Gottlieb v. Hot Forex

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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SEAN GOTTLIEB, MEMORANDUM AND ORDER

19 CV 6960 (RRM)

Plaintiff,

-against-

HOT FOREX, HF MARKETS (SV) LTD.,

Defendant.

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ROSLYNN R. MAUSKOPF, Chief United States District Judge:

Plaintiff Sean Gottlieb, proceeding pro se, commenced the above-captioned action on

November 27, 2019, and asserts diversity of citizenship pursuant to 28 U.S.C. § 1132 as a basis

for the Court’s jurisdiction. The Court grants Plaintiff’s request to proceed in forma pauperis

(“IFP”) pursuant to 28 U.S.C. § 1915 solely for the purpose the purpose of this Order. For the

reasons set forth below, the Court dismisses the complaint for lack of subject matter jurisdiction

and grants Plaintiff leave to file an amended complaint within thirty (30) days of the date of this

memorandum and order.

Background

The Court assumes the truth of the factual allegations in the Complaint for purposes of

this Memorandum and Order. Plaintiff asserts that he is a citizen of the United States with a

mailing address in Deer Park, New York. Defendant HotForex is an online foreign currency

exchange (forex) trading services provider incorporated in Saint Vincent and the Grenadines.1

Plaintiff alleges that on June 2019, he transferred $18,000.00 from his account at Bank of

America to HotForex. (Compl., Doc 1 at 4). He asserts that he was credited $15,000.00 for the

deposit rather than the amount he deposited. (Id.) Immediately thereafter, Plaintiff attempted to

1See https://www.hotforex.com/sv/en/about-us/about-hf.html (last visited December 13, 2019).

withdraw his money and was informed that due to trading losses, a $150.00 balance remained.

(Id. at 5). Plaintiff seeks actual damages in the amount of $100,000.00 along with punitive

damages.

Standard of Review

A complaint must plead “enough facts to state a claim to relief that is plausible on its

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible “when the

plaintiff pleads factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir.

2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Although all allegations contained

in the complaint are assumed to be true, this tenet is “inapplicable to legal conclusions.” Iqbal,

556 U.S. at 678.

In reviewing a pro se complaint, the court must be mindful that the plaintiff’s pleadings

should be held “to less stringent standards than formal pleadings drafted by lawyers.” Erickson v.

Pardus, 551 U.S. 89, 94 (2007) (per curiam) (quoting Estelle v. Gamble, 429 U.S. 97, 106

(1976)); see also Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (noting that even after Twombly,

courts “remain obligated to construe a pro se complaint liberally”). Nevertheless, the court is

required to dismiss sua sponte an in forma pauperis action if the court determines that it “(i) is

frivolous or malicious; (ii) fails to state a claim on which relief may be granted; or (iii) seeks

monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2)(B);

see also Abbas v. Dixon, 480 F.3d 636, 639 (2d Cir. 2007).

In addition, if the court “determines at any time that it lacks subject-matter jurisdiction,

the court must dismiss the action.” Fed. R. Civ. P. 12(h)(3); see also Cortlandt St. Recovery

Corp. v. Hellas Telecomms., S.À.R.L., 790 F.3d 411, 416–17 (2d Cir. 2015) (holding that a

district court may dismiss an action for lack of subject matter jurisdiction pursuant to Rule

12(b)(1) when the court “lacks the statutory or constitutional power to adjudicate it.” (quoting

Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)).

Discussion

Lack of Subject Matter Jurisdiction

Plaintiff alleges that the Court has jurisdiction over this matter pursuant to 28 U.S.C. §

1332. Under the diversity statute, federal courts have subject matter jurisdiction over claims

when the Plaintiff and Defendant are of diverse citizenship and “the matter in controversy

exceeds the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a); see

also Bayerische Landesbank, N. Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42, 48 (2d

Cir. 2012). The party asserting diversity jurisdiction bears the burden of proving that it exists by

a preponderance of the evidence. Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635,

638 (2d Cir. 2005); Finnegan v. Long Island Power Auth., No.17 CV 4424, 2019 WL 4467559,

at *3 (E.D.N.Y. Sept. 18, 2019).

Pursuant to 28 U.S.C. § 1332(c)(1), a corporation's citizenship is in the state where it was

incorporated and the state where it has its principal place of business. According to Plaintiff’s

allegations, Defendant is incorporated in Saint Vincent and the Grenadines. Thus, for the purpose

of this order, diversity of citizenship is satisfied. However, Plaintiff fails to satisfy the amount-

in-controversy. The “party invoking the jurisdiction of the federal court has the burden of

proving that it appears to a ‘reasonable probability’ that the claim is in excess of the statutory

jurisdictional amount.” Scherer v. Equitable Life Assur. Soc'y of U.S., 347 F.3d 394, 397 (2d Cir.

2003) (quoting Tongkook Am., Inc. v. Shipton Sportswear Co., 14 F.3d 781, 784 (2d Cir. 1994));

Gilot v. Greyhound, No. 18 CV 3074, 2018 WL 3093971, at *2 (E.D.N.Y. June 22, 2018). The

amount in controversy must be non-speculative in order to satisfy the statute. Baltazar v. Earth

Ctr. of Maanu, Inc., 14 CV 3543, 2014 WL 3887717, at *2 (E.D.N.Y. July 11, 2014). Here,

Plaintiff alleges $18,000.00 in actual damages and seeks to include a claim for punitive damages

and legal fees in order to meet the in excess of $75,000.00 amount-in-controversy threshold.

