Mullaugh v. J.P. Morgan Chase & Co. et al
Filing
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OPINION AND ORDER. For the reasons stated above, Defendants' motion to dismiss Plaintiff's complaint is GRANTED with prejudice. The Clerk of Court is respectfully directed to terminate the motion docketed at ECF No. 15 and close this case. SO ORDERED. re: 15 MOTION to Dismiss filed by J.P. Morgan Chase Bank, N.A., J.P. Morgan Chase & Co., J.P. Morgan Securities LLC, Michael S. Lee. (Signed by Judge John F. Keenan on 2/26/2019) (rjm) Transmission to Orders and Judgments Clerk for processing.
Case 1:09-md-02013-PAC Document 57
Filed 09/30/10 Page 1 of 45
USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: 02/26/2019
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------- X
UNITED STATES DISTRICT COURT
MICHAEL MULLAUGH as Personal YORK
:
SOUTHERN DISTRICT OF NEW
Representative of the
-----------------------------------------------------------x :
ESTATE OFFANNIE MAE 2008 SECURITIES
In re MICHAEL A. LORIG,
: :
08 Civ. 7831 (PAC)
:
LITIGATION
:
09 MD 2013 (PAC)
Plaintiff,
: :
: :
OPINION & ORDER
-against-----------------------------------------------------------x :
No. 18 Civ. 2908 (JFK)
:
OPINION & ORDER
J.P. MORGAN CHASE & CO.,
:
J.P. MORGAN CHASE BANK, N.A.,
:
J.P. MORGAN SECURITIES CROTTY, United States :
LLC, and
HONORABLE PAUL A.
District Judge:
:
MICHAEL S. LEE,
:
Defendants.
:
BACKGROUND1
:
------------------------------------- in home financing which was fueled, among
The early years of this decade saw a boom X
APPEARANCES
other things, by low interest rates and lax credit conditions. New lending instruments, such as
FOR PLAINTIFF MICHAEL MULLAUGH
Keith Martin Fleischman
subprime mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans)
THE FLEISCHMAN LAW FIRM
kept the boom going. Borrowers played a role too; they took on unmanageable risks on the
FOR DEFENDANTS J.P. MORGAN CHASE & CO., J.P. MORGAN CHASE BANK,
N.A., J.P. MORGAN SECURITIES LLC, and MICHAEL S. LEE
assumption that the market would continue to rise and that refinancing options would always be
Lloyd Blades Chinn
Daryl Gregory Leon
available in the future. Lending discipline was lacking in the system. Mortgage originators did
PROSKAUER ROSE LLP
not hold these high-risk mortgage loans. Rather than carry the rising risk on their books, the
JOHN F. KEENAN, United States District Judge:
originators sold their loans into the secondary mortgage market, often as securitized packages
Before the Court is a motion by Defendants J.P. Morgan
known as mortgage-backed securities (“MBSs”). MBS markets grew almost exponentially.
Chase & Co. (“JPMCC”), J.P. Morgan Chase Bank N.A. (“JPMCB”),
But then the housing bubble burst. In 2006, the demand for housing dropped abruptly
J.P. Morgan Securities LLC (“JPMS”), and Michael S. Lee (“Lee”)
and home prices began to fall. In light of the changing housing market, banks modified their
(collectively, the “Defendants”) to dismiss Plaintiff Michael
lending practices and became unwilling to refinance home mortgages without refinancing.
Mullaugh’s complaint. For the reasons below, Defendants’ motion
is granted.
1
Unless otherwise indicated, all references cited as “(¶ _)” or to the “Complaint” are to the Amended Complaint,
dated June 22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.
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1
I. Background
A. Factual Background
The Court takes the following facts and allegations from
the complaint which, for the purposes of this motion, must be
deemed true.
Plaintiff is the personal representative of the estate of
decedent Michael A. Lorig (“Lorig”) and brings this action in
that capacity. (Compl. ¶ 21.)
corporation. (Id. ¶ 24.)
Defendant JPMCC is a Delaware
Defendant JPMCB—a wholly-owned
subsidiary of JPMCC—is a nationally-chartered bank organized
under the laws of Ohio. (Id. ¶ 25.)
