Ex Rel. Laurence Schneider: Appellant'S Brief

USCA Case #17-7003 Document #1675663 Filed: 05/17/2017 Page 1 of 45
Case No. 17-7003
UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA
UNITED STATES et al.,

ex rel. LAURENCE SCHNEIDER
Appellant, Relator,
vs.
J.P. MORGAN CHASE BANK, N.A., et al.
Appellees.
On Appeal from a Final Order of the

U.S. District Court for the District of Columbia
(U.S. District Judge Rosemary M. Collyer)
Civil Action No. 14-1047 (RMC)
APPELLANT’S BRIEF
Joseph A. Black
Robert L. Di Marco Daniel E. Cohen
WALKER & DI MARCO, P.C. THE CULLEN LAW FIRM, PLLC
350 Main Street, First Floor 1101 30th Street NW, Suite 300
Malden, MA 02148 Washington, D.C. 20007
Tel: (781) 322-3700 Tel: (202) 944-8600
Fax: (781) 322-3757 Fax: (202 944-8611
May 17, 2017 Counsel for Appellant

CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rules of Appellate Procedure 26.1, Appellant Laurence
Schneider states that he is a private individual and not subject to Rule 26.1.
i
TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENT……………………………………..i
TABLE OF CONTENTS………………………………………………………….. ii
TABLE OF AUTHORITIES……………………………………………………… iv
GLOSSARY OF ABBREVIATIONS…………………………………..……… .. vii
STATEMENT OF JURISDICTION……………………………………………… . 1
STATEMENT OF ISSUES………………………………………… ....................... 2
STATEMENT OF THE CASE……………………………………………………. 3
SUMMARY OF ARGUMENT…………………………………………………... 16
ARGUMENT…………………………………………………………………… .. 18
I. STANDARD OF REVIEW......................................................................18
II. SCHNEIDER WAS NOT REQUIRED TO FOLLOW THE PRE-

LITIGATION PROCEDURES OF THE CONSENT JUDGEMENT
BEFORE HE FILED HIS FCA CASE. ...................................................18
A. The Relator Does Not Stand in the Shoes of the Government For All
Purposes and Only Does So After the Government Has Declined to
Intervene. .............................................................................................18
B. Prior to Filing His FCA Action Schneider Did Not Have Standing to
Raise Objections Under the Consent Judgment. .................................20
C. The SPA Signed by Chase Makes the Consent Judgment Subject to

The FCA. .............................................................................................23
D. Procedural Requirements of Contracts and Regulations Cannot

Supersede FCA Requirements. ..........................................................24
ii
E. The Government’s Separate Enforcement Actions Regarding

Chase’s Violations of the Bankruptcy and Foreclosure Servicing
Standards Demonstrate that the Government Did Not Have to
Exhaust the Remedies Contained in Exhibit E Before it Brought
Those Actions. .....................................................................................27
F. Giving Chase Notice of Schneider’s Allegations before the Filing

of the Complaint Would Defeat the Purposes of the Seal and
Potentially Impact First-to-File Requirements and Public
Disclosure Bar. ....................................................................................28
G. Schneider Effectively Gave the Monitoring Committee and

Chase Notice of His Allegations Before the Commencement
of Litigation. ........................................................................................30
III. SCHNEIDER ALLEGED SERVICING PRACTICES BY CHASE

THAT VIOLATED THE HAMP PRIOR TO 2010.................................31
CONCLUSION ........................................................................................................34
CERTIFICATE OF COMPLIANCE
CERTIFICATE OF SERVICE
ADDENDUM
iii
TABLE OF AUTHORITIES
Cases
Barr v. Clinton,
370 F.3d 1196 (D.C. Cir. 2004) ............................................................................18
EEOC v. Waffle House, Inc.,

534 U.S. (2002) ....................................................................................................22
Kowal v. MCI Commc’ns Corp.,

16 F.3d 1271. (D.C. Cir. 1994) .............................................................................18
Leftwich v. Gallaudet Univ.,

878 F. Supp. 2d (D.D.C. 2012) ........................................................................8, 32
Lujan v. Defenders of Wildlife,

504 U.S. 555 (2002) ..............................................................................................21
State Farm Fire & Casualty Co. v. United States ex rel. Rigsby,
137 S. Ct. 436 (2017) ..................................................................................... 28, 29
U.S. ex rel. Eisenstein v. City of New York,

556 U.S. 929 (2009) ..............................................................................................20
United States ex rel. Kelly v. Boeing Co.,

9 F.3d 743 (9th Cir. 1993) ....................................................................................19
United States ex rel. Morgan v. Sci. Application Int’l Co.,

604 F. Supp. 2d 245 (D.D.C. 2009) ............................................................... 18, 19
United States ex rel. Owens v. First Kuwaiti Gen. Trading & Constr. Co.,
612 F.3d 724 (4th Cir. 2010) ................................................................................26
United States ex rel. Phipps v. Comprehensive Cmty. Dev. Corp.,

152 F. Supp. 2d 443 (S.D.N.Y. 2001) ..................................................................20
United States ex rel. Spay v. CVS Caremark Corp.,

No. 009-4672, 2013 WL 1755214, (E.D. Pa. April 24, 2013) .............................23
iv
United States ex rel. Steury v. Cardinal Health, Inc.,

625 F.3d 262 (5th Cir. 2010) ................................................................................24
United States ex rel. Taylor v. Gabelli,

345 F. Supp. 2d 340 (S.D.N.Y. 2004) ..................................................................27
United States ex rel. Wall v. Circle C Const., LLC,

697 F.3d 345 (6th Cir. 2012) ...............................................................................27
United States ex rel. Walsh v. Eastman Kodak Co.,

98 F. Supp. 2d 141 (D. Mass. 2000) .....................................................................20
United States ex rel. Wilson v. Kellogg Brown & Root,Co.

525 F.3d 370 (4th Cir. 2008) ................................................................................25
United States v. Kellogg Brown & Root Servs., Inc.,

800 F. Supp. 2d 143 (D.D.C. 2011) ............................................................... 25, 26
United States v. Neifert-White Co.,

390 U.S. 228 (1968) ..............................................................................................27
United States v. Southland Mgmt. Corp.,

326 F.3d 669 (5th Cir. 2003) ................................................................................25
United States v. Williams,

162 F. Supp. 903 (M.D. Ala. 1957) ......................................................................24
Rockefeller v. Westinghouse Elec. Co.,

274 F. Supp. 2d 10 (D.D.C. 2003) ........................................................................19
Statutes
28 U.S.C. § 1291 ........................................................................................................1
28 U.S.C. § 1345 ........................................................................................................1
31 U.S.C. § 3730(c)(1) .............................................................................................20
31 U.S.C. § 3730(c)(2)(B) .......................................................................................20
v
31 U.S.C. § 3730(c)(3) .............................................................................................20
31 U.S.C. § 3732(a) ...................................................................................................1
31 U.S.C. §§ 3729–3733 ........................................................................................1, 4
vi
GLOSSARY OF ABBREVIATIONS
FCA False Claims Act
FAC First Amended Complaint
HAMP Home Affordable Modification Program
MHA Making Home Affordable
NMSA National Mortgage Settlement Agreement
OCC Office of the Comptroller of the Currency
RCV1 or RCV1 SOR Recovery One Population
SAC Second Amended Complaint
SPA Amended and Restated Commitment to

