The ongoing saga between Detroit-based mortgage lender Quicken Loans, Inc. (“Quicken”) and the U.S. Department of Justice (“DOJ”) continues, as on April 29, 2015, Quicken filed a motion to stay or transfer the DOJ’s pending lawsuit in the U.S. District Court for the District of Columbia. The motion alleges that the DOJ’s complaint filed on April 23, 2015, is duplicative of the lawsuit filed by Quicken on April 17, 2015, in the U.S. District Court for the Eastern District of Michigan, and that the DOJ is attempting to engage in forum shopping. On May 4, 2015, the D.C. Circuit filed an order to show cause for the DOJ to explain why the suit should not be stayed or transferred to the Eastern District of Michigan on or before May 14, 2015.
Quicken’s complaint alleged misconduct on the DOJ’s part for attempting to force a multi-million dollar settlement from Quicken over minor FHA compliance issues, and asked for a declaratory judgment that Quicken operated within FHA guidelines. The DOJ’s complaint in turn alleged that Quicken knowingly violated FHA guidelines and repeatedly covered its tracks to avoid being discovered.
Quicken offers two primary reasons why the D.C. Circuit lawsuit should be stayed or transferred: (1) the Detroit lawsuit, filed a week before the D.C. lawsuit, takes priority; and (2) the DOJ engaged in forum shopping when bringing its suit in the D.C. Circuit.
First, Quicken argues that both complaints arise from the same transaction or occurrence, and so the Detroit lawsuit should be decided first. Because Quicken filed in Detroit before the DOJ filed in the District of Columbia, so Quicken argues that at a minimum, the U.S. Court for the Eastern District of Michigan must decide which court should proceed first with the litigation. Quicken thus requested that the D.C. Circuit case be stayed because a court of first impression should determine which court should be the first to adjudicate the dispute. Quicken additionally contends that the general rule to offer priority to a first-filed lawsuit is followed by the D.C. Circuit, and so the Eastern District of Michigan is the more appropriate forum. Because its lawsuit is broader than the D.C. Circuit lawsuit, Quicken also claims that the Detroit lawsuit provides a more comprehensive resolution of the dispute between Quicken and the DOJ.
Next, dismissing the DOJ’s complaint as “duplicative,” Quicken argues that the DOJ engaged in forum shopping by filing its lawsuit in the D.C. Circuit. The alleged misconduct occurred in Detroit, and all of the known witnesses and evidence are located in Detroit. Although the DOJ argues that venue is proper in the District of Columbia because the FHA headquarters is located there, Quicken argues that this factor is given no material weight by the D.C. Circuit, and that the FHA program is carried out throughout the country, and is not exclusive to the District of Columbia. Quicken argues that there is no real connection between the lawsuit and FHA headquarters. The claims instead arose from alleged conduct which took place in Detroit, and that Detroit is more convenient for the parties because all known witnesses are located there. Quicken also claims that a transfer to Detroit would “facilitate the public interest in justice.” That is to say, the lawsuit can be disposed of quicker in Detroit due to the relative court congestion in the D.C. Circuit, and courts have an interest in seeing local controversies resolved where they arise. Quicken claims that Michigan has a substantial interest in deciding a case when all of the relevant conduct occurred there and involves a local company like Quicken.
It remains to be seen whether the D.C. Circuit will agree that it should yield to the pending Detroit lawsuit. However, the analysis will likely consider whether the DOJ engaged in forum shopping when bringing its lawsuit, as Quicken contends, or whether the D.C. Circuit believes Quicken attempted to shop for its own forum before the DOJ filed its suit.