UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
CAPITAL HILL DEVELOPMENT, LLC,
Plaintiff,
v. Civil Action No. 1:24-cv-3353 (CJN)
COHN, GOLDBERG, & DEUTSCH, LLC, et al.,
Defendants.
MEMORANDUM OPINION
Capital Hill Development, LLC, a real estate holdings company, intended to place a bid at
the foreclosure sale of a residential property that was subject to a defaulted-on mortgage loan from
the U.S. Department of Housing and Urban Development. But when Capital Hill Development
arrived at the auction, it was not permitted to bid because its certified check—although conforming
to the format that the HUD-appointed foreclosure commissioner had allegedly supplied that
morning—did not in fact comply with HUD’s regulations. Capital Hill Development subsequently
sued both the foreclosure commissioner and the auctioneer in D.C. Superior Court on tort claims
brought under District of Columbia law. The foreclosure commissioner removed the case here
and moved to dismiss, while Capital Hill Development moved to remand. For the reasons below,
the Court will deny the motion to remand and grant the motion to dismiss.
I. Background
A. Factual Background
The Secretary of Housing and Urban Development possesses statutory authority to
“designate a person . . . to serve as a foreclosure commissioner . . . for the purpose of foreclosing
1 upon a single family mortgage” on HUD’s behalf. 12 U.S.C. § 3754(a). Once designated, “[a]
foreclosure commissioner . . . shall have a nonjudicial power of sale” as to the property in question.
Id. § 3754(b).
In July 2024, the Secretary designated Defendant Cohn, Goldberg, & Deutsch, LLC
(CGD), a Maryland-incorporated law firm, as the foreclosure commissioner for a HUD-loan-
encumbered property located at 206 10th St. NE, Washington, D.C. ECF No. 2-2 (Compl.) ¶¶ 3,
5; ECF No. 2 (NOR) ¶ 2; ECF No. 2-1. CGD’s appointment letter (which was sent by a HUD
contractor) informed it that the “Single Family foreclosure[]” in question was “to be handled
pursuant to Section 805 of the Single Family Mortgage Foreclosure Act of 1994, 12 U.S.C. § 3751,
et seq.” ECF No. 2-1 at 1. Among other relevant documents, such as the loan papers and deed
form, the appointment letter enclosed a list of instructions and a “Foreclosure Check Sheet (Form
HUD-92218).” Id.
The foreclosure sale was scheduled for October 18, 2024, at 11:00 a.m., with Defendant
Tidewater Auctions, LLC, a Maryland-incorporated firm, acting as the auctioneer. Compl. ¶¶ 2,
5, 8. Before the sale began, CGD and Tidewater “engaged in [a] process to qualify bidders, which
entailed verifying that all potential bidders had certified funds, via check, in the correct amount
and issued to the correct party.” Id. ¶ 6. Plaintiff Capital Hill Development, LLC, a real estate
holdings company incorporated in the District of Columbia, was among that group of potential
bidders. Id. ¶¶ 1, 7.
Capital Hill Development alleges that, in anticipation of the qualification process, it
contacted a CGD representative just after 9:00 a.m. on the morning of the sale to inquire “how to
make its check payable to participate in the auction.” Id. ¶¶ 10, 28. The representative allegedly
responded that Capital Hill Development would need to bring “certified funds payable to [its]
2 LLC.” Id. ¶ 9. Capital Hill Development claims that it “relied on this information and proceeded
to obtain a cashier’s check for the deposit amount of $45,000.00 made payable to [it]self.” Id. ¶
11.
When the Tidewater auctioneer “view[ed] [Capital Hill Development’s] certified funds,”
however, the auctioneer determined that Capital Hill Development was not a qualified bidder
“because [its] certified check had to [be] made payable to HUD, not [its] LLC.” Id. ¶ 8. Capital
Hill Development “asked [] Tidewater if it could endorse the cashier’s check to HUD,” but
Tidewater “refused to accept a check endorsed to HUD from [Capital Hill Development]”—as
opposed to from the bank directly. Id. ¶¶ 13–14. The result was that only one bidder was eligible
to participate in the auction, and the property was ultimately sold to that bidder for approximately
$436,000.00. 1 Id. ¶ 15.
Capital Hill Development alleges that price to be “very low” compared to the fair market
value of the property, which it estimates at $1.2M. Id. ¶¶ 15–16. Capital Hill Development further
alleges that it was “prepared to nearly double that price” in order to “secure the property in its
portfolio.” Id. ¶ 17.
B. Procedural History
Soon after the sale, Capital Hill Development sued both CGD and Tidewater in D.C.
Superior Court. See Compl. at 1, 4–8. Capital Hill Development alleged that CGD had committed
negligent and fraudulent misrepresentation (Counts 2 and 3), as well as breached its fiduciary duty
1 The “approximately $436,000.00” figure is taken from Capital Hill Development’s complaint. CGD’s briefs, by contrast, state the sales price as $465,500.00. See ECF No. 4 at 2; ECF No. 12 at 2. For present purposes, the Court assumes as true the facts alleged in the complaint. But it would resolve the pending motions in the same way regardless of which number is correct. 3 as a “trustee of the sale” (Count 1), by misinforming Capital Hill Development about how to make
payment at the auction and thereby causing it to “los[e] out on purchasing the property.” Id. ¶¶
21–23, 28–32, 37–40. Capital Hill Development further alleged that Tidewater had breached its
fiduciary duty to “conduct the auction in a manner consistent with good faith and fair dealing”
(Count 4) when it refused to “make allowances for [Capital Hill Development] to endorse [its]
check to HUD for the purpose of participating in the auction.” Id. ¶¶ 43, 45. As relief, Capital
Hill Development sought a declaratory judgment (Count 5) and an order setting aside the sale and
requiring the property to be re-auctioned, in addition to punitive damages and fees. Id. at 8. To
date, neither HUD nor the auction winner have intervened in the suit or been joined as parties.
