Opinion
00 Civ. 5733 (JGK).
July 7, 2001
OPINION AND ORDER
This action arises out of the plaintiffs' disputes with their mortgage lender, Fleet Real Estate Funding Corp. ("Fleet") and their insurer, State Farm Fire and Casualty Co. ("State Farm") after a fire damaged their home. The plaintiffs, Michael and Cherie Burrell, proceeding pro se, claim that the defendants failed to meet their contractual obligations, committed fraud, and discriminated against them in various ways after the fire. The plaintiffs bring discrimination claims against the defendants under federal and state statutes including the Fair Housing Act, 42 U.S.C. § 3601, et seq.; the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq.; the Consumer Credit Protection Act, 15 U.S.C. § 1601, et seq.; the Civil Rights Acts, 42 U.S.C. § 1981, 1982, 1983, 1986; the New York City Human Rights Law, New York City Administrative Code § 8-101 et seq.; and the New York State Human Rights Law, N.Y. Executive Law § 296 et seq.; The plaintiffs also bring various state law claims against the defendants for breach of contract, fraud, negligence, breach of the implied duty of good faith and fair dealing, and harm to their children.
State Farm, Dean Fitrakis, M. Visgauss, M. Visgovich, and David Vales move to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(1) and (3) and ask the Court to abstain from deciding the plaintiffs' action because of a concurrent state court action brought by the plaintiffs against State Farm in New York State Supreme Court. All the defendants have moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6). The plaintiffs have moved for a preliminary injunction that would suspend their obligation to make mortgage payments to Fleet. For the reasons that follow, the defendants' motions are granted in part and denied in part and the plaintiffs' motion for a preliminary injunction is denied.
The plaintiffs note in the Affidavit by Michael Burrell in Opposition to State Farm's Motion to Dismiss dated September 30, 2000 and Memorandum of Law in Opposition to Fleet's Motion to Dismiss that they had filed a motion to amend their amended complaint. However, no such motion was filed or appears on the docket sheet.
At oral argument, the plaintiffs informed the Court that they had served another amended complaint on the defendants although counsel for the defendants were unaware of any such additional amended complaint. However, the Court did not give the plaintiffs permission to file and serve such an amended complaint prior to the oral argument. Any such attempt to amend the complaint prior to the date of this decision is ineffective. All of the arguments in the papers were directed to the Amended Verified Complaint dated August 24, 2000.
In any event, however, as discussed below, the Court grants the plaintiffs leave to file an amended complaint consistent with this Opinion and Order.
I.
The plaintiffs' claims are based on the following allegations. The plaintiffs are residents of the City and State of New York and have two children. (Am. Compl. ¶ 1.) Defendant Fleet is a corporation incorporated in South Carolina. (Am. Compl. ¶ 2.) Defendant State Farm is a corporation incorporated in Illinois that is authorized to issue insurance policies in New York. (Am. Compl. ¶¶ 3-4.) Defendants Dean Fitrakis ("Fitrakis"), M. Visgauss ("Visgauss"), M. Visgovich ("Visgovich"), and David Vales ("Vales") are all employees of State Farm (collectively with State Farm the "State Farm defendants"). (Am. Compl. ¶ 5.)
On January 25, 1993, Fleet and the plaintiffs entered into a mortgage agreement (the "Mortgage") in which the plaintiffs provided Fleet a mortgage on their residence at 134-21 232nd Street, Queens, New York, 11413 (the "Residence") as security for a loan. (Ex. A to Declaration of Kim Alpaugh dated Sept. 8, 2000 ("Alpaugh Decl.").) The plaintiffs and Fleet are named Insureds under insurance policy 56-0807118-4 issued by State Farm (the "Policy"). (Am. Compl. ¶¶ 8-9.) The Policy insures against all risks of loss to the Residence and the plaintiffs' personal property in the Residence. (Am. Compl. ¶ 8.) On November 1, 1998, the Residence and its contents were damaged by what the New York City Fire Department determined was an electrical fire. (Am. Compl. ¶ 10.) Both State Farm and Fleet were timely informed of the fire. (Id.) The plaintiffs claim they suffered $212,187.00 in damages to the residence and $269,547.15 in damages to their personal property. (Id.)
On November 2, 1998, State Farm and Fitrakis winterized the Residence. (Am. Compl. ¶ 38.) The plaintiffs allege that this winterization was deficient and caused the plumbing of the Residence to freeze and burst on January 14, 1999. (Am. Compl. ¶ 40.) The plaintiffs also allege that on November 2, 1998, Fitrakis damaged the Residence by improperly ransacking and searching it (Am. Compl. ¶ 45), and that on November 2, 1998 Fitrakis directed racial slurs against the plaintiffs. (Am. Compl. ¶ 47.)
The plaintiffs' first two causes of action are for breach of contract against Fleet. The plaintiffs' third and fourth causes of action allege various claims of discrimination against Fleet and the State Farm defendants respectively. The plaintiffs' fifth cause of action alleges fraud against the State Farm defendants. The plaintiffs' sixth cause of action alleges negligence against State Farm and Fitrakis for the allegedly unauthorized winterizing of their home and generally alleges that these defendants discriminated against the plaintiffs. The seventh cause of action alleges negligence, trespass, acts of discrimination, and various torts including infliction of emotional harm and invasion of privacy, against State Farm, Fitrakis, and Vales. The eighth cause of action alleges a breach of the contractually implied duty of good faith and fair dealing by Fleet and the State Farm defendants. The ninth cause of action alleges that Fleet and the State Farm defendants harmed the plaintiffs' children in various ways.
