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United States ex rel. Fisher v. JPMorgan Chase Bank N.A.

United States District Court, E.D. Texas, Sherman Division

March 27, 2017




         Pending before the Court is Defendant JPMorgan Chase Bank, N.A.'s Motion to Transfer to U.S. District Court for the District of Columbia (Dkt. #41). The Court, having considered the relevant pleadings and oral argument of the parties, finds the motion is denied.

         I. BACKGROUND

         In 2008, the United States faced a housing crisis caused, in part, by mortgage fraud and predatory lending. The crisis caused home prices to plummet and foreclosures to skyrocket, leaving homeowners with negative equity in their homes. Distressed homeowners were unable to sell or refinance their homes to meet their mortgage obligations. In response to this crisis, the government enacted the Emergency Economic Stabilization Act of 2008 (“EESA”). Fannie Mae entered a Financial Agency Agreement for a Homeownership Preservation under the EESA (“FAA”) with the U.S. Department of Treasury (“Treasury”), whereby the Treasury authorized Fannie Mae to act as a financial agent of the United States for EESA programs.

         The Home Affordable Modification Program (“HAMP”), administered by the Treasury Department, was a voluntary program under EESA designed to prevent avoidable foreclosures by providing homeowners with affordable mortgage loan modifications and other alternatives to eligible buyers. HAMP's primary goal was to relieve the burden on homeowners by lowering their mortgage payments to 31% or less of their gross monthly income. Investors would receive payments and a guarantee that no modification would result in a mortgage worth less than the net present value of the property. In return, mortgage servicers, in addition to their annual servicing fees, received HAMP incentive payments to complete the modifications. Each successful modification entitled the servicer from $1, 200-2, 000 depending on how long the mortgage was delinquent. From the program's start in 2009 through the second quarter of 2016, HAMP generated more than 1.6 million permanent modifications.

         In 2009, JPMorgan Chase Bank, N.A. (“Chase”), one of the country's largest mortgage servicers by volume, enrolled in HAMP. On July 31, 2009, Chase expressly certified its compliance with HAMP guidelines and applicable federal laws in signing the initial Servicer Participation Agreement (“SPA”). The SPA names Chase as the servicer and “Fannie Mae, solely as Financial Agent of the United States” as the administrator. The SPA also names Freddie Mac as a compliance agent. The SPA states that “[a]ny and all disputes between the parties . . . shall be resolved solely and exclusively in the United States Federal courts located within the District of Columbia. The parties signed a Financial Instrument on the same day, which details the representations, warranties, and covenants that Chase is obligated to make in connection with its participation in HAMP. The Financial Instrument was fully incorporated into the SPA. On March 24, 2010, Chase signed an Amended SPA. Chase also signed annual certifications, a prerequisite to receiving HAMP payments.

         Chase expressly certified in the SPAs and annual certifications that (1) it was in compliance with the terms and guidelines of HAMP; (2) it was in compliance with all applicable laws and requirements; (3) it created and maintained an effective HAMP program and committed the resources needed to employ enough trained, experienced personnel with the tools and technology necessary to provide quality service to homeowners; and (4) it had adequately documented and monitored its compliance and immediately reported to the Government any credible evidence of material violations of these certifications.

         The Fifth Amended Complaint alleges Chase systematically violated HAMP guidelines and knowingly presented false or fraudulent claims in excess of $430 million. On September 27, 2013, relator Michael J. Fisher sued in the Southern District of New York on behalf of the United States (Dkt. #17). On November 3, 2015, Keith Franklin, Regginald McPhaul, and Chezza Hartfield joined Michael J. Fisher as relators (“Relators”) in the third amended complaint (Dkt. #34). On May 26, 2016, Relators filed a motion to transfer venue to this Court. On June 2, 2016, the Southern District of New York transferred the case to this Court. On August 17, 2016, Chase filed this Motion to Transfer to U.S. District Court for the District of Columbia Under 28 U.S.C. 1404(a) (Dkt. #41). On September 19, 2016, Relators filed a response (Dkt. #52). On September 29, 2016, Chase filed a reply (Dkt. #55). On October 11, 2016, Relators filed a sur-reply (Dkt. #58). On October 25, 2016, the United States of America filed a statement of interest regarding the motion to transfer (Dkt. #63). On November 3, 2016, the Court issued an order granting an unopposed motion to defer ruling and allow for supplemental briefing (Dkt. #66). On January 6, 2017, Chase filed its supplemental brief (Dkt. #70). On January 17, 2017, Relators filed a response to the supplemental brief (Dkt. #72). On March 13, 2017, the Court held oral argument on the motion to transfer.


