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Plunkett v. Castro

United States District Court, District of Columbia

November 24, 2014

CHARLIE PLUNKETT, et al., Plaintiffs,



Plaintiffs have moved to amend or vacate the Court's judgment that was entered on August 28, 2014, in Plunkett v. Castro, No. 14-cv-326, 20104 U.S. Dist. LEXIS 119805 (D.D.C. Aug. 28, 2014). (Pls.' Mot. for Relief Under Rule 59(e) or, Alternatively, Rule 60(b) [ECF No. 49] ("Pls.' Mot.").) For the reasons given below, plaintiffs' motion will be denied.


The background of this case was discussed at length in this Court's original Opinion in Plunkett, see 2014 U.S. Dist. LEXIS 119805, at *3-15, and by the Circuit Court and this Court in the related case of Bennett v. Donovan, see 703 F.3d 582, 584-86 (D.C. Cir. 2013); 4 F.Supp. 3d 5, 7-8 (D.D.C. 2013), so the Court will limit its discussion to the relevant procedural history and facts.

Plaintiffs in both Bennett and Plunkett are widowed spouses of holders of home equity conversion mortgages ("HECMs"), also known as reverse mortgages, who were neither listed on the deeds to their spouses' homes nor on the HECMs that their spouses had signed. 2014 U.S. Dist. LEXIS 119805, at *6. In accordance with a regulation promulgated by the Department of Housing and Urban Development ("HUD"), 24 C.F.R. § 206.27(c), those HECM loans became due and payable upon the death of the spouse mortgagors. Id. In Bennet, plaintiffs filed suit claiming that 24 C.F.R. § 206.27(c)(1) violated federal law by failing to protect non-mortgagor spouses. This Court ultimately agreed and concluded that 12 U.S.C. § 1715z-20(j) unambiguously foreclosed HUD's interpretation in 24 C.F.R. § 206.27(c)(1). See Bennett, 4 F.Supp. 3d at 12. The Court remanded to the agency to fashion appropriate relief. Id. at 15. Several months later, four non-borrowing spouses filed the Plunkett lawsuit on behalf of themselves and a purported class of similarly situated individuals, mounting the same challenge to 24 C.F.R. § 206.27(c)(1). (Compl. [ECF No. 1].)

HUD issued its first determination on remand on June 4, 2014, concluding that the Bennett plaintiffs were not entitled to any relief. Plunkett, 2014 U.S. Dist. LEXIS 119805, at *9. That decision did not consider the appropriate remedy for other non-borrowing spouses, and so this Court remanded the Plunkett plaintiffs' case to the agency for review. On June 24, 2014, HUD issued a second determination on remand, which was limited to the Bennett plaintiffs and the named Plunkett plaintiffs. That decision introduced a new, voluntary remedy, known as the Mortgagee Optional Election ("MOE"), which permitted mortgagees to assign HECMs to HUD if the mortgages met certain criteria. See id. at *12-13.

The parties subsequently filed cross-motions for summary judgment. In that briefing, HUD identified a remedy not previously considered in its determination on remand: that "the effect of the Court's decision [in Bennett ] and statements invalidating the application of 24 C.F.R. § 206.27(c)(1) to plaintiffs is that 24 C.F.R. § 206.125 is not triggered as a result of their spouses' death." (Mem. in Supp. of Def.'s Mot. to Dismiss or, in the Alternative, for Summ. J. [ECF No. 37-1] ("Def.'s SJ Mem.") at 2.) The Court dubbed this remedy the Trigger Inapplicability Decision ("TID") and explained its consequences as follows:

[Under the TID, ] the relationship between HUD and the mortgagee does not change as a result of the death of the borrowing spouse and the mortgagee may continue to hold on to the reverse mortgage... without instituting foreclosure. Then, if the loan reaches 98% of the maximum loan amount, the mortgagee may assign the mortgage to HUD.

Plunkett, 2014 U.S. Dist. LEXIS 119805, at *39-40. To give effect to the TID, "HUD... informed the lenders holding the HECMs of each of the six named plaintiffs by e-mail that they did not need to foreclose until another triggering event occurred." Id at *15.

Ultimately, this Court held that the MOE "is an entirely reasonable program" that was not arbitrary or capricious. Id. at *32. The Court also held that HUD had not acted arbitrarily or capriciously in interpreting its authorizing statute as not giving it the power to compel immediate assignment of the HECMs. See id. at *37-38. Finally, the Court held that HUD had acted arbitrarily and capriciously in "not fully considering the TID in its final agency action." Id. at *49. Accordingly, the Court remanded with instructions that HUD should "consider whether the remedy of the TID applies to non-borrower surviving spouses." Id. The Court also denied class certification without prejudice. See id. at *50.

In their present briefing, plaintiffs explain that, in the wake of Plunkett, their counsel "contacted the mortgagees on the respective mortgages requesting that the mortgagees agree to hold the mortgages until they reach 98% of the maximum claim amounts." (Mem. of Law in Supp. of Pls.' Mot. for Relief Under Rule 59(e) or, Alternatively, Rule 60(b) [ECF No. 49-1] ("Pls.' Mem.") at 3-4.) One of plaintiffs' mortgagees stated in an e-mail that it did not "concur with [plaintiffs'] conclusion that HUD has affirmed that the... mortgage is no longer due and payable" and that "the threshold issue is whether [plaintiff] can meet all of the [MOE] factors." (Pls.' Mot., Ex. 1 [ECF 49-3].) A representative from a different one of plaintiffs' mortgagees stated that he had been in contact with a HUD official, Sally Bene, who had "told him that she had been given explicit instructions from the General Counsel's Office that HUD would not accept assignment of Plaintiffs' mortgages once they reached 98% of maximum claim amounts unless Plaintiffs could also meet the five [MOE] factors." (Decl. of Jean Constantine-Davis [ECF 49-2] ("Davis Decl.") at 3.) After receiving these communications, on September 10, 2014, plaintiffs' counsel contacted defendant's counsel "seeking an explanation." (Pls.' Mem. at 4.) Defendant's counsel subsequently responded by e-mail, stating:

HUD is currently working out the details of how [the TID] option will be implemented as to any individuals to whom it will apply. As you know, the TID will apply to the named plaintiffs. However, at this time, HUD has not finalized the details of implementation as to the named plaintiffs. To the extent that the mortgagees received information from Sally Bene regarding such details, that information does not represent HUD's final decision as to how the TID will be implemented.

(Pls.' Mot., Ex. 4 [ECF 49-3].)

On September 25, 2014, plaintiffs filed this motion to amend or vacate the judgment in Plunkett . Their stated objective is to obtain an "Order... mak[ing] clear that HUD committed to accepting assignment of the mortgages of the named Plaintiffs' spouses when they reach 98% of their maximum claim amounts, and to restrain HUD from failing to keep this commitment." (Pls.' Mem. at 1.) Plaintiffs argue that "HUD's actions since this Court's [ Plunkett ] decision effectively retract the representations it made to this Court about the application of the TID to Plaintiffs, on which the Court relied in issuing its decision." ( Id. at 6.) They contend that "[e]ven if HUD's back ...

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