II.
The State Farm defendants first move to dismiss the amended complaint pursuant to Fed.R.Civ.P. 12(b)(1). They argue that this Court has no subject matter jurisdiction over the plaintiffs' claims because the parties in the case do not meet the requirements of diversity jurisdiction pursuant to 28 U.S.C. § 1332.
On a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), the court may consider matters outside the pleadings, such as affidavits, documents, and testimony. See, e.g., Antares Aircraft v. Fed. Republic of Nigreria, 948 F.2d 90, 96 (2d Cir. 1991); Kamen v. American Tel. Tel. Co., 791 F.2d 1006, 1011 (2d Cir. 1986). Thus, the standard used to evaluate a Rule 12(b)(1) claim is similar to that for summary judgment under Fed.R.Civ.P. 56. See Kamen, 791 F.2d at 1011. The plaintiff has the ultimate burden of proving the Court's jurisdiction by a preponderance of the evidence. See Malik v. Meissner, 82 F.3d 560, 562 (2d Cir. 1996); Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762 (2d Cir. 1983); see also Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir. 1991) (when subject matter jurisdiction is challenged under Rule 12, plaintiff must bear burden of persuasion); John Street Leasehold, LLC v. Capital Mgmt. Res., L.P., No. 98 Civ. 1965, 2001 WL 310629, at *2 (S.D.N.Y. March 29, 2001);Martin v. Reno, No. 96 Civ. 7646, 1999 WL 527932 (S.D.N Y July 22, 1999).
The State Farm defendants claim that there is not complete diversity between the plaintiffs and the defendants because the plaintiffs, and the defendants Fitrakis, Visgauss, Visgovich, and Vales are all New York citizens. However, the plaintiffs also bring discrimination claims pursuant to federal statutes against the defendants, including the State Farm defendants. These claims arise under federal law and the Court has jurisdiction over the claims pursuant to 28 U.S.C. § 1331. The Court has supplemental jurisdiction over the plaintiffs' state law claims pursuant to 28 U.S.C. § 1367. The State Farm defendants' motion to dismiss the complaint for lack of subject matter jurisdiction is therefore denied.
III.
The State Farm defendants also move to dismiss this action against them pursuant to Fed.R.Civ.P. 12(b)(3) and 28 U.S.C. § 1406(a) for improper venue. 28 U.S.C. § 1406(a) provides: "[t]he district court, of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." In deciding a motion to dismiss for improper venue, a court may consider facts outside the pleadings. See, e.g., Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996). When the plaintiff's choice of forum is in dispute, the plaintiff is "entitled to have the facts viewed in the light most favorable to it, and no disputed fact should be resolved against that party until it has had an opportunity to be heard." New Moon Shipping Co., Ltd. v. Man BW Diesel AG, 121 F.3d 24, 29 (2d Cir. 1997) (construing forum selection clause);see also Dolson v. New York State Thruway Auth., No. 00 Civ. 6439, 2001 WL 363032, at *1 (S.D.N Y April 11, 2001) (standard to be applied to a Rule 12(b)(3) motion).
Because federal jurisdiction is not premised solely on diversity jurisdiction in this case, venue is proper only in:
(1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought.28 U.S.C. § 1391(b). The State Farm defendants argue that 28 U.S.C. § 1391(b)(1) is not a proper basis for venue in the Southern District of New York because the defendants do not "all reside in the same State." The State Farm defendants claim that State Farm and Fleet are out-of-state corporations and do not reside in New York as the other defendants do.
The amended complaint does not allege that a substantial portion of the events occurred in the Southern District of New York. Most of the events described relate to the plaintiffs' residence located in Queens, which is in the Eastern District of New York. Therefore, 28 U.S.C. § 1391(b)(2) is not a basis for venue in this case.
However, 28 U.S.C. § 1391(b)(1) may be a basis for venue in this case because for purposes of venue, a corporation resides in any district where it is subject to personal jurisdiction. 28 U.S.C. § 1391(c) provides:
For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State. . . .28 U.S.C. § 1391(c); see also American Motorists Ins. Co. v. Roller Bearing Co. of America, Inc., No. 99 Civ. 9133, 2001 WL 170658, at *3 (S.D.N.Y. Feb. 21, 2001). Because defendants State Farm and Fleet are both corporations, they are deemed to reside in New York pursuant to 28 U.S.C. § 1391(c) for venue purposes if they are subject to personal jurisdiction in New York. Moreover, they would be deemed to reside in the Southern District of New York if they are subject to personal jurisdiction in the Southern District of New York. While the parties have not briefed the issue of whether State Farm and Fleet are subject to personal jurisdiction in the Southern District of New York, neither State Farm nor Fleet have argued that they do not have sufficient contacts with this District to subject themselves to such jurisdiction. Therefore, reading the facts in a light most favorable to the plaintiff, the Court cannot conclude at this stage of the proceedings that the Southern District of New York is an improper venue for this case.
IV.
