Eastern Savings Bank, FSB v. Souphaphone et al
RULING denying 25 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Janet C. Hall on 4/9/2014. (Malone, P.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
EASTERN SAVINGS BANK, FSB,
SOUPHAPHONE et al.,
CIVIL ACTION NO.
APRIL 9, 2014
RULING RE: DEFENDANTS’ MOTION TO DISMISS (Doc. No. 25)
Defendants, Robert Zweygartt and Mousky Souphaphone (“Homeowners”),
move to dismiss the one-count Complaint of the plaintiff, Eastern Savings Bank, FSB
(“Eastern”). Defendants’ Motion to Dismiss (Doc. No. 25) at 1 (“Defs.’ Mot. to Dismiss”).
While New England Dental Center is a named defendant in this action, this Motion is
solely brought on behalf of the Homeowners. Id. Homeowners contend that Eastern’s
claim seeking to foreclose upon a mortgage from the Homeowners must be dismissed
pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter
jurisdiction. Id. at 2.
For the reasons set forth below, Homeowners’ Motion to Dismiss is DENIED.
FACTUAL AND PROCEDURAL BACKGROUND
On or about December 28, 2005, Homeowners borrowed $154,000.00 from
Eastern, executing and delivering to Eastern a promissory note (the “Note”) in the
original principal amount of $154,000.00. Complaint (“Compl.”) at ¶ 6. In order to
secure the Note, Homeowners executed and delivered to Eastern a mortgage on the
property known as 89 Dudley Town Road, Windsor, Connecticut, where the
Homeowners reside. Id. at ¶¶ 4, 7. “The Mortgage was dated December 28, 2005 and
recorded December 29, 2005 in Volume 1533 at Page 202 of the Windsor Land
Records.” Id. Eastern alleges that the Note is in default and that it provided written
notice to the Homeowners of their default under the Note and Mortgage. Id. at ¶ 9.
Eastern alleges that despite this notice, the Homeowners have failed to cure the default.
Id. Eastern has elected to accelerate the unpaid balance due under the Note, declaring
the Note to be due in full. Id. at ¶ 10. Eastern further alleges that the amount due on
the Note as of September 11, 2013, is $163,549.27.1 Id. Eastern filed this action
seeking to foreclose the mortgage against the Homeowners’ property and obtain a
deficiency judgment. Id. at ¶ 16.
STANDARD OF REVIEW
Pursuant to Federal Rule of Civil Procedure 12(b)(1), the court dismisses a suit
for lack of subject matter jurisdiction “when the district court lacks the statutory or
constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d
Cir. 2000). In determining whether to dismiss for lack of subject matter jurisdiction, “a
court must accept as true all material factual allegations in the complaint.” Shipping Fin.
Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998) (citing Scheuer v. Rhodes,
416 U.S. 232, 236 (1974)). However, “jurisdiction must be shown affirmatively, and that
showing is not made by drawing from the pleadings inferences favorable to the party
asserting it.” Id. (citing Norton v. Larney, 266 U.S. 511, 515 (1925)). In assessing a
Rule 12(b)(1) motion, a court “may refer to evidence outside the pleadings.” Makarova,
201 F.3d at 113 (citing Kamen v. American Tel. & Tel. Co., 791 F.2d 1006, 1011 (2d
Cir.1986)). On a Rule 12(b)(1) motion, the plaintiff bears the burden of proving by a
This amount includes interest, pre-acceleration late charges, collection costs, and
advancements for taxes and insurance. Compl. at ¶ 10.
preponderance of the evidence that subject matter jurisdiction exists. Makarova, 201
F.3d at 113 (citing Malik v. Meissner, 82 F.3d 560, 562 (2d Cir. 1996); Liranzo v. United
States, 690 F.3d 78, 84 (2d Cir. 2012) (citing Aurecchione v. Schoolman Transp. Sys.,
Inc., 426 F.3d 635, 638 (2d Cir.2005)).
Eastern contends that the court has subject matter jurisdiction over this case
pursuant to 28 U.S.C. § 1332(a)(1), because the parties are citizens of different states
and the amount in controversy exceeds $75,000.00. Compl. at ¶ 1. Eastern alleges
that, as a federal savings bank with its home office located in Maryland, it is considered
a resident of Maryland pursuant to 12 U.S.C. § 1464(x).2 Id. at ¶ 3. The Homeowners
argue that the Connecticut “Superior Court exercises exclusive jurisdiction over
foreclosure actions” in Connecticut pursuant to section 51-1643 of the Connecticut
General Statutes; and therefore, the “United States District Court for the District of
Connecticut lacks subject matter jurisdiction to adjudicate a foreclosure action
concerning real property located in Connecticut.” Defs.’ Mot. to Dismiss at 3.
