United States District Court, N.D. California, San Jose Division
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT'S MOTION TO DISMISS, Re: Dkt., 85
J. DAVILA UNITED STATES DISTRICT JUDGE
Lisa Strugala alleges that she was injured because Defendant
Flagstar Bank, FSB provided erroneous tax documents regarding
her mortgage interest payments. Flagstar moves to dismiss on
the grounds that Strugala lacks Article III standing.
Flagstar's motion will be GRANTED IN PART AND DENIED IN
obtained a home mortgage loan from Flagstar in
2007. First Am. Compl. (“FAC”)
¶¶ 24-25, Dkt. No. 18. Under the terms of the
mortgage, Strugala's monthly payments were less than the
monthly interest due, with the remainder added to the loan
principal. Id. ¶¶ 3-5, 25.
26 U.S.C. § 6050H, a lender must issue an annual Form
1098 stating the amount of mortgage interest that a borrower
paid during the year. Strugala alleges that in the tax years
before 2011, Flagstar issued Forms 1098 that erroneously
included both (1) the amount of interest borrowers actually
paid and (2) the amount of interest that was deferred and
added to the principal. Id. ¶¶ 1, 7. She
alleges that in 2011, Flagstar stopped reporting deferred
interest on Forms 1098 and “tr[ied] to make up for its
prior over-reporting of interest by under-reporting
consumers' interest payments in later years.”
Id. ¶ 17.
sold her home in 2012 and used the proceeds to pay roughly
$63, 000 in deferred interest to Flagstar. Id.
¶¶ 35-40. However, despite her requests, Flagstar
did not issue a Form 1098 to her for 2012. Id. As a
result, Strugala alleges that Flagstar over-reported her
interest payments for 2007-2011 and underreported her
interest payments in 2012. Id. ¶¶ 38-41.
discussed below, Strugala alleges that she suffered injuries
from Flagstar's over-reporting and subsequent
under-reporting. Flagstar moved to dismiss (Dkt. No. 55), and
this Court stayed the action and referred the matter to the
IRS under the primary jurisdiction doctrine to determine
whether Flagstar's reporting practices complied with 26
U.S.C. § 6050H and its related regulations (Dkt. No.
69). This Court required Strugala to submit a report every
six months describing the status of her IRS proceedings. On
May 30, 2017, Strugala filed a report indicating that the IRS
had accepted her amended 2012 tax return (among other
developments). Dkt. No. 81. On June 21, 2017, this Court
lifted the stay solely to permit Flagstar to file a motion
addressing Strugala's Article III standing. Dkt. No. 84.
Flagstar now moves to dismiss under Fed.R.Civ.P. 12(b)(1).
Def.'s Mot. to Dismiss (“MTD”), Dkt. No. 85.
under Fed.R.Civ.P. 12(b)(1) is appropriate if the complaint
fails to allege facts sufficient to establish subject-matter
jurisdiction. Savage v. Glendale Union High Sch.,
343 F.3d 1036, 1039 n.2 (9th Cir. 2003). The Court “is
not restricted to the face of the pleadings, but may review
any evidence, such as affidavits and testimony, to resolve
factual disputes concerning the existence of
jurisdiction.” McCarthy v. United States, 850
F.2d 558, 560 (9th Cir. 1988). The nonmoving party bears the
burden of establishing jurisdiction. Chandler v. State
Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir.
Article III Standing
standing, a plaintiff must have “(1) suffered an injury
in fact, (2) that is fairly traceable to the challenged
conduct of the defendant, and (3) that is likely to be
redressed by a favorable judicial decision.”
Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016).
The plaintiff bears the burden of proving these elements.
plaintiff's injury must be “particularized”
and “concrete.” Id. at 1548. To be
particularized, it “must affect the plaintiff in a
personal and individual way.” Id. To be
concrete, it must be real, not abstract. Id. at
1548-49. A concrete injury can be tangible or intangible.
Id. A statutory violation alone is not enough; the
plaintiff must also allege a concrete harm. Id. at
1549 (a plaintiff cannot “allege a bare procedural
violation, divorced from any concrete harm, and satisfy the
injury-in-fact requirements of Article III”).
plaintiff lacks Article III standing, then the case must be
dismissed for lack of subject-matter jurisdiction. Steel
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