The State Farm defendants argue based on the Supreme Court's decision in Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976) that this Court should abstain from deciding the causes of action asserted against them because of the pendency of the plaintiffs' state court lawsuit. In Colorado River, the Supreme Court held that abstention can be proper in certain situations involving the contemporaneous exercise of concurrent jurisdiction for reasons of "wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation." Id. at 817 (internal quotations and citation omitted); see also Doyle v. New York State Division of Housing, No. 98 Civ. 2161, 1999 WL 177441, at *5 (S.D.N.Y. March 30, 1999). However, there is a strong presumption that the district court will retain jurisdiction. A court may only abstain under Colorado River in "exceptional circumstances," Colorado River, 424 U.S. at 813, and "the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction." Id. at 817 (internal quotation and citation omitted); See also Woodford v. Community Action Agency of Greene County, Inc., 239 F.3d 517, 522 (2d Cir. 2001).
Under Colorado River, in determining whether to abstain from deciding a federal action because there is a related action in state court, a district court should consider: "(1) whether the controversy involved a res over which one of the courts has assumed jurisdiction, (2) whether one forum is more inconvenient than the other for the parties, (3) whether staying the federal action will avoid piecemeal litigation, (4) whether one action is significantly more advanced than the other, (5) whether federal or state law provides the rule of decision, and (6) whether the federal plaintiff's rights will be protected in the state proceeding." United States v. Pikna, 880 F.2d 1578, 1582 (2d Cir. 1989) (citations omitted). The presumption in favor of exercising jurisdiction dictates that "the facial neutrality of a factor is a basis for retaining jurisdiction, not for yielding it." Woodford, 239 F.3d at 522.
The State Farm defendants argue that the Court should abstain from deciding the claims against them under Colorado River because of an action the plaintiffs filed against State Farm in New York State Supreme Court, New York County on March 16, 2000 (the "State Action"), more than four months before the plaintiffs filed this action in August 2000. (Ex. B to Declaration of Michael P. Versichelli dated Sept. 11, 2000 ("Versichelli Decl.").) The complaint in the State Action contains six causes of action. The first, second, third, and fifth causes of action allege that State Farm is obligated to indemnify the plaintiffs for the damage done to the Residence and the plaintiffs' personal possessions in the Residence. (Id.) The fourth cause of action brings a claim arising out of the alleged faulty winterization of the Residence. (Id.) The sixth cause of action alleges that State Farm breached the implied duty of good faith and fair dealing inherent in the policy. (Id.) State Farm moved to change venue to Nassau County, and this motion was granted on April 12, 2000. (Ex. C to Versichelli Decl.) On June 8, 2000, State Farm filed a motion to dismiss the sixth cause of action. (Versichelli Decl., Ex. D.) The parties advised the Court at the argument of the present motions that a motion to dismiss was currently pending in the State Action.
After weighing the Colorado River factors, the Court concludes that abstention is not appropriate in this case. The first Colorado River factor is neutral because there is no res involved in this case. The second Colorado River factor is also neutral because there is no indication that the federal forum is less inconvenient than the state forum. These factors therefore favor retention of the case. See e.g., Woodford, 239 F.3d at 522.
With respect to the third Colorado River factor, State Farm argues that because there is a concurrent action in state court where a motion to dismiss has been filed, there is a risk of piecemeal litigation that could be avoided if the federal action is stayed. The Second Circuit Court of Appeals has approved Colorado River abstention primarily in "lawsuits that posed a risk of inconsistent outcomes not preventable by principles of res judicata and collateral estoppel." Woodford, 239 F.3d at 524. "The classic example arises where all of the potentially liable defendants are parties in one lawsuit, but in the other lawsuit, one defendant seeks a declaration of nonliability and the other potentially liable defendants are not parties." Id. (citations omitted).
State Farm along with the other State Farm Defendants are all defendants in this action but only State Farm is a defendant in the State Action. There is some overlap between the claims brought in the State Action and the claims brought in this action, particularly with respect to claims of alleged faulty winterization and a breach of the covenant of good faith and fair dealing.
Because only State Farm is named as a party in the State Action the other State Farm defendants may not be able to take advantage of a judgment in favor of State Farm in the State Action because they are not parties to that action. It is possible that State Farm could be found not liable in the State Action and therefore not liable in this action because of the doctrine of res judicata, while the individual State Farm defendants are found to be liable in this action. Thus, there is some potential for inconsistent results between the State Action and this action. The plaintiffs brought this about by their choice to sue initially in state court and to sue only State Farm, and then to bring this second action in this Court. The State Farm defendants have established that the third Colorado River factor weighs in favor of abstention in this case.
However, the individual State Farm defendants may be in privity with State Farm as agents of State Farm. If they are in privity with State Farm, they may be able to assert a res judicata defense if State Farm obtains a dismissal of claims against it in the State Action. See, e.g., John Street Leasehold, LLC, 2001 WL 310629, at *10.
With respect to the fourth Colorado River factor, State Farm represents that a motion to dismiss was filed in the State Action several months prior to the motion to dismiss in this case. However, a motion to dismiss remains pending in the State Action. This action and the State Action are essentially at the same phase. The fourth Colorado River factor thus points to retaining jurisdiction.
With respect to the fifth Colorado River factor, New York law governs the state law claims of trespass, breach of contract, negligence, and fraud against the State Farm defendants in this case. New York law also governs the claims against State Farm in the State Action. However, the plaintiffs also bring federal claims of discrimination against the State Farm defendants in this Court. "Even where there are some state-law issues, the presence of federal-law issues must always be a major consideration weighing against surrender." Woodford, 239 F.3d at 523 (internal quotation and citation omitted). The fifth Colorado River factor strongly supports retaining jurisdiction over this action.
