Beck v. Metro. Bank Holding Corp.

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Kimberly V. Beck, Plaintiff, v. Metropolitan Bank Holding Corp. and JPMorgan Chase Bank, N.A., Defendants.

No. 2:23-cv-07564 (NJC) (ARL)

United States District Court, E.D. New York

June 3, 2024

OPINION AND ORDER

NUSRAT J. CHOUDHURY, United States District Judge.

Plaintiff Kimberly Beck (“Beck”) brings this action against Defendant JPMorgan Chase Bank, N.A. (“Chase”) for failing to adopt and implement security procedures reasonably designed to protect her, a customer, from fraudulent wire transfers. (Not. of Removal, Ex. B at 1, ECF No. 1-2 (“Am. Compl.”).)^[1] Beck initially brought this action in state court, alleging three New York common law claims against Chase and Metropolitan Bank Holding Corporation (“Metropolitan”): (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, and (3) negligence. (Id. at 6-9.) After Beck and Metropolitan filed a stipulation of discontinuance dismissing the claims against Metropolitan with prejudice Chase removed the case to this Court on the basis of diversity jurisdiction. (Not. of Removal, Ex. A at 32 (“Stip. of Discontinuance”); Not. of Removal, ECF No. 1.)

Before the Court is Beck's Motion to Remand this action to state court pursuant to 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction. (Mot. to Remand, ECF No. 15.) The Motion to Remand asserts that removal was improper because Beck brings only state-law claims and the parties were not completely diverse in their citizenships at the time of removal as required by 28 U.S.C. § 1441(b)(2). (Id. at 4.) Chase objects to remand, asserting that complete diversity of the parties existed at the time of removal because Chase is a citizen of a different state than Beck and because Beck had previously voluntarily dismissed the only other defendant, Metropolitan. (Def.'s Mem. in Opp'n of Mot. to Remand (“Opp'n”), ECF No. 16.) For the following reasons, the Court denies the Motion to Remand.

PROCEDURAL HISTORY

I. State Court Verified Complaint and Amended Verified Complaint

On January 29, 2023, Beck filed a verified complaint in the Supreme Court of New York, Suffolk County against Metropolitan and Chase, asserting three New York common law claims: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, and (3) negligence. (Not. of Removal, Ex. A at 3-11 (“Compl.”) at 9-11, ECF No. 1-1.)^[2] Chase was served with the complaint on July 13, 2023, and Metropolitan was served on July 25, 2023. (Not. of Removal, Ex. A at 16, 20.)

On September 21, 2023, Beck filed an Amended Verified Complaint (“Amended Complaint”). (Am. Compl.) The Amended Complaint names both Chase and Metropolitan, and makes substantively the same allegations and asserts the same three state-law causes of action as the original complaint. (Id. at 1, 6-9.) It alleges that Defendants failed to adopt and “implement adequate security procedures reasonably designed to protect [Beck] from being coerced [by third-party actors] into sending [those actors] . . . wire transfers,” in violation of each bank's contractual obligations and duty of care to Beck. (Id. at 5; see also Id. at 7-9.) The Amended Complaint also alleges that due to these failures, third-party “threat actors” were able to successfully coerce Beck, through threat and deception, into withdrawing $10,000 from her Chase account and sending two wire transfers totaling $59,800 from her Chase account to a Metropolitan bank account held by an unknown third party. (Id. at 3-5.)

The Amended Complaint alleges that Beck is a “resident of the State of New York,” providing the New York address where Beck currently resides, and that Metropolitan is incorporated in Delaware and maintains it headquarters and principal place of business in New York. (Id. at 2.) It further alleges that Chase is incorporated in Delaware and maintains its principal place of business in New York. (Id. at 2.)

Beck seeks monetary damages in the amount of $77,800, compensatory and punitive damages for Beck's pain and suffering in the amount of $50,000, and legal fees and costs. (Id. at 9.)

II. Dismissal of Metropolitan from the State Court Action

On October 5, 2023, Beck filed a stipulation of discontinuance with prejudice as to Metropolitan. (Stip. of Discontinuance.) Attorneys for Beck and Metropolitan signed the stipulation of discontinuance, which did not cite any provision of the New York Civil Practice Law and Rules (“N.Y.C.P.L.R.”), but stated that “the above-captioned action . . . hereby is[] discontinued with prejudice and without costs to any party as against the other.” (Id. (emphasis supplied).) The state court record does not show that either Metropolitan or Chase answered the Amended Complaint prior to the dismissal of Metropolitan with prejudice from the action. (See Not. of Removal, Ex. A.)

