Andrews et al v. Citimortgage, Inc. et al
Filing
22
MEMORANDUM AND ORDER - For the foregoing reasons, Defendants motion to dismiss (Docket Entry 5) is GRANTED, and this action is DISMISSED for lack of subject matter jurisdiction. The Clerk of the Court is directed to mark this matter CLOSED. So Ordered by Judge Joanna Seybert on 3/31/15. c/ecf Judgment Clerk. (Coleman, Laurie)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------X
JAMES R. ANDREWS and ELIZABETH
ANDREWS,
Plaintiffs,
MEMORANDUM & ORDER
14-CV-1534(JS)(AKT)
-againstCITIMORTGAGE, INC. and
JOHN DOES 1-10,
Defendants.
-----------------------------------X
APPEARANCES
For Plaintiffs:
Kenneth S. Pelsinger, Esq.
Kenneth S. Pelsinger, LLC
3601 Hempstead Turnpike, Suite 410
Levittown, NY 11756
For Defendant:
Larry T. Powell, Esq.
Davidson Fink LLP
28 East Main Street, Suite 1700
Rochester, NY 14614
SEYBERT, District Judge:
Plaintiffs
James
R.
Andrews
(“Mr.
Andrews”)
and
Elizabeth Andrews (“Mrs. Andrews,” and together with Mr. Andrews,
“Plaintiffs”) commenced this action on March 7, 2014 against
defendant Citimortgage, Inc. (“Defendant”), seeking declaratory
judgment and injunctive relief regarding Defendant’s alleged fraud
and violations of securities law in connection with its attempt to
foreclose on Plaintiffs’ real property located in Cedarhurst, New
York. Defendant moves to dismiss the Complaint for lack of subject
matter jurisdiction pursuant to Federal Rule of Civil Procedure
12(b)(1).
(Docket
Entry
5.)
For
the
following
reasons,
Defendant’s motion to dismiss is GRANTED.
BACKGROUND
On March 31, 2006, Mr. Andrews obtained a loan in the
amount of $240,000 from ABN AMRO Mortgage Group, Inc. (“ABN”),
secured by a mortgage on Plaintiffs’ real property located at 211
Oakwood Drive, Cedarhurst, New York (the “Property”).
¶¶ 1, 15.)
(Compl.
On September 1, 2007, ABN merged into Defendant, and
Defendant become the surviving corporation.
(Compl. ¶ 191.)
As a
result of the merger, Defendant contends that it is the successor
to the mortgage-loan transaction between Mr. Andrews and ABN.
(Compl. ¶ 192.)
On September 25, 2009, Defendant commenced a foreclosure
action in New York State Supreme Court, Nassau County against
Plaintiffs,
alleging
that
they
defaulted
payments (the “Foreclosure Action”).3
5, Ex. B.)
on
their
(Powell Decl., Docket Entry
Plaintiffs failed to answer or otherwise appear.
1
The Complaint contains two paragraphs numbered “19.”
citation refers to the first of those paragraphs.
2
mortgage
This
This citation refers to the second of those paragraphs.
3
The original complaint did not actually include Mrs. Andrews as
a defendant, but the New York State Supreme Court later amended
the complaint to substitute Mrs. Andrews in place of the “John
Doe” defendant named therein. (See Powell Decl. Ex. D at 4.)
Pages numbers of exhibits referenced herein refer to the page
numbers supplied by the Electronic Case Filing system.
2
Accordingly, by Order of Reference dated July 7, 2010, the New
York State Supreme Court found that Plaintiffs were in default and
appointed a referee to compute the amount due under the loan and
mortgage.4
(Powell Decl. Ex. D at 4.)
On October 7, 2013, the
New York State Supreme Court entered a Judgment of Foreclosure and
Sale of the Property (the “Foreclosure Judgment”).
(Powell Decl.
Ex. E.)
Plaintiffs
have
not
contested
Foreclosure Judgment in state court.