Purchase Financial Instrument and Servicer
Participation Agreement
SOR System of Records
vii
JURISDICTIONAL STATEMENT
This is a civil action brought under the False Claims Act, 31 U.S.C. §§
3729–3733 (“FCA”) by Appellant Laurence Schneider, acting for himself and on
behalf of the United States, against Defendants , J.P. Morgan Chase Bank, N. A.,
J.P. Morgan Chase & Co., and Chase Home Finance LLC. The district court had
subject matter jurisdiction over this lawsuit pursuant to 28 U.S.C. § 1345 and 31
U.S.C. § 3732(a). This Court has appellate jurisdiction under 28 U.S.C. § 1291.
This is an appeal from a “final appealable order” of the district court entered on
December 22, 2016. ECF Doc. #119, Joint Appendix (“JA”) 23. The order
incorporated the opinion entered on the same date. ECF Doc. #118, JA 1-22. The
Notice of Appeal was timely filed on January 5, 2017. ECF Doc. #120.
1
STATEMENT OF ISSUES
Issue 1
Plaintiff/Relator Schneider brought this action under the False Claims Act
(“FCA”) alleging that Chase had filed false certifications of compliance with the
National Mortgage Settlement Agreement (“NMSA”) or (“Consent Judgment”).
The NMSA requires that government parties exhaust pre-enforcement procedures
prior to filing an enforcement action in the district court. Was Schneider, as a
private citizen and non-party to the agreement, required to exhaust those
procedures before filling his FCA action?
Issue 2
Additionally, Schneider alleged that Chase submitted two false certifications
of compliance with the Home Affordable Modification Program (“HAMP”) in
September 2010 related to violations of the HAMP. The district court dismissed
the HAMP allegations by finding that all the violations of the HAMP that
Schneider alleged in his complaint occurred after 2010. Did the court err in
dismissing Schneider’s HAMP claims when the complaint contains a number of
allegations of violations of the HAMP occurring before 2010?
2
STATEMENT OF THE CASE
Appellant/Relator Laurence Schneider initially filed this action in the U.S.
District Court for the District of South Carolina on May 6, 2013, against
Defendants, J.P. Morgan Chase Bank, N. A., J.P. Morgan Chase & Co., and Chase
Home Finance LLC (collectively “Chase”)1 on behalf of the United States,
individual states with laws similar to the FCA, and himself. ECF Doc. #1.
Schneider previously provided the information on which his action was based to
the United States and the state parties with equivalent FCA statutes on March 28,
2013. SAC ¶ 50. JA 40. Subsequently, after the United States declined to
intervene in his action and he had served the complaint on Chase, Schneider
moved to have the case transferred to the U.S. District Court for the District of
Columbia. ECF Doc. #57. That motion was granted and the case was transferred
on June 19, 2014. ECF Doc. #58.
With new counsel, Schneider moved to file his First Amended Complaint
(“FAC”) under seal on October 23, 2014. ECF Doc. #78. That motion was
granted on November 17, 2014. ECF Doc. #79. The government again declined to
intervene and the FAC was served on Chase. ECF Doc. #96. Schneider filed his
Second Amended Complaint (“SAC”) on October 2, 2015, which corrected certain
1
Chase Home Finance LLC merged into JPMorgan Chase Bank, N.A. in 2011 and
no longer exists as a separate entity.
3
factual errors and added further relevant information that had come to his attention
after the FAC was filed. ECF Doc. #102, JA. 24-121. Chase then filed its motion
to dismiss the SAC on November 12, 2015. ECF Doc. #105. This motion was
fully briefed by January 15, 2016. ECF Doc. #112. The district court granted
Chase’s motion on December 22, 2016, [ECF Doc. #118, JA 1-22], and issued a
“final appealable order” on the same date. ECF Doc. #119, JA 23. This appeal
followed.
1. Schneider’s original complaint sought to recover damages and civil
penalties under the False Claims Act (“FCA”), 31 USC §§ 3729-3733, based on
false claims made by Chase related to its performance under the National
Mortgage Settlement Agreement (“NMSA”) or (“Consent Judgment”). ECF Doc.
#1. Under the NMSA, Chase was required to meet certain loan servicing standards
and consumer relief provisions. When Chase failed to meet those standards and
conditions, it was required to make specified payments to the United States and
was also subject to penalties. In order to avoid these payments and penalties,
Chase filed false reports and certifications with the court appointed Monitor of the
NMSA. In its December 22, 2016 decision, the district court dismissed the
NMSA allegations with prejudice, stating that Schneider, “standing in the shoes”
of the government, failed to exhaust the pre-enforcement procedures required by
4
the NMSA for governmental parties before filing an enforcement action. ECF
Doc. #118.
The exhaustion requirements cited by the court are found in Exhibit E of the
Consent Judgment. They are:
G. Dispute Resolution Procedures. Servicer, the Monitor, and the

Monitoring Committee will engage in good faith efforts to reach
agreement on the proper resolution of any dispute concerning any issue
arising under this Consent Judgment, including any dispute or
disagreement related to the withholding of consent, the exercise of
discretion, or the denial of any application. Subject to Section J, below,
in the event that a dispute cannot be resolved, Servicer, the Monitor, or
the Monitoring Committee may petition the Court for resolution of the
dispute. Where a provision of this agreement requires agreement,
consent of, or approval of any application or action by a Party or the
Monitor, such agreement, consent or approval shall not be
unreasonably withheld.
* * *
J. Enforcement
1. Consent Judgment. This Consent Judgment shall be filed in the U.S.

District Court for the District of Columbia (the “Court”) and shall be
enforceable therein. Servicer and the Releasing Parties shall waive
their rights to seek judicial review or otherwise challenge or contest in
any court the validity or effectiveness of this Consent Judgment.
Servicer and the Releasing Parties agree not to contest any
jurisdictional facts, including the Court’s authority to enter this Consent
Judgment.
2. Enforcing Authorities. Servicer’s obligations under this Consent

Judgment shall be enforceable solely in the U.S. District Court for the
District of Columbia. An enforcement action under this Consent
Judgment may be brought by any Party to this Consent Judgment or the
Monitoring Committee. Monitor Report(s) and Quarterly Report(s)
shall not be admissible into evidence by a Party to this Consent
Judgment except in an action in the Court to enforce this Consent
5
Judgment. In addition, unless immediate action is necessary in order to

