Opinion
C. A. 6:23-cv-04570-BHH-JDA
11-21-2023
Carlo L. Morton, Plaintiff, v. J.P. Morgan Chase & Co., Defendant.
REPORT AND RECOMMENDATION
Jacquelyn D. Austin United States Magistrate Judge
Carlo L. Morton (“Plaintiff”), proceeding pro se, brought this action against the above-named Defendant. Pursuant to the provisions of 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2), D.S.C., the undersigned Magistrate Judge is authorized to review the pleadings for relief and submit findings and recommendations to the District Court.
This is one of five cases filed simultaneously by Plaintiff at case numbers 23-4567, 234568, 23-4569, 23-4570, and 23-4571. All five cases present nearly identical claims and allegations, with each case naming different defendants. The Court takes judicial notice of Plaintiff's other cases. See Philips v. Pitt Cnty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009) (explaining courts “may properly take judicial notice of matters of public record”); Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989) (“We note that ‘the most frequent use of judicial notice is in noticing the content of court records.'”).
Upon review and in accordance with applicable law, the undersigned concludes that the Amended Complaint should be summarily dismissed without issuance and service of process because the Court lacks jurisdiction over this action.
BACKGROUND
Procedural History
Plaintiff commenced this action by filing a Complaint on the standard court form. [Doc. 1.] By Order dated October 18, 2023, the undersigned notified Plaintiff that the Complaint was subject to summary dismissal for lack of jurisdiction. [Doc. 18.] The undersigned noted, however, that Plaintiff might be able to cure the deficiencies of his Complaint and granted Plaintiff twenty-one days to file an amended complaint. [ Id. at 7-8.] Further, Plaintiff was specifically warned as follows:
If Plaintiff fails to file an amended complaint that corrects those deficiencies identified [in the Court's Order], this action will be recommended for summary dismissal without further leave to amend.[Id. at 8 (emphasis omitted).] On November 7, 2023, Plaintiff filed an Amended Complaint. [Doc. 20.]
An amended complaint replaces all prior complaints and should be complete in itself. See Young v. City of Mount Ranier, 238 F.3d 567, 572 (4th Cir. 2001) (“As a general rule, an amended pleading ordinarily supersedes the original and renders it of no legal effect.”) (citation and internal quotation marks omitted); see also 6 Charles Alan Wright et al., Federal Practice and Procedure § 1476 (3d ed. 2017) (“A pleading that has been amended under Rule 15(a) supersedes the pleading it modifies and remains in effect throughout the action unless it subsequently is modified. Once an amended pleading is interposed, the original pleading no longer performs any function in the case ....”).
Factual Allegations
Plaintiff makes the following allegations in his Amended Complaint. As to the basis for jurisdiction, Plaintiff asserts that the Court has federal question jurisdiction and he lists the following as the specific federal statutes at issue in this case: 28 U.S.C. § 1332(9)(C) and 12 U.S.C. § 412. [Id. at 3.] As to the statement of the claim, Plaintiff alleges as follows:
Although Plaintiff cites to “28 USC 1332(9)(C),” that statute subsection does not exist. The undersigned believes that Plaintiff instead intended to cite to 28 U.S.C. § 1332(d)(9)(C), given his references to a “security collateral” and Defendant's purported “non-performance of fiduciary duties.” [Docs. 20 at 4; 20-1 at 2.] Accordingly, this Report and Recommendation analyzes jurisdiction under § 1332(d)(9)(C).
Breach of contract: I provided the company with two security collateral for two accounts. I mailed [Defendant's CFO] three
certified letters including my [notarized] power of attorney indicating that I am accepting all titles, rights, interest and equity of the accounts with instructions to apply the principal's balance to the principle's account for both accounts to the [Defendant's] address, three endorsed balance setoff bills of exchanges for each account along with a federal reserve act 16 and 29 as a reminder of the notes regulations and the penalties of non performance of fiduciary duties on the dates (see exhibit A and Statement of claim) for details. The company is not allowing me to access/utilize my security.[Id. at 4.] For his relief, Plaintiff requests the following:
1. [A]pply principle's balance to principle's account every billing cycle
2. [R]eturn all [payments] made from the start of all accounts, see exhibit B for detailed breakdown Total: $27,953.72 (CURRENT STATEMENTS COLLECTED)[Id.] Plaintiff makes no other allegations on the standard form of the Amended Complaint.
