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Fidelity National Title Insurance Company v. Jp Morgan Chase Bank

May 14, 2012


The opinion of the court was delivered by: Gary L. Sharpe Chief Judge


I. Introduction

Plaintiff Fidelity National Title Insurance Company commenced this action against defendant JP Morgan Chase Bank, N.A. asserting a claim of unjust enrichment stemming from JP Morgan's sale of real property in the Town of Harpersfield, New York. (See Compl., Dkt. No. 2.) Pending is JP Morgan's motion to dismiss. (See Dkt. No. 34.) For the reasons that follow, the motion is denied.

II. Background*fn1

On August 31, 2006, JP Morgan commenced a foreclosure action on a mortgage it held for the property located at 541 Bruce Hill Road, Harpersfield, New York ("the Property") against Linda and Roscoe Playford in a state court in Delaware County. (See Compl. ¶¶ 3-5.) While that action was pending, "a tax sale deed was recorded [on April 9, 2007] in favor of Delaware County in which the Property was conveyed to Delaware County as a result of the Playford's failure to pay taxes owed in 2005." (Id. ¶ 6.) Eight days later, JP Morgan obtained a judgment of foreclosure, which was recorded with the Delaware County Clerk's Office on April 25, 2007. (See id. ¶ 7.) Because of the tax lien, JP Morgan claims it was unable to proceed with the mortgage foreclosure proceedings. (See Dkt. No. 34 at 4.) Accordingly, its loan servicer, Ocwen Loan Servicing, LLC, paid the outstanding taxes on July 11, 2007. (See id.)

Instead of deeding the Property to JP Morgan, Delaware County conveyed the Property to Linda Playford, who, in turn, sold it to Eklund Farm Machinery, Inc. in December 2008. (See id.; Compl. ¶¶ 8, 11.) Meanwhile, with the tax lien lifted, JP Morgan conducted a foreclosure sale on October 10, 2007, conveyed the Property to itself, and thereafter, sold it to DT Schneider Development Corp. on August 8, 2011. (See Compl. ¶¶ 9-10.) To insure the validity of its title, DT purchased title insurance from Fidelity; a policy which DT filed a claim under after Eklund commenced an action in New York State Supreme Court to quiet title. (See id. ¶¶ 10-12.)

Under the terms of its insurance policy, DT "tendered a claim" to Fidelity after it was served by Eklund. (Id. ¶ 12.) Ultimately, the state court granted summary judgment in favor of Eklund, and extinguished DT's claim to the Property. (See id. ¶ 13.) As a result thereof, Fidelity paid DT $72,000 to resolve the claim, and also incurred an additional $25,000 in expenses in the course of defending DT against Eklund's suit. (See id. ¶ 14.)

Alleging that it is DT's subrogee, (see id.), Fidelity commenced the instant action in the Fourth Judicial Circuit in and for Duval County, Florida, claiming that JP Morgan was unjustly enriched in the amount $97,000, (see Dkt. No. 39 at 1-2; Compl. ¶¶ 14-16). On December 16, 2010, JP Morgan removed the case to the United States District Court for the Middle District of Florida, and thereafter, filed a motion to transfer the case to the Northern District of New York. (See Dkt. No. at 1.) JP Morgan's motion was granted on March 23, 2012 by United States District Judge Marcia Morales Howard. (See id. at 6.) Four days later, the case was transferred to this court. (See Dkt. No. 40.)

III. Standard of Review

The standard of review under Fed. R. Civ. P. 12 is well established and will not be repeated here. For a full discussion of the standard, the court refers the parties to its decision in Ellis v. Cohen & Slamowitz, LLP, 701 F. Supp. 2d 215, 218 (N.D.N.Y. 2010).

IV. Discussion

JP Morgan argues that Fidelity's Complaint should be dismissed because it failed to state an unjust enrichment claim and Fidelity cannot equitably subrogate its obligations to DT under the title insurance policy.

(See Dkt. No. 34 at 8-12.) Moreover, JP Morgan avers that there is no basis for Fidelity's claim of attorneys' fees. (See id. at 13.) Fidelity counters that its claim is sufficiently plead to survive JP Morgan's motion to dismiss. (See Dkt. No. 37 at 6-12.) The court agrees with Fidelity.

At this juncture, Fidelity's obligation is only to plead "factual content that allows the court to draw the reasonable inference that [JP Morgan] is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Specifically, under New York law,*fn2 Fidelity must allege facts to establish that JP Morgan was enriched at its expense, and "equity and good faith conscience militate against permitting [JP Morgan] to retain what [Fidelity] is seeking to recover." Ashland Inc. v. Morgan Stanley & Co., Inc., 652 F.3d 333, 339 (2d Cir. 2011) (internal quotation marks and citation omitted). Here, Fidelity has met its burden by alleging, albeit succinctly, that JP Morgan's "purported" ...

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