CGD timely filed a notice of removal, citing 28 U.S.C. § 1441(a). NOR ¶¶ 5, 7; see also
28 U.S.C. § 1446(b)(1) (generally requiring notices of removal to be filed within thirty days of the
defendant’s receipt of the initial pleading). In particular, CGD contended that its “actions in this
matter were undertaken pursuant to a federal statute, 12 U.S.C. § 3751, et seq.”—the Single Family
Mortgage Foreclosure Act of 1994—“and thus this matter arises under the laws of the United
States.” NOR ¶ 6. Tidewater did not join in the notice of removal, and CGD stated that it has “no
information indicating whether or not [Tidewater] has been served process in the removed case.” 2
Id. ¶ 8.
After the case was docketed here, CGD moved to dismiss. See ECF No. 4 (MTD). Capital
Hill Development opposed that motion, see ECF No. 9 (MTD Opp.), and moved to remand. See
ECF No. 6 (MTR).
2 CGD also stated that it did not itself “admit to proper service of process.” NOR ¶ 5 n.2. 4 II. Motion to Remand
“Only state-court actions that originally could have been filed in federal court may be
removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)
(citing 28 U.S.C. § 1441(a)). Two cases fall into that category: those implicating “diversity
jurisdiction” and those implicating “federal-question jurisdiction.” See id. As discussed, CGD’s
notice of removal argued that the Court could have exercised original jurisdiction over this case
because it “arises under the laws of the United States,” as contemplated by the federal-question
jurisdiction statute, 28 U.S.C. § 1331. NOR ¶ 7. And in its brief opposing remand, CGD argued
that this case is also removable under the diversity jurisdiction statute, 28 U.S.C. § 1332(a). See
ECF No. 12 (MTR Opp.) at 5. As the removing party, CGD bears the burden of demonstrating
that one of those statutes applies and confers jurisdiction in this case. See Steele v. Salb, 681 F.
Supp. 2d 34, 36 (D.D.C. 2010).
The Court will analyze both potential bases for removal below. Before doing so, however,
it will attend briefly to a threshold issue that neither party raised. “[W]here there is more than one
defendant [in an action], it is well established that removal generally requires unanimity among
the defendants.” Williams v. Howard Univ., 984 F. Supp. 27, 29 (D.D.C. 1997) (quotation marks
omitted); see also 28 U.S.C. § 1446(b)(2)(A). “Unless all defendants express such consent to
removal in a timely manner, the removal procedure is defective.” Williams, 984 F. Supp. at 29.
Nonetheless, “[a] defect in the removal procedure does not deprive the Court of subject matter
jurisdiction, and a[ny] motion to remand for defective procedure must be made within 30 days
after the filing of the Notice of Removal.” Id. at 29–30 (citations omitted); see also 28 U.S.C.
§ 1447(c).
5 Here, although both CGD and Tidewater are defendants in this matter, Tidewater has not
made any submission that could be construed as an “independent and unambiguous consent to
removal.” Williams, 984 F. Supp. at 30. It did not sign the notice of removal, and indeed, has not
even entered an appearance. On the other hand, though, Capital Hill Development’s motion to
remand makes no mention of defendants’ failure to “express their unanimous consent to removal,”
id. at 29, and the time to make such an objection has now lapsed. See 28 U.S.C. § 1447(c). The
Court therefore will not entertain this possible procedural flaw as a reason to remand, and need not
consider whether one of the exceptions to the general unanimity rule applies here—such as one
that exempts from the consent requirement a defendant that “has not been served with the initial
pleading at the time the removal petition was filed.” Busby v. Cap. One, N.A., 932 F. Supp. 2d
114, 127 (D.D.C. 2013) (listing “[t]hree well-established exceptions” to the “rule of unanimity”);
see also Williams, 984 F. Supp. at 30 (remanding for lack of unanimity specifically “where there
ha[d] been a timely motion to remand under 28 U.S.C. § 1447(c) for defective removal
procedure”).
With this initial matter settled, the Court turns next to subject matter jurisdiction. It begins
with diversity jurisdiction—the later-asserted basis for removal on which CGD finds stronger
footing.
A. Diversity Jurisdiction
Federal district courts “have original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between
. . . citizens of different States.” 28 U.S.C. § 1332(a)(1). This case appears to be one “between . .
. citizens of different States.” Id. The complaint alleges that Capital Hill Development is
incorporated in the District of Columbia, whereas CGD (like Tidewater) is incorporated in
6 Maryland. 3 Compl. ¶¶ 1–3; see In re Lorazepam & Clorazepate Antitrust Litig., 900 F. Supp. 2d
8, 18 (D.D.C. 2012) (“For diversity jurisdiction purposes, corporations are citizens of the state or
states in which they are incorporated and the state of its principal place of business.”). And
although the papers do not expressly address where the parties’ have their principal places of
business, Capital Hill Development explicitly “does not dispute that the parties live in different
states.” 4 ECF No. 15 (MTR Reply) at 2.
