Opinion
C. A. 8:21--cv-03544-BHH-KFM
01-26-2022
Leslie Jay Shayne, Plaintiff, v. Discover Bank, Defendant.
ORDER AND REPORT OF MAGISTRATE JUDGE
Kevin F. McDonald, United States Magistrate Judge.
This matter is before the court on two motions filed by Discover Bank (“Discover”) (docs. 6; 16) and five motions filed by the plaintiff (docs. 17; 26; 27; 32; 54). Pursuant to the provisions of 28 U.S.C. § 636(b) and Local Civil Rule 73.02(B)(2)(e) (D.S.C.), this magistrate judge is authorized to review all pretrial matters in this case and submit findings and recommendations to the district court.
LITIGATION HISTORY
This action is the latest brought by the plaintiff concerning the care of the plaintiff's deceased mother before she passed away and certain Discover accounts belonging to the plaintiff that have been frozen. The court takes judicial notice of the previous cases that have been filed (some of which are still pending) surrounding the care of the plaintiff's mother, as well as the same Discover accounts at issue in the present matter, including two state court probate actions, an interpleader pending in the United States District Court for the District of New Jersey, and three actions previously dismissed by this court. See Shayne v. Discover Bank, C/A No. 8:19-cv-00494-BHH (D.S.C.) (dismissed); Shayne v. Lampl, C/A No. 8:19-cv-00020-BHH (D.S.C.) (dismissed); Shayne v. Discover Bank, C/A No. 8:18-cv-03057-BHH (D.S.C.) (dismissed); Discover Bank v. Greenwood House Home for the Jewish Aged et al, C/A No. 3:18-cv-16020-FLW-TJB (D.N.J.) (“New Jersey Interpleader Action”); In re Charlotte Shayne, C/A Nos. 2017-GC-37-003, 2017-GC-37-004 (S.C. Prob. Ct., Oconee Cnty.); In re Charlotte Shayne, C/A No. MER-C-69-17 (N.J.Super. Ct., Mercer Cnty. Chancery Div. Prob. Part).
See United States v. Parker, 956 F.2d 169, 171 (8th Cir. 1992) (the district court had the right to take judicial notice of a prior related proceeding); Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989) (“We note that ‘[t]he most frequent use of judicial notice . . . is in noticing the content of court records.'”).
As noted by this court in a previous case, at some point, the plaintiff became dissatisfied with the care of his mother by Sondra Lampl and decided to seek guardianship over his mother (who was in New Jersey) and move her to South Carolina. See Shayne v. Discover Bank, C/A 8:18-cv-03057-BHH-KFM, 2019 WL 1866359, at *1 (D.S.C. Feb. 13, 2019), Report and Recommendation Adopted by 2019 WL 1862418 (D.S.C. Apr. 25, 2019). The plaintiff then filed a guardianship proceeding in the Oconee County Probate Court in South Carolina and obtained an order appointing him as guardian and conservator over his mother. Id. Despite the order, the plaintiff was unable to move his mother to South Carolina. Id. Ms. Lampl (who was acting as the guardian for the plaintiff's mother in New Jersey) then filed an action in the New Jersey Probate Court seeking to remain guardian for the plaintiff's mother. Id. At some point, pursuant to an order issued by the New Jersey Probate Court, Discover froze funds in the plaintiff's accounts with Discover. Id. The plaintiff filed actions in the Oconee County Probate Court seeking release of those funds, culminating in the plaintiff's first complaint against Discover on November 1, 2018. Id. That action was removed to this court by Discover. Id. During this same time, based upon the multiple proceedings concerning the frozen Discover accounts, Discover filed an interpleader action in the United States District Court for the District of New Jersey. Id.; see Discover Bank v. Greenwood House Home for the Jewish Aged et al, C/A No. 3:18-cv-16020-FLW-TJB. In the New Jersey Interpleader Action, on January 31, 2019, the Honorable Freda L. Wolfson, United States District Judge for the District of New Jersey, issued an order preventing the parties to the New Jersey Interpleader Action from instituting or prosecuting legal proceedings in state or federal courts relating to the Discover accounts in question in the New Jersey Interpleader Action. See Shayne, 2019 WL 1866539, at *1. Based upon the pending New Jersey Interpleader Action, this court dismissed Case Number 8:18-cv-03057-BHH. See Shayne, 2019 WL 1862418 (D.S.C. Apr. 25, 2019).
