Faloni & Assocs., LLC v. Citibank N.A.
| Decision Date | 13 August 2020 |
| Docket Number | CIV 19-4195 |
| Parties | FALONI & ASSOCIATES, LLC, Plaintiff, v. CITIBANK N.A.; a/k/a CITIMORTGAGE, INC.; a/k/a CITIFINANCIAL, INC., Defendant. |
| Court | U.S. District Court — District of South Dakota |
Plaintiff, Faloni & Associates, LLC ("Faloni"), brought this action in the Superior Court of Essex County, New Jersey on March 7, 2019, alleging breach of contract, promissory estoppel, unjust enrichment, and two counts of account stated. (Doc. 1.) On April 10, 2019, Defendant, Citibank, N.A.; a/k/a Citimortgage, Inc.; a/k/a Citifinancial, Inc. ("Citibank") removed the case to the U.S. District Court for the District of New Jersey. (Doc. 1.) On June 26, 2019, Citibank filed a motion to transfer the case to the U.S. District Court for the District of South Dakota pursuant to a forum selection clause in a contract between the parties. (Doc. 16). On October 16, 2019, the New Jersey federal court transferred the case to the District of South Dakota. (Docs. 33 and 34.)
After the case was transferred to this Court, Citibank filed a Motion to Dismiss. (Doc. 55.) The motion has been fully briefed. For the following reasons, Citibank's motion to dismiss will be granted in part and denied in part.
BACKGROUND
Faloni is a law firm licensed to do business in the State of New Jersey. Citibank is a national bank with its main office in South Dakota. For a number of years, Faloni represented Citibank in connection with certain lawsuits brought to collect amounts owed by Citibank customers.
On April 4, 2012, Citibank entered into a Consent Judgment with the United States, the District of Columbia, and 49 states. See Doc. 57, Declaration of Christopher Comstock, Ex. 2; United States of America, et al. v. Bank of America Corp., et al., CIV 12-0361, Doc. 12 (D.D.C. 2012). Among other things, the Consent Judgment required Citibank to provide at least $1.411 billion in mortgage loan relief to distressed borrowers. Id. ¶ 5. Mortgage loan forgiveness was one form of relief Citibank could provide to distressed borrowers under the Consent Judgment. Id. at Ex. D, ¶¶ 1-2.
A Monitor was appointed under Citibank's Consent Judgment. On March 18, 2014, the Monitor filed a report finding that Citibank and its affiliates had substantially complied with the terms of the Consent Judgment and had "satisfied the minimum requirements and obligations" to provide consumer relief. United States of America, et al. v. Bank of America Corp., et al., CIV 12-0361, Doc. 145, Monitor's Final Consumer Relief Report (D.D.C. 2012). (Excerpts of Monitor's Final Consumer Relief Report are attached as Exhibit 6 to Doc. 57, Comstock Declaration.).
In the Complaint in this case, Faloni alleges that Citibank placed certain "delinquent 2nd mortgages with Faloni" for collection. Complaint ¶ 4. Faloni commenced legal proceedings to collect the debts. Complaint ¶ 5. However, Citibank allegedly forgave the debts "in response to the national mortgage settlement campaign." Complaint ¶ 6; Complaint, Ex. A, May 7, 2018 Letter ( that Citibank "chose to extinguish the debt" on certain mortgage loans that had been placed with Faloni). Faloni alleges that, by forgiving the mortgage loans that had been placed with Faloni, Citibank received in January 2013 a "credit" of over $40 million toward its obligation to the government. Complaint ¶ 6.
Attached to Faloni's Complaint is a letter dated May 7, 2018 from Faloni to Citibank. The letter states that Citibank "terminated" the firm on November 24, 2014. The letter references "two outstanding invoices owed to our firm by Citibank for work done prior to and relating to our termination." Id. Copies of the invoices are attached to the letter. The first invoice is "dated June 2, 2015 in the sum of $21,002.50 . . . ." Id. This invoice relates to work done by Faloni to transfer Citibank's files to another law firm, Ruben & Rothman, after Citibank terminated its relationship with Faloni. Id. The invoice reflects services performed between October 27, 2014 and May 18, 2015. Id.
The second invoice is dated May 7, 2018 and is in the amount of $8,122,410.20. Id. Faloni states that this "invoice relates to Citibank's National Mortgage Settlement Campaign" and asserts that Citibank "received credit" of over $40 million toward the consumer relief obligations because Citibank "chose to extinguish the debt" on mortgage loan accounts that had been placed with Faloni. Id. The letter asserts that Faloni should receive a commission because it worked on the accounts and many of them had been "brought to judgment." Id. at 10. Faloni alleges that Citibank has not paid either of these two invoices. Complaint ¶¶ 7, 31.
