Reported / Citable
Background
Lakeview Loan Servicing sued Daniel Parker and several other defendants, including the United States on behalf of the Secretary of Housing and Urban Development. Lakeview asserted a state-law breach-of-contract claim against Parker and sought foreclosure as a remedy.
A magistrate judge recommended dismissal for lack of jurisdiction, concluding that 28 U.S.C. § 2410 did not supply original federal subject-matter jurisdiction. Lakeview objected, arguing that § 2410 conferred jurisdiction because its complaint alleged that the federal government held an interest in the property.
The Court’s Holding
The district court overruled Lakeview’s objections, adopted the magistrate judge’s report and recommendation, and dismissed the action without prejudice under Federal Rule of Civil Procedure 12(h)(3). It held that § 2410 waives the United States’ sovereign immunity for specified actions involving federal liens but does not independently create federal subject-matter jurisdiction. The court also noted that, in removed cases, 28 U.S.C. § 1444—not § 2410—is the jurisdictional source.
The court further held that the complaint did not establish federal-question jurisdiction under 28 U.S.C. § 1331. Lakeview’s breach-of-contract claim did not turn on federal law, and the complaint neither identified a contested issue concerning the existence, amount, or nature of HUD’s lien nor specified any federal law requiring interpretation. Because neither asserted jurisdictional basis was sufficient, dismissal was mandatory.
Key Takeaways
- Section 2410 waives sovereign immunity in specified lien-related actions but does not itself confer original federal jurisdiction.
- Naming the United States as a lienholder does not create federal-question jurisdiction when the pleaded state-law claim does not turn on a substantial, disputed federal issue.
- A federal complaint must plead facts supporting jurisdiction under an independent statute such as § 1331 or § 1332; otherwise, Rule 12(h)(3) requires dismissal.
Why It Matters
The decision underscores a jurisdictional obstacle for mortgage servicers filing foreclosure-related actions directly in federal court merely because HUD or another federal entity claims an interest in the property. Section 2410 permits certain suits against the United States, but its waiver of sovereign immunity cannot substitute for an independent basis of federal jurisdiction.
To invoke federal-question jurisdiction in a state-law property dispute, a plaintiff must identify a substantial and genuinely contested federal issue that is necessary to resolving the claim. A general assertion that federal lien rights may require interpretation is insufficient.