Whereas here, the jurisdictional amount is met only by inclusion of a claim for punitive

damages, such calculation must be considered with “heightened scrutiny.” Nwanza v. Time, Inc.,

125 Fed.Appx. 346, 349 (2d Cir. 2005); Cohen v. Narragansett Bay Ins. Co., No. 14 CV 3623,

2014 WL 4701167, at *3 n.4 (E.D.N.Y. Sept. 23, 2014) (“[T]he Court is not obligated to accept,

on face value, a claimed amount of punitive damages, particularly where there would be no

diversity without such damages.” (citation omitted)).

Therefore, the Court is not able to determine whether there is a “reasonable probability”

that damages exceed the $75,000 jurisdictional threshold. See, e.g., GW Holdings Group, LLC v.

US Highland, Inc., 367 F. Supp. 3d 78, 82 (S.D.N.Y. 2019) (dismissing action where Plaintiff

failed to establish the amount in controversy); Gilot v. Equivity, No. 18 CV 3492, 2018 WL

3653150, at *3 (E.D.N.Y. July 31, 2018) (dismissing pro se action where, inter alia, Plaintiff

failed to allege damages in excess of $75,000.00 as required to assert diversity jurisdiction in

action); Mallgren v. Sprint Nextel Corp., No. 13 CV 2477, 2014 WL 977663, at *3 (E.D.N.Y.

Mar. 12, 2014) (same).

Plaintiff’s IFP application

While the Court grants Plaintiff’s IFP application for the purpose of the instant Order, the

Court notes that the IFP application is deficient. The purpose of the statute permitting litigants to

proceed IFP is to insure that indigent persons have equal access to the judicial system. Davis v.

NYC Dept. of Educ., No. 10 CV 3812, 2010 WL 3419671, at *1 (E.D.N.Y. Aug. 27, 2010)

(citing Gregory v. NYC Health & Hospitals Corp., No. 07 CV 1531, 2007 WL 1199010, at *1

(E.D.N.Y. Apr. 17, 2007)); Cuoco v. U.S. Bureau of Prisons, 328 F. Supp. 2d 463, 467

(S.D.N.Y. 2004). Section 1915 of Title 28 of the United States Code authorizes a court to

dismiss a case brought by a plaintiff requesting to proceed IFP if the “allegation of poverty is

untrue.” 28 U.S.C. § 1915(e)(2)(A). Courts have found that the “purpose of this provision is to

‘weed out the litigants who falsely understate their net worth in order to obtain [IFP] status when

they are not entitled to that status based on their true net worth.’” Hobbs v. County of

Westchester, et al., No. 00 Civ. 8170, 2002 WL 868269, at *2 (S.D.N.Y. May 3, 2002) (quoting

Attwood v. Singletary, 105 F.3d 610, 613 (11th Cir. 1997)); accord Matthews v. Gaither, 902

F.2d 877, 881 (11th Cir. 1990). The question of whether a plaintiff qualifies for IFP status is

within the discretion of the district court. Farmer v. Dr. Lucia Patino, Optometrist, P.C., No. 18

CV 1435, 2018 WL 2214652, at *1 (E.D.N.Y. Mar. 16, 2018).

Here, Plaintiff in his IFP application states that he has zero dollars in income and assets.

He further alleges that he has zero housing expenses and is not in debt. (IFP Appl., Doc 2). Thus,

the financial information has submitted in support of his IFP request is insufficient for the Court

to determine if Plaintiff is able to pay the filing fee. If Plaintiff elects to file an amended

complaint, Plaintiff must, at the same time, file an amended IFP application with detailed

information as to any income he receives from any source, and his monthly expenses. Plaintiff

must submit his amended IFP application on the long form IFP application attached to this

Order.

Conclusion

Accordingly, the Court dismisses the Complaint without prejudice for lack of subject

matter jurisdiction pursuant to Rule 12(h)(3) of the Federal Rules of Civil Procedure. However,

in view of Plaintiff’s pro se status, the Court grants Plaintiff leave to amend the Complaint to

allege facts, if possible, to support subject matter jurisdiction. The Court grants Plaintiff thirty

(30) days from the date of this Memorandum and Order to file an amended complaint. If Plaintiff

files an amended complaint, Plaintiff must file an amended IFP application using the long form

application attached to this Order. In lieu of submitting a long form IFP application, Plaintiff

may pay the $400.00 filing fee.

If Plaintiff fails to file an amended complaint along with an amended IFP or fails to file

an amended complaint and pay the Court’s filing fee within 30 days of the date of this

memorandum and order, judgment shall enter. No summons shall issue at this time, and all

further proceedings shall be stayed for thirty (30) days.

The Clerk of Court is directed to send Plaintiff a long form IFP application along with

this Order. The Court certifies pursuant to 28 U.S.C. § 1915 (a)(3) that any appeal from this

order would not be taken in good faith and therefore in forma pauperis status is denied for the

purpose of an appeal. See Coppedge v. United States, 369 U.S. 438, 444–45 (1962).

SO ORDERED.

Dated: Brooklyn, New York

January 12, 2021 Roslynn R. Mauskopf

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ROSLYNN R. MAUSKOPF

Chief United States District Judge