Leifer v. JPMorgan Chase Bank, N.A.
- Paul Gardephe
- 1:18-cv-07477
- U.S. District Court · Southern District of New York
- 12
In Leifer v. JPMorgan Chase Bank, Judge Gardephe granted joinder and remand, returning the case to New York state court and denying oral argument as moot.
Seth Leifer, JPMorgan Chase Bank, N.A., Debbie Velez, Jane Au Yeung, and the Doe defendants. The federal case was closed and returned to New York state court; the order did not decide the underlying claims.
What happened
In Leifer v. JPMorgan Chase Bank, Seth Leifer sought to add Chase employees Debbie Velez and Jane Au Yeung as defendants. Because Leifer, Velez, and Yeung are New York citizens, adding them would eliminate the federal court’s diversity jurisdiction.
The court found that the claims against Chase, Velez, and Yeung arose from the same event—the removal of Leifer as the authorized signer on GHRF LLC’s Chase account—and involved common legal and factual questions. The court also found that joinder was fundamentally fair despite some delay in naming Velez, and that the allegations were sufficient at this stage to show joinder was not futile.
Judge Gardephe granted Leifer’s motion for joinder and remand, ordered the case returned to New York state court, and denied Chase’s motion for oral argument as moot. The court did not decide the underlying claims for damages.
The detailed version
- Leifer v. JPMorgan Chase Bank, N.A. · No. 1:18-cv-07477
- Paul Gardephe
- Mar. 9, 2020
Background
Seth Leifer sued JPMorgan Chase Bank, N.A. (Chase), along with John Doe and Jane Doe defendants, asserting claims including breach of contract, gross negligence, breach of fiduciary duty, and tortious interference. The action was filed in New York state court on August 7, 2018, and Chase removed it to federal court on August 16, 2018, based on diversity jurisdiction.
Leifer alleged that he was the managing member of GHRF LLC and the sole authorized signer on GHRF’s Chase account. He claimed that Chase employees Debbie Velez and Jane Au Yeung removed him as signer and replaced him with Ossama Youssef. Leifer alleged that he lost control of GHRF’s account and restaurant business and later surrendered his interest in GHRF, incurring tens of thousands of dollars in costs and legal fees. The Second Amended Complaint sought more than $500,000 in damages.
Leifer moved to join Velez and Yeung as defendants and to remand, or return, the case to state court. Leifer and the proposed defendants were New York citizens, while Chase was a citizen of Ohio. Their addition would therefore destroy complete diversity, the requirement that opposing parties be citizens of different states.
Court’s analysis
Under 28 U.S.C. § 1447(e), the court could deny joinder or permit joinder and remand the case. The court applied a two-part analysis: whether the proposed defendants were proper parties under Federal Rule of Civil Procedure 20(a), and whether joinder and remand would be fundamentally fair.
The court found that the claims against Chase, Velez, and Yeung arose from the same transaction—the removal of Leifer as signer on GHRF’s Chase account—and raised common questions of law and fact. Chase argued that joinder would be futile because Leifer’s claims against Velez and Yeung would not survive a motion to dismiss. The court noted that it was not clear whether futility is part of the Rule 20 joinder analysis. In any event, accepting the Second Amended Complaint’s allegations as true, the court concluded that Leifer had adequately pleaded a gross-negligence claim against Velez and Yeung at the pleading stage.
The court reasoned that Leifer was not an ordinary noncustomer because he was GHRF’s managing member and sole signer, and Velez had directly contacted him about the attempted change to the account. The allegations suggested that harm from losing control of the account was foreseeable to Velez and Yeung. The allegations also suggested that Yeung changed the signer improperly and that Velez failed to correct the change after Leifer alerted her. The court held that these allegations were sufficient at this stage and that Chase had not shown joinder was futile.
The court then considered four fairness factors: delay and its explanation, prejudice, the possibility of multiple lawsuits, and Leifer’s motivation. The court found no excessive delay as to Yeung because Leifer sought to add her within two weeks of learning her identity. The delay as to Velez weighed against joinder because she had been identified in the original complaint and Leifer did not explain why he had not named her earlier. Chase conceded that it would suffer no prejudice, which favored joinder.
The court also found that the possibility of multiple lawsuits favored joinder because Leifer alleged that Velez and Yeung played significant roles in the loss of control over GHRF’s account, and the original complaint had referred to Doe defendants. Although Leifer acknowledged that he was partly motivated to destroy diversity, the court found no reason to doubt his statement that his primary motivation was to include all defendants who may have caused or contributed to his damages. The court therefore concluded that the fairness factors, considered together, supported joinder and remand.
Disposition
The court granted Leifer’s motion for joinder and remand. It ordered the Clerk of Court to close the federal case and return the matter to the Clerk of the Supreme Court of the State of New York, New York County. The court denied Chase’s motion for oral argument as moot, and stated that any other pending motions were moot. The order did not resolve whether Leifer would ultimately prevail on his underlying claims.
Judge
The order was signed by Paul G. Gardephe, United States District Judge.
Read the full 12-page opinion on CourtListener, the free public archive maintained by the Free Law Project.