Opinion
SA-23-CV-1298-OLG (HJB)
01-17-2024
JAURICE ANTWAIN PAYNE, Plaintiff, v. SAN ANTONIO WATER SYSTEM, Defendant.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Henry J. Bemporad United States Magistrate Judge
To the Honorable United States District Judge Orlando L. Garcia:
Before the Court is Plaintiff's Amended Complaint. (Docket Entry 4.) This case has been automatically referred to the undersigned for review of Plaintiff's application to proceed in forma pauperis (“IFP”) under 28 U.S.C. § 1915(e), pursuant to this Division's October 8, 2019, Standing Order. (See Text Entry dated Oct. 12, 2023.) For the reasons that follow, I recommend that this case be DISMISSED.
I. Background.
In his original complaint, Plaintiff Jaurice Antwain Payne alleged that the Defendant San Antonio Water System (“SAWS”) is a bank, and that it committed a breach of contract, thereby violating the Securities Act of 1933, 15 U.S.C. § 78q-1, and the Federal Reserve Act (“FRA”), 12 U.S.C. § 504. (Docket Entry 1-1, at 1-4.)
This case is one of a number of complaints that Payne filed against various utility providers, each time insisting that they are banks. See SA-23-CV-1313-XR (Spectrum); SA-23-CV-1254-FB (RBF) (CPS Energy).
Reviewing the case under 28 U.S.C. § 1915(e), the Court ordered Payne to show cause why his claims should not be dismissed. (Docket Entry 3.) The Court identified four deficiencies in Payne's original complaint. First, the Court found that Payne failed to articulate how SAWS allegedly violated the Securities Act-or how the statute is even applicable to a municipal utility provider. (Id. at 2.) Second, the Court explained that the FRA only applies to banks-which SAWS is not-and that, in any event, “private individuals do not have a private right of action to enforce” it. (Id. (quoting Harp v. Police & Fire Fed. Credit Union, No. 23-2577, 2023 WL 5152625, at *4 (E.D. Pa. Aug. 10, 2023)).) Third, the Court noted that Payne alleged no facts to support the elements of his breach of contract claim. (Id. at 3.) And finally, the Court found that he had failed to demonstrate that the Court has subject matter jurisdiction over this case. (Id. at 23.) The Court accordingly ordered Payne to amend his complaint, affording him a second chance to articulate the basis for the Court's subject matter jurisdiction and to state a plausible claim for relief. (Id. at 3.)
Payne has now filed his amended complaint. (Docket Entry 4.) Payne's amended complaint alleges that the Court “has Federal Question jurisdiction.” (Id. at 1.) Payne contends that SAWS committed a breach of contract, in violation the Bills of Exchange Act of 1882 (“BEA”) and §§ 16 and 29 of the FRA (codified at 12 U.S.C. §§ 411, 504). (Docket Entry 4, at 1, 6-8.) He asserts that SAWS is a “federal savings association” as defined by the Federal Home Loan Bank Act (citing 12 U.S.C. § 1431) and that it entered into a contract with Payne in the form of a “consumer credit transaction.” (Id. at 7.) The alleged breach appears to be that Payne sent SAWS “a bill of exchange with attached tender,” but SAWS “failed to apply the tendered amounts from the . . . principal balance to principal account for setoff.” (Id. at 5.) Payne avers that SAWS' alleged breach of contract caused him to suffer actual damages in the amount of $10 million. (Id. at 9.)
II. Legal Standards.
The Court is empowered to screen any civil complaint filed by a party proceeding IFP to determine whether the claims presented therein are frivolous or fail to state a claim for which relief may be granted. See 28 U.S.C. §§ 1915(e)(2)(B)(i)-(ii). The Court is “vested with especially broad discretion” in making this determination. Green v. McKaskle, 788 F.2d 1116, 1119 (5th Cir. 1986). A complaint is frivolous when it “lacks an arguable basis either in law or in fact.” Neitzke v. Williams, 490 U.S. 319, 325 (1989). Thus, a complaint is frivolous when “the facts alleged are ‘fantastic or delusional . . .' or the legal theory upon which . . . [it] relies is ‘indisputably meritless.'” Eason v. Thaler, 14 F.3d 8, 9 n.5 (5th Cir. 1994) (quoting Neitzke, 490 U.S. at 32728). But even when not entirely frivolous, to avoid dismissal a plaintiff's complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has facial plausibility when the factual allegations allow the court “to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While a complaint need not be painstakingly detailed, it must contain enough factual allegations to “raise a right to relief above a speculative level.” Twombly, 550 U.S. at 555. A plaintiff has an obligation to present more than labels, conclusions, and formulaic recitations of the elements to avoid dismissal. Id.
Because federal courts like this one have limited jurisdiction, a complaint also must contain “clear, distinct, and precise affirmative jurisdictional allegations” to avoid dismissal. See SXSW, L.L.C. v. Fed. Ins. Co., 83 F.4th 405, 407 (5th Cir. 2023). Indeed, the Court “must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum.” Chandler v. United States, 338 F.Supp.3d 592, 598 (N.D. Tex. 2018) (quoting Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001)). “If the [C]ourt determines at any time that it lacks subject-matter jurisdiction, the [C]ourt must dismiss the action.” FED. R. CIV. P. 12(h)(3).
