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McMillan v. Barclays Bank PLC

United States District Court, S.D. New York

September 3, 2014

L. LONDELL McMILLAN, Plaintiff,
v.
BARCLAYS BANK PLC, et al., Defendants.

OPINION AND ORDER

ANDREW L. CARTER, Jr., District Judge.

Plaintiff L. Londell McMillan ("Plaintiff") has brought this suit against Barclays Bank PLC ("Barclays") for declaratory judgment and recission of their contract, and against Steven H. Davis, Stephen Dicarmine, Joel I. Sanders, and Francis J. Canellas ("Individual Defendants") (collectively, "Defendants") for breach of a fiduciary duty, fraud, and negligent misrepresentation. According to Plaintiff, this Court has subject matter jurisdiction over this case under 28 U.S.C. § 1334 because the issues that the Court will confront here "arise in" or are "related to" the ongoing bankruptcy court proceedings for Dewey & LeBoeuf ("Dewey"), the now defunct law firm. Defendants dispute Plaintiff's asserted basis of jurisdiction and have moved to dismiss the Complaint for lack of subject matter jurisdiction. (ECF Nos. 45-47, 49-50). The Court has considered all relevant submissions, including the parties' letters submitted in August and December 2013. For the reasons discussed below, Defendants' Motions to Dismiss (ECF Nos. 45-47, 49-50) are GRANTED.

I. Background

Plaintiff was a partner at Dewey. (Am. Compl. ¶¶ 14-15, ECF No. 7). The Individual Defendants were directors and officers of Dewey. (Am. Compl. ¶¶ 4-7, ECF No. 7). Upon becoming a partner at the firm, Plaintiff was required to make a capital contribution of $540, 000 to the operating capital of the firm. (Am. Compl. ¶ 16, ECF No. 7).

In March 2010, Barclays received a loan application for $540, 000, signed by Plaintiff. (Studen Decl. Ex. 1, May 28, 2013, ECF No. 28). Three months later, Barclays informed Plaintiff via letter that his loan application had been approved, and included the terms of the loan for Plaintiff's review. (Studen Decl. Ex. 2, May 28, 2013, ECF No. 28). The terms detailed matters such as the purpose of the loan, Plaintiff's designated agent, events of default that may trigger full repayment of the loan, and governing law. (Id.). Plaintiff's signature appears twice at the bottom of the letter, once in the presence of a witness, evidencing Plaintiff's manifest acceptance of the terms of the loan. (Id.).

In July 2010, Barclays transferred $540, 000 to Plaintiff's capital account at Dewey pursuant to their loan agreement. (Studen Decl. Ex. 3, May 28, 2013, ECF No. 28). For approximately two years, Barclays received quarterly interest payments on the loan in accordance with the loan agreement. (Barclays Mem. Supp. Mot. Dismiss 7, ECF No. 27). In May 2012, Dewey filed for Bankruptcy. (Am. Compl. ¶ 32, ECF No. 7). Following Dewey's commencement of bankruptcy proceedings, Plaintiff became solely responsible for the loan. (Barclays Mem. Supp. Mot. Dismiss 7, ECF No. 27). Despite receiving a notice informing him that an interest payment was due in July 2012, Plaintiff failed to make the interest payment. (Id.).

In September 2012, Barclays served Plaintiff with notice that the loan was in default and demanded repayment of the principal plus all interest accrued to that date. (Studen Decl. Ex. 11, May 28, 2013, ECF No. 28). In December 2012, with the loan still outstanding, Barclays commenced proceedings in an English court to recoup the full amount due under the loan agreement. (Studen Decl. Ex. 5, May 28, 2013, ECF No. 28).

Plaintiff, however, alleges that he never applied for such a loan from Barclays. Plaintiff has "no recollection of signing any such Letter Agreement...." (Am. Compl. ¶ 32, ECF No. 7). "Plaintiff never received any funds from Barclays." (Am. Compl. ¶ 33, ECF No. 7). And Plaintiff never executed a promissory note for this loan with Barclays. (Am. Compl. ¶ 34, ECF No. 7). Consequently, Plaintiff believes that this letter agreement is a fabrication. (Am. Compl. ¶ 35, ECF No. 7). To vindicate his rights, Plaintiff commenced this action in February 2013 against Barclays and the former directors and officers of Dewey. (See generally Compl., ECF No. 1).

II. Standard of Review

Federal Rule of Civil Procedure 12(b)(1) requires that a case be dismissed for lack of subject matter jurisdiction "when the district court lacks the statutory or constitutional authority to adjudicate it." Makarova v. United States , 201 F.3d 110, 113 (2d Cir. 2000). "A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Id . The plaintiff may meet this burden by "alleg[ing] facts that affirmatively and plausibly suggest" that the court has subject matter jurisdiction over the case. Amidax Trading Grp. V. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011). A court is not limited to the allegations in the complaint; it can consider evidence outside the pleadings. Makarova , 201 F.3d at 113; see also APWU v. Potter , 343 F.3d 619, 627 (2d Cir. 2003) (citations omitted) ("[W]here jurisdictional facts are placed in dispute, the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits.").

III. Discussion

Plaintiff asserts that "[t]he Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1334, because the case arises in or is related to Dewey & LeBoeuf's bankruptcy." (Am. Compl. ¶ 10, ECF No. 7). Defendants' contend that "the connection between [Plaintiff's] claims... and the Dewey bankruptcy proceeding... is too attenuated to permit the exercise of either arising in' or related to' bankruptcy jurisdiction...." (Barclays Mem. Supp. Mot. Dismiss 11, ECF No. 27). Moreover, they urge that even if this Court were to find "arising in" or "related to" jurisdiction in this matter, it should abstain from exercising such jurisdiction pursuant to 28 U.S.C. § 1334(c)(1). ( Id. at 14).

A. The Court does not have "arising in" jurisdiction over this case.

"Arising in" jurisdiction "covers claims that are not based on any right expressly created by [T]itle 11, but nevertheless, would have no existence outside of the bankruptcy.'" Baker v. Simpson , 613 F.3d 346, 350-51 (2d Cir. 2010) (per curiam) (alteration in original) (quoting In re Wood , 825 F.2d 90, 97 (5th Cir. 1987)). In Baker, a debtor brought a malpractice claim against counsel that the bankruptcy court had appointed to represent him in the Title 11 proceeding. Id. at 348. The Second Circuit concluded that ...


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