Opinion
2:22-cv-01088-CAS-JCx
07-24-2023
JEFFRY P. SAMUELS v. FEDERAL EMERGENCY MANAGEMENT AGENCY & U.S. DEPARTMENT OF TREASURY
Present: The Honorable CHRISTINA A. SNYDER
CIVIL MINUTES - GENERAL
Proceedings: DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S SECOND AMENDED COMPLAINT (Dkt. 43, filed on June 12, 2023)
I. INTRODUCTION
On February 18, 2022, plaintiff Jeffrey Samuels filed suit against the Federal Emergency Management Agency ("FEMA") and the U.S. Department of the Treasury ("Treasury") (collectively, "defendants"). Dkt. 1 ("Compl."). On September 19, 2022, plaintiff filed a first amended complaint against defendants. Dkt. 28 ("FAC"). Plaintiff alleges that he received approximately $19,215.01 from FEMA to repair his property damages from Hurricane Harvey in August 2017. Plaintiff alleges that FEMA sent a demand to recoup the funds in 2020, but that FEMA's actions are barred by the three-year statute of limitations under the Discovery Assistance Reform Act. Additionally, plaintiff alleges that FEMA referred collection of the alleged debt in 2022 to the Treasury, which has "begun wrongfully taking money from plaintiffs social security" disbursements. Plaintiff seeks declaratory and injunctive relief barring FEMA from collecting any money from plaintiff and for the Treasury to return "all money wrongfully taken." See generally id.
On February 27, 2023, defendants filed a motion to dismiss plaintiffs FAC for lack of subject matter jurisdiction over the statutory claims and failure to state a claim. Dkt. 33 ("Mot."). On April 6, 2023, the Court granted defendants' motion, concluding it did not have jurisdiction over plaintiffs statutory claims under the Robert T. Stafford Disaster Relief and Emergency Assistance Act ("Stafford Act"). Dkt. 39. The Court granted plaintiff leave to amend the complaint to the extent he wished to attempt to allege claims for constitutional violations.
On April 28, 2023, plaintiff filed a second amended complaint. Dkt. 40 ("SAC"). The SAC contains many of the same factual allegations made in plaintiffs FAC. In the SAC, however, plaintiff alleges that the actions defendants took to recoup the emergency relief assistance and issue debt collection violate the Due Process Clause of the Fifth Amendment to the U.S. Constitution.
On June 12, 2023, defendants filed a motion to dismiss plaintiffs SAC for failure to state a claim. Dkt. 43 ("Mot."). On June 25, 2023, plaintiff filed an opposition. Dkt. 44 ("Opp."). On July 10, 2023, defendants filed a reply. Dkt. 45 ("Reply").
On July 24, 2023, the Court held a hearing. Having carefully considered the parties' arguments and submissions, the Court finds and concludes as follows.
II. BACKGROUND
A. Statutory framework for emergency relief provided by FEMA
The Stafford Act provides statutory authority for the federal disaster response activities of FEMA. 42 U.S.C. § 5121 et seq. The Stafford Act provides that upon request from the governor of a state affected by a major disaster requiring federal assistance, the "President may declare under this chapter that a major disaster or emergency exists." Id. § 5170.
Consequently, "[i]n any major disaster, the President may . .. direct any Federal agency ... to utilize its authorities and the resources granted to it under Federal law . . . in support of State and local assistance efforts [....] Id.
Section 408 of the Stafford Act authorizes FEMA to provide direct assistance to individuals and households in response to a major disaster or emergency declared by the president. See 42 U.S.C. § 5174. In relevant part. Section 408 establishes that the president "may provide financial or other assistance under this section to individuals and households to respond to the disaster-related housing needs of individuals and households who are displaced from their predisaster primary residences or whose predisaster primary residences are rendered uninhabitable." Id. § 5174(b)(1).
In accordance with this Section, FEMA has promulgated regulations establishing the criteria and eligibility for individual housing assistance. While "[i]n general, FEMA may provide assistance to individuals and households who qualify for such assistance," FEMA "may only provide" housing assistance "if the primary residence has been destroyed, is uninhabitable, or is inaccessible." 44 C.F.R. § 206.113(a). FEMA "may not provide" housing assistance "to individuals or households who are displaced from other than their pre-disaster primary residence ... or who have adequate rent-free housing accommodations." Id. § 206.113(b).