However, Plaintiff has attached various exhibits to the Amended Complaint including a “Statement of Claim” exhibit, a “Relief” exhibit, and various credit card billing statements. [Docs. 20-1-20-3.] The Court considers these attachments as part of the Amended Complaint. Significantly, Plaintiff specifically incorporates these attachments by reference in the body of his Amended Complaint. [See, e.g., Doc. 20 at 4 (stating in Section III, “see exhibit A and Statement of claim[] for details,” and in Section IV, “see exhibit B for detailed breakdown”)]; see also Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016) (noting a court, when evaluating the sufficiency of a complaint, “consider[s] documents that are explicitly incorporated into the complaint by reference and those attached to the complaint as exhibits” (citations omitted)). In the exhibit containing the Statement of Claim, Plaintiff makes the following assertion:
Morton, Carlo (Agent) for CARLO L MORTON (principal) gave the chief financial officer specific instructions over the course of 2-3 months to offset the principal's account with the bill of exchange that was delivered. After multiple accounts, the chief financial officer failed to perform his/her fiduciary duties by not allowing Morton, Carlo (Agent) to utilize the principal's securities which Morton, Carlo (Agent) is entitled to per the Power of Attorney (Exhibit A).[Doc. 20-1 at 2.]
APPLICABLE LAW
Under established local procedure in this judicial district, a careful review has been made of the pro se Complaint. The Court is required to liberally construe the pro se pleadings, and Plaintiff's allegations are assumed to be true. Erickson v. Pardus, 551 U.S. 89, 93 (2007); Estelle v. Gamble, 429 U.S. 97, 106 (1976); Loe v. Armistead, 582 F.2d 1291, 1295 (4th Cir. 1978); Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir. 1978). Pro se pleadings are held to a less stringent standard than those drafted by attorneys. Haines v. Kerner, 404 U.S. 519, 520 (1972). Even under this less stringent standard, however, the pleadings are still subject to summary dismissal. Id. at 520-21.
Because Plaintiff has paid the full filing fee [Doc. 14], a review of this action is not made under 28 U.S.C. § 1915, the in forma pauperis statute.
This Court possesses the inherent authority to review a pro se complaint to ensure that subject matter jurisdiction exists and that a case is not frivolous. See Mallard v. U.S. Dist. Court, 490 U.S. 296, 307-08 (1989) (“Section 1915(d) . . . authorizes courts to dismiss a ‘frivolous or malicious' action, but there is little doubt they would have power to do so even in the absence of this statutory provision.”); Ross v. Baron, 493 Fed.Appx. 405, 406 (4th Cir. 2012) (“[F]rivolous complaints are subject to dismissal pursuant to the inherent authority of the court, even when the filing fee has been paid . . . [and] because a court lacks subject matter jurisdiction over an obviously frivolous complaint, dismissal prior to service of process is permitted.” (citations omitted)). Accordingly, “[t]he present Complaint is subject to review pursuant to the inherent authority of this Court to ensure that subject matter jurisdiction exists and that the case is not frivolous.” Trawick v. Med. Univ. of S.C., No. 2:16-cv-730-DCN-MGB, 2016 WL 8650132, at *4 (D.S.C. June 28, 2016) (citation omitted).
DISCUSSION
Plaintiff brings this action pursuant to the Court's federal question jurisdiction and he purports to assert a claim for breach of contract. However, the undersigned concludes that Plaintiff has failed to allege facts showing that this Court has subject matter jurisdiction over this action.
