Change Lending LLC v. Federal Home Loan Bank of San Francisco

Background

Change Lending LLC, described in the opinion as a certified Community Development Financial Institution, sought membership in the Federal Home Loan Bank of San Francisco, which is regulated by the Federal Housing Finance Agency. Change alleged that the bank rescinded its prior approval of Change’s membership in September 2019 because Change did not satisfy an operating-liquidity requirement. Change further alleged that the Federal Housing Finance Agency authorized or approved that rescission.

Change asserted two claims under the Administrative Procedure Act against the Federal Housing Finance Agency and, for one claim, Sandra L. Thompson in her official capacity as the agency’s Director. Both claims challenged the 2019 rescission. Change sought declarations that it remained a member and that the rescission was invalid. The opinion states that the other claims in the Third Amended Complaint had already been dismissed in an earlier order.

Events After the Complaint

When Change filed its Third Amended Complaint, its third membership application was pending. The Federal Home Loan Bank of San Francisco later denied that application on grounds unrelated to the operating-liquidity requirement. Change appealed to the Federal Housing Finance Agency, which reversed the bank’s decision, found that Change met the requirements for membership, and directed the bank to approve the application if Change submitted updated information. Change submitted the information and became a member in May 2024.

Court’s Analysis

The defendants argued that the two remaining claims were moot because Change had become a member. Mootness means that changed circumstances have eliminated a live dispute that a court can resolve. Because Change sought declaratory relief, the court considered whether a substantial and sufficiently immediate dispute remained.

The court held that Change’s request for a declaration that it was a member was moot. Change had already become a member through the approval of its third application, and Change did not argue otherwise.

The court also held that the request for a declaration that the 2019 rescission was invalid was moot. Even if the court declared the rescission invalid, that declaration would not provide Change with relief because Change was already a member. The court found that Change’s concern that the defendants might repeat the process at some indefinite future time was too remote and speculative.

The court rejected Change’s reliance on the voluntary-cessation exception because Change became a member through its successful third application, not because the defendants stopped the challenged conduct. The court also rejected the exception for injuries capable of repetition but likely to evade review. Change did not show that the challenged action was inherently too short to be litigated, or that there was a reasonable expectation that Change itself would face the same action again.

Disposition

The court concluded that the Third and Sixth Counts were subject to dismissal as moot. Judge Maxine M. Chesney granted the Federal Housing Finance Agency defendants’ motion to dismiss and vacated the hearing scheduled for August 9, 2024. The opinion does not state that the motion or the claims were dismissed with or without prejudice.