The plaintiff then filed an action against Ms. Lampl, seeking an order allowing him to pick up his mother in New Jersey. Shayne v. Lampl, C/A No. 8:19-cv-00020-BHH (D.S.C.). In that case, the court dismissed the plaintiff's complaint for lack of subject matter jurisdiction, because the plaintiff was seeking to overturn a state court order in a federal district court. Id. at docs. 8; 15. The plaintiff then filed another action in the Oconee County Court of Common Pleas against Discover, arguing that Discover illegally froze his accounts, and the action was removed to this court. Shayne v. Discover, C/A No. 8:19-cv-00494-BHH (D.S.C.). In that case, the plaintiff failed to respond to multiple court orders and the case was dismissed with prejudice pursuant to Rule 41 of the Federal Rules of Civil Procedure on May 9, 2019. Id. at docs. 15; 18. The New Jersey Interpleader action remains pending at this time, with the plaintiff prohibited from contacting Discover directly and both parties instructed that leave of court is required for any additional filings until a motion for recusal is ruled upon. See Discover Bank v. Greenwood House Home for the Jewish Aged et al, C/A No. 3:18-cv-16020-FLW-TJB, at doc. 266.
PROCEDURAL HISTORY
The instant matter was filed on September 28, 2021, against Discover, in the Oconee County Court of Common Pleas at Case Number 2021-CP-37-00661, regarding accounts that were frozen by Discover (doc. 1-1 at 4-49). Discover removed the action to this court on October 28, 2021 (doc. 1). On November 4, 2021, Discover filed a motion to dismiss (doc. 6). On November 9, 2021, the court issued an order in accordance with Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975), advising the plaintiff of the summary judgment/dismissal procedure and of the possible consequences if he failed to adequately respond to the motion (doc. 12). On December 1, 2021, Discover filed a motion for sanctions (doc. 16). When the plaintiff failed to file a response to Discover's motion to dismiss by the deadline provided in the Roseboro order, the court issued an order providing him until January 3, 2022, to file his response to Discover's motion to dismiss (doc. 34). The plaintiff then filed a motion on December 20, 2021, seeking additional time to file his response to Discover's motion to dismiss (doc. 36), which was denied as moot because the plaintiff's deadline had already been extended (doc. 38). After the deadline passed, the plaintiff filed another motion for extension of time, asserting an emergency with his dog (doc. 44), and his deadline was extended a second time (doc. 45). That order informed the plaintiff that no further extensions of the deadline would be provided and that if the plaintiff failed to file a response by the deadline, all pending motions would be considered without the benefit of his response (id.). Instead of filing his response, on January 10, 2022, the plaintiff filed another motion for extension of time (doc. 48), which was denied (doc. 49). The plaintiff then filed a motion for reconsideration regarding his motion for extension of time (doc. 53) and a motion for recusal (doc. 57), both of which were denied (doc. 58). To date, despite filing several motions, with various affidavits, exhibits, and memorandums of law totaling more than 350 pages (including two motions to remand totaling more than 250 pages), the plaintiff has failed to respond to Discover's motion to dismiss and Discover's motion for sanctions and the time to respond has passed. Thus, Discover's motions are ripe for review.
During this same time, on November 30, 2021, the plaintiff filed his first motion to remand this action back to the Oconee County Court of Common Pleas (doc. 17). Discover filed a response on December 7, 2021 (doc. 23). The plaintiff then filed a second motion to remand on December 13, 2021 (doc. 32), to which Discover responded on December 28, 2021 (doc. 42). The plaintiff also filed two motions for a hearing (docs. 27; 54), and a motion to stay (doc. 26). These motions are also ripe for review at this time.
ALLEGATIONS
The plaintiff, apparently dissatisfied with the proceedings in the New Jersey Interpleader Action, for the third time, has filed suit against Discover (docs. 1, 1-1). The plaintiff's complaint, which spans more than forty pages, with more than twenty pages of exhibits, largely restates allegations that have been previously presented to this court (doc. 1-1 at 4-49). At issue in this matter, the plaintiff contends that in 2018 Discover wrongfully froze all of the plaintiff's accounts (id.). The plaintiff alleges that Discovery has colluded with other parties in the New Jersey Interpleader Action to wrongfully prevent the plaintiff from accessing his funds (id.). For relief, the plaintiff seeks money damages (id. at 49).
