Associated Mortgage Bankers, Inc. v. Castro ( 2019 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ASSOCIATED MORTGAGE BANKERS,
INC.,
Plaintiff,
Civil Action No. 17-0075 (ESH)
v.
BEN CARSON, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Associated Mortgage Bankers, Inc. (“AMB”) has filed a motion to modify the
Court’s January 4, 2019 Order remanding the case to the Department of Housing and Urban
Development (“Remand Order”). Because AMB’s motion lacks merit, the Court will deny the
motion.
BACKGROUND
AMB is a mortgage loan company that brought suit against defendants, the U.S.
Department of Housing and Urban Development and its Secretary (collectively referred to as
“HUD”), on January 12, 2017. (Compl., ECF No. 1.) The details of AMB’s allegations and the
case’s procedural history are described in the Court’s January 4, 2019 Opinion regarding HUD’s
partial motion to dismiss AMB’s amended complaint, or in the alternative, motion to remand to
the administrative agency. See Associated Mortg. Bankers, Inc. v. Carson, No. 17-cv-75, 2019
WL 108882, at *1–4 (D.D.C. Jan. 4, 2019). In relevant part, AMB’s amended complaint
asserted a claim that the HUD Administrative Judge (“AJ”) who ruled that AMB owed a legally
enforceable debt to HUD under an indemnification agreement had not been appointed in
accordance with the U.S. Constitution’s Appointments Clause. (Am. Compl. ¶¶ 217–224, ECF
No. 34.) In particular, AMB argued that AJ Vanessa Hall had not been appointed by the
President, a court of law, or a head of department despite being an “inferior Officer” within the
meaning of the Appointments Clause (see U.S. Const. art. II, § 2, cl. 2), and thus her decision
regarding AMB’s debt to HUD should be vacated.
In light of the U.S. Supreme Court’s June 21, 2018 decision in Lucia v. Securities &
Exchange Commission, 138 S. Ct. 2044 (2018), HUD stated in its August 15, 2018 memorandum
in support of its motion to dismiss or remand that it “no longer dispute[d] the substance of
AMB’s claim that the HUD Administrative Judge [Vanessa Hall] was unconstitutionally
appointed.” (HUD Memo. in Supp. of Mot. to Dismiss or Remand at 2, ECF No. 46-1.) HUD
argued that this Court should nonetheless decline to reach AMB’s Appointments Clause claim
because AMB had forfeited the claim by failing to raise it before the agency. (Id. at 8.) For the
reasons stated in the Court’s January 4, 2019 Opinion, the Court utilized its discretion to reach
the Appointments Clause claim and remanded to HUD, providing the remedy that Lucia dictates
for Appointments Clause violations of this kind: a remand for a hearing before a different,
properly-appointed official. Associated Mortg. Bankers, Inc., 2019 WL 108882, at *4–7. In
particular, the Court’s Remand Order decreed “that the December 16, 2016 Decision and Order
issued by the Department of Housing and Urban Development (“HUD”) Administrative Judge in
In Re: Associated Mortgage Bankers, No. 15-VH-0026-AO-009, 7-207084340A, is hereby
VACATED and the case is REMANDED to HUD for a new hearing before a different,
constitutionally-appointed official, consistent with the Appointments Clause of the United States
Constitution.” (Remand Order at 1, ECF No. 50.)
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After the issuance of the Court’s Order, counsel for HUD filed a notice with the Court on
February 22, 2019, attaching a letter authored two days earlier by HUD’s Chief Administrative
Law Judge (“ALJ”) J. Jeremiah Mahoney. (See HUD Chief ALJ Letter, ECF No. 52-1.) In his
letter, HUD’s Chief ALJ asserted that he believed HUD’s prior factual concession—that the
HUD AJ had not been appointed in accordance with the Appointments Clause—was erroneous,
as he believed that AJ Hall had been appointed by the HUD Secretary. (Id. at 1–2.) The letter
further stated:
Although I am willing to implement the court’s order of remand by
assigning this matter for hearing before another constitutionally-
appointed official, I am first returning the matter to HUD counsel to
afford them the opportunity to bring the foregoing facts to the
attention of the District Court, and to provide the District Judge the
opportunity to develop a factual record, and possibly reinstate Judge
Hall’s decision. If the District Judge chooses not to do so, I will
comply with her Order.