Plaintiffs
commenced
the
or
appealed
(Powell Decl. ¶ 8.)
instant
action,
seeking:
the
Rather,
(1)
a
declaratory judgment that Defendant “never had any rights, title,
interest or subject matter jurisdiction over the subject mortgage
and
note
because
it
[sic]
was
never
properly
or
lawfully
transferred or conveyed to [Defendant],” (Compl. ¶ 40); (2) an
injunction
“restrain[ing]
continuing
the
prosecution
and
enjoin[ing]
of
the
[Defendant]
[Foreclosure
Action]
from
and
proceeding with the public auction of the sale of the [Property],
4
Section 1321 of the New York Real Property Actions and
Proceedings Law states in relevant part that “[i]f the defendant
[in a foreclosure action] fails to answer within the time
allowed,” the court, upon motion of the plaintiff, “shall
ascertain and determine the amount due, or direct a referee to
compute the amount due to the plaintiff and to such of the
defendants as are prior incumbrancers of the mortgaged
premises.” N.Y. REAL PROP. ACTS. § 1321(1). A motion for the
appointment of a referee to compute the amount due on a mortgage
is “a preliminary step towards obtaining a judgment of
foreclosure.” Home Sav. of Am., F.A. v. Gkanios, 230 A.D.2d
770, 771, 646 N.Y.S.2d 530, 531 (2d Dep’t 1996).
3
or from otherwise taking any steps to deprive Plaintiffs of their
ownership interest [during] the pendency of this action, and
permanently thereafter,” (Compl. ¶ 52); and (3) an order under the
New York Real Property Actions and Proceedings Law (“RPAPL”), N.Y.
REAL PROP. ACTS. § 1301 et seq., “expunging, extinguishing, setting
aside,
discharging,
releasing
and
cancelling”
the
mortgage,
(Compl. ¶ 67).
Defendant moves to dismiss the Complaint for lack of
subject matter jurisdiction.
(Docket Entry 5.)
This motion is
currently pending before the Court.
DISCUSSION
Defendant argues that this action should be dismissed
for lack of subject matter jurisdiction because: (1) Plaintiffs
are essentially appealing a state court judgment of foreclosure in
federal court, which is prohibited by the Rooker-Feldman doctrine,
(Def.’s Br., Docket Entry 5-1, at 4-7); and (2) there is no federal
jurisdictional basis for this action, (Def.’s Br. at 7-8).
Court agrees with Defendant on both grounds.
set
forth
the
applicable
legal
standard
The
The Court will first
before
addressing
Defendant’s arguments more specifically.
I.
Legal Standard
“A case is properly dismissed for lack of subject matter
jurisdiction under Rule 12(b)(1) when the district court lacks the
statutory or constitutional power to adjudicate it.”
4
Makarova v.
United States, 201 F.3d 110, 113 (2d Cir. 2000).
“The party
invoking federal jurisdiction bears the burden of proving facts to
establish that jurisdiction.”
947 (2d Cir. 1998).
Linardos v. Fortuna, 157 F.3d 945,
In resolving a motion to dismiss for lack of
subject matter jurisdiction, the Court may consider affidavits and
other materials beyond the pleadings to resolve jurisdictional
questions.
See Morrison v. Nat’l Australia Bank, Ltd., 547 F.3d
167, 170 (2d Cir. 2008).
II.
Subject Matter Jurisdiction
“A party seeking relief in the district court must at
least plead facts which bring the suit within the court’s subject
matter jurisdiction.”
Capistran v. Carbone, No. 11-CV-2531, 2012
WL 1247117, at *1 (E.D.N.Y. Apr. 13, 2012) (quoting Espada v. N.Y.
Bd. of Elections, No. 07-CV-7622, 2007 WL 2588477, at *2 (S.D.N.Y.
Sept. 4, 2007)).
Generally speaking, a district court’s subject
matter jurisdiction is limited to the grounds set forth in 28
U.S.C. §§ 1331 and 1332. Under these statutes, jurisdiction arises
where a “federal question” is presented, see 28 U.S.C. § 1331, or
where the parties are of diverse citizenship and the amount in
controversy exceeds $75,000, see 28 U.S.C. § 1332.
As discussed
below, neither basis for jurisdiction exists in this case.
A.
Diversity Jurisdiction
“[F]or a case to come within [diversity jurisdiction
under 28 U.S.C. § 1332] there must be complete diversity and that
5
diversity is not complete if any plaintiff is a citizen of the
same state as any defendant.”
Cresswell v. Sullivan & Cromwell,
922 F.2d 60, 68 (2d Cir. 1990).
Plaintiffs argue that diversity
of citizenship exists in this case because Plaintiffs are New York
residents
and
Defendant’s
principal
place
of
business
Missouri.
(Pls.’ Opp. Br., Docket Entry 20, at 65.)
is
in
However, “[a]
corporation has dual citizenship for purposes of a federal court’s
diversity jurisdiction under 28 U.S.C. § 1332; namely, it is a
citizen of the state of its incorporation and of the state where
it has its principal place of business.”).
