Court Opinion

ID: 9393461
Source: CourtListenerOpinion
Date Created: 2023-05-10 15:00:32.895231+00
Date Added: 2024-06-11T17:18:53.584350
License: Public Domain

22-1403
     Osuagwu v. Home Point Fin. Corp.

                                    UNITED STATES COURT OF APPEALS
                                        FOR THE SECOND CIRCUIT
                                                  SUMMARY ORDER

     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
     CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS
     PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE
     32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
     IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
     FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
     “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A
     COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1          At a stated term of the United States Court of Appeals for the Second Circuit, held
 2   at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New
 3   York, on the 10th day of May, two thousand twenty-three.
 4
 5             PRESENT:          JOSÉ A. CABRANES,
 6                               GERARD E. LYNCH,
 7                               RAYMOND J. LOHIER, JR.,
 8                                        Circuit Judges.
 9             ------------------------------------------------------------------
10             CHINONYEREM OSUAGWU, M.D.,
11
12                               Plaintiff-Appellant,
13
14                        v.                                                        No. 22-1403
15
16             HOME POINT FINANCIAL CORPORATION,
17             HOME POINT CAPITAL, INC., AMTRUST TITLE
18             INSURANCE COMPANY, MARIANNE
19             GONZALEZ, PHYLLIS SIMON, ARVIND
20             GALABAYA, LEATICIA OSUGWU OR ASUZU,
21             THOMAS AMADEO, YANIRA AMADEO, JOHN
22             DOE, JANE DOE, AMTRUST FINANCIAL
23             SERVICES, INC.,
24
25                               Defendants-Appellees. ∗
26             ------------------------------------------------------------------

     ∗
         The Clerk of Court is directed to amend the caption as set forth above.
 1         FOR PLAINTIFF-APPELLANT:                       Chinonyerem Osuagwu, pro se,
 2                                                        New City, NY
 3
 4         FOR DEFENDANTS-APPELLEES                       Marc James Ayers, Evan A.
 5         HOME POINT FINANCIAL CORP.                     Ward, Bradley Arant Boult
 6         AND HOME POINT CAPITAL, INC.:                  Cummings LLP, Birmingham, AL
 7
 8         FOR DEFENDANTS-APPELLEES                       Nathaniel Z. Marmur, The Law
 9         AMTRUST TITLE INSURANCE CO.,                   Offices of Nathaniel Z. Marmur,
10         AMTRUST FINANCIAL SERVICES, INC.,              PLLC, New York, NY
11         THOMAS AMADEO, AND YANIRA
12         AMADEO:
13
14         FOR DEFENDANT-APPELLEE                         Rachel Aghassi, Furman
15         MARIANNE GONZALEZ:                             Kornfeld & Brennan LLP, New
16                                                        York, NY
17
18         FOR DEFENDANTS-APPELLEES                       No appearance
19         PHYLLIS SIMON, ARVIND GALABAYA,
20         AND LEATICIA OSUGWU OR ASUZU:
21
22         Appeal from a judgment of the United States District Court for the

23   Southern District of New York (Cathy Seibel, Judge).

24         UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

25   AND DECREED that the judgment of the District Court is AFFIRMED.

26         Plaintiff-Appellant Chinonyerem Osuagwu, proceeding pro se, appeals

27   from a June 27, 2022 order of the United States District Court for the Southern

28   District of New York (Seibel, J.) dismissing his federal claim under § 7434 of the

29   Internal Revenue Code, 26 U.S.C. § 7434(a), for failure to state a claim, dismissing

30   his state claims for lack of subject-matter jurisdiction, and declining to exercise

                                               2
 1   supplemental jurisdiction over those claims. We assume the parties’ familiarity

 2   with the underlying facts and the record of prior proceedings, to which we refer

 3   only as necessary to explain our decision to affirm.