Instead, Capital Hill Development argues that the amount-in-controversy requirement is
not met, because it “is not asking the court for monetary damages” equal to either the amount of
the winning bid on the property ($436,000) or the fair market value of the property ($1.2M). Id.;
Compl. ¶¶ 15–16. It is rather “seeking declaratory and injunctive relief,” in the form of an order
directing defendants to “set aside the sale . . . for 206 10th Street, NE and re-advertise [it] for sale.”
MTR Reply at 3. Accordingly, Capital Hill Development argues, “there is a ‘legal certainty’ that
[its] claim amounts to less than $75,000.” Id. at 2 (quoting Bronner v. Duggan, 962 F.3d 596, 605
(D.C. Cir. 2020)).
But diversity jurisdiction is of course not limited to suits for damages. To the contrary,
“[w]hen [declaratory or] injunctive relief is sought, the amount-in-controversy may be measured
by (1) the value of the right that the plaintiffs seek to enforce; or (2) the cost to the defendants to
remedy the alleged denial of that right.” Bronner v. Duggan, 364 F. Supp. 3d 9, 22 (D.D.C. 2019),
3 For purposes of removal, “[t]he term ‘State’ includes the District of Columbia.” 28 U.S.C. § 1451(2). 4 In theory, Capital Hill Development could have argued that either CGD or Tidewater has its principal place of business in the District of Columbia, thereby making one or the other a citizen of the District and precluding removal on this basis. See 28 U.S.C. § 1441(b)(2); see also Compl. ¶¶ 2–3 (alleging that CGD “attorneys handle matters in the District of Columbia” and that Tidewater is “licensed to do business in the District of Columbia”). But Capital Hill Development did not do so—and, as noted, did not make any allegations at all about either defendant’s “principal” place of business—so the Court will not explore this possible nuance. 7 aff’d, 962 F.3d 596 (D.C. Cir. 2020). Here, even assuming that the cost to defendants of setting
aside the sale and re-auctioning the property would not exceed $75,000, see MTR Reply at 3, the
complaint plainly alleges that the value of those events to Capital Hill Development (or, put
differently, the value it lost by not being able to participate in the auction) is far more than the
jurisdictional amount. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938)
(“[T]he sum claimed by the plaintiff controls if the claim is apparently made in good faith.”). After
all, Capital Hill Development attests that it was prepared to pay double the winning bid for the
property—i.e., $872,000. Compl. ¶¶ 15, 17. It follows that the opportunity to place a bid is worth
at least that much, and perhaps even as much as $1.2M—what it asserts is the “fair market value”
of the property. Id. ¶ 16; see also, e.g., Info. Strategies, Inc. v. Dumosch, 13 F. Supp. 3d 135, 143
(D.D.C. 2014) (analyzing value of trade secrets in order to assess value of injunction that would
prevent their disclosure). There is thus at minimum a “present probability” that the value of the
“right sought to be protected meet[s] the statutory requirement,” Gomez v. Wilson, 477 F.2d 411,
421 n.51 (D.C. Cir. 1973), and so the Court concludes that it possesses diversity jurisdiction over
this case (and thus that removal was proper).
B. Federal-Question Jurisdiction
Federal courts also have original jurisdiction over cases “arising under the . . . laws . . . of
the United States.” 28 U.S.C. § 1331. “The ‘vast majority’ of the cases that arise under federal
law are those where the cause of action is actually created by federal law.” Bhagwanani v. Howard
Univ., 355 F. Supp. 2d 294, 298 (D.D.C. 2005) (quoting Merrell Dow Pharms. Inc. v. Thompson,
478 U.S. 804, 808 (1986)). This case surely does not belong to that predominating set, because
Capital Hill Development asserts only common law tort claims under District of Columbia law.
See Compl at 4–8.
8 There is, however, “a special and small category of cases in which arising under
jurisdiction still lies,” “even where a claim finds its origins in state rather than federal law.” Gunn
v. Minton, 568 U.S. 251, 258 (2013) (quotation marks omitted). That is so when a state-law claim
“necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum
may entertain without disturbing any congressionally approved balance of federal and state judicial
responsibilities.” Id. But the Supreme Court has construed this category narrowly, declining to
find its so-called “Grable exception” satisfied where the federal issue lacks “significan[ce] to the
federal system as a whole,” id. at 264, or is otherwise “fact-bound and situation-specific.” Empire
Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 701 (2006). And lower courts have followed
suit, confining the category “to those rare state-law claims posing a context-free inquiry into the
meaning of federal law.” Flavell v. Int’l Bank for Reconstruction & Dev., 2021 WL 1146301, at
*7 (D.D.C. 2021).
Capital Hill Development has not brought those rare claims here. To start, it is not
imminently clear whether any federal question is “necessary to” or “actually disputed” in this case.
Gunn, 568 U.S. at 259. CGD argues that whether it breached a fiduciary duty or made a materially
false statement will turn on “whether it followed the rules and regulations outlined by the [Single
Family Mortgage Foreclosure Act of 1994, 12 U.S.C. § 3751, et seq.],” which outlines the “terms”
of any HUD foreclosure sale. MTR Opp. at 4–5. But that assertion is difficult to assess: CGD
does not specifically reference any of those terms, and the sole statutory provision to which it cites
contains only the findings and purpose of the Foreclosure Act. See id.; 12 U.S.C. § 3751.
