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Celinda Acevado and Jacqueline Lopez, Individually and On v. Citibank

March 23, 2012

CELINDA ACEVADO AND JACQUELINE LOPEZ, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
CITIBANK, N.A.,
DEFENDANT.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.:

MEMORANDUM OPINION & ORDER

In this putative class action, Plaintiffs Celinda Acevado and Jacqueline Lopez allege that Defendant Citibank, N.A., restrained their bank accounts and charged them fees in violation of New York's Exempt Income Protection Act (the "EIPA" or the "Act") and state common law.

Citibank has moved to dismiss the Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(1) and (6) or, in the alternative, for an order compelling arbitration and/or granting summary judgment.*fn1 Citibank argues, inter alia, that the EIPA does not create a private right of action for money damages for an account holder seeking to sue his or her bank for alleged EIPA violations.

For the reasons stated below, Citibank's motion to dismiss under Fed. R. Civ. P. 12(b)(6) will be granted in part and denied in part.

BACKGROUND*fn2

At all relevant times, Plaintiffs -- who are New York residents -- each maintained an account at one of Citibank's New York City branches. (Am. Cmplt. ¶¶ 11-12)*fn3 Citibank is a Delaware corporation. (Id. ¶ 10)

In or about June 2009, Acevado received a notice from Citibank stating that her savings account had been frozen due to a restraining notice and/or levy served on Citibank by non-party judgment creditors. (Id. ¶ 12(b)) At that time, Acevado's account contained approximately $2,000 in wages she had earned. (Id.) Citibank charged Acevado an administrative fee of approximately $100 in connection with placing the restraint on her account. (Id. ¶ 13) Acevado did not receive any disclosures from Citibank concerning funds that might be exempt from restraint. (Id.) Acevado further alleges, "[u]pon information and belief," that she was unable to access the funds in her account as a result of the restraint. (Id.)

On or about January 5, 2011, Lopez received a notice from Citibank stating that her checking account was frozen due to service of a restraining notice and/or levy by non-party judgment creditors. (Id. ¶ 14) At that time, Lopez's account contained approximately $3,305.60 in wages she had earned. (Id.) Citibank advised Lopez that her funds would be transferred to a Citibank holding account and charged her an administrative fee of approximately $125 for processing the restraining notice. (Id. ¶ 15) Lopez alleges, "upon information and belief," that she was not able to access the funds in her account as a result of the restraint. (Id.)

Plaintiffs seek to bring this action on behalf of all Citibank account holders whose accounts were restrained and/or levied upon between January 1, 2009, and the present in violation of the EIPA. (Id. ¶ 25) Plaintiffs assert six causes of action: (1) violations of the EIPA (id. ¶¶ 36-43); (2) conversion (id. ¶¶ 44-48); (3) breach of fiduciary duty (id. ¶¶ 49-52); (4) unjust enrichment (id. ¶¶ 53-59); (5) negligence (id. ¶¶ 60-63); and (6) breach of contract (id. ¶¶ 64-68). The ad damnum clause of the Amended Complaint recites that the Plaintiffs are seeking, inter alia, compensatory damages and "statutory, exemplary and punitive damages," and an order "[p]ermanently enjoining Defendant from continuing to engage in the unlawful and inequitable conduct alleged herein and requiring Defendant to comply with [the] EIPA." (Am. Cmplt., ad damnum clause)

DISCUSSION

I. SUBJECT MATTER JURISDICTION

A. Applicable Law

Plaintiffs assert that this Court has subject matter jurisdiction under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d)(2), which provides:

The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which --

(A) any member of a class of plaintiffs is a citizen of a State different from any defendant. . . .

The CAFA permits aggregation of the claims of individual class members to reach the jurisdictional amount. 28 U.S.C. § 1332(d)(6) ("In any class action, the claims of the individual class members shall be aggregated to determine whether the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs.").

"'Determining the existence of subject matter jurisdiction is a threshold inquiry and a claim is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.'" Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008), aff'd, 130 S. Ct. 2869 (2010) (quoting Arar v. Ashcroft, 532 F.3d 157, 168 (2d Cir. 2008) (internal citations and quotation marks omitted)). "In reviewing a motion to dismiss under Rule 12(b)(1), the court 'must accept as true all material factual allegations in the complaint, but [it is] not to draw inferences from the complaint favorable to Plaintiffs.'" Wood v. Gen. Motors Corp., No. CV 08-5224(JFB)(AKT), 2010 WL 3613812, at *3 (E.D.N.Y. Aug. 23, 2010) (quoting Toomer v. City of Nassau, 07-CV-01495(JFB)(ETB), 2009 WL 1269946, at *3 (E.D.N.Y. May 5, 2009) (quoting J.S. ex rel. N.S. v. Attica Cent. Schs., 386 F.3d 107, 110 (2d Cir. 2004))).