         Defendant moves to transfer venue pursuant to 28 U.S.C. § 1404(a), which permits a district court to transfer any civil case “[f]or the convenience of parties and witnesses, in the interest of justice . . . to any other district or division where it might have been brought.” 28 U.S.C. § 1404(a). “Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an ‘individualized, case-by-case consideration of convenience and fairness.'” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). The purpose of 28 U.S.C. § 1404(a) “is to prevent the waste ‘of time, energy and money' and ‘to protect the litigants, witnesses and the public against unnecessary inconvenience and expense…'” Van Dusen v. Barrack, 376 U.S. 612, 616 (1964).

         The U.S. Supreme Court has held that “when the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause.” Atl. Marine Constr. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 134 S.Ct. 568, 581 (2013) (emphasis added). The U.S. Supreme Court made clear that its “analysis pre suppose[d] a contractually valid forum-selection clause.” Id. at 581 n.5. The inquiry into a clause's validity and scope thus precedes the question of transfer pursuant that clause. See, e.g., Indus. Print Techs. LLC v. Canon U.S.A., Inc., No. 2:14-CV-00019, 2014 WL 7240050, at *1-2 (E.D. Tex. Dec. 19, 2014) (“[T]he Atlantic Marine analysis . . . presupposes a valid contract and a dispute that unquestionably falls within the scope of that contract.”); In re Union Elec. Co., 787 F.3d 903, 907 (8th Cir. 2015) (citing with approval a lower court's preliminary determination of a forum selection clause's validity); Ashmore v. Allied Energy, Inc., No. 8:14-CV-00227-JMC, 2015 WL 128596, at *3 (D.S.C. Jan. 9, 2015) (noting that a “[c]ourt must first determine whether the forum-selection clause is valid under federal law” (internal quotations omitted)); Rogovsky Enter., Inc. v. Masterbrand Cabinets, Inc., 88 F.Supp.3d 1034, 1042 (D. Minn. 2015) (treating a relevant forum-selection clause's validity as a threshold question on a motion to transfer). Where a court finds that the forum selection clause is not valid or that the dispute does not fall within the scope of the contract, the typical section 1404 venue transfer analysis comes into play. See Indus. Print Technologies, 2015 WL 128596, at *1.

         The threshold inquiry when determining transfer eligibility under section 1404(a) is “whether the judicial district to which transfer is sought would have been a district in which the claim could have been filed, ” or whether all parties have consented to a particular jurisdiction. In re Volkswagen AG, 371 F.3d 201, 203 (5th Cir. 2004) (“Volkswagen I”). Once that threshold inquiry is met, the Fifth Circuit has held that “[t]he determination of ‘convenience' turns on a number of public and private interest factors, none of which can be said to be of dispositive weight.” Action Indus., Inc. v. U.S. Fid. & Guar. Co., 358 F.3d 337, 340 (5th Cir. 2004). The private interest factors include (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; (4) all other practical problems that make trial of a case easy, expeditious and inexpensive. In re Volkswagen of America, Inc., 545 F.3d 304, 315 (5th Cir. 2008) (en banc) (“Volkswagen II”). The public interest factors include (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws or in the application of foreign law. Id. These factors are not exhaustive or exclusive, and no single factor is dispositive. Id.

         The party seeking transfer of venue must show good cause for the transfer. Volkswagen II, 545 F.3d at 315. The moving party must show that the transferee venue is “clearly more convenient” than the transferor venue. Volkswagen II, 545 F.3d at 315. The plaintiff's choice of venue is not a factor in this analysis, but rather contributes to the defendant's burden to show good cause for the transfer. Volkswagen II, 545 F.3d at 313 & 314 n.10 (“[W]hile a plaintiff has the privilege of filing his claims in any judicial division appropriate under the general venue statute, § 1404(a) tempers the effects of the exercise of this privilege.”). However, “when the transferee venue is not clearly more convenient than the venue chosen by the plaintiff, the plaintiff's choice should be respected.” Id. at 315.

         III. ...

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