APPLICABLE LAW AND ANALYSIS
As an initial matter, although the plaintiff is a licensed attorney in the state of South Carolina, in this action, he is a pro se litigant; thus, his pleadings are accorded liberal construction. See Erickson v. Pardus, 551 U.S. 89 (2007) (per curiam). The requirement of liberal construction, however, does not mean that the court can ignore a clear failure in the pleading to allege facts which set forth a claim cognizable in a federal district court. See Weller v. Dep't of Soc. Servs., 901 F.2d 387, 391 (4th Cir. 1990). “The Federal Rules of Civil Procedure recognize that courts must have the authority to control litigation before them.” Ballard v. Carlson, 882 F.2d 93, 95 (4th Cir. 1989) (citing Fed.R.Civ.P. 41(b)). 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). Since federal courts have limited subject matter jurisdiction, there is no presumption that the court has jurisdiction. Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999) (citing Lehigh Mining & Mfg. Co. v. Kelly, 160 U.S. 337 (1895)). Accordingly, a federal court is required to determine if a valid basis for its jurisdiction exists, “and to dismiss the action if no such ground appears.” Bulldog Trucking, 147 F.3d at 352; 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.”).
There are seven motions pending before the court, including two by Discover and five by the plaintiff. Discover argues that this matter should be dismissed based upon res judicata as well as the pending New Jersey Interpleader Action (doc. 6). Discover also seeks sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure from the plaintiff for having to defend this lawsuit (doc. 16). The plaintiff has filed two motions seeking to have this matter remanded to the state court (docs. 17; 32), two motions seeking a hearing (docs. 27; 54), and one motion seeking to stay this matter (doc. 26). The undersigned will address the procedural motions and then the substantive motions.
Plaintiff's procedural motions
As noted, the plaintiff has filed several procedural motions, including two motions seeking a hearing (docs. 27; 54) and a motion seeking to stay this matter (doc. 26). The plaintiff's motions for a hearing seek to have the court “investigate” alleged unethical behavior by counsel for Discover (docs. 27; 54). The plaintiff's motion to stay argues that this matter should be stayed so that the plaintiff has time to file motions challenging the court's jurisdiction in this matter (doc. 26). Discover asserts that there is no need for an evidentiary hearing in this matter as well as that the plaintiff has not met the standard for issuance of a stay in this matter (doc. 30). The undersigned agrees that no evidentiary hearing or stay is required in this matter because it should be dismissed, as outlined infra. As such, the plaintiff's motions (docs. 26; 27; 54) are denied.
Plaintiff's Motions to Remand
The plaintiff has moved in two separate motions to remand this action to the Oconee County Court of Common Pleas (docs. 17; 32). Remand of a case to state court following removal is governed by 28 U.S.C. § 1447. “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). The instant action was removed based upon diversity jurisdiction (doc. 1). Diversity jurisdiction is conferred upon the court when a suit is between citizens of different states and the amount in controversy exceeds $75,000.00. 28 U.S.C. § 1332(a). The plaintiff seeks remand of the instant action, arguing that this is a question of state law and that this forum is not convenient - but does not address Discover's assertion that there is diversity jurisdiction in this matter (see docs. 17; 32). Indeed, the plaintiff asserts that this case involves a question of state law and involves actions which occurred in Oconee County, South Carolina, but Discover did not remove this action based upon federal question jurisdiction and the plaintiff's arguments regarding forum non conveniens and unfair burden are questions of venue and not jurisdiction (compare docs. 17 at 2; 32 with doc. 1).
Despite the foregoing, the court will analyze whether diversity jurisdiction exists in this matter to justify Discover's removal. The first prong of diversity jurisdiction is whether the parties are completely diverse. 28 U.S.C. § 1132(a). An individual is a citizen of the state in which he or she is domiciled. Johnson v. Advance Am., 549 F.3d 932, 937 n.2 (4th Cir. 2008). A corporation, for jurisdiction purposes, is a citizen of the state(s) in which it has been incorporated as well as the state(s) where it has its principal place of business. Cent. W.Va. Energy Co. v. Mountain State Carbon, LLC, 636 F.3d 101, 102 (4th Cir. 2011). The plaintiff, per his own allegations, is a citizen and resident of the state of South Carolina (docs. 1 at 2; 1-1 at 4). Discover, as recognized by the plaintiff, is a corporation organized and existing under the laws of Delaware (docs. 1 at 2; 1-1 at 4). Additionally, Discover's notice of removal indicates that its principal place of business is in Illinois (doc. 1 at 2). Although the plaintiff asserts that Discover engaged in business with the plaintiff in South Carolina, he has not challenged in either motion to remand Discover's principle place of business for diversity jurisdiction purposes (see docs. 17; 32). As such, the parties to this action are completely diverse for the purposes of diversity jurisdiction.
