United States District Court, S.D. Mississippi, Southern Division
U.S. BANK NATIONAL ASSOCIATION PLAINTIFF
UNITED STATES SMALL BUSINESS ADMINISTRATION DEFENDANT
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF U.S.
BANK NATIONAL ASSOCIATION'S MOTION  FOR SUMMARY
JUDGMENT AND GRANTING DEFENDANT U.S. SMALL BUSINESS
ADMINISTRATION'S MOTION  TO DISMISS OR, IN THE
ALTERNATIVE, FOR SUMMARY JUDGMENT
SULEYMAN OZERDEN UNITED STATES DISTRICT JUDGE
THE COURT are the Motion  for Summary Judgment filed by
Plaintiff U.S. Bank National Association, as Trustee for
Structured Asset Securities Corporation, Mortgage
Pass-through Certificates 2006-EQ1 (“Plaintiff”
or “U.S. Bank”) and the Motion  to Dismiss
or, in the Alternative, for Summary Judgment filed by
Defendant United States Small Business Administration
(“Defendant” or “SBA”). Both Motions
are fully briefed. Having considered the submissions of the
parties and relevant legal authority, the Court is of the
opinion that Defendant's Motion  to Dismiss should be
granted and Plaintiff's claims should be dismissed for
lack of subject-matter jurisdiction. Plaintiff's Motion
 for Summary Judgment should be denied as moot.
dispute centers on the proceeds of a foreclosure sale
conducted by Defendant SBA. On May 3, 2006, Lee Vern Williams
and Renee E. Williams (“the Williamses”)
purchased a residence located in D'Iberville, Mississippi
(“the Subject Property”). Am. Compl.  at 2.
The Williamses borrowed $64, 950.00 from EquiFirst
Corporation (“EquiFirst”), Plaintiff U.S.
Bank's predecessor-in-interest, to finance the
purchase. Mem. Supp. U.S. Bank Mot.  at 1.
According to Plaintiff, the EquiFirst loan proceeds were
applied to pay off an existing first mortgage lien in favor
of Regions Mortgage in the amount of $77, 886.84.
Id. at 2-3; Ex. “D” Settlement Statement
[13-4]. According to Plaintiff, “[b]y paying off the
existing mortgage in favor of Regions Mortgage, EquiFirst
Corporation fully intended to have a first priority lien
against the Subject Property.” Am. Compl.  at 4.
Williamses executed a Deed of Trust (“the U.S. Bank
Deed of Trust”) in favor of Mortgage Electronic
Registration System (“MERS”), as nominee for
EquiFirst, that was recorded in the Office of the Chancery
Clerk of Harrison County, Mississippi, Second Judicial
District, at 1:43 p.m. on May 23, 2006, as Instrument 2006
3778T-J2. Id.; Ex. “C” U.S. Bank Deed of
Trust [13-3] at 1. On May 9, 2014, MERS assigned all of its
rights under the U.S. Bank Deed of Trust to U.S. Bank, as
Trustee for Structured Asset Securities Corporation, Mortgage
Pass-Through Certificates, Series 2006-EQ 1. Am. Compl. 
at 5; Ex. “H” Corporate Assignment of Deed of
addition to the EquiFirst mortgage, the Williamses secured a
separate loan from Defendant SBA in the amount of $51, 600.00
in order to finance the purchase of the Subject Property. Am.
Compl.  at 3. Defendant had initially agreed to provide
the Williamses with $58, 000.00 in the form of a SBA disaster
loan for the purpose of repairing or replacing their previous
residence and its contents located at 364 Crawford Street in
Biloxi, Mississippi, which was damaged during Hurricane
Katrina in August 2005. Mem. Supp. SBA Mot.  at 2-3.
However, the Williamses requested that Defendant allow them
to use the disaster loan proceeds to purchase the Subject
Property instead of repairing their damaged Biloxi residence.
Id. at 3.
approved the Williamses' request in April 2006, amending
the prior loan agreement and reducing the loan amount to $51,
600.00. Id. Defendant calculated the reduced loan
amount as the difference between the purchase price of the
Subject Property, $129, 900.00, and the $78, 300.00 available
to the Williamses, which the SBA determined to be the sum of
$69, 300.00 in insurance proceeds and FEMA funds, plus $9,
000.00 in personal funds. Id. According to
Defendant, the Williamses did not disclose to the SBA that
they intended to obtain other financing for the purchase of
the Subject Property, and Defendant had no knowledge of
either the EquiFirst loan or the preexisting Regions Mortgage
lien in place at the time of the sale. Id.; Sarra
Decl. [49-1] at 2-3.