Jurisdiction Generally
Federal courts are courts of limited jurisdiction, “constrained to exercise only the authority conferred by Article III of the Constitution and affirmatively granted by federal statute.” In re Bulldog Trucking, Inc., 147 F.3d 347, 352 (4th Cir. 1998). Accordingly, a federal court is required, sua sponte, to determine if a valid basis for its jurisdiction exists, “and to dismiss the action if no such ground appears.” Id.; see also Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”). Although the absence of subject matter jurisdiction may be raised at any time during the case, determining jurisdiction at the outset of the litigation is the most efficient procedure. Lovern v. Edwards, 190 F.3d 648, 654 (4th Cir. 1999). There is no presumption that a federal court has jurisdiction over a case, Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999), and a litigant must allege facts essential to show jurisdiction in his pleadings, McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); see also Dracos v. Hellenic Lines, Ltd., 762 F.2d 348, 350 (4th Cir. 1985) (“[P]laintiffs must affirmatively plead the jurisdiction of the federal court.”). As such, Federal Rule of Civil Procedure 8(a)(1) requires that the complaint provide “a short and plain statement of the grounds for the court's jurisdiction[.]”
Generally, federal district courts have original jurisdiction over two types of cases, referred to as (1) federal question cases, pursuant to 28 U.S.C. § 1331, and (2) diversity cases, pursuant to 28 U.S.C. § 1332. Here, for the reasons below, Plaintiff's claims do not fall within the scope of either form of this Court's limited jurisdiction.
Notably, Plaintiff has not answered the questions on the standard form regarding diversity jurisdiction. As such, it appears that Plaintiff solely invokes this Court's federal question jurisdiction and does not intend to proceed on the basis of diversity jurisdiction. [Doc. 20 at 3.] Nonetheless, out of an abundance of caution, the Court will address both federal question jurisdiction and diversity jurisdiction.
Federal Question Jurisdiction
First, federal question jurisdiction arises from 28 U.S.C. § 1331, which provides that the “district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” “To determine whether a plaintiff's claims ‘arise under' the laws of the United States, courts typically use the ‘well-pleaded complaint rule,' which focuses on the allegations of the complaint.” Prince v. Sears Holdings Corp., 848 F.3d 173, 177 (4th Cir. 2017) (quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004)). “In other words, federal question jurisdiction exists ‘only when a federal question is presented on the face of the plaintiff's properly-pleaded complaint.'” Burbage v. Richburg, 417 F.Supp.2d 746, 749 (D.S.C. 2006) (quoting Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987); King v. Marriott Int'l, Inc., 337 F.3d 421, 426 (4th Cir. 2003)).
Here, Plaintiff appears to allege that federal question jurisdiction exists over this action on the basis of two federal statutes: 28 U.S.C. § 1332(d)(9)(C) and 12 U.S.C. § 412. [Doc. 20 at 3.] However, neither statute provides a basis for this Court to exercise federal question jurisdiction over the claims asserted in this case. The Court addresses each statute in turn.
28 U.S.C. § 1332(d)(9)(C)To the extent Plaintiff intended to cite to 28 U.S.C. § 1332(d)(9)(C), that statute provides as follows:
(9) Paragraph (2) shall not apply to any class action that solely involves a claim-
...
(C) that relates to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to any security (as defined under section 2(a)(1) of the Securities Act of 1933 (15 U.S.C. 77b(a)(1)) and the regulations issued thereunder).
Section 1332(d) codifies the jurisdictional provisions of the Class Action Fairness Act (“CAFA”), which expanded federal court subject matter jurisdiction to certain large class action lawsuits. See Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014) (noting “Congress enacted [CAFA] to facilitate adjudication of certain class actions in federal court”). Specifically, CAFA confers original jurisdiction to federal district courts over class actions “that satisfy three requirements: (1) the putative class has more than 100 members (numerosity); (2) the amount in controversy exceeds five million dollars, exclusive of interest and costs (amount in controversy); and (3) the parties are minimally diverse in citizenship (minimal diversity).” Dominion Energy, Inc. v. City of Warren Police & Fire Ret. Sys., 928 F.3d 325, 330 (4th Cir. 2019). The subsection apparently cited by Plaintiff-§ 1332(d)(9)(C)-provides an exception to CAFA's broad grant of federal subject matter jurisdiction over such class actions (the “Securities-Related Exception”). Id. at 330-31, n.3. Thus, although the overarching goal of CAFA was to expand federal court jurisdiction over most class actions, the Securities-Related Exception excludes from CAFA's grant of original jurisdiction any class actions that solely involve a claim that relates to the rights, duties (including fiduciary duties), and obligations relating to or created by or pursuant to any security. Id. at 338.