The first four causes of action in Faloni's Complaint allege claims for breach of contract, promissory estoppel, unjust enrichment, and account stated. The Complaint also includes a fifth cause of action for "Additional Accounts Stated" which relates to Faloni's June 2, 2015 invoice in the amount of $21,002.50. In its response to Citibank's motion to dismiss, Faloni admits that its claims for "account stated" in Counts IV and V are not valid causes of action in South Dakota. For this reason, Counts IV and V of Faloni's Complaint will be dismissed.
In its response to Citibank's motion to dismiss, Faloni asks the Court to grant its motion to amend its Complaint to conform to South Dakota law. (Doc. 66 at 14.) Faloni, however, did not file a motion to amend its Complaint or submit a proposed Amended Complaint for the Court's review. Without a motion and a proposed Amended Complaint, the Court is unable to grant Faloni's request to amend at this time. See Meehan v. United Consumers Club Franchising Corp., 312 F.3d 909, 913-14 (8th Cir. 2002) ().
Citibank asks the Court to dismiss the remaining counts in the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
DISCUSSION
"To survive a motion to dismiss, 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 court assessing such a motion must accept all factual allegations in the complaint as true and draw all inferences in favor of the nonmovant. Blankenship v. USA Truck, Inc., 601 F.3d 852, 853 (8th Cir. 2010); Brooks v. Midwest Heart Group, 655 F.3d 796, 799 (8th Cir. 2011). Courts consider "plausibility" by"'draw[ing] on [their own] judicial experience and common sense.'" Whitney v. Guys, Inc., 700 F.3d 1118, 1128 (8th Cir. 2012) (quoting Iqbal, 556 U.S. at 679). Also, courts must "'review the plausibility of the plaintiff's claim as a whole, not the plausibility of each individual allegation.'" Id. (quoting Zoltek Corp. v. Structural Polymer Grp., 592 F.3d 893, 896 n. 4 (8th Cir. 2010)).
In considering a motion to dismiss for failure to state a claim under Rule 12(b)(6), courts primarily look to the complaint and "'matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned;' without converting the motion into one for summary judgment." Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928, 931 n. 3 (8th Cir. 2012) (quoting 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2004)).
"On a motion to dismiss for breach of contract, courts look not only at the sufficiency of the complaint but also at the contract itself, which by definition is integral to the complaint." Axiom Inv. Advisors, LLC by & through Gildor Mgmt., LLC v. Deutsche Bank AG, 234 F. Supp. 3d 526, 533 (S.D.N.Y. 2017). See also Stahl v. U.S. Dep't of Agric., 327 F.3d 697, 700 (8th Cir. 2003) (). A copy of the governing contract is not attached to Faloni's Complaint, but before the case was transferred to South Dakota, the parties agreed that the governing contract is a contract signed by the parties on or about January 1, 2013. See Doc. 33 at p. 3 (). A copy of the contract entitled "Attorney Collection Services Master Agreement" is attached as Exhibit 1 to the Declaration of Christopher Comstock, doc. 57. In ruling on Citibank's Rule 12(b)(6) motion to dismiss, the Court will consider the Master Agreement ("Agreement") filed at Doc. 57-1.
As a preliminary matter, the Court must decide what other documents, if any, it can consider for purposes of the Rule 12(b)(6) motion to dismiss. Both Citibank and Faloni have attached various documents to two declarations filed in this case. (Doc. 57, Declaration of Christopher Comstock; Doc. 67, Declaration of David A. Faloni, Sr.) The Court concludes that it may consider the excerpts from Citibank's Attorney Work Standards, attached as Exhibit 1 to the Declaration of David A. Faloni Sr., as a document "integral to the claim." Miller, 688 F.3d at 931 n. 3. The Attorney WorkStandards are incorporated into the Agreement between the parties.1 Citibank does not admit or deny that its Attorney Work Standards are incorporated into the Agreement, but it does not deny the existence or authenticity of the Attorney Work Standards excerpts that are attached as Exhibit 1 to the declaration of David A. Faloni, Sr.
The Court also will consider the Consent Judgment Citibank entered into with the United States, the District of Columbia, and 49 states. (Doc. 57, Comstock Declaration, Exhibit 2.) The Consent Judgment is filed in United...
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