Williamses executed a Deed of Trust (“the SBA Deed of
Trust”) on May 3, 2006, granting SBA a lien and
security interest in the Subject Property. This Deed of Trust
was recorded in the Office of the Chancery Clerk of Harrison
County, Mississippi, Second Judicial District, on May 23,
2006, as Instrument 2006 3774T-J2 at 1:35 p.m., or eight
minutes before the U.S. Bank Deed of Trust was recorded. Am.
Compl.  at 4; Ex. “E” SBA Deed of Trust
[13-5] at 1. As a result of the order in which the Deeds of
Trust were recorded, Defendant SBA obtained a first priority
lien position ahead of EquiFirst, Plaintiff U.S. Bank's
predecessor-in-interest. Am. Compl.  at 4; see
also Miss. Code Ann. § 89-5-5 (in Mississippi, the
priority positions of deeds of trusts are “governed by
the priority in time of the filing of the several
early 2014, the SBA loan was in default. Mem. Supp. SBA
Mot.  at 6. After being unable to negotiate a workout
plan, Defendant initiated foreclosure proceedings in November
2014. Id. In December 2014, Defendant appointed
Underwood Law Firm PLLC (“Underwood”) as
substitute trustee on the SBA Deed of Trust. Id. at
7. On January 31, 2015, Underwood published a Notice of Sale
of the Subject Property and notified U.S. Bank, as junior
lienholder, by letter of the scheduled foreclosure sale.
Id.; Wright Decl. [40-2] at 2-3, 19. The foreclosure
sale took place as scheduled on March 3, 2015. Mem. Supp. SBA
Mot.  at 7. Underwood accepted the highest bid of $49,
042.00, which was sufficient to satisfy the SBA loan in full
and resulted in excess proceeds of $1, 486.93. Id.
initiated this litigation by filing a Complaint [1-1] on July
11, 2016, in the Chancery Court of Harrison County,
Mississippi, alleging that “[b]ecause the aforesaid
Deeds of Trust were recorded out of order, the SBA
erroneously obtained a first priority lien against the
Subject Property, ” and that SBA was unjustly enriched
by receipt of the sale proceeds from the foreclosure. Compl.
[1-1] at 8. Defendant removed the case to this Court on
August 12, 2016, pursuant to 42 U.S.C. § 1442(a)(1).
Not. of Removal  at 2.
subsequently filed an Amended Complaint  on December 2,
2016, which asserts claims for unjust enrichment, declaratory
judgment, equitable subrogation, negligence, and equitable
estoppel. Am. Compl.  at 6-11. Plaintiff seeks a monetary
award in the amount of the $49, 042.00 Defendant received
from the foreclosure sale and a declaratory judgment that the
U.S. Bank Deed of Trust enjoys a first lien position under
the doctrine of equitable subrogation. See Id. at 7.
Motion  for Summary Judgment, Plaintiff urges the Court
to apply the doctrine of equitable subrogation, under which
Plaintiff's later-filed lien might be substituted into
the primary lienholder position ahead of Defendant's
lien. Mem. Supp. U.S. Bank Mot.  at 7. Plaintiff
maintains that “[p]rior to the loan closing, EquiFirst
instructed its closing agent that it required a good, valid,
recorded, first deed of trust to secure the loan” and
that the SBA Deed of Trust was erroneously recorded before
the U.S. Bank Deed of Trust. Id. at 2. Plaintiff
seeks a judgment as a matter of law that it is entitled to
the foreclosure sale proceeds in the amount of $49, 042.00.
Id. at 9.
Motion  to Dismiss or, in the Alternative, for Summary
Judgment, raises sovereign immunity as a defense to all
claims asserted against it. Mot.  at 1-2. Plaintiff
apparently does not contest Defendant's argument that the
Court lacks subject-matter jurisdiction over its negligence
claim on grounds that Plaintiff did not present a written
claim for damages to Defendant as required by the Federal
Tort Claims Act (“FTCA”), 28 U.S.C. §§
1346(b), 2671-2680. See Pl.'s Resp. to Req. for
Adm. [40-4] at 2.
argues that the remaining claims for unjust enrichment,
equitable subrogation, equitable estoppel, and declaratory
judgment are subject to dismissal because they do not fall
within any waiver of sovereign immunity, depriving this Court
of subject-matter jurisdiction. Mem. Supp. SBA Mot.  at
2. Alternatively, Defendant seeks summary judgment as to
Plaintiff's remaining claims on the theory that ...