prevent irreparable and immediate harm, prior to commencing any
enforcement action, a Party must provide notice to the Monitoring
Committee of its intent to bring an action to enforce this Consent
Judgment. The members of the Monitoring Committee shall have no
more than 21 days to determine whether to bring an enforcement action.
If the members of the Monitoring Committee decline to bring an
enforcement action, the Party must wait 21 additional days after such a
determination by the members of the Monitoring Committee before
commencing an enforcement action.
Exhibit E at E14-E15, Add. 9-10.
The district court’s decision presents a number of logical and practical issues
including whether Schneider, as a private citizen, could have standing to challenge
Chase’s performance under the Consent Judgment prior to filing his FCA action.
The Consent Judgment language set out above does not contemplate that a private
party has that authority. The decision also raises the question of whether the
Consent Judgment can supersede the FCA, especially when the Consent Judgment
specifically states that it is subject to the FCA.
2. The FAC and SAC added allegations that Chase violated the
“Amended and Restated Commitment to Purchase Financial Instrument and
Servicer Participation Agreement” (“Commitment” or “SPA”) entered into
between the United States and Chase. Under the Commitment, Chase was required
to meet servicing standards specified in the Home Affordable Modification
Program (“HAMP”) and provide loan modifications to its borrowers. These
allegations were based on the same loan servicing practices that violated the
6
Consent Judgment, which had begun as early as 2000. Chase was paid various
amounts for each loan modification by the Government. Chase also received
additional incentive payments based on its performance. Payments were
conditioned upon Chase certifying that it was in compliance with the HAMP
servicing standards. Chase falsely certified that it was in compliance with those
standards and created false records to support each certification. The district court
dismissed the HAMP allegations without prejudice by finding that Schneider’s
SAC did not allege any violations of the HAMP prior to September 2009, when
Chase submitted the alleged false certifications set out in the complaint. The court
stated:
In light of the terms set by Treasury, noncompliance with HAMP

would be shown only if Chase’s nonsolicitation of RCV1 loans for
HAMP modification had a material effect on Chase’s “ability to
comply” with the Making Home Affordable program requirements.
Relator makes no such allegations. His arguments concerning RCV1
loans eligible for modification focus on their eligibility under the
National Mortgage Settlement, not HAMP.
* * *
Both of these instances of alleged false claims occurred in 2010, before
the National Mortgage Settlement in 2012 and, therefore, any data
about RCV1 loans discharged and reported to the Monitor as a result of
the National Mortgage Settlement in 2012 or later are irrelevant to the
falsity of the alleged claims made under HAMP in 2010. Relator’s
Complaint focuses on actions during the 3-year compliance period of
the National Mortgage Settlement period and provides no allegations
identifying the “fact misrepresented” to the HAMP compliance monitor
in 2010.
JA 18-19.
7
As set out in detail below, there are a number paragraphs in the SAC that
allege that violations of the HAMP were occurring before 2010. If there is any
question regarding that issue, it must be resolved in favor of the plaintiff.
“Ambiguities must be resolved in favor of Plaintiff, giving him the benefit of every
reasonable inference drawn from the well-pleaded facts and allegations in the
complaint.” Leftwich v. Gallaudet Univ., 878 F. Supp. 2d 90 (D.D.C. 2012).
BACKGROUND
Appellee Chase’s fraud arises out of its response to efforts by the United
States and forty-nine States2 and the District of Columbia to remedy the
misconduct of Chase and other financial institutions whose actions significantly
contributed to the consumer housing crisis. SAC ¶ 3, JA 28 . Chase’s misconduct
resulted in the issuance of improper mortgages, premature and unauthorized
foreclosures, violation of service members’ and other homeowners’ rights and
protections, the use of false and deceptive affidavits and other documents, and the
waste and abuse of taxpayer funds. SAC ¶ 4, JA 28.
2
States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut,
Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas,
Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana,
Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North
Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, South Dakota,
Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and
Wyoming; the Commonwealths of Kentucky, Massachusetts, Pennsylvania and
Virginia, and the District of Columbia.
8
In March 2012, after a lengthy investigation, the U.S. Department of Justice
and the States filed a complaint against Chase and the other banks responsible for
the fraudulent and unfair mortgage practices. Specifically, the Government alleged
that Chase, as well as other financial institutions, engaged in improper practices
related to mortgage origination, mortgage servicing, and foreclosures, including,
but not limited to, irresponsible and inadequate oversight of the banks’ quality
control standards. SAC ¶ 5, JA 28-29.
In April 2012, the district court approved a settlement between the Federal
Government, the States, the Defendants and four other banks, which resulted in the
NMSA. The operative document of this agreement was the Consent Judgment
(“Consent Judgment”). See United States v. Bank of America, Corp., 1:12-cv-
00361-RMC, ECF Doc. #10 (April 4, 2012). Included in the Consent Judgment
are Consumer Relief provisions, which require Chase to provide over $4 billion in
consumer relief to their borrowers. This relief was to be in the form of, among
other things, loan modification, loan forgiveness, and loan refinancing. Chase
received “credits” towards its Consumer Relief obligations by forgiving or
modifying loans it maintained as a result of complying with the procedures and
requirements contained in Exhibits D and D-1 of the Consent Judgment. SAC ¶ 7,
JA 29.
9
The Consent Judgment also contains Servicing Standards in Exhibit A that
were intended to be used as a basis for granting Consumer Relief. The Servicing
Standards were tested through various established “Metrics” and were designed to
improve upon the lack of quality control and communication with borrowers.
Chase’s compliance was overseen by an independent Monitor. SAC ¶ 8, JA 29-30.
The Servicing Standards and Consumer Relief requirements of the NMSA
were based on a series of Treasury Directives that were themselves designed as
part of the Making Home Affordable (“MHA”) program. The MHA program was
a critical part of the Government's broad strategy to help homeowners avoid
foreclosure, stabilize the country's housing market, and improve the nation's
economy by setting uniform and industry wide default servicing protocols, policies
and procedures for the distribution of federal and proprietary loan modification
programs. SAC ¶ 9, JA 30. Both the Servicing Standards and Consumer Relief
requirements of the Consent Judgment are subject to and interpreted “by the terms
and provisions of Servicer Participation Agreement [“SPA”] with the Department
of Treasury.” Add 3 & 7. Exhibits A and D of the Consent Judgment contain
largely identical provisions related to governing law and interpretation:
Exhibit A
IX. GENERAL PROVISIONS, DEFINITIONS, AND

IMPLEMENTATION.
A. Applicable Requirements.
10
1. The servicing standards and any modifications or other actions taken

in accordance with the servicing standards are expressly subject to, and
shall be interpreted in accordance with, (a) applicable federal, state and
local laws, rules and regulations, including, but not limited to, any
requirements of the federal banking regulators, (b) the terms of the
applicable mortgage loan documents, (c) Section 201 of the Helping
Families Save Their Homes Act of 2009, and (d) the terms and
provisions of the Servicer Participation Agreement with the
Department of Treasury. . . .
Exhibit A at A-41 (emphasis added). Add. 3.
Exhibit D
11. Applicable Requirements
The provision of consumer relief by the Servicer in accordance with

this Agreement in connection with any residential mortgage loan is
expressly subject to, and shall be interpreted in accordance with, as
applicable, the terms and provisions of the Servicer Participation
Agreement with the U.S. Department of Treasury. . . .
Exhibit D at 12 (emphasis added). Add. 7.
The Servicer Participation Agreement referenced in each of these
provisions contains the following provision:
(f) Servicer acknowledges that the provision of false or misleading