Defendant JPMS—a wholly-
owned subsidiary of JPMorgan—is a Delaware limited liability
company. (Id. ¶ 28.)
All three entities are headquartered in
New York, New York (Id. ¶¶ 24-25, 28) and the complaint refers
to them collectively—and apparently interchangeably—as
“JPMorgan.” (Id. ¶ 3.)
Defendant Lee “is a Managing Director of
JPMCC and Regional Director of JPMS” and, on information and
belief, “resides in New York.” (Id. ¶ 31.)
1. Lorig’s Disability Leaves & Death
In 2008, Lorig joined JPMorgan as a Senior Managing
Director following its acquisition of and merger with Lorig’s
previous employer. (Id. ¶¶ 3, 44, 62.)
At all relevant times,
Defendant Lee was Lorig’s direct supervisor. (Id. ¶ 66.)
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Lorig “suffered from clinically diagnosed, medically
treated anxiety and depression” which caused him to take two
six-month medical leaves, in 1989 and 2001, for treatment and
recovery. (Id. ¶¶ 68-69.)
On both occasions, Lorig “overcame
his disability, and continued his” career. (Id. ¶ 70.)
In late February 2014, Lorig “suffered another bout of
severe depression” and, on February 25, 2014, started a shortterm disability leave for treatment. (Id. ¶¶ 72-73.)
JPMorgan
granted his leave and all Defendants were “fully aware” of
Lorig’s health issues. (Id. ¶¶ 74-75, 78.)
At all relevant
times, “Lorig consistently informed JPMorgan” that he “fully
intended to return to his position.” (Id. ¶ 76.)
When Lorig started his leave, Lee unilaterally split the
commissions Lorig received on his book of business, leaving
Lorig with a twenty percent share while a younger broker
assigned to manage Lorig’s cases in his absence received eighty
percent. (Id. ¶¶ 89-91.)
In June 2014, Lee suggested to Lorig that JPMorgan would
forgive the debt on a loan Lorig had taken from JPMorgan if
Lorig (1) retired rather than take long-term disability leave
and (2) transfer his business to a younger JPMorgan employee.
(Id. ¶¶ 125-27.)
Lorig declined the proposal, advising that he
could not fairly evaluate the proposal, needed the longer leave
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to treat his illness, and planned to return to work once
healthy. (Id. ¶ 128.)
On August 15, 2014, as Lorig’s health had not materially
improved, he commenced long-term disability leave. (Id. ¶¶ 129,
136.)
Prudential Insurance (“Prudential”)—who had taken
responsibility for Lorig’s case at JPMorgan’s request—granted
and paid for this leave. (Id. ¶¶ 137-38.)
Lorig made clear to
Defendants that “it was his full intention to treat his
disability and return to work” and Defendants knew Lorig’s leave
was due to his continuing mental health issues. (Id. ¶¶ 139-40.)
After Lorig commenced his long-term leave, Lee unilaterally
cancelled Lorig’s commission splits, permanently transferred his
accounts to other brokers, and informed Lorig that JPMorgan
would terminate his professional licenses. (Id. ¶¶ 93-94.)
In
August 2014, despite knowing Lorig’s condition, Lee insisted
that Lorig meet him and again pressured him to voluntarily
retire, stating that—in exchange—JPMorgan would forgive his loan
balance and fully vest his restricted stock units. (Id. ¶¶ 14246.)
This proposed retirement deal would “have eliminated the
standard retirement packages JPMorgan offered to employees
similarly situated to” Lorig, including the ability to transfer
their book of business to a JPMorgan broker of their choice and,
in exchange, receive between thirty and sixty percent trailing
commissions for three years. (Id. ¶ 149.)
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Lorig did not accept
this proposal and again told Lee that his mental condition
prevented him from being able to consider any such proposals at
that time. (Id. ¶¶ 150-52.)
On July 26, 2016, nearly two years after starting his longterm leave, Lorig informed Defendant Lee and other JPMorgan
employees “that he was being released from disability . . . with
a clearance to return to work when his disability ended on
August 25, 2016.” (Id. ¶ 208.)