 4          The following facts are drawn from Osuagwu’s pro se pleadings, which

 5   we construe liberally. See Weixel v. Bd. of Educ. of City of N.Y., 287 F.3d 138,

 6   145-46 (2d Cir. 2002). During Osuagwu’s divorce proceedings, the New York

 7   Supreme Court, Rockland County issued orders allowing Osuagwu’s former

 8   wife to sign documents on his behalf to facilitate the sale of his home against his

 9   wish. While his appeal from the divorce proceedings was pending in state court,

10   Osuagwu brought this federal action against the buyers of his former home, the

11   buyers’ mortgage bank and its attorney, his former wife and her attorney, and

12   others, alleging that the sale of his home violated state law and that the mortgage

13   bank’s attorney filed fraudulent tax forms reflecting what Osuagwu contends

14   was an inaccurate statement of his share of the proceeds from the purportedly

15   illegal sale, in violation of § 7434(a).

16          In a May 24, 2022 order, the District Court of its own accord dismissed

17   Osuagwu’s § 7434(a) claim for failure to state a claim and his state claims for lack

18   of diversity jurisdiction and as barred by either the Younger abstention doctrine,

                                                3
 1   see Younger v. Harris, 401 U.S. 37 (1971), or the Rooker-Feldman doctrine, see

 2   District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983); Rooker v.

 3   Fidelity Trust Co., 263 U.S. 413 (1923). In the same order, the District Court

 4   permitted Osuagwu to replead his § 7434(a) claim against the mortgage bank and

 5   its attorney, cautioning that “[i]f [Osuagwu] fails to file an amended complaint

 6   within the time allowed, the Court will enter judgment” dismissing the

 7   complaint. App’x 29. The District Court further explained that, in addition to

 8   the reasons for dismissal discussed in the order, it would decline to exercise

 9   supplemental jurisdiction over Osuagwu’s state claims in the absence of a viable

10   federal claim. Id. Instead of amending his federal claim, however, Osuagwu

11   moved for reconsideration and leave to amend the complaint in its entirety. On

12   June 10, 2022, the District Court denied Osuagwu’s motion. On June 27, 2022, the

13   District Court entered a final order dismissing Osuagwu’s complaint.

14         I.     Sua Sponte Dismissal

15         On appeal, Osuagwu argues that the District Court’s sua sponte dismissal

16   of his complaint constituted a denial of due process. While we have cautioned

17   district courts against sua sponte dismissals without giving the plaintiff prior

18   notice and an opportunity to be heard, see Catzin v. Thank You & Good Luck

                                              4
 1   Corp., 899 F.3d 77, 82 (2d Cir. 2018), vacatur is not warranted in this case. By

 2   initially dismissing Osuagwu’s complaint with leave to amend, the District Court

 3   provided Osuagwu with notice and an opportunity to be heard before issuing a

 4   final order of dismissal. See Slayton v. Am. Exp. Co., 460 F.3d 215, 224 (2d Cir.

 5   2006) (“A dismissal with leave to amend is a non-final order . . . .”); see also

 6   Curcio v. Abrams, No. 22-693, 2023 WL 31183, at *2 (2d Cir. Jan. 4, 2023)

 7   (summary order) (affirming the district court’s sua sponte dismissal because “the

 8   [pro se] plaintiff had an opportunity to file an amended complaint in an initial

 9   action but instead began a new action with a complaint largely identical to the

10   first”). While leave to amend extended only to the claim brought under § 7434,

11   the District Court explained that it would decline to exercise supplemental

12   jurisdiction over the remaining state claims only absent a valid federal claim.

13         Moreover, while the District Court did not afford Osuagwu the same

14   opportunity to amend or defend his other claims before dismissing them, we

15   have approved such dismissals where “it is unmistakably clear that the court

16   lacks jurisdiction” over the claims in question. Catzin v. Thank You & Good

17   Luck Corp., 899 F.3d 77, 82 (2d Cir. 2018) (quotation marks omitted); see, e.g.,

18   Digitel, Inc. v. MCI Worldcom, Inc., 239 F.3d 187, 189-90 (2d Cir. 2001) (affirming

                                               5
 1   the district court’s sua sponte dismissal on subject-matter jurisdiction grounds).