information to Fannie Mae or Freddie Mac in connection with any of
the Programs or pursuant to the Agreement may constitute a violation
of: (a) Federal criminal law involving fraud, conflict of interest, bribery,
or gratuity violations found in Title 18 of the United States Code; or (b)
the civil False Claims Act (3 I U.S.C. §§ 3729-3733).
Amended and Restated Commitment to Purchase Financial Instrument and
Servicer Participation Agreement at B4 (emphasis added) JA #127.
11
Relator discovered, during the course of investigating Chase’s servicing
practices related to loans his companies 3 had previously purchased from Chase
between 2006 and 2010, that Chase maintains a large set of loans outside of its
primary System of Records (“SOR”), which is known as the Recovery One
population (“RCV1” or “RCV1 SOR”). SAC ¶ 16, JA 31-32. RCV1 was
described to the Monitor by Chase as an “application” for loans that had been
charged off but still part of its main SOR. Id. However, once loans had been
charged off by Chase, the accuracy and integrity of the information pertaining to
the borrowers’ accounts whose loans became part of the RCV1 population was,
and continues to be, fatally and irreparably flawed. Id. Chase began this practice
in 2000. SAC ¶¶ 188, 194, JA 72, 74. The loans in the RCV1 were not serviced
according to the requirements of Federal law, the Consent Judgment, the MHA
programs, or any of the other consent orders or settlements reached by Chase with
any government agency prior to the NMSA. SAC ¶ 16. JA 31-32. The number
and original value of loans in RCV-1 was significant. Schneider estimated that it
exceeded 500,000 loans. SAC ¶ 228. JA 81. Documentary evidence showed that
160,000 of these loans had a total aggregate outstanding balance of over $12
billion. SAC ¶ 225, JA 80.
3
S&A Capital Partners, Inc., Mortgage Resolution Servicing, LLC, and 1st Fidelity
Loan Servicing, LLC (the “Schneider Entities”) [SAC ¶¶ 47-49 JA 39-40]
12
Chase instituted a practice of sending unsolicited debt-forgiveness letters to
pre-selected borrowers of valueless loans. SAC ¶ 17, JA 32-33. This practice did
not meet the Servicing Standards set out in the Consent Judgment to establish
eligibility for credits toward its Consumer Relief obligations. It also violated the
Anti-Blight procedures set out in the Servicing Standards for forgiving and
releasing first liens. Chase sought to take credit for valueless charged-off and
third-party owned loans instead of applying the Consumer Relief procedures under
the NMSA and MHA loan modification programs to properly vetted borrowers
who could have applied for and benefitted from the relief and modification
programs—the borrowers that were originally intended by the Government to
receive the benefit of the Government’s bargain with Chase. Id.
The purpose of this scheme was to quickly satisfy the Defendant’s
Consumer Relief obligations as cheaply as possible, without actually providing the
relief that Chase promised in exchange for the settlement that Chase reached with
the Federal Government and the States. For example, Chase converted a pool of
approximately $3 billion in second liens, whose lifetime collectability was only
$4.2 million, into credits equal to $397 million dollars. SAC ¶ 214, JA 79. In a
single move, Chase planned to increase its rate of return on these defaulted loans
by nearly 100 times. Id. Since the requirement to provide $4 billion in consumer
relief was intended in part as a punishment for Chase’s past fraudulent and unfair
13
mortgage practices, this result—which could only be accomplished by violating
servicing and crediting provisions of the Consent Judgment—was obviously not
the intent of that settlement.
In addition, Chase applied for and received MHA incentive payments
without complying with the MHA’s mandatory requirements. SAC ¶ 39, JA 37.
In short, Chase decreased its liabilities, increased its revenues, avoided its
obligations, and provided little to no relief to consumers.
The Servicing Standards and the Consumer Relief Requirements of the
Consent Judgment are set forth in Exhibits A and D of that document. SAC ¶¶ 71,
97, JA 45, 51-52. As indicated, the Consent Judgment is governed by the
underlying SPA of the MHA program, which required mandatory compliance with
the Treasury Directives under the MHA Handbook (“Handbook”). SAC ¶ 136, JA
59. Chase is required to demonstrate compliance with the Handbook’s guidelines
in the form of periodic certifications to the government. Chase ignored the
requirements of Exhibits A and D of the Consent Judgment, especially with respect
to the RCV1 population of loans. Therefore, Chase has been unable to service
with any accuracy the charged-off loans it owns and to segregate those loans that it
no longer owns. As such, any certifications of compliance with the Consent
Judgment or the SPA are false claims.
14
Chase’s false claims related to its performance under the Consent Judgment
and the HAMP were confirmed by two independent investigations by the U.S.
Trustee Program (“USTP”) and the Office of the Comptroller of the Currency
(“OCC”). On March 3, 2015 the Department of Justice announced that the USTP
had entered into a $50 million settlement agreement with JP Morgan Chase. As
part of the settlement, Chase acknowledged that it filed over 50,000 false payment
change notices (“PCN”) in bankruptcy courts around the country. SAC ¶ 167, JA
67-68. The false documents described in the USTP settlement directly violated the
servicing requirements related to bankruptcy proceedings set out in Exhibit A of
the Consent Judgment. SAC¶ 171, JA 69. As the Department of Justice noted
when entering into the settlement:
It is shocking that the conduct admitted to by Chase in this settlement,

including the filing of tens of thousands of documents in court that
never had been reviewed by the people who attested to their accuracy,
continued as long as it did. . . . [Y]ears after uncovering improper
mortgage servicing practices and entering into court-ordered
settlements to fix flawed systems, it is deeply disturbing that a major
bank would still make improper court filings and fail to provide
adequate and timely notices to homeowners about payments due.
U.S. Trustee Program Reaches $50 Million Settlement with JPMorgan Chase to
Protect Homeowners in Bankruptcy, U.S. Dep’t of Justice (March 3, 2015),
https://www.justice.gov/opa/pr/us-trustee-program-reaches-50-million-settlement-
jpmorgan-chase-protect-homeowners-bankruptcy.
15
Similarly, on June 16, 2015, the OCC filed a document in bankruptcy court
titled “CONSENT ORDER AMENDING THE 2011 CONSENT ORDER and
2013 AMENDMENT TO THE 2011 CONSENT ORDER” regarding Chase. SAC
¶ 169, JA 68-69. The original consent order was issued after the OCC “identified
certain deficiencies and unsafe or unsound practices in residential mortgage
servicing and in the Bank’s initiation and handling of foreclosure proceedings.”
As part of the original OCC consent order, Chase agreed to take specific actions to
correct its servicing deficiencies. The OCC’s amended consent order details the
many ways in which Chase violated these commitments and as a consequence
submitted false certifications when it asserted that it did abide by its commitments.
Id.
SUMMARY OF ARGUMENT
1. By requiring Mr. Schneider to exhaust the government’s pre-litigation
remedies set out in the Consent Judgment before filing his FCA action, the district
court created conditions that no relator could possibly meet. The court stated that
Schneider “stood in the shoes” of the government and therefore was required to
follow any requirement imposed on the government. The problem with this logic is
that prior to filing his FCA complaint, Schneider had no standing to challenge
Chase’s fraud and violations of the Consent Judgment since he was not a party to
that agreement. Therefore, there was no statutory or contractual vehicle that would
16
have permitted Schneider to challenge Chase’s performance under the Consent
Judgment apart from the FCA. For this reason alone, the district court’s dismissal
of Schneider’s action must be reversed.
Moreover, there is no authority requiring a relator or the government to
exhaust contractual or administrative remedies before filing an FCA action. This is
not an action to enforce the contractual terms of the Consent Judgment. Instead, it
is an action alleging false certifications of compliance with that agreement. When
the allegations involve fraud, the FCA is the appropriate vehicle for seeking
redress. This is particularly true when, as here, the Consent Judgment is governed
by another agreement that specifically acknowledges that an FCA action may be
brought to remedy fraud. Further, at the same time that Chase’s performance was
being monitored under the Consent Judgment, two separate government agencies
brought enforcement actions for the same servicing violations covered by the
Consent Judgment without following the pre-litigation procedures outlined in that
agreement. All of these factors demonstrate that the district court’s decision
requiring exhaustion of contractual remedies before the filing of an FCA case is
unprecedented, quite extraordinary and beyond any such requirement imposed by
any other court.
2. The district court simply misread the complaint when it asserted that
Schneider did not allege any facts concerning violations of the HAMP occurring
17
prior to 2010 that would have made the year 2010 claims of compliance false. The
complaint clearly states that the defective servicing practices associated with RCV1
began in the year 2000 and that the mortgages Schneider purchased between 2006
and 2010 “were saturated with violations of past and present regulations, statutes and
other governmental requirements for first and second federally related home
mortgage loans.” SAC ¶ 10, JA 30. In the context of the complaint, these
allegations fairly assert that Chase was violating the HAMP before 2010, which,
therefore, made its certifications of compliance with the HAMP in 2010 false.
ARGUMENT
I. STANDARD OF REVIEW
Courts of Appeals review de novo a district court’s ruling on a Rule 12(b)(6)
motion to dismiss. Kowal v. MCI Commc’ns Corp. 16 F.3d 1271, 1276. (D.C. Cir.
1994). “The complaint is construed liberally in the plaintiffs’ favor, and we grant
plaintiffs the benefit of all inferences that can be derived from the facts alleged.”
Id. See also Barr v. Clinton, 370 F.3d 1196, 1199 (D.C. Cir. 2004).
II. SCHNEIDER WAS NOT REQUIRED TO FOLLOW THE PRE-

