LeMaster v. United States

Background

In 2015, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission brought a civil enforcement action against Green Tree Servicing, LLC, a mortgage-servicing business. The case ended with a consent order requiring Green Tree to pay $48 million to the CFPB for consumer redress, pay a $15 million civil penalty, and comply with injunctive requirements.

The consent order provided that the CFPB or its agent would administer the redress funds. It allowed the CFPB, after consulting with the Federal Trade Commission, to decide whether consumer redress was impracticable or inappropriate and, in that event, to use remaining funds for other related relief. The order authorized, but did not require, the CFPB to request information and compliance reports from Green Tree.

LeMaster alleged that Green Tree had serviced her mortgage and engaged in unlawful conduct before her home was sold at a foreclosure sale. She claimed that the CFPB failed to consider her for redress, properly investigate her complaints, ensure that eligible consumers received funds, and determine whether Green Tree supplied a complete list of relevant consumers. She brought the claim under the Federal Tort Claims Act, alleging that the CFPB breached a fiduciary duty related to the consent order.

Motion and Arguments

The United States moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction and under Rule 12(b)(6) for failure to state a claim. It argued that the Federal Tort Claims Act’s discretionary-function exception preserved the United States’ immunity from suit because the CFPB’s administration of the consent order and redress funds involved discretionary decisions. The United States also argued that issue preclusion and the consent order’s terms barred LeMaster’s claim.

LeMaster opposed the motion. She argued that the CFPB had a duty of due care and that distributing funds to eligible consumers was not discretionary. In the alternative, she asked the court to transfer the action to the Court of Federal Claims.

Court’s Analysis

The Federal Tort Claims Act generally allows certain tort claims against the United States, but it preserves immunity for claims based on a federal agency’s exercise or failure to exercise a discretionary function. The court applied a two-step test: whether the challenged conduct involved judgment or choice rather than a mandatory requirement, and whether that judgment was susceptible to social, economic, or political policy analysis.

The court concluded that LeMaster identified no statute, regulation, or other mandate requiring the CFPB to administer the consent order in a particular way. The consent order gave the CFPB discretion about how to monitor Green Tree, whether to act on compliance issues, how to investigate complaints, and whether particular consumers qualified for redress. The court stated that an alleged mistake or abuse of discretion would not create liability under the Federal Tort Claims Act when the discretionary-function exception applies.

The court also concluded that the CFPB’s choices were susceptible to policy analysis, including decisions about enforcement, monitoring, priorities, available resources, and payment of redress funds. Because the discretionary-function exception applied, the court held that it lacked subject-matter jurisdiction over LeMaster’s claim.

The court did not decide whether issue preclusion barred the action or whether LeMaster otherwise failed to state a claim. It also denied transfer to the Court of Federal Claims as inappropriate because that court likewise lacked jurisdiction over this Federal Tort Claims Act claim for the reasons discussed in the opinion.

Disposition

The court granted the United States’ Motion to Dismiss. The order states: “LET JUDGMENT BE ENTERED ACCORDINGLY.”