Kelly v. PNC Bank, NA et al

Filing 24

ORDER Overruling Objections 14 , Adopting Report And Recommendation 13 , Granting Motion To Dismiss, And Dismissing Complaint As To Defendant Small Business Administration 5 . Signed by District Judge Thomas L. Ludington. (JCur)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
ROGER LEE KELLY, #748808,
Plaintiff,
v.

Case No. 15-cv-10721
Honorable Thomas L. Ludington

PNC BANK, NA, et al.,
Defendants.
_______________________________________/
ORDER OVERRULING OBJECTIONS, ADOPTING REPORT AND
RECOMMENDATION, GRANTING MOTION TO DISMISS, AND DISMISSING
COMPLAINT AS TO DEFENDANT SMALL BUSINESS ADMINISTRATION
On December 1, 2014, Plaintiff Roger Lee Kelly filed a pro se complaint against
Defendants PNC Bank, NA; the PNC Financial Services Group, Inc.; the Small Business
Administration (“SBA”); and Paul F. Beggs in the State of Michigan Circuit Court for the
County of Saginaw. Defendant SBA removed the case to federal court on February 26, 2015.1
The case was referred to Magistrate Judge Patricia T. Morris for general case management.
On March 24, 2015, Defendant SBA filed a motion to dismiss. It argued that Kelly had
not pled facts sufficient to overcome the SBA’s sovereign immunity as a government agency
and, even if he had, he did not exhaust his administrative remedies and is past the limitations
period for doing so. Judge Morris issued a Report on August 7, 2015 recommending that the
SBA’s motion to dismiss be granted and Kelly’s complaint dismissed as to the SBA. Kelly

1

The PNC Defendants eventually entered appearances in federal court following removal. Paul F. Beggs has
not had an appearance entered on his behalf and has not answered or otherwise moved in response to Kelly’s
complaint. There is at least some evidence that service was improperly effected by Kelly, see ECF Nos. 2 & 4.
Nevertheless, Defendant Beggs is not an active party.

timely filed objections to the Report, of which he made five. Those objections are now under
consideration.
I.2
On December 19, 2005, Plaintiff Roger Kelly and his business partner James Oczepek
secured a loan from the Small Business Administration that was underwritten by National City
Bank.3 The two used the funds from the loan to purchase a convenience store. Only a few
months later, the venture collapsed. Mr. Oczepek sought to withdraw from the venture, claiming
it was losing money. Kelly accused Mr. Oczepek of embezzling from the store and removing
money from the joint bank account. Each of them tried to have Mr. Oczepek removed from the
line of credit, but for different reasons.
In an attempt to exclude Mr. Oczepek from the joint line of credit, Kelly worked to
establish a new line of credit. He placed a personal credit card as collateral against the line of
credit. Kelly’s debt mounted and, on the brink of bankruptcy, he attempted to avoid foreclosure
but was unsuccessful.4 As the difficulties Kelly was facing increased, his relationship with Mr.
Oczepek grew more hostile. Eventually, the two got into a physical confrontation that resulted in
Mr. Oczepek’s death. Kelly is currently incarcerated as a result.
Kelly has sued PNC Financial Services and PNC Bank as successors to National City
Bank. He has also sued the SBA. He claims that they “have breached their fiduciary
responsibilities by approving a loan that he and his partner had no chance to successfully

2

The facts as conveyed here are assembled out of Kelly’s complaint and a statement of facts he attached to
his objections. To the extent they contain inaccuracies or inconsistencies, they are the result of taking the facts as he
presented them as true.
3

National City Bank was acquired by PNC Financial Services in 2008, hence PNC’s involvement in this

suit.
4

Kelly does not explain whether his residence, another piece of real property, or the convenience store
would be foreclosed on.

-2-

discharge.” ECF No. 1 at 10. Further, National City Bank “intentionally misled him, breached its
contract with him and sent him into a state of bankruptcy when it (through its loan officers),
offered partner Oczepek a way out” of the loan. Id. at 11.
II.
A.
Pursuant to Federal Rule of Civil Procedure 72, a party may object to and seek review of
a Magistrate Judge’s report and recommendation. See FED. R. CIV. P. 72(b)(2). If objections are
made, “[t]he district judge must determine de novo any part of the magistrate judge’s disposition
that has been properly objected to.” FED. R. CIV. P. 72(b)(3). Objections must be stated with
specificity. Thomas v. Arn, 474 U.S. 140, 151 (1985) (citation omitted).
De novo review requires at least a review of the evidence before the Magistrate Judge;
the Court may not act solely on the basis of a Magistrate Judge’s report and recommendation.
See Hill v. Duriron Co., 656 F.2d 1208, 1215 (6th Cir. 1981). After reviewing the evidence, the
Court is free to accept, reject, or modify the findings or recommendations of the Magistrate
Judge. See Lardie v. Birkett, 221 F. Supp. 2d 806, 807 (E.D. Mich. 2002). If the Court accepts a
report and recommendation, the Court is not required to state with specificity what it reviewed; it
is sufficient for the Court to state that it engaged in a de novo review of the record.
B.
This Court may dismiss a pleading for “failure to state a claim upon which relief can be
granted.” FED. R. CIV. P. 12(b)(6). A pleading fails to state a claim if it does not contain
allegations that support recovery under any recognizable legal theory. Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). In considering a Rule 12(b)(6) motion, the Court construes the pleading in the
non-movant’s favor and accepts the allegations of facts therein as true. See Lambert v. Hartman,