(Id. at 2.) HUD’s counsel indicated in their notice to the Court that they would “investigat[e] the
factual statements described in the Chief ALJ’s memorandum” and “notify this Court once [the]
investigation is complete.” (HUD Notice at 2, ECF No. 52.)
AMB filed a response on February 26, 2019, not only disputing the Chief ALJ’s factual
assertion that AJ Hall had been appointed by the HUD Secretary, but also moving to modify the
Court’s Remand Order under Federal Rule of Civil Procedure 60(b) on the basis of the letter.
(AMB Mot. to Modify at 1–2, ECF No. 53.) In particular, AMB requested that the Court modify
its prior Order so the remand would be assigned to a “constitutionally-appointed official not
under the direction, supervision, or control of HUD’s Chief ALJ.” (Id. at 2.) AMB argued that
the Chief ALJ’s letter represented his “advocacy in favor of reinstating the AJ’s initial decision,”
and thus, “it will now be impossible for AMB to receive a fair and impartial hearing before a
HUD AJ” under his “direction, supervision, or control.” (Id.) HUD filed a memorandum in
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opposition on March 12, 2019, in which it 1) informed the Court that, after a factual
investigation, it wished to maintain its prior position regarding AJ Hall’s appointment (i.e., that
she had not been appointed by the HUD Secretary as the Appointments Clause required), and 2)
the Chief ALJ’s letter did not provide a sufficient basis for the Court to modify its prior Order
under Rule 60(b). (HUD Opp. at 2–7, ECF No. 55.) AMB filed a reply in support of its motion
to modify the Court’s Order on March 19, 2019. (AMB Reply, ECF No. 57.)
ANALYSIS
AMB’s motion to modify the Court’s Remand Order is without merit, and thus, it will be
denied.
I. LEGAL STANDARD
Federal Rule of Civil Procedure 60(b) provides that “[o]n motion and just terms, the court
may relieve a party or its legal representative from a final judgment, order, or proceeding” for six
enumerated reasons. Fed R. Civ. P. 60(b) (emphasis added). AMB argues that, in particular,
two provisions apply: 1) under Rule 60(b)(2), the Chief ALJ’s letter constitutes “newly
discovered evidence,” and 2) under Rule 60(b)(6), the Chief ALJ’s letter falls within the catchall
of “any other reason that justifies relief.” (AMB Mot. to Modify at 6.)
“[T]he district judge . . . is vested with a large measure of discretion in deciding whether
to grant a Rule 60(b) motion,” and “must strike a delicate balance between the sanctity of final
judgments . . . and the incessant command of a court’s conscience that justice be done in light
of all the facts.’” Twelve John Does v. D.C., 841 F.2d 1133, 1138 (D.C. Cir. 1988) (internal
citation and quotation marks omitted, emphasis removed). “When a party seeks relief under
Rule 60(b), that party bears the threshold burden of proving that a ‘significant change’ in legal or
factual circumstances ‘warrants revision of the decree.’” Salazar v. D.C., 896 F.3d 489, 492
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(D.C. Cir. 2018) (quoting Rufo v. Inmates of Suffolk Cty. Jail, 502 U.S. 367, 383 (1992)).
HUD’s opposition does not disagree that Rule 60 provides the appropriate legal standard for a
modification of the Court’s Remand Order, but disputes whether AMB is entitled to relief under
this Rule. (See HUD Opp. at 2–5.)
However, it is not clear to the Court that Rule 60(b) should govern modification of an
order remanding to an administrative agency. The D.C. Circuit has repeatedly held that remand
orders are not “final decisions” for purposes of appellate jurisdiction under 28 U.S.C. § 1291.
See, e.g., N.A.A.C.P., Jefferson Cty. Branch v. U.S. Sugar Corp., 84 F.3d 1432, 1436 (D.C. Cir.
1996) (“A remand order usually is not a final decision, even if the district court dismisses the
case when it remands”); Occidental Petroleum Corp. v. S.E.C., 873 F.2d 325, 329 (D.C. Cir.