 2   Here, for the reasons discussed below, it was unmistakably clear that the District

 3   Court lacked subject-matter jurisdiction over Osuagwu’s state claims. And in

 4   any event, by permitting Osuagwu to cure his federal claim, the District Court

 5   left open an avenue for Osuagwu to pursue his state claims under the court’s

 6   supplemental jurisdiction. Osuagwu declined to avail himself of that

 7   opportunity. We conclude that, under these circumstances, granting leave to

 8   amend the federal claim—the only basis for federal jurisdiction over his

 9   lawsuit—provided Osuagwu with adequate process. The District Court’s sua

10   sponte dismissal was therefore not “reversible error.” Catzin, 899 F.3d at 82.

11         II.    Claim Under § 7434

12         We agree with the District Court that Osuagwu failed to state a claim

13   under § 7434(a), a provision that creates a civil damages remedy for the willful

14   filing of "fraudulent information return[s].” We review dismissals under Federal

15   Rule of Civil Procedure 12(b)(6) de novo. See Dolan v. Connolly, 794 F.3d 290,

16   293 (2d Cir. 2015).

17         “The private right of action created by § 7434(a) applies only ‘[i]f any

18   person willfully files a fraudulent information return.’” Katzman v. Essex

                                              6
 1   Waterfront Owners LLC, 660 F.3d 565, 568 (2d Cir. 2011) (quoting 26 U.S.C. §

 2   7434(a)). Osuagwu argues that he raised a plausible § 7434(a) claim because the

 3   mortgage bank, through its attorney, prepared a Form 1099 that “indicated or

 4   intended to indicate to the [Internal Revenue Service] that the transaction from

 5   which [the form] arose was a legitimate one, when the opposite is the case.” Pl.-

 6   Appellant’s Br. 48. But even accepting those allegations as true, we agree with

 7   the District Court that Osuagwu has failed to demonstrate how the mortgage

 8   bank and its attorney’s reliance on a court order expressly authorizing the sale

 9   (and the means by which it was conducted) could possibly amount to a willful

10   filing of a fraudulent return. Cf. Maness v. Meyers, 419 U.S. 449, 458 (1975)

11   (articulating the “basic proposition that all orders and judgments of courts must

12   be complied with promptly”). We therefore conclude that Osuagwu failed to

13   state a claim under § 7434.

14         III.   Claims Under State Law

15         We also affirm the District Court’s dismissal of Osuagwu’s state claims for

16   lack of subject-matter jurisdiction based on an absence of complete diversity

17   among the parties. Diversity jurisdiction under 28 U.S.C. § 1332 requires

18   “complete diversity,” meaning that “all plaintiffs must be citizens of states

                                              7
 1   diverse from those of all defendants.” Pa. Pub. Sch. Emps.’ Ret. Sys. v. Morgan

 2   Stanley & Co., 772 F.3d 111, 117–18 (2d Cir. 2014). This case fails that statutory

 3   requirement. Osuagwu is a citizen of New York, and although two of the

 4   defendants are citizens of Michigan, several other defendants are New York

 5   citizens. The District Court therefore properly concluded that it lacked diversity

 6   jurisdiction over the state claims.

 7         We also conclude that the District Court did not abuse its discretion when

 8   it declined to exercise supplemental jurisdiction over Osuagwu’s state claims

 9   given its dismissal of the sole federal claim. See Kolari v. N.Y.-Presbyterian

10   Hosp., 455 F.3d 118, 123 (2d Cir. 2006) (“Plaintiffs’ federal-law claims were

11   eliminated on a motion to dismiss, prior to the investment of significant judicial

12   resources, and we can discern no extraordinary inconvenience or inequity

13   occasioned by permitting the [state] claims to be refiled in state court.”). 1

     1
      While these are sufficient grounds on which to affirm the District Court’s
     dismissal of Osuagwu’s state claims, we also agree with the District Court’s
     initial assessment that Osuagwu’s state claims are barred by the Younger
     abstention doctrine because the relief he seeks would “countermand the state
     court’s orders” directing the sale of his home. App’x 17. As Osuagwu
     acknowledges on appeal, “his appeal to the New York state [A]ppellate
     [D]ivision is pending.” Pl.-Appellant’s Br. 40. Younger abstention applies
     where, as here, a “federal lawsuit implicates the way that New York courts
     manage their own divorce and custody proceedings – a subject in which the

                                                8
 1         IV.    Denial of Reconsideration and Leave to Amend

 2         Osuagwu also appeals from the District Court’s June 10, 2022 order

 3   denying his motion for reconsideration and leave to amend his complaint.

