Carpenter, Administrator of the Estate of Daniel N. Grimes v. Secretary of Housing and Urban Development

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Patrick Carpenter, Administrator

of the Estate of Daniel N. Grimes,

Plaintiff, Case No. 2:23-cv-3885

Vv. Judge Michael H. Watson

Secretary of Housing and Urban Magistrate Judge Jolson

Development, et ai/.,

Defendants.

OPINION AND ORDER

The Secretary of Housing and Urban Development (the “Secretary’)

moves to dismiss Patrick Carpenter's, Administrator of the Estate of Daniel N.

Grimes’s (“Plaintiff’) Complaint. ECF No. 4. For the following reasons, the

motion is GRANTED.

I. FACTS

Daniel N. Grimes passed away in September 2019. Compl., ECF No. 3,

PAGEID #67. At the time of his death, Mr. Grimes owned real property located

in Licking County, Ohio, at 1815 Hallie Lane Road, Granville, Ohio 43023 (the

“Property’). /d. HUD holds the primary mortgage on the Property, a home equity

conversion mortgage (also known as a reverse mortgage), by way of

assignment. See Resp. 1-2, ECF No. 7.

In 2019, HUD sent a condolence letter to Grimes’ estate (“Estate”), setting

forth the balance due on the mortgage and the Estate’s options for satisfying the

same. HUD’s Notice 1-2, ECF No. 13. When no response was received, HUD

later issued a notice of intent to foreclose, pursuant to 24 C.F.R § 206.125(a)(2).

Id. at2. Again, HUD received no response. /d.

In 2021, after a delay due to the COVID-19 foreclosure moratorium, HUD

referred the case to the foreclosure commissioner to proceed with foreclosure.

See id.; see also Plaintiffs Notice 3, ECF No. 16 (“The Referral was

subsequently recorded in the Office of the Licking County Recorder on

November 15, 2022[.]”).

In July 2023, Plaintiff opened an estate administration case for Grimes in

the Licking County Probate Court, and Plaintiff was appointed as the

administrator of the estate. Compl., ECF No. 3, PAGEID # 67. Plaintiff then

brought this land sale action, seeking to sell the Property under Ohio Revised

Code § 2127.02, free and clear of all liens (the “Land Sale Action”). /d. PAGEID

# 67-68. Plaintiff also requested permission to pay the costs of administering the

sale, his fiduciary commission, and attorney's fees, all from the proceeds of the

sale. /d. PAGEID # 69.

The Secretary removed the Land Sale Action to this Court pursuant to 28

U.S.C. §§ 1442(a)(1) and 1444. See Notice of Removal, ECF No. 1,

PAGEID # 2-3. The Secretary represents that HUD has initiated a nonjudicial

foreclosure. See id. PAGEID # 2 (“HUD has initiated foreclosure proceedings.”);

Case No. 2:23-cv-3885 Page 2 of 9

HUD’s Notice 2, ECF No. 13 (“HUD recently issued the Notice of Default and

Foreclosure Sale Legal Notice[.]’).1 The Secretary now moves to dismiss the

claims against HUD on the grounds of sovereign immunity and because the

Single Family Mortgage Foreclosure Act preempts state probate law.

For the reasons explained below, the Court finds HUD has not waived

sovereign immunity, and, therefore, the Court cannot address preemption.

ll. © STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(1) provides for dismissal for lack of

subject matter jurisdiction. Without subject matter jurisdiction, a federal court

lacks authority to hear a case. Lightfoot v. Cendant Mortg. Corp., 580 U.S. 82,

91 (2017) (citation omitted). “Motions to dismiss for lack of subject matter

jurisdiction fall into two general categories: facial attacks and factual attacks.”

United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). A facial attack under

Rule 12(b)(1) “is a challenge to the sufficiency of the pleading itself,” and the trial

court therefore takes the allegations of the complaint as true. /d. (citation

omitted). To survive a facial attack, the complaint must contain a “short and plain

statement of the grounds” for jurisdiction. Rote v. Zel Custom Mfg. LLC, 816

F.3d 383, 387 (6th Cir. 2016) (internal quotation marks and citations omitted).

1 The nonjudicial forclosure of the mortgage is “commence[d]’ when the foreclosure

commissioner serves “a notice of default and foreclosure sale in accordance with

sections 3757 and 3758 of this title.” 12 U.S.C. § 3756. The Court notes that the

Secretary has not stated the day on which the foreclosure commissioner served the

notice of default and foreclosure sale. The Court presumes that the nonjudicial

foreclosure commenced after Plaintiff brought the Land Sale Action.

