McCurdy v. USDA Rural Development

Filing 5

MEMORANDUM. Signed by Judge Gregory M. Sleet on 4/25/2017. (nmg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
JOHN M. MCCURDY,
Plaintiff,
v.
U.S.D.A. RURAL DEVELOPMENT,
Defendant.

)
)
)
)
) Civ. Action No. 17-030-GMS
)
)
)
)

MEMORANDUM
The plaintiff, John M. McCurdy ("McCurdy"), filed this lawsuit on January 11, 2017,
alleging fraud by the defendant U.S.D.A. Rural Development ("USDA"). (D.I. 2.) He appears ;

prose and was granted permission to proceed informa pauperis pursuant to 28 U.S.C. § 1915.
(D.I. 4.) The court proceeds to review and screen the complaint pursuant to 28 U.S.C.
§ 1915(e)(2)(B).

I.

BACKGROUND
McCurdy alleges that between September 2003 through August 2015, the USDA

participated with one or more persons in defrauding him with regard to his home loan. McCurdy
alleges the USDA and others allowed unauthorized changes and charges to his home loan
account and others allowed fraudulent activity including unauthorized: address changes, account
information, account access without password authentication, loan changes without permission,
second loan, and hardship deferments. McCurdy alleges the fraudulent activity caused him
financial and credit damage, irreversible harm to his credit line and credit history, and harmed his
ability to gain stable employment and obtain other loans. He seeks compensatory and punitive

and the removal of all credit lines with regard to the home loan agreement and any other
agreement affiliated with the home loan account.

II.

STANDARD OF REVIEW
A federal court may properly dismiss an action sua sponte under the screening provisions

of28 U.S.C. § 1915(e)(2)(B) if"the action is frivolous or malicious, fails to state a claim upon
which relief may be granted, or seeks monetary relief from a defendant who is immune from such
relief." Ball v. Famiglio, 726 F.3d 448, 452 (3d Cir. 2013); see also 28 U.S.C. § 1915(e)(2) (in

forma pauperis actions). The court must accept all factual allegations in a complaint as true and
take them in the light most favorable to a prose plaintiff. Phillips v. County ofAllegheny, 515
F.3d 224, 229 (3d Cir. 2008); Erickson v. Pardus, 551 U.S. 89, 93 (2007). Because McCurdy
proceeds prose, his pleading is liberally construed and his complaint, "however inartfully
pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers."

Erickson v. Pardus, 551 U.S. at 94 (citations omitted).
An action is frivolous if it "lacks an arguable basis either in law or in fact." Neitzke v.

Williams, 490 U.S. 319, 325 (1989). Under 28 U.S.C. § 1915(e)(2)(B)(i), a court may dismiss a
complaint as frivolous if it is "based on an indisputably meritless legal theory" or a "clearly
baseless" or "fantastic or delusional" factual scenario. Neitzke, 490 at 327-28; Wilson v.

Rackmill, 878 F.2d 772, 774 (3d Cir. 1989).
The legal standard for dismissing a complaint for failure to state a claim pursuant to
§ 1915(e)(2)(B)(ii) is identical to the legal standard used when ruling on Rule 12(b)(6) motions.

Tourscher v. McCullough, 184 F.3d 236, 240 (3d Cir. 1999) (applying Fed. R. Civ. P. 12(b)(6)
standard to dismissal for failure to state a claim under§ 1915(e)(2)(B)). However, before
2

dismissing a complaint or claims for failure to state a claim upon which relief may be granted
pursuant to the screening provisions of28 U.S.C. § 1915, the court must grant McCurdy leave to
amend his complaint unless amendment would be inequitable or futile. See Grayson v. Mayview

State Hosp., 293 F.3d 103, 114 (3d Cir. 2002).
A well-pleaded complaint must contain more than mere labels and conclusions. See

Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell At!. Corp. v. Twombly, 550 U.S. 544 (2007). A
plaintiff must plead facts sufficient to show that a claim has substantive plausibility. See

Johnson v. City of Shelby, _U.S._, 135 S.Ct. 346, 347 (2014). A complaint may not dismissed,
however, for imperfect statements of the legal theory supporting the claim asserted. See id. at
346.
Under the pleading regime established by Twombly and Iqbal, a court reviewing the
sufficiency of a complaint must take three steps: ( 1) take note of the elements the plaintiff must
plead to state a claim; (2) identify allegations that, because they are no more than conclusions,
are not entitled to the assumption of truth; and (3) when there are well-pleaded factual
allegations, the court should assume their veracity and then determine whether they plausibly
give rise to an entitlement to relief. Connelly v. Lane Const. Corp., 809 F.3d 780, 787 (3d Cir.
2016) (internal citations and quotations omitted). Elements are sufficiently alleged when the
facts in the complaint "show" that the plaintiff is entitled to relief. Iqbal, 556 U.S. at 679
(quoting Fed. R. Civ. P. 8(a)(2)). Deciding whether a claim is plausible will be a "contextspecific task that requires the reviewing court to draw on its judicial experience and common
sense." Id.

