Case: 14-15325 Date Filed: 08/12/2016 Page: 1 of 15
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 14-15325
Non-Argument Calendar
________________________
D.C. Docket No. 1:13-cv-22975-JEM
MARIA FERRER,
ARMANDO ALUART,
Plaintiffs-Appellants,
versus
JANET YELLEN,
Chairman of the Federal Reserve,
THOMAS J. CURRY,
Comptroller of the Currency,
GALEN VETTER,
Chief Executive Officer of Rust Consulting, Inc.,
SELECT PORTFOLIO SERVICING, INC.,
U.S. BANK, N.A., et al.,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(August 12, 2016)
Case: 14-15325 Date Filed: 08/12/2016 Page: 2 of 15
Before HULL, MARCUS, and ROSENBAUM, Circuit Judges.
PER CURIAM:
This case arises out of administrative enforcement actions by federal
banking agencies against various mortgage servicers, including U.S. Bank, N.A.,
following the mortgage foreclosure crisis of 2009 and 2010. These enforcement
actions led to consent orders between the federal agencies and the mortgage
servicers, which required the servicers to take action to correct their deficient
residential mortgage servicing and foreclosure practices and to provide some
compensation for borrowers injured by the deficient practices.
Plaintiffs-Appellants Maria Ferrer and Armando Aluart (collectively,
“Plaintiffs”), represented by court-appointed counsel on appeal, are both eligible
borrowers who received some compensation as a result of the consent orders.
Believing that they had been shortchanged on the amount they were owed,
Plaintiffs filed this lawsuit, proceeding pro se throughout the district court
proceedings. The district court dismissed Plaintiffs’ claims after concluding that
12 U.S.C. § 1818(i)(1), a judicial-review provision in the Financial Institutions
Supervisory Act, which authorized the enforcement actions against the mortgage
servicers, precluded the district court from hearing and resolving Plaintiffs’ claims.
After careful review, we agree with the district court that it lacked subject-matter
jurisdiction, and we therefore affirm.
2
Case: 14-15325 Date Filed: 08/12/2016 Page: 3 of 15
I.
We briefly recount some of the historical background to give context to
Plaintiffs’ specific allegations on appeal. In April 2011, the Office of the
Comptroller of the Currency and the Board of Governors of the Federal Reserve
System1 (collectively, the “Federal Regulators”) announced consent cease-and-
desist orders (“consent orders”) against several large mortgage servicers, including
U.S. Bank, pursuant to 12 U.S.C. § 1818(b). The consent orders, in broad terms,
sought to correct unsafe and unsound practices related to residential mortgage loan
servicing and foreclosure processing and to provide some remediation for
borrowers injured by those practices.
The consent orders required the mortgage servicers to take a number of
corrective actions, including retaining an independent consultant to conduct a
comprehensive review of foreclosure actions from 2009 and 2010. See, e.g., April
13, 2011 Consent Order against U.S. Bank (“U.S. Bank Consent Order”) (Doc. 77-
1, Exh. 1).2 Eligible borrowers—those who had a pending or completed
1
The former Office of Thrift Supervision was also involved in these enforcement actions,
but its functions have now been transferred to the Board of Governors and the Comptroller of the
Currency. See 12 U.S.C. § 5412.
2
While we normally limit our review of a grant of a motion to dismiss to the complaint
and its attachments, see Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1215–
16 (11th Cir. 2012), we may consider two of the documents attached to the Federal Regulators’
motion to dismiss—the consent order against U.S. Bank and its later amendment—because they
are central to Plaintiffs’ claims and their authenticity is not disputed, see Day v. Taylor, 400 F.3d
1272, 1276 (11th Cir. 2005).
3
Case: 14-15325 Date Filed: 08/12/2016 Page: 4 of 15
foreclosure on their primary residence during that time—could request an
independent review of their file and receive compensation identified financial
injury. This process was known as Independent Foreclosure Review (“IFR”).
In June 2012, the Federal Regulators published the “Financial Remediation
Framework” (the “IFR Framework”) to help independent consultants recommend
remediation for financial injury identified during the IFR.3 The IFR Framework
provides examples of situations where compensation or other remediation, such as
correction of credit records, is required, and it specifies the remedies applicable to
each situation. The servicers were to develop remediation plans, subject to
approval by the Federal Regulators, based on the recommendations of the
independent consultants.