Here, other than apparently citing to the statute codifying CAFA's Securities-Related Exception, Plaintiff offers no explanation as to how CAFA provides a basis for this Court's jurisdiction. Indeed, CAFA does not apply and cannot provide a basis for jurisdiction as this case does not involve a class action claim. Further the Securities-Related Exception of CAFA is an exception limiting federal court subject matter jurisdiction and not a basis for jurisdiction. Thus, even if Plaintiff could show that his claim “relates to the rights, duties . . ., and obligations relating to or created by or pursuant to any security,” 28 U.S.C. § 1332(d)(9)(C), such a showing would actually bar this Court from exercising jurisdiction in this case.
This Court's Order dated October 18, 2023, provided a detailed discussion about the requirements for jurisdiction under both federal question and diversity. [Doc. 18 at 3-7.] Nevertheless, Plaintiff's conclusory and confusing reference to the Securities- Related Exception of CAFA fails to establish a federal question and does not provide a basis for subject matter jurisdiction. Indeed, the Securities-Related Exception of CAFA simply has no application to the claims asserted in the present case.
12 U.S.C. § 412The second statute cited by Plaintiff-12 U.S.C. § 412-is part of the Federal Reserve Act and establishes the process for federal reserve banks to apply for federal reserve notes. As the undersigned previously noted in its October 18 Order, Section 16 of the Federal Reserve Act is codified, in part, at 12 U.S.C. § 412. [Doc. 18 at 6.] However, Section 16 of the Federal Reserve Act does not provide a basis for federal question jurisdiction.
Plaintiff's original Complaint also invoked federal question jurisdiction on the basis of the Federal Reserve Act. [Doc. 1 at 3.] However, other than citing to the Federal Reserve Act, the original Complaint was devoid of any allegations or explanation as to how that statute provided Plaintiff with a basis for relief. In the Court's October 18 Order regarding amendment, the undersigned notified Plaintiff that the Federal Reserve Act-specifically Sections 16 and 29-did not provide him, as an individual, with a private cause of action upon which federal question jurisdiction could be based. [Doc. 18 at 5-6.] Nevertheless, in the Statement of Claim section of the Amended Complaint, Plaintiff again refers to Sections 16 and 29 of the Federal Reserve Act. [Doc. 20 at 4.] Because Plaintiff again invokes the Federal Reserve Act as a basis for his claims, the undersigned again addresses whether that statute provides a valid basis for Plaintiff's claims.
It is well settled that Sections 16 and 29 of the Federal Reserve Act do not create a private cause of action and, consequently, do not provide a basis to invoke this Court's federal question jurisdiction. See White v. Lake Union Ga Partners LLC, No. 1:23-cv-02852-VMC, 2023 WL 6036842, at *2 (N.D.Ga. July 14, 2023) (“Multiple courts across the country have held that [Sections 16 and 29 of the Federal Reserve Act do] not provide plaintiffs with a private right of action and therefore do[] not establish federal question jurisdiction.” (collecting cases)). “Section 16 of the Federal Reserve Act, 12 U.S.C. §§ 411-21, . . . governs the issuance and redemption of Federal Reserve notes [and] Section 29 of the Federal Reserve Act, 12 U.S.C. § 504, . . . imposes penalties on banks for an array of misconduct.” Murphy v. Cap. One, No. 4:23-cv-1120-HEA, 2023 WL 5929340, at *3 (E.D. Mo. Sept. 12, 2023). However, “the imposition of civil penalties under Section 29 is carried out by federal officials, and private individuals do not have a private right of action to enforce Section 29 of the Federal Reserve Act.” Id. As such, because the Federal Reserve Act does not provide a private right of action and thus cannot confer federal question jurisdiction, see id., see also White, 2023 WL 6036842, at *2, and because Plaintiff has failed to identify any other federal statute upon which his claims are based, the Amended Complaint fails to allege facts showing that this Court has federal question jurisdiction over this case.
Diversity Jurisdiction
Likewise, Plaintiff fails to plead facts showing the diversity statute's requirements are satisfied. Indeed, as noted, Plaintiff expressly invokes the Court's federal question jurisdiction and failed to answer the questions on the standard form regarding diversity jurisdiction. [Doc. 20 at 3.] Although it appears that Plaintiff does not intend to invoke diversity jurisdiction, the Court again briefly addresses the requirements to establish diversity jurisdiction.
