Opinion
1:24-CV-00262-DII-DH
06-14-2024
STEPHEN J. GUTIERREZ Plaintiff v. EXETER FINANCE, LLC Defendant
ORDER AND REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
DUSTIN M. HOWELL, UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE
Before the Court is Plaintiff Stephen J. Gutierrez's Application to Proceed In Forma Pauperis. Dkt. 2. The undersigned submits this report and recommendation to the United States District Court pursuant to 28 U.S.C. § 636(b) and Rule 1 of Appendix C of the Local Court Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges.
I. APPLICATION TO PROCEED IN FORMA PAUPERIS
The Court has reviewed Gutierrez's financial affidavit and determined Gutierrez is indigent and should be granted leave to proceed in forma pauperis. Accordingly, the Court hereby GRANTS Gutierrez's request for in forma pauperis status, Dkt. 2. The Clerk of the Court shall file the complaint without payment of fees or costs or giving security therefor pursuant to 28 U.S.C. § 1915(a). This indigent status is granted subject to a later determination that the action should be dismissed if the allegation of poverty is untrue or the action is found frivolous or malicious pursuant to 28 U.S.C. § 1915(e). Gutierrez is further advised that, although he has been granted leave to proceed in forma pauperis, a court may, in its discretion, impose costs of court at the conclusion of this lawsuit, as in other cases. Moore v. McDonald, 30 F.3d 616, 621 (5th Cir. 1994).
As stated below, the undersigned has made a § 1915(e) review of the claims made in this complaint and is recommending Gutierrez's claims be DISMISSED WITHOUT PREJUDICE under 28 U.S.C. § 1915(e)(2). Therefore, service upon Defendant should be withheld pending the District Judge's review of the recommendations made in this report. If the District Judge declines to adopt the recommendations, then service should be issued at that time upon Defendant.
II. REVIEW OF THE MERITS OF THE CLAIM
Because Gutierrez has been granted leave to proceed in forma pauperis, the undersigned is required by statute to review the Complaint. Section 1915(e)(2) provides in relevant part that “the court shall dismiss the case at any time if the court determines that ... the action or appeal (i) is frivolous or malicious; (ii) fails to state a claim on which relief may be granted; or (iii) seeks monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2). A complaint is frivolous if it “lacks an arguable basis either in law or in fact.” Neitzke v. Williams, 490 U.S. 319, 325 (1989); Siglar v. Hightower, 112 F.3d 191, 193 (5th Cir. 1997). A claim lacks an arguable basis in law when it is “based on an indisputably meritless legal theory.” Neitzke, 490 U.S. at 327.
Pro se complaints are liberally construed in favor of the plaintiff. Haines v. Kerner, 404 U.S. 519, 520-21 (1972). However, pro se status does not offer a plaintiff an “impenetrable shield, for one acting pro se has no license to harass others, clog the judicial machinery with meritless litigation, and abuse already overloaded court dockets.” Farguson v. MBank Houston N.A., 808 F.2d 358, 359 (5th Cir. 1986).
Gutierrez sues Exeter Finance, LLC, with whom he took out car loan. Dkt. 2, at 8. Pursuant to the loan agreement, Exeter sent Gutierrez a statement notifying him that he had a past-due balance of $520.66 and requesting that he pay $1,611.73 on his account. Id. Gutierrez apparently understood the statement as an offer to apply a non-existent positive balance to his credit account. Id. at 6. He wrote “Accepted” and “Pay to Bearer for Deposit” on the perforated part of the statement and returned it to Exeter. Id. Gutierrez then sent multiple emails demanding that Exeter “apply [his] positive balance to [his] account.” Id. at 4. Exeter did not respond. Gutierrez claims that his correspondence with Exeter constitutes a unilateral contract which is now the basis of this suit. Dkt. 1, at 3.
Gutierrez claims Exeter had a duty under the alleged unilateral contract to apply what he understood as a positive balance to his credit account. Id. He contends that, because Exeter did not apply the alleged positive balance to his account, Exeter “fail[ed] to perform fudiciary [sic] duties” and breached the unilateral contract Dkt. 1, at 3. Gutierrez requests specific performance and asks the Court to void his debt. Id. In the alternative, Gutierrez seeks “$7,000,000 in civil money penalties as per [the] federal reserve act [§] 29 [sic].” Id.