In February 2013, the Federal Regulators issued amendments to the consent
orders that significantly changed the remediation process. 4 The amendments were
based on agreements reached one month earlier between the Federal Regulators
and the servicers, including U.S. Bank. The participating servicers agreed to pay
$9.3 billion to eligible borrowers, including $3.6 billion in direct cash payments
and $5.7 billion in other assistance, such as loan modifications and forgiveness of
3
Plaintiffs attached the IFR Framework, apart from its cover page, to their amended
complaint. The full version is available through the Federal Reserve website at
https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20120621b2.pdf (last visited July
20, 2016).
4
Most, but not all, of the servicers subject to the original consent orders agreed to the
amendments. Servicers who did not agree to the amendments remained under the IFR process.
4
Case: 14-15325 Date Filed: 08/12/2016 Page: 5 of 15
deficiency judgments. The $3.6 billion was to be paid out to eligible borrowers
from a Qualified Settlement Fund (the “Settlement Fund”) by a paying agent, Rust
Consulting, Inc.
The amendments terminated the case-by-case IFR process and, in its place,
outlined a more streamlined process to provide remediation to eligible borrowers.
See, e.g., Amendment to April 13, 2011 Consent Order against U.S. Bank (“2013
Amendment”), Art. I, § (1) (Doc. 77-1, Exh. 2). Servicers would place eligible
borrowers into categories, based on loan-file characteristics as determined by the
Federal Regulators, id., Art. II, § (1), and Federal Regulators would develop a
distribution plan, in their sole discretion, specifying the amounts applicable to each
borrower category, id., Art. II, §§ (2) & (3). Based on the distribution plan and the
servicers’ categorization of borrowers, Rust Consulting would distribute payments
from the Settlement Fund to individual eligible borrowers. Id. Plaintiffs have
submitted with their amended complaint a table specifying the standard payout
amounts for various categories of borrowers from the Settlement Fund (the
“Settlement Fund Table”). See Amended Compl., Exh. 2 (Doc. 69 at 17).5
Notably, the cash payments to eligible borrowers were not meant to “reflect
specific financial injury or harm that may have been suffered by borrowers
5
What appears to be the same table is also available through the Federal Reserve website
at https://www.federalreserve.gov/newsevents/press/bcreg/bcreg20130409a1.pdf (last visited
July 20, 2016).
5
Case: 14-15325 Date Filed: 08/12/2016 Page: 6 of 15
receiving payments.” 2013 Amendment at 2–3. Nor was remediation from the
Settlement Fund intended to displace any independent claims a borrower may have
against his or her servicer. See id., Art. V, § (3) (“In no event shall the Bank
request or require any borrower to execute a waiver of any claims against the Bank
(including any agent of the Bank) in connection with any payment or Foreclosure
Prevention assistance pursuant to this Amendment to the Consent Order.”).
With this general background in mind, we turn to Plaintiffs’ specific
allegations in this case.
II.
Ferrer and Aluart are both eligible borrowers under the terms of the U.S.
Bank Consent Order and 2013 Amendment. They both received a cash payment
from Rust Consulting. They allege, however, that they received less than they
were owed under the IFR Framework and the Settlement Fund Table, which we
collectively, though loosely, refer to as the “payout plans.”6
According to the operative amended complaint, Ferrer and U.S. Bank
reached a loan-modification agreement after U.S. Bank had filed to foreclose
6
While Plaintiffs exclusively referenced the IFR Framework in their allegations, the
payments they received were from the Settlement Fund after the termination and replacement of
the IFR process and, implicitly, the IFR Framework. They also attached the Settlement Fund
Table to their amended complaint. Thus, their claims appear to be based primarily on the 2013
Amendment and the Settlement Fund Table. In any case, it makes no legal difference whether
their claims are based on the IFR Framework, the Settlement Fund Table, or both. Given their
explicit references to the IFR Framework, we construe their allegations as broadly referring to
both payout plans.
6
Case: 14-15325 Date Filed: 08/12/2016 Page: 7 of 15
Ferrer’s mortgage. Under the agreement, U.S. Bank promised to give Ferrer a
permanent loan modification and to withdraw the foreclosure action if she
successfully completed a six-month trial modification period. While Ferrer
completed the trial modification period, U.S. Bank did not convert her trial
modification into a permanent one, though it did withdraw the foreclosure action.
Citing the payout plans, Ferrer claims that she was entitled to $5,000, suspension
of foreclosure, permanent loan modification, and correction of servicer and credit
records. In April 2013, Ferrer received a $2,000 check from Rust Consulting.