Moreover, CGD appears to admit that either the Act or its implementing regulations require
prospective purchasers to proffer checks made out to HUD in order to qualify for the auction—the
single fact Capital Hill Development alleges CGD misrepresented. See MTD at 2, 7; MTR Opp.
9 at 3 (“Due to Plaintiff’s non-compliance with the HUD regulations, Plaintiff was prevented from
bidding at the foreclosure sale.”). It thus is not clear—at least without further explanation from
CGD—what daylight exists between the parties on this purported federal interpretive “issue.” Cf.
Gunn, 568 U.S. at 259.
CGD fares no better in arguing that whether it owed Capital Hill Development a fiduciary
duty in the first place “explicitly turn[s] on” the Foreclosure Act. MTR Opp. at 5. Again, CGD
offers little explanation on this point, beyond simply stating that its work entailed “acting as an
agent of HUD under federal law.”5 Id. And CGD overlooks that District of Columbia law provides
its own guidance about when a fiduciary relationship has been created. See, e.g., Paul v. Jud.
Watch, Inc., 543 F. Supp. 2d 1, 6 (D.D.C. 2008). It simply is not discernible from CGD’s brief
how federal law would necessarily resolve or even bear on this element of Capital Hill
Development’s claim.
But even assuming the vague “federal issues” CGD flags are necessary and disputed, they
are “not substantial in the relevant sense” because they are of limited “importance . . . to the federal
system as a whole.” Gunn, 568 U.S. at 260. At most, this case presents a question about what
steps federal law requires of foreclosure commissioners conducting non-judicial foreclosures.
Even if the case indeed presents that question, it does so in a manner that is unduly “fact-bound
5 CGD makes a few statements in its brief, this one included, that could be construed as invoking the federal officer removal statute—a separate removal hook that government contractors may utilize in certain circumstances. See Kormendi/Gardner Partners v. Surplus Acquisition Venture, LLC, 606 F. Supp. 2d 114, 119 (D.D.C. 2009) (describing the “three-part showing” required for a contractor to effect removal under that statute) (citing 28 U.S.C. § 1442(a)(1)); see also MTR Opp. at 4 (“[W]hen executing the non-judicial foreclosure sale, CGD was effectively acting as HUD.”). But it is the contractor’s burden to show that the elements required for federal officer removal are met, see Kormendi/Gardner, 606 F. Supp. 2d at 119, and CGD’s passing references to its claimed status as an agent of HUD (unaccompanied by any citation to the statute itself) do not accomplish that.
10 and situation-specific.” Empire, 547 U.S. at 701. After all, the crux of the controversy here
appears to be about whether CGD’s statements in a single conversation were consistent with
federal requirements (and relatedly, with CGD’s written statements in a similar time frame). See
Compl. ¶¶ 12, 18, 38. That is far from the kind of “pure issue of law” the Supreme Court has
deemed substantial enough to warrant federal jurisdiction under Grable. Empire, 547 U.S. at 700.
There is no indication, for instance, that resolution of this narrow question could “thereafter . . .
govern numerous [HUD-foreclosure] cases.” 6 Id. at 687–88, 700 (reimbursement suit by
federally-contracted health insurer was not susceptible to federal jurisdiction where the “bottom-
line practical issue [wa]s the share of [a] settlement properly payable to [the insurer]”).
CGD emphasizes that the relief Capital Hill Development seeks in this case is the “set
aside” of a “federal foreclosure sale,” MTR Opp. at 4, suggesting that the federal government has
a “direct interest in the availability of a federal forum to vindicate its own administrative action.”
Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 315 (2005). But there is
no question here of the government’s authority to foreclose; there is only a question as to whether
its contractor, CGD, followed proper procedures when assisting with the foreclosure. Cf. id. at
311, 315–16 (exercising jurisdiction over quiet title suit where plaintiff alleged that the purchaser’s
“record title was invalid because the IRS had failed to notify [plaintiff] of its seizure of the property
in the exact manner required by [federal law]”). CGD cites no authority for the proposition that,
6 CGD’s notice of removal and brief opposing remand can also be read as suggesting that removal is appropriate because compliance with federal law insulates CGD (and foreclosure commissioners generally) from state tort liability for actions taken in the course of conducting a non-judicial foreclosure. See NOR ¶ 6; MTR Opp. at 4. But that argument is “properly understood as an assertion of a federal preemption defense, which cannot serve as the basis for federal subject- matter jurisdiction.” D.C. v. Elevate Credit, Inc., 554 F. Supp. 3d 125, 145–46 (D.D.C. 2021) (declining to exercise jurisdiction on the basis of defendant’s argument that “federal regulation[s] permit[ted] the conduct that the District allege[d] [the defendant] undertook in violation of the District’s laws.”). 11 where a case turns essentially on factual questions, a plaintiff’s requested remedy alone can confer
federal jurisdiction. See, e.g., D.C. v. Elevate Credit, Inc., 554 F. Supp. 3d 125, 146 (D.D.C. 2021)
(declining to exercise jurisdiction over District of Columbia consumer law claims alleged to
implicate FDIC regulations where, like here, the “main issue” was a “substantially factual”
question as to “the identity of the true lender of [certain] loans”). For all of these reasons, and
considering its obligation to construe removal jurisdiction “strictly,” Flavell, 2021 WL 1146301,
at *3, the Court will not assert federal-question jurisdiction over Capital Hill Development’s state
law claims.