1989) (“[C]ourts of appeals that have considered the question . . . have uniformly held that, as a
general rule, a remand order is ‘interlocutory’ rather than ‘final’”). There is reason to think that
a remand order might similarly not be considered “final” within the meaning of Rule 60. See
Nat’l Wildlife Fed’n v. Nat’l Marine Fisheries Serv., 886 F.3d 803, 816 (9th Cir. 2018) (“The
word ‘final’” in Rule 60(b) “designates orders that terminate litigation and are subject to
appeal.”); Kapco Mfg. Co. v. C & O Enterprises, Inc., 773 F.2d 151, 154 (7th Cir. 1985) (“Rule
60(b) must be limited to review of orders that are independently ‘final decisions’ under 28
U.S.C. § 1291.”).
If the Court’s Remand Order were considered interlocutory rather than final, Federal
Rule of Civil Procedure 54(b) would govern AMB’s present motion. See Associated Mortg.
Bankers Inc. v. Carson, 281 F. Supp. 3d 5, 7 (D.D.C. 2017). Rule 54(b) provides that an
interlocutory order “may be revised at any time before the entry of a judgment.” Fed. R. Civ. P.
54(b). Motions under Rule 54(b) “are left to the sound discretion of the trial court to decide as
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justice requires.” Lederman v. United States, 539 F. Supp. 2d 1, 2 (D.D.C. 2008). “The moving
party has the burden of showing that reconsideration is warranted, and that some harm or
injustice would result if reconsideration were to be denied.” Marshall v. Honeywell Tech.
Solutions, Inc., 598 F. Supp. 2d 57, 60 (D.D.C. 2009). The discretion of the Court to grant a
motion under Rule 54(b) “as justice requires” is considered “more flexib[le]” than the standard
for granting a Rule 60(b) motion, which cabins relief to certain enumerated bases. Cobell v.
Norton, 224 F.R.D. 266, 272 (D.D.C. 2004); see also Jordan v. U.S. Dep’t of Justice, No. 17-cv-
2702, 2019 WL 2028399, at *2 (D.D.C. May 8, 2019).
II. AMB’S MOTION TO MODIFY THE COURT’S REMAND ORDER
Under either Rule 54(b) or 60(b), AMB’s motion fails. See Lemmons v. Georgetown
Univ. Hosp., 241 F.R.D. 15, 23–24 (D.D.C. 2007) (concluding it is “unnecessary for the Court to
decide under which rule the plaintiff’s motion is properly brought” where the party’s motion
“should not be granted even under the ‘more flexib[le]’ standard of Rule 54(b)”). AMB’s entire
argument for a modification of the Remand Order rests on the HUD Chief ALJ’s letter, which
merely expressed a belief regarding the factual circumstances of AJ Hall’s appointment. This
factual issue has been resolved now that HUD’s counsel has had time to investigate, and the
parties currently agree that AJ Hall was not properly appointed. (See HUD Opp. at 2.)
Furthermore, the facts surrounding AJ Hall’s appointment—the only issue the Chief ALJ’s letter
addresses—are irrelevant to the parties’ dispute moving forward, given that the Court’s Remand
Order vacated AJ Hall’s prior decision and order and specifically required that an AJ other than
Hall hear the case on remand. (See Remand Order at 1.) The Chief ALJ’s letter has nothing to
do with—and expresses no opinion about—the merits of the dispute that will be addressed on
remand, which will focus on whether AMB owes a debt to HUD under the terms of an
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indemnification agreement.
“An ALJ is presumed to be unbiased,” and the Chief ALJ’s letter falls far short of
demonstrating the “unequivocal antagonism” necessary to rebut that presumption. Jackson v.
Berryhill, 268 F. Supp. 3d 115, 134 (D.D.C. 2017). Indeed, the Chief ALJ’s letter displays no
bias or antagonism at all. The letter explicitly states that the Chief ALJ will comply with the
Court’s Order and assign the case for a new hearing before a constitutionally-appointed AJ who
is not Vanessa Hall. (HUD Chief ALJ Letter at 2.) AMB has put forth no evidence to cause the
Court to doubt this representation. The Court sees no reason to alter the remand instructions
described in its prior Order.
CONCLUSION
For the reasons stated above, it is hereby ORDERED that AMB’s motion to modify the
Court’s Remand Order (ECF No. 53) is DENIED.
_______________________
ELLEN S. HUVELLE
United States District Judge
Date: July 9, 2019
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