Even after this Court entered its October 18 Order, which pointed out that Plaintiff left the questions blank on the original Complaint form regarding diversity jurisdiction [Doc. 18 at 7, n.3] and pointed out what requirements were necessary to establish diversity jurisdiction [id. at 6], Plaintiff again left the questions blank on the Amended Complaint form [Doc. 20 at 3-4] and thus does not appear to be invoking diversity jurisdiction.
The diversity statute requires complete diversity between the parties and an amount in controversy in excess of $75,000.00. See 28 U.S.C. § 1332(a) ; Anderson v. Caldwell, No. 3:10-cv-1906-CMC-JRM, 2010 WL 3724752, at *4 (D.S.C. Aug. 18, 2010), Report and Recommendation adopted by 2010 WL 3724671 (D.S.C. Sept. 15, 2010). Complete diversity of the parties means that no party on one side may be a citizen of the same state as any party on the other side. See Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 372-74 (1978). As noted, here, Plaintiff provides no allegations as to the requirements of the diversity statute. Accordingly, the Court finds that the pleadings filed in this action fail to satisfy the diversity requirement of 28 U.S.C. § 1332(a).
Importantly, Plaintiff has not alleged facts showing the amount in controversy is met in this case. [Doc. 20 at 4 (question on the Amended Complaint form regarding the amount in controversy is blank).] Additionally, although Plaintiff has provided his address [id. at 1], he has failed to indicate where Defendant is incorporated or has its principal place of business and thus has not shown complete diversity of the parties [id. at 3-4 (questions on the Amended Complaint form regarding the citizenship of the parties are blank).]
Thus, Plaintiff has failed to allege facts to establish that this Court has subject matter jurisdiction over his claims under either federal question or diversity grounds.
RECOMMENDATION
Accordingly, for the reasons stated, it is recommended that the District Court DISMISS this action for lack of subject matter jurisdiction.
As Plaintiff has been afforded an opportunity to file an Amended Complaint, but failed to correct his pleading deficiencies, the undersigned recommends that this action be dismissed without further leave to amend. Additionally, it appears to the undersigned that any attempt to cure the deficiencies in an another amended complaint would be futile for the reasons stated herein. Plaintiff has had multiple opportunities to correct his pleading deficiencies. In light of the allegations in the original Complaint and now in the Amended Complaint, the undersigned finds that Plaintiff cannot establish jurisdiction in this Court over his claims. Accordingly, the District Court should dismiss this action without affording Plaintiff any further opportunity to amend. See Workman v. Kernell, No. 6:18-cv-00355-RBH-KFM, 2018 WL 4826535, at *2 n.7 (D.S.C. Oct. 2, 2018) (declining to grant an opportunity to amend where amendment would be futile); Young v. Santos, No. GLR-16-cv-1321, 2018 WL 1583557, at *6 (D. Md. Apr. 2, 2018) (same).
IT IS SO RECOMMENDED.
Plaintiff's attention is directed to the important notice on the next page.
Notice of Right to File Objections to Report and Recommendation
The parties are advised that they may file specific written objections to this Report and Recommendation with the District Judge. Objections must specifically identify the portions of the Report and Recommendation to which objections are made and the basis for such objections. “[I]n the absence of a timely filed objection, a district court need not conduct a de novo review, but instead must ‘only satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.'” Diamond v. Colonial Life & Acc. Ins. Co., 416 F.3d 310 (4th Cir. 2005) (quoting Fed.R.Civ.P. 72 advisory committee's note).
Specific written objections must be filed within fourteen (14) days of the date of service of this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Fed.R.Civ.P. 6(a), (d). Filing by mail pursuant to Federal Rule of Civil Procedure 5 may be accomplished by mailing objections to:
Robin L. Blume, Clerk
United States District Court
250 East North Street, Suite 2300 Greenville, South Carolina 29601
Failure to timely file specific written objections to this Report and Recommendation will result in waiver of the right to appeal from a judgment of the District Court based upon such Recommendation. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Wright v. Collins, 766 F.2d 841 (4th Cir. 1985); United States v. Schronce, 727 F.2d 91 (4th Cir. 1984).