III. Analysis.
Contrary to the assertion in Payne's amended complaint (Docket Entry 4, at 1), the Court lacks federal question jurisdiction over this case. Payne is unable to pursue civil remedies under either the BEA or the FRA. Payne references §§ 16 and 29 of the FRA (id. at 1, 6-8), but neither of these provisions afford a private right of action and, thus, they cannot serve as a basis for federal question jurisdiction. See Payne v. Spectrum, No. SA:23-CV-1313-XR, 2023 WL 8681199, at *2 (W.D. Tex. Dec. 15, 2023) (“[D]istrict courts across the country have repeatedly rejected attempts to invoke [§§ 16 and 29] . . . as a private cause of action.”) (citing White v. Lake Union Ga Partners LLC, No. 1:23-CV-02852-VMC, 2023 WL 6036842, at *2 (N.D.Ga. July 14, 2023) (collecting cases)); Harp, 2023 WL 5152625, at *4 (explaining that “private individuals do not have a private right of action to enforce” § 29 of the FRA). The BEA, meanwhile, is an English law with no bearing on this case. See Des Rochers v. Moynihan, No. A-16-CV-560-SS-ML, 2016 WL 11584833, at *2 (W.D. Tex. May 16, 2016) (finding that plaintiff's “attempt to enforce an English law in an American court [wa]s legally frivolous”).
Because the Court lacks federal question jurisdiction, it may only consider Payne's breach of contract claim-an alleged violation of Texas law-if he and SAWS are citizens of different states and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332. However, Payne has failed to clearly and affirmatively plead his own citizenship or that of SAWS. Although Payne represents that he is a resident of Texas and that SAWS is a resident of the United States, doing business in Texas (Docket Entry 4, at 2), an allegation of residency alone “does not satisfy the requirement of an allegation of citizenship.” MidCap Media Fin., L.L.C. v. Pathway Data, Inc., 929 F.3d 310, 313 (5th Cir. 2019) (citation omitted). Moreover, although Payne purports to seek $10 million in “actual damages,” he has not plausibly alleged that he suffered any damages-let alone $10 million dollars' worth. Ultimately, absent “clear, distinct, and precise affirmative jurisdictional allegations” to the contrary, the Court must presume that there is no diversity jurisdiction over this case. See SXSW, L.L.C., 83 F.4th at 407; Howery, 243 F.3d at 916; Chandler, 338 F.Supp.3d at 598.
Even assuming arguendo that the Court has jurisdiction, Payne's claims are either frivolous or, at best, implausible. Even if it afforded a private right of action, the FRA only applies to banks-not municipal utility providers likes SAWS. See 12 U.S.C. §§ 221, 504. Payne's BEA claim is also frivolous, as there is no colorable basis for supposing that English laws are applicable to Payne's grievance with SAWS. See id.
Payne also fails to state a plausible breach of contract claim. Payne asserts that he “entered into a consumer credit transaction” with SAWS, in which SAWS agreed “to provide utility goods and services” in exchange for Payne's “promise to pay the principal balance....” (Docket Entry 4, at 7.) Payne asserts that SAWS breached this alleged contract by failing “to transfer the principal balance to the principal account for continuous set-off each and every billing cycle....” (Id. at 6.) The meaning of these legal assertions is far from clear, but Payne ultimately has alleged no facts from which the Court could reasonably infer that SAWS breached the terms of any contractual agreement with Payne. See Iqbal, 556 U.S. at 678 (requiring dismissal where a complaint's factual content does not “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged”). All Payne offers in his amended complaint are “conclusory allegations, unwarranted factual inferences, or legal conclusions.” See Arnold v. Williams, 979, F.3d 262, 266 (5th Cir. 2020) (citation omitted). Such a complaint, “supported by mere conclusory statements, do[es] not suffice.” Firefighters' Ret. Sys. v. Grant Thornton, L.L.P., 894 F.3d 665, 669 (5th Cir. 2018) (quoting Iqbal, 556 U.S. at 678).
Finally, Payne should not be granted leave to file yet another amended complaint, as he has already presented his “best case.” Oyewole v. Depositors Ins. Co., No. 9:15-CV-143, 2016 WL 8736996, at *1 (E.D. Tex. Apr. 19, 2016), report and recommendation adopted, No. 9:15-CV-143, 2016 WL 8711493 (E.D. Tex. May 13, 2016). Payne was warned that his original complaint failed to establish subject matter jurisdiction, but he made no effort to remedy that deficiency in his amended complaint. He was also warned that he had no claims arising under the FRA and that his breach of contract claim was implausibly pleaded-yet he also failed to cure these deficiencies. (See Docket Entries 3, at 2-3; 4 at 4-9.) In short, Payne has already had an opportunity to plead his best case. See Wiggins v. La. State Univ.-Health Care Servs. Div., 710 Fed.Appx. 625, 627 (5th Cir. 2017) (“A plaintiff has pleaded her best case after she is apprised of the insufficiency of her complaint.”) (citation and internal quotation omitted). Dismissal is therefore appropriate.
IV. Conclusion and Recommendation.
Based on the foregoing, I recommend that Payne's claims be DISMISSED for lack of subject matter jurisdiction, or alternatively for failure to state a claim, and as frivolous. See FED. R. CIV. P. 12(h); 28 U.S.C. §§ 1915(e)(2)(B)(i)-(ii).
V. Instructions for Service and Notice of Right to Object.
The United States District Clerk shall serve a copy of this Report and Recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a “filing user” with the Clerk of Court, or (2) by mailing a copy to those not registered by certified mail, return receipt requested. Written objections to this Report and Recommendation must be filed within fourteen (14) days after being served with a copy of the same, unless this time period is modified by the District Court. 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(B).
The parties shall file any objections with the Clerk of the Court and serve the objections on all other parties. Absent leave of Court, objections are limited to twenty (20) pages in length. An objecting party must specifically identify those findings, conclusions, or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusory, or general objections. Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings, conclusions, and recommendations contained in this Report and Recommendation shall bar the party from a de novo review by the District Court. Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuna v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to file timely written objections to the proposed findings, conclusions, and recommendations contained in this Report and Recommendation shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to, proposed findings and conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).