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Campbell v. M&T Bank

United States District Court, W.D. Pennsylvania

March 22, 2017

M&T BANK, Defendant.



         The United States Code is the official compilation of codified federal law. As of March 2017, the U.S. Code contains 54 titles. Those 54 titles contain hundreds of chapters, and those hundreds of chapters contain thousands of laws. To a layperson, it may seem as though all those laws are bases upon which to sue. After all, if a law is broken, is it not up to the courts to declare it so?

         The simple answer is maybe. Our legal system has certain threshold requirements that must be met before a person can sue. These requirements include the existence of a private cause of action; just because a law was broken does not mean that Congress intended that law be judicially enforceable by a private litigant. This means that flipping through the U.S. Code in search of aptly named laws upon which to sue is a poor litigation strategy. Which brings us to this case.

         On April 11, 2016, Debra Heverly Campbell-representing herself-sued M&T Bank in the Blair County Court of Common Pleas.[1] Campbell's case arises out of the foreclosure of her residence in Honolulu, Hawaii, in the early 2000s. M&T Bank removed the case to this Court on May 26, 2016. (ECF No. 1.) Pending before the Court is M&T Bank's motion to dismiss Campbell's complaint (ECF No. 3). For the reasons that follow, M&T Bank's motion to dismiss is GRANTED.

         I. Background

         Although Campbell's recital of the facts underlying this case is disjointed and difficult to understand, the Court has attempted below to distill the relevant facts from her complaint and the exhibits thereto (ECF No. 1-3), which the Court may also consider in deciding a motion to dismiss. Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010). The Court accepts as true the factual allegations of Campbell's complaint for purposes of deciding the motion to dismiss, but “[w]here those allegations are contradicted by written exhibits that [Campbell] attached to [her] . . . complaint, . . . the exhibits trump the allegations.” Abcarian v. McDonald, 617 F.3d 931, 933 (7th Cir. 2010).

         On April 14, 2000, Pohaku Funding Investment Corporation-as trustee for the Pohaikealoha Trust-obtained a $400, 000 loan from Keystone Financial Bank, N.A. (ECF No. 1-3 at 37-40, 41-42).[2] Campbell was a guarantor for this loan (id.), and asserts that she was the beneficiary of the Pohaikealoha Trust (see Id. ¶ 84). The purpose of the loan was to finance the purchase of an apartment in Honolulu, Hawaii, at Colony Surf Apartments. (Id. ¶ 9.) At the time, Keystone Bank already held a mortgage on that property. (Id.; see also Id. at 45.) Campbell made the payments on this loan directly to Keystone Bank-presumably through her bank account with Keystone Bank. (Id. ¶ 8-9.)

         In October 2000, M&T Bank became the successor to Keystone Bank via merger. (Id. ¶ 10.) When M&T Bank merged with Keystone Bank, M&T Bank without notice placed 10-business-day holds on all deposits. (Id.) This caused Campbell's loan payments to become late and caused her to incur late and overdraft fees. (Id.) At the same time, M&T Bank canceled Campbell's lines of credit and demanded immediate payment on her outstanding balances. (Id. ¶ 11.) Campbell then closed her accounts with M&T Bank, opened a bank account with a bank in California, and began making her loan payments through that bank. (Id. ¶¶ 14-15.)

         Campbell is not clear on the chronology of the subsequent events, but as best the Court can make out the following occurred: although Campbell remained current on her loan payments to M&T Bank, she fell behind on her payment of maintenance fees to Colony Surf Apartments due to medical issues involving her daughter. (Id. ¶ 28.) Campbell was never more than three months behind on her maintenance-fee payments and was making monthly catch-up payments. (Id.) Nevertheless, Colony Surf sent Keystone Bank-and not M&T Bank, Campbell, or the Pohaikealoha Trust-a notice of default for Campbell's maintenance fees plus legal fees.[3](Id. ¶¶ 20, 29, 33.) Campbell's default was not cured by the relevant deadline. (Id. ¶ 31.) Colony Surf thereafter refused to accept any more monthly payments from Campbell unless she paid all her arrears and legal fees, which totaled approximately $16, 500. (Id. ¶ 36.)

         At some point during these events, Campbell also filed for bankruptcy under Chapter 13 “in an effort to have a federal judge address the egregious legal fees being charged by Colony Surf, ” though Campbell later withdrew her bankruptcy filing. (Id. ¶¶ 37, 39.) Although Campbell claims she never fell behind on her payments to M&T Bank (id. ¶ 28), she contradicts this assertion later in her complaint by stating that she paid an “amount owed to Keystone Bank/M&T Bank, ” (id. ¶ 39).

