RUALES v. SPENCER SAVINGS BANK

Filing 20

OPINION. Signed by Judge Kevin McNulty on 1/9/2019. (sm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

MIGUEL RUALES,

Civ. No. 18-9 192 (KM) (MAH)

Plaintiff,
MEMORANDUM OPINION
V.

SPENCER SAVINGS BANK,
Defendant.

KEVIN MCNULTY, U.S.D.J.:

Plaintiff Miguel Ruales brings this action pro se against Spencer Savings
Bank (“SSB” or “the Bank”). According to the Amended Complaint,’ the Bank
closed Mr. Ruales’s checking account without properly communicating to him
the reasons for doing so. Plaintiff claims that this conduct amounted to
negligence and a violation of his civil rights under 42 U.S.C.

§

1983. Defendant

moved to dismiss the Amended Complaint for lack of subject matter
jurisdiction and failure to state a claim pursuant to Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6). For the reasons explained in this opinion, I will
dismiss the Amended Complaint on Rule l2(b)(6) grounds.
I.

SUMMARY OF ALLEGATIONS
a. Factual Background

For purposes of a Rule 12(b)(6) motion, the allegations of the Amended
Complaint are assumed to be true. See Section II.A, infra.

For ease of reference, certain items from the record will be abbreviated as
follows:
“DE
“AC”

“

=

=

Docket Entry in this case
Amended Complaint (DE 7)
1

Mr. Ruales is a citizen domiciled in New Jersey. (AC

¶

13). SSB is a

mutual savings and loan association chartered pursuant to the New Jersey
Saving and Loan Act. (Id.

¶J

business in New Jersey. (Id.

14-17). It operates in and has its principal place of

¶J

14-17). The Bank is alleged to be subject to the

supervision of the New Jersey Department of Banking and Insurance. (Id.).
Mr. Ruales had a noncommercial bank account with SSB. (Id.

¶

21).

On August 9, 2017, the Bank mailed Mr. Ruales a one-page letter
informing him that it would be closing his SSB checking account on September
9, 2017. (AC

¶

2). That letter did not include the reason his account was being

closed, and the Bank refused to tell Mr. Ruales why it closed his account. (Id.

¶jJ

5, 23, 24, 33). The lack of any explanation led “certain parties to speculate”

that Mr. Ruales had engaged in money-laundering activities. (Id.

¶1J

6, 10). Mr.

Ruales alleges that he did not engage in money-laundering activities and had
“an unblemished” relationship with the Bank. (Id.

¶J

7, 9).

Plaintiff asserts that the Bank violated a duty in not providing him with
an explanation as to why his account was terminated. (Id.

¶f

7, 9, 19, 20). The

account closure allegedly impaired his credit rating, jeopardized his ability to
obtain credit in the future, and caused him to bounce checks. (Id.

¶

12).

Prior to the account closure, Mr. Ruales “was very satisfied with the
excellent services provided to him” by the Bank. (Id.

¶

21). During that time, no

SSB representative informed Mr. Ruales of any problems with his account or
banking practices, and he did not engage in any criminal activity. (Id.

¶f

22,

26). Consequently, according to Mr. Ruales, there was “no need to generate any
Suspicious Activity Reports [(hereinafter, “SAR”)] in connection with activity in
his account.” (Id.).
b. Procedural Background
Plaintiff filed the original complaint on May 14, 2018. (DE 1). Defendant
filed a motion to dismiss the original complaint on June 11, 2018. (DE 5). On
June 12, 2018, Plaintiff filed the currently operative Amended Complaint,
which contains two counts. (DE 7). Count 1 of the Amended Complaint asserts

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a claim of negligence; Count 2 asserts a civil rights claim under 42 U.S.C.

§

1983.
On July 31, 2018, Plaintiff filed a request for default on the basis that
Defendant had not answered the Amended Complaint. (DE 9). On August 9,
2018, Defendant filed a motion to vacate default and to dismiss the Amended
Complaint. (DE 10). Because the clerk had not entered default, the portion of
defendant’s motion that seeks to vacate default

was

terminated. (DE 19).

