PAMELA K. CHEN, District Judge.
Plaintiff U.S. Bank Trust, N.A., as Trustee for LSF9 Master Participation Trust, brings this diversity action against Defendants, pursuant to Article 13 of the New York Real Property Actions and Proceeding Law, to foreclose a mortgage encumbering 97 Ash Drive, Great Neck, New York (the "Property"). Before the Court is the motion to dismiss of Defendants Farid Adhami, Mitra Adhami, Nicole Adhami, and David Adhami (collectively, the "Adhami Defendants"). For the reasons set forth herein, that motion is denied.
On January 23, 2004, Defendants Farid Adhami and Mitra Adhami executed and delivered a Note whereby they promised to pay the sum of $343,000 plus interest on the unpaid Note. (Complaint ("Compl."), Dkt. 1, at ¶ 14.) As security for the Note, Defendants executed and delivered a mortgage on the Property on February 13, 2004. (Id. at ¶ 15.) The mortgage was recorded by Defendant Nassau County Clerk's Office and assigned to non-party Chase Bank, the predecessor-in-interest to Plaintiff. (Id. at ¶¶ 15-16.)
On June 25, 2009, Chase commenced a foreclosure action on the Property against Farid and Mitra Adhami in New York Supreme Court, Nassau County. (Dkt. 25-2, at 45-56 (Summons and Complaint).)
On August 11, 2017, Chase filed a motion to dismiss the 2011 action, stating that it was "elect[ing] not to proceed with the subject foreclosure action" and that "[Chase] hereby revokes the acceleration of the maturity of the loan that is the subject of the foreclosure action and withdraws its prior demand for immediate payment[.]" (Dkt. 25-2, at 85-92.) On March 13, 2018, the state court issued a Short Form Order granting Chase's motion to voluntarily discontinue the 2011 action. It noted that "defendants all oppose the plaintiff's motion on the grounds that it improperly seeks to revoke the acceleration of the loan's maturity[,]" but found that "the resolution of that matter is not ripe for judicial review at this juncture." (Id. at 94-95 (Short Order).)
Plaintiff U.S. Bank Trust, N.A. filed the instant action on January 25, 2018. (Dkt. 1.) No Defendant timely filed an answer. On March 26, 2018, Plaintiff moved for default against all Defendants pursuant to Federal Rule of Civil Procedure 55(a). (Dkt. 14.) That same day, the Adhami Defendants moved to withdraw the certificate of default as to them. (Dkt. 15.) That motion was granted by the Honorable Leonard D. Wexler on March 28, 2018. (Mar. 28, 2018 Order.) The Adhami Defendants' motion to dismiss was fully briefed on June 8, 2018. (Dkt. 25.)
"A case is properly dismissed for lack of subject matter jurisdiction under [Federal Rule of Civil Procedure] Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). The standard for reviewing a 12(b)(1) motion to dismiss "is essentially identical to the 12(b)(6) standard," Allstate Ins. Co. v. Elzanaty, 916 F.Supp.2d 273, 286 (E.D.N.Y. 2013), except that "[a] plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists[,]" Makarova, 201 F.3d at 113. In adjudicating a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), the court may consider matters outside the pleadings. Id.
To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A "claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (quoting Twombly, 550 U.S. at 556). The "plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (citation omitted). Determining whether a complaint states a plausible claim for relief is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679 (citation omitted). "In addressing the sufficiency of a complaint, [the Court] accept[s] as true all factual allegations and draw[s] from them all reasonable inferences; but [the Court is] not required to credit conclusory allegations or legal conclusions couched as factual allegations." Rothstein v. UBS AG, 708 F.3d 82, 94 (2d Cir. 2013).
The Adhami Defendants move to dismiss the complaint on three grounds: (1) Plaintiff has not demonstrated subject matter jurisdiction; (2) this action is barred by the statute of limitations; and (3) the Court should abstain from deciding this matter. The Court will address each of these arguments in turn.
When a defendant "moves to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction, and also moves to dismiss on other grounds, such as Rule 12(b)(6) for failure to state a claim upon which relief can be granted, the Court must consider the Rule 12(b)(1) challenge first." Pivotal Payments, Inc. v. FVA Ventures, Inc., No. 11-CV-5713 (SJF)(ARL), 2012 WL 3887360, at *2 (E.D.N.Y. July 30, 2012), report and recommendation adopted, No. 11-CV-5713 (SJF)(ARL), 2012 WL 3909739 (E.D.N.Y. Sept. 6, 2012) (citation and internal quotation marks omitted).
