Stikas v. J.P. Morgan Chase Bank et al

Filing 53

OPINION & ORDER re: 41 . CONCLUSION: The Court GRANTS Defendant's motion for summary judgment and dismisses the action for lack of jurisdiction. The Clerk is directed to enter judgment and terminate 14 cv 1277. SO ORDERED. (Signed by Judge Paul A. Crotty on May 13, 2016) (mov)

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UNITED STATES DISTRICT COURT
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MARIANNE STIKAS, on behalf of herself
and all others similarly situated,

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14 Civ. 1277 (PAC)

-againstOPINION & ORDER

J.P. MORGAN CHASE BANK, N.A., and
JOHN DOES 1-20,

Defendants.

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HONORABLE PAUL A. CROTTY, United States District Judge:
PlaintiffMarianne Stikas sues Defendants J.P. Morgan Chase Bank, N.A. ("J.P. Morgan")
and various unknown entities, alleging that they breached the terms of a mortgage note by seeking
non-legal fees in a foreclosure judgment under the guise of attorneys' fees. 1 Previously, the Court
granted J.P. Morgan's motion to dismiss all but Plaintiffs claim for breach of contract. 2015 WL
1262203 (S.D.N.Y. Mar. 19, 2015). The Court also held that Plaintiff adequately pleaded standing
by alleging that "[t]he fees and charges under the Uniform Note were paid by [P]laintiff ... directly
to or on behalf of J.P. Morgan." Id. at *3 n.2 (quoting Compl. ~ 61).
J.P. Morgan now moves for summary judgment, arguing the undisputed proof is that
Plaintiff never paid any legal fees and accordingly lacks standing. The Court agrees; and GRANTS
the motion for summary judgment.

Plaintiff alleges that the unknown John Doe Defendants "assigned or conveyed residential mortgage loans to J.P.
Morgan for purposes ofloan servicing" and, as such, are jointly and severally liable for J.P. Morgan's breach of the
mortgage note. Compl. ~ 62.
1

1

BACKGROUND
On January 21,2004, Washington Mutual issued Plaintiff an adjustable-rate mortgage note
and loan in the amount of $277,500 for the purchase of residential property in Kent, Connecticut.
Def. 56.1 Stmt., Dkt. 44 ~~ 1-2. In September 2008, J.P. Morgan acquired Washington Mutual and
became mortgagee and servicer for the loan. Id.

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4. In April 2009, Plaintiff defaulted on the note,

and in August 2009, J.P. Morgan accelerated the note and hired Bendett & McHugh, a Connecticut
law firm, to pursue a foreclosure action. Id.

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6-10. On February 14, 2012, the foreclosure court

entered an Order for Judgment of Strict Foreclosure, transferring title in the property to J.P.
Morgan. Id.

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18. In addition to the outstanding debt, the foreclosure judgment included $3,025 in

attorneys' fees, $960 in appraisal costs, and $225 in title search costs. Id.

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19; Decl. of James L.

Bernard, Dkt. 42 Ex. L. Those fees and costs were supported by detailed expense reports prepared
by Bendett & McHugh. Dkt. 42 Ex. K.
In July 2012, J.P. Morgan sold the property for $187,118.66, which it applied to the
$299,192.28 outstanding principal balance on Plaintiff's loan. Def. 56.1 Stmt.

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20-21. Plaintiff

never made any payments to J.P. Morgan on the net outstanding balance, and J.P. Morgan never
pursued a deficiency judgment against Plaintiff. Id.

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23, 53. Instead, J.P. Morgan canceled the

remaining debt and wrote off the outstanding balance. Id.

~54.

Plaintiff disputes a small portion of the $3,025 attorneys' fee awarded in the foreclosure
judgment. Specifically, Plaintiff challenges a $140 fee that Bendett & McHugh paid Fidelity
National Information Services, J.P. Morgan's foreclosure processor, at the outset of the foreclosure
proceedings in August 2009. Pl. 56.1 Stmt., Dkt. 48 ~~ 4, 13, 30. Plaintiff contends that the
Fidelity fee was necessarily incorporated into the attorneys' fee award charged to her in the
foreclosure judgment. Id.

