A. Standing
The party seeking to invoke federal jurisdiction has the burden of establishing standing.28
Constitutional standing analysis includes three elements: (1) the plaintiff must have suffered an
injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized,
and (b) actual or imminent, not conjectural or hypothetical; (2) there must be a causal connection
between the injury and the conduct complained of; and (3) it must be likely, as opposed to
merely speculative, that the injury will be redressed by a favorable decision.29
Beyond these three constitutional requirements,30 there are additional, prudential standing
limitations,31 including the requirement that a plaintiff must assert its own legal rights and
interests, and cannot rest its claim to relief on the legal rights or interests of third parties.32 One
cannot sue to protect the interests of another when the plaintiff’s only interest is a “byproduct” of
26 See Home Builders Ass’n, v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998) (citation and internal quotationmarks omitted).
the litigation.33 However, courts have generally held that a party in interest may assign its legal
claims to a third party, typically by a contract assigning its full and exclusive interest in a legal
claim to the assignee.34 The assignee may then bring suit in its own name on behalf of the party
in interest.35
AHMIS relies on Sprint Communications Co. v. APCC Services, Inc. to demonstrate its
standing. There, APCC Services aggregated the legal claims of approximately 1,400 payphone
operators who had claims against long-distance telephone carriers.36 When customers made a
call on a payphone using an access code or a 1-800 number, the provider of the access code or 1-
800 number paid the long-distance carrier a fee.37 The payphone operator could then seek
payment from the long-distance carrier for the use of its payphone, and, if the carrier did not pay,
the payphone operator could sue the carrier.38 Because pursuing these legal claims individually
could be prohibitively expensive, many payphone operators assigned their claims to aggregators,
like APCC Services, which collected the claims of payphone operators.39 If the suit was
successful, the aggregator turned over the award to the payphone operators and received a fee for
its services.40 The Supreme Court noted that the assignee’s contract with the payphone operators
contained clear language granting full and exclusive legal power to the assignee.41 Since the
33 Vt. Agency of Natural Res. v. United States (ex rel. Stevens), 529 U.S. 765, 772, 120 S. Ct. 1858, 1862 (2000)
(holding that a qui tam relator under the False Claims Act has Article III standing).
34 Sprint Commc’ns Co. v. APCC Servs. Inc., 554 U.S. 269, 284–85, 128 S. Ct. 2531, 2541 (2008) (holding that an
assignee of legal claims could bring suit for another even though the assignee had to forward all proceeds to that
third party and only received servicing fees).
35 Id. at 285, 128 S. Ct. at 2541–42.
36 Id. at 272, 128 S. Ct. at 2534.
37 Id. at 271, 128 S. Ct. at 2534.
38 Id.
39 Id. at 271–72, 128 S. Ct. at 2534.
40 Id. at 272, 128 S. Ct. at 2534.
41 The contract stated that each operator “assigns, transfers and sets over to [the aggregator] for purposes of
collection all rights, title and interest of the [payphone operator] in the [payphone operator’s] claims, demands or
causes of action for ‘Dial-Around Compensation’ . . . due the [payphone operator] for periods since October 1,
1997.” Id. at 272, 128 S. Ct. at 2534 (alteration in original).
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Supreme Court had long granted assignees standing to sue for third parties,42 and since APCC
Services was unmistakably an assignee, the Supreme Court held that APCC Services had
standing, despite the fact that it would forward any aggregated award to the payphone
operators.43
AHMSI also relies upon CWCapital Asset Mgmt., L.L.C. v. Chicago Props., L.L.C. In
CWCapital, the Seventh Circuit held that a contract giving a mortgage servicer “full power and
authority, acting alone” to initiate any action the servicer believed necessary may be construed as
giving the servicer “effective equitable ownership” to the legal claim.44 Although the contract at
issue lacked clear language assigning ownership of the legal claim, the Seventh Circuit construed
as an assignment the contract since it gave the servicer total and exclusive control over legal
claims, including the right to pursue any legal actions it deemed necessary, and the right to sue in
the mortgagee’s name without indicating its status as servicer. 45 The Seventh Circuit found the
servicer to be an “effective assignee.”
However, here AHMSI does not allege it is an assignee or effective assignee of the
mortgagees’ legal claims, nor does it allege or show that its contract with the mortgagees of
record made AHMSI an assignee or effective assignee.46 AHMSI asserts that it is “responsible
for the servicing of mortgage loans,” and that it “may be subject to liability if property entrusted
to its care is not returned.”47 Such an assertion merely implies that a contract exists between
42 Id. at 285, 128 S. Ct. at 2541.
43 Id. at 287, 128 S. Ct. at 2542–43.
44 610 F.3d 497, 501 (7th Cir. 2010).
45 Id. However, when a court determines that a contract was only meant to confer a power of attorney, the contract
will not suffice to give a third party standing under the assignee exception. See W.R. Huff Asset Mgmt. Co. v.
Deloitte & Touche, L.L.P., 549 F.3d 100, 108 (2d Cir. 2008).
46 See, e.g., Lear Siegler Servs. v. Ensil Int’l Corp., No. SA-05-CV-679-XR, 2009 WL 3297975, at *4 (W.D. Tex.
Oct. 13, 2009) (dismissing a case for lack of jurisdiction where plaintiff failed to provide a contract showing an
assignment had been made).
47 Pl.’s Opp’n to Defs.’ Mot. to Dismiss at 7.
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AHMSI and the mortgagee, but does not create a reasonable inference that AHMSI is an
assignee or an effective assignee of the mortgagees’ legal claims.
AHMSI argues that HUD must either process insurance claims submitted by AHMSI or
return collateral to AHMSI since AHMSI is “the party that dealt with [HUD] throughout the
administrative process.”48 However, the NHA and its accompanying regulations define HUD’s
responsibilities, and the regulations state that the FHA Commissioner “shall have no obligation
to recognize or deal with any party other than the mortgagee of record with respect to the rights,
benefits and obligations of the mortgagee under the contract of insurance.”49 While the NHA
allows for the assignment of insured mortgages, it does not require the FHA to enter into a legal
or any other type of relationship with an assignee. The FHA Commissioner retains the right to
deal with the mortgagee alone.
The regulations allow mortgagees to employ mortgage servicers. However, the
regulations make clear that the mortgagee “shall remain fully responsible to the Secretary for
proper servicing, and the actions of its servicer shall be considered to be the actions of the
mortgagee.”50 Further, such assignment of servicing does not amount to assignment of the
mortgagee’s right to pursue legal claims against HUD or its Secretary.
AHMSI does not allege or prove that it is an assignee, that its contract with the
mortgagee amounts to an effective assignment, or that the NHA and its accompanying
regulations require HUD to recognize AHMSI as such. In light of those failures, AHMSI has not
proven it has standing.
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