DECISION & ORDER
ARTHUR D. SPATT, District Judge.
On October 18, 2012, the Plaintiff HICA Education Loan Corporation ("HICA") commenced this action against the Defendant Ana J. Romeo a/k/a Ana I. Romeo a/k/a Ana I. Romeo-Lopez (the "Defendant"), alleging failure to satisfy certain promissory notes.
Presently pending before the Court is a motion by the Plaintiff for summary judgment pursuant to Federal Rules Civil Procedure ("Fed. R. Civ. P.") 56 and an award of damages.
However, sua sponte, the Court finds that it lacks subject matter jurisdiction over this action. Therefore, the complaint is dismissed without prejudice to re-file in state court and the motion for summary judgment is denied as moot.
I. BACKGROUND
Unless stated otherwise, the following facts are drawn from the parties' Rule 56.1 Statements and Exhibits and construed in a light most favorable to the non-moving party, the Defendant.
A. The Parties
HICA is a corporation organized, chartered, and existing under the laws of South Dakota.
The Defendant is a citizen of the State of New York and maintains a residence at 126 4th Avenue, Brooklyn, Kings County, New York 11217.
B. The Underlying Promissory Notes
From 1985 to 1988, the Defendant executed four promissory notes with the original note holder, the federal Student Loan Marketing Association ("Sallie Mae"). According to the Plaintiff, such notes were "sold, transferred, and assigned" to HICA by Sallie Mae.
The notes were executed under the Health Education Assistance Loan ("HEAL") program,
The underlying notes are identified as follows: (1) HEAL Promissory Note dated August 21, 1985, from the Defendant payable to The Chase Manhattan Bank, NA, New Hyde Park, NY, in the original amount of $15,000.00 ("Note No. 11"); (2) HEAL Promissory Note dated August 11, 1986, from the Defendant payable to The Chase Manhattan Bank, NA, New Hyde Park, NY, in the original amount of $10,000.00 ("Note No. 12"); (3) HEAL Promissory Note dated October 13, 1985 from the Defendant payable to The Chase Manhattan Bank, NA, New Hyde Park, NY, in the original amount of $10,000.00 ("Note No. 13"); and (4) HEAL Promissory Note dated June 23, 1988, from the Defendant payable to The Chase Manhattan Bank, NA, New Hyde Park, NY, in the original amount of $15,000.00 ("Note No. 14").
C. Procedural History
As noted above, on October 18, 2012, the Plaintiff commenced the present action.
On March 18, 2013, the Clerk of the Court noted the default of the Defendant.
On March 29, 2013, the Defendant filed an Answer. However, she has not moved to vacate the default, nor has HICA moved for a default judgment.
Rather, on December 1, 2014, the Plaintiff moved for summary judgment.
II. DISCUSSION
A. Legal Standards Governing Subject Matter Jurisdiction
Federal courts have "an independent obligation to determine whether subject matter jurisdiction exists, even in the absence of a challenge from any party."
It is the "plaintiff [who] has the burden to prove subject matter jurisdiction by a preponderance of the evidence."
B. Whether Subject Matter Jurisdiction Exists in this Case
Federal courts are empowered to exercise jurisdiction over two types of cases: (1) cases involving a "federal question" in which there is a colorable claim that "aris[es] under the Constitution, laws, or treaties of the United States," 28 U.S.C. § 1331; and (2) cases between "citizens of different states" in which the amount in controversy exceeds $75,000, 28 U.S.C. § 1332.
Here, HICA invokes U.S.C. § 1331 as the basis for subject matter jurisdiction, contending that its claims "arise under the Constitution, laws, or treaties of the United States" as "Plaintiff seeks enforcement of an indebtedness arising under the [HEAL Statutes and Regulations]." (Compl. ¶ 3).
However, the Court agrees with the "district courts within this Circuit [that] have determine[d] that federal courts do not have subject matter jurisdiction over actions to recover payments due on loans issued pursuant to the HEAL Statutes and Regulations."
For example, in
In addition, in addressing this question, the majority of courts outside of this circuit reached the same conclusion.
On this issue, the Supreme Court of the United States has stated federal jurisdiction over a state law claim will lie if a federal issue is (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.
In this regard, although HICA correctly notes that defaulting on a HEAL loan is a violation of certain federal regulations, "the Supreme Court has made clear that a mere violation of a federal statute for which Congress has not established a federal cause of action `does not state a claim arising under the Constitution laws, or treaties of the United States,' even when the violation is an essential element of a state law cause of action."
HICA "presents no discernable federal issue at all, let alone one that either is disputed or substantial. Rather, the sole issue in the case is whether HICA is entitled to collect [the Defendant's four] defaulted promissory notes."
Nor does "[t]he federal government's interest in HICA's collection of a defaulted student loan [] transform HICA's state law claim into one that necessarily raises a disputed and substantial federal issue."
Also, sua sponte, The Court also considers whether it has diversity jurisdiction under 28 U.S.C. § 1332. HICA is a South Dakota corporation and the Defendant is a New York citizen. However, the amount in controversy, calculated "at the time the action is commenced," is less than $75,000.
These conclusions are unaltered by the fact that the Defendant defaulted. This is because "it is the Court's duty to dismiss a complaint at any time when there is no basis for subject matter jurisdiction, regardless of whether a default has been entered."
In sum, HICA has failed to demonstrate that subject matter jurisdiction is proper in this case. Under these circumstances, "dismissal is mandatory."
III. CONCLUSION
For the foregoing reasons, (1) sua sponte, the Court finds that it lacks subject matter jurisdiction over this action; (2) the complaint is dismissed without prejudice to re-file in state court; (3) the motion for summary judgment is denied as moot; and (4) the Clerk of the Court is respectfully directed to close the case.
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