         It appears that Campbell's default to Colony Surf was not timely addressed, and Colony Surf filed an accelerated-foreclosure action in the Circuit Court of the First Circuit for the State of Hawaii. (Id. ¶ 40; see ECF No. 1-3 at 56.) Campbell admits she was served with notice of the accelerated-foreclosure action. (ECF No. 1-3 ¶ 26.) The Pohaku Funding Investment Corporation-one of the defendants in the accelerated-foreclosure action-was represented by counsel in that case. (ECF No. 1-3 at 56.) Colony Surf prevailed in that action, and on March 27, 2003, the court cancelled Pohaku's sublease to the property. (Id.) The court also ordered that Pohaku “and all persons claiming any interest in the leasehold property . . . [were] forever barred and foreclosed of and from any and all right, title, and interest and claims at law or equity in and to” the property, and awarded possession to Colony Surf. (Id. at 57.)

         After being awarded possession, Colony Surf transferred the property to M&T Bank. (Id. ¶ 61.) On October 18, 2004, M&T Bank sold the property to a third party. (Id. ¶ 71; id. at 45.) At some point before the sale, M&T Bank and Colony Surf entered into an agreement about how the proceeds of the property's sale would be divided. (See Id. at 48-52.) That agreement is the crux of this case; Campbell alleges the agreement is a “kickback/quid pro quo agreement, ” and states that she did not learn about the agreement until “almost two years after the loss of her home and its subsequent sale by M&T Bank.” (Id. ¶¶ 4-6.) She further states that she was not able to obtain an escrow settlement statement regarding the property's sale and the division of funds until August 2012. (Id. ¶ 3.)

         Campbell also alleges that M&T Bank did something unlawful with the loan and her bank account. At some point in 2009 Campbell obtained a statement and lien release from M&T Bank's collections department. (Id. ¶ 8.) Campbell alleges she also spoke to an M&T Bank employee, who told her that her loan with M&T Bank was written down to zero when M&T took over Keystone. (Id.) Campbell states that this occurred three years before the foreclosure proceedings, meaning she made payments on the loan while “unaware that loan had been written down to zero, and . . . that the loan was never paid off, but rather ‘satisfied' by an alleged forty thousand dollar debit from [her] account in 2006.” (Id.) Campbell implies that this alleged debit constitutes unlawful conduct in light of the fact that she closed her accounts with M&T Bank in 2000. (See id.)

         On August 10, 2015, Campbell, representing herself, filed a praecipe for writ of summons against M&T Bank in the Pennsylvania Court of Common Pleas for Blair County. (ECF No. 1-2 at 2.) Campbell failed to file a complaint in that case. (Id.) On April 11, 2016, Campbell filed another case in the Blair County Court of Common Pleas, but this time did file a complaint. (ECF No. 1-4 at 2.) The two cases were consolidated by the Court of Common Pleas, (id.) and M&T thereafter removed the case to this Court (ECF No. 1.)

         Campbell's complaint contains 15 counts; 3 common-law counts and 12 federal counts. Specifically, Campbell has sued M&T Bank for (1) fraud, (2) breach of fiduciary duty, (3) material breach of contract, (4) a violation of the False Claims Act (31 U.S.C. § 3731(b)), (5) bank fraud (18 U.S.C. § 1344), (6) a RICO violation involving bank fraud (18 U.S.C. § 1963), (7) theft, embezzlement, or misapplication by bank officer or employee (18 U.S.C. § 656), (8) fraud concerning bank entries, reports, and transactions (18 U.S.C. § 1005), (9) wire fraud affecting a financial institution (18 U.S.C. § 1343), (10) mail fraud affecting a financial institution (18 U.S.C. § 1341), (11) fraud concerning FDIC transactions (18 U.S.C. § 1007), (12) disclosure of classified information (50 U.S.C. § 783), (13) communication of restricted data (42 U.S.C. § 2274), (14) obstruction of justice (18 U.S.C. § 1581), and (15) unfair or deceptive acts or practices by state chartered banks (15 U.S.C. § 45).

         II. Standard of Review

         M&T Bank has filed a motion to dismiss Campbell's complaint on the basis that it fails to state a claim upon which relief can be granted (Federal Rule of Civil Procedure 12(b)(6)) and on the basis that Campbell has failed to join an indispensable party (Rule 12(b)(7)).

