945 F. Supp. 2d 426
S.D.N.Y.2013Background
- This action began in NY state court alleging state-law fraud claims against thirteen defendants.
- Defendants removed to federal court asserting Edge Act and related bankruptcy jurisdiction.
- Second Circuit decisions later cast doubt on Edge Act jurisdiction; court invited remand considerations.
- The court previously granted partial summary judgment for most plaintiffs; FSAM’s claims related to five RMBS remained.
- Virgin Islands mortgage origination and JPMorgan Chase Bank subsidiaries were central to jurisdictional analysis.
- Court ultimately vacated its summary judgment order and remanded the case to state court for lack of Edge Act jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court propery had Edge Act jurisdiction | Dexia argued Edge Act jurisdiction existed due to offshore banking connections. | Defendants argued JPMorgan entities’ international activities fell within Edge Act scope. | Lacked Edge Act jurisdiction; remand required. |
| Whether mandatory remand under 28 U.S.C. § 1334(c)(2) applied | Plaintiffs urged remand to state court under § 1334(c)(2). | Defendants contended jurisdiction barred remand or justified related-to bankruptcy handling. | Remand is appropriate; control question is lack of Edge Act jurisdiction. |
| Whether the summary-judgment order must be vacated | Defendants urged maintaining merits decision despite remand. | Vacatur unnecessary if jurisdiction existed. | Vacated; order null and void due to lack of jurisdiction. |
Key Cases Cited
- Amer. Int’l Grp., Inc. v. Bank of Am. Corp., 712 F.3d 775 (2d Cir. 2013) (Edge Act jurisdiction limited to federally chartered corporation and offshore transactions)
- Parmalat Capital Fin. Ltd. v. Bank of Am. Corp., 671 F.3d 261 (2d Cir. 2012) (procedural remand notions and lack of jurisdiction considerations)
- In re MTBE Prods. Liab. Litig., 488 F.3d 112 (2d Cir. 2007) (jurisdictional determinations and removal standards)
- City of Rome, N.Y. v. Verizon Commc’ns, Inc., 362 F.3d 168 (2d Cir. 2004) (vacatur of merits when jurisdiction lacking)
- Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999) (prudential sequencing in jurisdictional decisions)
- Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S. 422 (2007) (court may address threshold jurisdictional issues first)
- Am. Int’l Grp., Inc. v. Bank of Am. Corp., 712 F.3d 775 (2d Cir. 2013) (edge act jurisdiction clarified; broader interpretation scrutinized)