For his part, Aluart alleged that U.S. Bank sold his home at a foreclosure
sale in July 2010 after he had filed for bankruptcy protection. The sale was later
rescinded by the bankruptcy court. Citing the payout plans, he claims that he was
entitled to $31,250, trial loan modification, and correction of servicer and credit
records. Aluart received a $6,000 check from Rust.
Count I of Plaintiffs’ amended complaint alleged that the Federal Regulators
and Rust Consulting violated the Florida Deceptive and Unfair Trade Practices Act
(“FDUTPA”) by publishing the payout plans but failing to comply with their
terms. Count II alleged that all Defendants committed the offense of “civil theft.”
Count III alleged that Rust Consulting breached a fiduciary duty by failing to
comply with the payout plans. Count IV alleged that the Federal Regulators were
negligent in overseeing the distribution of cash payments from the Settlement
7
Case: 14-15325 Date Filed: 08/12/2016 Page: 8 of 15
Fund. For relief, Plaintiffs requested injunctive relief they claim was “mandated”
by the payout plans (such as loan modification), a declaration of wrongdoing on all
four counts, and compensatory damages in the amount of the difference between
what they received from Rust Consulting and what they claim they were owed.
Defendants filed separate motions to dismiss, arguing, in relevant part, that
the district court lacked subject-matter jurisdiction over Plaintiffs’ claims. In
Defendants’ view, a judicial-review provision in 12 U.S.C. § 1818, the statute
under which the U.S. Bank Consent Order and 2013 Amendment were issued,
precluded Plaintiffs from challenging any actions taken pursuant to those orders.
Specifically, § 1818(i)(1) provides that, outside of narrow circumstances, “no court
shall have jurisdiction to affect by injunction or otherwise the issuance or
enforcement of any notice or order under [§ 1818], or to review, modify, suspend,
terminate, or set aside any such notice or order.” Plaintiffs disputed that
§ 1818(i)(1) applied, characterizing their claims as based on the payout plans
alone, which, Plaintiffs asserted, were not orders under § 1818.
A magistrate judge prepared a report and recommendation for the district
court, concluding that § 1818(i)(1) deprived the court of jurisdiction over
Plaintiffs’ claims. The magistrate judge found that the court could not review the
U.S. Bank Consent Order, the 2013 Amendment, or the actions of Defendants
taken pursuant to either of those orders. The district court adopted the magistrate
8
Case: 14-15325 Date Filed: 08/12/2016 Page: 9 of 15
judge’s recommendation over Plaintiffs’ objections. Plaintiffs now bring this
appeal, for which we appointed counsel.7
III.
Plaintiffs first argue that the district court abused its discretion by denying
their motion for appointment of counsel filed early on in the case. A magistrate
judge denied their motion, and Plaintiffs did not ask the district court to review the
order by objecting to it. On appeal, Plaintiffs contend that their case presented
exceptional circumstances warranting appointment of counsel and that the court
improperly justified the denial on a lack of funds to appoint counsel in civil cases.
While we generally review the denial of a motion for appointment of
counsel for an abuse of discretion, Dean v. Barber, 951 F.2d 1210, 1216 (11th Cir.
1992), “where a party fails to timely challenge a magistrate’s nondispositive order
before the district court, the party waived his right to appeal those orders in this
Court,” Smith v. Sch. Bd. of Orange Cty., 487 F.3d 1361, 1365 (11th Cir. 2007),
Fed. R. Civ. P. 72(a) (objections must be filed within fourteen days of service of
the order). Cf. United States v. Schultz, 565 F.3d 1353, 1359, 1361–62 (11th Cir.
2009) (holding that we lack jurisdiction to hear appeals directly from federal
magistrate judges). Here, because Plaintiffs did not timely object to the magistrate
7
We note that the only remaining claims appear to be against Rust Consulting for breach
of fiduciary duty and a violation of the FDUTPA. In their response to the motions to dismiss,
Plaintiffs abandoned their civil-theft claim, which was the sole claim clearly raised against U.S.
Bank. Further, on April 11, 2016, we granted the parties’ joint motion to dismiss with prejudice
the claims against the Federal Regulators.
9
Case: 14-15325 Date Filed: 08/12/2016 Page: 10 of 15
judge’s order denying appointment of counsel, see Schultz, 565 F.3d at 1357–59
(holding that orders regarding representation are non-dispositive), we will not
consider the issue on appeal, see Smith, 487 F.3d at 1365.
