Izmirligil v. Select Portfolio Servicing, Inc.
| Decision Date | 22 April 2020 |
| Docket Number | 17-CV-6157 (PKC) (LB) |
| Parties | ARIF S. IZMIRLIGIL, Plaintiff, v. SELECT PORTFOLIO SERVICING, INC., ASSURANT, INC., and AMERICAN SECURITY INSURANCE COMPANY, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Plaintiff Arif Izmirligil, proceeding pro se,1 brings this action against Defendants Select Portfolio Servicing, Inc. ("SPS"), Assurant, Inc., and American Security Insurance Company ("ASIC"), alleging civil violations of the Racketeer Influenced and Corrupt Organizations ("RICO") Act, 18 U.S.C. §§ 1961 et seq., as well as various state law causes of action. Pending before the Court are Defendants' motions to dismiss for lack of subject matter jurisdiction, or, in the alternative, for failure to state a claim, as well as Plaintiff's motion to amend. For the reasons set forth below, the Court grants Defendants' motion. Furthermore, though the Court denies Plaintiff's motion to amend, it does grant Plaintiff leave to file an amended complaint as described herein.
In 2006, Plaintiff obtained a mortgage loan, in the original principal amount of $1,100,000, secured by his home in Miller Place, New York ("the Property"). (Compl., Dkt. 1, ¶ 45.) Plaintiff was sent an acceleration warning in July 2009 stating Plaintiff was in default as of May 1, 2009. (Complaint Exhibit ( ) 10, Dkt. 1-10, at ECF3 2.) Plaintiff disputes that he was in default at that time. (See Compl., Dkt. 1, ¶ 68.) Therefore, when Plaintiff filed the instant action, he was already a defendant in a state foreclosure proceeding that was been initiated in 2009 because that default ("the 2009 Foreclosure Action"). (Id. ¶¶ 31, 34.) Plaintiff is seeking to dismiss that 2009 Foreclosure Action. (Id.)
Defendant SPS began servicing Plaintiff's mortgage loan on November 1, 2013. (Id. ¶ 53.) On November 11, 2013, Defendant SPS notified Plaintiff that its records reflected that the Property did not have the required hazard insurance policy and that SPS therefore planned to buy such an insurance policy on Plaintiff's behalf ("Lender-Placed Insurance Policy" or "LPI Policy"). (Declaration of Ronald K. Wilson ("Wilson Dec.") Exhibit A, Dkt. 17-11, at ECF 3-4.) Though Plaintiff sent information to Defendant SPS indicating that he did have a hazard insurance policy in December 2013 (Compl. Ex. 5, Dkt. 1-5; Compl., Dkt. 1, ¶ 27), SPS proceeded to issue an LPI Policy on Plaintiff's Property effective November 1, 2013 (Wilson Dec. Exhibit B, Dkt. 17-12, at ECF 4; Wilson Dec. Exhibit C, Dkt. 17-13, at ECF 3-4; Compl., Dkt. 1, ¶¶ 69-71). The LPI Policywas issued by Defendants Assurant and ASIC, and had an annual premium of $10,032. (Compl., Dkt. 1, ¶¶ 27, 44; see also Compl. Ex. 4, Dkt. 1-4.) Plaintiff alleges that the LPI Policy was placed as a part of "[a]n undisclosed exclusive arrangement [] between SPS and Assurant and ASIC to manipulate the forced-placed insurance process and 'artificially' inflate the amounts charged to [Plaintiff]."
Payments for the LPI Policy were assessed against Plaintiff on January 14, 2014, February 5, 2014, March, 10, 2014, April 1, 2014, May 6, 2014, June 3, 2014, and June 30, 2014, totaling $7,524. In July 2014, after receiving confirmation that Plaintiff had the required insurance, SPS cancelled the LPI Policy. $181 of the LPI Policy charges was refunded to Plaintiff on July 14, 2014. (SPS Supp. Br., Dkt. 70, at ECF 8.) The remaining LPI Policy charges were refunded to Plaintiff on November 2, 2017. (Id. at ECF 9.)
Plaintiff brings a total of seven claims, two of which are based on federal law. (See generally Compl., Dkt. 1, ¶¶ 89-220.) Plaintiff's federal law claims allege RICO conspiracy and a substantive RICO violation. (Id. ¶¶ 162-220.) Specifically, Plaintiff asserts that Defendants engaged in a RICO enterprise with the common purpose of "increase[ing] and maximiz[ing] their revenues by fraudulently forcing Plaintiff and other victims to pay fraudulently inflated—unreasonably high amounts for force-placed insurance through a scheme that inflated such charges to cover briberies, kickbacks, and expenses . . . ." (id. ¶ 168), and that Defendants engaged in a RICO conspiracy to commit this illegal conduct (id. ¶¶ 209-220). Plaintiff also asserts various state law claims against different Defendants, all of which relate to the imposition of the LPI Policyand premiums paid for that policy. (Id. ¶¶ 89-161 ().)