As a preliminary matter, to the extent that Gutierrez's claims are asserted pursuant to the Federal Reserve Act § 29, they should be dismissed as frivolous. Section 29 of the Act, as codified in 12 U.S.C. § 504, imposes civil money penalties on banks or other institutions who violate provisions of the Act. 12 U.S.C. § 504. Additionally, it designates who “shall assess[ ] and collect[ ]” the penalty, namely: (1) in the case of a national bank, by the Comptroller of the Currency; and (2) in the case of a State member bank, by the Board. As relevant here, “[w]hen a private citizen relies on a federal statute as a basis for federal question jurisdiction, that statute must provide a private cause of action, or else a federal court will not have subject matter jurisdiction to hear the dispute.” Lowe v. Viewpoint Bank, 972 F.Supp.2d 947, 954 (N.D. Tex. 2013) (citing Merrell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 817 (1986)). In this case, § 29 of the Federal Reserve Act does not create a private right of action and thus does not provide a basis for this Court's exercise of federal question jurisdiction. Many courts have held that several sections of the Federal Reserve Act, including § 29, do not create private rights of action. See White v. Lake Union Ga. Partners LLC, Nos. 1:23-cv-02852-VMC, 1:23-cv-02960-VMC, 1:23-cv-02961-VMC, 1:23-cv-4-02962-VMC, 2023 WL 6036842, at *2 (N.D.Ga. July 14, 2023) (collecting cases discussing individuals' inability to sue under § 29); Scriven v. Barnum, No. 24-CV-1805(EK)(MJ), 2024 WL 1769318, at *1 (E.D.N.Y. Apr. 24, 2024) (“there is no private right of action under the Federal Reserve Act”); Lillacalenia v. Kit Fed. Credit Union, No. 3:14-CV-151-H, 2014 WL 3940289, at *2 (W.D. Ky. Aug. 12, 2014) (sua sponte dismissal of pro se complaint that referred to the Federal Reserve Act). Because the Federal Reserve Act does not confer on private citizens the right to sue for violations of the Act, Gutierrez's claim for damages pursuant to the Act should be dismissed for lack of subject-matter jurisdiction.
To the extent Gutierrez's asserts common-law breach-of-contract and breach-of-fiduciary-duty claims, he has not pleaded diversity jurisdiction or any facts from which the Court can infer diversity jurisdiction. To invoke the Court's diversity jurisdiction, Gutierrez would have the burden to “distinctly and affirmatively allege” the citizenship of himself and Exeter and establish that the amount in controversy exceeds the $75,000 jurisdictional threshold. Mullins v. TestAmerica, Inc., 564 F.3d 386, 397 (5th Cir. 2009); 28 U.S.C. §1332 (a), (b). While he claims damages in the amount of $7,000,000, he has not alleged Exter's citizenship nor pleaded that the parties are diverse. Dkt. 1, at 3. Accordingly, Gutierrez's common-law breach-of-contract and breach-of-fiduciary-duty claims should be dismissed. Stafford v. Mobil Oil Corp., 945 F.2d 803, 805 (5th Cir. 1991) (‘The failure to adequately allege the basis for diversity jurisdiction mandates dismissal.”).
Because the Federal Reserve Act does not create a private cause of action through which Guitierrez can bring his claims, and because Guitierrez has failed to assert or plead the elements of diversity jurisdiction, the Court lacks subject-matter jurisdiction over his claims. Guitierrez's complaint should, therefore, be dismissed.
III. ORDER AND RECOMMENDATION
In accordance with the foregoing discussion, the undersigned hereby GRANTS Gutierrez's Application to Proceed In Forma Pauperis. Dkt. 2. The undersigned RECOMMENDS that the District Court DISMISS WITHOUT PREJUDICE Gutierrez's lawsuit as frivolous under 28 U.S.C. § 1915(e)(2).
The referral of this case to the Magistrate Judge should now be canceled.
IV. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).