Plaintiffs respond that their failure to object should be excused because they
were proceeding pro se and they did not receive notice of their need to object to
the magistrate judge’s order. However, we have held that such notice is not
required for non-dispositive orders, even if it may be required for dispositive
recommendations, Schultz, 565 F.3d at 1361–62, and we have required pro se
parties to comply with the requirements of Rule 72(a), see Smith, 487 F.3d at
1365–66 (holding that a pro se litigant waived his right to appellate review of a
magistrate’s non-dispositive order by not objecting to the order before the district
court, as required by Rule 72(a)), Farrow v. West, 320 F.3d 1235, 1249 n.21 (11th
Cir. 2003) (same). Therefore, we do not consider the merits of Plaintiffs’ request
for counsel in the district court.
IV.
As for the dismissal of Plaintiffs’ amended complaint, the district court
concluded that § 1818(i)(1) prevented the court from exercising jurisdiction over
Plaintiffs’ claims. We review de novo questions of statutory interpretation, United
States v. Maupin, 520 F.3d 1304, 1306 (11th Cir. 2009), and of the subject-matter
10
Case: 14-15325 Date Filed: 08/12/2016 Page: 11 of 15
jurisdiction of the district court, Gupta v. McGahey, 709 F.3d 1062, 1064–65 (11th
Cir. 2013).
Section 1818(b) gives federal banking agencies the power to initiate
administrative proceedings culminating in cease-and-desist orders against
depository institutions engaged in, or about to engage in, unsafe, unsound, or
unlawful practices. 12 U.S.C. § 1818(b)(1); Bd. of Governors of Fed. Reserve Sys.
v. MCorp. Fin., Inc., 502 U.S. 32, 38, 112 S. Ct. 459, 463 (1991). There is no
dispute that the U.S. Bank Consent Order and 2013 Amendment in this case are
orders under § 1818(b).
Federal district courts’ ability to review or enforce cease-and-desist orders
under § 1818 is strictly limited by statute. Judicial review in the district court is
available in two situations.8 See MCorp Fin., 502 U.S. at 38, 112 S. Ct. at 463.
First, a party may seek an injunction to block enforcement of a temporary cease-
and-desist order pending completion of the related administrative proceeding. See
12 U.S.C. § 1818(c)(2). Second, federal banking agencies, in their discretion, may
apply to an appropriate district court for enforcement of a notice or order issued
under § 1818. See 12 U.S.C. § 1818(i)(1).
Beyond these two limited situations, however, district courts lack
jurisdiction “to affect by injunction or otherwise the issuance or enforcement of
8
Additionally, 12 U.S.C. § 1818(h) authorizes an appropriate court of appeals to review
final orders directly on the application of an aggrieved party.
11
Case: 14-15325 Date Filed: 08/12/2016 Page: 12 of 15
any notice or order under [§ 1818], or to review, modify, suspend, terminate, or set
aside any such notice or order.”9 12 U.S.C. § 1818(i)(1); see Henry v. Office of
Thrift Supervision, 43 F.3d 507, 513 (10th Cir. 1994) (“In § 1818(i) Congress . . .
explicitly preclud[ed] jurisdiction in any situation except where it had specifically
provided for a particular court to exercise jurisdiction.”). Here, it is clear that this
case does not fit into either of the two situations where district courts have been
granted jurisdiction over § 1818 orders. Accordingly, the jurisdictional bar of
§ 1818(i)(1) comes into play.
Nevertheless, despite the “plain, preclusive language” of § 1818(i)(1),
MCorp. Fin., 502 U.S. at 39, 112 S. Ct. at 463, that provision does not appear to
prevent courts from adjudicating claims based on substantive laws solely because a
federal banking agency has taken similar or parallel actions. Cf. 2013 Amendment,
Art. V, § (3) (Doc. 77-1, Exh. 2) (“In no event shall the Bank request or require
any borrower to execute a waiver of any claims against the Bank (including any
agent of the Bank) in connection with any payment or Foreclosure Prevention
9
12 U.S.C. § 1818(i)(1), in its entirety, states,
The appropriate Federal banking agency may in its discretion apply to the
United States district court, or the United States court of any territory, within the
jurisdiction of which the home office of the depository institution is located, for
the enforcement of any effective and outstanding notice or order issued under this
section or under section 1831o or 1831p-1 of this title, and such courts shall have
jurisdiction and power to order and require compliance herewith; but except as
otherwise provided in this section or under section 1831o or 1831p-1 of this title
no court shall have jurisdiction to affect by injunction or otherwise the issuance or
enforcement of any notice or order under any such section, or to review, modify,
suspend, terminate, or set aside any such notice or order.