On August 8, 2016, one of
Lorig’s doctors faxed JPMorgan a letter stating that Lorig “has
made significant improvement and in my opinion is now able to
return to work with no restrictions.” (Id. ¶¶ 218-20.)
On an August 8, 2016 phone call, however, JPMorgan employee
Jen Smith (“Smith”) informed Lorig that he could not return to
JPMorgan because there was no “business for him to return to
[and] his employment had been terminated following the
conclusion” of what Smith characterized as Lorig’s Family and
Medical Leave Act (“FMLA”) leave. (Id. ¶¶ 215, 222.)
Following
emails in which Lorig disputed these characterizations and
voiced a desire to return to work, Smith conceded that until an
agreement between them could be reached, Lorig would officially
remain a JPMorgan employee. (Id. ¶¶ 236-39.)
Smith also advised
Lorig that his professional licenses had been terminated in
September 2014, though JPMorgan “inexplicably failed” to provide
Lorig with information on which licenses had been terminated and
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when until November 8, 2016. (Id. ¶¶ 223-24, 266.)
JPMorgan
also refused Lorig’s request to reactivate his licenses while
his return to work was being discussed—which would have allowed
him to avoid a two-year suspension—or even amend their filings
terminating his licenses to reflect that they were simply
inactive. (Id. ¶¶ 268, 271, 276.)
On January 22, 2017, “[d]espondent over the prospect of
watching his career prospects and personal self-worth evaporate,
and facing the daunting task of finding work as a 66-year old
with a history of mental illness and expired professional
licenses,” Lorig took his own life. (Id. ¶ 284.)
2. Defendants’ Knowledge & Actions
The complaint alleges that on five occasions ending on July
20, 2014 Lorig’s medical team sent JPMorgan updates on his
health, all of which indicated Lorig had suicidal thoughts. (Id.
¶¶ 83-85, 106-109, 110-112, 115, 117.)
Plaintiff further
alleges that on July 26, 2014, August 10, 2014, June 20, 2015,
and February 10, 2015, Lorig’s medical professionals sent
Prudential, which provided JPMorgan’s disability management
services, updates on Lorig’s health, with the first two reports
indicating Lorig had suicidal thoughts. (Id. ¶¶ 118, 130-132,
204.)
In any event, Plaintiff pleads that, at “all relevant
times, the Defendants knew, deliberately ignored, or were
reckless or negligent in not knowing that [Lorig] suffered from
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a disability which specifically caused him to frequently engage
in suicidal ideation.” (Id. ¶ 293.)
Plaintiff further alleges that Defendants undertook an
“intentional, systematic, policy, pattern and/or practice of
intentionally discriminating against” Lorig based on his
disability and age. (Id. ¶ 300.)
Defendants, among other
actions, “intentionally, knowingly, recklessly, or negligently”
(1) “subjected [Lorig] to differing working conditions and
compensation;” (2) “unilaterally permanently transferred
[Lorig’s] accounts to other of the Defendants’ younger
employees;” (3) “pressured [Lorig] to voluntarily retire, and
insisted that any separation be treated as a ‘voluntarily
retirement’ rather than a reduction-in-force;” (4) “pressured
[Lorig] to retire notwithstanding his stated intention to return
to work once he had overcome his illness;” (5) “pressured
[Lorig] to not commence long-term disability leave, and
thereafter fail[ed] to provide him with statutorily-mandated
notice under the FMLA;” (6) “deliberately and fully terminated
[Lorig’s] securities licenses with full knowledge that [Lorig’s]
disability prevented him from timely re-associating his licenses
with a new firm;” (7) “failed to provide clear notice that
JPMorgan had filed a Form U5 terminating [Lorig’s] professional
licenses;” (8) “inaccurately described the reasons for [Lorig’s]
absence on the Form U5;” (9) “refused to re-activate [Lorig’s]
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professional licenses or take any steps to do so in the face of
the licenses’ imminent expiry;” (10) “deliberately and
spitefully refused to take any steps enabling [Lorig] to reactivate his licenses once [Lorig] announced his intention to
return to work;” (11) “terminated [Lorig’s] employment;” and
(12) “failed and refused to take reasonable and adequate steps
to prevent and correct instances of discrimination.” (Id.)
