Opinion
No. 3:01-CV-0376-M
February 8, 2002
FINDINGS CONCLUSIONS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Pursuant to the provisions of 28 U.S.C. § 636 (b) and an Order of Reference, dated July 16, 2001, this case was referred to the United States Magistrate Judge for pretrial management.
FINDINGS AND CONCLUSIONS
The Motion to Dismiss of Edward O. Moody (and Pentagon Federal Credit Union, filed July 30, 2001 is before the Court for consideration. In an Order and Notice entered July 16, 2001, the District Court stated that any summons for an individual listed only in the caption of a Complaint, but not in the body of that Complaint, will not be valid. In the original complaint, filed February 26, 2001, Plaintiffs sued twenty-five defendants in four causes of action. In a first amended complaint, filed March 6, 2001, Plaintiffs added thirty-seven defendants and a fifth cause of action, specifically incorporating by reference the first four causes of action in the original complaint. In a second amended complaint, filed July 6, 2001, Plaintiffs added forty-three more defendants and attached some exhibits. The July 6 Amended Complaint did not incorporate by reference any of the previous complaints. Moreover, it consists of pages 1-3, a second page 3, page 4, page 4a, and pages 9a through 9r. On October 31, 2001, the District Court noted the deficiencies in the July 6, 2001 complaint and ordered Plaintiffs to file a complete amended complaint. Plaintiffs declined to file a complete amended complaint. Rather, they have elected to stand on their July 6, 2001 amended complaint. Despite the liberal interpretation afforded pro se plaintiffs, a plaintiff retains the burden of proof to show that federal jurisdiction has properly been invoked. See Hooks v. Army and Air Force Exchange Serv., 944 F. Supp. 503, 506 (N.D. Tex. 1996). An amended complaint supersedes an original complaint and renders it of no legal effect unless the amended complaint specifically refers to and adopts or incorporates by reference the earlier pleading. King v. Dogan, 31 F.3d 344,346 (5th Cir. 1994).
Standard of Review
A motion to dismiss for failure to state a claim under FED. R. CIV. P. 12(b)(6) is viewed with disfavor and is rarely granted. Lowrey v. Texas AM Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997). A district court cannot dismiss a complaint, or any part of it, for failure to state a claim upon which relief can be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995). In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In ruling on such a motion, the court cannot look beyond the face of the pleadings. Baker, 75 F.3d at 196; Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert. denied, 530 U.S. 1229 (2000). A plaintiff, however, must plead specific facts, not mere conclusory allegations, to avoid dismissal. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992). Dismissal is warranted if a plaintiff has (1) been given the opportunity to amend her complaint, (2) made specific and detailed allegations constituting her best case, and (3) still fails to state a claim. See Jacquez v. Procunier, 801 F.2d 789, 792-93 (5th Cir. 1986) (recognizing that dismissal is required if a plaintiff has had fair opportunity to make his case, but has failed); Morrison v. City of Baton Rouge, 761 F.2d 242, 246 (5th Cir. 1985) (assuming that the specific allegations of the amended complaint constitute the plaintiffs' best case).
Analysis Plaintiffs' Conclusory Allegations of Conspiracy
Plaintiffs claim that Edward O. Moody and his client Pentagon Federal Credit Union conspired with Paul E. Coggins and William T. Neary to file a false claim in the bankruptcy case. Mere conclusory allegations of conspiracy cannot, absent reference to material facts, survive a motion to dismiss. Arsenaux v. Roberts, 726 F.2d 1022, 1024 (5th Cir. 1982), quoting Slotnick v. Staviskey, 560 F.2d 31, 33 (1st Cir. 1977). Edward O. Moody has filed an affidavit that he has never communicated with Coggins or Neary, does not even know who they are, and could not have conspired with them. Plaintiffs' conclusory allegations are insufficient to state a claim against Moody and Pentagon Federal Credit Union for conspiracy.
Plaintiffs Allegations Involving Ms. Hatch's Bankruptcy
Moody speculates that he has been sued because he filed a claim on behalf of his client, Pentagon Federal Credit Union, in Ms. Hatch's bankruptcy proceeding. Plaintiffs' allegations against these defendants are an attempt to bring claims in this Court which should have been brought in the bankruptcy court and to circumvent the normal channels of appealing bankruptcy orders. The jurisdiction of the bankruptcy courts, like that of other federal courts, is grounded in, and limited by, statute. The terms of 28 U.S.C. § 1334 (b) provide that the district courts shall have original but not exclusive jurisdiction of all civil proceedings arising under Title 11, United States Code, or arising in or related to cases under Title 11. The district courts may, in turn, refer any or all proceedings arising under Title 11 or arising in or related to a case under Title 11 to the bankruptcy judges for the district. 28 U.S.C. § 157 (a). The jurisdictional grant in § 1334(b) was a distinct departure from the jurisdiction conferred under previous Acts, which had been limited to either possession of property by the debtor or consent as a basis for jurisdiction. See S.Rep. No. 95-989, 2nd Sess., pp. 153, 154 (1978) U.S. Code Cong. Admin.News 1978, pp. 5787, 5939, 5940. The United States Supreme Court agrees with the views expressed by the Court of Appeals for the Third Circuit in Pacor, Inc. v. Higgins, 743 F.2d 984 (3rd Cir. 1984). Celotex v. Edwards, 514 U.S. 300, 308 (1995). "Congress intended to grant comprehensive jurisdiction to the bankruptcy courts so that they might deal efficiently and expeditiously with all matters connected with the bankruptcy estate," Pacor, 743 F.2d at 994; see also H.R. Rep. No. 95-595, pp. 43-48 (1977). The "related to" language of § 1334(b) must be read to give district courts (and bankruptcy courts under § 157(a)) jurisdiction over more than simple proceedings involving the property of the debtor or the estate. Celotex, 514 U.S. at 308.
"The usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy. . . . Thus, the proceeding need not necessarily be against the debtor or against the debtor's property. An action is related to bankruptcy if the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate."Pacor, 743 F.2d at 994 (emphasis in original; citations omitted). The Fifth Circuit Court of Appeals has adopted the Pacor test with little or no variation. See Matter of Wood, 825 F.2d 90, 93 (5th Cir. 1987).
It appears that Plaintiffs can prove no set of facts in support of their claims against these defendants because Plaintiffs alleges no actions other than those taken or which should have been taken in the bankruptcy proceedings. With respect to Plaintiffs' broad conclusory allegations that these defendants have filed false claims, these are matters which will have an effect on the estate being administered in Bankruptcy Court and are within the Bankruptcy Court's jurisdiction or the District Court's appellate jurisdiction over bankruptcy matters. For these reasons, Moody and Pentagon Federal Credit Union, named because of their involvement in the bankruptcy proceeding, should be dismissed with prejudice for lack of subject matter jurisdiction.
RECOMMENDATION
The Court recommends that Defendant Edward O. Moody's Motion to Dismiss, filed July 30, 2001, be granted and that Plaintiffs' claims against Edward O. Moody and Pentagon Federal Credit Union be dismissed with prejudice for lack of subject matter jurisdiction.