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32. Plaintiff alleges that since Fidelity performed non-legal work, J.P.

Morgan violated Connecticut Rules of Professional Conduct that bar splitting legal fees with
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non-lawyers and, as a result, breached the term of the note that prohibits J.P. Morgan from seeking
any recovery "prohibited by Applicable Law." Pl. Opp. Mem., Dkt. 4 7 at 1-2. She seeks to bring a
class action on behalf of herself and all other holders of similarly breached J.P. Morgan mortgage
notes. Compl.

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18. In response, J.P. Morgan contends that it never sought to recover the Fidelity

fee through the foreclosure judgment; rather, the attorneys' fees award consists entirely of Bendett
& McHugh's legal work. See Def. Mem., Dkt. 43 at 1-2.

On August 1, 2014, J.P. Morgan moved to dismiss. In addition to seeking dismissal of the
individual claims, J.P. Morgan also argued that Plaintifflacked standing because she failed to allege
"that she actually paid any of J.P. Morgan's 'costs and expenses' under the Note, including the
challenged Fidelity fees." Stikas, 2015 WL 1262203, at *3 n.2. On March 19,2015, the Court
granted the motion in part, holding that only a claim for breach of contract was adequately pleaded
and timely. !d. at *6. The Court also held that Plaintiff's allegation that "[t]he fees and charges
under the Uniform Note were paid by [P]laintiff ... directly to or on behalf of J.P. Morgan"
adequately pleaded standing. !d. at *3 n.2.
J.P. Morgan now moves for summary judgment, again arguing that Plaintiff lacks standing.
DISCUSSION
I.

Applicable Law
Summary judgment is appropriate where "the movant shows that there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(a). The Court "resolve[s] all ambiguities and draw[s] all reasonable inferences in the light most
favorable to the nonmoving party." Summa v. Hofstra Univ., 708 F.3d 115, 123 (2d Cir. 2013).
Summary judgment is warranted where "the record taken as a whole could not lead a rational trier
of fact to find for the non-moving party." Smith v. Cty. ofSuffolk, 776 F.3d 114, 121 (2d Cir. 2015).

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Article III of the Constitution limits federal court jurisdiction to "Cases" and
"Controversies." The standing doctrine, which sets apart those "Cases" and "Controversies" that
are justiciable, has three necessary elements. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
( 1992). First, the party asserting jurisdiction must have suffered an injury-in-fact, defined as "an
invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical." E.M v. New York City Dep 't of Educ., 758 F.3d 442,
449 (2d Cir. 2014) (quoting Lujan, 504 U.S. at 560). Second, "there must be a causal connection
between the injury and the conduct" of which the party asserting jurisdiction complains. !d. at 44950. And third, "it must be likely, as opposed to merely speculative, that the injury will be redressed
by a favorable decision." !d. at 450.
"[S]tanding represents a jurisdictional requirement which remains open to review at all
stages of the litigation." Stepniak v. United Materials, LLC, 305 Fed. Appx. 789, 790 (2d Cir.
2009). "At the pleading stage, general factual allegations of injury resulting from the defendant's
conduct will suffice to allege standing." Id. Summary judgment is different; "mere allegations" are
insufficient. Lujan, 504 U.S. at 561. Rather, "[t]o defend against summary judgment for lack of
standing, a plaintiff ' must set forth by affidavit or other evidence specific facts' supporting
standing, as is generally required under Rule 56." Nat'! Res. Def Council, Inc. v. FDA , 710 F.3d
71, 79 (2d Cir. 2013) (quoting Lujan, 504 U.S. at 561). If the Court determines at any time that it
lacks jurisdiction, the action must be dismissed. Fed. R. Civ. P. 12(h)(3).