With respect to the sixth Colorado River factor, there is no reason to believe that the plaintiffs' rights would not be protected in the New York State Supreme Court proceeding.
The Colorado River factors weigh in favor of retaining jurisdiction over this action. The first, second, fourth, and fifth Colorado River factors all weigh against abstention in this case. The fact that there is a risk of conflicting results between this case and the State Action is not enough to overcome the strong presumption that a federal court should exercise its jurisdiction. Therefore, the State Farm defendants' motion to dismiss the plaintiffs' claims pursuant to Colorado River is denied.
V.
Fleet moves to dismiss the first cause of action, which alleges that Fleet breached an obligation under the Mortgage to file a claim on behalf of the plaintiffs after the fire to the Residence on November 1, 1998. Fleet argues that it has no such obligation under the Mortgage.
A.
On a motion to dismiss for failure to state a claim, the allegations in the complaint are accepted as true. See Grandon v. Merrill Lynch Co., 147 F.3d 184, 188 (2d Cir. 1998). In deciding a motion to dismiss, all reasonable inferences must be drawn in the plaintiff's favor. See Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir. 1995); Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989). The court's function on a motion to dismiss is "not to weigh the evidence that might be presented at trial but merely to determine whether the complaint itself is legally sufficient." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). Therefore, the defendants' present motion should only be granted if it appears that the plaintiff can prove no set of facts in support of its claim that would entitle it to relief. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Grandon, 147 F.3d at 188; see also Goldman, 754 F.2d at 1065.
In deciding the motion, the court may consider documents referenced in the complaint and documents that are in the plaintiff's possession or that the plaintiff knew of and relied on in bringing suit. See Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993);Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir. 1991); I. Meyer Pincus Assoc., P.C. v. Oppenheimer Co., Inc., 936 F.2d 759, 762 (2d Cir. 1991); Skeete v. IVF America, Inc., 972 F. Supp. 206, 208 (S.D.N.Y. 1997).
The plaintiffs are proceeding pro se in this case. A court is to "read the pleadings of a pro se plaintiff liberally and interpret them to raise the strongest arguments that they suggest." McPherson v. Coombe, 174 F.3d 276, 280 (2d Cir. 1999) (internal citation and quotations omitted).
B.
New York law governs this claim pursuant to the Mortgage's choice-of-law clause because the Residence is located in New York. (Ex. A to Alpaugh Decl. at 7.); see also International Minerals and Resources, S.A. v. Pappas, 96 F.3d 586, 592 (2d Cir. 1996). "Under New York law, a written contract is to be interpreted so as to give effect to the intention of the parties as expressed in the unequivocal language they halve employed." Terwilliger v. Terwilliger, 206 F.3d 240, 245 (2d Cir. 2000) (citation omitted); accord Transtech Electronics PTE Ltd. v. NAS Electronics, Inc., No. 98 Civ. 1209, 2000 WL 381428, at *2 (S.D.N.Y. April 13, 2000); Compania Financiera Ecuatoriana de Desarollo, S.A. v. Chase Manhattan Bank, No. 97 Civ. 5724, 1998 WL 74299, at *3 (S.D.N.Y. Feb. 19, 1998), aff'd 165 F.3d 13 (2d Cir. 1998). It is the court's function to construe an unambiguous contract provision, and the court may not consider evidence extrinsic to the agreement when "the intent of the parties can fairly be gleaned from the face of the instrument."Terwilliger, 206 F.3d at 245 (citation omitted); accord Transtech Electronics PTE Ltd., 2000 WL 381428, at *2; Compania Financiera Ecuatoriana de Desarollo. S.A., 1998 WL 74299, at *3.
Fleet points to section 5 of the Mortgage, which provides: "If there is a loss or damage to the Property, I will promptly notify the insurance company and Lender. If I do not promptly prove to the insurance company that the loss or damage occurred, then Lender may do so." (Ex. A to Alpaugh Decl. at 4.) The language is unambiguous. It is the plaintiffs' obligation to give notice to the insurance company and not Fleet's. While Fleet may choose to give notice to the insurance company, it is not obligated to do so under the Mortgage. The plaintiffs do not point to any provision in the Mortgage that contradicts this clear language. Section 5 of the Mortgage establishes that Fleet has no obligation to file a claim on behalf of the plaintiffs.
The plaintiffs attempt to rely on the No-Suit clause in the Policy to argue that Fleet was obligated to give notice of a claim. The parties did not include a copy of the Policy to the Court, but agree that the No-Suit clause provides: "No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of the policy shall have been complied with, and unless commenced within twelve months next after inception of the loss." (Pl.'s Memo. of Law in Opposition to Fleet's Motion to Dismiss at 6; Fleet's Reply Memo. at 4.) However, this clause only prevents Fleet from suing State Farm if it did not timely commence suit. It does not require Fleet to file a claim on behalf of the plaintiffs. Moreover, the Policy does not. impose any obligations on Fleet because Fleet is not a party to the Policy.
The plaintiffs also cite the standard Mortgage Clause provision in the Policy to support their argument that Fleet was obligated to give State Farm notice of the loss. Again, neither party has provided the Court with a copy of this provision but agree on its substance. (Affirmation of Michael Burrell in Support of Order to Show Cause dated July 13, 2000 ¶ 14; Fleet's Memo. of Law in Support of Motion to Dismiss at 5-6.) Fleet correctly responds that the Mortgage Clause does not require it to give notice of the plaintiffs' loss. Instead, it protects Fleet's independent interest in the Residence if the plaintiffs failed to file a timely statement of loss.
