United States District Court, S.D. Ohio, Western Division, Cincinnati
MICHAEL R BARRETT, UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendants' Motion to
Dismiss (Doc. 10). Plaintiff, Great American Life Insurance
Company (“Plaintiff” or “GALIC”),
asserts nine claims against the Secretary of the Interior and
multiple other Defendants on the basis that the United States
government failed to honor a guaranty governed by the Indian
Financing Act of 1974. Defendants (“Defendants”
or “the government”) contend that almost all of
Plaintiff's claims must be dismissed due to failure to
state a claim, lack of jurisdiction, sovereign immunity, or
some combination thereof.
Indian Loan Guaranty, Insurance, and Interest Subsidy Program
(Program) was established under the Indian Financing Act of
1974 (IFA), Pub. L. No. 93-262, as amended, 25 U.S.C. §
1451 et seq., and regulations at 25 C.F.R. pt. 103.
Loan guaranties are governed by Title II of the IFA (codified
at §§ 1481-1499), which authorizes the Secretary of
the Interior to guarantee up to 90 percent of the unpaid
principal and interest due on loans to Indian entities or
individuals “[i]n order to provide access to private
money sources which otherwise would not be available.”
25 U.S.C. § 1481.
order for a loan to be guaranteed under the Program, that
loan must close and fund. 25 C.F.R. § 103.18. Under
§ 103.36(d)(1), a guaranty holder may submit a claim for
loss to the Department of the Interior
(“Interior” or “Agency”) if the loan
borrower has defaulted. The Agency may deny a claim for loss
if the loan is not guaranteed as indicated in § 103.18.
25 C.F.R. § 103.39(a).
24, 2010, the Agency issued Loan Guaranty No. G103D1A1501.
(Compl. ¶ 14). Plaintiff purchased the guaranteed loan
on April 2, 2012. (Id. at ¶ 27). Plaintiff
claims it was “induced” to purchase the loan.
(Id. at PageID 3). On June 19, 2013, asserting
default on the loan, Plaintiff submitted a claim to the
Agency for loss under the guaranty. (Id. at ¶
32). On December 23, 2013, the Agency denied Plaintiff's
$20, 043, 618 claim for loss under the guaranty, for the
purported reason that Plaintiff failed to demonstrate that
the loan had been funded, as required by regulation.
(Id. at ¶¶ 33, 47).
argues that, as a result, the Agency has “dump[ed] the
burden of [a] failed tribal business on [Plaintiff].”
(Doc. 15, PageID 126). According to Plaintiff, “the
Government achieved this unjust result through a flawed
administrative process triggered by GALIC's claim for
payment under the Guaranty, ” in which the “[t]he
Agency's final decision to renege on the Guaranty . . .
was supported by . . . [the] alleged lack of
‘sufficient documentation' that the original loan .
. . ever funded.” (Id.) Plaintiff asserts
that, as a purchaser in due course in the secondary market,
it had nothing to do with this original closing.
(Id.) Regardless, Plaintiff alleges that the
Agency's rationale for not honoring the guaranty is
arbitrary and capricious because, inter alia, the
Bureau of Indian Affairs monitored, almost hour by hour, the
closing and funding of the original loan; reviewed and
approved the loan structure; and accepted and cashed a
premium check in the amount of $405, 354.00. (Compl.
¶¶ 50-52). This premium check is set by federal
regulation at 2% of the original loan principal amount that
the BIA guarantees. 25 C.F.R. § 103.8. Also by
regulation, the premium must be paid to the BIA by the
original lender at the time the original loan closes and
funds. 25 C.F.R. § 103.19 (“The premium is due
within 30 calendar days of the loan closing.”).
now seeks relief in this Court. As Defendants, it names the
Agency, its then-Secretary (Sally Jewel) in her official
capacity, and two employees of the Agency (Lawrence Roberts
and Jack Stevens) in their official capacities. Plaintiff
asserts the following claims for relief: (1) breach of
contract; (2) “Violations of Due Process”; (3)
“de novo review”; (4) “Arbitrary
and Capricious Action”: (5) fraudulent inducement; (6)
intentional misrepresentation; (7) negligent
misrepresentation; (8) declaratory judgment; and (9)
government argues for dismissal under Rule 12(b)(1) and Rule
12(b)(6) of the Federal Rules of Civil Procedure.
12(b)(1) allows a defendant to move for dismissal on the
basis that the court lacks subject matter jurisdiction. When
subject matter jurisdiction is challenged, the party
asserting jurisdiction bears the burden of establishing that
subject matter jurisdiction exists. Moir v. Greater
Cleveland Reg'l Transit Auth., 895 F.2d 266, 269
(6th Cir. 1990); Mich. S.R.R. v. Branch & St. Joseph
Counties Rail Users Ass'n., 287 F.3d 568, 573 (6th
Cir. 2002). A Rule 12(b)(1) facial challenge to subject
matter jurisdiction questions the sufficiency of the
pleadings. In such cases, courts apply the Rule 12(b)(6)
standard and the court must accept the alleged facts to be
true and determine if those facts are sufficient to state a
claim for relief that is plausible on its face. Ohio
Nat'l Life Ins. Co. v. United States, 922
F.2d 320, 325 (6th Cir. 1990); Ashcroft v. Iqbal,
556 U.S. 662 (2009) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
is generally recognized . . . that Rule 12(b)(1) is the
appropriate vehicle for a court's consideration of claims
that are asserted to be . . . barred by sovereign
immunity.” Living Care Alternatives of Utica, Inc.
v. United States, 312 F.Supp.2d 929, 931 (S.D. Ohio
2004), aff'd, 411 F.3d 621 (6th Cir. 2005).
“On a motion invoking sovereign immunity to dismiss for
lack of subject matter jurisdiction, the plaintiff bears the
burden of proving by a preponderance of evidence that
jurisdiction exists.” Chayoon v. Chao, 355
F.3d 141, 143 (2d Cir. 2004).