Maitland v. Fishbein, 712 F. App'x 90

Background

Plaintiffs-appellants Edson and Yvonne Maitland (pro se) sued Lisa and Robert Fishbein and JPMorgan Chase, N.A., asserting federal claims including RICO and state-law fraud claims arising from property disputes involving real property in New York.
The magistrate judge recommended dismissal of the federal claims for failure to state a claim; the district court adopted that recommendation and dismissed the federal claims.
The district court concluded the Maitlands failed to plead diversity jurisdiction and therefore declined supplemental jurisdiction over the state-law claims, dismissing those without prejudice.
The Maitlands did not object to the magistrate judge’s RICO ruling and did not defend several federal claims on appeal.
On appeal, the Second Circuit reviewed the 12(b)(6) dismissal de novo and considered whether the Maitlands had adequately alleged diversity jurisdiction; the Court also considered whether to excuse the appellants’ waiver of objections to the magistrate judge’s RICO analysis.
The Second Circuit affirmed dismissal of the federal claims, found the plaintiffs had waived some appellate review but excused the jurisdictional pleading defect by deeming the complaint amended to allege domicile in Florida, and remanded the state-law claims to the district court for further proceedings.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the federal claims (including RICO) were properly dismissed for failure to state a claim	Maitlands contended federal claims were viable	Defendants argued claims failed to plead required elements and were subject to dismissal under Rule 12(b)(6)	Court affirmed dismissal of federal claims (plaintiffs waived review of RICO and abandoned other federal arguments)
Whether district court had diversity jurisdiction to hear state-law claims	Maitlands argued they are Florida domiciliaries and diversity exists	Defendants argued plaintiffs’ allegations of residence were insufficient to establish domicile	Court held original complaint failed to allege domicile but, under 28 U.S.C. § 1653 and Canedy, deemed pleadings amended to show Florida domicile and found record supports diversity jurisdiction
Whether plaintiffs’ failure to object to magistrate judge’s report forfeited appellate review of RICO claim	Maitlands urged merits review	Defendants relied on waiver rule for failure to object	Court found waiver but exercised that it would affirm anyway for reasons stated by magistrate judge; waiver not excused on substantial-merit grounds
Whether district court properly declined to exercise supplemental jurisdiction over state-law claims after dismissing federal claims	Maitlands argued district court should have retained or allowed amendment to establish diversity	Defendants maintained dismissal was proper given lack of alleged diversity	Court vacated dismissal of state-law claims and remanded for district court to address them in first instance after deeming diversity adequately alleged

Key Cases Cited

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible to survive Rule 12(b)(6))
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (legal conclusions need not be accepted as true on a motion to dismiss)
Biro v. Condé Nast, 807 F.3d 541 (2d Cir. 2015) (standard of review for Rule 12(b)(6) dismissal)
Canedy v. Liberty Mut. Ins. Co., 126 F.3d 100 (2d Cir. 1997) (defective jurisdictional allegations may be amended under 28 U.S.C. § 1653)
Universal Reinsurance Co. v. St. Paul Fire & Marine Ins. Co., 224 F.3d 139 (2d Cir. 2000) (domicile requires physical presence and intent to remain)
Cephas v. Nash, 328 F.3d 98 (2d Cir. 2003) (failure to object to magistrate judge report waives appellate review)