Zink v. First Niagara Bank, N.A.

• Decision Date: 12 January 2016
• Docket Number: 13–CV–1076A
• Citation: 155 F.Supp.3d 297
• Parties: Jeffrey Zink, on behalf of himself and all others similarly situated, Plaintiff, v. First Niagara Bank, N.A., Defendant.
• Court: U.S. District Court — Western District of New York

155 F.Supp.3d 297

Jeffrey Zink, on behalf of himself and all others similarly situated, Plaintiff,

v.First Niagara Bank, N.A., Defendant.

13–CV–1076A

United States District Court, W.D. New York.

Signed January 12, 2016

D. Gregory Blankinship, Jeremiah Frei–Pearson, Todd S. Garber, Shin Young Hahn, Finkelstein Blankinship Frei–Pearson & Garber LLP, White Plains, NY, for Plaintiff.

Jeffrey Thomas Fiut, Cynthia Giganti Ludwig, Jodyann Galvin, Hodgson Russ LLP, Buffalo, NY, for Defendant.

DECISION AND ORDER

HONORABLE RICHARD J. ARCARA

, UNITED STATES DISTRICT COURT

The above-referenced case was referred to Magistrate Judge Jeremiah J. McCarthy, pursuant to 28 U.S.C. § 636(b)(1)(B)

. On October 20, 2015, Magistrate Judge McCarthy filed a Report and Recommendation (Dkt. No. 94), recommending that plaintiff's uncontested Motion for Settlement (Dkt. No. 92) be denied. Per the Court's November 5, 2015 text order, the parties had until December 10, 2015 to file objections, if any, to Magistrate Judge McCarthy's report and recommendation. As of today's date, neither party has filed objections or requested additional time to do so.

The Court has carefully reviewed the Report and Recommendation, the record in this case, and the pleadings and materials submitted by the parties, and no objections having been timely filed, it is hereby

ORDERED, that pursuant to 28 U.S.C. § 636(b)(1)

, Judge McCarthy's Report and Recommendation is adopted in its entirety, and plaintiff's Motion for Settlement is denied.

The case is referred back to Magistrate Judge McCarthy for further proceedings.

IT IS SO ORDERED.

REPORT AND RECOMMENDATION

JEREMIAH J. McCARTHY

, United States Magistrate Judge

Before me is plaintiff's uncontested motion seeking conditional certification of a proposed settlement class and preliminary approval of a class action settlement pursuant to Fed.R.Civ.P. (“Rule”) 23

[92] (the “Uncontested Motion”).¹ That motion, being dispositive (28 U.S.C. § 636(b)(1)(A) ), has been referred to me by Hon. Richard J. Arcara for a Report and Recommendation [38]. For the following reasons, I recommend that the Uncontested Motion be denied, without prejudice to renewal upon a showing of further facts demonstrating the existence of subject matter jurisdiction and justifying the relief requested.

BACKGROUND

Procedural History

Plaintiff Jeffrey Zink commenced this action on July 19, 2013, seeking to recover class penalties from First Niagara pursuant to New York's Real Property Law (“RPL”) § 275(1)

and Real Property Actions and Proceedings Law (“RPAPL”) § 1921(1), for its allegedly “systematic failure to timely present to the county clerks of New York State proof that mortgages have been satisfied”. Complaint [1], ¶ 1; Amended Complaint [21], ¶ 1.

Both statutes contain the following provision: “Failure by a mortgagee to present a certificate of discharge for recording shall result in the mortgagee being liable to the mortgagor in the amount of five hundred dollars if he or she fails to present such certificate within thirty days [after payment] ... in the amount of one thousand dollars if he or she fails to present a certificate of discharge for recording within sixty days and ... in the amount of one thousand five hundred dollars if he or she fails to present a certificate of discharge for recording within ninety days.”

The proposed class was defined as: “All persons who were the mortgagor party to a mortgage held by First Niagara, N.A. secured by real property located in New York State for which the principle, interest and all other amounts due or otherwise owed was completely paid after July 19, 2007 but Defendant failed to present a certificate of discharge or satisfaction of mortgage within 30 days to the recording officer of the county where the mortgage was recorded.” Complaint ¶ 16; Amended Complaint [21], ¶ 20.

First Niagara moved to dismiss the Amended Complaint pursuant to Rule 12(b)(6) [37], arguing that Zink's statutory claims are preempted by the National Banking Act (“NBA”), 12 U.S.C. § 1, et seq .,

and a regulation promulgated thereunder by the Office of the Controller of the Currency (“OCC”), 12 C.F.R. § 34.4(a)(10) (First Niagara's Memorandum of Law [37–1], Point I); that Zink lacked standing to pursue his claims because his satisfaction of mortgage had already been recorded (id., Point II); and finally, that Zink failed to properly allege that First Niagara violated RPL § 275 or RPAPL § 1921 (id., Point III).