Section 51-164s of the Connecticut General Statutes provides:
The superior court shall be the sole court of original jurisdiction for
all causes of action, except such actions over which the courts of
probate have original jurisdiction, as provided by statute. All
jurisdiction heretofore conferred upon and exercised by the court of
Subsection 1464(x) of title 12 of the United States Code provides that, “[i]n determining whether
a Federal court has diversity jurisdiction over a case in which a Federal savings association is a party, the
Federal savings association shall be considered to be a citizen only of the State in which such savings
association has its home office.” 12 U.S.C. § 1464(x).
Although the Homeowners cite to section 51-164 of the Connecticut General Statutes in support
of their argument that Connecticut superior courts exercise exclusive jurisdiction over foreclosure actions,
Defs.’ Mot. to Dismiss at 3, there is no section 51-164. Therefore, the court assumes that the
Homeowners are referring to section 51-164s of the Connecticut General Statutes.
common pleas and the juvenile court prior to July 1, 1978 shall be
transferred to the superior court on July 1, 1978.
Conn. Gen. Stat. § 51-164s. Connecticut case law demonstrates that the legislature’s
objective in enacting section 51-164s “was ‘to combine the trial jurisdiction which [was
then] spread between the Superior Court, the Court of Common Pleas and the Juvenile
Court into one Court . . . the Superior Court.’” In re Shonna K., 77 Conn. App. 246, 25455 (2003) (quoting 19 H.R. Proc., Pt. 7, 1976 Sess., p. 2862, remarks of Representative
James T. Healey); see also State v. Kelley, 206 Conn. 323, 328 (1988) (stating that
section 51-164s “merged the Juvenile Court and the Superior Court in order to
maximize the efficiency of scarce judicial resources”). Section 51-164s cannot be, and
was not, intended to limit the adjudication of foreclosure actions to the state courts.
Moreover, federal law makes clear that a plaintiff is statutorily permitted to invoke
a federal court’s diversity jurisdiction. See 28 U.S.C. § 1332(a)(1). Article III, section 1,
of the United States Constitution provides in pertinent part: “The judicial Power of the
United States, shall be vested in one supreme Court, and in such inferior Courts as the
Congress may from time to time ordain and establish.” U.S. Const. art. III, § 1. Under
Article III, section 2, authority is extended to the federal courts to hear all “Controversies
. . . between Citizens of different States.” U.S. Const. art. III, § 2, cl. 1. Consequently,
because “[o]nly the jurisdiction of the Supreme Court is derived directly from the
Constitution,” all other courts “created by the general government derive . . .
jurisdiction wholly from the authority of Congress.” Kline v. Burke Const. Co., 260 U.S.
226, 234 (1922). Congress “may give, withhold or restrict such jurisdiction at its
discretion, provided it be not extended beyond the boundaries fixed by the Constitution.”
Section 1332(a) clearly confers upon federal district courts “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,” such that
state law cannot divest the federal court of subject matter jurisdiction. 28 U.S.C. §
1332(a)(1). Therefore, contrary to the Homeowners’ contentions, this state statute
cannot possibly grant exclusive jurisdiction over foreclosure actions in Connecticut to
Connecticut state courts to the exclusion of federal diversity jurisdiction.
Despite the Homeowners’ argument that, if this case were to proceed in this
court, they would be deprived of participation in the foreclosure mediation program
offered to homeowners in the Superior Court of Connecticut,4 Defs.’ Mot to Dismiss at 4,
the plaintiff has a statutory right to select the forum in which it will seek relief, see 28
U.S.C. § 1332(a)(1). Because the parties are citizens of different states and the amount
in controversy unquestionably exceeds $75,000.00, the requirements of section
1332(a)(1) have been satisfied. 28 U.S.C. § 1332(a)(1). Therefore, the court may
properly exercise subject matter jurisdiction over the instant action.
For the reasons set forth above, the court DENIES defendant’s Motion to
Section 49-31m of the Connecticut General Statutes establishes that each judicial district in
Connecticut shall have a foreclosure mediation program, which addresses all issues relating to the
foreclosure and is conducted by foreclosure mediators. Conn. Gen. Stat. § 49-31m. However, the
mediation program is simply a procedure incident to a state court proceeding and does not create a
substantive right. That the federal courts may not “deny substantive rights created by State law . . . does
not mean that whatever equitable remedy is available in a State court must be available in a diversity suit
in a federal court.” Guar. Trust Co. of N.Y. v. York, 326 U.S. 99, 105 (1945).
Dated at New Haven, Connecticut this 9th day of April, 2014.
/s/ Janet C. Hall
Janet C. Hall
United States District Judge
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