Opinion
5:21-CV-208-FL
07-29-2022
LARRY D. HILL, JR., Plaintiff, v. JONATHAN SUTTON, SUTTON AMUSEMENT, and GMD LLC, Defendants.
ORDER AND MEMORANDUM AND RECOMMENDATION
BRIAN S. MEYERS UNITED STATES MAGISTRATE JUDGE
This pro se case is before the court on the motion by plaintiff Larry D. Hill, Jr. (“plaintiff” or “Hill”) to proceed in forma pauperis [D.E. 1] under 28 U.S.C. § 1915(a)(1). The motion was referred to the undersigned magistrate judge pursuant to 28 U.S.C. § 636(b)(1) for a memorandum and recommendation, and for a frivolity review. The court finds that plaintiff has demonstrated appropriate evidence of his inability to pay the required court costs, and the application to proceed in forma pauperis will be ALLOWED. However, based on the court's frivolity review and for the reasons stated below, the undersigned recommends that plaintiff's complaint [D.E. 1-1] be DISMISSED.
ORDER ON IN FORMA PAUPERIS MOTION
To qualify for in forma pauperis status, a person must show that he “cannot because of his poverty pay or give security for the costs . . . and still be able to provide himself and dependents with the necessities of life.” See Adkins v. E.I. DuPont de Nemours & Co., 335 U.S. 331, 339 (1948) (internal quotation marks omitted). Based on the information in the motion to proceed in forma pauperis, the court finds that plaintiff has adequately demonstrated his inability to prepay the required court costs. Plaintiff's motion to proceed in forma pauperis [D.E. 1] is therefore ALLOWED.
MEMORANDUM AND RECOMMENDATION ON FRIVOLITY REVIEW
I. PLAINTIFF'S ALLEGATIONS AND CLAIMS
Plaintiff filed his complaint as an attachment to his motion to proceed in forma pauperis filed on May 6, 2021. [D.E. 1-1]. In his complaint, plaintiff alleges that “defendants breached contract [sic] and put the plaintiff in a [sic] illegal situation that could have got movant in serious trouble.” Id. at 2. Specifically, plaintiff alleges that he “entered into a business partnership with the defendants under false pretenses . . . [and] upon research [] discovered the defendant runs several illegal gambling businesses.” Id. He alleges that he “removed himself once all illegal actions was [sic] discovered.” Id. at 3. And, this “deception . . . could have lead [sic] movant into serious trouble[,] . . . has caused the movant to loose [sic] millions of dollars over the course of a business[,] . . . [and] caused extreme emotional distress by putting the movant in a [sic] illegal situation.” Id. at 2-3.
In an attached civil cover sheet, plaintiff indicates that the basis of his jurisdiction is federal question jurisdiction. [D.E. 1-2]. He further indicates that the nature of his suit is tort, specifically, “other fraud” and “truth in lending,” as well as a suit arising under statutes for “racketeer influenced and corrupt organizations.” Id. Finally, when asked to cite the civil statute under which his cause of action, plaintiff states “breach of contract - illegal enticement.” Id.
The relief sought by plaintiff is $5,500,000.00 for his breach of contract claim and “putting movant in [sic] illegal arrangement (business),” and $2,500,000.00 for emotional distress. [D.E. 1-1] at 4.
II. APPLICABLE LEGAL STANDARDS FOR FRIVOLITY REVIEW
After allowing a party to proceed in forma pauperis, as here, the court must conduct a frivolity review of the case pursuant to 28 U.S.C. § 1915(e)(2)(B). In such a review, the court must determine whether the action is frivolous or malicious, fails to state a claim upon which relief can be granted, or seeks monetary relief from an immune defendant, and is thereby subject to dismissal. 28 U.S.C. § 1915(e)(2)(B); see Denton v. Hernandez, 504 U.S. 25, 27 (1992) (standard for frivolousness). A case is frivolous if it lacks an arguable basis in either law or fact. Neitzke v. Williams, 490 U.S. 319, 325 (1989).