Before addressing the merits of that motion, I raised sua sponte the issue of whether diversity jurisdiction exists: “Although First Niagara's motion does not raise this issue, I have an independent obligation to determine whether this court has jurisdiction to proceed. See Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 131 S.Ct. 1197, 1202, 179 L.Ed.2d 159 (2011)

(‘Courts do not usually raise claims or arguments on their own. But federal courts have an independent obligation to ensure that they do not exceed the scope of their jurisdiction, and therefore they must raise and decide jurisdictional questions that the parties either overlook or elect not to press').” Amended Report and Recommendation [51], p. 3.

I noted that “Zink alleges that ‘[j]urisdiction in this civil action is authorized pursuant to 28 U.S.C. § 1332(d)(2)(A)

, as minimal diversity exists, there are more than 100 Class members, some of whom are not citizens of New York State, and the amount in controversy is in excess of $5 million’. Amended Complaint [12], ¶ 5. Although no class has yet been certified, 28 U.S.C. § 1332(d)(8) provides that ‘[t]his subsection shall apply to any class action before or after the entry of a class certification order’. Therefore, resolution of the issue of diversity jurisdiction must await the determination of whether any members of the proposed class are citizens of states other than New York, whether there are at least 100 members in the class, and whether the amount in controversy exceeds $5 million. Since those determinations have not yet been made, I may not dismiss the action at this time for lack of diversity jurisdiction, for ‘where the issue of subject matter jurisdiction is so intertwined with the merits that its resolution depends on the resolution of the merits, the court should ... dismiss for lack of jurisdiction only where no triable issues of fact exist’. Hamm v. United States, 439 F.Supp.2d 262, 264 (W.D.N.Y.2006) (Larimer, J.), aff'd, 483 F.3d 135 (2d Cir.2007). ‘This doctrine is applicable ... before adequate discovery has been completed, and when conflicts of fact exist.’ Id. ” Amended Report and Recommendation [51], pp. 3–4. However, I cautioned that “should it subsequently be determined that the minimal diversity requirements of § 1332(d)(2)(A) have not been satisfied, then this action must be dismissed for lack of subject matter jurisdiction”. Id., p. 4.

After analyzing the arguments raised by First Niagara, I recommended that its motion to dismiss be denied. Id., p. 17. That recommendation was adopted by Judge Arcara [59] (reported at 18 F.Supp.3d 363 (W.D.N.Y.2014)

). First Niagara then alleged lack of subject matter jurisdiction as a defense in its Answer ( [62], ¶ 36) and Amended Answer ( [83], ¶ 36). It also alleged that “the claims of any putative class are barred, in whole or in part, by a three year statute of limitations”. Amended Answer [83], ¶ 45.

Thereafter, the parties engaged in “extensive and hard-fought litigation, which included motion practice and substantial discovery, and after extended settlement negotiations that commenced with a mediation before mediator David Geronemus, Esq. of JAMS and that continued for two additional months, [the parties] have agreed to settle this action”. Plaintiff's Memorandum of Law [92–1], p. 1.²

Terms of the Proposed Settlement

The proposed Settlement Class is defined as: “All persons who were the mortgagor party to a mortgage held by First Niagara, N.A. secured by real property located in New York State for which the principle, interest and all other amounts due or otherwise owed was completely paid after July 19, 2007 but Defendant failed to present a certificate of discharge or satisfaction of mortgage within 30 days to the recording officer of the county where the mortgage was recorded.” Plaintiff's Memorandum of Law [92–1], p. 6. While the “class period” runs from July 19, 2010 to November 14, 2014 (Settlement Agreement and Release [92–3], § 2.06), the Uncontested Motion does not explain why the class is cut off as of the latter date.

“[T]here are 5010 members of the Settlement Class, 2792 for whom certificates of discharge were presented more than thirty but less than sixty-one days late, 1137 for whom certificates of discharge were presented more than sixty but less than ninety-one days late, and 1081 for whom certificates of discharge were presented more than ninety days late.” Plaintiff's Memorandum of Law [92–1], p. 5. “First Niagara has agreed to pay up to $2.2 million dollars to pay claims made by class members, the costs of administering the proposed settlement, and Plaintiff's counsel's costs and fees. Class members who make claims will receive substantial cash payments: up to $250 for mortgagors whose certificates were presented more than 30 days after satisfaction; up to $500 for mortgagors whose certificates were presented more than 60 days after satisfaction; and up to $750 for mortgagors whose [certificates were] presented more than 90 days after satisfaction.” Id., p. 1. “Claimants will receive these amounts unless the number of claims is such that their payment would exceed the Settlement Fund after costs and fees have been deducted. In that event, the awards paid to each Claimant will be proportionally reduced to prevent the total Settlement Fund from exceeding $2.2 million.” Id., p. 7.

“The Parties estimate that the cost of notice and administration will be approximately $30,000 to $50,000, and Defendant has agreed not to contest an...