These actions and Defendants’ “clear notice of the harms that
threatened to befall [Lorig] if his job and professional
licenses were terminated” rendered “it eminently foreseeable
that he would take his own life.” (Id. ¶ 300-01.)
Accordingly,
Plaintiff pleads that the Defendants’ acts or omissions were a
proximate cause of Lorig’s suicide. (Id. ¶ 303.)
B. Procedural Background
On April 2, 2018, Plaintiff filed this complaint alleging a
single claim for wrongful death against all Defendants.
This
motion to dismiss followed.
II. Legal Standard
To survive a motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), “a complaint must contain sufficient
factual matter . . . to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).
The Court’s charge in ruling on a Rule 12(b)(6) motion
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“is merely to assess the legal feasibility of the complaint, not
to assay the weight of the evidence which might be offered in
support thereof.” Eternity Global Master Fund Ltd. v. Morgan
Guar. Trust Co. of N.Y., 375 F.3d 168, 176 (2d Cir. 2004)
(quoting Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir.
1980)).
The Court must construe the complaint in the light most
favorable to the plaintiff, “taking its factual allegations to
be true and drawing all reasonable inferences in the plaintiff’s
favor.” Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009).
The
Court, however, is not required to credit “mere conclusory
statements” or “[t]hreadbare recitals of the elements of a cause
of action.” Iqbal, 556 U.S. at 678.
A complaint that offers
such “labels and conclusions” or naked assertions without
“further factual enhancement” will not survive a motion to
dismiss. Id. (citing Twombly, 550 U.S. at 555, 557).
III. Discussion
“Under New York law, to recover damages for wrongful death,
a plaintiff must prove:
(1) the death of a human being; (2) a
‘wrongful act, neglect or default of the defendant’ that caused
the decedent’s death; (3) the survival of distributees who
suffered pecuniary loss by reason of the decedent’s death; and
(4) the appointment of a personal representative of the
decedent.” Pub. Adm’r of Queens Cnty. ex rel. Estate &
Beneficiaries of Guzman v. City of New York, No 06 Civ. 7099
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(LBS), 2009 WL 498976, at *12 (S.D.N.Y. Feb. 24, 2009) (citing
Chong v. New York City Transit Auth., 441 N.Y.S.2d 24, 25-26 (2d
Dep’t 1981)). 1
Defendants argue that the complaint fails to allege a claim
on which relief can be granted as (1) Plaintiff has failed to
allege Defendants’ actions proximately caused Lorig’s suicide
and (2) Plaintiff’s claim is barred by the New York Workers’
Compensation Law. (Mem. of L. in Supp. of Defs.’ Mot. to Dismiss
at 5-9, ECF No. 16 (filed Aug. 24, 2018)).
A. Proximate Cause
Tragically, the courts of New York and this circuit have
all too often been called upon to consider the circumstances in
which a defendant’s actions could be considered the proximate
cause of an individual’s suicide.
As New York courts recognize,
“it is rather obvious[] that there never can be a sole cause for
suicide.” Case v. Anderson, No. 16 Civ. 983 (NSR), 2017 WL
3701863, at *27 (S.D.N.Y. Aug. 25, 2017) (quoting Fuller v.
Preis, 35 N.Y.2d 425, 433 (1974)).
While a defendant may be
“held liable for the suicide of persons who, as the result of
their negligence, suffers mental disturbance destroying their
The complaint does not state under which law this wrongful death
claim arises, but—as both parties’ briefs extensively cite New York
law to support their positions—the Court assumes New York law governs
this dispute. See Federated Retail Holdings, Inc. v. Sanidown, Inc.,
No. 06 Civ. 6119 (LTS)(THK), 2009 WL 2394528, at *3 n.9 (S.D.N.Y. Aug.
5, 2009).
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will to survive,” the suicide must be “a foreseeable risk
associated with the [defendant’s] alleged wrongful acts.”
D’Addezio v. Agway Petroleum Corp., 186 A.D.2d 929, 931 (3d
Dep’t 1992) (quoting Fuller, 35 N.Y.2d at 428; Wells v. St.