In evaluating frivolity specifically, a pro se plaintiff's pleadings are held to “less stringent standards” than those drafted by attorneys. White v. White, 886 F.2d 721, 722-23 (4th Cir. 1989). Nonetheless, the court is not required to accept a pro se plaintiff's contentions as true. Denton, 504 U.S. at 32. The court is permitted to “pierce the veil of the complaint's factual allegations and dismiss those claims whose factual contentions are clearly baseless.” Neitzke, 490 U.S. at 327. Such baseless claims include those that describe “fantastic or delusional scenarios.” Id. at 328. Provided that a plaintiff's claims are not clearly baseless, the court must weigh the factual allegations in plaintiff's favor in its frivolity analysis. Denton, 504 U.S. at 32. The court must read the complaint carefully to determine if a plaintiff has alleged specific facts sufficient to support the claims asserted. White, 886 F.2d at 724.
Under Rule 8 of the Federal Rules of Civil Procedure, a pleading that states a claim for relief must contain “a short and plain statement of the grounds for the court's jurisdiction . . . [and] a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(1), (2). Case law explains that the factual allegations in the complaint must “‘state[ ] a plausible claim for relief' that ‘permit[s] the court to infer more than the mere possibility of misconduct' based upon ‘its judicial experience and common sense.'” Coleman v. Md. Court of Appeals, 626 F.3d 187, 190 (4th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). Likewise, a complaint is insufficient if it offers merely “labels and conclusions,” “a formulaic recitation of the elements of a cause of action,” or “naked assertion[s]” devoid of “further factual enhancement.” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks omitted)).
A court may also consider subject matter jurisdiction as part of the frivolity review. See Lovern v. Edwards, 190 F.3d 648, 654 (4th Cir. 1999) (holding that “[d]etermining the question of subject matter jurisdiction at the outset of the litigation is often the most efficient procedure”); Cornelius v. Howell, No. 3:06-3387-MBS-BM, 2007 WL 397449, at *2-4 (D.S.C. Jan. 8, 2007) (discussing the lack of diversity jurisdiction during frivolity review as a basis for dismissal). “Federal courts are courts of limited jurisdiction and are empowered to act only in those specific situations authorized by Congress.” Bowman v. White, 388 F.2d 756, 760 (4th Cir. 1968). The presumption is that a federal court lacks jurisdiction in a particular case unless it is demonstrated that jurisdiction exists. Lehigh Min. & Mfg. Co. v. Kelly, 160 U.S. 327, 336 (1895). The burden of establishing subject matter jurisdiction rests on the party invoking jurisdiction, here the plaintiff. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982) (“The burden of proving subject matter jurisdiction . . . is on the plaintiff, the party asserting jurisdiction.”). The complaint must affirmatively allege the grounds for jurisdiction. Bowman, 388 F.2d at 760. If the court determines that it lacks subject matter jurisdiction, it must dismiss the action. Fed.R.Civ.P. 12(h)(3).
III. ANALYSIS OF PLAINTIFF'S COMPLAINT
Having found that plaintiff is financially eligible to proceed in forma pauperis, the court must now undertake a frivolity review of this case, pursuant to 28 U.S.C. § 1915(e)(2)(B). Under § 1915(e)(2)(B), a court shall dismiss a case if the action is: “(i) 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)(B). Based upon the court's review and for the reasons stated below, the undersigned recommends this matter be dismissed in its entirety.
A. Lack of subject matter jurisdiction
In the section of plaintiff's proposed complaint in which plaintiff is required to explain the jurisdiction of the court, plaintiff responds: “The plaintiff is suing for $5.5 million dollars because defendants breached contract and put the plaintiff in a [sic] illegal situation that could have got movant in serious trouble.” [D.E. 1-1] at 2. He further explains in his proposed complaint that he seeks damages “for the breach of contract - contract under false pretenses.” Id. at 3. In an attached civil cover sheet, plaintiff also indicates that the basis of his jurisdiction is federal question jurisdiction. [D.E. 1-2]. And, that the nature of his suit is based in both a tort claim for “other fraud” and “truth in lending,” and a claim made pursuant to the Racketeer Influenced and Corrupt Organizations Act. Id. Finally, when asked to cite the civil statute under which his cause of action is brought, plaintiff states “breach of contract - illegal enticement.” Id.