 4         We review the denial of a motion for reconsideration for abuse of

 5   discretion. See Trikona Advisers Ltd. v. Chugh, 846 F.3d 22, 29 (2d Cir. 2017).

 6   As noted, the District Court properly dismissed Osuagwu’s complaint, and in his

 7   motion seeking reconsideration Osuagwu identified no controlling decisions or

 8   facts that the court had overlooked. Accordingly, we conclude that the District

 9   Court did not abuse its discretion in denying his motion for reconsideration. See

10   Cho v. Blackberry Ltd., 991 F.3d 155, 170–71 (2d Cir. 2021).

11         Osuagwu also appeals the denial of his request for leave to amend his

12   complaint. “Although we generally review” such denials “for abuse of

13   discretion, in cases in which the denial is based on futility, we review de novo

14   that legal conclusion.” Melendez v. Sirius XM Radio, Inc., 50 F.4th 294, 309 (2d

15   Cir. 2022) (quoting Shimon v. Equifax Info. Servs. LLC, 994 F.3d 88, 91 (2d Cir.

     states have an especially strong interest.” Falco v. Justs. of the Matrim. Parts of
     Sup. Ct. of Suffolk County, 805 F.3d 425, 427 (2d Cir. 2015) (quotation marks
     omitted). Osuagwu has failed to allege anything about the “subjective
     motivation of the state [court]” (whether “bad faith” or “bias”), nor any other
     extraordinary circumstances, that would warrant an exception to this rule.
     Diamond “D” Const. Corp. v. McGowan, 282 F.3d 191, 198-201 (2d Cir. 2002).
                                               9
 1   2021)). By the time it issued its May 24, 2022 order dismissing the complaint, the

 2   District Court had already granted Osuagwu leave to amend his federal claim.

 3   Instead of amending his federal claim, however, Osuagwu filed a motion for

 4   leave to amend his entire complaint. The June 10, 2022 order denied that motion

 5   on the ground that “[t]he arguments advanced by [Osuagwu] in his motion do

 6   not convince [the court] that [its] original ruling was incorrect.” Dist. Ct. Dkt.

 7   No. 19 at 1. But the order also reminded Osuagwu that he “may still replead his

 8   claims under 26 U.S.C. § 7434(a) . . . before the thirty-day deadline, as set forth in

 9   [the District Court’s] original ruling.” Id. Later that month, on June 27, 2022, the

10   District Court dismissed Osuagwu’s complaint with prejudice because he failed

11   to replead his federal claim. We therefore construe the June 10, 2022 denial of

12   Osuagwu’s request for leave to amend as affecting his state claims only.

13         We agree with the District Court’s conclusion that any amendment to

14   Osuagwu’s state claims would have been futile. As discussed above, the District

15   Court properly determined that it lacked subject-matter jurisdiction over

16   Osuagwu’s state claims due to the absence of complete diversity of citizenship,

17   among other jurisdictional problems. To the extent a viable federal claim may

18   have allowed the District Court to exercise supplemental jurisdiction over

                                               10
 1   Osuagwu’s state claims, Osuagwu was given the chance to amend his federal

 2   claim but failed to do so. In any case, supplemental jurisdiction is a matter of

 3   discretion, not of right. See United Mine Workers v. Gibbs, 383 U.S. 715, 725-26

 4   (1966). We therefore affirm the District Court’s denial of Osuagwu’s request for

 5   leave to amend his state claims.

 6         We have considered Osuagwu’s remaining arguments and conclude that

 7   they are without merit. For the foregoing reasons, the judgment of the District

 8   Court is AFFIRMED.

 9                                         FOR THE COURT:
10                                         Catherine O’Hagan Wolfe, Clerk of Court

                                              11