Fleet had no obligation to give notice to State Farm after the fire. None of the provisions in the Policy cited by the plaintiffs imposes such an obligation on Fleet. The first cause of action must therefore be dismissed with prejudice.
VI.
Fleet next moves to dismiss the plaintiffs' second cause of action, which alleges that Fleet breached the Mortgage by requiring the plaintiffs to continue making payments on the Mortgage after the fire on November 1, 1998. This claim has no merit. Fleet argues without contradiction that the plaintiffs' obligation to make principal and interest payments is not contingent on Fleet providing timely notice to State Farm. The plaintiffs do not point to a provision of the Mortgage that would require suspension of Mortgage payments in the event of an incident such as the fire. Indeed the Mortgage provides that if the proceeds of insurance on the Property are used to reduce the amount of principal owed to Fleet, that will not reduce the amount of the monthly payments due. (Ex. A to Alpaugh Decl. at 5.)
The plaintiffs also generally allege that Fleet breached a duty of good faith and fair dealing with respect to the Mortgage. "Implicit in all contracts is a covenant of good faith and fair dealing in the course of contract performance." Dalton v. Educational Testing Service, 663 N.E.2d 289, 291 (N Y 1995) (citations omitted). This covenant includes "any promises which a reasonable person would be justified in understanding were included." Id. (internal quotations and citations omitted) However, the breach of the covenant is only a breach of the underlying contract. See, e.g., Fasolino Foods Co., Inc. v. Banca Nazioale Del Lavoro, 961 F.2d 1052, 1056 (2d Cir. 1992) (citations omitted). No obligation can be implied that would be inconsistent with the other terms of the contract. Dalton, 663 N.E.2d at 292.
The plaintiffs have brought specific breach of contract claims alleging that Fleet breached the Mortgage. These claims have no merit. The plaintiffs' good faith and fair dealing claim is duplicative of the breach of contract claims and must also be dismissed as an effort to read into the contract provisions that the parties never agreed to and that are inconsistent with the plain meaning of the contract. See e.g., Abraham v. Penn Mutual Life Ins. Co., No. 98 Civ. 6439, 2000 WL 1051848, at *3 (S.D.N Y July 31, 2000); Village on Canon v. Bankers Trust Co., 920 F. Supp. 520, 534-35 (S.D.N.Y. 1996); Engelhard Corp. v. Research Corp., 702 N.Y.S.2d 255, 256 (App.Div. 2000); Odingo v. Allstate Ins. Co., 672 N.Y.S.2d 727, 727 (App.Div. 1998).
Moreover, no reasonable person would be justified in believing that the Mortgage requires Fleet to allow the Mortgagor to suspend Mortgage payments in the event of a fire. There is no authority supporting the proposition that a Mortgagee is required to allow the suspension of payments in the event of a fire. Fleet has not breached any duty of good faith and fair dealing.
The plaintiffs' second cause of action must be dismissed with prejudice.
VII.
All of the defendants move to dismiss the plaintiffs' third and fourth causes of action, which are primarily claims of discrimination, and the plaintiffs' sixth and seventh causes of action, which also allege that the defendants discriminated against the plaintiffs. The plaintiffs bring these actions under numerous state and federal statutes including: the Fair Housing Act, 42 U.S.C. § 3601, et seq. ("FHA"); the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq. ("ECOA"); the Consumer Credit Protection Act, 15 U.S.C. § 1601, et seq.; the Civil Rights Acts, 42 U.S.C. § 1981, 1982, 1983, 1986; the New York City Human Rights Law ("NYCHRL"), New York City Administrative Code § 8-101 et seq.; and the New York State Human Rights Law ("NYSHRL"), N.Y. Executive Law § 296 et seq. The defendants argue that the amended complaint is defective because its allegations of discrimination against the defendants are conclusory.
The fifth, eighth, and ninth causes of action also mention the word discrimination and the following analysis applies to those causes of action as well.
A.
To assert a claim under the statutes cited in the amended complaint, the plaintiffs must allege either that the defendants acted with discriminatory intent or their actions had a discriminatory impact. Intentional discrimination is an essential element of a claim brought under the Civil Rights Acts. See, e.g., Yusuf v. Vassar College, 35 F.3d 709, 713-14 (2d Cir. 1994) (citations omitted); Mian v. Donaldson, Lufkin Jenrette Securities Corp., 7 F.3d 1085, 1087-88 (2d Cir. 1993). For a claim of intentional discrimination to survive a motion to dismiss, a plaintiff may not rely on conclusory assertions of racial discrimination and "must specifically allege the events claimed to constitute intentional discrimination as well as circumstances giving rise to an inference of racially discriminatory intent." Yusuf, 35 F.3d at 713. "[A] complaint consisting of nothing more than naked assertions, and setting forth no facts upon which a court could find a violation of the Civil Rights Acts, fails to state a claim under Rule 12(b)(6)." Id. (internal citation and quotation omitted).