Defendants state in a conclusory fashion that Plaintiff has not demonstrated subject matter jurisdiction. (Defendants' Brief ("Defs.' Br."), Dkt. 27, at 13-14.) The Court disagrees; here, there is diversity jurisdiction pursuant to 28 U.S.C. § 1348.
Under 28 U.S.C. § 1348, all national banking associations "shall, for the purposes of . . . actions by or against them, be deemed citizens of the States in which they are respectively located." In Wachovia Bank v. Schmidt, the Supreme Court "addressed the meaning of `located' within § 1348, finding that a national banking association is located for diversity purposes `in the State designated in its articles of association as its main office.'" U.S. Bank Tr., N.A. v. Dupre, No. 15-CV-0558 (LEK)(TWD), 2016 WL 5107123, at *3 (N.D.N.Y. Sept. 20, 2016) (quoting Wachovia Bank v. Schmidt, 546 U.S. 303, 318 (2006)). "[I]t is the law of this Circuit that [a] national bank is a citizen only of the state in which its main office is located, and not the state in which its principal place of business is located, if that state differs from the location of its main office." U.S. Bank Tr., N.A. for LSF9 Master Participation Tr. v. Gross, 255 F.Supp.3d 427, 431 (W.D.N.Y. 2017) (citation and internal quotation marks omitted).
Plaintiff's complaint only asserts its principal place of business, rather than its main office (Compl., at ¶ 2); however, Plaintiff has sufficiently proven diversity of citizenship because Defendants are citizens of New York and Las Vegas (id. at ¶¶ 3-9), and Plaintiff has provided its Certified Articles of Association, which state that its main office is in Delaware (Dkt. 26-1, at 170).
Accordingly, the Court has subject matter jurisdiction over this matter under Section 1348.
Defendants argue that this action should be dismissed as time-barred. "Because the statute of limitations is an affirmative defense, the defendant bears the burden of establishing by prima facie proof that the limitations period has expired since the plaintiff's claims accrued. . . . The burden then shifts to the plaintiff to establish that the limitations period should be tolled." Overall v. Estate of Klotz, 52 F.3d 398, 403 (2d Cir. 1995). Under New York law,
Here, Plaintiff's predecessor-in-interest, Chase, commenced a foreclosure action against Defendants Farid and Mitra Adhami in 2009, which specifically stated, inter alia, that "Plaintiff elects to call due the entire amount secured by the mortgage." (Dkt. 25-2, at 48.)
In Zucker, this Court noted that "[t]he New York Court of Appeals has not addressed whether the voluntary discontinuance of a foreclosure action constitutes an affirmative act revoking a prior acceleration." 2018 WL 2048880, at *7; see also In re Taylor, 584 B.R. 590, 595 (Bankr. E.D.N.Y. 2018) ("New York courts have acknowledged that the law has not specified exactly which act or acts are sufficient to revoke acceleration."). In the absence of a decision from the New York Court of Appeals, federal courts will "[p]rincipally . . . consider the language of the state intermediate appellate courts to be helpful indicators of how the state's highest court would rule. Although [the Court is] not strictly bound by state intermediate appellate courts, rulings from such courts are a basis for `ascertaining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.'" DiBella v. Hopkins, 403 F.3d 102, 112 (2d Cir. 2005) (quoting West v. Am. Tel. & Tel. Co., 311 U.S. 223 237 (1940)). New York State appellate courts have provided limited guidance on the mortgage acceleration question at issue here. In NMNT Realty Corp. v. Knoxville 2012 Trust, the Second Department found that "when a mortgagee moves for and is granted an order of discontinuance, it raises a question of fact as to [whether] there was an affirmative act to revoke its election to accelerate." Zucker, 2018 WL 2048880, at *7 (discussing NMNT Realty Corp. v. Knoxville 2012 Tr., 58 N.Y.S.3d 118, 120-21 (2d Dep't 2017)); see also Cortes-Goolcharran v. Rosicki, Rosicki & Associates, P.C., No. 17-CV-3976 (FB)(SJB), 2018 WL 3748154, at *3 (E.D.N.Y. Aug. 7, 2018) ("Discontinuance of a foreclosure action does