LITIGATION PROCEDURES OF THE CONSENT JUDGMENT
BEFORE HE FILED HIS FCA CASE.
A. The Relator Does Not Stand in the Shoes of the Government for all
Purposes and Does So Only After the Government Has Declined to
Intervene.
18
The district court stated that Schneider was required “to have exhausted all
remedies the Federal Government would have been required to exhaust prior to
filing his suit.” Opinion at 13, JA 13. This position was premised on the finding
in other cases that the relator “stands is the shoes of the federal government as a
plaintiff.” Id. (citing United States ex rel. Morgan v. Sci. Application Int’l Co., 604
F. Supp. 2d 245, 249 (D.D.C. 2009)). This logic, as applied to this case, is faulty
for a number of reasons.
The rule that the Relator stands in the shoes of the government applies only
after the government has declined to intervene in the FCA action. See United
States ex rel. Kelly v. Boeing Co., 9 F.3d 743, 748 (9th Cir. 1993) (“If the
government declines to prosecute the alleged wrongdoer, the qui tam plaintiff
effectively stands in the shoes of the government.”). This rule was applicable in
Morgan because the government declined to intervene in his case. Also in
Morgan, the relator was not represented by counsel, and since a lay person is not
qualified to represent the United States, see Rockefeller v. Westinghouse Elec. Co.,
274 F.Supp.2d 10, 16 (D.D.C. 2003), aff’d, No. 03–7120, 2004 WL 180264 (D.C.
Cir. Jan. 21, 2004), the court found that the relator may not proceed pro se.
Morgan, 604 F. Supp. 2d at 249.
In other circumstances the rule does not apply. For example, relators have
only 30 days to appeal dismissals, not the 60 days that the government is given.
19
U.S. ex rel. Eisenstein v. City of New York, 556 U.S. 929 (2009). If the rule that
relators stand in the shoes of the government were applied to all cases, then they
would have the full 60 days to file an appeal. Further, if the government does
intervene in the case, it has “the primary responsibility for prosecuting the action,”
and is not bound by any action of the relator. 31 U.S.C. § 3730(c)(1). The
government may settle the case over the relator’s objection whether or not it
intervenes. 31 U.S.C. § 3730(c)(2)(B). The relator cannot dismiss or settle the
action without the government’s consent. 31 U.S.C. § 3730(c)(3). Thus, the rule
that the relator stands in the shoes of the government is limited by circumstances
and only after the government has declined to intervene in the action.
B. Prior to Filing His FCA Action Schneider Did Not Have Standing to
Raise Objections Under the Consent Judgment.
As demonstrated, the rule that the relator stands in the shoes of the
government applies only after the relator files his case and the government declines
to intervene. Before he filed his FCA case, Schneider could not have stood in the
shoes of the government since he had no standing to challenge Chase’s compliance
with the NMSA. A relator’s standing extends only to the legal actions permitted
by the FCA. See United States ex rel. Phipps v. Comprehensive Cmty. Dev. Corp.,
152 F. Supp. 2d 443, 451-52 (S.D.N.Y. 2001) (holding that a relator lacks standing
to bring common law claims of fraud, mistake of fact, and unjust enrichment);
United States ex rel. Walsh v. Eastman Kodak Co., 98 F. Supp. 2d 141, 149 (D.
20
Mass. 2000) (same); see generally Lujan v. Defenders of Wildlife, 504 U.S. 555,
560 (2002) (holding that a plaintiff must suffer an injury in fact in order to satisfy
one of the three elements for the “constitutional minimum of standing. . . .”).
Except for the FCA, there is no procedure for Schneider, as a private citizen, to
challenge Chase’s compliance with the NMSA.
The district court described the exhaustion requirements that a party was
required to follow before filing an action as:
Under the National Mortgage Settlement, a party wishing to dispute

compliance by a signatory bank was required to follow explicit steps:
(1) give notice to the allegedly noncompliant bank, the Monitor, and
the Monitoring Committee; and (2) “engage in good faith efforts to
reach agreement on the proper resolution of any dispute.” Consent
Judgment, Ex. E at E-14; see also id. at E-15.
Opinion at 13, JA 13.
The procedures cited by the district court do not permit Schneider’s
participation. Paragraph G of Exhibit E addressing dispute resolution procedures
states only that the “Servicer, the Monitor, and the Monitoring Committee will
engage in good faith efforts to reach agreement on the proper resolution of any
dispute concerning any issue arising under this Consent Judgment.” App. 9. It
does not refer to any private party who may have a grievance against a Servicer
such as Chase. Therefore, this provision does not require or permit, by its terms, a
private party such as Schneider to engage in discussions with the bank to reach a
resolution of his allegations of fraud, or suggest that a private citizen may take over
21
the role of the federal government on the monitoring committee. If Schneider truly
stepped into the shoes of the government, he would have been given a seat on the
monitoring committee. Obviously, such an action is not contemplated by the
Consent Judgment or the FCA.
Moreover, Paragraph G of Exhibit E does not specifically refer to the federal
government, or suggest that the federal government, apart from the Monitoring
Committee, has an obligation to engage in “good faith efforts” to resolve disputes.
Therefore, not only was the district court in error in suggesting that the relator had
to engage in dispute resolution with Chase before he filed his action, the district
court was also in error when it stated that the federal government must seek
resolution of disputes before it could file an enforcement action.
Similarly, Paragraph J of Exhibit J states only that “an enforcement action
under this Consent Judgment may be brought by any Party to this Consent
Judgment or the Monitoring Committee,” and that “a Party must provide notice to
the Monitoring Committee of its intent to bring an action to enforce this Consent
Judgment.” Add. 10. Obviously, Schneider was not a party to the Consent
Judgment before or after he filed his complaint. Certainly, there is no legal
rationale that could make him a party to the Consent Judgment before he filed his
complaint. “It goes without saying that a contract cannot bind a nonparty.” EEOC
v. Waffle House, Inc. 534 U.S. 298, 294 (2002). Because Schneider had no
22
relationship with the government before he filed his FCA complaint, it was
impossible for him to “stand in the shoes” of the government before the complaint
was filed. Therefore, there is nothing in the Consent Judgment that would require
Schneider to give notice to the Monitoring Committee under Paragraph J before
filing his action.
C. The SPA Signed by Chase Makes the Consent Judgment Subject to