The plaintiffs can also bring suit for discriminatory impact under the ECOA and the FHA, which allow individuals to bring actions against policies that are facially neutral but have discriminatory effects. See, e.g., Hack v. President and Fellows of Yale College, 237 F.3d 81, 88 (2d Cir. 2000) (FHA); Gross v. United States Small Business Admin., 669 F. Supp. 50, 52 (N.D.N.Y. 1987), aff'd 867 F.2d 1423 (2d Cir. 1988) (ECOA) Individuals may also bring suit for acts motivated by discriminatory intent under these statutes. Id. Similar standards govern claims brought under the New York Human Rights Laws. See, e.g., Rosenblatt v. Bivona Cohen, P.C., 946 F. Supp. 298, 300 (S.D.N.Y. 1996).
The amended complaint does not allege the facts supporting the plaintiffs' conclusory statements of discrimination. The amended complaint simply states that the defendants discriminated against the plaintiffs without describing specific acts by the defendants that would give rise to an inference of discriminatory intent. For example, the third cause of action accuses Fleet of discrimination because it required continuing payments of the mortgage payments without any allegations to support a claim of discrimination. In the fourth cause of action, the amended complaint asserts that State Farm committed discriminatory acts that deprived the plaintiffs of their rights under the Policy by defrauding the plaintiffs of their right to recovery under the Policy, making false statements to the plaintiffs, refusing to advance money to the plaintiffs, demanding information that it would not have demanded from non-minorities, and canceling the Policy in retaliation, but it fails to allege any facts to support the conclusory allegations of discrimination. (Am. Compl. ¶ 28-29.) See Yusuf, 35 F.3d at 713;Dickerson v. State Farm Fire Casualty Co., No. 95 Civ. 10733 1997 WL 40966, at *3-*7 (S.D.N.Y. Feb. 3, 1997).
The plaintiffs describe a number of allegedly discriminatory statements by Fitrakis in their Affidavit in Opposition to State Farm's Motion to Dismiss, which they had referred to in a conclusory way in the Amended Complaint. (Am. Compl. ¶ 47.) The alleged statements are only specifically described in Affidavits in Opposition to the State Farm Motion to Dismiss. The Affidavits are not part of the allegations in the complaint and were not presented as an amendment to the complaint. Thus, these statements will not be considered in evaluating the motion to dismiss the current complaint, although they could be added in a second amended complaint. See, e.g., Fonte v. Board of Managers of Continental Towers Condominium, 848 F.2d 24, 25-26 (2d Cir. 1988). Moreover, those allegations with respect to Mr. Fitrakis are directed solely against State Farm and do nothing to cure the absence of any factual allegations to support any claim of discrimination against Fleet.
There is also no allegation that an otherwise facially neutral policy of the defendants had a discriminatory impact on a class to which the plaintiffs belong. To state a claim for discriminatory impact, a complaint must allege "a causal connection between (a] facially neutral policy . . . and the resultant proportion of minority group members in the population at issue." Hack, 237 F.3d at 90-91 (internal quotations and citations omitted). The plaintiffs simply assert that Fleet has discriminated against them by aggressively pursuing foreclosure against members of a predominantly African-American community. (Am. Compl. ¶ 24.) This allegation does not support a discriminatory impact claim.See, e.g., Hack, 237 F.3d at 90-91. There is no indication, for example, what racially neutral policy Fleet has been pursuing that has a disproportionate impact on minority group members.
The amended complaint is deficient in that it lacks the requisite specificity needed to support a claim of discrimination under either a discriminatory intent or discriminatory impact theory. The plaintiffs' third and fourth causes of action must therefore be dismissed in their entirety with respect to all defendants. The plaintiffs' sixth and seventh causes of action must be dismissed insofar as they assert claims of discrimination against the defendants. However, the plaintiffs may be able to amend their amended complaint to allege a claim of discriminatory intent or discriminatory impact. Therefore, these claims are dismissed without prejudice to repleading.
B.
There is an additional barrier preventing the plaintiffs from bringing a claim under 42 U.S.C. § 1983. Plaintiffs may only bring a claim against a defendant pursuant to section 1983 if the defendant is acting under color of state law. See, e.g., Hack v. President and Fellows of Yale College, 237 F.3d 81, 83-84 (2d Cir. 2000); Kia P. v. McIntyre, 235 F.3d 749, 755-56 (2d Cir. 2000); Leeds v. Meltz, 85 F.3d 51, 54 (2d Cir. 1996); Yaba v. Cadwalader, Wickersham Taft, 931 F. Supp. 271, 274 (S.D.N Y 1996). The defendants are all private corporations or persons working for such a corporation. The plaintiffs have alleged no facts to suggest that there was "state action" or that the defendants were "state actors." Thus, the plaintiffs' claims pursuant to 42 U.S.C. § 1983 against these defendants must be dismissed with prejudice. See, e.g., Ponticelli v. Zurich American Ins. Group, 16 F. Supp.2d 414, 426 (S.D.N.Y; 1998); CBF Trustee v. Hymans, No. 96 Civ. 9557, 1998 WL 91123, at *7 (S.D.N.Y. March 2, 1998).
VIII.
The State Farm defendants move to dismiss the plaintiffs' allegations of fraud against them in the fifth cause of action. They argue that the amended complaint does not make its allegations with sufficient particularity.
The fourth, sixth, seventh, and eighth causes of action mention the word fraud and this analysis applies to them as well.
