, the balance of factors [of judicial
economy, convenience, fairness, and comity] will point toward declining to exercise jurisdiction
over the remaining state-law claims." Carnegie-Mel/on Univ. v. Cohill, 484 U.S. 343, 350 n. 7,
108 S. Ct. 614,98 L. Ed. 2d 720 (1988); see Tops Markets, Inc. v. Quality Markets, Inc., 142
F.3d 90, 103 (2d Cir. 1998) ("[W]hen all federal claims are eliminated in the early stages of
litigation, the balance of factors generally favors declining to exercise pendent jurisdiction over
remaining state law claims and dismissing them without prejudice.") (emphasis in original).
Here, as plaintiff has failed to state a claim under federal law at this juncture, this Court agrees
with Judge Shield's recommendation that, in the interests of judicial economy, convenience,
fairness, and comity, this Court should decline to exercise supplemental jurisdiction over
plaintiff's state law claim, and therefore, that this claim should be dismissed.
IV.
LEAVE TO AMEND
Judge Shields recommended that plaintiff be denied leave to replead, concluding that
better pleading would not cure the defects in plaintiff's complaint. This Court agrees that
plaintiff's claims for violation of Executive Order 11063 and the False Claims Act are defective
and cannot be cured by any amendment to the pleadings. However, the Court concludes that
plaintiff should be permitted to amend her claim for violation of the FHA.
Leave to amend should be freely granted when justice so requires. Fed. R. Civ. P.
5(a)(2). "'This relaxed standard applies with particular force to prose litigants." Pangburn v.
Culbertson, 200 F.3d 65, 70 (2d Cir. 1999). The Second Circuit has emphasized that a "court
should not dismiss [a prose complaint] without granting leave to amend at least once when a
libeml reading of the complaint gives any indication that a valid claim might be stated." Cuoco
v. Moritsugu, 222 F.3d 99, 112 (2d Cir. 2000) (citations and internal quotation marks omitted);
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see also Chavis v. Chappius, 618 F.3d 162, 170 (2d Cir. 2010). "Further, if the court dismisses
the complaint for failure to comply with Rule 8, it should generally give the plaintiff leave to
amend. This is especially true when the complaint states a claim that is on its face
nonfrivolous." Simmons v. Abruzzo, 49 F.3d 83,86-87 (2d Cir. 1995).
Although plaintiff has already been permitted to replead the FHA claim following the
dismissal of her original complaint; her FHA clalm in her original complaint proceeded on a
different theory (discrimination based upon her relationship with her fiance) than the one
proffered in the amended complaint (pregnancy and familial status discrimination). Thus, the
court concludes that. in the interest of justice, especially in light of plaintiffs pro se status,
plaintiff should have a chance to replead her discrimination claim based upon this new theory
and be provided with an opportunity to set forth in an amended complaint what facts support her
conclusory claim that she was the victim of discrimination based on her pregnancy and familial
status. Plaintiff shall have thirty days from the date of this Order to file an amended complaint to
assert a valid claim under the FHA. Plaintiff is cautioned that her failure to file an amended
complaint within the time allowed will lead to the dismissal of her federal claims with prejudice.
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V.
CONCLUSION
For the foregoing reasons, the Court adopts the portion of the R & R dismissing
plaintiff's complaint; however, the Court shall grant plaintiff leave to amend her FHA claim.
Plaintiff shall have thirty days from the date of this Order to file an amended complaint. The
Court certifies pursuant to 28 U.S.C. § 1915(a)(3) that aoy appeal from this Order would not be
taken in good faith and therefore in forma pauperis status is denied for the purpose of any
appeal. See Coppedge v. United States, 369 U.S. 438,444-45 (1962).
SOJIIIRDERED.
Dated: September 23, 2016
Central Islip, New York
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