Moskovits v. Grigsby

Background

Alexander Moskovits sued Calvin Grigsby, Bank of America, N.A., Raimundo Colombo, and Jorge Siega, asserting claims for unjust enrichment and breach of contract. Moskovits alleged that he provided Grigsby with a financing structure and business opportunities involving potential oil-related transactions in Brazil, and that Grigsby and Bank of America later used his structure in transactions without paying him compensation.

Moskovits originally filed the action in New York Supreme Court, New York County. The complaint also named the Federal Republic of Brazil and three Brazilian states. The Federal Republic of Brazil removed the case to the Southern District of New York under 28 U.S.C. § 1441(d), which allows a foreign state to remove certain cases filed against it in state court. The day after removal, Moskovits voluntarily dismissed the foreign-state defendants.

Federal Jurisdiction

The court held that the foreign-state defendants’ dismissal eliminated the basis for removal under Section 1441(d). The court concluded that it had discretion to remand the case because the original jurisdictional basis no longer existed, and it chose to remand in part because Moskovits had clearly preferred to litigate in state court.

The defendants argued that the court could retain the case under diversity jurisdiction. Diversity jurisdiction generally permits federal courts to hear state-law disputes involving citizens of different states when the amount in controversy exceeds $75,000. The court rejected that argument because Moskovits was a citizen of Brazil, while the defendants included citizens of New York, California, and Brazil. The court stated that federal courts do not have diversity jurisdiction over a case in which one side consists only of an alien and the other side includes both citizens and aliens.

Fraudulent Joinder

The defendants argued that Siega and Colombo were fraudulently joined to defeat diversity jurisdiction. Fraudulent joinder is a claim that a non-diverse defendant was added without a real legal basis so that the case could not be heard in federal court. The removing defendants had to show by clear and convincing evidence either fraud in the pleadings or no possibility that Moskovits could state a claim against the non-diverse defendant in state court.

The court found that the defendants did not meet that burden as to Siega. Applying a liberal reading to Moskovits’s pro se state-court complaint, the court rejected the defendants’ arguments that the unjust-enrichment claim was barred by the statute of limitations, the statute of frauds, or inadequate pleading. The court concluded that the allegations created a possibility that Moskovits could state an unjust-enrichment claim against Siega in state court.

The court did not decide whether Moskovits had actually pleaded a claim sufficient to survive a motion to dismiss. It expressly stated that its ruling addressed only fraudulent joinder, which uses a lower and more favorable standard for the plaintiff at the remand stage. Because Siega was not fraudulently joined, his presence independently supported the conclusion that diversity jurisdiction was unavailable. The court did not rule on the sufficiency of the allegations against Colombo.

Disposition

The court granted Moskovits’s motion to remand and remanded the case to the Supreme Court of the State of New York, New York County. It denied the defendants’ motion to dismiss and Moskovits’s motion to amend the complaint as moot. The clerk was directed to close the motions and terminate the federal case. The order did not decide the merits of Moskovits’s unjust-enrichment or breach-of-contract claims.