What remains is Defendant’s motion to dismiss the Amended Complaint
pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). (DE 10) For the reasons stated
below, I will dismiss the Amended Complaint without prejudice.
ANALYSIS

II.
A.

Legal Standard

The Bank has moved to dismiss the complaint for failure to state a claim,
pursuant to Fed. I?. Civ. P. 12(b)(6), which provides for the dismissal of a
complaint, in whole or in part, if it fails to state a claim upon which relief can
be granted. The defendant, as the moving party, bears the burden of showing
that no claim has been stated. Animal Science Products, Inc. v. China Minmetals
Corp., 654 F.3d 462, 469 n. 9 (3d Cir. 2011). For the purposes of a motion to
dismiss, the facts alleged in the complaint are accepted as true and all
reasonable inferences are drawn in favor of the plaintiff. New Jersey Carpenters

& the Trustees Thereof u. Tishman Const. Corp. of New Jersey, 760 F.3d 297,
302 (3d Cir. 2014).
Federal Rule of Civil Procedure 8(a) does not require that a complaint
contain detailed factual allegations. Nevertheless, “a plaintiffs obligation to
provide the ‘grounds’ of [his or herj ‘entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of
action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Thus,
the complaint’s factual allegations must be sufficient to raise a plaintiffs right
to relief above a speculative level, so that a claim is “plausible on its face.” Id.
at 570; see also West Run Student Hous. Assocs., LLC i-c Huntington Nat. Bank,

3

712 F.3d 165, 169 (3d Cir. 2013). That facial-plausibility standard is met
“when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556).
While “[t]he plausibility standard is not akin to a ‘probability requirement’..
it asks for more than a sheer possibility.” Iqbal, 556 U.S. at 678.
Where a plaintiff, like Mr. Ruales, is proceeding pro se, the complaint is
“to be liberally construed,” and, “however inartfully pleaded, must be held to
less stringent standards than formal pleadings drafted by lawyers.” Erickson v.
Pardus, 551 U.S. 89, 93-94 (2007). Nevertheless, “prose litigants still must
allege sufficient facts in their complaints to support a claim.” Mala v. Crown
Bay Marina, Inc., 704 F.3d 239, 245 (3d Cir. 2013); see also Thakar v. Tan, 372
F. App’x 325, 328 (3d Cir. 2010).2

B.

Negligence (Count 1)

To state a claim for negligence, a plaintiff must allege the following four
elements: “(1) that the defendant owed a duty of care; (2) that the defendant
breached that duty; (3) actual and proximate causation; and (4) damages.”
Jovic ii. Legal Sea Foods, LLC, No. 16-0 1586, 2018 WL 5077900, at *2 (D.N.J.
Oct. 18, 2018) (quoting Femandes v. DAR Dey. Corp., 222 N.J. 390, 403-04

The defendant also moves to dismiss under Fed. R. Civ. P. 12(b)(1), which
governs jurisdictional challenges to a complaint. Because the Amended Complaint at
least purports to invoke federal law, I exercise my discretion to consider first whether
any federal claim is stated for purposes of Rule 12(b)(6). CNA u. United States, 535
F.3d 132, 144 (3d Cir. 2008) (“[Wjhen faced with a jurisdictional issue that is
intertwined with the merits of a claim, district courts must demand less in the way of
jurisdictional proof than would be appropriate at a trial stage.”) (internal quotations
omitted); Kulick v. Pocono Downs Racing Ass’n, Inc., 816 F.2d 895, 899 (3d Cir. 1987);
Daigle v. Opelousas Health Care, Inc., 774 F.2d 1344, 1347 (5th Cir.1985) (“The
jurisdictional facts are often intertwined with the merits of a claim. For example, if a
it could be argued that the plaintiff
plaintiffs constitutional claim is found wanting.
has failed to present a federal question and thus subject matter jurisdiction is absent.
However, the courts have uniformly held that in such instances the preferable practice
is to assume that jurisdiction exists and proceed to determine the merits of the claim
pursuant to [Rule 12] subdivision b(6) or Rule 56.”) (quoting 2 J. Moore, W. Taggart &
J. Wicker, Moore’s Federal Practice ¶ 12.07 [2.—i] at 12—50 (1982)).
2

.

4

.