44 C.F.R. § 206.116(b), "Recovery of Funds," establishes in relevant part that '[a]n applicant must return funds to FEMA . . . when FEMA . . . determines that the assistance was provided erroneously, that the applicant spent the funds inappropriately, or that the applicant obtained the assistance through fraudulent means."
Applicants for FEMA assistance "may appeal any determination of eligibility for assistance made" to individuals and households, and "may appeal... (1) eligibility for assistance, including recoupment." 44 C.F.R. § 206.115(a). Such appeal must be filed within 60 days after FEMA notifies the applicant of an award or denial of assistance. Id.
The Stafford Act provides a statute of limitations of 3 years for the recoupment of covered assistance: "unless there is evidence of civil or criminal fraud, the Agency may not take any action to recoup covered assistance from the recipient of such assistance if the receipt of such assistance occurred on a date that is more than 3 years before the date on which the Agency first provides to the recipient written notification of an intent to recoup." 42 U.S.C. § 5174a(b)(1).
While FEMA "may waive a debt owed to the United States related to covered assistance provided to an individual or household if certain criteria are met, FEMA "may not waive a debt... if the debt involved fraud, the presentation of a false claim, or misrepresentation by the debtor or any party having an interest in the claim." IcL § 5174a(a)(2).
B. Plaintiff receives Hurricane Harvey emergency relief and FEMA attempts to recoup payment.
In August 2017, Hurricane Harvey struck the state of Texas, damaging plaintiffs property at 4442 Cheena Drive, Houston, TX 77096. SAC, p. 6. Plaintiff applied for emergency relief from FEMA, which required that the damaged property be the applicant's "primary residence." On November 17, 2017, FEMA granted plaintiff approximately $19,215.01 in assistance. Id. As part of that grant, FEMA provided a list of written notices. Notably, the letter including the following bolded warning:
FEMA is required by law to conduct routine audits of disaster assistance provided and to recover any assistance that was awarded in error, the applicant spent the funds inappropriately, or the applicant obtained the funds through fraudulent means. [. . .] In rare instances, there may be a requirement for you to return some or all of the assistance provided.Id.
Later, FEMA could not verify plaintiffs occupancy of the 4442 Cheena Drive property, which is required as a condition to grant the assistance. Rather, FEMA's Fraud and Investigations Division conducted a review of plaintiff s disaster assistance application and discovered that numerous indicia reflect that plaintiff did not primarily reside at 4442 Cheena Drive in Houston at the time of his application in 2017. Dkt. 33-1 ("FEMA Case File") at 40-43. Instead of primarily residing at the 4442 Cheena Drive property, FEMA determined that plaintiff was associated with alternative addresses in Houston, Texas, and Pensacola, Florida. Id. FEMA concluded its review in September 2020 and determined that plaintiffs application contained fraudulent representations. Id.
On October 23, 2020, FEMA initiated the recoupment process to recover the disaster assistance funds by notifying plaintiff that he did not appear to be eligible and accordingly owed FEMA the amount of the emergency relief. Id. at 26-27. FEMA's notification letter included the process by which plaintiff could appeal this determination. The letter specified the requirements that a written appeal letter must contain and noted that it needed to be postmarked no later than 60 days from the date shown on the letter. Additionally, the letter included the following information:
You may request an oral hearing to discuss your appeal when you submit your written appeal request. If FEMA determines your oral testimony is needed to clarify the documents you submitted, your request may be granted. FEMA may also request that you participate in an oral hearing via telephone as part of the appeal process when the appeal involves an issue of credibility or veracity, or the appeal record contains conflicting information that cannot be resolved.Id.
On November 20, 2020, plaintiff mailed FEMA a response. He explained that his relevant records were stored in Arizona and California while he was at the time residing in New Mexico. In light of the Covid-19 pandemic, he requested a sixth month continuance to file his written appeal.