The second prong of diversity jurisdiction is that the amount in controversy exceeds $75,000.00. 28 U.S.C. § 1332(a). A defendant's notice of removal based on diversity jurisdiction must include a “plausible allegation” that the amount in controversy exceeds the jurisdictional threshold. Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547, 554 (2014). “[T]he defendant's amount-in-controversy allegation should be accepted when not contested by the plaintiff or questioned by the court.” Id. Here, Discover's notice of removal alleges that the amount in controversy is met because the plaintiff's complaint requests that Discover return more than $300,000.00 in improperly withheld funds as well as “substantial” punitive damages (see doc. 1 at 3 (citing doc. 1-1 at 6, 48-49)). The plaintiff's motions to remand do not assert that the amount in controversy has not been met (docs. 17; 32). As such, the amount in controversy has been met. Thus, the two prongs of diversity jurisdiction have been met in this case.
Despite the foregoing, the plaintiff argues that this matter should be remanded based upon the Rooker-Feldman doctrine, because he seeks enforcement of an order from the Oconee County Probate Court (doc. 32-3 at 5-6). “[T]he Rooker-Feldman doctrine applies . . . when the loser in state court files suit in federal district court seeking redress for an injury allegedly caused by the state court's decision itself.” Davani v. Virginia Dep't of Transp., 434 F.3d 712, 713 (4th Cir. 2006). However, the Rooker-Feldman doctrine does not apply to cases which have been removed to federal court. See Aiken v. Waffle House, Inc., 509 F.Supp.2d 541, 544 n.2 (D.S.C. 2007) (citing Brown & Root, Inc. v. Breckenridge, 211 F.3d 194, 198-99 (4th Cir. 2000)) (“Cases invoking the [Rooker-Feldman] doctrine involve separate federal court actions, filed in the original jurisdiction of the court, rather than removal of state court actions over which the federal court has, at the time of removal, original jurisdiction.”). As such, the plaintiff's reliance on the Rooker-Feldman doctrine does not provide a basis for remand in this action. Accordingly, it is recommended that the plaintiff's motions to remand (docs. 17; 32) be denied.
In support of his argument, the plaintiff notes that his prior case was dismissed by this court based upon the Rooker Feldman doctrine, Case Number 8:19-cv-00020-BHH (doc. 32-3 at 5-6). However, the case referenced by the plaintiff was filed in this court, not removed. See Shayne v. Lampl, C/A No. 8:19-cv-00020-BHH (D.S.C.).
Discover's Motion to Dismiss
Discover moves to dismiss this case, arguing that it is barred by res judicata, violates an order issued in the New Jersey Interpleader Action, and duplicative of the New Jersey Interpleader Action (doc. 6). The court agrees that this matter should be dismissed. Generally, a case pending in federal court “may be dismissed ‘for reasons of wise judicial administration whenever it is duplicative of a parallel action already pending in another federal court.'” Nexsen Pruet, LLC v. Westport Ins. Corp., No. 3:10-895-JFA, 2010 WL 3169378, at *2 (D.S.C. Aug. 5, 2010) (quoting Motley Rice, LLC v. Baldwin & Baldwin, LLP, 518 F.Supp.2d 688, 697 (D.S.C. 2007)). Suits are considered parallel if “substantially the same parties litigate substantially the same issues in different forums.” New Beckley Mining Corp. v. Int'l Union, United Mine Workers of Am., 946 F.2d 1072, 1073 (4th Cir. 1991) (citing LaDuke v. Burlington N. R.R., 879 F.2d 1556, 1559 (7th Cir. 1989)).