Fed.R.Civ.P. 9(b) provides that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed.R.Civ.P. 9(b); see Four Finger Art Factory v. DiNicola, No. 99 Civ. 1259, 2001 WL 21248, at *5 (S.D.N.Y. Jan. 9, 2001). To meet the requirements of Rule 9(b), a complaint must "(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent." Mills v. Polar Molecular Corp., 12 F.3d 1170, 1175 (2d Cir. 1993). Although Rule 9(b) allows a plaintiff to allege fraudulent intent generally, a plaintiff must allege facts that give rise to a strong inference of fraudulent intent. Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir. 1994). This strong inference can be established either "(a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness." Id; accord PI, Inc. v. Ogle, 932 F. Supp. 80, 84 (S.D.N.Y. 1996).
The allegations of fraud in the fifth cause of action do not meet these requirements. For example, the plaintiffs simply allege that State Farm defrauded them of their right to be indemnified under the Policy and generally committed fraud by committing various actions against them such as by failing to advocate relocation funds and failing to answer correspondence (Am. Compl. ¶ 33), without specifying what statements the plaintiffs allege were fraudulent, why they were fraudulent, and without alleging facts giving rise to a strong inference of fraudulent intent.
The allegations in the fifth cause of action do not support a claim for fraud. However, because it cannot be said at this stage that the plaintiffs cannot allege a claim for fraud against State Farm, this claim is dismissed without prejudice.
IX.
The State Farm defendants next argue that portions of the plaintiffs' seventh cause of action for state law torts should be dismissed for failure to state a claim. The Court will apply New York substantive law to these claims because the parties do not dispute that New York law governs these claims, see, e.g., John Street Leasehold, LLC, 2001 WL 310629, at *12 n. 5, and they are based on allegedly tortious conduct that occurred in New York. See, e.g., American Protein Corp. v. AB Volvo, 844 F.2d 56, 62 (2d Cir. 1988).
A.
First, the seventh cause of action must be dismissed insofar as it seeks to recover damages for emotional distress. In New York, claims for the intentional infliction of emotional distress are governed by a one year statute of limitations. See N.Y. C.P.L.R. § 215(3); see also Spinale v. Guest, 704 N.Y.S.2d 46, 47 (App.Div. 2000). The actions alleged in the seventh cause of action occurred on November 2, 1998. This action was filed more than one year afterwards in August, 2000. The plaintiffs' claim for intentional infliction of emotional distress is therefore barred by the statute of limitations.
B.
The seventh cause of action must also be dismissed insofar as it alleges an invasion of privacy. New York does not recognize a cause of action to recover damages for an invasion of privacy beyond that provided for commercial misappropriation as provided in sections 50 and 51 of the New York Civil Rights Law. See, e.g., D'Agostino v. Pan Am. World Airways, Inc., 433 N.Y.S.2d 823, 824 (App.Div. 1980).
C.
The seventh cause of action must also be dismissed insofar as it alleges that the plaintiffs suffered emotional damage from an alleged wrongful failure to pay a claim. New York does not allow for such a recovery. See, e.g., Tate v. Metropolitan Life Ins. Co., 587 N.Y.S.2d 813, 813-14 (App.Div. 1992); Fiore v. State Farm Fire Cas. Co., 522 N.Y.S.2d 180, 181 (App.Div. 1987).
X.
The defendants move to dismiss the plaintiffs' eighth cause of action.
A.
Fleet moves to dismiss the plaintiffs', eighth cause of action insofar as it alleges that it violated an implied covenant of good faith and fair dealing with respect to the Mortgage. In New York, while parties are bund by implied covenant of good faith and fair dealing, the breach of that covenant is only a breach of the underlying contract. See, e.g., Fasolino Foods Co., Inc., 961 F.2d at 1056.
The eighth cause of action does no more than re-allege the conduct specified in the first six causes of action. (Am. Compl. ¶ 53.) Thus, it is duplicative of the breach of contract claims against Fleet in the first two causes of action and must be dismissed with prejudice just as the breach of contract claims against Fleet were dismissed with prejudice. See, e.g., Abraham, 2000 WL 1051848, at *3; Engelhard Corp., 702 N.Y.S.2d at 256; Odingo, 672 N.Y.S.2d at 727.
B.
The State Farm defendants argue that the plaintiffs' breach of the duty of good faith and fair dealing claim against it. is duplicative of a claim for breach of contract of the Policy. However, in this action, the plaintiffs did not allege that the State Farm defendants breached a particular provision of the Policy, although they do generally allege in the fourth cause of action that the State Farm defendants discriminated against them by breaching the Policy. Thus, to the extent that the eighth cause of action can be read to allege that State Farm breached a duty of good faith and fair dealing inherent in the Policy, this claim is not duplicative.
But, the claim of a breach of the duty of good faith and fair dealing against the State Farm defendants is conclusory. The plaintiffs do not point to any provisions of the Policy that the State Farm defendants violated. They do not refer to any promises that a reasonable person would be justified in understanding were included in the Policy. The motion by the State Farm defendants to dismiss the plaintiffs' eighth cause of action of a breach of the duty of good faith and fair dealing is therefore granted. See, e.g., Lewis Tree Serv., Inc. v. Lucent Tech. Inc., No. 99 Civ. 8556, 2000 WL 1277303, at *5 (S.D.N Y Sept. 8, 2000). Because it cannot be said that the plaintiffs cannot allege a claim for breach of the duty of good faith and fair dealing against the State Farm defendants, the claim is dismissed without prejudice.