On December 9, 2020, before FEMA responded to his request for a continuance, plaintiff filed a timely appeal via letter. Id. at 50-53. He did not make a request for an oral hearing to discuss his appeal as optionally provided. Id.
FEMA reviewed plaintiffs appeal, and on December 16, 2020, it mailed plaintiff a letter affirming its previous decision. Id. at 28. Specifically, the letter also notified plaintiff, "[y]ou will receive a separate letter with payment instructions and additional information on how to resolve this matter." Additionally, the letter provided information to contact to FEMA if plaintiff had "any questions regarding [his] appeal decision." Id.
On January 14, 2021, plaintiff spoke to a FEMA representative over the phone and sent the agency a letter requesting "any and all papers or documents FEMA has" regarding his housing assistance. Id. at 56. On January 26, 2021, FEMA sent plaintiff a letter containing information from his FEMA file in response to his request. Id. at 29.
On March 22, 2021, FEMA mailed plaintiff a notification that the debt had become final and if it did not receive full payment within 30 days, it would begin collection action as required by law. Id. at 30. The notice informed plaintiff that FEMA would "work with [him] to resolve" the debt and that he could "request a waiver of all or part of [the] debt," if he was able to demonstrate the FEMA distributed the funds in error without fault of plaintiff. The letter provided plaintiff with the contact information and operating hours of FEMA's Finance Center to answer "any questions about this notice, payment options, or current debt balance." Id. at 31.
Because plaintiff did not pay the outstanding debt, FEMA transferred the unpaid debt to the Treasury on December 22, 2021. Id. at 113. Plaintiff alleges that in 2022 the Treasury began garnishing plaintiffs Social Security distributions. SAC at p. 7.
III. LEGAL STANDARD
A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in a complaint. Under this Rule, a district court properly dismisses a claim if "there is a 'lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.'" Conservation Force v. Salazar. 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep't. 901 F.2d 696, 699 (9th Cir. 1988)). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twomblv. 550 U.S. 544, 555 (2007). "[F]actual allegations must be enough to raise a right to relief above the speculative level." Id.
In considering a 12(b)(6) motion, a court must accept as true all material allegations in the complaint, and all reasonable inferences to be drawn from them. Pareto v. FDIC 139 F.3d 696, 699 (9th Cir. 1988). A court must read the complaint in the light most favorable to the non-movant. Sprewell v. Golden State Warriors. 266 F.3d 979, 988 (9th Cir. 2001). However, "a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Ashcroft v. Iqbal. 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service. 572 F.3d 962, 969 (9th Cir. 2009) ("[F]or a complaint to survive a motion to dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief"). Ultimately, "[determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.
Unless a court converts a Rule 12(b)(6) motion into a motion for summary judgment, a court cannot consider material outside of the complaint (e.g., facts presented in briefs, affidavits, or discovery materials). In re American Cont'l Corp./Lincoln Sav. & Loan Sec. Litis.. 102 F.3d 1524, 1537 (9th Cir. 1996), rev'd on other grounds sub nom Lexecon, Inc. v. Milberg Weiss Bershad Hvnes & Lerach, 523 U.S. 26 (1998). A court may, however, consider exhibits submitted with or alleged in the complaint and matters that may be judicially noticed pursuant to Federal Rule of Evidence 201. See Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001). Where a court converts a motion to dismiss into a motion for summary judgment, "[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Fed.R.Civ.P. 12(d).
While generally a "court should 'freely give leave [to amend] when justice so requires,'" leave to amend is "properly denied" where "amendment would be futile," Cameo v. City & Cry, of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011) (quoting Fed.R.Civ.P. 15(a)(2)). Amendment would be futile if the plaintiff cannot state a cognizable claim. See Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 1034, 1041 (9th Cir. 2011) ("Although leave to amend should be given freely, a district court may dismiss without leave where a plaintiffs proposed amendments would fail to cure the pleading deficiencies and amendment would be futile.").
IV. DISCUSSION
Defendants argue that (1) plaintiff fails to state a claim for violation of the Due Process Clause with respect to FEMA's recoupment of the distributed housing assistance; and (2) the Treasury is not a property party to this action. The Court addresses each in turn.