***
As set forth above, the Court has diversity jurisdiction but not federal-question jurisdiction
over this case. But one form of jurisdiction is enough, and so the Court will deny the motion to
remand.
III. Motion to Dismiss
CGD makes two overarching arguments in support of dismissal: (1) that Capital Hill
Development lacks Article III standing to bring any of its claims, and (2) that, in any event, Capital
Hill Development has not adequately pleaded the elements of those claims. See MTD at 4–8. The
Court concludes that, while Capital Hill Development does have standing to sue, it presently fails
to state any claim for relief.
A. Standing
There are three elements of constitutional standing. “First, 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. Second, there must be a causal
connection between the injury and the conduct complained of—the injury has to be fairly traceable
12 to the challenged action of the defendant, and not the result of the independent action of some third
party not before the court. Third, it must be likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560
(1992) (quotation marks, alterations, ellipses, and citations omitted). Each of these elements is
present here. 7
According to CGD’s framing of Capital Hill Development’s complaint, “the only ‘injury’
alleged to have been suffered by Plaintiff is that [it] w[as] prevented from bidding at the foreclosure
sale and thus ‘lost out on purchasing the property.’” MTD at 4 (quoting Compl. ¶ 23). That
asserted injury is “mere[ly] speculati[ve],” CGD argues, because there was another bidder present
at the sale and so Capital Hill Development may not have been able to buy the property regardless.
Id. But CGD overlooks the antecedent harm that Capital Hill Development alleges: the fact that
it was not able to bid at all. Compl. ¶ 12. It is well-established that “the denial of a business
opportunity satisfies the injury requirement,” even if it is not certain that the plaintiff would
ultimately have “succe[eded] in seeking to exploit that opportunity.” Lepelletier v. F.D.I.C., 164
F.3d 37, 42 (D.C. Cir. 1999).
7 There is tension (at least) between CGD’s decision to remove this case and its argument that Capital Hill Development lacks Article III standing, because it is the burden of the removing party to establish that the Court has subject-matter jurisdiction over the complaint and “Article III standing is a part of subject-matter jurisdiction.” Heaven v. Prime Hydration LLC, 761 F. Supp. 3d 812, 817–18 (E.D. Pa. 2025) (discussing this tension). But federal courts also are bound to “exercise the jurisdiction that is conferred upon them by Congress,” and have “no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not.” Hartig Drug Co. Inc. v. Senju Pharma. Co., 836 F.3d 261, 267 (3d Cir. 2016). Especially where Capital Hill Development does not concede that it lacks standing—as some litigants do under similar circumstances—the Court finds it appropriate to “engage in an independent analysis to determine if [it] has Article III standing to litigate [its] claim in federal court, where it now resides.” Johnson v. Patenaude & Felix, A.P.C., 2021 WL 3260064, at *3 (M.D. Pa. 2021); see also Zanotti v. Invention Submission Corp., 2020 WL 2857304, at *8 (S.D.N.Y. June 2, 2020) (conducting an “independent review” of standing where the party seeking remand did not “concede[] that jurisdiction did not exist”). 13 CGD next argues that Capital Hill Development’s inability to bid is not “fairly traceable”
to CGD, because it was Tidewater, not CGD, that finally “refused to accept a check endorsed to
HUD from Plaintiff” and disqualified Capital Hill Development from the auction. MTD at 5
(quoting Compl. ¶ 14). Taking Capital Hill Development’s allegations as true, though, the only
reason Tidewater did not accept the check was that it conformed to the incorrect format that CGD
supplied. See Compl. ¶¶ 11, 14. That kind of “but-for” causal link satisfies the traceability
requirement, even if CGD’s actions were not the “sole cause” of Capital Hill Development’s
injury. Mennonite Church USA v. U.S. Dep’t of Homeland Sec., 2025 WL 1094223, at *5 (D.D.C.
2025).
Finally, CGD contends that Capital Hill Development’s alleged injury is unlikely to be
redressed by a decision in its favor because, “[a]s a bona fide purchaser for value without notice
of any defects, the purchaser’s interest in this matter outweighs any possible interest that Plaintiff
may have.” MTD at 5. Although CGD does little to explain this point, the Court understands
CGD to be suggesting that Capital Hill Development specifically lacks standing to pursue the set
aside of the foreclosure sale because, where the purchaser allegedly has already recorded the deed
to the foreclosed-upon property, the Court either cannot or likely would not issue such drastic
relief. See id. & n.1.
It is true that “standing is not dispensed in gross,” and so “a plaintiff must demonstrate
standing for each . . . form of relief that is sought.” MSP Recovery Claims, Series LLC v. Pfizer,
Inc., 728 F. Supp. 3d 89, 99 (D.D.C. 2024). Yet, CGD’s argument regarding the redressability-
potential of the set aside remedy incorrectly conflates standing with the merits. See Est. of Boyland
v. U.S. Dep’t of Agric., 913 F.3d 117, 123 (D.C. Cir. 2019). CGD is not suggesting (nor, logically,
could it suggest) that the act of re-auctioning the property, if ordered by the Court, would not cure
14 Capital Hill Development’s asserted injury of having been unable to bid at the first auction. Nor,
as far as the Court can tell, is CGD suggesting that the Court categorically lacks power to order
that remedy. Cf. Seed v. Env’t Prot. Agency, 100 F.4th 257, 264 (D.C. Cir. 2024) (plaintiff lacked
standing where the compensatory damages she sought were unavailable as a matter of law); see,
e.g., Movahedi v. U.S. Bank, N.A., 853 F. Supp. 2d 19, 24–27 (D.D.C. 2012) (listing possible
reasons for setting aside a foreclosure sale). CGD appears instead to simply be arguing that it
would be inappropriate as a matter of equity for the Court to order that relief in this particular case.