the FCA.
The district court’s ruling dismisses the fact that the Consent Judgment and
the HAMP are subject to the SPA [Opinion 13-14, JA 13-14], and that the SPA
specifically provides that any false claims made in connection with the SPA are
subject to the FCA. It states:
Servicer acknowledges that the provision of false or misleading

information to Fannie Mae or Freddie Mac in connection with any of the
Programs or pursuant to the Agreement may constitute a violation of:
(a) Federal criminal law involving fraud, conflict of interest, bribery, or
gratuity violations found in Title 18 of the United States Code; or (b) the
civil False Claims Act (3 I U.S.C. §§ 3729-3733).
Amended and Restated Commitment to Purchase Financial Instrument and
Servicer Participation Agreement at B-4, Ex. 1 (emphasis added), JA 127.
Based on this agreement, there should be no question that any false claims
made by Chase in connection with compliance with either the Consent Judgment
or the HAMP are subject to the FCA.
23
D. Procedural Requirements of Contracts and Regulations Cannot

Supersede FCA Requirements.
Before this case, no court has ever held that relators, or the government,
must exhaust remedies before filing an FCA action. See United States ex rel. Spay
v. CVS Caremark Corp., No. 009-4672, 2013 WL 1755214, (E.D. Pa. April 24,
2013) (“Defendants have not cited—and this Court's own research cannot
unearth—any case or statutory provision imposing any exhaustion of
administrative remedies requirement on plaintiffs bringing FCA claims, either in
the Medicare context or any other context.”).
Even though there are no cases that support an exhaustion requirement
before the filing of an FCA action regarding the performance under a contract,
there are numerous cases that acknowledge the different remedies available to the
government to deal with mere contract violations on one hand and fraudulent
representations involving contract performance on the other. An early example is
United States v. Williams, 162 F. Supp. 903 (M.D. Ala. 1957), which held that a
final decision by the Armed Services Board of Contract Appeals does not preclude
the Government from bringing an action under the False Claims Act based upon
the same matters. Id. at 905.
Courts have recognized that the FCA is the appropriate remedy for fraud as
opposed to mere contract violations and provides different remedies than those
available under a contract. See United States ex rel. Steury v. Cardinal Health,
24
Inc., 625 F.3d 262, 268 (5th Cir. 2010) (The FCA is not a general ‘enforcement
device’ for federal statutes, regulations, and contracts.”) (citations omitted); see
also United States ex rel. Wilson v. Kellogg Brown & Root, Co., 525 F.3d 370, 383
(4th Cir. 2008), (“[B]reach of contract claims are not the same as fraudulent
conduct claims, and the normal run of contractual disputes are not cognizable
under the False Claims Act.”); Steury, 625 F.3d at 268 (explaining the “crucial
distinction between punitive FCA liability and ordinary breaches of contract”)
(citing United States v. Southland Mgmt. Corp., 326 F.3d 669, 680 (5th Cir.
2003)). And further, noting the essential difference between contract claims and
FCA claims, the Fourth Circuit has noted that “[i]f every dispute involving
contractual performance were to be transformed into a qui tam FCA suit, the
prospect of litigation in government contracting would literally have no end.”
Kellogg, 525 F.3d at 373. The District Court for the District of Columbia
expounded on the difference between the FCA and a contract dispute, while
recognizing the underlying policy considerations of the FCA:
To blur the distinction between fraud and breach of contract, then, is to

contradict the purpose of the statute. “Allowing [the FCA] to be used
in run-of-the-mill contract disagreements . . . would burden, not help,
the contracting process, thereby driving up costs for the government
and, by extension, the American public.”
25
United States v. Kellogg Brown & Root Servs., Inc., 800 F.Supp.2d 143, 155
(D.D.C. 2011) (quoting United States ex rel. Owens v. First Kuwaiti Gen. Trading
& Constr. Co., 612 F.3d 724, 726–27 (4th Cir. 2010).
Here, Schneider is not attempting to rectify a breach of contract, or obtain
compliance with the Consent Judgment, which would be the object of an action
filed under Paragraph J of Exhibit E. Instead, he filed an action alleging fraudulent
assertions of compliance with the requirements of the contract by Chase. The
distinction is important, because if the government were proceeding under a
contract enforcement action, it would have known that Chase was not in
compliance based on the work of the Monitor and would only be attempting to
secure that compliance. Indeed, the requirements of Paragraph J of Ex. E. apply
only to “enforcement actions under this Consent Judgment.” Ex E at E15, Add.
10. They do not apply to actions under the FCA. An FCA action is appropriate
here because Chase made false claims of compliance that were not contemplated
by the Consent Judgment.
As noted, the alternative dispute mechanism that the district court focuses on
is limited to disputes that the Monitor or the Monitoring Committee raises based on
Chase’s known practices. It does not deal with false claims and fraud of which the
Monitor or the Monitoring Committee are unaware. It is important to remember
that “the objective of Congress in enacting the False Claims Act ‘was broadly to
26
protect the funds and property of the Government from fraudulent claims,
regardless of the particular form, or function, of the government instrumentality
upon which such claims were made’. . . This remedial statute reaches beyond
‘claims’ which might be legally enforced, to all fraudulent attempts to cause the
Government to pay out sums of money.” United States v. Neifert-White Co., 390
U.S. 228, 233 (1968) (internal quotation marks and citation omitted). The district
court’s holding is similar to the argument that, when faced with an FCA action, the
court should defer to an agency’s primary jurisdiction. Most courts that have
confronted a primary jurisdiction argument have rejected it. See United States ex
rel. Wall v. Circle C Const., LLC, 697 F.3d 345, 353 (6th Cir. 2012). “This is
particularly true where the gravamen of the Complaint is that defendants defrauded
the Government by falsely certifying compliance with governing administrative
regulations.” United States ex rel. Taylor v. Gabelli, 345 F. Supp. 2d 340, 353
(S.D.N.Y.2004). Thus, even if the Consent Judgment—through the SPA—did not
provide for FCA enforcement, this action would still be proper.
E. The Government’s Separate Enforcement Actions Regarding Chase’s

