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LeMaster v. Ditech Financial LLC

United States District Court, D. Minnesota

August 3, 2018

VALERIE LEMASTER, Plaintiff,
v.
DITECH FINANCIAL LLC, f/k/a Green Tree Servicing, LLC, FEDERAL NATIONAL MORTGAGE ASSOCIATION, and CONSUMER FINANCIAL PROTECTION BUREAU, Defendants.

          Valerie LeMaster, plaintiff pro se.

          Jada Lewis, STINSON LEONARD STREET LLP, and Katherine E. Devlaminck, STINSON LEONARD STREET LLP, for defendants Ditech Financial LLC and Federal National Mortgage Association.

          Bernard J. Barrett, Jr. for defendant Consumer Financial Protection Bureau.

          MEMORANDUM OPINION AND ORDER ADOPTING REPORT & RECOMMENDATION

          JOHN R. TUNHEIM CHIEF JUDGE

         Plaintiff Valerie LeMaster brought this action against Ditech Financial LLC (“Ditech”), the Federal National Mortgage Association (“Fannie Mae”), and the Consumer Financial Protection Bureau (“CFPB”). LeMaster alleges that the Defendants breached a 2015 Consent Order that resolved an action brought by the Federal Trade Commission and CFPB against Ditech for various alleged violations of federal consumer-protection laws. Here, the CFPB moves to dismiss LeMaster's action for lack of standing, and Ditech and Fannie Mae move for judgment on the pleadings. United States Magistrate Judge David T. Schultz issued a Report and Recommendation (“R&R”), recommending that the motions be granted. LeMaster objects. Because the Court will conclude that it lacks subject-matter jurisdiction over all claims, the Court will grant the CFPB's motion and dismiss this action without prejudice.

         BACKGROUND

         Starting in 2014, Ditech and Fannie Mae were involved in foreclosure- and eviction-related litigation against LeMaster in Minnesota state court. Although LeMaster was permitted to remain in her home during those proceedings, Ditech and Fannie Mae have prevailed, and LeMaster has exhausted her appeals.

         “Meanwhile, in April 2015, while LeMaster's action challenging the foreclosure was still pending, [the] CFPB, FTC and Ditech signed a Consent Order in which Ditech agreed, among other things, to pay $48 million to CFPB to create a consumer redress fund.” (R&R at 3, June 29, 2018, Docket No. 67.) “The Consent Order was not related to LeMaster's lawsuit, and she is not a party to the Consent Order.” (Id.)

         In this action in federal court, LeMaster alleges “that she is ‘a third-party beneficiary under the terms of the Consent Order' and therefore is entitled to relief under that agreement.” (Id. at 4 (quoting Compl. ¶ 11, Nov. 14, 2017, Docket No. 1).) She asserts, among other things, that Ditech and the CFPB breached the Consent Order with respect to her, and that Fannie Mae is liable to her for setting an unconscionable repurchase price for her home. (Id.) LeMaster asserts claims for relief pursuant to the Consent Order, for which the Court has original federal-question jurisdiction pursuant to 28 U.S.C. § 1331. (Compl. ¶ 6.) LeMaster asserts various state-law claims for which the Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367. (Id. ¶ 7.)

         The CFPB moves to dismiss this action for lack of standing, arguing that LeMaster cannot enforce the Consent Order because she was neither a party to the Consent Order nor a person intended to have the ability or authority to enforce it. Ditech and Fannie Mae move for judgment on the pleadings, arguing that this action is barred under several theories. The Magistrate Judge recommended that LeMaster's federal-question claims be dismissed for lack of standing and that the Court decline to exercise supplemental jurisdiction over LeMaster's remaining state-law claims. (R&R at 11.) LeMaster objects. (Pl.'s Obj., July 12, 2018, Docket No. 70.)

         DISCUSSION

         I. STANDARD OF REVIEW

         Upon the filing of an R&R by a magistrate judge, “a party may serve and file specific written objections to the proposed findings and recommendations.” Fed.R.Civ.P. 72(b)(2); accord D. Minn. LR 72.2(b)(1). “The district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to.” Fed.R.Civ.P. 72(b)(3); accord D. Minn. LR 72.2(b)(3).

         II. ...


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