A. Failure to State a Claim for a Violation of the Due Process Clause
The Fifth Amendment to the United States Constitution states that "no person shall ... be deprived of life, liberty, or property, without due process of law." U.S. Const, amend. V. "To be entitled to procedural due process, a party must show a liberty or property interest in the benefit for which protection is sought." Buckingham v. Sec'y of U.S. Dep't of Agric, 603 F.3d 1073, 1081 (9th Cir. 2010). The inquiry is two-fold: first, a plaintiff must establish a protected property interest by alleging a "legitimate claim of entitlement," and not just a "unilateral expectation." Bd. of Regents v. Roth, 408 U.S. 564, 577 (1972). Second, once a protected property interest has been established, the plaintiff must show that the denial or deprivation of that interest did not comport with due process. Logan v. Zimmerman Brush Co.. 455 U.S. 422, 428 (1982).
1. Whether plaintiff has a protected property interest in FEMA's disaster assistance
Defendants argue that plaintiff does not have a protected property interest in FEMA's disaster assistance. Defendants cite to several out-of-circuit cases in support of their contention "persons receiving benefits distributed by FEMA under the Stafford Act do not have a protected property interest in those benefits because they are not entitled to them." Mot. at 6-7 (citations omitted). Defendants argue that FEMA housing assistance, which is a "one-time discretionary award," is distinguishable from the "continued receipt of social security disability benefits and welfare benefits" which the Supreme Court found to give rise to a protected property interest in cases such as Mathews v. Eldridge and Goldberg v. Kelly. Id. at 7-8 (citing 424 U.S. 319 (1976); 397 U.S. 254 (1970)). Rather, defendants emphasize that "a benefit is not a protected entitlement if officials have discretion to grant or deny it.") Id. at 6 (quoting Town of Castle Rock, Colo, v. Gonzales, 545 U.S. 748, 748 (2005)).
In opposition, plaintiff argues that he "has a legitimate interest of entitlement to the property to be protected by the Fifth Amendment of the U.S. Constitution," citing the Supreme Court's opinion in Goldberg which recognized a protected property interest in the receipt of welfare benefits. Opp. at 2 (citing 397 U.S. at 262). Additionally, plaintiff cites to Ass'n of Cmtv. Orgs, for Reform NOW, Inc. v. FEMA, where a district court in the District of Columbia granted a preliminary injunction after finding that recipients of FEMA disaster relief had established a likelihood of succeeding on a procedural due process claim. Id. at 3 (citing 463 F.Supp.2d 26 (D.D.C. 2006)).
In reply, defendants argue that plaintiffs cited authorities do not support the finding of a protectable property interest in the housing assistance. Defendants reiterate their argument that Goldberg is distinguishable, because the continuing welfare benefits in Goldberg were a "matter of statutory entitlement," whereas plaintiffs one-time housing assistance here derives from "implementing regulations [that] are written in entirely permissive terms." Reply at 2-3 (citing Ridgely v. FEMA, 512 F.3d 727, 736 (5th Cir. 2008)). Additionally, defendants note that the preliminary injunction granted by the district court in ACORN v. FEMA was overturned on appeal, with the D.C. Circuit expressing "doubt [that] plaintiff-appellees are likely to succeed on their claim that they have a property right to benefits" under the Stafford Act. Id. at 3 (quoting 2007 U.S. App. LEXIS 929 (D.C. Cir. Jan. 16, 2007) at* 1).
The Court concludes that there is not a protected property interest in the housing assistance. To start, the Court has considered plaintiffs cited authorities and agrees with defendants that they do not properly support the finding of a property interest in this case. The district court's grant of a preliminary injunction in ACORN v. FEMA was "effectively[] overturned." Santos v. Fed. Emergency Mgmt. Agency, 327 F.Supp.3d 328, 337 (D. Mass. 2018) (noting that the subsequent vacating of the preliminary injunction in ACORN "undermines reliance" on the district court order granting the injunction). Moreover, in Goldberg, the fact that the welfare benefits were a protected property status was not in dispute in the litigation, as the Supreme Court noted that "such benefits are a matter of statutory entitlement for persons qualified to receive them." 397 U.S. at 261. Distinguishing benefits that are a "matter of statutory entitlement," the Supreme Court has also explained that "[o]ur cases recognize that a benefit is not a protected entitlement if government officials may grant or deny it in their discretion." Castle Rock. 545 U.S. at 756.