Luke’s Mem’l Hosp. Ctr., 129 A.D.2d 952, 953 (3d Dep’t 1987)).
While “proximate causation generally remains an issue of fact
for the jury” (Am. Tissue, Inc. v. Donaldson, Lufkin & Jenrette
Sec. Corp., 351 F. Supp. 2d 79, 91 (S.D.N.Y. 2004)), New York
courts and the courts of this circuit have recognized that
“there may be and undoubtedly have been cases where the causal
nexus becomes too tenuous to permit a jury to ‘speculate’ as to
the proximate cause of [a] suicide.” Fuller, 35 N.Y.2d at 433;
see also Reinard v. Harsco Corp., No. 05 Civ. 738S (WMS), 2006
WL 2795639, at *5-6 (W.D.N.Y. Sept. 26, 2006) (holding that even
assuming that the defendant employer discharged employee because
of age discrimination, employee’s suicide the day after his
termination was not a reasonably foreseeable consequence); Mroz
v. City of Tonawanda, 999 F. Supp. 436, 458-61 (W.D.N.Y. 1998)
(finding no causal link between an alleged failure to protect
against a minor’s suicide where police arrested him but him
released less than an hour later); Watkins v. Labiak, 282 A.D.2d
601, 602 (2d Dep’t 2011) (holding that suicide was not a
reasonably foreseeable result of medical malpractice during back
surgery); Valkenburgh v. Robinson, 225 A.D.2d 839, 840-41 (3d
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Dep’t 1996) (police officer’s alleged negligence in allowing his
wife access to his service weapon was not the proximate cause of
the wife’s death as her “suicidal act” was an intentional
intervening action that was not a reasonably foreseeable
result); D’Addezio, 186 A.D.2d at 930-32 (holding that defendant
employer’s decision to terminate decedent’s employment because
of a violation in company policy was too attenuated to be the
proximate cause of decedent’s suicide).
Here, Plaintiff specifies twelve different acts or
omissions that he alleges caused Lorig’s suicide by destroying
his career prospects and self-worth and making it difficult for
him to find new employment. (Compl. ¶¶ 284, 300, 303.)
It is
clear from the complaint that, on July 26, 2016—when Lorig first
made JPMorgan aware of his imminent medical release from
disability—Lorig was under the impression he could simply return
to his old position at JPMorgan and was unaware his licenses had
lapsed in a way that would complicate a future job hunt. (Id. ¶¶
208-211, 223-224.)
Indeed, Lorig was not made aware that
JPMorgan officially opposed his return and the complications
with his licenses until his August 8, 2016 conversation with
Smith, the same day that JPMorgan received confirmation from
Lorig’s doctors clearing him “to return to work with no
restrictions.” (Id. ¶¶ 215, 220.)
Accordingly, only the actions
Defendants took after August 8, 2016 can be said to have caused
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Lorig’s suicide under Plaintiff’s own theory.
Further, by that
time, even granting the Plaintiff every favorable reasonable
inference, it had been nearly two years since Lorig’s medical
team had last advised JPMorgan that Lorig was suicidal. (Id. ¶¶
130-32 (alleging that Prudential received its last report
stating that Lorig was suicidal on August 10, 2014).)
Given
these circumstances, it was not reasonably foreseeable that
Defendants’ actions would result in Lorig’s suicide.
As such,
these actions were “simply too attenuated to be the proximate
cause.” D’Addezio, 186 A.D.2d at 931 (quoting Wells, 129 A.D.2d
at 954.)
Plaintiff has thus failed to sufficiently plead the
causal element of a wrongful death claim and that claim must be
dismissed.
B. New York Workers’ Compensation Law
As the Court has found that Plaintiff’s complaint can be
dismissed on the above grounds, there is no need for it to
consider Defendants’ alternate grounds for dismissal.
IV. Leave to Amend
Although Rule 15 of the Federal Rules of Civil Procedure
instructs courts to “freely give leave” to amend “when justice
so requires,” Fed. R. Civ. P. 15(a)(2), the Court cannot imagine
a set of circumstances that would allow Plaintiff to adequately
plead the causal element of a wrongful death claim in this case.
Accordingly, this complaint is dismissed with prejudice.
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