Indymac Mortgage Holdings, Inc. v. Reyad
| Citation | 167 F.Supp.2d 222 |
| Decision Date | 10 August 2001 |
| Docket Number | No. 3:00CV835(CFD).,3:00CV835(CFD). |
| Parties | INDYMAC MORTGAGE HOLDINGS, INC. and Indymac, Inc. Plaintiffs, v. Mostafa REYAD and Wafa Reyad, Defendants. |
| Court | United States District Courts. 2nd Circuit. United States District Court (Connecticut) |
David R. Schaefer, Brian P. Daniels, Rowena Amanda Moffett, Brenner, Saltzman & Wallman, New Haven, CT, for Plaintiffs.
Mostafa and Wafa Reyad, Fort Lee, NJ, pro se
RULINGS ON VARIOUS PENDING MOTIONS
This diversity of citizenship action arises out of the plaintiffs' claims that the defendants breached a number of agreements relating to residential mortgage financing. Counts One and Two allege breach of contract against Mostafa Reyad; Count Three alleges breach of guaranty against Mostafa Reyad and Wafa Reyad; and Count Four alleges violations of the Connecticut Unfair Trade Practices Act, Conn. Gen.Stat. § 42-110b, against Mostafa Reyad. Pending are various motions filed by both defendants.
Plaintiffs Indymac Mortgage Holdings, Inc., doing business as Warehouse Lending Corporation of America ("WLCA") and Indymac, Inc. ("IMI"), are corporations organized under the laws of Delaware with their principal place of business in California. IMI is a wholly-owned subsidiary of WLCA. Defendants Mostafa and Wafa Reyad, who are husband and wife, are residents of Fort Lee, New Jersey. Mr. Reyad owns and operates a mortgage lending business in Stamford, Connecticut.1 This business is known under several names, including Federal Mortgage Company of Connecticut, National Funding, and NFC of New York. For the purposes of this ruling, the Court will refer to this business as the Federal Mortgage Company of Connecticut ("FMCC").2
WLCA provides financing to small and mid-sized mortgage loan originators by supplying them with lines of credit known as "warehouse lines." These loan originators use this warehouse financing to fund residential mortgage loans. FMCC is such a mortgage loan originator, and borrowed a warehouse line from WLCA pursuant to the Lending Agreement described below. After FMCC originates a mortgage loan, it repays WLCA's warehouse line financing by selling the mortgage loan to investors on the secondary market. IMI is one of these investors. The obligations of IMI and FMCC with respect to this arrangement are set forth in the Seller Contract executed by the parties, also described below Although IMI is a wholly-owned subsidiary of WLCA, FMCC apparently has no obligation to sell its mortgages to IMI; it may sell the mortgage loans to other investors.
FMCC first borrowed a warehouse line from WLCA on or about December 6, 1996. On that date, the parties executed a "Master Revolving Loan and Security Lending Agreement" (the "Lending Agreement") and a Promissory Note (the "note").3 Under the terms of the Lending Agreement and note, WLCA was to provide FMCC with a warehouse line to be used to originate mortgage loans, and FMCC agreed to pay WLCA the principal and interest borrowed against the warehouse line within certain time requirements. WLCA also retained a first lien security interest in any mortgage loans made by FMCC using financing from the warehouse line. The parties also executed a letter specifying borrowing and lending criteria to be used by WLCA and FMCC, terms which were revised periodically by the parties. The most recent of these revisions, dated November 10, 1998, lists the FMCC aggregate credit limit under the warehouse line as $12 million.4 At the time the parties entered into the Lending Agreement and note, both Mr. and Mrs. Reyad also executed documents entitled "Credit Guaranty (Individual)" in which they personally guaranteed FMCC's obligations to WLCA.5 Paragraph 15 of both guarantees states, "This Guaranty shall be deemed to be made under and shall be governed by the laws of the State of California, without reference to conflicts of laws principles."
Mr. Reyad, through FMCC, originated 33 mortgage loans, borrowing $5.7 million under the warehouse line from WCLA, an amount which was outstanding at the time the plaintiffs filed their complaint. IMI had initially offered to purchase 30 of these loans, pursuant to the terms contained in the Seller Contract and IMI's "Seller's Guide." The Seller Contract contains a choice of law provision and a forum selection clause, which states:
This Contract shall be governed, and construed and enforced in accordance with, applicable federal laws and the laws of the State of California, without reference to conflict of laws principles, and the Seller [FMCC] hereby agrees that any court action arising out of this Contract shall be brought in any court of competent jurisdiction within the State of California, County of Los Angeles.6
After reviewing 21 of the loans more carefully, IMI claims that it discovered that the loan files contain documents with substantial misrepresentations. Specifically, the plaintiffs allege that the documents contain forged signatures, falsified credit histories, false information regarding bank deposits and employment, and false representations of income. According to the declaration of Brian E. Ainslie, a corporate credit manager at WLCA, the value of the mortgages is overvalued by an average of 22.27 percent, a result of the misinformation contained in the fraudulent documents submitted by FMCC.7
Pending are the following motions: Wafa Reyad's "Motion to Remove Defendant Wafa Reyad Due to Improper Venue" [Doc. # 22]; Wafa Reyad's "Request to Dismiss" [Doc. # 32]; "Defendant, Mostafa Reyad's Motion for Judgment of Dismissal: Or in the Alternative for Dismissal of the Original Complaint for Lack of Subject Matter Jurisdiction and for Other Relief Pursuant to Federal Rule of Civil Procedure 12" [Doc. # 82]; "Defendant, Wafa Reyad's Motion for Judgment of Dismissal: Or in the Alternative for Dismissal of the Original Complaint for Lack of Subject Matter Jurisdiction and for Other Relief Pursuant to Federal Rule of Civil Procedure 12" [Doc. # 83]; and "Defendant Mostafa Reyad's Rule 12(B)(1) Motion to Dismiss" [Doc. # 101]. Both Mostafa and Wafa Reyad are proceeding pro se.
