Elleman & Krause ("ZEK"), in which Glenn L. Stephenson ("Stephenson")
and OCI Mortgage Corporation ("OCI") join, to dismiss the plaintiffs'
second amended complaint (the "Complaint") on the following grounds: (1)
pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject matter
jurisdiction; (2) pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state
a claim upon which relief can be granted: (3) pursuant to Fed.R.Civ.P.
12(b)(5) for defective service of process; and (4) pursuant to
Fed.R.Civ.P. 9(b) for failure to plead the claim of fraud with sufficient
particularity and specificity.
The following facts are taken from plaintiffs' Complaint. The
plaintiffs assert that on or about August 18, 1988, Citibank approved them
for a loan, to purchase a home, in the sum of $139,500.00, at an interest
rate of 11.375%. On August 18, 1988 the plaintiffs went to closing on the
house and signed a mortgage agreement with Citibank. At an unspecified
time thereafter, OCI and Stephenson purchased the plaintiffs' mortgage
from Citibank. On August 18, 1996, OCI and Stephenson commenced eviction
and foreclosure proceedings against the plaintiffs for failure to make
payments "at the sixth district court of Suffolk." On July 23, 1997, the
plaintiffs were forcibly removed from their home.
The Complaint includes claims against the defendants, both individually
and collectively, under the Racketeer Influenced Corrupt Organizations
Act ("RICO"), 18 U.S.C. § 1961 et seq., 42 U.S.C. § 1983, and
related state law claims for common-law fraud, usury and breach of
contract. The plaintiffs allege that: (1) Citibank breached the mortgage
agreement by failing to lend "lawful money of the United States"; (2)
that Citibank perpetrated a fraud by lending such unlawful monies; (3)
that by creating this unlawful debt Citibank has engaged in the
collection of usurious interest rates, and racketeering activity,
including mail and wire fraud; and (4) that Stephenson and OCI
"unlawfully" created a debt by purchasing the Citibank mortgage and, in
violation of the plaintiffs' 14th Amendment rights, forcibly removed the
plaintiffs from their home. As far as the Court can discern, the
plaintiffs assert no claims against ZEK.
A. The Plaintiffs' Pro Se Status
In addressing the defendant's motion, the Court is mindful that the
plaintiffs are proceeding pro se and that their submissions should be held
"to less stringent standards than formal pleadings drafted by lawyers."
Hughes v. Rowe, 449 U.S. 5, 9, 101 S.Ct. 173, 66 L.Ed.2d 163 (1980) (per
curiam) (quoting Haines v. Kerner, 404 U.S. 519, 520, 92 S.Ct. 594, 30
L.Ed.2d 652 (1972)); Fleming v. United States, 146 F.3d 88, 90 (2d Cir.
1998) (citations omitted). The Court recognizes that it must make
reasonable allowances so that these pro se plaintiffs do not forfeit
their rights by virtue of their lack of legal training. Traguth v. Zuck,
710 F.2d 90, 95 (2d Cir. 1983). However, the plaintiffs' pro se status
does not "exempt [them] from compliance with relevant rules of procedural
and substantive law." Id. (quoting Birl v. Estelle, 660 F.2d 592, 593
(5th Cir. 1981)).
B. ZEK's Motion to Dismiss
Fed.R.Civ.P. 8(a) requires a plaintiff to set forth in the complaint a
"short and plain statement of the claim showing that the [plaintiff] is
entitled to relief." The complaint must at least "sufficiently appraise a
defendant of the charges asserted against it." Humpherys v. Nager,
962 F. Supp. 347, 351 (E.D.N.Y. 1997) (quoting Gould v. Russi,
830 F. Supp. 139, 143 (N.D.N.Y. 1993)). As noted above, a review of the
Complaint reveals that the defendant ZEK is mentioned only once: in the
caption. "The complaint does not provide any facts to indicate how [ZEK]
could have injured [the plaintiffs]. `The courts have consistently held
that, where the complaint names a defendant in the caption but contains
no allegations indicating how the defendant violated the law or injured
the plaintiff, a motion to dismiss the complaint in regard to that
defendant should be granted.'" Humpherys v. Nager, 962 F. Supp. at 351
(quoting Morabito v. Blum, 528 F. Supp. 252, 262 (S.D.N.Y. 1981)
[granting 12(b)(6) motion to dismiss where defendant was
named only in caption and noting that complaint fails to meet standard of
Fed.R.Civ.P. 8(a)]). Since apparently no claims are raised against the
defendant ZEK, the Complaint fails to meet the minimal threshold of
notice pleading established by Rule 8, and the firm's motion to dismiss
the Complaint, as against it, is granted.
