ZAROUR v. JPMORGAN CHASE BANK, N.A.

Filing 25

OPINION. Signed by Judge Noel L. Hillman on 2/21/2017. (tf,)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

SIMON ZAROUR,

14-cv-06261-NLH-AMD
Plaintiff,

OPINION

v.
JPMORGAN CHASE BANK, N.A.,
Defendant.

APPEARANCES:
TOMAS ESPINOSA
8324 KENNEDY BLVD.
NORTH BERGEN, NJ 07047
On behalf of Plaintiff
BRIAN PETER SCIBETTA
RICHARD P. HABER
BUCKLEY MADOLE, P.C.
99 WOOD AVENUE SOUTH, SUITE 803
ISELIN, NJ 08830
On behalf of Defendant
HILLMAN, District Judge
Pending before the Court is the motion of Defendant,
JPMorgan Chase Bank, N.A. (“Chase” or “Defendant”), to dismiss
the complaint of plaintiff, Simon Zarour.

Zarour claims that

Defendant, as mortgagee of his property, should have forceplaced flood insurance on his home, which was significantly
damaged in Superstorm Sandy, when plaintiff lapsed on his own
coverage.

For the reasons expressed below, Defendant’s motion

will be granted, and the matter dismissed for lack of subject

matter jurisdiction.
BACKGROUND & DISCUSSION
According to Plaintiff’s complaint, Plaintiff is the owner
of a home located at 32 Ocean Avenue, Monmouth Beach, New Jersey
(the “Property”).

Chase is the mortgagee on the Property.

The

Property was designated by FEMA as located in Zone VE, which is
a flood-prone area requiring flood insurance.

Chase did not

purchase or force-place a flood insurance policy on the
Property, and Plaintiff failed to maintain this type of
insurance on the Property himself.

On October 29, 2012,

Superstorm Sandy made landfall in New Jersey and caused
significant damage to the Property in excess of $600,000.

The

damage incurred by the Property was not covered by flood
insurance.
Plaintiff asserts a claim of negligence against Chase for
its purported failure to ensure that the Property had sufficient
insurance coverage in accordance with federal law.

Plaintiff

also asserts a breach of contract claim against Chase for
violating the terms of the mortgage, which he alleges
necessarily included any and all obligations of a mortgagee
imposed by federal law.

Plaintiff seeks compensatory damages in

the combined amount of $1,500,000, in addition to consequential
and punitive damages, and attorneys’ fees.
Chase has moved to dismiss Plaintiff’s complaint, arguing
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that there is no private right of action under the Flood
Disaster Protection Act of 1973 (“FDPA”), and its related
regulations, including the National Flood Insurance Act of 1968
(“NFIP”), 42 U.S.C. § 4001-4129, and Plaintiff’s state law
claims based on alleged conduct that would constitute a
violation of the FDPA and its related regulations are preempted
by the FDPA.

Chase also argues that Plaintiff has not pled the

requisite elements of claims for negligence or a breach of
contract, and those claims fail as a matter of law. 1
Plaintiff originally filed his complaint in this Court,
claiming that subject matter jurisdiction under 28 U.S.C. §
1332(a) because there is complete diversity of citizenship of
the parties and the amount in controversy exceeds $75,000.
Plaintiff also asserted that subject matter jurisdiction exists
pursuant to 28 U.S.C. § 1331 because “claims presented in this
Complaint will require the interpretation of Federal law and
Regulations.”

(Compl. ¶ 3.)

Plaintiff, however, has not specifically asserted claims
against Chase for violation of federal law.

1

Plaintiff does not

After briefing was completed on Chase’s motion to dismiss, the
matter was placed on the Master Docket that was created for
“Write Your Own” flood insurance carrier cases arising out of
properties flooded by Superstorm Sandy, and stayed for a period
of time. It was eventually determined that this case was
erroneously associated with the Master Sandy docket, and the
matter was removed from the Master Sandy docket and reactivated.
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allege that Chase directly violated the FDPA, and in opposition
to Chase’s motion to dismiss, Plaintiff does not dispute that he
cannot assert a private cause of action under the FDPA, as
pointed out by Chase in its motion. 2

Instead, Plaintiff contends

that Chase acted negligently and breached the parties’ mortgage
contract 3 by not force-placing flood insurance on his property in
violation of state law, even though that requirement arises
under the FDPA.