3

III.

DISCUSSION
McCurdy alleges that a federal defendant engaged in fraud causing him harm. The

Federal Tort Claims Act ("FTCA") provides a remedy in damages for the tortious conduct of
employees of the United States. See United States v. Muniz, 374 U.S. 150, 150 (1963). The
FTCA "was designed primarily to remove the sovereign immunity of the United States from suits
in tort and, with certain specific exceptions, to render the Government liable in tort as a private
individual would be under like circumstances." Sosa v. Alvarez-Machain, 542 U.S. 692, 700
(2004). The FTCA provides a limited, expressed waiver of sovereign immunity of tort claims
brought against the Government and its agencies. Smith v. United States, 507 U.S. 197, 113
(1993).
Section 1346(b) of Title 28 provides that immunity is waived: for injury or loss of
property, or personal injury or death caused by the negligent or wrongful act or omission of any
employee of the Government while acting within the scope of his office or employment, under
circumstances where the United States, if a private person, would be liable to the claimant in
accordance with the law of the place where the act or omission occurred. 28 U.S.C. § 1346(b).
However, the waiver of immunity is not without limitations. Under § 2680(h) the immunity
exceptions do not apply to "[a]ny claim arising out of ... misrepresentation, deceit, or
interference with contract rights." 28 U.S.C. § 2680(h).
The complaint must be dismissed in light of§ 2680(h). If plaintiffs allegations are
construed as alleging interference with contract rights, then recovery is barred under § 2680(h).
Similarly, the FTCA is of no assistance to McCurdy's claims of fraud because they fall squarely
under the exemption of claims arising out of "misrepresentation" or "deceit" under. § 2680(h).
4

Beneficial Consumer Discount Co. v. Poltonowicz, 47 F.3d 91, 96 (3d Cir. 1995) ("courts have
consistently held that fraud claims against the government are not permitted under the FTCA");
see also Brobst v. United States, 659 F. App'x 135, 137 n.l (3d Cir. 2016) (unpublished).
Accordingly, the court will dismiss the complaint as legally frivolous pursuant to 28 U.S.C.
§ 1915(e)(2)(B)(i).

In addition, in reviewing the complaint, it does not appear that this court has subject
matter jurisdiction. The court is permitted ·to raise the issue of subject matter jurisdiction sua
sponte. See Liberty Mut. Ins. Co. v. Ward Trucking Corp., 48 F.3d 742, 750 (3d Cir. 1995)
("Federal courts have an ever-present obligation to satisfy themselves of their subject matter
jurisdiction and to decide the issue sua sponte .... ").
There are no allegations that McCurdy exhausted his administrative remedies with respect
to his FTCA claims as is required. The FTCA provides:
An action shall not be instituted upon a claim against the United States for money
damages for injury or loss of property or personal injury or death caused by the
negligent or wrongful act or omission of any employee of the Government while
acting within the scope of his office or employment, unless the claimant shall
have first presented the claim to the appropriate Federal agency and his claim
shall have been finally denied by the agency in writing and sent by certified or
registered mail.
28 U.S.C. § 2675(a).
"Fulfillment of the administrative exhaustion requirement is essential to a court's subject
matter jurisdiction over a claim under the FTCA. A complaint's failure to allege exhaustion of
administrative remedies, therefore, requires dismissal of the complaint for lack of subject matter
jurisdiction." Biase v. Kaplan, 852 F. Supp. 268, 283 (D.N.J. 1994) (citations omitted).
McCurdy fails to allege that he has exhausted his administrative remedies by filing an

5

administrative claim. Accordingly, the complaint will also be dismissed for lack of subject
matter jurisdiction.

IV.

CONCLUSION
For the above reasons, the court will dismiss the complaint as legally frivolous and for

lack of subject matter jurisdiction pursuant to 28 U.S.C. § 1915(e)(2)(B)(i). The court finds
amendment futile.
An appropriate order will be entered.

~,:/ '.l.-yf,

Willlgton, ~laware

, 2017

6