C. The Defendants' Rule 12(b)(1) Motions to Dismiss for Lack of Subject
Matter Jurisdiction: The Standard
All of the defendants move to dismiss the Complaint pursuant to Rule
12(b)(1) on the ground that this Court lacks subject matter
jurisdiction. Federal subject matter jurisdiction exists only when a
"federal question" is presented under 28 U.S.C. § 1331, or, as
provided in 28 U.S.C. § 1332, where the plaintiffs and all the
defendants are of diverse citizenship and the amount in controversy
exceeds $75,000. Where jurisdiction is lacking, the district court must
dismiss the Complaint without regard to the merits of the lawsuit. Nowak
v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1188 (2d Cir. 1996).
Here, the plaintiffs assert that federal subject matter jurisdiction is
predicated on federal question and diversity jurisdiction.
"In considering motions to dismiss for want of subject matter
jurisdiction, the Court must accept as true all material factual
allegations in the Complaint and refrain from drawing inferences in favor
of the party contesting jurisdiction." Serrano v. 900 5th Ave. Corp.,
4 F. Supp.2d 315, 316 (S.D.N.Y. 1998) (citing Atlantic Mut. Ins. Co. v.
Balfour Maclaine Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992)). The
district court, however, is not merely confined to the four corners of
the Complaint. "On a motion under Fed.R.Civ.P. 12(b)(1) challenging the
district court's subject matter jurisdiction, the court may resolve
disputed jurisdictional fact issues by reference to evidence outside the
pleadings, such as affidavits." Id. (citations omitted) (internal
1. Diversity Jurisdiction
As indicated above, to invoke diversity of citizenship jurisdiction,
the plaintiffs must establish that there is complete diversity between
the parties and that the amount in controversy exceeds $75,000.
28 U.S.C. § 1332. Complete diversity means that no plaintiff is a
citizen of the same state as any defendant. See Cresswell v. Sullivan
& Cromwell, 922 F.2d 60, 68 (2d Cir. 1990) ("It is well established
that for a case to come within this statute there must be complete
diversity and that diversity is not complete if any plaintiff is a
citizen of the same state as any defendant.").
The defendants assert that the plaintiffs and the defendants ZEK and
Citibank are citizens of New York and, as such, there is no diversity of
citizenship. Despite their assertion in their opposition papers that the
parties are diverse, the plaintiffs concede in their Complaint that ZEK
and Stephenson are citizens of New York. (Compl., ¶ 2). By the
plaintiffs' own admission, therefore, diversity of citizenship is lacking
and they may not invoke subject matter jurisdiction on that basis.
2. Federal Question Jurisdiction
To invoke "federal question" jurisdiction, the plaintiffs' claims must
arise "under the Constitution, laws, or treaties of the United States."
28 U.S.C. § 1331. The Second Circuit has found that, in determining
whether federal question jurisdiction exists, the Court should not look
to see if the plaintiff could recover on their claims. Town of West
Hartford v. Operation Rescue, 915 F.2d 92, 100 (2d Cir. 1990) (internal
quotation omitted) (citations omitted). "Instead, the test is whether
`the cause of action alleged is so patently without merit as to justify
. . . the court's dismissal for want of jurisdiction.'" Id. (quoting
Hagans v. Lavine, 415 U.S. 528, 542-43, 94 S.Ct. 1372, 39 L.Ed.2d 577
(1974)). Consequently, a federal question claim should only be dismissed
for want of subject matter jurisdiction if it is "`so insubstantial,
implausible, foreclosed by prior decisions of this Court, or otherwise
completely devoid of merit as not to involve a federal controversy.'"