III. Removal and Motion to Remand

Almost one week after Metropolitan was dismissed with prejudice from the action, on October 11, 2023, Chase filed a Notice of Removal in this Court pursuant to 28 U.S.C. § 1446(b)(3) and 28 U.S.C. § 1332(a)(1). (See Not. of Removal.) The Notice of Removal asserts that the action “may be removed to this Court because there is complete diversity of citizenship between Beck and Chase, and more than $75,000, exclusive of interest and costs, is at stake.” (Id. ¶ 11.) Chase asserts that it was an Ohio citizen at the time of the filing of the initial complaint and the Amended Complaint because Chase is a national banking association with its main office located in Ohio. (Id. ¶ 14.) In support, Chase attached its Certified Articles of Association to the Notice of Removal. (Not. of Removal, Ex. D, ECF No. 1-4.)

On January 19, 2023, Beck filed a Motion to Remand the case to state court, raising two main arguments. (Mot. to Remand.) First, Beck asserts that removal was improper because Metropolitan, a citizen of New York and therefore a non-diverse defendant, had been “properly served and joined” in the state court action and “there has been no court order dismissing Metropolitan Bank from the case” prior to the filing of the Notice of Removal. (Id. at 7, 9; see also id. 7-11.) Second, Beck argues that, for the purposes of diversity jurisdiction, Chase shares the same citizenship as its “alter ego” and parent company, “JP Morgan Chase Bank Co,” which is a citizen of “New York and Delaware.” (Id. at 11, 13-14.) Accordingly, Beck argues that both Chase and Beck are New York citizens and this Court therefore lacks subject matter jurisdiction over this action under 28 U.S.C. § 1332(a). (Id. at 13-14.) Chase filed a Memorandum in Opposition (Opp'n), and Beck filed a Reply (Reply Supp. Remand (“Reply”), ECF No. 18).

On May 21, 2024, the Court issued an Order to Show Cause directing Chase, as the party asserting jurisdiction in this case, to file proof of Beck's domicile. (Elec. Order, May 21, 2024.)

On May 24, 2024, Chase filed a Supplemental Memorandum in Opposition to the Motion to Remand (ECF No. 21), and the Declaration of Tyler Kandel, counsel for Chase (Kandel Decl., ECF No. 21-1). Kandal attests that Beck opened a Chase bank account in trust for a “Michael Beck” in New York in December 2022 and provided a copy of the signature card through which Plaintiff executed that account. (Kandel Decl. ¶ 3; Kandel Decl., Ex A (“Cortese Decl.”), Ex 1.) Kandel further affirms that Beck has a New York State driver's license that was issued on August 6, 2018 and that she used that license as her primary form of identification when she executed the two wire transfer agreements at issue in this case on February 17, 2023 and February 18, 2023. (Kandel Decl. ¶¶ 4-5; see also Cortese Decl., Ex. 2.) Kandel also conducted a search for public records pertaining to Beck through WestLaw's “PeopleMap” search engine, and the results of that search demonstrated that Beck has maintained continuous New York residences since April 2001. (Kandel Decl. ¶¶ 6-8; Kandel Decl., Ex. B.) Additionally, Kandel attached a voter registration search for Beck which reflects that Beck is registered to vote in New York based on her current New York residence. (Kandel Decl. ¶ 9; Kandel Decl., Ex. C.)

LEGAL STANDARDS

I. Removal Standard

A defendant may remove to federal court “any civil case brought in State court of which [the federal courts] have original jurisdiction,” so long as Congress has not expressly prohibited removal. 28 U.S.C. § 1441(a). District courts “have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States.” 28 U.S.C. § 1332(a) (“Section 1332(a)”).

Where the only basis for the district court's subject matter jurisdiction is diversity of citizenship under Section 1332(a), the “forum defendant rule” precludes removal “if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2) (“Section 1441(b)(2)”); see also Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699, 704-05 (2d Cir. 2019) (discussing Section 1441(b)(2)'s forum defendant rule).

II. Remand Standard

A plaintiff may move to remand a case after it has been removed to federal court, and “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded” back to the state court. 28 U.S.C. § 1447(c); Brown v Eli Lilly & Co., 654 F.3d 347, 356 (2d Cir. 2011). “When a case is properly removed based on diversity jurisdiction,” however, “the district court may not remand it, as diversity jurisdiction is not discretionary.” Parnoff v. Fireman's Fund Ins. Co., 796 Fed.Appx. 6, 9 (2d Cir. 2019) (citing Carnegie-Mellon Univ. v....