Plaintiffs
allege
that
Defendant
is
a
In the Complaint,
“banking
corporation
organized under the laws of the State of New York.”
(Compl. ¶ 4.)
Thus,
diversity
by
Plaintiffs’
own
admission,
complete
citizenship does not exist in this case.
of
Plaintiff therefore
cannot rely on 28 U.S.C. § 1332 for subject matter jurisdiction.
B.
Federal Question Jurisdiction
Federal question jurisdiction is also lacking.
Federal
question jurisdiction is set forth in 28 U.S.C. § 1331, which
states:
“The district courts shall have original jurisdiction of
all civil actions arising under the Constitution, laws, or treaties
of the United States.”
28 U.S.C. § 1331.
5
An action arises under
Plaintiffs’ counsel failed to include page numbers for their
opposition brief. The Court will therefore refer to the page
numbers supplied by the Electronic Case Filing system.
6
federal law only where “‘a well-pleaded complaint establishes
either that federal law creates the cause of action or that the
plaintiff’s right to relief necessarily depends on resolution of
a substantial question of federal law.’”
Empire Healthchoice
Assur., Inc. v. McVeigh, 547 U.S. 677, 690, 126 S. Ct. 2121, 2131,
165 L. Ed. 2d 131 (2006) (quoting Franchise Tax Bd. of Cal. v.
Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 27–28,
103 S. Ct. 2841, 2856, 77 L. Ed. 2d 420 (1983)); see also Chan Ah
Wah v. HSBS Bank PLC, No. 13-CV-4789, 2014 WL 2453304, at *2
(S.D.N.Y.
June
2,
2014)
(stating
that
federal
question
jurisdiction arises “only when the plaintiff’s statement of his
own cause of action shows that it is based upon [federal] laws or
th[e] Constitution.” (alterations in original) (internal quotation
marks and citation omitted)).
Here, the Complaint mentions that this Court has subject
matter jurisdiction under 28 U.S.C. §§ 1337(a), (Compl. ¶ 1), but
it does not refer to this statute again, nor does it contain any
specific allegations or facts as to how Defendant violated this
statute.
Plaintiffs’ mere reference to Section 1337 does not
establish federal question jurisdiction.
See Chan Ah Wah, 2014 WL
2453304, at *2 (“Merely invoking the existence of some federal
statute, without presenting facts or alleging a claim related to
that statute, does not establish federal question jurisdiction.”).
7
Additionally,
although
the
Complaint
includes
a
declaratory judgment claim pursuant to 28 U.S.C. § 2201, “‘[t]he
operation of the Declaratory Judgment Act is procedural only.’”
Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading Inc., 697
F.3d
59,
66
(2d
Cir.
2012)
(quoting
Skelly
Oil
v.
Phillips
Petroleum, 339 U.S. 667, 671, 70 S. Ct. 876, 879, 94 L. Ed. 1194
(1950)).
Thus, the Declaratory Judgment Act “‘does not provide an
independent basis for jurisdiction; jurisdiction must be founded
separately on either federal question or diversity.’”
Williams v.
Bank of N.Y. Mellon Trust Co., No. 13-CV-6814, 2015 WL 430290, at
*4 (E.D.N.Y. Feb. 2, 2015) (quoting Zyburo v. Cont’l Cas. Co., No.
13-CV-6438, 2014 WL 6603877, at *1 (S.D.N.Y. Nov. 21, 2014)).
Here, Plaintiffs seek a declaration that Defendant did not lawfully
obtain the mortgage and loan from ABN in part because Defendant
allegedly “converted” the loan to stock, thereby committing “a
form of securities fraud,” which Plaintiffs refer to as “double
dipping.”
(Compl.
¶¶ 33-36.)
However, a plaintiff seeking to
invoke federal question jurisdiction “must cite some particular
federal statute or section of the Constitution or a treaty that
confers jurisdiction on a district court.”
Siwula v. Res. Ctr.,
No. 86-CV-0077, 1987 WL 8389, at *1 (W.D.N.Y. Mar. 24, 1987).
Plaintiffs do not identify any particular federal securities law
that Defendant violated, and the Court will not comb through
federal securities laws to determine whether the allegations of
8
the Complaint implicate a particular federal statute.
Complaint
does
not
present
a
basis
for
Thus, the
federal
question
jurisdiction.
In sum, because this Court lacks both federal question
jurisdiction under 28 U.S.C. § 1331 and diversity jurisdiction
under 28 U.S.C. § 1332, this case is DISMISSED for lack of subject
matter jurisdiction.