-3-

517 F.3d 433, 439 (6th Cir. 2008). The pleader need not have provided “detailed factual
allegations” to survive dismissal, but the “obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007). In essence, the pleading “must contain sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S.
at 570).
III.
Kelly makes five objections to Judge Morris’s Report. They will be considered in turn.
All of them raise the existence of facts in the record that, construed liberally, appear to support a
claim that he was diligently pursuing his rights and attempting to figure out what sort of harm
SBA had caused him. Two of his objections (Nos. 1 & 2) argue that his lawyer did not tell him
that he had to file suit within the two year statute of limitations period and that other lawyers he
contacted mentioned this requirement. It is well settled that a lack of knowledge of the law and
legal process is not enough to warrant equitable tolling of the statute of limitations. Cheatom v.
Quicken Loans, 587 F. App'x 276, 281 (6th Cir. 2014). Kelly’s claims about his attorney and the
attorneys he consulted do not equitably toll the statute of limitations period.
Kelly next claims (in objection No. 3) that he was in fact diligent in pursuing his rights.
He cites to a series of letters sent to attorneys, legal services providers, PNC Bank, and the
Saginaw County Register of Deeds. An action against the SBA must be presented to the agency
within two years after the claim accrues. 28 U.S.C. § 2401(b). “Typically, a tort claim accrues
under 28 U.S.C. § 2401(b) ‘at the time of the plaintiff's injury.’”Amburgey v. United States, 733
F.3d 633, 637 (6th Cir. 2013) (quoting United States v. Kubrick, 444 U.S. 111, 120 (1979)).

-4-

Kelly does not object to the Report’s conclusion that his claim accrued in 2006 or 2007.5 The
Report does not specify why these dates are most appropriate but it is most likely because that is
when Kelly realized he could not service the line of credit extended to him by PNC Bank and the
SBA. Based on Kelly’s representations in the attachments to his objections, it could even be said
that he was aware of his inability to service this line of credit at the time it was extended on
December 19, 2005. If so, that is when his claim accrued. At the latest, his claim accrued in
2007, meaning the statute of limitations on his suit against the SBA ran in 2009.
All of the letters he cites to were sent outside of the limitations period. Even if they were
evidence of diligently pursuing his rights, they do not evidence him pursuing his rights diligently
against the SBA. Nowhere in his letters to attorneys or to legal services providers does he
mention that the SBA has done anything wrong. In fact, he hardly mentions the SBA in any of
the correspondences except to note that he secures a loan through an SBA program.
Fourth, Kelly objects to say that the SBA is not prejudiced by the delay in him filing this
action against it. Assuming, without deciding, that the SBA is not prejudiced, that is but one
element of the equitable tolling inquiry. Kelly’s inability to meet the other requirements to
benefit from equitable tolling means this objection, meritless or not, is moot. Nevertheless, the
SBA would be prejudiced by a nearly ten-year delay in filing from the time Kelly’s cause of
action accrued.
Lastly, Kelly objects that every lawyer and legal services provider he contacted denied
him representation or assistance, or misinformed him about the proper statute of limitations or
the need to file an administrative claim with the SBA. This objection is indistinguishable from
his first two objections, except in that he claims the poor advice came from lawyers he had not

5

He also does not object to the Report’s conclusion that his claim against the SBA sounds in tort.

-5-

retained. It is also indistinguishable from his third objection to the extent it attempts to show
diligent pursuit of his rights.
Kelly’s objections are without merit and will be overruled.
IV.
Accordingly, it is ORDERED that Plaintiff Roger Lee Kelly’s Objections, ECF No. 14,
are OVERRULED.
It is further ORDERED that the Report and Recommendation, ECF No. 13, is
ADOPTED.
It is further ORDERED that Defendant Small Business Administration’s Motion to
Dismiss, ECF No. 5, is GRANTED.
It is further ORDERED that Plaintiff Roger Lee Kelly’s Complaint, ECF No. 1, is
DISMISSED as to Defendant Small Business Administration.

Dated: February 16, 2016

s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge

PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on February 16, 2016.
s/Johnetta Curry
JOHNETTA CURRY
Acting Case Manager

-6-