XI.
All of the defendants correctly argue that the plaintiffs' ninth cause of action should be dismissed because the plaintiffs' children are not named as parties to this action. The children are the real parties of interest with respect to this claim and any action must be prosecuted under their name. Fed.R.Civ.P. 17(a). While the plaintiffs may bring suit on the behalf of their children, Fed.R.Civ.P. 17(c), a "non-attorney parent must be represented by counsel in bringing an action on behalf of his or her child." Cheung v. Youth Orchestra Found. of Buffalo, Inc., 906 F.2d 59, 61 (2d Cir. 1990). A claim might be brought on behalf of the plaintiffs' children if they are named as parties and represented by an attorney. Thus, the plaintiffs' ninth cause of action must be dismissed without prejudice to a renewed claim brought with counsel.
XII.
Because all of the federal claims have been dismissed, although some have been dismissed with leave to replead, the Court declines to exercise supplemental jurisdiction over any remaining state law claims, which are dismissed without prejudice. See 28 U.S.C. § 1367(c)(3); Martinez v. Simonetti, 202 F.3d 625, 636 (2d Cir. 2000); Durven D. v. Giuliani, No. 98 Civ. 0523, 2000 WL 1145425, at *9 (S.D.N Y. Aug. 11, 2000). If the plaintiff chooses to file another amended complaint, supplemental jurisdiction would remain over the remaining claims of negligence asserted in the sixth cause of action and over the trespass claims alleged in the seventh cause of action together with any properly repleaded state law claims.
XIII.
The plaintiffs move for a preliminary injunction ordering a suspension of their obligation to make further mortgage payments to Fleet. The standards governing the issuance of a preliminary injunction are well established. "[A] party seeking a preliminary injunction must demonstrate (1) the likelihood of irreparable injury in the absence of such an injunction, and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation plus a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Federal Express Corp. v. Federal Espresso. Inc., 201 F.3d 168, 173 (2d Cir. 2000).
The plaintiffs have not shown that they will suffer irreparable injury without a preliminary injunction. With a few exceptions, "irreparable injury means injury for which a monetary award cannot be adequate compensation." Abish v. Northwestern Nat'l Ins. Co., 924 F.2d 448, 453-54 (2d Cir. 1991) (citations omitted). The plaintiffs have not demonstrated that any legally compensable injury they might suffer by continuing to make their mortgage payments is not compensable through a monetary award. Furthermore, for the reasons explained above, the plaintiffs have not demonstrated a likelihood of success on the merits of their claims or sufficiently serious questions going to the merits to make them a fair ground for litigation. Indeed, the Court has concluded that all of the plaintiffs' claims should be dismissed at this time. It should be noted that, with respect to their allegations of discrimination, the plaintiffs have failed, even in their affidavits, to present any specific factual support for their conclusory allegations of discrimination against Fleet. Thus, the plaintiffs' motion for a preliminary injunction is denied. CONCLUSION
The plaintiffs have also alleged in correspondence that the defendants broke into their home and seek a preliminary injunction enjoining such a break in. However, the plaintiffs have not submitted affidavits or any other evidence indicating that the defendants broke into their home or that there is a possibility that the defendants would do so again. The request for a preliminary injunction is denied.
Fleet voluntarily stayed any proceedings in connection with foreclosure on the Property in view of the pendency of the motion for a preliminary injunction. In view of the denial of the motion for a preliminary injunction, Fleet is no longer bound by that voluntary stay.
For the reasons explained above:
(1) The State Farm defendants' motion to dismiss the amended complaint pursuant to Fed.R.Civ.P. 12(b)(1) and (3) is denied.
(2) The State Farm defendants' motion to dismiss the amended complaint based on the Colorado River abstention doctrine is denied.
(3) The plaintiffs' first and second causes of action against Fleet are dismissed with prejudice.
(4) The plaintiffs' third and fourth causes of action and the portions of the plaintiffs' sixth and seventh causes of action alleging discrimination against the defendants are dismissed without prejudice to repleading.
(5) The plaintiffs' claims alleging discrimination against the defendants that are based on 42 U.S.C. § 1983 are dismissed with prejudice.
(6) The plaintiffs' fifth cause of action for fraud against the State Farm defendants is dismissed without prejudice to repleading.
(7) The plaintiffs' seventh cause of action is dismissed with prejudice insofar as it seeks damages for the intentional infliction of emotional distress.
(8) The plaintiffs' seventh cause of action is dismissed with prejudice insofar as it alleges a claim for invasion of privacy.
(9) The plaintiffs seventh cause of action is dismissed with prejudice insofar as it alleges that the plaintiffs suffered emotional damage from an alleged wrongful failure to pay a claim.
(10) The plaintiffs' eighth cause of action against Fleet is dismissed with prejudice.
(11) The plaintiffs' eighth cause of action against the State Farm defendants is dismissed without prejudice to repleading.
(12) The plaintiffs' ninth cause of action is dismissed without prejudice to repleading.
(13) declines to exercise supplemental jurisdiction over any remaining state law claims.
(14) The plaintiffs' motion for a preliminary injunction is denied.
(15) If the plaintiffs wish to submit an amended complaint in accordance with this decision, they may do so within thirty (30) days of the date of this opinion.
The Court has carefully considered all of the arguments made by the parties. To the extent not specifically discussed, the Court has found them to be without merit or moot.
SO ORDERED.