Based on Plaintiff’s contention that his claims

are grounded on state law, Plaintiff asks that his claims be
dismissed without prejudice so he can replead them accordingly.
Chase argues that Plaintiff’s state law claims implicate
the FDPA, and they are therefore preempted by federal law and
barred.

As a result, Chase argues that the dismissal of

Plaintiff’s claims should be with prejudice, because even though
Plaintiff wishes to pursue state law claims, he has not, and

2

See Psychiatric Solutions, Inc. v. Fidelity National Property
and Casualty Ins. Co., 652 Fed. Appx. 122, 125 (3d Cir. June 16,
2016) (explaining that Third Circuit precedent stands for the
proposition that both state contract claims and state claims
sounding in tort but intimately related to the disallowance of
an insurance claim are preempted under the NFIP (quotations and
citations omitted)); Oates v. Wells Fargo Bank, N.A., 880 F.
Supp. 2d 620, 624 (E.D. Pa. 2012) (“Congress did not expressly
confer a private right of action in the FDPA. And courts that
have considered the issue have concluded that no private right
of action exists.”).
3

Plaintiff refers to ¶ 5 of the mortgage, which provides, “If
Borrower fails to maintain any of the coverages described above,
Lender may obtain insurance coverage at Lender’s option and
Borrower’s expense.” (Compl. ¶ 23, Docket No. 1 at 6.)
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cannot, articulate how those claims would not implicate the
FDPA.
Before substantively addressing the parties’ arguments,
however, the Court must firmly establish subject matter
jurisdiction.

See Zambelli Fireworks Mfg. Co., Inc. v. Wood,

592 F.3d 412, 418 (3d Cir. 2010) (providing that federal courts
have an independent obligation to address issues of subject
matter jurisdiction sua sponte and may do so at any stage of the
litigation).

As noted above, Plaintiff premises subject matter

jurisdiction over his case on both § 1331 and § 1332.

Because

it is undisputed that Plaintiff’s claims either do not allege,
or cannot allege, violations of federal law, subject matter
jurisdiction under § 1331 is lacking.
With no federal claims, and no jurisdiction under § 1331,
two other bases for subject matter jurisdiction potentially
exist – 28 U.S.C. § 1367(a) or § 1332.

Under § 1367(a), “in any

civil action of which the district courts have original
jurisdiction, the district courts shall have supplemental
jurisdiction over all other claims that are so related to claims
in the action within such original jurisdiction that they form
part of the same case or controversy under Article III of the
United States Constitution.”

A district court may decline to

exercise supplemental jurisdiction over a claim under subsection
(a), however, if (1) the claim raises a novel or complex issue
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of State law, (2) the claim substantially predominates over the
claim or claims over which the district court has original
jurisdiction, (3) the district court has dismissed all claims
over which it has original jurisdiction, or (4) in exceptional
circumstances, there are other compelling reasons for declining
jurisdiction.

Id. § 1367(c).

Section 1367(a) is typically implicated when a plaintiff
has advanced both federal law claims and state law claims, there
is no basis for subject matter jurisdiction other than under §
1331, and the federal claims are dismissed or otherwise fall out
of the case.

In that situation, a court must determine whether

to continue exercising supplemental jurisdiction over the state
law claims by assessing various factors.

See Chicago v.

International College of Surgeons, 522 U.S. 156, 173 (1997)
(“Depending on a host of factors, then - including the
circumstances of the particular case, the nature of the state
law claims, the character of the governing state law, and the
relationship between the state and federal claims - district
courts may decline to exercise jurisdiction over supplemental
state law claims.”).
Here, Plaintiff’s federal claims and state law claims are
currently one-in-the-same.

Plaintiff’s negligence and breach of

contract claims are based on Chase’s purported breach of its
obligation under federal banking regulations to provide flood
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insurance if a mortgagor fails to maintain insurance for
himself.

As currently pleaded, those claims are not

maintainable.

With those claims dismissed from the case, no

other state law claims remain.

Thus, § 1367(a) is inapplicable

– the Court cannot continue to exercise supplemental
jurisdiction over claims that do not exist.
Plaintiff has not formally sought leave to amend his
complaint to replead his claims so that they do not
impermissibly implicate federal law.

See Fed. R. Civ. P. 15.

Plaintiff only asks that his claims be dismissed without
prejudice so he can do so.

It is unclear whether Plaintiff’s

request presumes that he may replead his claims in this current
action.

The only way that would be possible is if another basis

for subject matter jurisdiction exists.
Plaintiff claims that jurisdiction over this action can be
premised under § 1332.