But that is a merits question that has no bearing on Capital Hill Development’s threshold
entitlement to sue. 8
B. Failure to State a Claim
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quotation marks omitted). “The plausibility standard is not akin to a probability
requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.”
Id. (quotation marks omitted). The Court concludes that Capital Hill Development has not met
8 In addition to challenging Capital Hill Development’s constitutional standing in the ways discussed above, CGD gestures at a “prudential” standing argument in asserting that “Plaintiff further lacks standing to raise the issue of whether or not the foreclosure sale produced a reasonable price or whether it ‘sold for an unconscionably low price.’” MTD at 5 (quoting Compl. ¶ 24); id. at 3. The Court agrees that Capital Hill Development would be improperly “raising another person’s” (HUD’s or the mortgagor’s) rights if its claim of harm indeed centered on the ultimate sale price of the property. Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 126 (2014). Any such claim might also run into difficulty under the statutory presumption of fairness in the Single Family Mortgage Foreclosure Act of 1994. See 12 U.S.C. § 3760(e). But again, the Court understands Capital Hill Development to be seeking redress specifically for the injury of having been excluded from the bidding process, and to have mentioned the sale price to add color to that theory. 15 that standard as to any of its claims. It will, however, permit Capital Hill Development to replead
some in an amended complaint.
At the outset, though, the Court addresses one argument that CGD makes as to all of Capital
Hill Development’s claims. CGD points out that 12 U.S.C. § 3760, the provision of the Single
Family Mortgage Foreclosure Act of 1994 which sets out the duties of foreclosure commissioners,
provides that “[a]ny foreclosure sale held in accordance with this chapter shall be conclusively
presumed to have been conducted in a legal, fair and reasonable manner.” MTD at 4 (quoting 12
U.S.C. § 3760(e)). CGD asserts that all of Capital Hill Development’s claims must be “viewed
through the lens” of this presumption—but does not explain whether that would mean subjecting
them to some kind of heightened pleading standard, or something else. Id. Regardless, the statute
says only that a HUD “foreclosure sale” should be presumed fair, 12 U.S.C. § 3760(e), and here
Capital Hill Development’s claims concern only events that transpired before the actual sale. See
Compl. at 4–8. The Court thus will decline CGD’s invitation to factor 12 U.S.C. § 3760(e) into
its analysis of the complaint.
1. Breach of Fiduciary Duty
To plead a claim for breach of fiduciary duty under District of Columbia law, Capital Hill
Development “must allege facts sufficient to show that (1) [CGD] owed [Capital Hill
Development] a fiduciary duty; (2) [CGD] breached that duty; and (3) the breach proximately
caused an injury.” 333 8th St. NE, LLC v. Turnkey Title, LLC, 2024 WL 4625638, at *2 (D.D.C.
2024). CGD argues that Capital Hill Development’s breach of fiduciary duty claim founders on
the first element because Capital Hill Development “fails to identify any [] authority to support
the proposition th[at] CGD owed [it] a fiduciary duty as a prospective bidder at the foreclosure
sale.” MTD at 6. The Court agrees.
16 Certain relationships, such as those between doctor and patient, agent and principal, and
trustee and beneficiary, “automatically trigger fiduciary duties.” Krukas v. AARP, Inc., 458 F.
Supp. 3d 1, 7 (D.D.C. 2020). Capital Hill Development seeks to slot its relationship with CGD
into something resembling the “agency relationship” category. MTD Opp. at 3. It begins from
the premises that CGD was “acting as an agent to HUD” in its capacity as a foreclosure
commissioner; that HUD, according to Chapter 4 of the HUD Handbook, “exercises fiduciary
responsibility toward the taxpayer”; and that the managing member of Capital Hill Development
“is a taxpayer in the District of Columbia” who “sought to purchase a property that was originally
purchased using a HUD product.” Id. at 2–3. Capital Hill Development argues that putting these
pieces together reveals that CGD—as an agent of HUD—owed it a fiduciary duty vis-à-vis the
foreclosure sale. Id. at 3.
That conception of fiduciary duty is far too broad to be tenable. To start, the provision of
the HUD Handbook to which Capital Hill Development cites is extremely general: it describes
HUD’s “mission” to “help provide and preserve an adequate supply of affordable housing” by
“minimizing losses in the multifamily insured loan and property disposition programs, []
maximizing collections, [] enforcing statutes and regulations, and [] allocating, administering and
monitoring subsidy-based programs in a cost-effective manner.” HUD Handbook 4350.4,
Section 4-1. That kind of programmatic language does not create a relationship between HUD
and the American taxpayers that is somehow akin to the relationship between a trustee and his
beneficiary.