Case No. 2:23-cv-3885 Page 3 of 9

A factual attack is a “challenge to the factual existence of subject matter

jurisdiction.” Ritchie, 15 F.3d at 598. No “presumptive truthfulness applies to the

factual allegations[.]’ /d. (citation omitted). When examining a factual attack

under Rule 12(b)(1), “the court can actually weigh evidence to confirm the

existence of the factual predicates for subject-matter jurisdiction.” Glob. Tech.,

Inc. v. Yubei (XinXiang) Power Steering Sys. Co., 807 F.3d 806, 810 (6th Cir.

2015) (internal quotation marks and citation omitted).

HUD does not specify whether it brings a facial or a factual attack on the

Court's subject matter jurisdiction. See generally, Mot., ECF No. 4. Here, the

Court need not consider any evidence offered by the parties beyond the

Complaint to dispose of the Motion to Dismiss. Accordingly, the Court treats this

as a facial attack.

lll. ANALYSIS

The Secretary moves to dismiss Plaintiffs Complaint for lack of subject

matter jurisdiction because sovereign immunity bars Plaintiffs suit. Mot., ECF

No. 4.

“The doctrine of sovereign immunity removes subject matter jurisdiction in

lawsuits against the United States unless the government has consented to suit.”

Beamon v. Brown, 125 F.3d 965, 967 (6th Cir. 1997). The United States

includes federal agencies. Fed. Hous. Admin. v. Burr, 309 U.S. 242, 244 (1940).

“A waiver of the Federal Government’s sovereign immunity must be

unequivocally expressed in statutory text.” Lane v. Pena, 518 U.S. 187, 192

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(1996) (cleaned up). Courts generally construe a waiver of sovereign immunity

narrowly. See Hunter v. United States, 769 F. App’x 329, 331 (6th Cir. 2019).

The burden is on Plaintiff to show sovereign immunity has been waived. /d.

Relevant here, 28 U.S.C. § 2410(a) provides a limited statutory waiver as

follows:

[T]he United States may be named a party in any civil action or suit in

any district court, or in any State court having jurisdiction of the subject

matter--

(1) to quiet title to,

(2) to foreclose a mortgage or other lien upon,

(3) to partition,

(4) to condemn, or

(5) of interpleader or in the nature of interpleader with respect to,

real or personal property on which the United States has or claims a

mortgage or other lien.

(the “Statute”). Thus, if Plaintiff shows this action falls within the scope of the

Statute, then sovereign immunity is waived, and the Court has subject matter

jurisdiction over this suit.

As an initial matter, Plaintiff argues that § 2410 does not require the suit be

one of the five types listed in subsections (a)(1}(5). See Resp. 7-8, ECF No. 7.

Plaintiff instead argues § 2410 encompasses any action involving real property in

which the United States holds an interest, so long as the court in which the action

is commenced has jurisdiction over the enumerated types of cases. /d.

Case No. 2:23-cv-3885 Page 5 of 9

Plaintiff's argument is unavailing. The Statute requires that the civil action

or suit for which waiver is claimed must be one of the types listed in subsections

(a)(1}1{(5). See, e.g., Pollack v. United States, 819 F.2d 144, 145-46 (6th Cir.

1987) (analyzing whether the action could be characterized as “a suit to quite title

so as to fall within the limited waiver of sovereign immunity provided by 28 U.S.C.

§ 2410” (emphasis added)). Not only has the Sixth Circuit Court of Appeals

implicitly so held, but also the principles of statutory interpretation demand that

result. Plaintiff's reading would impermissibly broaden the scope of the waiver.

See Hunter, 769 F. App’x at 332 (declining to adopt Hunter’s broader

interpretation of § 2410 because “courts should interpret Congress's waiver of

sovereign immunity narrowly”). Therefore, in order for the Statute to apply and

waive sovereign immunity, the Land Sale Action must be one of the listed types.

Accordingly, the Court must next decide whether the Land Sale Action falls

into one of the five categories. Plaintiff argues that this is a suit “to quiet title.”2

See Plaintiffs Notice 13-14, ECF No. 16. Therefore, the Court must decide

whether this is a suit “to quiet title” within the meaning of the Statute.

The Sixth Circuit has yet to take a position on the meaning of “quiet title” in

§ 2410, but it has laid out two possible interpretations. Hunter v. United States,

769 F. App’x 329, 331 (6th Cir. 2019). “Some courts have read the words ‘quiet

2 Because it is Plaintiffs burden to show waiver, and Plaintiff has not argued this is a “to

foreclose a mortgage or other lien upon,” “to partition,” “to condemn, or” “of interpleader

or in the nature of interpleader[,]’ the Court will not address whether this is a suit under

§ 2410(a)(2)-(5). See generally Resp., ECF No. 7; Plaintiffs Notice, ECF No. 16.