As noted, Discover argues that this case should be dismissed because it is duplicative of the New Jersey Interpleader Action-and implicates the order entered on January 31, 2019, in the New Jersey Interpleader Action (“the Interpleader Order”) (doc. 6 at 9). The Interpleader Order entered in the New Jersey Interpleader Action restrained all defendants in the New Jersey Interpleader Action-including Leslie Shayne-from “instituting or prosecuting legal proceedings in state or federal courts affecting, involving, or any way relating to the Discover Accounts that are the subject of the Verified Complaint for Interpleader . . . or the disposition of the Discover Accounts” (doc. 11-1 at 3-4). Here, the accounts that the plaintiff seeks to un-freeze are the same accounts being addressed in the New Jersey Interpleader Action (see doc. 1-1). Indeed, although the plaintiff has not filed a response to Discover's motion, the plaintiff's complaint appears to concede this point - alleging that counsel for Discover circumvented the Oconee County Probate court's order addressing the accounts in question by filing the New Jersey Interpleader Action (doc. 1-1 at 6-7). As such, the plaintiff's complaint is barred by the New Jersey Interpleader Action and the Interpleader Order, as previously held by this court. See Shayne, 2019 WL 1862418. Accordingly, the undersigned recommends granting Discover's motion to dismiss (doc. 6).
Discover's Motion for Sanctions
Discover also file a motion for sanctions pursuant to Rule 11 of the Federal Rules of Civil Procedure (doc. 16). Discover asserts that the plaintiff's lawsuit was filed for an improper purpose, because it was filed to harass Discover and violates the Interpleader Order (id.). For relief, Discover seeks to recover attorney's fees and costs for defending this action as well as an order enjoining the plaintiff from filing future litigation regarding the Discover accounts in question in this court (id. at 5). The plaintiff has not responded to Discover's motion.
Rule 11(b) of the Federal Rules of Civil Procedure requires attorneys or self-represented parties, such as the plaintiff, to certify that “to the best of the person's knowledge, information, and belief” that, among other things, the pleading, motion, or other paper “is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation . . . .” Fed.R.Civ.P. 11(b). When sanctions are sought under Rule 11(b)(1), the assessment is made using an “objective standard of reasonableness.” In re Kunstler, 914 F.2d 505, 518 (4th Cir. 1990). Here, Discover asserts that the plaintiff did not have a proper purpose in filing this action because it is repetitive of other filings and in violation of the Interpleader Order (doc. 16 at 4). The undersigned agrees. As outlined in more detail above, the plaintiff has continued to file actions against Discover despite involvement in the New Jersey Interpleader Action and awareness of the Interpleader Order. Indeed, in the New Jersey Interpleader Action, the plaintiff has been enjoined from contacting Discover (in lieu of its attorneys), with a notation that contacting Discover would be considered a violation of the Rules of Professional Conduct as well as a violation of the order, and that violation of the order would “likely result in sanctions” (doc. 30-1). As such, the undersigned finds that sanctions pursuant to Rule 11 should be entered against the plaintiff.
Sanctions under Rule 11 may be monetary or nonmonetary, and only “the least severe sanction adequate to serve the purposes of Rule 11 should be imposed.” Cabell, 810 F.3d at 466. Rule 11's purpose is to deter improper litigation not compensate the opposing party for the costs of defending the lawsuit; however, the amount of “expense borne by opposing counsel in combatting frivolous claims may well be an appropriate factor for a district court to consider in determining whether a monetary sanction should issue and if so, in what amount”. Kunstler, 914 F.2d at 522. Here, the undersigned recommends that Discover's request for monetary sanctions be granted. Additionally, the undersigned recommends that Discover's request for an injunction in this court preventing the plaintiff from filing additional actions regarding the Discover accounts in question be granted.
CONCLUSION AND RECOMMENDATION
Now, therefore, based upon the foregoing, IT IS HEREBY ORDERED that the plaintiff's motion to stay (doc. 26) and motions for a hearing (docs. 27; 54) are denied;
IT IS HEREBY RECOMMENDED that Discover's motion to dismiss (doc. 6) be granted and that the plaintiff's motions to remand (docs. 17; 32) be denied. IT IS FURTHER RECOMMENDED that Discover's motion for sanctions (doc. 16) be granted. Should the United States District Judge assigned to this case adopt this recommendation, it is recommended that Discover be directed to submit to the court a detailed invoice setting forth its fees and costs for defending this matter as well as submit a proposed order enjoining the plaintiff from litigating additional cases in this court regarding the frozen Discover accounts.
The attention of the parties 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, Room 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).