Plaintiff initiated the instant action on October 23, 2017. (Compl., Dkt. 1.) At a pre-motion conference on December 11, 2017, the Honorable Joseph F. Bianco granted Defendants permission to file a motion to dismiss. (Dec. 11, 2017 Minute Entry.) Defendants' motions were fully briefed on March 16, 2018. (See Dkts. 17-21.) Judge Bianco held oral arguments on Defendants' motions on April 16, 2018 and September 7, 2018. (See Apr. 18, 2018 Minute Entry; Sept. 7, 2018 Docket Order; see also Sept. 14, 2018 Minute Entry.) At the September 7, 2018 oral argument, Judge Bianco denied Defendants' motions to dismiss without prejudice to renew to allow the parties to conduct limited discovery as to whether Plaintiff had standing. (Sept. 7, 2018 Oral Argument Transcript, Dkt. 60, at 14-15.) On December 11, 2018, Plaintiff filed a second federal action, Izmirligil v. Select Portfolio Services, 18-CV-7043 (PKC) (LB) ("the 2018 Action"), which is also pending before this Court, solely against Defendant SPS alleging claims under the Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq., and its implementing regulations, known as Regulation X, 12 C.F.R. §§ 1024 et seq., as well as the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq. See generally Complaint, Izmirligil v. Select Portfolio Servicing, Inc., No. 18-CV-7043 (PKC) (LB) (E.D.N.Y. Dec. 11, 2018), ECF No. 1.
On March 21, 2019, this action was reassigned to the undersigned. (Mar. 21, 2019 Docket Order.) After the parties conducted limited discovery as to whether Plaintiff had standing to pursue this case, the Court granted Defendants' request to renew their motions to dismiss and ordered supplemental briefing. (Oct. 18, 2019 Docket Order.) Plaintiff was also granted permission to filea motion to amend his complaint. (Id.) Supplemental briefing was completed on December 16, 2019. (Dkts. 69-74.) On January 30, 2020, Plaintiff withdrew his proposed twelfth cause of action alleging state law mail and wire fraud. (Jan. 30, 2020 Letter, Dkt. 75.)
"A case is properly dismissed for lack of subject matter jurisdiction under [Federal Rule of Civil Procedure] 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova, 201 F.3d at 113 (2d Cir. 2000). "When a defendant moves to dismiss for lack of standing, our standard of review depends on whether the defendant brings a 'facial' challenge, 'based solely on the allegations of the complaint' or a 'fact-based' challenge, 'proffering evidence beyond the [p]leading.'" Sonterra Capital Master Fund Ltd. v. UBS AG, 2020 WL 1544478, at *2 (2d Cir. Apr. 1, 2020) (quoting Carter, 822 F.3d at 56-57 (2d Cir. 2016)). "In a fact-based challenge, a defendant must proffer evidence beyond what is alleged in or attached to the complaint." Amaya v. Ballyshear LLC, 340 F. Supp. 3d 215, 219 (E.D.N.Y. 2018) (citing Robinson v. Gov't of Malaysia, 269 F.3d 133, 140 n.6 (2d Cir. 2001)). "In opposition to such a motion, the plaintiff[] will need to come forward with evidence of [his] own to controvert that presented by the defendant . . . ." Carter, 822 F.3d at 57. Or, a plaintiff "may instead rely on the allegations in their pleading if the evidence proffered by the defendant is immaterial because it does not contradict plausible allegations that are themselves sufficient to show standing." Katz v. Donna Karan Co., L.L.C., 872 F.3d 114, 119 (2d Cir. 2017) (internal quotation marks, alterations, and citation 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." Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014) (quoting APWU v. Potter, 343 F.3d 619, 627 (2d Cir. 2003)). "[T]he party asserting subjectmatter jurisdiction 'has the burden of proving by a preponderance of the evidence that it exists.'" Id. (quoting Makarova, 201 F.3d at 113).
"Under Article III of the Constitution, federal courts are empowered to adjudicate only actual, ongoing cases or controversies." Del. Riverkeeper Network v. N.Y. State Dep't of Envtl. Conservation, 788 F. App'x 65, 66 (2d Cir. 2019) (summary order) (quoting Deeper Life Christian Fellowship, Inc. v. Sobol, 948 F.2d 79, 81 (2d Cir. 1991)). "The case-or-controversy limitation on our jurisdiction, and its focus on parties' stakes in the action, manifests in three distinct legal inquiries: standing, mootness, and ripeness." Klein on behalf of Qlik Techs., Inc. v. Qlik Techs., Inc., 906 F.3d 215, 221 (2d Cir. 2018), cert. dismissed sub nom. Cadian Capital Mgmt., LP v. Klein, 139 S. Ct. 1406 (2019). At issue in this action are the related inquires of standing and mootness. "[S]tanding doctrine evaluates a litigant's personal stake as of the outset of litigation." Altman v. Bedford Cent. Sch. Dist., 245 F.3d 49, 70 (2d Cir. 2001) (internal quotation marks, alteration, and citation omitted); see...
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