Defendants' cited authorities have addressed different types of Section 408 assistance administered by FEMA, none of which have found a protected property interest in the various categories of disaster relief. In Ridgley v. FEMA, the Fifth Circuit vacated the grant of a preliminary injunction granted by the district court. The Fifth Circuit explained that because Section 408 "contains only a permissive grant of authority to FEMA," "an individual has no right to receive rental assistance, even if assistance is being offered and he meets the eligibility criteria." 512 F.3d at 736. In Pride v. FEMA. a court in the Southern District of Mississippi relied on Ridgley's holding to similarly find that the discretionary aspects of Section 408 's direct housing benefits did not create a protected properly interest for the purpose of the Due Process Clause. No. 1:11CV22-HSO-JMR, 2013 WL 6048153, at *4 (S.D.Miss. Nov. 15, 2013). Similarly, in Carrawav v. U.S. ex rel. FEMA. a court in the Western District of Louisiana dismissed claims brought against FEMA because the agency had only awarded $300 in emergency relief after determining that the claimed damages pre-dated and were not attributable to Hurricane Gustav. No. CIV.A. 09-1526, 2010 WL 2737161, at *4 (W.D. La. July 9, 2010). The court concluded that granting leave to amend to add a procedural due process claim would be futile because "the language of the Stafford Act, the FTCA and applicable regulations is permissive and does not create a property interest in favor of plaintiff sufficient to support Due Process considerations." Id. at *5.
While none of defendants' cases are binding precedent on this Court, they nonetheless persuade the Court's conclusion that there is not a protected property interest in the housing assistance FEMA provided to plaintiff. Moreover, this conclusion is consistent with this Court's prior order concluding that "FEMA's determination of housing assistance eligibility for plaintiff and subsequent recoupment are discretionary acts." Dkt. 39 at 8. As noted in the Court's prior order and as set forth above, FEMA's discretionary ability to grant housing assistance is subject to the condition that an applicant properly meets the eligibility criteria: here, that the residence is the applicant's primary residence. 42 U.S.C. § 5174(b)(1). FEMA cannot grant housing assistance for what is not an applicant's primary residence, and it has an obligation to monitor for instances of fraud and misrepresentation. 44 C.F.R. § 206.113. The grant of housing assistance is also conditioned upon a potential recoupment by FEMA within the general three year statute of limitations period, or at any time when there is evidence of fraud. 42 U.S.C. § 5174a(b)(1). Crucially, the implementing regulation specifically notes that '[a]n applicant must return funds to FEMA . . . when FEMA . .. determines that the assistance was provided erroneously, that the applicant spent the funds inappropriately, or that the applicant obtained the assistance through fraudulent means." 44 C.F.R. § 206.116(b) (emphasis added).
Here, there is no mandatory language within the relevant provisions to establish a "matter of statutory entitlement" for plaintiff to expect to receive and retain the housing assistance for which he applied. Instead, all of the relevant provisions clearly give FEMA discretion when and how much assistance to award qualifying applicants, and at the same time prohibit FEMA from distributing assistance when an application in ineligible. The provisions also put applicants on notice that they are obligated to "return funds to FEMA . . . when FEMA . . . determines that the assistance was provided erroneously, that the applicant spent the funds inappropriately, or that the applicant obtained the assistance through fraudulent means." Id.
On this basis, the Court concludes that the Stafford Act and its implementing regulations do not create a protected property interest in the emergency housing assistance.
2. Whether FEMA's recoupment procedure provided plaintiff with sufficient due process
As a threshold matter, for the reasons set forth above, plaintiff did not have a protected property interest in the housing assistance, so no process was due. See Buckingham, 603 F.3d at 1081. However, assuming arguendo plaintiff had a protected property interest, the Court concludes that FEMA provided constitutionally sufficient process.