not necessarily constitute such an affirmative act. Rather, it may, as in NMNT Realty, `raise[ ] a triable issue of fact' as to the intent behind the discontinuance.'") (quoting NMNT Realty, 58 N.Y.S.3d at 120). And in Freedom Mortgage Corporation v. Engel, the Second Department held that the lower court erred when it failed to grant defendants' motion for summary judgment, finding that "the plaintiff's execution of the . . . stipulation [of dismissal] did not, in itself, constitute an affirmative act to revoke its election to accelerate, since, inter alia, the stipulation was silent on the issue of the revocation of the election to accelerate, and did not otherwise indicate that the plaintiff would accept installment payments from the defendant." No. 1139/15, 2018 WL 3371696, at *2 (N.Y. App. Div. July 11, 2018); see also U.S. Bank Trust, N.A. v. Aorta, 89 N.Y.S.3d 717, 719 (N.Y. App. Div. Dec. 12, 2018) (finding on summary judgment that a plaintiff's motion to voluntarily discontinue a foreclosure action did not raise a triable issue of fact with respect to revocation because the plaintiff failed to demonstrate the basis for the motion and the order of discontinuance did not expressly address the election to accelerate); Ventures Trust—I-H-R v. Chitbahal et al., 90 N.Y.S.3d 45, 46-47 (N.Y. App. Div. Dec. 5, 2018) (declining to toll the statute of limitations where the reasons for discontinuance of a prior action did not appear in the record). Additionally, although they are "only . . . trial level case[s]" that "this Court is not bound to follow," Rodland v. Judlau Contracting, Inc., 844 F.Supp.2d 359, 363 (S.D.N.Y. 2012), ten of the thirteen New York trial courts
In light of this (albeit limited) precedent, the Court finds that Plaintiff has sufficiently alleged, at this stage, that the prior voluntary discontinuance tolled the statute of limitations. To overcome this defense at trial, Plaintiff will have to prove that the voluntarily discontinuance indicated that Plaintiff "intended to forgive the default and revoke its acceleration," not "that [Plaintiff] simply intended to bring another foreclosure action for the full amount. . . ." Cortes-Goolcharran, 2018 WL 3748154, at *3 (finding that at the pleading stage, plaintiff-mortgagee was "entitled to the more favorable inference" regarding its intent to forgive the default and revoke the mortgage acceleration). For example, if Defendants can establish that they "continued to receive statements that [their] loan was still accelerated and/or being foreclosed" after the 2012 voluntary discontinuance, that fact "would negate any inference that [Plaintiff] intended to revoke its acceleration." Id.; see also Freedom Mortg. Corp., 2018 WL 3371696, at *2. As noted in BSD 265, LLC, it is possible that Plaintiff's "discontinuance of the foreclosure action only evinced the intent of [the bank] to not immediately seek a judgment of foreclosure and sale." N.Y. Slip Op. 31373(U), at *7-8 (citations and internal quotation marks omitted). "[S]uch act is otherwise not inconsistent with [Plaintiff's] insistence that the entire debt be paid." Id. (finding that "the mere discontinuance of the foreclosure action, standing alone and without further proof expressing [the bank's] intent, does not constitute an affirmative act revoking the acceleration.").
Accordingly, the Court finds, at this stage, that this action is not time-barred.
Lastly, Defendants argue that the Court should abstain, pursuant to Burford v. Sun Oil Co., 319 U.S. 315 (1943), from adjudicating this case because "New York has set forth a specific and detailed statutory scheme relating to foreclosure actions." (Defs.' Br., at 15-16.) This argument was recently rejected in this district in Avail Holding LLC, v. Ramos, No. 15-CV-7068 (NGG)(LB), 2017 WL 979027, at *2 (E.D.N.Y. Mar. 10, 2017). There, the Honorable Nicholas G. Garaufis held, inter alia:
Id. at *5-6 (citations omitted) (collecting cases). For the reasons stated in Avail Holding, the Court declines to exercise Burford abstention in this case.
For the reasons stated herein, the Adhami Defendants' motion to dismiss is denied.
SO ORDERED.