II.

Analysis
It is now clear that Plaintiffs basis for standing as alleged in the Complaint-that she paid

the "fees and charges under the Uniform Note"- is completely inaccurate. In fact, Plaintiff has not
made any payments at all on the foreclosure judgment. While her unsupported allegation was
sufficient to survive a motion to dismiss, it is not sufficient on summary judgment, where
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Plaintiff-as the party asserting jurisdiction-bears the burden of proof. Nat 'l Res. Def Council,
710 F.3d at 79.
To salvage her claim, Plaintiff now argues two alternate theories of standing. As an initial
matter, dismissal is warranted because Plaintiff disavows the sole ground for standing alleged in the
complaint. See La Asociacion de Trabajadores de Lake Forest v. City of Lake Forest, 624 F.3d
1083, 1089 (9th Cir. 201 0) ("[Plaintiff] may not effectively amend its Complaint by raising a new
theory of standing in its response to a motion for summary judgment."). Further, Plaintiffs two
new theories of standing are meritless.
First, Plaintiff argues that she has standing because J.P. Morgan's breach ofthe note in and

of itself is a cognizable injury-in-fact, even though she had no resulting financial loss. That may be
correct as a matter of law. See Fleisher v. Phoenix Life Ins. Co., No. 11 cv 8405 (CM), 2013 U.S.
Dist. LEXIS 99959, at *23 (S.D.N.Y. July 12, 2013) ("Invading a legally protected interest by
breaching the terms of a contract is an injury-in-fact for purposes of standing."). But that theory,
which in effect merges standing with the merits, fails here because Plaintiff has not adduced
evidence that J.P. Morgan in fact breached the note. The record contains detailed invoices
documenting the items that composed the $3,025 in attorneys ' fees that Bendett & McHugh charged
J.P. Morgan and which J.P. Morgan subsequently sought in the foreclosure judgment. Dkt. 42 Ex.
K, L. Those invoices do not include the Fidelity fee that allegedly breached the note.
In response, Plaintiff speculates that "the illegal referral fee paid to Fidelity was necessarily
included in the amounts for attorneys' fees charged to Stikas in foreclosure proceedings." Pl. Opp.
Mem. at 2. But her only purported support for that claim is a declaration submitted by Bruce A.
Green, a Professor who teaches legal ethics at Fordham University School of Law. Dkt. 49 Ex. K.
At best, the Green Declaration only urges that if the foreclosure judgment included the Fidelity fee,
then J.P. Morgan would have violated several Connecticut Rules of Professional Conduct. See id.
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2 (explaining that Professor Green is only qualified "to provide expert opinions on questions of
lawyers' professional conduct"). It provides no independent evidence that the foreclosure judgment

in fact included the Fidelity fee. As such, there is no genuine dispute of material fact as to whether
J.P. Morgan breached the note and, accordingly, Plaintiff has not met her burden to establish
standing on this ground.

Second, Plaintiff asserts that she has standing based on J.P. Morgan's outstanding
foreclosure judgment against her. Even if that is a cognizable injury-in-fact, it fails the causation
test. Lujan, 504 U.S. at 560. The conduct complained of(the Fidelity fee) did not cause the injury
(the foreclosure judgment). If anything the opposite is true: the necessity of foreclosure led J.P.
Morgan to accrue and later seek reimbursement for resulting fees, including (allegedly) the Fidelity
fee. Standing premised on the foreclosure judgment fails as a matter of law. !d.
Since the Court lacks jurisdiction, the action is dismissed. Fed. R. Civ. P. 12(h)(3).

CONCLUSION
The Court GRANTS Defendant' s motion for summary judgment and dismisses the action
for lack of jurisdiction. The Clerk is directed to enter judgment and terminate 14 cv 1277.

Dated: New York, New York
May 13,2016

SO ORDERED

PAUL A. CROTTY
United States District Judge

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