"The base requirement of the Due Process Clause is that a person deprived of property be given an opportunity to be heard 'at a meaningful time and in a meaningful manner.'" Brewster v. Bd. of Educ. of Lvnwood Unified Sch. Dist.. 149 F.3d 971, 984 (9th Cir. 1998) (quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965)). "Procedural due process does not require that the notice and opportunity to be heard occur before the deprivation." Buckingham, 603 F.3d at 1082. Notice and hearing "can take place through a combination of pre- and post-deprivation procedures" Id. Furthermore, due process does not necessarily require an "adversarial hearing" a "full evidentiary hearing" or even a "formal hearing"-instead, "[t]he opportunity for informal consultation with designated personnel empowered to correct a mistaken determination constitutes a 'due process hearing' in appropriate circumstances." Id. at 1082-83 (quoting Memphis Light, Gas, & Water Div. v. Craft, 436 U.S. 1, 16 n. 17 (1978)).
Here, defendants contend that "[t]his Court does not need to determine precisely which procedures might be constitutionally required in FEMA's recoupment proceedings because the agency's existing process is sufficient, and there is no protected property interest for disaster relief funds by which process is due." Mot. at 8. Specifically, defendants argue that FEMA's recoupment procedure followed its promulgated regulations: FEMA sent notice by mail to plaintiff of its initial determination of fraud and notified him that he could appeal this determination. Subsequently, plaintiff filed an appeal with FEMA that the agency reviewed in full, but FEMA determined that its initial determination was correct. FEMA informed plaintiff of its final decision on December 16, 2020, at which time FEMA's letter notifying plaintiff "also contained contact information to be used in the event of any questions." Id. at 9. According to defendants, plaintiff "remained in communication with FEMA by telephone and mail to request documentation related to the recoupment, which FEMA provided." Finally, defendants contend that FEMA mailed plaintiff a letter on March 22, 2021, notifying him of his ability to request a debt waiver. Id.
In opposition, plaintiff argues that FEMA did not follow the appropriate statutory and regulatory requirements for the recoupment process. Plaintiff acknowledges that FEMA notified him of its fraud determination and his ability to appeal that determination in October 2020. Plaintiff also acknowledges that he pursued the appeal process and that FEMA formally reviewed and denied his appeal in December 2020. See SAC at p. 7. However, plaintiff argues that, notwithstanding these notifications and the appeal process he was given, FEMA's communications were nonetheless constitutionally deficient because they did not notify him of his ability to seek a debt waiver until a letter mailed in March 2021. Specifically, plaintiff argues that "Sections 1216(a) and 1216(b) [of the Disaster Recovery Reform Act of 2018] are mandatory orders requiring FEMA to give notice" of the debt waiver at the specific time that FEMA notified him of its initial determination in October 2020. Additionally, while defendants argue that they mailed him such a notice in a letter sent by FEMA on March 22, 2021, plaintiff argues that he did not receive the letter because he no longer used the New Mexico mailing address to which the letter was sent.
In reply, defendants reiterate their contentions that FEMA both followed the legal requirements to recoup the housing assistance, and that the process was procedurally appropriate. Specifically, defendants argue that no statute or regulation mandated that FEMA mail plaintiff notice of the debt waiver when it first sent him its intention to recoup the funds in March 2021. Reply at 4. Instead, defendants argue that it was sufficient that FEMA sent him notice of the debt waiver in the letter mailed in March 2021. Id. Finally, defendants argue that plaintiff was not even eligible to receive the debt waiver, because FEMA "may not waive a debt under [the Stafford Act] if the debt involves fraud, the presentation of a false claim, or misrepresentation by the debtor." 42 U.S.C. § 5174(a)(2)(B).