III. Rooker-Feldman
Even if diversity or federal question jurisdiction were
present here, the Court would not exercise jurisdiction because of
the
Rooker-Feldman
doctrine.
Under
Rooker–Feldman,
federal
district courts are prohibited from exercising subject matter
jurisdiction “over suits that are, in substance, appeals from
state-court judgments.”
Hoblock v. Albany Cnty. Bd. of Elections,
422 F.3d 77, 84 (2d Cir. 2005).
“The doctrine applies when a
litigant seeks to reverse or modify a state court judgment, or
asserts claims that are inextricably intertwined with state court
determinations.”
Park v. City of N.Y., No. 99-CV-2981, 2003 WL
133232, at *7 (S.D.N.Y. Jan. 16, 2003) (internal quotation marks
and citations omitted).
There
are
four
requirements
for
the
application
of
Rooker–Feldman: (1) “the federal-court plaintiff must have lost in
state court”; (2) “the plaintiff must complain of injuries caused
by a state-court judgment”; (3) “the plaintiff must invite district
9
court review and rejection of that judgment”; and (4) “the statecourt judgment must have been rendered before the district court
proceedings commenced.”
Hoblock, 422 F.3d at 85 (brackets and
internal quotation marks and citations omitted).
“The first and
fourth of these requirements may be loosely termed procedural; the
second and third may be termed substantive.”
Here,
the
procedural
requirements
Id.
are
clearly
met.
Plaintiffs lost in state court before the commencement of this
action
when
the
New
York
State
Supreme
Foreclosure Judgment on October 7, 2013.
Court
entered
the
(Powell Decl. Ex. E.)
Both substantive requirements are also met.
There is no doubt
that Plaintiffs complain of injuries caused by the Foreclosure
Judgment and that the purpose of this action is to undo the
Foreclosure Judgment.
The Complaint specifically asks the Court
to enter an injunction “restrain[ing] and enjoin[ing] [Defendant]
from continuing the prosecution of the [Foreclosure Action] and
proceeding with the public auction of the sale of the [Property],
or from otherwise taking any steps to deprive Plaintiffs of their
ownership interest [during] the pendency of this action, and
permanently thereafter.”
(Compl. ¶ 52.)
Nonetheless, Plaintiffs argue that Rooker-Feldman does
not apply because they “are not seeking to vacate [the Foreclosure
Judgment], but rather are seeking a return of mortgage payments
made pursuant to the illegal securitization of the mortgage note.”
10
(Pls.’s Opp. Br. at 4.)
However, Plaintiffs’ claim for the return
of mortgage payments can only be construed as alleging injuries
that occurred as a result of the Foreclosure Judgment, because
that claim depends on the validity of the loan and mortgage--an
issue “which has already been resolved against [Plaintiffs] in the
[Foreclosure Action].”
Done v. Option One Mortg., No. 09-CV-4770,
2011 WL 1260820, at *6 (E.D.N.Y. Mar. 30, 2011). Thus, Plaintiffs’
claims are “inextricably intertwined” with the Foreclosure Action
and
“‘would
effectively
require
[this
Court]
to
vacate
the
[Foreclosure Judgment] issued by the [New York State Supreme
Court].’”
Estate of Keys v. Union Planters Bank, N.A., 578 F.
Supp. 2d 629, 637 (S.D.N.Y. 2008) (quoting Grumbkow v. Greenpoint
Bank, 132 F. App’x 913, 914 (2d Cir. 2005)); see also Done, 2011
WL
12607820,
at
*7
(“Although
plaintiff
has
made
a
cursory
reference to seeking monetary damages, it is abundantly clear that
the whole purpose of this action is to undo the foreclosure
judgment.
Therefore, Rooker–Feldman clearly applies.”); Goldberg
v. Roth, No. 99-CV-11591, 2001 WL 1622201, at *5 (S.D.N.Y. Dec.
17, 2001) (“Plaintiff cannot make an end run around the Rooker–
Feldman doctrine and into federal court, however, through the mere
assertion of new and baseless claims to supplement the old.”).
Plaintiffs
also
argue
that
their
claims
are
not
“inextricably intertwined” with the Foreclosure Action because
they “never even answered the Complaint in the foreclosure action,
11
and thus, never raised any defenses or litigated that action in
any manner.”
(Pls.’ Opp. Br. at 4.)
However, it is well settled
that “‘a federal plaintiff cannot escape the Rooker–Feldman bar
simply by relying on a legal theory not raised in state court.’”
