Ragle et al v. Monticello Banking Company et al

Filing 63

MEMORANDUM OPINION AND ORDER Signed by Chief Judge Joseph H. McKinley, Jr on 06/11/2014 granting 60 Motion for Partial Summary Judgment. IT IS FURTHER ORDERED that the remaining state-law claims be REMANDED to the Russell Circuit Court. cc: Counsel of Record, Russell Circuit Court (TJD)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CIVIL ACTION NO. 1:12CV-198-JHM
ROBERT RAGLE, ET AL.

PLAINTIFFS

VS.
MONTICELLO BANKING
COMPANY, ET AL.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on Defendants Richard Owens and Sons Construction
Company, Inc. (“Owens Construction”) and Richard Owens’ (in his individual capacity) Motion
for Partial Summary Judgment [DN 60]. Plaintiffs responded to Owens (in his individual
capacity) and Owens Construction’s motion but Defendants failed to file a reply.
I. BACKGROUND
This action arises out of the alleged mishandling of Plaintiffs’ account held by Monticello
Banking Company, a party now dismissed from this case. [Mem. Op. and Order, DN 43].
Plaintiffs, Robert Ragle and Laura Ragle, initially filed this action in Russell Circuit Court on
July 23, 2007. [Complaint, DN 1-1, at 1]. In 2011, Plaintiffs amended their Complaint in state
court and added Richard Owens, in his individual capacity and official capacity as Director and
President of Monticello Banking, and Owens Construction alleging violations of several federal
banking regulations. [Complaint, DN 1-1, at 7].

These added allegations arose out of a

construction loan Plaintiffs obtained from Monticello. Plaintiffs believe that Owens received
“certain benefits that he was not due” because of his position at both Monticello Banking and

president of the construction company the Plaintiffs hired. [Resp. to Mot. for Summ. J., DN 41,
at 1].
On September 5, 2013, the Court issued a Memorandum Opinion and Order dismissing
all claims under Regulation O, the Unfair and Deceptive Acts and Practices Act, Regulation AA,
Real Estate Settlement Practices Act, and for wrongful dishonor of checks against Monticello
and Owens (in his official capacity). [Mem. Op. and Order, DN 43]. In reliance on that Opinion,
Owens (in his official capacity) and Owens Construction now move to dismiss the remaining
federal banking claims.
II. SUMMARY JUDGMENT
Before the Court may grant a motion for summary judgment, it must find that there is no
genuine dispute as to any material fact and that the moving party is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(a). The moving party bears the initial burden of specifying the
basis for its motion and identifying that portion of the record that demonstrates the absence of a
genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the
moving party satisfies this burden, the non-moving party thereafter must produce specific facts
demonstrating a genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247–48 (1986).
Although the Court must review the evidence in the light most favorable to the nonmoving party, the non-moving party must do more than merely show that there is some
“metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). Instead, the Federal Rules of Civil Procedure require the nonmoving party to present specific facts showing that a genuine factual issue exists by “citing to
particular parts of materials in the record” or by “showing that the materials cited do not

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establish the absence . . . of a genuine dispute[.]” Fed. R. Civ. P. 56(c)(1). “The mere existence
of a scintilla of evidence in support of the [non-moving party’s] position will be insufficient;
there must be evidence on which the jury could reasonably find for the [non-moving party].”
Anderson, 477 U.S. at 252. It is against this standard the Court reviews the following facts.

III. ANALYSIS
A. Regulation O
Plaintiffs claim Defendants violated Regulation O, 12 C.F.R. § 215 (2013), which deals
with the extension of credit by a regulated bank to an individual officer, director, principal or
shareholder, or to a business owned by one of those insiders. 12 C.F.R. § 215.1. In moving for
summary judgment on Regulation O, Defendants simply state that the Court previously
determined that the regulation does not provide a private right of action. As noted in the Court’s
prior Opinion, the FDIC alones appears to be the enforcement arm of Regulation O, not
individuals. [Mem. Op., DN 43, at 3]. Plaintiffs do not cite to any change in existing law that
would suggest that a private party has a cause of action under Regulation O, and therefore, the
Plaintiffs’ claim under Regulation O is dismissed as to Owens (in his individual capacity) and
Owens Construction.
B. Unfair and Deceptive Act and Practices Act and Regulation AA
Plaintiffs assert that Defendants violated the Unfair and Deceptive Act and Practices
(“UDAP”) under 15 U.S.C. § 45(a) (2012) and Federal Reserve Regulation AA under 12 C.F.R.
227 (2013). Plaintiffs separately identify these claims, but Regulation AA simply implements
the provisions of UDAP. 12 C.F.R. 227.1 (“The purpose of [12 C.F.R. 227] is to prohibit unfair
or deceptive acts or practices in violation of section 5(a)(1) of the Federal Trade Commission
Act, 15 U.S.C. 45(a)(1).”). The Court previously dismissed this cause of action based on the