First, the Court finds that FEMA followed the applicable regulations for the recoupment process. Crucially, plaintiff received notice of his right to appeal FEMA's fraud determination, he chose to appeal, and FEMA duly considered his appeal. Plaintiffs SAC acknowledges that this appeal process occurred. See generally Dkt. 33-1 at 26-28; SAC at p. 7; 44 C.F.R. § 206.115 (setting forth appeal requirements). Additionally, as described above, "[t]he opportunity for informal consultation with designated personnel empowered to correct a mistaken determination constitutes a 'due process hearing' in appropriate circumstances." Buckingham. 603 F.3d at 1082-83. In light of the foregoing, plaintiff fails to adequately allege that his appeal did not comport with due process.
At oral argument, plaintiff reiterated his contention that FEMA did not comply with the statute of limitations and thereby violated his right to due process. However, as set forth above, the Stafford Act provides a statute of limitations of 3 years for the recoupment of distributed emergency assistance. No later than 3 years after the emergency assistance is granted, FEMA must "provide to the recipient written notification of an intent to recoup." 42 U.S.C. § 5174a(b)(1). It is undisputed that FEMA provided written notification of its intent to recoup within the statute of limitation period and that plaintiff received this notification. The statute of limitations does not require anything further to take place within that period, such as any potential appeal or final agency determination. Moreover, the statute of limitations is expressly waived if "there is evidence of civil or criminal fraud," and FEMA can accordingly seek to recoup funds under those circumstances at any point. Id. Here, FEMA determined that plaintiff made fraudulent misrepresentations in his application, so the statute of limitations would not have barred FEMA's ability to recoup in this case.
Instead, plaintiff raises several, hyper-technical arguments relating to perceived notice requirements, but they fail for the following reasons. First, plaintiff claims that FEMA was statutorily required to provide notice of his right to seek a debt waiver during his appeal of FEMA's fraud determination. Specifically, plaintiff appears to claim that FEMA was required to provide such notice at the specific time it first notified plaintiff of its fraud determination. However, the statutory provisions cited by plaintiff in no way require mandatory notice of ability to apply for a debt waiver, let alone that it must have been done at the time specified by plaintiff. See generally 42 U.S.C. § 5174a(c) (establishing statute of limitations but not providing any specific notice requirements).
Moreover, FEMA did mail plaintiff a letter explaining the process to apply for a waiver, after it had reviewed plaintiffs appeal and made a final determination. Plaintiff argues that this letter was constitutionally deficient on the basis that he longer used the New Mexico mailing address to which the March 2021 was delivered. However, plaintiff had previously mailed correspondence to FEMA from the same New Mexico address, including as late as January 2021. See, e.g., Dkt. 33-1 at 46-59. It appears that plaintiff did not notify FEMA of his change of address, so FEMA continued to use the same mailing address it had used three months earlier. Moreover, defendants note that FEMA and plaintiff had also communicated telephonically throughout the appeals process, again as late as January 2021. See id. at 59 (letter from plaintiff describing his January 14, 2021 phone call with a FEMA agent). Under these circumstances, plaintiffs argument that it was constitutionally deficient for FEMA to have mailed the March 2021 letter to the New Mexico address is unavailing. See, e.g.. Konashenko v. Fed. Emergency Mgmt. Agency, No. 12-CV-3034 SJF WDW, 2014 WL 1761346, at *9 (E.D.N.Y. Apr. 29. 2014) (explaining that because the plaintiff "clearly was aware of the appeals process and how to pursue an appeal," "the procedural flaws, as alleged, do not rise to the level of constitutional inadequacy necessary to a colorable procedural due process claim").
Finally, as defendants note, plaintiff would not have even been eligible for such a debt waiver. Typically, FEMA "shall. . . waive a debt owed to the United States related to covered assistance provided to an individual or household if the covered assistance was distributed based on an error by the Agency and such debt shall be construed as a hardship." 42 U.S.C. § 5174a(a)(2). However, FEMA "may not waive a debt. . . if the debt involves fraud, the presentation of a false claim, or misrepresentation by the debtor or any party having an interest in the claim." Id. Here, upon conclusion of plaintiff s appeal, FEMA made a "final" determination that plaintiffs application contained a misrepresentation. 44 C.F.R. § 206.115. Accordingly, plaintiff is ineligible for the debt waiver.