"Under CAFA, as under the traditional rule, the party asserting subject matter jurisdiction has the burden of proving it." Blockbuster, Inc. v. Galeno, 472 F.3d 53, 59 (2d Cir. 2006); see also Makarova, 201 F.3d at 113 ("A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists."). Plaintiffs "must show that it appears to a 'reasonable probability' that the aggregate claims of the plaintiff class are in excess of $5 million." Blockbuster, 472 F.3d at 58 (citing Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291, 296 (2d Cir. 2000)).

However, "[o]n a motion to dismiss challenging the sufficiency of the amount in controversy, the sum claimed by the plaintiff ordinarily controls, so long as it is claimed in good faith." Stengel v. Black, No. 03 Civ. 0495(GEL), 2004 WL 1933612, at *1 (S.D.N.Y. Aug. 30, 2004) (citing St. Paul Mercury Indem., Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)); see also Cappuccitti v. DirecTV, Inc., 623 F.3d 1118, 1122 n.8 (11th Cir. 2010) (in an action brought under CAFA, "[w]e assume that the sum claimed here by [plaintiff] was made in good faith, and it therefore controls."). "A suit may not be dismissed for lack of the jurisdictional amount in controversy unless it appears 'to a legal certainty' that the plaintiff cannot recover the amount claimed." Stengel, 2004 WL 1933612, at *1 (quoting St. Paul, 303 U.S. at 289); see also Aros v. United Rentals, Inc., No. 3:10-CV-73(JCH), 2011 WL 1647471, at *2 (D. Conn. Apr. 25, 2011) (in a class action under CAFA, noting that defendant "has not presented any argument to demonstrate to a legal certainty that the plaintiff could not recover the amount alleged"). "'[T]he legal impossibility of recovery must be so certain as virtually to negat[e] the plaintiff's good faith in asserting the claim. If the right of recovery is uncertain, the doubt should be resolved . . . in favor of the subjective good faith of the plaintiff.'" Stengel, 2004 WL 1933612, at *1 (quoting Chase Manhattan Bank, N.A. v. Am. Nat'l Bank and Trust Co., 93 F.3d 1064, 1070 (2d Cir. 1996) (citations omitted)).

Courts in this Circuit "recognize a 'rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy.'" Colavito v. New York Organ Donor Network, Inc., 438 F.3d 214, 221 (2d Cir. 2006) (quoting Wolde-Meskel v. Vocational Instruction Project Cmty. Servs., Inc., 166 F.3d 59, 63 (2d Cir. 1999)). "In order to rebut this presumption, the defendant must show that the complaint 'was so patently deficient as to reflect to a legal certainty that [the plaintiffs] could not recover the amount alleged or that the damages alleged were feigned to satisfy jurisdictional minimums.'" Id.

B. Analysis

Citibank argues that the Amended Complaint does not adequately allege damages sufficient to satisfy the $5,000,000 jurisdictional amount threshold under 28 U.S.C. § 1332(d)(2). The Amended Complaint pleads that the number of class members is "in the thousands" (Am. Cmplt. ¶ 26) and that "the damages of the Class exceed $5,000,000 in the aggregate." (Id. ¶ 7)

Citibank contends that "[t]here is no factual basis to support any contention that the amount in controversy in the aggregate is $5 million" (Def. Br. 9), and has offered evidence that it has placed restraints on approximately 8,831 accounts pursuant to CPLR § 5222 since January 2009, resulting in aggregate fees assessed by Citibank of no more than $1,103,875. (Wagner Decl. ¶ 10; Def. Br. 10)

Plaintiffs seek more in the Amended Complaint than simply the return of fees, however. Plaintiffs allege that Citibank denied them access to their funds, and they seek recovery of those funds. (Am. Cmplt. ¶¶ 13, 15; Pltf. Opp. Br. 7) Moreover, in addition to compensatory damages, Plaintiffs seek "statutory, exemplary and punitive damages" and an injunction "[p]ermanently enjoining [Citibank] from continuing to engage in the unlawful and inequitable conduct alleged herein and requiring [Citibank] to comply with [the] EIPA." (Am. Cmplt., ad damnum clause) "Where non-monetary relief is sought, 'the amount in controversy is measured by the value of the object of the litigation.'" Ava Acupuncture P.C. v. State Farm Mut. Auto. Ins. Co., 592 F. Supp. 2d 522, 527 (S.D.N.Y. 2008) (quoting Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977)). "In traditional class action suits in federal court under diversity jurisdiction, the object of the litigation has been viewed as 'the monetary value of the benefit that would flow to the plaintiff if injunctive or declaratory relief were granted.'" Id. (quoting American Standard, Inc. v. Oakfabco, Inc., 498 F. Supp. 2d 711, 717 (S.D.N.Y. 2007)).

Based on the record here, the Court cannot say to a "legal certainty" that the amount in controversy is less than $5,000,000. Accordingly, Citibank's motion to dismiss for lack ...


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