United States District Court, District of Columbia
HENRY L. KLEIN, et al., Plaintiffs,
STEVEN TERNER MNUCHIN, Defendant.
E. BOASBERG UNITED STATES DISTRICT JUDGE.
that one of its real-estate-development projects was
deep-sixed because of faulty title insurance, Plaintiff Levy
Gardens Partners 2007 LP and its principal, former Plaintiff
Henry Klein, have brought a series of suits against the
insurer, a title-insurance association, and government
agencies. In the latest iteration, Levy Gardens alleges that
the Secretary of the Treasury is violating the Administrative
Procedure Act by refusing to declare that title insurance is
not actually insurance and by failing to include the industry
in an annual report to Congress. As the Secretary correctly
points out that Plaintiff has no standing to bring such a
case, the Court will grant his Motion to Dismiss.
is a 50% owner of Levy Gardens, a New Orleans real-estate
developer. See ECF No. 21 (Am. Compl.), ¶ 4.
“In 2008, Levy Gardens paid a total of $108, 761.52 in
so-called insurance premiums to . . . Lewis Title.”
Id. That title company, however, apparently
overlooked an old ordinance, which led to the enjoining of
Levy Gardens's housing project and a loss of over $9
million. Id. After Levy Gardens obtained an award of
only $605, 000, Klein “pledged to God and himself that
what happened to Levy Gardens should never happen to anyone
again.” ECF No. 33 (Opp.) at 7 (emphasis and
capitalization deleted). The carrying out of such oath has
precipitated a series of suits against Lewis Title, the
American Land Title Association (ALTA), and now the
background, the Dodd-Frank Wall Street Reform and Consumer
Protection Act established the Federal Insurance Office
within the Department of the Treasury. See 31 U.S.C.
§ 313(a). The FIO, which “monitor[s] all aspects
of the insurance industry, ” submits an annual report
to Congress “on the insurance industry and any other
information as deemed relevant by the [agency] or requested
by [Congress].” Id. § 313(n)(2).
Plaintiffs Klein and Levy Gardens initially alleged in this
suit that the Court should compel Secretary of Treasury
Steven Mnuchin either to declare that title insurance is not
“insurance” under federal law or to add title
insurance to the FIO's annual reporting. See ECF
No. 1 (Complaint), ¶¶ 5, 42-44. The Court dismissed
the initial Complaint without prejudice, finding that
mandamus jurisdiction did not exist because Plaintiffs had
alleged neither a clear duty to act by the Secretary nor the
lack of other available remedies. See Klein v. Mnuchin, 2019
WL 108878 (D.D.C. Jan. 4, 2019). The Court invited
Plaintiffs to file an Amended Complaint if they could
sufficiently allege jurisdiction. Id. at *2. It
further expressly cautioned Plaintiffs that they must clear
the standing bar in order to proceed. Id.
the invitation, Plaintiffs have filed a new Complaint, which
is far less clear on what cause(s) of action are actually
being asserted. See Am. Compl. Indeed, no specific
cause of action is listed. Klein has also withdrawn,
see ECF No. 22 (Notice), so Levy Gardens is the sole
Plaintiff. The Secretary again moves to dismiss.
the defendant files a Rule 12(b)(1) motion to dismiss, the
plaintiff must demonstrate that the court indeed has
subject-matter jurisdiction to hear his claims. See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 561 (1992); U.S.
Ecology, Inc. v. U.S. Dep't of Interior, 231 F.3d 20, 24
(D.C. Cir. 2000). “Because subject-matter jurisdiction
focuses on the court's power to hear the plaintiffs
claim, a Rule 12(b)(1) motion [also] imposes on the court an
affirmative obligation to ensure that it is acting within the
scope of its jurisdictional authority.” Grand Lodge
of Fraternal Order of Police v. Ashcroft 185 F.Supp.2d
9, 13 (D.D.C. 2001). For this reason, “‘the
[p]laintiff s factual allegations in the complaint . . . will
bear closer scrutiny in resolving a 12(b)(1) motion' than
in resolving a 12(b)(6) motion for failure to state a
claim.” Id. at 13-14 (quoting 5A Charles A.