(2015)). The Bank argues that it did not have a duty to provide the rationale to
Mr. Ruales as to why it closed his checking account. I agree that Mr. Ruales
has not sufficiently alleged the existence of a duty and dismiss his negligence
count under Fed. 1?. Civ. P. 12(b)(6) on this basis.
The facts and analysis of Doe v. Bank of Am. Corp., 273 F. Supp. 3d 203,
206 (D.D.C. 2017), are comparable to the present case. In Doe, the plaintiff
sued his former bank for negligence after it summarily closed his account
without providing any reason for the closure. Id. The Doe plaintiff complained
of damage to his reputation, “alleging that the abrupt and unexplained closing
of his account may suggest to international corporations on whose boards he
might serve, that he was engaged in illegal financial activities, such as money
laundering, which he vehemently denie[d].” Id. The “only reason” the plaintiff
filed the lawsuit was due to his bank’s “adamant refusal to tell him the reasons
why his account was closed.” Id. at 207.
Like Mr. Ruales, the Doe plaintiff alleged that he had a longstanding
relationship with his former bank, there were no prior problematic incidents,
and there were no reasons for the bank to generate a SAl? based on his
account activity. Id. Nonetheless, the Doe plaintiffs account was closed without
explanation, and the bank made “no effort to inform [Mr. Doe] of the
accusations against [him] or investigate them.” Id. In doing this, the Doe
plaintiffs bank allegedly “violated its ‘duty to act with reasonable care at all
times

.

.

.

[b]y closing the accounts before affording [Mr. Doe] an opportunity to

explain any alleged wrongdoing disclosed to the bank by federal authorities or
other sources.”’ Id. (quoting Doe Complaint). The Doe plaintiff sought a court
order requiring his former bank to explain in writing why it closed his account

5

and also a monetary award to compensate him for reputational and businessrelated damages. Id. at 207-08.
The Doe court granted the bank defendant’s motion to dismiss on Rule
12(b)(6) grounds. As to the negligence count, it held that no violation of a
legally enforceable duty’ had been alleged:
Essential to a successful negligence claim is the existence of a
legally enforceable duty, which Plaintiffs allege is a duty to act with
to investigate”
reasonable care that encompasses “a duty.
charges made against Mr. Doe and to “determine whether they
Plaintiffs provide no facts to
were bona fide.” Compl. ¶j 15, 20.
that reasonable commercial standards in
support their assertion
any relevant state require banks to investigate totally external
information that impedes their banking relationship or to provide
customers an opportunity to respond to that information before a
bank account may be closed, with prior notice, as here. Nor do
Plaintiffs point to any industry standard requiring banks to provide
reasons for the closure of an account.
.

.

.

.

.

Id. at 211.
I find this reasoning persuasive and adopt it here. Like the Doe plaintiff,
Mr. Ruales does not point to any law or industry standard that requires the
Bank to provide reasons for the closure of an account. In the absence of such a
duty, Mr. Ruales has failed to state a claim for negligence. The motion to
dismiss Count 1 is therefore granted.
C.

42 U.S.C.

§

1983 (Count 2)

Mr. Ruales has failed to state a claim under 42 U.S.C.

§

1983 because

the defendant is not alleged to have acted under color of state law.
In order to state a claim under 42 U.S.C.

§

1983, a plaintiff must allege

two essential elements: “(1) the conduct complained of must be ‘committed by a
person acting under color of state law’; and (2) this conduct must ‘deprive[

J

a

person of rights, privileges, or immunities secured by the constitution or laws
of the United States.”’ Clark v. Punshon, 516 F. App’x 97, 99 (3d Cir. 2013)
(quoting Kost

ii.

Kozakiewicz, 1 F.3d 176, 184 (3d Cir. 1993)); accord Mitchell v.

Mitchell, 737 F. App’x 630, 631 (3d Cir. 2018) (“under Section 1983, a plaintiff

6

must show she was deprived of a federal constitutional or statutory right by a
state actor.”); see also West z’. Atkins, 487 U.S. 42, 48 (1988).
The state-action element of a Section 1983 claim requires that “the
conduct allegedly causing the deprivation of a federal right be fairly
attributable to the State.” Lugar v. Edmonson Oil Co., 457 U.S. 922, 937, 102 S.
Ct. 2744 (1982). For the conduct to be “fairly attributable” to the State, 1) the
deprivation must be caused by a) the exercise of some right or privilege created
by the State or b) by a rule of conduct imposed by it or by a person for whom
the State is responsible, and 2) the defendant must be a person who may fairly
be said to be a state actor, either because the person a) is a state official, b)
acted together with or has obtained significant aid from state officials, or c)
performed conduct otherwise chargeable to the State. See id. at 936-39.
“[A] private party can qualify as a state actor when ‘he [or she] is a willful
participant in joint action with the State or its agents,”’ but Mr. Ruales has
alleged no such facts here. Clark, 516 F. App’3c at 99 (quoting Dennis z.’. Sparks,
449 U.S. 24, 27-28, 101 5. Ct. 183 (1980)). True, the Amended Complaint
alleges that the Bank was subject to the supervision of the New Jersey
Department of Banking and Insurance. (AC