Violations of the Bankruptcy and Foreclosure Servicing Standards
Demonstrate that the Government Did Not Have to Exhaust the
Remedies Contained in Exhibit E Before it Brought Those Actions.
As noted, both the U.S. Trustee Program (“USTP”) and the Office of the
Comptroller of the Currency (“OCC”) conducted enforcement actions and issued
penalties involving servicing practices that violated the servicing standards of the
27
Consent Judgment. SAC ¶¶ 167 -169, JA 67-68. Both of those settlements sprang
from actions that did not reference the Consent Judgment. There was no
suggestion that the monitoring committee was involved in those actions. Since
Chase entered into these settlements, it obviously did not object based on the view
that the government’s sole remedies were under Exhibit E of the Consent
Judgment. Therefore, these settlements represent adequate precedent, that the
provisions under Exhibit E of the Consent Judgment are not the government’s sole
remedies for addressing fraudulent servicing practices.
F. Giving Chase Notice of Schneider’s Allegations Before the Filing of

the Complaint Would Defeat the Purposes of the Seal and Potentially
Impact First-to-File Requirements and Public Disclosure Bar.
The exhaustion requirements of the Consent Judgment are completely at
odds with the procedures of the FCA. Giving Chase notice of a potential FCA
action against it would defeat the purpose of the seal requirement, and the first-to-
file rule and create public disclosure issues.
The seal requirement was inserted into the current statute in 1986 to assist
the government. As noted by the Supreme Court in State Farm Fire & Casualty
Co. v. United States ex rel. Rigsby:
At the time, “perhaps the most serious problem plaguing effective

enforcement” of the FCA was “a lack of resources on the part of Federal
enforcement agencies.” [S. Rep. No. 99–345, at 7 (1986)]. The Senate
Committee Report indicates that the seal provision was meant to allay
the Government’s concern that a relator filing a civil complaint would
alert defendants to a pending federal criminal investigation. Id. at 24.
28
137 S. Ct. 436, 443 (2017).
This benefit to the government would be lost if the relator were required to
disclose his allegations to the defendant before he filed his action. Obviously, if a
defendant learns that it may be subject to an investigation before it begins, the
defendant can take steps to clean up the documents that may confirm the fraud and
instruct potential witnesses how to respond to certain questions. Therefore, the
district court’s suggestion that the relator inform the defendant before filing an
FCA action against it is completely antithetical to the purposes of the seal
requirement.
In addition, disclosing the existence of his action prior to filing his complaint
could expose Schneider to public disclosure and first-to-file issues. For example,
the defendant could arrange for a story in the press that discusses the same issues
that would be addressed in the complaint. Such an action would be the basis for a
motion to dismiss on public disclosure grounds. No relator would want to be put
in the position of having to litigate that issue. Also, a delay could give another
relator an opportunity to file a similar action in another district court that would
effectively bar the relator that first raised the issue.
In short, the court’s requirement that a relator exhaust the government’s
remedies would be detrimental to the purposes of the statute and create
unnecessary uncertainties at the beginning of the case.

29
G. Schneider Effectively Gave the Monitoring Committee and Chase

Notice of His Allegations Before the Commencement of Litigation.
Even though Schneider was not obligated to follow the pre-litigation
exhaustion requirements of Exhibit E, by following the requirements of the FCA
he effectively accomplished the same result. Schneider notified DOJ and States
with FCA-like statutes more than 39 days prior to filing his action. SAC ¶ 50, JA
40. The Monitoring Committee is composed of some of the States that received
notice of Schneider’s FCA complaint. ECF Doc. # 11. Under Ex. E, Paragraph J
of the Consent Judgment this is all of the notice required of the federal government
before commencing an enforcement action. Under Paragraph J, the federal
government was not required to notify Chase prior to filling an enforcement action.
However, Chase was effectively notified of Schneider’s allegations when the
complaint was partially unsealed and given to Chase by the government in
November 2013 [ECF Doc. # 20] well before the complaint was formally served
and litigation commenced in May 2014. ECF Doc. # 56. During this time, Chase
had the opportunity to explain to the government why it was not in violation of the
Consent Judgment. Therefore, as a practical matter, the Monitoring Committee
and Chase received all of the notice required by the NMSA before Schneider was
able to commence litigation.
III. SCHNEIDER ALLEGED SERVICING PRACTICES BY CHASE

THAT VIOLATED THE HAMP PRIOR TO 2010.
30
The concluding sentence of the HAMP section of the district court’s opinion
states: “Without facts specific to HAMP and allegations regarding the materiality
of any misrepresentations concerning Chase’s HAMP-specific compliance
obligation, Relator’s FCA claims under HAMP must be dismissed.” Opinion at
19, JA 19. Schneider alleged that Chase made two false certifications in
September 2010. SAC ¶¶ 303-304, JA 94. The court stated:
In light of the terms set by Treasury, noncompliance with HAMP

would be shown only if Chase’s nonsolicitation of RCV1 loans for
HAMP modification had a material effect on Chase’s “ability to
comply” with the Making Home Affordable program requirements.
Relator makes no such allegations. His arguments concerning RCV1
loans eligible for modification focus on their eligibility under the
National Mortgage Settlement, not HAMP.
* * *
Both of these instances of alleged false claims occurred in 2010, before
the National Mortgage Settlement in 2012 and, therefore, any data
about RCV1 loans discharged and reported to the Monitor as a result of
the National Mortgage Settlement in 2012 or later are irrelevant to the
falsity of the alleged claims made under HAMP in 2010. Relator’s
Complaint focuses on actions during the 3-year compliance period of
the National Mortgage Settlement period and provides no allegations
identifying the “fact misrepresented” to the HAMP compliance monitor
in 2010.
Opinion at 18-19, JA 18-19.
The district court’s decision is both legally and factually erroneous. First,
the district court violated the rule that if there is any question regarding a pleading
issue, it must be resolved in favor of the plaintiff. “Ambiguities must be resolved
in favor of Plaintiff, giving him the benefit of every reasonable inference drawn
31
from the well-pleaded facts and allegations in the complaint.” Leftwich v.
Gallaudet Univ., 878 F. Supp. 2d 81, 90 (D.D.C. 2012).
Second, the district court’s narrow reading of the SAC ignores a number of
paragraphs in the SAC that allege, when read together, that the violations of the
HAMP long predated September 2010. For example:
10. Before the Consent Judgment was entered into, Chase sold a
significant amount of its mortgage obligations to individual investors.
Between 2006 and 2010, the Relator bought the rights to thousands of
mortgages owned and serviced by Chase. Unbeknownst to the Relator,
these mortgages were saturated with violations of past and present
regulations, statutes and other governmental requirements for first and
second federally related home mortgage loans. JA 30.
39. As explained in more detail below, Chase must certify that it is

in compliance with the SPA and the MHA program and must strictly
adhere to the guidelines and procedures issued by the Treasury with
respect to the programs outlined in the Service Schedules (“Program
Guidelines”). The Program Guidelines pursuant to the Treasury
Directives are cataloged in the MHA Handbook (“Handbook”). None
of the loans that Chase and EMC identified and submitted for payment
against their respective Participation Caps were eligible for the
incentive payment, because neither Chase nor EMC complied with the
SPA and Handbook guidelines. Specifically, all loan modification
programs must be made available to all borrowers, who must then apply
to determine eligibility. Hundreds of thousands of borrowers’
mortgage loan accounts in the RCV1 system of records were not offered
and thereby unable to be considered for all eligible loss mitigation
options (even though they likely could have qualified). Due to the
omission of the RCV1 population for any loss mitigation options, none
of the modifications that Chase provided qualified for HAMP
incentives. Thus, Chase does not qualify for any of the HAMP
incentives for which it applied and received funds. JA 37.
173. In short, the RCV1-SOR is a loose collection of once compliant