Id. (quoting Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 666
(1974)). Thus, "[s]ubject matter jurisdiction exists as long as a
states a colorable federal claim." Rodriguez by Rodriguez v. DeBuono,
162 F.3d 56, 60 (2d Cir. 1998) (citing Savoie v. Merchants Bank,
84 F.3d 52, 57 (2d Cir. 1996)).
The defendants argue that this Court lacks federal question
jurisdiction under 28 U.S.C. § 1331 because the defendants are not
"state actors," a necessary element of the plaintiffs' Section 1983
claim. The Court disagrees that this serves as a basis for dismissal
under 12(b)(1). The defendants' argument is relevant only to the
plaintiffs' civil rights claims under Section 1983, and does not address
the plaintiffs' RICO claims. which contain no element of "state action."
In any event, to the extent the defendants contend that they are not
amenable to a Section 1983 suit because they did not act under color of
state law, such arguments are more appropriately raised in a Rule
12(b)(6) motion to dismiss for failure to state a claim. Rodriguez by
Rodriguez v. DeBuono, 162 F.3d at 60-61 ("The issue of whether
42 U.S.C. § 1396a(a)(10)(B) provides an enforceable private right of
action pursuant to § 1983. therefore, does not implicate
jurisdiction. Rather, it is more aptly viewed as a question of whether
the plaintiffs have failed to state a claim upon which relief may be
3. The Rooker-Feldman Doctrine
The Court concludes that it lacks subject matter jurisdiction under the
Rooker-Feldman doctrine, because the plaintiffs' Complaint implicitly and
explicitly seeks to have this Court review a final decision of the state
court. Specifically, the plaintiffs ask this Court to review the state
court's judgment of foreclosure and eviction, by seeking damages for the
loss of their property, and "declaring the mortgage null and void"
(Complaint, at p. 9). This is a direct attack on the state court
foreclosure and eviction.
This Court lacks subject matter jurisdiction to review a final state
order, because "[t]he jurisdiction of the district courts is strictly
original." Olitt v. Vacco, 1998 WL 901727, *2 (S.D.N.Y. Dec. 28, 1998)
(quoting Rooker v. Fidelity Trust Co., 263 U.S. 413, 416 (1923)). A
district court lacks "authority to review final judgments of a state
court in judicial proceedings." District of Columbia Court of Appeals v.
Feldman, 460 U.S. 462, 482, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983); see
also Moccio v. New York State Office of Court Admin., 95 F.3d 195, 197
(2d Cir. 1996) (noting that under the Rooker-Feldman, doctrine, "inferior
federal courts have no subject matter jurisdiction over cases that
effectively seek review of judgments of state courts"). Consequently,
this Court is without jurisdiction if the issues raised in the
plaintiffs' Complaint are inextricably intertwined with a state court
judgment; that is, the federal claim would succeed only if the state
court wrongly decided the issue.
The claims raised in the plaintiffs' Complaint implicate the propriety
of the state judgment of foreclosure and eviction — the very issues
apparently decided by the state court. Because the Rooker-Feldman doctrine
compels a federal court to give full faith and credit to the judgments of
state courts, see 28 U.S.C. § 1738, this Court is without subject
matter jurisdiction to hear this case. Accordingly, the defendants'
motion to dismiss for lack of subject matter jurisdiction under Rule
12(b)(1) is granted, and the Complaint is dismissed.
D. The Defendants' Rule 12(b)(6) Motions to Dismiss for Failure to
State a Claim: The Standard
Even if the Court were to conclude that the Rooker-Feldman doctrine was
not a bar to this suit, it nevertheless would grant the motion to dismiss
under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which
relief can be granted.