More importantly, though, Capital Hill Development is mistaken in suggesting that,
whenever an agency relationship is formed, the agent necessarily acquires the fiduciary duties held
by its principal. To be sure, an agent owes a fiduciary duty to its principal, and must “act with [its]
17 interests in mind.” High v. McLean Fin. Corp., 659 F. Supp. 1561, 1568 (D.D.C. 1987). But that
does not as a matter of course entail the agent’s stepping into the principal’s shoes—just the same
as, when a doctor hires a lawyer, the lawyer does not suddenly enter a fiduciary relationship with
that doctor’s patients. Nonetheless, that is the far-reaching import of Capital Hill Development’s
argument.
Capital Hill Development’s theory of fiduciary duty also runs into an additional roadblock.
As CGD points out, foreclosure commissioners are required by statute to “conduct [] foreclosure
sale[s] in accordance with the provisions of [the Single Family Mortgage Foreclosure Act of 1994]
and in a manner fair to both the mortgagor and the [HUD] Secretary.” 12 U.S.C. § 3760(b)(1)(A).
And under District of Columbia law, the general rule in the analogous real estate context is that
“broker[s] must act for the exclusive benefit of the principal and for that principal only.” Urb.
Invs., Inc. v. Branham, 464 A.2d 93, 97 (D.C. 1983). Capital Hill Development has not alleged
any facts to suggest the existence of a “special confidential relationship” between itself and CGD
that could overcome the basic principle that “a broker [] may not serve both parties to a
transaction”—here, HUD and the mortgagor on one side, and prospective buyers like Capital Hill
Development on the other. Id. at 96.
In sum, Capital Hill Development has not demonstrated that its relationship with CGD is
one that would traditionally give rise to a fiduciary duty—and indeed, it is one that traditionally
does not do so. See id. Nor, as just mentioned, has Capital Hill Development pleaded any facts to
show that, under the circumstances, “the parties extended their relationship beyond the limits of
contractual obligations or ordinary business relations to a relationship founded upon trust and
confidence.” Krukas, 458 F. Supp. 3d at 8 (quotation marks omitted). At bottom, Capital Hill
Development’s interactions with CGD—which seemingly consisted of a single phone call—were
18 “simply too fleeting and too superficial to give rise to a fiduciary duty.” Steele v. Isikoff, 130 F.
Supp. 2d 23, 37 (D.D.C. 2000) (dismissing breach of fiduciary claim brought by source against
reporter where “their contact was limited to several short telephone calls and one face-to-face
meeting”). Because the parties’ relationship “lacks the traditional earmarks of a fiduciary
relationship,” Hopper v. Fin. Mgmt. Sys., Inc., 1997 WL 31101, at *6 (D.D.C. 1997), and because
the Court sees no indication that additional facts could put those earmarks in place, the Court will
dismiss this claim with prejudice.
2. Fraudulent Misrepresentation
“To successfully assert a claim for fraudulent misrepresentation . . . under District of
Columbia law, a plaintiff must prove (1) a false representation, (2) in reference to a material fact,
(3) made with knowledge of its falsity, (4) with the intent to deceive, and (5) action taken [by the
plaintiff] . . . in reliance upon the representation, (6) which consequently resulted in provable
damages.” Jacobson v. Hofgard, 168 F. Supp. 3d 187, 195 (D.D.C. 2016) (quotation marks
omitted). Importantly, “Federal Rule of Civil Procedure 9(b) requires a claim of fraudulent
misrepresentation to be pled with particularity,” which means that a plaintiff must state “the time,
place, and content of the false misrepresentations, the fact misrepresented, and what was retained
or given up as a consequence of the fraud, as well as the individuals allegedly involved in the
fraud.” Id.
Capital Hill Development’s fraudulent misrepresentation claim is inadequate as currently
pleaded, for several reasons. To start, Capital Hill Development’s complaint does not “state with
particularity the circumstances [allegedly] constituting fraud.” Fed. R. Civ. P. 9(b). Although
Capital Hill Development alleges that it “specifically request[ed] [that CGD explain] how to make
its check payable to participate in the auction,” and that CGD “told [Capital Hill Development] to
19 make the check payable to itself,” Capital Hill Development does not describe in any detail how
it framed its question or how CGD framed its response. Compl. ¶¶ 10, 28, 30. Indeed, while the
complaint implies that the conversation occurred over a phone call, it never actually says so
explicitly. Nor does Capital Hill Development offer the identity of its managing member—the
individual whom it claims reached out to CGD—or even attempt to identify the CGD
representative with whom its managing member allegedly spoke. Id. ¶¶ 9–13. These omissions
presently prevent CGD from formulating an adequate response to the complaint. See, e.g., Alemu
v. Dep’t of For-Hire Vehicles, 327 F. Supp. 3d 29, 46 (D.D.C. 2018) (dismissing fraudulent
misrepresentation claim where plaintiffs did not “identify one specific official” who made the
misrepresentations in question).
Capital Hill Development also fails to plausibly allege that CGD acted with an “intent to
deceive.” Jacobson, 168 F. Supp. 3d at 195. There is no requirement that intent be pleaded with
specificity, see Fed. R. Civ. P. 9(b), but here Capital Hill Development’s complaint contains no
facts to indicate that CGD had the requisite degree of scienter. See Compl. ¶¶ 35–40. Capital Hill
Development’s conclusory assertion in its opposition brief that CGD “knowingly gave [it] the
wrong terms such that [it] could not bid” is plainly insufficient. MTD Opp. at 6; see Arbitraje
Casa de Cambio, S.A. de C.V. v. U.S. Postal Serv., 297 F. Supp. 2d 165, 170 (D.D.C. 2003) (“It is
axiomatic that a complaint may not be amended by the briefs in opposition to a motion to
dismiss.”).