Although not entirely clear which form of subject matter jurisdiction plaintiff intends to plead, having reviewed plaintiff's proposed complaint, the undersigned finds that neither diversity nor federal question subject matter jurisdiction exist over plaintiff's tort claims. The Piney Run Pres. Ass'n v. The Cnty. Comm'rs of Carroll Cnty., 523 F.3d 453, 459 (4th Cir. 2008) (“The Association, as plaintiff, bears the burden of providing that subject-matter jurisdiction exists.”).
Diversity jurisdiction exists in “civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different states ....” 28 U.S.C. § 1332(a). There must be “complete” diversity between parties, which “means that no plaintiff may share a citizenship with any defendant.” Navy Fed. Credit Union v. LTD Fin. Servs., LP, 972 F.3d 344, 352 (4th Cir. 2020) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806)); see also N.C. Ins. Guar. Ass'n v. Wesco Ins. Co., 518 F.Supp. 3D 876, 878 (E.D. N.C. 2021). Here, in his proposed complaint, plaintiff indicates that defendants' address is in Greenville, North Carolina. See [D.E. 1-1] at 1. In his civil cover sheet he again confirms that the first named defendant, Johnathan Sutton, is a resident of Pitt County, North Carolina. See [D.E. 1-2]. Because at least one defendant shares the same citizenship as plaintiff, plaintiff fails to establish the existence of diversity jurisdiction. See Navy Fed. Credit Union, 972 F.3d at 35253.
Next, federal question jurisdiction exists in “all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Breach-of-contract causes of action, however, are not created under federal law and do not give rise to federal question jurisdiction. Int'l Legware Grp., Inc. v. Americal Corp., No. 5:10-CV-153-D, 2010 WL 3603784, at *3 (E.D. N.C. Sept. 8, 2010) (citing Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986)); see also Dubar v. Ditech Fin. LLC, No. 7:19-CV-16-BO, 2019 WL 1440327, at *4 (E.D. N.C. Mar. 6, 2019) (finding that the plaintiff's tort and breach of contract claims do not confer federal question jurisdiction and dismissing a complaint upon frivolity review).
Accordingly, because plaintiff has failed to establish subject matter jurisdiction over his tort claims, IT IS RECOMMENDED that such claims be DISMISSED. Furthermore, given the lack of federal jurisdiction, the court expresses no opinion as to whether, if jurisdiction existed, plaintiff's tort claims would survive further evaluation for frivolity.
B. Failure to state a claim under 18 U.S.C. § 1964
Finally, to the extent that plaintiff also attempts to pursue a claim under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1964, plaintiff's deficient pleading of the claims in the complaint would subject the complaint to dismissal for failure to state a claim upon which relief may be granted. While pro se litigants are entitled to leniency, such leniency is not without bounds. See Holder v. U.S. Marshals Office, No. 5:16-CV-00145-FL, 2016 WL 3919502, at *1 (E.D. N.C. 17 May 2016) (“[T]he principles requiring generous construction of pro se complaints are not without limits.”), mem. & recomm. adopted, 2016 WL 3920213 (July 15, 2016). The court finds plaintiff's statement of his claims to be insufficient to satisfy the pleading requirements of Federal Rule of Civil Procedure 8.
As noted above, in his civil cover sheet, plaintiff marks a checkbox indicating that the nature of his suit is based both in a tort claim and in a claim made pursuant to the Racketeer Influenced and Corrupt Organizations Act. See [D.E. 1-2] at 1.