Wright & Arthur R. Miller, Federal Practice and
Procedure § 1350 (2d ed. 1987)) (alteration in
original). In policing its jurisdictional borders, the court
must scrutinize the complaint, treating its factual
allegations as true and granting the plaintiff the benefit of
all reasonable inferences that can be derived from the
alleged facts. See Jerome Stevens Pharms., Inc. v.
FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005).
seeking dismissal, Defendant relies on both jurisdictional
and merits arguments. See ECF No. 31. The Court need
look no farther than standing. Article III of the United
States Constitution limits the jurisdiction of federal courts
to resolving “Cases” and
“Controversies.” U.S. Const. art. III, § 2,
cl. 1. A party's standing “is an essential and
unchanging part of the case-or-controversy requirement of
Article III.” Defenders of Wildlife, 504 U.S.
at 560. To maintain standing, a plaintiff must meet the
following criteria. First, it “must have suffered an
injury in fact - an invasion of a legally-protected interest
which is (a) concrete and particularized . . . and (b) actual
or imminent, not conjectural or hypothetical.”
Id (citations and internal quotation marks omitted).
Second, “there must be a causal connection between the
injury and the conduct complained of - the injury has to be
fairly . . . trace[able] to the challenged action of the
defendant, and not . . . th[e] result [of] the independent
action of some third party not before the court.”
Id. (alterations in original) (citation and internal
quotation marks omitted). Third, “it must be
‘likely' as opposed to merely
‘speculative,' that the injury will be
‘redressed by a favorable decision.'”
Id. at 561 (citation omitted). A “deficiency
on any one of the three prongs suffices to defeat
standing.” U.S. Ecology 231 F.3d at 24.
Court does not question that Levy Gardens's financial
loss on its enjoined housing project is an actual injury, as
the developer claims to have suffered a $9 million setback.
The difficulty is how the Secretary's failure to include
title insurance in his annual report caused that or
any other injury or how this Court can redress that
loss or any future one. If, as alleged, malfeasance by
another precipitated the injunction and thereby the loss, the
malfeasor is Lewis Title, not the Secretary. Even assuming
that the Government may be sued when its action or inaction
caused a third party to act in a way that injured a
plaintiff, see Defenders of Wildlife, 504 U.S. at 562
(“When . . . a plaintiffs asserted injury arises from
the government's allegedly unlawful regulation (or lack
of regulation) of someone else, much more is
needed.”), what can the Court do now to undo the harm?
This is not a suit for damages - which this Court would
unlikely have jurisdiction to hear anyway - but for
declaratory relief under the APA. Yet the Court's
obligating the Secretary to include insurance in his annual
report would not assist Plaintiff in recovering its lost
sums. “Relief that does not remedy the injury suffered
cannot bootstrap a plaintiff into federal court; that is the
very essence of the redressability requirement.”
Steel Co. v. Citizens for a Better Env't 523
U.S. 83, 107 (1998). In addition, Levy Gardens never alleges
that it intends to develop any future project or that the
title insurance available for such project would be somehow
positively affected by any action sought here. The Court,
accordingly, is powerless to offer succor.
Gardens, it appears, knows this to be the case. That is why
the prior suits it and Klein have brought targeted Lewis
Title and ALTA, not the Government. See, e.g., Klein v.
Lewis Title Ins. Co., 2017 WL 4156609 (E.D. La.
Sept. 18, 2017) (suit against title company regarding
contracts of insurance it issued); Klein v. American Land
Title Ass'n, 926 F.Supp.2d 193 (D.D.C. 2013) (suit
challenging title-insurance policy drafted by ALTA). Only
when they came up empty, did they redirect their sights on
this more attenuated target.
in its Opposition to the Secretary's Motion to Dismiss
here, Plaintiff spills much ink raging against the abuses of
the title-insurance industry, see ECF No. 3 3 at 1
-7, but offers little rebuttal on the standing question. Levy
Gardens instead discusses standing in the two aforementioned
cases, explaining, for example, that Judge Reggie Walton
found standing in the latter one. Id. at 7-9. But
those suits, as just mentioned, were brought against a title
company and a title-insurance association, not the Secretary.
Again, the question is not whether Plaintiff has been harmed
at all, but rather who ...