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Pennachietti v. Mansfield

United States District Court, E.D. Pennsylvania

December 11, 2017

DANIEL S. PENNACHIETTI, Plaintiff,
v.
CRAIG MANSFIELD, Defendant

          MEMORANDUM

          GERALD J. PAPPERT, J.

         Daniel Pennachietti received an allegedly usurious loan through an internet website operated by Sovereign Lending Solutions, LLC, a title lending company established under the tribal law of the Lac Vieu Desert Band of Lake Superior Chippewa Indians. (Compl., at 1-2, ECF No. 1.) Pennachietti has not sued the Chippewa Tribe or Sovereign. Instead, he has sued Craig Mansfield, “a manager in charge of day-to-day operations” at Sovereign. (Ex. P-2, at 2, ECF No. 1-1.) Mansfield moves to dismiss the Complaint pursuant to Rules 8(a)(1), 12(b)(1), 12(b)(2), and 12(b)(3) of the Federal Rules of Civil Procedure.[1] (Def.'s Mot. to Dismiss, at 10, 11, 16, 22, ECF No. 5.) For the reasons that follow, the Court denies Mansfield's Motion.

         I

         In July 2013, Pennachietti borrowed $5, 050.00 from Sovereign. (Compl., at 3.) He submitted his loan application online through “Title Loan America, ” a website operated by Sovereign. (Id., Ex. P-1.) Pennachietti does not recall seeing or accepting any particular terms or conditions at the time he took the loan, and he was not provided a copy of the loan agreement. (Id. at 3-4.) Over the next year, Pennachietti made payments to Sovereign totaling $6, 301.68. (Id. at 4.) He was late making the final, or “balloon” payment for the outstanding balance on the loan, and Sovereign had his car was repossessed. (Id.) Sovereign demanded $7, 000.00 from Pennachietti to get his car back, which he paid in two installments in August and October of 2014. (Id.) Pennachietti filed his Complaint against Mansfield on June 8, 2017, alleging violations of the Racketeer Influences and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c)-(d) (id. at 5-9), and a violation of Pennsylvania's Loan Interest and Protection Law, 41 Pa. Cons. Stat. §§ 201, 502-504 (id. at 9-10).

         In Count One, Pennachietti alleges Mansfield violated 18 U.S.C. § 1962(c), which makes it a crime for “any person employed by or associated with an enterprise engaged in, or the activities of which affect, interstate…commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity….” Pennachietti identifies Sovereign as the RICO enterprise, Mansfield as a prior manager of Sovereign, and alleges Mansfield conducted or participated in the enterprise's affairs by directing Sovereign to collect unlawful debt from citizens of Pennsylvania, including Pennachietti. (Compl., at 6-7.) In Count Two, Pennachietti alleges Mansfield violated 18 U.S.C. § 1962(d), which provides that “[i]t shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.” 18 U.S.C. § 1962(d). Pennachietti contends Mansfield violated § 1962(d) by conspiring with other individuals to operate an enterprise and collect unlawful debt from Pennsylvania borrowers. (Id. at 8.) In Count Three, Pennachietti alleges Mansfield collected interest above the statutory annual maximum of six percent, in violation of the Loan Interest and Protection Law. (Id. at 9.) Mansfield argues that the Complaint should be dismissed because he enjoys tribal sovereign immunity and that this Court lacks personal jurisdiction over him.

         II

         Courts address issues of tribal sovereign immunity pursuant to motions to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). E.F.W. v. St. Stephen's Indian High Sch., 264 F.3d 1297, 1302-03 (10th Cir. 2001) (“Tribal sovereign immunity is a matter of subject matter jurisdiction, which may be challenged by a motion to dismiss under Fed.R.Civ.P. 12(b)(1)”)); cf. United States v. Gov't of Virgin Islands, 363 F.3d 276, 284 (3d Cir.2004) (“Eleventh Amendment immunity is relevant to jurisdiction....”). A motion to dismiss for lack of subject matter jurisdiction may be asserted as either a facial or factual attack. A facial attack challenges the sufficiency of the complaint because of a defect on its face, and the court “must consider the allegations of the complaint as true.” Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). In a factual attack, the trial court “is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Id. Because Mansfield presents a factual attack, the Court may consider evidence outside the pleadings, and no presumptive truthfulness attaches to Pennachietti's allegations. See id.