Ultimately, defendants argue that "[p]laintiff has had the opportunity to make his arguments, and he has made them. They were denied, not because he had no opportunity to be heard, but because his arguments were defective." Mot. at 10. In light of the applicable law, the Court agrees with defendants that plaintiff has not been denied the opportunity to be heard and concludes that the SAC must be dismissed.
B. Failure to State a Claim Against the Treasury
Defendants also move to dismiss plaintiffs claim to the extent it is brought against the Treasury. Although, as noted above, the Court dismisses plaintiffs SAC in its entirety, the Court finds it appropriate to address the arguments relating specifically to the Treasury.
Defendants argue that the Treasury is not a proper party to the litigation. Specifically, defendants note that the Treasury's role here is limited to administering the federal debt offset program, which requires a federal agency creditor to refer delinquent debts to Treasury for collection and offsets. As part of this process, defendants explain, "the creditor agency must certify to Treasury that the debt is eligible for collection by offset and that all due process protections have been met." Mot. at 10. Once the debt is certified, the Treasury has a "mandatory, non-discretionary" obligation to carry out the offset. Id. at 10-11. In support of this argument, defendants cite to several cases in which courts have dismissed claims against the Treasury relating to its administrative offset activities. Id. see, e.g.. Phillips v. Social Sec. Admin., No. 1:18-CV-324, 2019 WL 1438296, at *4 (N.D. Ind. Mar. 29, 2019) (explaining that any dispute of a debt subject to the Treasury Offset Program must be directed "to the agency to which [the plaintiff] owes the debt").
Notably, plaintiffs opposition does not address whether the Treasury should be considered a proper party to this action, which defendants assert constitutes a waiver to their argument. See Reply at 5 (citing Thompson v. Ferrso. No. CV 20-8241-SVW (KS), 2021 WL 4456963, at *9 (CD. Cal. May 26, 2021) (holding that the plaintiffs Fourth Amendment claims against the defendant were waived where they were not addressed in its opposition papers.)).
The Court concludes that the Treasury is not a proper party to this action. As defendants note, federal courts have routinely dismissed constitutional and statutory claims brought against the Treasury when its only role alleged in a lawsuit relates to debt offset collection, because "[i]f a plaintiff disputes the outstanding debt, he must proceed against the agency to which he owes the debt." Chambers v. Berrvhill, No. 3:19-CV-1062-K-BH, 2020 WL 5099829, at *11 (N.D. Tex. Aug. 12, 2020), report and recommendation adopted sub nom. Chambers v. Soc. Sec. Admin., No. 3:19-CV-1062-K-BH, 2020 WL 5094684 (N.D. Tex. Aug. 29, 2020); see also Johnson v. U.S. Dep't of Treasury. 300 Fed.Appx. 860, 862-63 (11th Cir. 2008) ("[I]t is the creditor agency, not the disbursing agency, that is required to ensure that the debtor receives due process under the law.").
C. Leave to Amend
As described above, while generally a "court should 'freely give leave [to amend] when justice so requires,'" leave to amend is "properly denied" where "amendment would be futile." Cameo, 656 F.3d at 1008 (quoting Fed.R.Civ.P. 15(a)(2)). Amendment would be futile if the plaintiff cannot state a cognizable claim.
The Court finds that amendment would be futile in this case. Plaintiff has already filed three complaints in this case, which have contained a variety of statutory and constitutional claims. Moreover, plaintiff has not identified any possible amendments he could make that would not be futile. "A district court may dismiss without leave where a ] amendments would fail to cure the pleading deficiencies." Cervantes v. Countrywide Home Loans. 656 F.3d at 1041; see also Price v. Peerson. No. CV133390PSGJEMX, 2014 WL 12579823, at *4 (CD. Cal. May 15, 2014), affd. 643 Fed.Appx. 637 (9th Cir. 2016) ("[P]ro se attorneys . . . cannot claim the special consideration which the courts customarily grant to pro se parties.").
V. CONCLUSION
In accordance with the foregoing, the Court GRANTS defendants' motion to dismiss plaintiffs second amended complaint with prejudice.
IT IS SO ORDERED.