In his complaint, Plaintiff avers the

following as to the parties’ citizenship:
5. Plaintiff is an individual who was, and still is,
the owner of 32 Ocean Avenue, Monmouth Beach, New Jersey
(hereinafter, the “Property”), and has been at all times
material to the allegations set forth in this Complaint.
6. The Defendant, JPMorgan Chase Bank, N.A., is a
foreign corporation registered to do business in New Jersey
and with main place of business at JP Morgan Chase & Co.
(The Corporation Trust Company, Service of process agent)
120 Bear Tavern Road, West Trenton, NJ 08628. Defendant
holds, and has at all times relevant hereto held, a
mortgage on the Property.

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(Docket No. 1 at 4.)
Neither Plaintiff’s nor Chase’s citizenship is properly
pleaded.

Plaintiff must plead his state of citizenship, not

merely his status as the owner of a property located in a
particular state, or his use of that property as a residence.
See McCann v. Newman Irrevocable Trust, 458 F.3d 281, 286 (3d
Cir. 2006) (“Citizenship is synonymous with domicile, and the
domicile of an individual is his true, fixed and permanent home
and place of habitation. It is the place to which, whenever he
is absent, he has the intention of returning.”); Vanz, LLC v.
Mattia & Associates, 2016 WL 3148386 (D.N.J. June 1, 2016)
(citing Zambelli, 592 F.3d at 418; Palazzo ex rel. Delmage v.
Corio, 232 F.3d 38, 42 (2d Cir. 2000)) (“The citizenship of a
natural person is determined by their domicile, not their
residence(s).

That is because a natural person may have many

residences, but only one domicile.

Domicile is the location of

a person's true fixed home . . . to which, whenever he is
absent, he has the intention of returning.”); Witasick v.
Hambrecht, 2013 WL 1222680, at *2 (D.N.J. Mar. 25, 2013) (citing
Williamson v. Osenton, 232 U.S. 604, 614 (1914)) (“[A]n
individual may only have one domicile, and thus may only be a
citizen of one state for diversity jurisdiction purposes.
Residence and domicile are not the same for legal purposes, as
residency alone does not establish citizenship.”).
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Similarly, the citizenship of Chase must be properly
pleaded.

Chase’s corporate disclosure statement reveals that

JPMorgan Chase Bank, N.A., is a national banking association and
a wholly owned subsidiary of JPMorgan Chase & Co.
5.)

(Docket No.

A national bank is a citizen of the state in which its main

office, as set forth in its articles of association, is located.
Wachovia Bank v. Schmidt, 546 U.S. 303, 307 (2006) (citing 28
U.S.C. § 1348).

Plaintiff’s complaint does not provide the

location of Chase’s main office and thereby aver Chase’s
citizenship.
Based on the foregoing, the matter currently stands as
follows:

Plaintiff’s claims implicate federal law, and those

claims serve as the basis for subject matter jurisdiction under
§ 1331.

Those claims as pleaded must be dismissed because

Plaintiff cannot maintain a cause of action, no matter how it is
styled, based on violations of the FDPA.

They are the only

claims in Plaintiff’s complaint, and no other claims remain over
which the Court may assert supplemental jurisdiction under §
1367(a).

There is no pending motion for leave to file an

amended complaint to reassert viable claims, but even if there
were, subject matter jurisdiction under § 1332 is lacking as
currently pleaded.
Thus, in addition to the lack of current or proposed state
law-based claims for the Court to assess, subject matter
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jurisdiction over this matter has not been established.

“It is

. . . well established that when jurisdiction depends upon
diverse citizenship the absence of sufficient averments or of
facts in the record showing such required diversity of
citizenship is fatal and cannot be overlooked by the court, even
if the parties fail to call attention to the defect, or consent
that it may be waived.”

Thomas v. Board of Trustees, 195 U.S.

207, 211 (1904), quoted in Carlsberg Resources Corp. v. Cambria
Sav. and Loan Ass'n, 554 F.2d 1254, 1256 (3d Cir. 1977)
(affirming the district court’s sua sponte dismissal of a
complaint for lack of subject matter jurisdiction under § 1332
despite the failure of any party to address the question of
jurisdiction).

Consequently, the Court must dismiss the

complaint, without prejudice, for lack of subject matter
jurisdiction.
An appropriate Order will be entered.

Date:
February 21, 2017
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

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