Kelly v. PNC Bank, NA et al

Filing 40

ORDER Adopting 26 Report and Recommendation; Overruling Objections; Granting 17 Motion to Dismiss; Denying 21 Motion to Stay; an Denying 27 Motion to Amend. Signed by District Judge Thomas L. Ludington. (RLou)

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

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

PNC BANK, NA, et al.,
Defendants.
_______________________________________/
ORDER ADOPTING REPORT AND RECOMMENDATION, OVERRULING
OBJECTIONS, GRANTING MOTION TO DISMISS, DENYING MOTION TO STAY,
AND DENYING MOTION TO AMEND
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.2
On October 18, 2015, Defendants PNC Bank, NA, and the PNC Financial Services
Group, Inc. (collectively “PNC”) filed a motion to dismiss. PNC argued that Kelly’s claims are
barred by the applicable statutes of limitations and Kelly has not pled facts sufficient to justify
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.
Judge Morris directed the United States Marshal Service to serve Beggs on April 11, 2016. ECF No. 31. A
certificate of service was docketed on April 22, 2016. ECF No. 37. Attorney Beggs appeared in this case on May 18,
2016. ECF No. 39.
2

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 timely filed objections to the Report, of which he made five. Kelly’s objections were overruled and
Judge Morris’s Report was adopted on February 16, 2016. ECF No. 24. SBA was dismissed from the case.

tolling or extending those limitations periods. Judge Morris issued a Report on March 18, 2016
recommending that PNC’s motion to dismiss be granted and Kelly’s complaint dismissed as to
PNC. Kelly timely filed objections to the Report, of which he made three.3 Those objections are
now under consideration.
I.4
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.5 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.6 As the difficulties Kelly was facing increased, his relationship with Mr.

3

Jude Morris also directed Kelly to show cause why his claims against Defendant Beggs should not be
dismissed for want of prosecution. Kelly filed his response to that order on April 4, 2016. See Resp. to Order Show
Cause, ECF No. 29. Included in the packet of documents Kelly filed that day were his objections to Judge Morris’s
Report. They were docketed by the Clerk of Court as one document. Kelly’s objections, despite being included with
his response to the order to show cause, were otherwise timely filed.
4

The facts as conveyed here are assembled out of Kelly’s complaint and a statement of facts he attached to a
prior set of objections. To the extent they contain inaccuracies or inconsistencies, they are the result of taking the
facts as he presented them as true.
5

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

suit.
6

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

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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
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.

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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,
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 three objections to Judge Morris’s Report. First, he argues that the Report
erred in concluding that he has not offered evidence of fraudulent concealment by Defendant
PNC. Second, he argues that his former attorney, Defendant Beggs, may provide evidence
substantiating the fact that PNC engaged in fraudulent concealment. Third, he claims that the
Report erred by concluding that Kelly had no “interaction with PNC whatsoever after the date of
Oczepek’s murder.” Rep. & Rec. 6, ECF No. 26.
All three objections are predicated on the same argument by Kelly: the statute of
limitations does not bar his claims against PNC because of fraudulent concealment on PNC’s
part. Kelly has pled no facts, and has not argued in his objections that he has pled facts consistent
with fraudulent concealment sufficient to toll the statute of limitations. Kelly has attached to his

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objections a copy of an amended complaint filed in Saginaw County Circuit Court on December
18, 2015. He claims in his objections that this amended complaint provides evidence (at least for
purposes of Rule 12(b)(6)) of fraudulent concealment by PNC. But this amended complaint is
not part of the pleadings in this case and Kelly has not attempted to amend his pleadings to
include any of these allegations. Indeed, Kelly has attempted to amend his pleadings, see
Addendum to Am. Compl., ECF No. 27, but did not use that opportunity to incorporate any
allegations that PNC engaged in fraudulent concealment. Although Kelly is pro se and his
pleadings should be construed liberally, an amended complaint filed in an unrelated state court
action does not stand in for pleadings in this case, particularly when it is first brought to the
Court’s attention as an addendum to objections to a report and recommendation.
But even if those allegations in Kelly’s state amended complaint were considered, he still
cannot demonstrate fraudulent concealment sufficient to overcome the statute of limitations. All
of the allegations in Kelly’s state court amended complaint that he claims show fraudulent
concealment are nothing more than conclusory allegations of fraud. See, e.g., State Am. Compl.
¶¶ 55–62, ECF No. 29. The closest Kelly gets to alleging fraudulent concealment is his claim
that “the statement or representation made by National City Bank’s loan manager Connie Tripp,
that both loan applicants were required to collateralize their homes for approval of the SBA loan,
was deceptive or misleading, as evidenced by the lack of a recorded mortgage for Oczepek’s
home.” Id. at ¶ 55. Yet, this claim does not bear any immediately apparent relevant relation to
the core of Kelly’s claims in this case: that Oczepek was permitted to withdraw from the loan he
and Kelly secured for their poorly performing business. The claim may provide background for
how Oczepek was seemingly able to withdraw from the loan agreement (because he did not have
any collateral at risk). The claim does not, however, substantiate an allegation that PNC

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“concealed the conduct that constitutes [Kelly’s] cause of action” or that PNC’s alleged
“concealment prevented [Kelly] from discovering the cause of action within the limitations
period.” Egerer v. Woodland Realty, Inc., 556 F.3d 415, 422 (6th Cir. 2009) (also explaining that
plaintiffs must demonstrate that “until discovery, [they] exercised due diligence in trying to find
out about the cause of action). Both showings are necessary for Kelly to overcome the statute of
limitations bar to his claims.
Finally, Kelly also requested a stay of proceedings. See Mot. Stay, ECF No. 21. Judge
Morris recommended denying the motion because “no amount of discovery could cure Kelly’s
statute of limitations deficiencies.” Rep. & Rec. 6, ECF No. 26. Kelly did not specifically object
to this recommendation. It will be adopted.
In any event, Kelly’s request for a stay borders on nonsensical and appears to be directed
at events occurring in a different case. It warrants denial.
Kelly cannot demonstrate any justification for tolling the statute of limitations as to any
of his claims against PNC. Kelly’s objections will be overruled.
IV.
The day before Judge Morris filed her Report, Kelly filed an “addendum to amended
complaint.” See Addendum to Am. Compl., ECF No. 27. The addendum was not docketed until
after the Report was filed. The addendum is properly construed as a motion to amend Kelly’s
complaint. The addendum only attempts to remedy Kelly’s complaint’s lack of allegations that
PNC breached a contractual agreement between it and Kelly. It does not contain any allegations
that would surmount the statute of limitations issue that Kelly faces. Kelly’s motion to amend
will be denied.
V.

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Accordingly, it is ORDERED that the Report and Recommendation, ECF No. 26, is
ADOPTED.
It is further ORDERED that Plaintiff Roger Kelly’s Objections, ECF No. 29, are
OVERRULED.
It is further ORDERED that Defendants PNC Bank, NA and PNC Financial Services
Group, Inc.’s Motion to Dismiss, ECF No. 17, is GRANTED.
It is further ORDERED that Plaintiff Roger Kelly’s Motion to Stay, ECF No. 21, is
DENIED.
It is further ORDERED that Plaintiff Roger Kelly’s Motion to Amend, ECF No. 27, is
DENIED.
Dated: May 19, 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 May 19, 2016.
s/Richard Loury for Michael A. Sian
Case Manager

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