Still, despite all these flaws, it is not clear to the Court that Capital Hill Development could
never plead it adequately. And “[o]rdinarily, when a court grants dismissal under Rule 9(b), it
provides the claimant leave to amend the pleading to achieve the particularity required by Rule
9(b) and in accordance with Rule 15(a).” Anderson v. USAA Cas. Ins. Co., 221 F.R.D. 250, 255
20 (D.D.C. 2004). The Court will therefore dismiss this claim without prejudice and permit Capital
Hill Development to file an amended complaint.
3. Negligent Misrepresentation
“Under District of Columbia law, the elements of a negligent misrepresentation claim are
the same as those of a fraudulent misrepresentation claim, except a negligent misrepresentation
claim does not include the state of mind requirements of fraud”—i.e., the defendant’s knowledge
of falsity and intent to deceive. Jacobson, 168 F. Supp. 3d at 206 (quotation marks omitted).
“And, like claims for fraudulent misrepresentation, Rule 9(b)’s particularity requirements apply to
claims for negligent misrepresentation.” Id. Thus, while Capital Hill Development’s negligent
misrepresentation claim does not suffer from a failure to adequately allege scienter, it does suffer
from all the other infirmities described above: namely, the omission of specific details regarding
the circumstances of CGD’s supposed misrepresentation and the identities of the parties involved.
CGD also argues for dismissal of this claim on the basis that it was unreasonable for Capital
Hill Development to rely on a contrary oral statement by CGD where “the foreclosure sale
advertisement contained the specific requirement that prospective bidders must bring checks
payable to the HUD Secretary.” MTD at 7. It is true that courts have held reasonable reliance to
be an element of negligent misrepresentation claims, and that they have specifically found reliance
to be unreasonable where “the misrepresentations in question were oral statements that
contradicted written contracts between the parties.” Burlington Ins. Co. v. Okie Dokie, Inc., 329
F. Supp. 2d 45, 49 (D.D.C. 2004). But here, of course, there was no contract—written or
otherwise—between the parties, and the Court is not prepared to endorse at the pleading stage
CGD’s argument that a plaintiff acts per se unreasonably in crediting an oral representation about
sale terms over a written advertisement as to those terms. See id. (explaining that the relevant
21 inquiry is whether “the plaintiff should have known that the defendant’s representations were
untrue”).
The Court will therefore dismiss this claim only on the basis that Capital Hill Development
failed to meet the Rule 9(b) pleading standard, and not on the basis that its reliance on CGD’s
alleged statement was unreasonable as a matter of law. For the same reasons discussed above with
respect to the fraudulent misrepresentation claim, the dismissal shall be without prejudice.
4. Declaratory Judgment
The Declaratory Judgment Act provides that, “[i]n a case of actual controversy within its
jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations
of any interested party seeking such declaration, whether or not further relief is or could be sought.”
28 U.S.C. § 2201(a). Here, in addition to its request for damages and the set aside of the
foreclosure sale, Capital Hill Development seeks a declaratory judgment that CGD breached a
fiduciary duty and engaged in fraudulent and negligent misrepresentation. Compl. ¶ 48. CGD
argues that, even setting aside Capital Hill Development’s failure to plead the elements of those
underlying claims, there is no basis for the Court to issue a declaratory judgment because “Plaintiff
is now aware of the requirement that deposit checks in HUD non-judicial foreclosures be drafted
specifically in favor of the HUD Secretary” and thus “there is little chance that this issue would
arise prospectively.” MTD at 8.
Because Capital Hill Development presently has not adequately alleged the claims which
“wholly subsume[]” its declaratory judgment claim, the Court must dismiss the latter along with
all of the former. Walpin v. Corp. for Nat. & Cmty. Serv., 718 F. Supp. 2d 18, 24 (D.D.C. 2010),
aff’d, 630 F.3d 184 (D.C. Cir. 2011). But in any event, “[a] declaratory judgment always rests
within the sound discretion of the court,” and should be awarded (or not) consistent with factors
22 like “whether [it] w[ould] serve a useful purpose in clarifying the legal relations at issue” and
“whether it would finally settle the controversy between the parties.” Harris v. Bessent, 2025 WL
679303, at *8 (D.D.C. 2025). Here, even if Capital Hill Development could plausibly plead and
later prove that CGD’s statements were unlawful, it is not clear how a declaratory judgment would
serve any useful purpose in this case. There is no “ongoing uncertainty” about the parties’
relationship—as CGD notes, the substantive question of what kind of checks the HUD regulations
require appears undisputed—and the events at issue are hardly matters of “significant public
importance.” Id. (quotation marks omitted). The Court will therefore dismiss this claim with
prejudice.
IV. Conclusion
For the reasons above, the Court will deny Capital Hill Development’s motion to remand
and grant CGD’s motion to dismiss. Capital Hill Development’s breach of fiduciary duty and
declaratory relief claims shall be dismissed with prejudice, and its fraudulent and negligent
misrepresentation claims shall be dismissed without prejudice. An Order will accompany this
Opinion.
DATE: June 11, 2025 ________________________ CARL J. NICHOLS United States District Judge