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Zarour v. JPMorgan Chase Bank, N.A.

United States District Court, D. New Jersey

February 21, 2017

SIMON ZAROUR, Plaintiff,

          TOMAS ESPINOSA NORTH BERGEN, On behalf of Plaintiff



          NOEL L. HILLMAN, U.S.D.J.

         Pending before the Court is the motion of Defendant, JPMorgan Chase Bank, N.A. (“Chase” or “Defendant”), to dismiss the complaint of plaintiff, Simon Zarour. Zarour claims that Defendant, as mortgagee of his property, should have force-placed flood insurance on his home, which was significantly damaged in Superstorm Sandy, when plaintiff lapsed on his own coverage. For the reasons expressed below, Defendant's motion will be granted, and the matter dismissed for lack of subject matter jurisdiction.


         According to Plaintiff's complaint, Plaintiff is the owner of a home located at 32 Ocean Avenue, Monmouth Beach, New Jersey (the “Property”). Chase is the mortgagee on the Property. The Property was designated by FEMA as located in Zone VE, which is a flood-prone area requiring flood insurance. Chase did not purchase or force-place a flood insurance policy on the Property, and Plaintiff failed to maintain this type of insurance on the Property himself. On October 29, 2012, Superstorm Sandy made landfall in New Jersey and caused significant damage to the Property in excess of $600, 000. The damage incurred by the Property was not covered by flood insurance.

         Plaintiff asserts a claim of negligence against Chase for its purported failure to ensure that the Property had sufficient insurance coverage in accordance with federal law. Plaintiff also asserts a breach of contract claim against Chase for violating the terms of the mortgage, which he alleges necessarily included any and all obligations of a mortgagee imposed by federal law. Plaintiff seeks compensatory damages in the combined amount of $1, 500, 000, in addition to consequential and punitive damages, and attorneys' fees.

         Chase has moved to dismiss Plaintiff's complaint, arguing that there is no private right of action under the Flood Disaster Protection Act of 1973 (“FDPA”), and its related regulations, including the National Flood Insurance Act of 1968 (“NFIP”), 42 U.S.C. § 4001-4129, and Plaintiff's state law claims based on alleged conduct that would constitute a violation of the FDPA and its related regulations are preempted by the FDPA. Chase also argues that Plaintiff has not pled the requisite elements of claims for negligence or a breach of contract, and those claims fail as a matter of law.[1]

         Plaintiff originally filed his complaint in this Court, claiming that subject matter jurisdiction under 28 U.S.C. § 1332(a) because there is complete diversity of citizenship of the parties and the amount in controversy exceeds $75, 000. Plaintiff also asserted that subject matter jurisdiction exists pursuant to 28 U.S.C. § 1331 because “claims presented in this Complaint will require the interpretation of Federal law and Regulations.” (Compl. ¶ 3.)

         Plaintiff, however, has not specifically asserted claims against Chase for violation of federal law. Plaintiff does not allege that Chase directly violated the FDPA, and in opposition to Chase's motion to dismiss, Plaintiff does not dispute that he cannot assert a private cause of action under the FDPA, as pointed out by Chase in its motion.[2] Instead, Plaintiff contends that Chase acted negligently and breached the parties' mortgage contract[3] by not force-placing flood insurance on his property in violation of state law, even though that requirement arises under the FDPA. Based on Plaintiff's contention that his claims are grounded on state law, Plaintiff asks that his claims be dismissed without prejudice so he can replead them accordingly.

         Chase argues that Plaintiff's state law claims implicate the FDPA, and they are therefore preempted by federal law and barred. As a result, Chase argues that the dismissal of Plaintiff's claims should be with prejudice, because even though Plaintiff wishes to pursue state law claims, he has not, and cannot, articulate how those claims would not implicate the FDPA.

         Before substantively addressing the parties' arguments, however, the Court must firmly establish subject matter jurisdiction. See Zambelli Fireworks Mfg. Co., Inc. v. Wood, 592 F.3d 412, 418 (3d Cir. 2010) (providing that federal courts have an independent obligation to address issues of subject matter jurisdiction sua sponte and may do so at any stage of the litigation). As noted above, Plaintiff premises subject matter jurisdiction over his case on both § 1331 and § 1332. Because it is undisputed that Plaintiff's claims either do not allege, or cannot allege, violations of federal law, subject matter jurisdiction under § 1331 is lacking.

         With no federal claims, and no jurisdiction under § 1331, two other bases for subject matter jurisdiction potentially exist - 28 U.S.C. § 1367(a) or § 1332. Under § 1367(a), “in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.” A district court may decline to exercise supplemental jurisdiction over a claim under subsection (a), however, if (1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction. Id. § 1367(c).

         Section 1367(a) is typically implicated when a plaintiff has advanced both federal law claims and state law claims, there is no basis for subject matter jurisdiction other than under § 1331, and the federal claims are dismissed or otherwise fall out of the case. In that situation, a court must determine whether to continue exercising supplemental jurisdiction over the state law claims by assessing various factors. See Chicago v. International College of Surgeons, 522 U.S. 156, 173 (1997) (‚ÄúDepending on a host of factors, then - including the circumstances of the particular case, the nature of the state law claims, the character of the ...

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