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holding in Holloway v. Bristol-Meyers Corp., 485 F.2d 986 (D.C. Cir. 1971). Plaintiffs do not
cite to any change in law, and therefore, their claims under UDAP against Owens (in his
individual capacity) and Owens Construction are dismissed
C. Real Estate Settlement Procedures Act
The Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2607 (2012), provides
for a private right of action in certain circumstances. Defendants contend that the Court’s
previous ruling on Plaintiffs’ RESPA claim should be extended to Owens (in his individual
capacity) and Owens Construction.
RESPA clearly provides for a private right of action but not where loans are for
temporary financing. 24 C.F.R. 3500.5(b)(3). The Court previously dismissed Plaintiffs’ RESPA
claim based on the fact that there was only evidence that the loan made to them was a
construction loan, which can be a type of temporary financing. Id. However, on Plaintiffs’
Motion to Alter or Amend [DN 49], they produced a Real Estate Settlement Statement that
appeared to suggest that the loan may fall under RESPA. [Settlement Statement, DN 49-3].
However, the Court noted that the Plaintiffs could have easily produced the document and made
an argument at the time of summary judgment. Plaintiffs rely on this document in the present
summary judgment motion, but Defendants do not respond to this argument. Even though
Defendants fail to respond to this document, Plaintiffs still do not demonstrate or provide any
basis to support their RESPA claim other than making factually unsupported allegations that
Owens received a kickback from the loan. As a result, the Court dismisses the claim on these
grounds.
The Court also previously dismissed Plaintiffs’ RESPA claim based on the one-year
statute of limitations under 12 U.S.C. § 2614. Plaintiffs did not add the RESPA claim against

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Defendants until they amended their Complaint in 2011. This was almost four years after filing
their initial Complaint in 2007. On Plaintiffs’ Motion to Alter or Amend, they first made an
argument that their RESPA claim should relate back to their 2007 Complaint based on Fed. R.
Civ. P. 15(c). Again, the Court rejected Plaintiffs’ assertion as one that could have easily been
made at the time of summary judgment. Additionally, Plaintiffs contended that the RESPA
claim did not accrue until less than a year before the filing of their Amended Complaint, but this
lacked any factual support in the record. Therefore, the Court also rejected that argument.
Taking into consideration Plaintiffs’ argument made in their motion to alter or amend, the
Court finds little reason to accept that the RESPA claim should relate back to the filing of the
2007 Complaint.

First, the 2007 Complaint almost exclusively discusses issues related to

overdraft fees on accounts, not anything related to the settlement of a construction loan. Second,
neither Owens (in his official capacity) nor Owens Construction was a party named in the 2007
Complaint, and thus, Fed. R. Civ. P. 15(c)(1)(C) must also be met. There is no evidence that
Owens or Owens Construction had notice of this action or knew of any claims against them in
2007. Therefore, Plaintiffs may not pursue a RESPA claim against either defendant.
D. Remaining State Law Claims
Plaintiffs maintain contract claims against Owens (in his individual capacity) and Owens
Construction. However, because Plaintiffs’ federal claims are subject to dismissal, the Court
declines to exercise supplemental jurisdiction over the state-law claims.

See 18 U.S.C. §

1367(c)(3) (providing that a district court may decline to exercise supplemental jurisdiction when
it has dismissed all claims over which it has original jurisdiction); see also United Mine Workers
v. Gibbs, 383 U.S. 715, 726 (1966). Although this is not a mandatory rule, see Taylor v. First of
Am. Bank–Wayne, 973 F.2d 1284, 1287 (6th Cir. 1992), the Court must “consider such factors

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as comity, judicial economy, convenience, and fairness in deciding whether to exercise
jurisdiction over pendent state law claims, as well as the avoidance of unnecessarily deciding
state law.” Fossyl v. Milligan, 317 F. App'x 467, 473 (6th Cir. 2009) (citing Pinney Dock &
Transp. Co. v. Penn. Cent. Corp., 196 F.3d 617, 620–21 (6th Cir. 1999)). The Court has never
addressed the merits of these contract claims, and therefore, these claims should be remanded to
state court for further adjudication.
IV. CONCLUSION
For the reasons set forth above, Defendants Richard Owens and Sons Construction
Company, Inc. and Richard Owens’ (in his individual capacity) Motion for Partial Summary
Judgment [DN 60] is GRANTED.
IT IS FURTHER ORDERED that the remaining state-law claims be REMANDED to
the Russell Circuit Court.

cc: counsel of record
Russell Circuit Court
June 11, 2014

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