         A. Failure to State a Claim upon Which Relief Can Be Granted

         The Federal Rules of Civil Procedure require that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) allows a party to seek dismissal of a complaint for failure to state a claim upon which relief can be granted. In determining the sufficiency of a complaint challenged under Rule 12(b)(6), a district court must conduct a two-part analysis. First, the court should separate the factual and legal elements of the claims. Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). Second, the court must determine whether the factual matters alleged are sufficient to establish that the plaintiff has a “plausible claim for relief.” Id. at 211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). The complaint, however, need not include “detailed factual allegations.” Phillips, 515 F.3d at 231 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         The court must also accept as true all factual allegations in the complaint and draw all inferences from the facts alleged in the light most favorable to the non-moving party. See Id. at 228 (citing Worldcom, Inc. v. Graphnet, Inc., 343 F.3d 651, 653 (3d Cir. 2003)). But “legal conclusions” and “[t]hreadbare recitals of the elements of a cause of action . . . do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). Rather, the complaint must present sufficient “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Sheridan v. NGK Metals Corp., 609 F.3d 239, 262 n.27 (3d Cir .2010) (quoting Iqbal, 556 U.S. at 678).

         Ultimately, whether a plaintiff has stated a “plausible claim for relief” is a context-specific inquiry that requires the district court to “draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679 (citation omitted). The record to consider in making this determination includes the complaint and any “document integral or explicitly relied on in the complaint.” U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002) (emphasis and citation omitted). If a claim is vulnerable to dismissal under Rule 12(b)(6), the district court must permit a curative amendment regardless of whether a plaintiff seeks leave to amend, unless amendment would be inequitable or futile. Phillips, 515 F.3d at 236 (citation omitted).

         B.Failure to Join an Indispensable Party

         Rule 12(b)(7) allows a party to seek dismissal of a claim for failure to join a required party. As with (12)(b)(6) challenges, in analyzing a motion under Rule 12(b)(7) the court must accept as true all factual allegations in the complaint and draw all inferences from the facts alleged in the light most favorable to the non-moving party. See Jurimex Kommerz Transit G.M.B.H. v. Case Corp., 65 F. App'x 803, 805 (3d Cir. 2003). In evaluating a 12(b)(7) motion, the court applies the two-part test found in Rule 19. Rule 19(a) provides that an absent person is a necessary party if he is subject to service of process and either: (1) in his absence, complete relief cannot be accorded among the parties; or (2) the absent person claims an interest in the subject matter of the case and his absence will, as a practical matter, prejudice his ability to protect that interest or result in multiple or otherwise inconsistent obligations.

         If a person is necessary under Rule 19(a) but cannot be joined, the court must determine whether the case should proceed among the existing parties or be dismissed. Fed.R.Civ.P. 19(b). In making this determination, the court must consider the extent to which prejudice will result to the non-party or the current parties as a result of the non-party's absence, the extent to which any such prejudice could be lessened, whether a judgment rendered in the non-party's absence would be adequate, and whether the plaintiff has an adequate remedy if the case were to be dismissed. Fed.R.Civ.P. 19(b)(1)-(4).

         III. Analysis

         A threshold issue warrants discussion before addressing the merits of M&T Bank's motion to dismiss, namely Campbell's failure to file a response to M&T Bank's motion. This Judge's Practices and Procedures provide that responses to motions to dismiss “shall be filed within 21 days from the date of service of the motion.”[4] Although district courts may grant motions by default when they are truly unopposed, the United States Court of Appeals for the Third Circuit has counseled that district courts should not grant motions to dismiss against pro se plaintiffs without analyzing the merits of the motion. Stackhouse v. Mazurkiewicz, 951 F.2d 29, 30 (3d Cir. 1991); see also Xenos v. Hawbecker, 441 F. App'x 128, 131 (3d Cir. 2011) (“unless a plaintiff's failure to oppose a motion can truly be understood to reflect that the motion is unopposed-for instance, when the plaintiff is represented by counsel-we have expressed a preference for an assessment of the complaint on its merits” (citing Stackhouse, 951 F.2d at 30)). Thus, the Court will assess the merits of M&T Bank's motion to dismiss notwithstanding Campbell's failure to respond.

         M&T Bank advances multiple arguments for why Campbell's complaint should be dismissed. Specifically, it argues that the three state-law claims are timebarred and that the statutes of limitations were not tolled, that the False Claims Act claim does not present a viable claim for relief and suffers from procedural defects, that seven claims are predicated on criminal statutes that do provide a private right of action[5], that the claim for a RICO violation involving bank fraud does not present a viable claim for relief and is timebarred, and that the three remaining claims fail as a matter of law. M&T Bank argues further that the Court lacks jurisdiction over Campbell's claims under the so-called Rooker-Feldman doctrine, [6] and that her claims are barred by res judicata and collateral estoppel. ...

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