In her pending motions, Wafa Reyad argues that she should be dismissed from this action for three reasons. First, she contends that under Fed.R.Civ.P. 12(b)(2) this Court lacks personal jurisdiction over her because she has not transacted any business in Connecticut. Second, she maintains that venue is improper in this district, and appears to argue that this action should be transferred to New Jersey. She further argues that this Court lacks subject matter jurisdiction because the plaintiffs have not adequately demonstrated that the diversity of citizenship requirement is satisfied based on the indefinite jurisdictional language in the complaint.8 Finally, Mostafa Reyad argues that this action should be dismissed due to the existence of the California forum selection clause in the Seller Contract.
In response, the plaintiffs argue that Mrs. Reyad has waived any defense of lack of personal jurisdiction, but maintain that even if the Court were to reach the merits of her motions, the supporting affidavits and evidence indicate that Mrs. Reyad transacted business in Connecticut and that there are minimum contacts with this state sufficient to subject her to jurisdiction and to comply with due process requirements. In particular, they point to the fact that Mrs. Reyad executed a guaranty for her husband's Connecticut business, loaned him money, obtained a Connecticut mortgage broker's license, and owned property in this state. The plaintiffs also contend that venue in this state is proper, and that this court does not lack subject matter jurisdiction, as they have properly pled diversity of citizenship in their complaint. Finally, in response to Mostafa Reyad's motion to dismiss, they argue that the forum selection clause contained in the Seller Contract should not be enforced.
In light of the defendants' pro se status, the Court has given them significant latitude when considering and deciding the motions that they have filed. See, e.g., Kadosh v. TRW, Inc., No. 91 Civ. 5080(PKL), 1994 WL 681763, *5 (S.D.N.Y. Dec.5, 1994) (). While the arguments contained in some of the motions are difficult to understand, the Court has interpreted them as best as it could.
For the following reasons, documents 22, 32, 82, and 83 are DENIED, and document 101 is GRANTED IN PART.
When the defendant moves to dismiss a case for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2), the plaintiff has the burden of showing that the court has jurisdiction. See Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.), cert. denied, 519 U.S. 1006, 117 S.Ct. 508, 136 L.Ed.2d 398 (1996). "Prior to discovery, a plaintiff may defeat a motion to dismiss based on legally sufficient allegations of jurisdiction."9 Id. (citing Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.), cert. denied, 498 U.S. 854, 111 S.Ct. 150, 112 L.Ed.2d 116 (1990)). That is, the plaintiff must make a prima facie showing through affidavits and other evidence that the defendant's conduct was sufficient for the court to exercise personal jurisdiction. See Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981) (); Hardy v. Ford Motor Car, 20 F.Supp.2d 339, 341 (D.Conn.1998). In ruling, the court must resolve all doubts in favor of the plaintiff, regardless of controverting...
To continue reading
Request your trial
-
Dennis v. JPMorgan Chase & Co.
...(April 3, 2014); Credit Suisse Group AG, Annual Report (Form 20-F) at 108-09 (March 23, 2012); see also Indymac Mortg.Holdings, Inc. v. Reyad , 167 F.Supp.2d 222, 237 (D. Conn. 2001) (concluding that although generally, the "court must take all allegations in the complaint as true," if an a......
-
Lans v. Llp
...forum was that the non-Mexican co-defendant had stipulated to submit to service of process there); Indymac Mortgage Holdings, Inc. v. Reyad, 167 F.Supp.2d 222, 248 n. 33 (D.Conn.2001) (holding that dismissal on the basis of forum non conveniens was not available since “it is not clear that ......
-
Carney v. Horion Invs. Ltd.
...a motion to dismiss for improper venue, plaintiffs bear the burden of proving that venue is proper. Indymac Mortgage Holdings, Inc. v. Reyad, 167 F.Supp.2d 222, 237 (D.Conn.2001). When deciding a motion to dismiss for improper venue, courts may consider materials outside the pleadings. See,......
-
Leichter v. Lebanon Bd. of Educ.
...command ... The term ‘may’ generally imports permissive conduct and the use of discretion.” Id.; see also Indymac Mortgage Holdings, Inc. v. Reyad, 167 F.Supp.2d 222, 245 (D.Conn.2001) (noting that the “word ‘shall’ is a mandatory term”); Black's Law Dictionary (9th Ed.)(Defining shall as “......