United States Ex Rel. Szymoniak v. American Home Mortgage Servicing, Inc.
679 F. App'x 299
| 4th Cir. | 2017Background
- Relator Lynn Szymoniak, after defaulting on her Florida mortgage and contesting foreclosure, alleged trustees and servicers forged or falsified mortgage-assignment documents for loans pooled into mortgage-backed securities (MBS) trusts.
- In 2010 Szymoniak filed a sealed qui tam complaint under the False Claims Act (FCA); the United States declined to intervene after multiple extensions and the complaint was unsealed in 2013–2014.
- Her third amended complaint named fifteen defendants (later narrowed to nine), alleging the defendants caused false claims by: charging the government for trustee/custodial services for defective MBS, selling impaired securities to the government, seeking FHA insurance payments using false assignments, and charging for filing falsified foreclosure documents.
- The district court dismissed allegations based on public-disclosure/time-bar issues for conduct before March 23, 2010, and several claims were voluntarily dismissed by Szymoniak; only nine defendants remained for the motion to dismiss.
- Applying Rule 9(b) and Fourth Circuit precedent in United States ex rel. Nathan v. Takeda, the district court held the complaint failed to allege specific false claims or facts showing the scheme necessarily resulted in submission of false claims, and dismissed all remaining defendants (U.S. Bank resolved separately).
- The Fourth Circuit affirmed, rejecting Szymoniak’s contention that Nathan required only general fraud pleading and declining to overrule Nathan.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FCA claim met Rule 9(b) by pleading the "who, what, where, when, and how" of fraud without identifying specific false claims | Szymoniak: alleging an elaborate, systemic scheme to create fraudulent foreclosure documents suffices under Nathan’s “who/what/where/when/how” formulation | Defendants: relator must identify specific false claims or allege a scheme that necessarily led to submission of false claims | Court: Nathan requires either identification of specific false claims or allegations that the scheme necessarily resulted in submission of false claims; pleading here was insufficient; affirmed dismissal |
| Whether the Fourth Circuit should overrule or relax Nathan’s rule requiring specificity about false claims | Szymoniak: asks the court to reconsider/overrule Nathan and permit less specific pleading of FCA claims | Defendants: Nathan remains controlling precedent; panel cannot overrule prior panel precedent | Court: declines to revisit Nathan; panel bound by precedent; affirmation on district court’s reasoning |
Key Cases Cited
- United States ex rel. Nathan v. Takeda Pharm. N. Am., 707 F.3d 451 (4th Cir. 2013) (FCA relators must allege specific false claims or that a scheme necessarily caused submission of false claims)
- World Fuel Servs. Trading v. Hebei Prince Shipping Co., 783 F.3d 507 (4th Cir. 2015) (panels cannot overrule prior panel precedent)
- Scotts Co. v. United Indus. Corp., 315 F.3d 264 (4th Cir. 2002) (discusses stare decisis among panels)
- Harrison v. Westinghouse Savannah River Co., 176 F.3d 776 (4th Cir. 1999) (12(b)(6) review standard cited for de novo review)