Opinion
5:24-cv-00226-FL
05-24-2024
Khalid Khan, Plaintiff, v. PNC Bank, Defendant.
ORDER & MEMORANDUM & RECOMMENDATION
ROBERT T. NUMBERS, II UNITED STATES MAGISTRATE JUDGE
Pro se Plaintiff Khalid Khan alleges that PNC Bank negligently allowed him to transfer large sums of money to a fraudulent business that was scamming him. He seeks $40,500 in damages as a result. He also asks the court for permission to proceed without paying the standard filing fees. Although the court will not require Khan to pay the filing fee because he lacks the requisite resources, the district court should dismiss his federal cause of action because it fails to state a claim and decline to exercise supplemental jurisdiction over his remaining state-law-based claims.
I. Background
Khan initiated three wire transfers from PNC Bank to a cryptocurrency-related company. Compl. at 2. He alleges that the company then stole his money. Id. He claims PNC Bank violated the Bank Protection Act of 1968 by sending the wires and not adopting the required security procedures. Id. citing 12 U.S.C. § 1882. He also contends that PNC Bank should not have transferred the money if they had proper security features and training to detect fraud. Id.
Khan sent letters requesting that PNC Bank return the $35,500 he transferred as part of the scam. Id. PNC Bank denied these requests in January 2023 and March 2024. Id. Khan then hired a company to try to recover his money. Id. The company has not been able to, and so he claims the bank also owes him the $5,000 he paid the company. Id.
II. IFP Motion
Khan asks the court to allow him to proceed with this action without paying the required filing fee and other costs associated with litigation (colloquially known as proceeding in forma pauperis or IFP). The court may grant his request if he submits an affidavit describing his assets and the court finds that he is unable to pay the filing fee. 28 U.S.C. § 1915. In assessing a request to proceed IFP, the court should consider whether the plaintiff can pay the costs associated with litigation “and still be able to provide himself and his dependents with the necessities of life.” Adkins v. E.I. DuPont de Nemours & Co., 335 U.S. 331, 339 (1948) (internal quotations omitted).
The court has reviewed Khan's application and finds that he lacks the resources to pay the costs associated with this litigation. The court thus grants Khan's motion (D.E. 2) and allows him to proceed IFP.
III. Screening Under 28 U.S.C. § 1915
In addition to determining whether Khan is entitled to IFP status, the court must also analyze the viability of the claims contained in the Complaint. 28 U.S.C. § 1915(e). The court reviews a complaint to eliminate those claims that unnecessarily impede judicial efficiency and the administration of justice. Specifically, the court must dismiss any portion of the complaint it determines is frivolous, malicious, fails to state a claim upon which relief may be granted, or seeks monetary relief from a defendant who is immune from such relief. Id. § 1915(e)(2)(B).
A complaint fails to state a claim upon which relief may be granted if it does not “contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Supreme Court has explained that “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Khan's pro se status relaxes, but does not eliminate, the requirement that his complaint contain facially plausible claims. The court must liberally construe a pro se plaintiff's allegations, but it “cannot ignore a clear failure to allege facts” that set forth a cognizable claim. Johnson v. BAC Home Loans Servicing, LP, 867 F.Supp.2d 766, 776 (E.D. N.C. 2011).
Khan alleges that PNC Bank violated the Bank Protection Act of 1968 by allowing him to wire money to a cryptocurrency scam without proper security. Khan also alleges that PNC Bank was negligent and breached a contract with him by failing to follow security measures when they wired Khan's funds which would have alerted them to the potential scam.
Yet the Bank Protection Act of 1968 is inapplicable here. The Bank Protection Act of 1968 requires banks to maintain minimum safety procedures to “discourage robberies, burglaries, and larcenies” and to assist in identifying individuals who commit these acts. 12 U.S.C. § 1882(a). Khan was not the victim of a burglary and PNC Bank did not wire his money without his permission. Instead, Khan chose to wire his funds to this company and directed the bank to do so.
And even if it did apply, Kahn's claim would still be subject to dismissal because the Bank Protection Act does not create a private right of action. Sadler v. Citibank, N.A., 947 F.2d 642, 43-44 (2d Cir. 1991). It “is not intended to protect individual depositors. Rather, it is designed to prevent theft that would deplete federal insurance funds and to aid law enforcement officials in apprehending perpetrators.” Id. at 644.
Finally, Kahn makes two additional claims. First, he alleges the bank was negligent in its security measures. And second, he claims the bank breached its contract with him. He claims it failed to fulfill duties Khan alleges are outlined in an agreement with him. This court recommends these claims be dismissed as the district court lacks diversity jurisdiction and should decline to exercise supplemental jurisdiction.
Unlike their state counterparts, federal courts have jurisdiction only over a limited set of cases and controversies. They are “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).
In most civil cases, a court obtains subject matter jurisdiction in one of two ways. First, under “federal question jurisdiction,” a federal court will have jurisdiction to resolve a claim if it arises “under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.
Second, a federal court may have authority to hear a case through what is known as diversity jurisdiction. This type of jurisdiction exists if the amount at issue exceeds $75,000 and the parties to the case are citizens of different states. 28 U.S.C. § 1332. There must also be complete diversity between the parties, meaning that the plaintiff must be a citizen of a different state than each of the defendants. Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806).
Khan also brought state law claims of negligence and breach of contract. Federal courts have limited jurisdiction to hear state law claims. But so long as a district court has original jurisdiction over a dispute, it may exercise supplemental jurisdiction over any state law tort claims that are “part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a). A district court, however, may decline to exercise supplemental jurisdiction over a case once it has dispensed with all the claims over which it had original jurisdiction. Id. § 1367(c)(3); Shanaghan v. Cahill, 58 F.3d 106, 110 (4th Cir. 1995).
The undersigned recommends the district court decline to exercise supplemental jurisdiction over these claims. Kahn has not stated a claim for relief under federal law, so he cannot rely on federal question jurisdiction to pursue his claims. And he is seeking only $40,500 in damages, so he cannot invoke the court's diversity jurisdiction to pursue his claims. See 28 U.S.C. 1332(a) (authorizing diversity jurisdiction if “the matter in controversy exceeds the sum or value of $75,000”). After considering the interests of judicial economy, fairness, federalism, and comity, the undersigned recommends that the district court should decline to exercise supplemental jurisdiction over Khan's negligence and breach of contract claims. Thus, these claims should be dismissed.
IV. Conclusion
For the reasons stated above, the court grants Khan's motion to proceed IFP. But the court should dismiss his proposed complaint without prejudice.
The Clerk of Court must serve a copy of this Memorandum and Recommendation (“M&R”) on each party who has appeared in this action. Any party may file a written objection to the M&R within 14 days from the date the Clerk serves it on them. The objection must specifically note the portion of the M&R that the party objects to and the reasons for their objection. Any other party may respond to the objection within 14 days from the date the objecting party serves it on them. The district judge will review the objection and make their own determination about the matter that is the subject of the objection. If a party does not file a timely written objection, the party will have forfeited their ability to have the M&R (or a later decision based on the M&R) reviewed by the Court of Appeals.