Under section 1964, “[a]ny person injured in his business or property by reason of a violation of section 1962 of [the Racketeer Influenced and Corrupt Organizations Act] may sue therefor . . . and shall recover threefold the damages he sustains and the cost of the suit ” 18 U.S.C. § 1964(c). To do so, the plaintiff must make “two closely related showings: (1) that he has suffered injury to his business or property; and (2) that this injury was caused by the predicate acts of racketeering activity that make up the violation of § 1962.” Strates Shows, Inc. v. Amusements of Am., Inc., 379 F.Supp.2d 817, 825 (E.D. N.C. 2005) (quoting Brandenburg v. Seidel, 859 F.2d 1179, 1187 (4th Cir. 1988)). Here, plaintiff fails to make either showing. For example, plaintiff fails to plead any facts supporting that he has suffered injury to his business or property. Plaintiff alleges that defendant's conduct here caused him to withdraw from a business venture with defendant, which “caused [plaintiff] to loose [sic] millions of dollars over the course of a business.” [D.E. 1-1] at 2. However, “[i]njury to mere expectancy interests or to an ‘intangible property interest' is not sufficient to confer RICO standing.” Strates Shows, 379 F.Supp. at 825 (quoting Regions Bank v. J.R. Oil Co., LLC, 387 F.3d 721, 730 (8th Cir. 2004)); see also Anderson v. Kutak, Rock & Campbell (In re Taxable Mun. Bond Sec. Litig.), 51 F.3d 518, 523 (5th Cir.1995) (“Anderson's suit shows only a lost opportunity to obtain a ... loan. Such lost opportunity by itself does not constitute an injury that confers standing to bring a RICO cause of action.”); Steele v. Hospital Corp. of Am., 36 F.3d 69, 70 (9th Cir.1994) (holding that, for RICO standing, the plaintiffs must prove a “concrete financial loss,” an actual loss “of their own money,” and “not mere ‘injury to a valuable intangible property interest'”); Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 24 (2d Cir.1990) (“[I]njury in the form of lost business commissions . . . is too speculative to confer standing, because Hecht only alleges that he would have lost commissions in the future, and not that he has lost any yet.”). Plaintiff also fails to plead any facts that defendant was engaged in racketeering activity in violation of 18 U.S.C. § 1962. While plaintiff does make conclusory allegations that defendant “runs several illegal gambling businesses” ([D.E. 1-1] at 2), no facts are alleged in support of this claim. Finally, as a whole, plaintiff's complaint fails to provide any specific circumstances about his claim as required by Rule 8.
The court therefore concludes that plaintiff's complaint fails to state a claim upon which relief may be granted under the Racketeer Influenced and Corrupt Organizations Act and RECOMMENDS that this case also be DISMISSED pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii).
IV. CONCLUSION
For the reasons set forth above, IT IS RECOMMENDED that plaintiff's complaint [D.E. 1-1] be DISMISSED as frivolous pursuant to 28 U.S.C. § 1915(e)(2)(B)(i) and (ii).
IT IS DIRECTED that a copy of this Memorandum and Recommendation be served on plaintiff or, if represented, his counsel. Plaintiff shall have until August 12, 2022 to file written objections to the Memorandum and Recommendation. The presiding district judge must conduct her own review (that is, make a de novo determination) of those portions of the Memorandum and Recommendation to which objection is properly made and may accept, reject, or modify the determinations in the Memorandum and Recommendation; receive further evidence; or return the matter to the magistrate judge with instructions. See, e.g., 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(3); Local Civ. R. 1.1 (permitting modification of deadlines specified in local rules), 72.4(b), E.D. N.C.
If plaintiff does not file written objections by the foregoing deadline, plaintiff will be giving up the right to review of the Memorandum and Recommendation by the presiding district judge as described above, and the presiding district judge may enter an order or judgment based on the Memorandum and Recommendation without such review. In addition, plaintiff's failure to file written objections by the foregoing deadline will bar plaintiff from appealing to the Court of Appeals from an order or judgment of the presiding district judge based on the Memorandum and Recommendation. See Wright v. Collins, 766 F.2d 841, 846-47 (4th Cir. 1985).
SO ORDERED