         Mansfield contends that he is entitled to tribal sovereign immunity because he acted within the scope of his employment and in his official capacity as manager at Sovereign, and thus Sovereign is the real party in interest. (Def.'s Mot. to Dismiss, 13- 16.)

         A

         In Lewis v. Clarke, 137 S.Ct. 1285 (2017), the most recent United State Supreme Court case to address tribal sovereign immunity, the Court held that “[i]n a suit brought against a tribal employee in his individual capacity, the employee… is the real party in interest and the tribe's sovereign immunity is not implicated.” 137 S.Ct. at 1288. Brian and Michelle Lewis were driving on an interstate highway when William Clarke, an employee of the Mohegan Tribe of Indians of Connecticut transporting Mohegan Sun Casino patrons, struck their car. Id. at 1286. The plaintiffs sued Clarke in his individual capacity in state court, and Clarke moved to dismiss the case for lack of subject-matter jurisdiction, arguing that he was entitled to tribal sovereign immunity because he was acting within the scope of his employment at the time of the accident. Id. The trial court denied Clarke's motion because “the damages remedy sought was solely against [the defendant] and would in no way affect the Tribe's ability to govern itself independently.” Id. at 1289. The Supreme Court of Connecticut reversed, holding that “tribal sovereign immunity barred the suit because [the defendant] was acting within the scope of his employment when the accident occurred.” Id. The Court reasoned that “plaintiffs cannot circumvent tribal immunity by merely naming the defendant, an employee of the tribe, when the complaint concerns actions taken within the scope of his duties….” Id. (quoting Lewis v. Clarke, 320 Conn. 706, 717 (2016)).

         The United States Supreme Court reversed, holding that tribal sovereign immunity is not implicated in a suit brought against a tribal employee in his individual capacity because the employee is the real party in interest. Id. at 1288. That the defendant “was acting within the scope of his employment…is not, on its own, sufficient to bar a suit against that employee on the basis of sovereign immunity.” Id. Instead, courts must determine whether tribal sovereign immunity applies by evaluating the principles of common-law sovereign immunity to decide “whether the sovereign is the real party in interest….” Id. at 1290.

         The Court explained that common-law sovereign immunity distinguishes between individual and official capacity suits when determining the real party in interest. Id. at 1291. In an official capacity claim, “the relief sought is only nominally against the official and in fact is against the official's office and thus the sovereign itself.” Id. (citing Will v. Michigan Dept. of State Police, 491 U.S. 58, 71 (1989)). Because official capacity claims are essentially actions against the sovereign, the sovereign is the real party in interest and immunity may be asserted. Id.; see also Kentucky v. Graham, 473 U.S. 159, 167 (1985).

         Personal capacity suits, however, “seek to impose individual liability upon a government officer for actions taken under color of state law.” Lewis, 137 S.Ct. at 1291 (emphasis added) (quoting Hafer v. Melo, 502 U.S. 21, 25 (1991)). Upon taking office, newly elected Pennsylvania Auditor General Barbara Hafer fired eighteen employees who she believed obtained their positions by paying a former employee of the Auditor General's office. The employees sued Hafer in her personal capacity, seeking money damages under 42 U.S.C. § 1983. Hafer, 502 U.S. at 21. Hafer argued that she was entitled to sovereign immunity because “liability turns not on the capacity in which state officials are sued, but on the capacity in which they acted when injuring the plaintiff.” Id. at 27. The Court rejected this argument, reasoning that “officers sued in their personal capacity come to court as individuals, ” and “may be held personally liable for damages…based upon actions taken in their official capacities.” Id. at 21, 27. Individuals are the real party in interest where the plaintiff “seeks to impose personal liability upon an individual [to] recover from the personal assets” of that individual, and sovereign immunity is not implicated because the sovereign is not the real party in interest. Garden State Electrical Inspection Services, Inc. v. Levin, 144 Fed.Appx. ...


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