loans that Chase has relegated to the No Man’s Land of the bank where
32
these mortgage loans and the associated borrowers are ignored to the
point where compliance with any regulatory body is impossible. JA 70.
188. The practice of porting loans out of the primary SOR and into the
RCV1-SOR began as early as 2000 when JP Morgan & Company
merged with Chase Manhattan Corporation. JA 72.
194. Internal documents of Chase demonstrate that the RCV1
contains mortgage loans whose borrowers have had no contact with
Chase since as far back as 2000, more than a decade before such loans
were then vetted for potential inclusion within the Consumer Relief
portions of the Consent Judgment. JA 194.
These paragraphs and others demonstrate that the SAC alleged that material
violations of the HAMP occurred before 2010. Indeed, the whole discussion of the
defective servicing practices of the loans in RCV-1 at Paragraphs 172-199 of the
SAC [JA 70-75] indicates that those practices were longstanding, dating back to
the year 2000. Chase’s practice of not servicing the loans contained RCV1,
including the failure to offer loan modifications to those borrowers, made it
impossible for Chase to comply with the requirements of the HAMP from that
date.
As stated in the SAC at Paragraph 20:
The mere existence of RCV1 makes all claims by Chase that it

complied with the Servicing Standards and the Consumer Relief
Requirements of the Consent Judgment false. Likewise, the existence
of RCV1 makes all claims by Chase that it complied with the SPA of
the MHA program false. JA 34.
33
Thus, Schneider’s allegations that the certifications Chase made in 2010 were false
were sufficiently pled so that the district court should have given Schneider the
benefit of the inference that Chase was in violation of the HAMP prior to that date.
Schneider filed the FAC and SAC specifically because he realized that the
fraud he discovered related the Chase’s servicing practices affected the loans that
he purchased between 2006 and 2010, and therefore, were in violation of the
HAMP prior to the time when Chase filed its false certifications of compliance.
This allegation is contained in Paragraph 10 of the SAC, set out above. This
allegation alone should satisfy the court that Schneider alleged violations of the
HAMP that would have made the certifications filed in 2010 false.
CONCLUSION
For the foregoing reasons, Appellant Laurence Schneider, respectfully
requests that the Court:
1. Reverse and remand the district court’s decision that Schneider was
required to exhaust the pre-litigation procedures of Exhibit E of the Consent
Judgment before he filed his FCA action;
2. Reverse and remand the district court’s finding that Schneider failed
to allege material violations of the HAMP occurring before 2010. Alternatively,
Schneider requests that the Court remand with instructions permitting him to
34
amend his complaint to clarify his allegations regarding violations of the HAMP
occurring before 2010.
Dated: May 17, 2017 Respectfully submitted,
/s/ Joseph A. Black

JOSEPH A. BLACK
DANIEL E. COHEN
The Cullen Law Firm, PLLC
1101 30th Street NW, Suite 300
Washington, DC 20007
Tel: (202) 944-8600
Fax: (202) 944-8611
ROBERT L. DI MARCO
WALKER & DI MARCO, P.C.
350 Main Street, First Floor
Malden, MA 02148
Tel: (781) 322-3700
Fax: (781) 322-3757
Counsel for Appellant
35
CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME

LIMITATION
This brief complies with the type-volume limitation of Fed. R. App. P.
32(a)(7)(C) and Cir. R. 32 (1) in that the brief contains 8,221 words excluding
those parts exempted by Fed. R. App. P. 32(a)(7)(B)(iii).
Dated: May 17, 2017 /s/ Joseph A. Black

Joseph A. Black
CERTIFICATE OF SERVICE
I hereby certify that on this 17th day of May, 2017 an electronic copy
of Appellant’s Opening Brief, was served via CM/ECF system to all parties of
record.
Dated: May 17, 2017 /s/ Joseph A. Black

JOSEPH A. BLACK
The Cullen Law Firm, PLLC
1101 30th Street NW, Suite 300
Washington, DC 20007
Tel: (202) 944-8600
Fax: (202) 944-8611

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USCA Case #17-7003 Document #1675663 Filed: 05/17/2017 Page 1 of 45

Case No. 17-7003

UNITED STATES COURT OF APPEALS

UNITED STATES et al.,

J.P. MORGAN CHASE BANK, N.A., et al.

On Appeal from a Final Order of the

Civil Action No. 14-1047 (RMC)

May 17, 2017 Counsel for Appellant

CORPORATE DISCLOSURE STATEMENT

Pursuant to Federal Rules of Appellate Procedure 26.1, Appellant Laurence

CORPORATE DISCLOSURE STATEMENT……………………………………..i

GLOSSARY OF ABBREVIATIONS…………………………………..……… .. vii

STATEMENT OF ISSUES………………………………………… ....................... 2

STATEMENT OF THE CASE……………………………………………………. 3

II. SCHNEIDER WAS NOT REQUIRED TO FOLLOW THE PRE-

C. The SPA Signed by Chase Makes the Consent Judgment Subject to

D. Procedural Requirements of Contracts and Regulations Cannot

E. The Government’s Separate Enforcement Actions Regarding

F. Giving Chase Notice of Schneider’s Allegations before the Filing

G. Schneider Effectively Gave the Monitoring Committee and

III. SCHNEIDER ALLEGED SERVICING PRACTICES BY CHASE

EEOC v. Waffle House, Inc.,

Kowal v. MCI Commc’ns Corp.,

Leftwich v. Gallaudet Univ.,

Lujan v. Defenders of Wildlife,

U.S. ex rel. Eisenstein v. City of New York,

United States ex rel. Kelly v. Boeing Co.,

United States ex rel. Morgan v. Sci. Application Int’l Co.,

United States ex rel. Phipps v. Comprehensive Cmty. Dev. Corp.,

United States ex rel. Spay v. CVS Caremark Corp.,

United States ex rel. Steury v. Cardinal Health, Inc.,

United States ex rel. Taylor v. Gabelli,

United States ex rel. Wall v. Circle C Const., LLC,

United States ex rel. Walsh v. Eastman Kodak Co.,

United States ex rel. Wilson v. Kellogg Brown & Root,Co.

United States v. Kellogg Brown & Root Servs., Inc.,

United States v. Neifert-White Co.,

United States v. Southland Mgmt. Corp.,

United States v. Williams,

Rockefeller v. Westinghouse Elec. Co.,

28 U.S.C. § 1291 ........................................................................................................1

28 U.S.C. § 1345 ........................................................................................................1

31 U.S.C. § 3730(c)(1) .............................................................................................20

31 U.S.C. § 3730(c)(2)(B) .......................................................................................20

31 U.S.C. § 3730(c)(3) .............................................................................................20

31 U.S.C. § 3732(a) ...................................................................................................1

31 U.S.C. §§ 3729–3733 ........................................................................................1, 4

FCA False Claims Act

FAC First Amended Complaint

HAMP Home Affordable Modification Program

MHA Making Home Affordable

NMSA National Mortgage Settlement Agreement

OCC Office of the Comptroller of the Currency

RCV1 or RCV1 SOR Recovery One Population

SAC Second Amended Complaint

SPA Amended and Restated Commitment to

SOR System of Records

3729–3733 (“FCA”) by Appellant Laurence Schneider, acting for himself and on