fl

14-17). However, merely being

under the supervision of a state regulatory agency does not transform a private
entity into a state actor. Shine v. TD Bank Fin. Grp., No. 09-4377, 2010 WL
2771773, at *5 (D.N.J. July 12, 2010) (“[M]ere regulation of an entity by the
government does not transform the entity into a state actor.”) (citing Jackson v.
Metro. Edison Co., 419 U.S. 345, 350, 95 5. Ct. 449 (1974)). That principle has
been applied to regulated banks in particular. Bailey a Harleysuille Nat’l Bank
& Th, 188 F. App’x 66, 68 (3d Cir. 2006) (“[B]anks have been found not to be
state actors, despite [their] extensive regulation, even when their complained-of
actions have been explicitly authorized by the state.

.

.

.

Thus, the Bank is not

a state actor by virtue of its regulation by the government and participation in
the federal reserve system and Federal Deposit Insurance Corporation.”). To
deem a regulated entity a state actor would broaden the scope of 1983 liability

7

beyond the limits of the statutory text and case law interpreting it. See Lugar,

457 U.S. at 937 (“[T]he party charged with the deprivation must be a person
who may fairly be said to be a state actor. This may be because he is a state
official, because he has acted together with or has obtained significant aid from
state officials, or because his conduct is otherwise chargeable to the State.
Without a limit such as this, private parties could face constitutional litigation
whenever they seek to rely on some state rule governing their interactions with
the community surrounding them.”).
Defendant SSB is a private-sector entity. No facts are alleged to suggest
that it was acting under color of state law, or as a willful participant in joint
action with the State or its agents. See James v. Heritage Valley Fed. Credit
Union, 197 F. App’x 102, 106 (3d Cir. 2006) (“To the extent [plaintiff] raises
claims under

§

1983 [against a credit union and its employees], none of the

defendants is a state actor.”).
Consequently, Mr. Ruales has failed to state a claim under Section 1983
and the motion to dismiss Count 2 is granted.3

The jurisdictional allegations of the Amended Complaint state that the claims
are “brought under Federal consumer financial law” and cite 12 U.S.C. § 5565(a)(I) as
a basis for jurisdiction. (AC ¶ 18). That statute provides federal courts with subject
matter jurisdiction over claims “brought under Federal consumer fmancial law.” Id.
The statutory defmition of “Federal consumer financial law” includes “the provisions of
this title, the enumerated consumer laws, the laws for which authorities are
transferred under subtitles F and H, and any rule or order prescribed by the Bureau
of Consumer Financial Protectionj under this title, an enumerated consumer law, or
pursuant to the authorities transferred under subtitles F and H. The term does not
include the Federal Trade Commission Act.” 12 U.S.C. § 5481(14). The phrase
“enumerated consumer laws” is defined to include a group of eighteen separate federal
laws. See 12 U.S.C. § 548 1(12).
Even a pro se complaint must provide a defendant with “fair notice of the claim
and the grounds upon which it rests.” Erickson, 551 U.S. at 127 (citing Twombly, 550
U.S. 544 (2007)). This complaint contains no count under federal consumer financial
laws, and does not specify any such law. To the extent such a claim may have been
intended, it is dismissed for failure to meet minimal pleading standards. See Normela
*5 (CD.
Upshaw v. United States Dep’t ofEdue., No. 17-00 164, 2017 WL 7171525, at
Cal. Sept. 18, 2017) (“Plaintiff broadly asserts violations of ‘Federal Consumer
By failing to identify particular statutes, this claim fails to satisfy
Financial Law[s
3

8

III.

CONCLUSION

For the reasons stated in this Opinion, Defendant’s motion to dismiss the
Amended Complaint is granted on Rule 12(b)(6) grounds. Because this is an
initial dismissal, 1 will order that it be entered without prejudice to the filing,
within 30 days, of a properly supported motion to submit a second amended
complaint. An appropriate Order follows.

/

Dated: Janua 9, 2019

(1

HON. HEWN MCNULTY, U.S.D&

the minimal notice pleading requirements of Federal Rule of Civil Procedure 8 and
therefore must be dismissed.”).
9