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Vereline v. Woodsville Guaranty Savings Bank

United States District Court, D. Vermont

December 16, 2015



Geoffrey W. Crawford, Judge

In this lender-liability case, Plaintiffs Blue Sky Builders, Inc. ("Blue Sky") and its President Michael Vereline sue Defendant Woodsville Guaranty Savings Bank ("Woodsville") claiming: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) tortious interference with business relations; and (4) equitable estoppel. (See Doc. 1.) For relief, Plaintiffs seek a declaration that Woodsville is not entitled to foreclose on property owned by Blue Sky, and "such other relief as this court deems necessary and just." (Id. at 7.)

Woodsville has filed a Motion to Dismiss or Stay the Complaint under Fed.R.Civ.P. 12(b)(1) and (3), asserting that: (1) the Complaint fails to allege grounds for Federal jurisdiction; (2) the Complaint violates the Anti-Injunction Act, 28 U.S.C. § 2283, to the extent that it seeks to enjoin a state-court foreclosure; and (3) the court should abstain from exercising subject-matter jurisdiction under Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976), because the Complaint in this case is identical to claims asserted by Plaintiffs in a compulsory counterclaim in the state-court foreclosure action. (Doc. 4 at 1.) Plaintiffs oppose Woodsville's Motion to Dismiss. (Doc. 5.) Woodsville filed a Reply on November 5, 2015. (Doc. 6.) The court heard argument on the Motion on November 30, 2015. For the reasons discussed below, Woodsville's Motion to Dismiss or Stay (Doc. 4) is GRANTED IN PART and DENIED IN PART.


Plaintiffs' claims against Woodsville arise out of a commercial lending relationship between the parties. According to the Complaint, since the mid-1990s, Woodsville has provided financing for a lakeside Vermont condominium development owned by Blue Sky. Changes to Vermont's shoreline setback statutes required Blue Sky to submit certain permit applications by July 1, 2014 to protect the value of the development. Blue Sky could not afford to prepare the applications while also servicing the debt to Woodsville. Blue Sky failed to make payments to Woodsville, and Woodsville accelerated the loan balance. Woodsville subsequently declined to advance funds to pay property taxes and prevented two sales of cabins at the development. According to Plaintiffs, Woodsville's actions left the condominium project "fractured." (Doc. 1 at 4, ¶ 45.)

Woodsville filed a mortgage foreclosure action against Blue Sky and Vereline on May 6, 2015 in Vermont Superior Court. {See Docs. 4-1; 4-4.) On July 29, 2015, Blue Sky and Vereline filed their Complaint in this court. (Doc. 1.) On August 14, 2015, Blue Sky and Vereline filed a Verified Answer and Counterclaim in the foreclosure case. {See Docs. 4-3; 4-4.) The counterclaims against Woodsville are virtually identical to Plaintiffs' claims in this case. On October 22, 2015, the parties in the foreclosure case stipulated to a discovery and alternative dispute resolution (ADR) schedule. (Doc. 6-1.) That schedule calls for ADR to be completed by April 15, 2016, sets a motions deadline for May 1, 2016, and a trial-ready date of June 1, 2016.


I. Rule 12(b)(1) Standard

"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court 'lacks the statutory or constitutional power to adjudicate it.'" Mastafa v. Chevron Corp., 110 F.3d 170, 177 (2d Cir. 2014) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). '"A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.'" Id. (quoting Makarova, 201 F.3d at 113). The issue of subject-matter jurisdiction maybe raised at any time. McCain v. United States, No. 2:14-cv-92, 2015 WL 1221257, at *19 (D. Vt. Mar. 17, 2015); see also Fed. R Civ. P. 12(h)(3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action."). Under Rule 12(b)(1), the court is "permitted to rely on non- conclusory, non-hearsay statements outside the pleadings." M.E.S., Inc. v. Snell, 712 F.3d 666, 671 (2d Cir. 2013).

A motion to dismiss based on the abstention doctrine may be analyzed under Rule 12(b)(1). See Stahl York Ave. Co., LLC v. City of New York, No. 14 Civ. 7665(ER), 2015 WL 2445071, at *7 (S.D.N.Y. May 21, 2015) ("A motion to dismiss based on Colorado River is considered as a motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure."), appeal docketed No. 15-2000 (2d Cir. 2015); City of New York v. Milhelm Attea & Bros., Inc., 550 F.Supp.2d 332, 341 (E.D.N.Y. 2008) ("A motion to dismiss based on the abstention doctrine is also considered as a motion made pursuant to Rule 12(b)(1)."); 5B Charles Alan Wright et al., Federal Practice & Procedure § 1350 (3d ed.) ("Courts have recognized a variety of other defenses that one normally would not think of as raising subject-matter jurisdiction questions when considering a Rule 12(b)(1) motion, such as claims that... the subject matter is one over which the federal court should abstain from exercising jurisdiction.").[1]

II. Diversity Jurisdiction

Woodsville contends that the Complaint should be dismissed because it fails to allege facts establishing federal diversity jurisdiction under 28 U.S.C. § 1332(a). (Doc. 4 at 3.) Section 1332(a) provides, in pertinent part, that "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different States . . . ." Woodsville does not dispute that it is a citizen of New Hampshire and Plaintiffs are citizens of Vermont, but Woodsville maintains that Plaintiffs' sole jurisdictional allegation is the conclusory assertion that jurisdiction is proper under § 1332(a). (See Doc. 1 at 1, ¶6.) Woodsville argues that this bare statement is insufficient to establish diversity jurisdiction. Plaintiffs respond that there is a rebuttable presumption that the face of the Complaint is a good-faith representation of the amount in controversy, and that since § 1332(a) includes the $75, 000 amount-in-controversy requirement, Plaintiffs' citation to that provision is sufficient. (Doc. 5 at 3; 5 n.l.)

Courts recognize "a rebuttable presumption that the face of the complaint is a good faith representation of the actual amount in controversy." Scherer v. Equitable Life Assurance Soc 'y of the United States, 341 F.3d 394, 397 (2d Cir. 2003) (quoting Wolde-Meskel v. Vocational Instruction Project Cmty. Servs., Inc., 166 F.3d 59, 63 (2d Cir. 1999)). "To overcome the face-of-the-complaint presumption, the party opposing jurisdiction must show 'to a legal certainty' that the amount recoverable does not meet the jurisdictional threshold." Id. (quoting Wolde-Meskel, 166 F.3d at 63). "[I]n actions for declaratory or injunctive relief, which ... are equitable in nature, the amount in controversy is measured by the value of the object of the litigation." DiTolla v. Doral Dental IP A of New York, LLC, 469 F.3d 271, 276 (2d Cir. 2006) (citing Hunt v. Wash. State Apple Advert. Comm'n, 432 U.S. 333, 347 (1977)).

Here, the Complaint does not include any explicit statement that the amount in controversy exceeds $75, 000; in fact the Complaint does not include any explicit demand for a sum certain in damages or restitution. But the Complaint does cite § 1332(a) as the basis of jurisdiction, and asserts by implication that the amount in controversy exceeds $75, 000. See Scottsdale Ins. Co. v. Universal Crop Prot. All, LLC, 620 F.3d 926, 932 (8th Cir. 2010) (invoking diversity jurisdiction under ยง 1332 implicitly alleged claims exceeding $75, 000). Woodsville has not shown that the value of the object of the litigation ...

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