Citibank, N.A v. Jacobsen
- Andrew Carter
- 1:19-cv-00959
- U.S. District Court · Southern District of New York
- 14
In Citibank v. Jacobsen, Judge Ramos denied dismissal of Citibank’s contract and attorneys’ fees claims but granted dismissal of its unjust-enrichment claim.
Citibank’s breach-of-contract and attorneys’ fees claims continued, while its unjust-enrichment claim was dismissed. The court also allowed Citibank to amend its complaint concerning two alleged guarantee-triggering events.
What happened
Citibank, N.A. and Citibank, N.A., as Administrative Agent and Collateral Agent v. Douglas Jacobsen and Norman J. Kravetz concerned Citibank’s effort to recover loan payments that it alleged the defendants had guaranteed. The defendants asked the court to dismiss Citibank’s claims for breach of contract, attorneys’ fees, and unjust enrichment.
The defendants argued that the guarantees did not cover repayment of the borrower’s loan and that Citibank had not adequately alleged certain events that would trigger the guarantees. They also argued that the attorneys’ fees claim should be dismissed because Citibank had not adequately alleged a breach. Neither party challenged the recommendation to dismiss the unjust-enrichment claim.
Judge Ramos adopted and modified the magistrate judge’s recommendation. The court denied dismissal of the breach-of-contract and attorneys’ fees claims, granted dismissal of the unjust-enrichment claim, and allowed Citibank to amend its complaint to plead fraud-based and covenant-based triggering events.
The detailed version
- Citibank, N.A v. Jacobsen · No. 1:19-cv-00959
- Andrew Carter
- Mar. 30, 2020
Background
Citibank sued Douglas Jacobsen and Norman J. Kravetz over limited indemnity guarantees that they signed after an amendment to a credit agreement. Citibank alleged that the guarantees covered repayment obligations connected to a $50 million loan made to JHCG Holdings LLC. It asserted claims for breach of contract, attorneys’ fees, and unjust enrichment.
The defendants moved to dismiss. Magistrate Judge James L. Cott recommended denying dismissal of the breach-of-contract and attorneys’ fees claims and granting dismissal of the unjust-enrichment claim. The defendants objected to portions of that recommendation.
Breach-of-Contract Claim
The court agreed that Citibank had not sufficiently alleged two proposed guarantee-triggering events: fraud-based and covenant-based events. Because the court did not determine that amendment would be futile, it allowed Citibank to file an amended complaint pleading those events.
The defendants also argued that the guarantees’ definition of “Guaranteed Obligations” did not include the borrower’s obligation to repay the loan. The court rejected dismissal on that basis. It held that the language did not unambiguously exclude the loan-repayment obligation. The court stated that it did not need to decide at that stage whether the language was ambiguous or unambiguously included the repayment obligation. Defendants’ motion to dismiss the breach-of-contract claim was DENIED.
Attorneys’ Fees
The guarantees required the guarantor to pay or reimburse reasonable out-of-pocket costs, including attorneys’ fees, incurred to protect, defend, or enforce the guarantee. Because the court found that Citibank had adequately alleged a breach of the guarantees, it did not dismiss the attorneys’ fees claim. Defendants’ motion to dismiss that claim was DENIED.
Unjust Enrichment
Neither party objected to the recommendation concerning unjust enrichment. After reviewing that portion for clear error, the court adopted the recommendation to dismiss the claim. Defendants’ motion to dismiss the unjust-enrichment claim was GRANTED.
Disposition
The court adopted the Report and Recommendation in part and modified it in part. It denied dismissal of the breach-of-contract and attorneys’ fees claims, granted dismissal of the unjust-enrichment claim, and allowed Citibank to amend its complaint regarding the fraud-based and covenant-based triggering events. The court also denied as moot the defendants’ request for oral argument.
Read the full 14-page opinion on CourtListener, the free public archive maintained by the Free Law Project.