12
Case: 14-15325 Date Filed: 08/12/2016 Page: 13 of 15
assistance pursuant to this Amendment to the Consent Order.”). In other words, if
a plaintiff could bring an action against his or her servicer before the issuance of a
cease-and-desist order under § 1818, that plaintiff likely could bring such an action
after the issuance of such an order. See, e.g., In re JPMorgan Chase Mortg.
Modification Litig., 880 F. Supp. 2d 220, 231-34 (D. Mass. 2012) (stating that, by
enacting § 1818(i)(1), “Congress did not intend to also prohibit non-parties from
exercising their separate remedies at law”). But an order issued under § 1818
cannot be the basis for a cause of action by a non-party to the order. Cf. U.S. Bank
Consent Order, Art. XIII § (10) (Doc. 77-1, Exh. 1) (“Nothing in the Stipulation
and Consent or this Order, express or implied, shall give to any person or entity,
other than the parties hereto . . . any benefit or any legal or equitable right, remedy
or claim under the Stipulation and Consent or this Order.”); 2013 Amendment, Art.
VII § (8) (Doc. 77-1, Exh. 2) (using nearly identical language).
Here, the district court properly concluded that it lacked jurisdiction to
address and resolve Plaintiffs’ claims because they are based on orders issued
under § 1818. See 12 U.S.C. § 1818(i)(1). Plaintiffs’ amended complaint
challenged the implementation and oversight of the remediation schemes arising
out of the administrative cease-and-desist proceedings initiated by the Federal
Regulators under § 1818. Specifically, Plaintiffs claimed that Defendants failed to
follow the payout plans (the IFR Framework and the Settlement Fund Table) and
13
Case: 14-15325 Date Filed: 08/12/2016 Page: 14 of 15
that Plaintiffs were entitled to the relief supposedly mandated by those plans.
Though Plaintiffs attempt to distinguish the payout plans from the orders issued
under § 1818, the U.S. Bank Consent Order and 2013 Amendment, the payout
plans are part and parcel of those orders. Any rights to remediation, and the
attendant responsibilities in determining the remediation owed individual
borrowers (such as classifying eligible borrowers and developing a distribution
plan), were created by the § 1818 orders; the payout plans simply specify the
amount of remediation due various categories of borrowers. In essence, Plaintiffs’
allegations amount to a claim that Defendants breached their duties under the
§ 1818 orders against U.S. Bank.
Because Plaintiffs effectively seek enforcement of the U.S. Bank Consent
Order and 2013 Amendment through the payout plans, resolving Plaintiffs’ claims
would necessarily “affect . . . the . . . enforcement” of orders issued under § 1818,
something “no court shall have jurisdiction” to do outside of an enforcement action
by federal banking agencies. See 12 U.S.C. § 1818(i)(1). For the same reasons,
Plaintiffs also cannot use the § 1818 orders and payout plans as a basis for a
FDUTPA claim. See Newton v. Am. Debt Servs., Inc., 75 F. Supp. 3d 1048, 1058–
62 (N.D. Cal. 2014) (holding that a plaintiff could not “borrow” a § 1818 order as
predicate authority for imposing liability under a similar state statute).
14
Case: 14-15325 Date Filed: 08/12/2016 Page: 15 of 15
Nor have Plaintiffs raised any claims against U.S. Bank, their former
mortgage servicer, independent of the § 1818 orders. While counsel for Plaintiffs
now suggests that, had Plaintiffs been appointed counsel in the district court, they
could have brought an independent cause of action against U.S. Bank for breach of
contract relating to the loan modification, Plaintiffs expressly abandoned such a
theory in response to U.S. Bank’s motion to dismiss, which raised that possibility.
In particular, Plaintiffs clarified that their claims against U.S. Bank were based
solely on the payout plans and not on the modification agreement. Accordingly,
we will not revive this claim on appeal even though Plaintiffs were proceeding pro
se.10
In sum, the district court properly found that § 1818(i)(1) divested the court
of jurisdiction over Plaintiffs’ claims.
V.
For the foregoing reasons, we agree with the district court that it lacked
subject-matter jurisdiction over Plaintiffs’ amended complaint. Accordingly, the
judgment of the district court is AFFIRMED.
10
In addition, the district court noted that Ferrer had filed a separate lawsuit against U.S.
Bank alleging breach of contract.
15