United States District Court, Southern District of New York
October 3, 1991
REDDY AND GADDAM-USHA REDDY, PLAINTIFFS, V. BARCLAYS BANK OF NEW YORK, N.A., DEFENDANT.
The opinion of the court was delivered by: Sprizzo, District Judge.
MEMORANDUM OPINION AND ORDER
Plaintiffs, Dr. Gaddam V. Reddy and Gaddam Usha Reddy (the
"Reddys") bring this action seeking damages arising out of an
alleged unauthorized transfer of funds from plaintiffs' money
market fund account, by defendant, Barclays Bank of New York,
N.A. ("Barclays"). The defendant, pursuant to Fed.R.Civ.P.
12(b)(1), moves to dismiss the complaint for lack of federal
subject matter jurisdiction on the ground that the plaintiffs
cannot meet the monetary requirement needed to invoke federal
jurisdiction over this diversity case. 28 U.S.C. § 1332(a)
(1988).*fn1 For the reasons set forth below, the defendant's
motion is denied.
The following statement of facts is based upon the allegations
set forth in the plaintiffs' complaint, which for purposes of
this motion, must be assumed to be true.
In March and April of 1989, Barclays allowed two unauthorized
wire transfers of funds from the Reddys' account in the amount of
twenty-nine thousand, eight hundred and ninety dollars
($29,890.00).*fn2 See Complaint at ¶¶ 8, 10. As a result of
the unauthorized transfers, Barclays dishonored three subsequent
checks issued by plaintiffs in connection with a contract of sale
for real estate in India, triggering a penalty provision in the
real estate contract and causing plaintiffs to incur
consequential damages in the amount of thirty-nine thousand, two
hundred and fifty dollars ($39,250.00). Id. at ¶ 29.
In support of their motion to dismiss, Barclays claims that
absent bad faith, Article 4 of the Uniform Commercial Code,
U.C.C. § 4-103(5) (McKinney 1988), limits the plaintiffs'
recovery to their actual damages of $29,890.00.*fn3 See
Law in Support of Defendant's Motion at 5-6. Alternatively,
Barclays claims that for a depositor to recover consequential
damages under Article 4, reasonably foreseeable damages must be
shown and that the Reddys cannot sustain this burden. Id. at 7.
Finally, Barclays challenges the amount of consequential damages
claimed by the Reddys because Dr. Reddy paid only a portion of
the forfeited funds under the real estate contract. Id. at 8.
To determine whether the amount in controversy requirement of
section 1332(a) has been satisfied, it must appear to a legal
certainty that the plaintiff's claim is for less than the
jurisdictional amount. St. Paul Mercury Indemnity Co. v. Red Cab
Co., 303 U.S. 283, 289, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938).
Moreover, in making that determination, although the Court is
entitled to consider facts developed during discovery which
amplify the allegations of plaintiff's complaint, the Court may
not resolve the merits of factual issues raised by defenses
asserted, which a defendant claims will reduce plaintiff's claim
below the requisite jurisdictional amount. Zacharia v. Harbor
Island Spa, Inc., 684 F.2d 199, 202 (2d Cir. 1982).
Tested by that standard, since all of the defendant's arguments
involving bad faith and consequential damages cannot be resolved
without addressing the merits of these defenses, these
allegations cannot be a basis for a conclusion that a motion to
dismiss for lack of the jurisdictional amount should be granted.
This is especially true since "even where the allegations leave
grave doubt about the likelihood of a recovery of the requisite
amount, dismissal is not warranted." Id. (citing Deutsch v.
Hewes Street Realty Corp., 359 F.2d 96 (2d Cir. 1966)).
For the reasons stated above, the defendant's motion to dismiss
the plaintiffs' complaint for lack of subject matter jurisdiction
shall be and hereby is denied.
It is SO ORDERED.