Lajaunie v. Samuels & Son Seafood Co., --- F. Supp. 3d ----, 2014
WL 7190922, at *4 (S.D.N.Y. Dec. 12, 2014) (quoting Hoblock, 422
F.3d at 87); see also Hoblock, 422 F.3d at 86 (“Just presenting in
federal court a legal theory not raised in state court, however,
cannot insulate a federal plaintiff’s suit from Rooker–Feldman if
the federal suit nonetheless complains of injury from a statecourt
judgment
reversed.”).
equally
to
and
seeks
Moreover,
state
court
to
the
have
that
state-court
Rooker-Feldman
judgments
obtained
doctrine
by
judgment
applies
default.
See
Ballyhighlands, Ltd. v. Bruns, 182 F.3d 898, 1999 WL 377098 (Table)
(2d Cir. 1999) (unpublished opinion) (“Rooker-Feldman applies to
default judgments just as it does to other types of judgments.”);
Lajaunie, 2014 WL 7190922, at *4 (“[C]ourts have repeatedly applied
Rooker–Feldman to state court default judgments.”); Smith v. Wayne
Weinberger, P.C., 994 F. Supp. 418, 424 (E.D.N.Y. 1998) (“[T]o
adjudicate [the plaintiff’s] conversion claims would run afoul of
the Rooker–Feldman doctrine, since his complaint is, at the very
least, an indirect challenge to the default judgment of foreclosure
entered in the New York Supreme Court.”).
12
Finally, Plaintiffs argue that Rooker-Feldman does not
apply
because
Defendant
Judgment through fraud.
allegedly
obtained
the
Foreclosure
However, in the Second Circuit, “any
attack on a judgment of foreclosure is . . . barred by the RookerFeldman doctrine.”
Feinstein v. The Chase Manhattan Bank, No. 06-
CV-1512, 2006 WL 898076, at *2 (E.D.N.Y. Apr. 5, 2006) (emphasis
added) (collecting cases); accord Gonzalez v. Ocwen Home Loan
Servicing, --- F. Supp. 3d ----, 2015 WL 778432, at *6 (D. Conn.
Feb. 25, 2015) (collecting cases).
“This even includes challenges
to a judgment of foreclosure that were allegedly procured by fraud,
as [P]laintiffs have alleged herein.” Niles v. Wilshire Inv. Grp.,
LLC,
859
F.
Supp.
2d
308,
334
n.24
(E.D.N.Y.
2012);
accord
Vossbrinck v. Accredited Home Lenders, Inc., 773 F.3d 423, 427 (2d
Cir. 2014) (per curiam) (“To the extent [the plaintiff] asks the
federal court to grant him title to his property because the
foreclosure judgment was obtained fraudulently, Rooker–Feldman
bars [the plaintiff’s] claim. . . .
[since] [t]his would require
the federal court to review the state proceedings and determine
that the foreclosure judgment was issued in error.”); Gonzalez,
2015 WL 778432, at *6 (“‘Even where a plaintiff alleges that a
state court judgment was procured by fraud, Rooker–Feldman will
divest the federal court of jurisdiction.’” (quoting Astoria Fed.
Sav. & Loan Ass’n v. Arcamone, No. 12–cv–0230, 2012 WL 4355550, at
*2 (D. Conn. Sept. 18, 2012)); Parra v. Greenpoint Mortg., No. 0113
CV-2010, 2002 WL 32442231, at *2 (E.D.N.Y. Mar. 26, 2002) (“The
fact that [a] plaintiff alleges that the state court judgment was
procured by fraud does not remove [her] claims from the ambit of
Rooker–Feldman.” (alterations in original) (internal quotation
marks and citation omitted)), aff’d sub nom., Parra v. Wilshire
Credit Corp., 53 F. App’x 164 (2d Cir. 2002).
In sum, Plaintiffs lost in state court; the Foreclosure
Judgment was rendered before the instant action was commenced;
Plaintiffs seek to undo the Foreclosure Action; and they complain
of injuries caused by the Foreclosure Judgment.
Accordingly, even
if subject matter jurisdiction existed in this case, the Court not
would not exercise jurisdiction because of the Rooker-Feldman
doctrine.
CONCLUSION
For the foregoing reasons, Defendant’s motion to dismiss
(Docket Entry 5) is GRANTED, and this action is DISMISSED for lack
of subject matter jurisdiction. The Clerk of the Court is directed
to mark this matter CLOSED.
SO ORDERED.
/S/ JOANNA SEYBERT
Joanna Seybert, U.S.D.J.
Dated:
March
31 , 2015
Central Islip, NY
14
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