Case No. 2:23-cv-3885 Page 6 of 9

title’ narrowly” such that “Congress waived immunity only over disputes about”

who holds title to property. /d. (citing cases). “[O]ther courts have interpreted

Congress’s waiver more broadly, saying that quiet title actions can also seek to

remove a cloud over already established title.” /d. (cleaned up; emphasis in

original); see also Nationstar Mortg., LLC v. Humphrey, No. 11-2185-STA, 2011

WL 3273077, at *4 (W.D. Tenn. July 29, 2011) (finding § 2410(a)(1) waives

sovereign immunity with respect to “claims to adjudicate lien priority” (citing

cases)).

Here, the Land Sale Action is not a suit “to quiet title” under either

interpretation. Under the narrow interpretation, Plaintiff does not bring a quiet

title action because the Complaint does not raise any dispute over title to the

property. The primary relief Plaintiff seeks out of the Land Sale Action is the

authority to sell the property. See generally Compl., ECF No. 3; Resp. 9, ECF

No. 7 (“The entire focus of the Land Sale Action is to sell the [Property] and

utilize the sale proceeds to pay off creditors.”). Plaintiff also seeks an order

confirming the sale, extinguishing all liens (so that the sale may be made free

and clear), and determining distribution of the sale proceeds in accordance with

Ohio law. These requests do not require the Court to resolve a dispute over who

holds title, and the Land Sale Action is therefore not a quiet title action under the

narrow interpretation.

Even under the broader interpretation, the Land Sale Action is not a suit to

quiet title. First, it is not a suit to challenge the procedural regularity of HUD’s

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lien. See Pollack, 819 F.2d at 145 (holding that suits to challenge the procedural

regularity of the Government's lien are actions to quiet title under § 2410).

Indeed, Plaintiff provides no basis for challenging the existence, validity, or

amount of HUD’s mortgage. See generally Compl., ECF No. 3. Second, it is not

a suit to determine lien priority, as Plaintiff likewise provides no basis to dispute

HUD’s lien priority. /d. Instead, Plaintiff seeks to extinguish HUD'’s mortgage,

selling the property free and clear, and then determine lien priority for purposes

of distributing the sale proceeds. The Statute does not provide for waiver of

sovereign immunity in a suit to sell property free and clear of the government's

lien. See Estate of Green, No. 20 C 6608, 2021 WL 185081, at *2 (N.D. Ill. Jan.

19, 2021) (“There is no provision in Section 2410 that indicates that a party can

first sell a property free and clear of a government lien, and then quiet title to the

proceeds.” (cleaned up)). Accordingly, the Land Sale Action is not a suit “to quiet

title” under the Statute.

Plaintiff counters that if the Statute does not waive sovereign immunity with

respect to the Land Sale Action, then in circumstances in which HUD took no

foreclosure action and refused to consent to sale, an administrator of an

insolvent estate would have no way of disposing of the property and paying the

estate debts. See Plaintiffs Notice 14-15. Plaintiff argues that is precisely the

type of situation § 2410 was intended to remedy when Congress added the

words “quiet title” to the Statute. /d.

Case No. 2:23-cv-3885 Page 8 of 9

But an administrator in such circumstances would have other options. For

example, an adminstrator could seek to sell the property subject to HUD'’s lien.

See Pennant Mgmt., Inc. v. First Farmers Fin., LLC, No. 14-CV-7581, 2015 WL

4511337, at *3 (N.D. Ill. July 24, 2015); see also Mot. 8, ECF No. 4.

Alternatively, an administrator could seek to sell the property in accordance with

the requirements laid out in the Code of Federal Regulations § 206.125(c) for

selling the property when a home equity conversion mortgage is due and

payable. See HUD’s Notice 3, ECF No. 15. Accordingly, Plaintiffs argument is

unpersuasive.

Plaintiff points to no other statute waiving sovereign immunity in an action

brought by an administrator to sell the property free and clear of all liens, nor is

the Court independently aware of any. Accordingly, because Plaintiff has not

met his burden of demonstrating waiver of sovereign immunity, the Court lacks

subject matter jurisdiction.

IV. CONCLUSION

The Secretary's motion is GRANTED and the claims against the Secretary

are DISMISSED WITHOUT PREJUDICE. The case is REMANDED to the

Licking County Probate Court.

IT IS SO ORDERED. : | | Non

MICHAEL H. WA N, JUDGE

UNITED STATES DISTRICT COURT

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