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Anirudh v. Citimortgage

February 11, 2009


The opinion of the court was delivered by: Conner, Sr. D.J.


Plaintiffs Tony L. Anirudh and Dianne C. Anirudh, on behalf of themselves and all others similarly situated, (collectively, "plaintiffs") bring this proposed class action against defendant CitiMortgage, Inc., f/k/a Citicorp Mortgage, Inc. and CMINY, Inc.,*fn1 ("defendant" or "CMI") to recover damages for breach of contract, unjust enrichment, violations of N.Y. GEN. BUS. LAW § 349 and New York Consumer Fraud Statute, and violations of the New Jersey Fraud Act, N.J. STAT. ANN. §§ 56:8-1, et seq. Defendant now moves to dismiss the claims against it pursuant to FED. R. CIV. P. 12(b)(1) for lack of subject matter jurisdiction. For the following reasons, the motion is granted.


The following facts are taken from the Complaint and are assumed to be true for purposes of this decision, unless noted otherwise.

In April 2005, plaintiffs, residents of New York, obtained a "co-op loan" from defendant in order to purchase a cooperative apartment ("the apartment") located in Bronx, New York. (Complt. ¶¶ 22, 25, 36, 37.) Pursuant to the terms of this transaction with defendant (the "loan agreement"), defendant lent plaintiffs $85,500.00 in exchange for a security interest in the stock and lease of the apartment. (Id. ¶¶ 31-32.) Defendant retained physical custody of the original stock certificate and lease while the unpaid principal remained outstanding. (Id. ¶ 32.) Interest was to be charged on the unpaid principal "until the full amount of the principal [had] been paid" and calculated at an established yearly rate. (Id. ¶ 30.) The terms of the loan agreement were set forth in various documents, which were executed by the parties as part of the transaction. (Id. ¶¶ 28, 30-31.) None of these documents stated that plaintiffs would be required to pay interest beyond the date of termination of the loan or that plaintiffs would be unable to sell or transfer the apartment unless plaintiffs first paid additional charges. (Id. ¶¶ 29, 35.)

In October 2007, plaintiffs entered a contract to sell the apartment to a third party and requested a "payoff letter" from defendant in order to proceed with closing the transaction, as required under plaintiffs' contract of sale.*fn2 (Id. ¶ 38.) Defendant issued such letter, pursuant to which defendant requested payment for, inter alia, one day's worth of interest beyond the closing date. (Id. ¶ 40.) Plaintiffs objected to this charge and were advised by defendant's legal counsel that unless the extra day of interest was paid, defendant would not release the physical collateral of the stock and lease nor issue a "UCC-3 release of lien." (Id. ¶ 42.) Therefore, plaintiffs, "under extreme undue hardship," paid $11.95 to defendant for the extra day's worth of interest. (Id. ¶ 43.)

Plaintiffs now bring this action "to recover damages for themselves and a class of thousands of consumers consisting of all persons who have suffered damages from [defendant]'s fraudulent practice of charging interest on New York State and New Jersey [c]o-op loans, as well as [c]o-op loans throughout the country beyond the termination and pay off closing date of the class' [c]o-op loan borrowers." (Id. ¶ 17.) The class period encompasses all co-op loans made by defendant that were paid off in full from March 26, 2002 to the present. (Id. ¶ 3.)


I. Legal Standard

"In deciding a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1), a court must accept as true all of the material factual allegations in the complaint." Brescia v. Sia, 2008 WL 1944010, at *2 (S.D.N.Y. April 30, 2008) (Conner, J.) (citing Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998)). However, "[t]he plaintiff bears the burden of proving by a preponderance of the evidence that subject matter jurisdiction exists." Bonime v. Avaya, Inc., 2006 WL 3751219, at *1 (E.D.N.Y. Dec. 20, 2006), aff'd, 547 F.3d 497 (2d Cir. 2008) (citing Luckett v. Bure, 290 F.3d 493, 497 (2d Cir. 2002)). "Subject matter jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Brescia, 2008 WL 1944010, at *2 (citing Drakos, 140 F.3d at 131) (internal quotation marks omitted). Rather, "[t]he mover and the pleader may use affidavits and other materials beyond the pleadings themselves in support of, or in opposition to, a challenge to subject matter jurisdiction." Giovanniello v. N.Y. Law Publ'g Co., 2007 WL 2244321, at *2 (S.D.N.Y. Aug. 6, 2007) (internal citations omitted). District courts must consult this evidence to decide a 12(b)(1) motion to dismiss "if resolution of a proffered factual issue may result in the dismissal of the complaint for want of jurisdiction." Robinson v. Gov't of Malaysia, 269 F.3d 133, 141 n.6 (2d Cir. 2001).

II. Jurisdiction Under the Class Action Fairness Act

Plaintiffs assert that this Court has federal subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332, as amended by the Class Action Fairness Act of 2005 ("CAFA"). (Complt. ¶ 19.)

A. Applicable Law

"CAFA was enacted to curtail the abuses existing in class action practice by extending federal jurisdiction over interstate class actions of national importance." Brook v. UnitedHealth Group, Inc., 2007 WL 2827808, at *2 (S.D.N.Y. Sept. 27, 2007). In furtherance of this purpose, the statute relaxes the ...

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