Towne Auto Sales, LLC v. Tobsal Corporation et al
Opinion and Order. Plaintiff's Motion to Remand (Related doc # 7 ) is denied. Defendant Bank of America's Motion to Dismiss (Related doc # 5 ) is denied. Plaintiff's Motion for Leave to Amend Complaint (Related doc # 8 ) is granted. Plaintiff shall file Second Amended Complaint by 5/17/2017. Judge Christopher A. Boyko on 5/4/2017. (H,CM)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
TOWNE AUTO SALES, LLC,
TOBSAL CORPORATION, et al.,
CASE NO. 1:16CV2739
JUDGE CHRISTOPHER A. BOYKO
OPINION AND ORDER
CHRISTOPHER A. BOYKO, J.:
This matter comes before the Court upon the pending motions: (1) Motion (ECF DKT
#5) of Defendant, Bank of America, N.A. (“BANA”), to Dismiss; (2) Motion (ECF DKT #7)
of Plaintiff, Towne Auto Sales, LLC, to Remand; and (3) Alternative Motion (ECF DKT #8)
for Leave to Amend the Complaint. For the following reasons, the Motion to Remand is
denied, the Motion for Leave to Amend is granted and the Motion to Dismiss is denied.
I. FACTUAL BACKGROUND
According to the First Amended Complaint (ECF DKT #1-1), Plaintiff, Towne Auto
Sales, LLC, is an Ohio limited liability company engaged in the business of buying and
selling pre-owned vehicles. On or about November 5, 2015, Plaintiff negotiated with
Defendant Tobias Trucks for the purchase of a 1958 Corvette. Plaintiff wired $27,050 from
its account with Chase Bank to a BANA account in New York for the purchase. Plaintiff was
informed by a Tobias representative that the title and notarized bill of sale would be
forwarded the following morning. There was no delivery of the vehicle, title or bill of sale.
The First Amended Complaint further alleges that an individual named Sergejs
Traskovs opened a bank account at BANA as the purported president of Defendant Tobsal
Corporation on October 23, 2015. Defendant Suzel Yapor was the BANA employee who
opened the account for Traskovs. Plaintiff additionally claims:
Bank of America and Yapor owed a duty to Plaintiff as codified under state
and federal law, including through the federal Bank Secrecy Act and Patriot
Bank of America and Yapor breached those specific duties by allowing the
Tobsal Defendants to open and engage in a fraudulent scheme using a Bank of
(First Amended Complaint, ECF DKT #1-1, ¶¶ 48-49).
BANA removed the above-captioned action from the Court of Common Pleas for
Medina County to the United States District Court for the Northern District of Ohio, Eastern
Division based upon federal question jurisdiction. Plaintiff’s First Amended Complaint
asserts claims based upon BANA’s alleged violation of the Patriot Act and the Bank Secrecy
Act and claims against other Defendants for the alleged commission of mail and wire fraud in
violation of 18 U.S.C. §§ 1341, 1343.
In its Motion to Remand (ECF DKT #7), Plaintiff argues that, while violations of
federal laws can establish the duty and breach elements of its negligence and negligence per
se claims against BANA, violation of federal law is simply one possible theory of liability.
Plaintiff asserts that its claims are insufficiently “substantial” to confer federal question
BANA moves for dismissal of the Negligence, Negligence per se and Respondeat
Superior causes of action because BANA owes no duty of care to a non-customer and because
the federal laws at issue do not provide a private cause of action. (ECF DKT #5). Plaintiff
opposes the dismissal motion and seeks leave to amend to incorporate additional facts it has
discovered. (ECF DKT #8).
II. LAW AND ANALYSIS
Notice of Removal and Subject Matter Jurisdiction
28 U.S.C. § 1441 “provides that an action is removable only if it could have initially
been brought in federal court.” Cole v. Great Atl. & Pacific Tea Co., 728 F. Supp. 1305,
1307 (E.D.Ky.1990). Put another way, “[a] civil case that is filed in state court may be
removed by the defendant to federal district court if the plaintiff could have chosen to file
there originally.” Warthman v. Genoa Twp. Bd. of Trs., 549 F.3d 1055, 1059 (6th Cir.2008).
The burden of establishing federal jurisdiction rests upon the removing party. Alexander v.
Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir.1994). “Concern about encroaching on a
state court’s right to decide cases properly before it, requires this court to construe removal
jurisdiction narrowly.” Cole, 728 F. Supp. at 1307 (citing Shamrock Oil & Gas Corp. v.
Sheets, 313 U.S. 100, 109 (1941)). A removed case must be remanded if the district court
lacks subject matter jurisdiction. 28 U.S.C. § 1447(c). In addition, “[w]here there is doubt as
to federal jurisdiction, the doubt should be construed in favor of remanding the case to the
State court where there is no doubt as to its jurisdiction.” Walsh v. Am. Airlines, Inc., 264 F.
Supp. 514, 515 (E.D.Ky.1967); see also Breymann v. Pennsylvania, O. & D. R.R., 38 F.2d
209, 212 (6th Cir.1930).
Federal district courts are courts of limited jurisdiction. Bender v. Williamsport Area
Sch. Dist., 475 U.S. 534, 541 (1986) (citing Marbury v. Madison, 1 Cranch 137, 5 U.S. 137
(1803)). “Subject matter jurisdiction is the unwaivable sine qua non for exercise of the
federal judicial power.” Crabtree v. Wal-Mart, 2006 WL 897210 at *1 (E.D.Ky. Apr. 4,
2006), slip copy; Richmond v. Int’l Bus. Machs. Corp., 919 F.Supp. 107 (E.D.N.Y.1996)
(citing Fed.R.Civ.P. 12(b)(1)).
In the absence of diversity, a civil action filed in state court may be removed to federal
court only if the claim “arises under” federal law. Beneficial Nat’l Bank v. Anderson, 539
U.S. 1, 6 (2003). “Any civil action of which the district courts have original jurisdiction
founded on a claim or right arising under the Constitution, treaties or laws of the United
States shall be removable without regard to the citizenship or residence of the parties.” 28
“To determine whether a claim arises under federal law, a court, under the wellpleaded-complaint rule, generally looks only to the plaintiff’s complaint.” Gentek Bldg.
Prods., Inc. v. The Sherwin-Williams Co., 491 F.3d 320, 325 (6th Cir.2007) (citing Palkow v.
CSX Transp., Inc., 431 F.3d 543, 552 (6th Cir.2005)). For jurisdictional purposes, a claim
arises under federal law only if plaintiff’s statement of the cause of action affirmatively shows
that it is based on federal law. Beneficial Nat’l Bank, 539 U.S. at 6-8.
“[T]he scope of removal jurisdiction based on the existence of a federal question” is
“identical to the scope of federal question jurisdiction under [28 U.S.C.] § 1331.” Warthman,
549 F.3d at 1061 (quoting Long v. Bando Mfg. of Am., 201 F.3d 754, 758 (6th Cir.2000)).
“Federal question jurisdiction can be established by showing ‘either that federal law creates
the cause of action or that the plaintiff[’]s right to relief necessarily depends on resolution of a
substantial question of federal law.’” Warthman, 549 F.3d at 1061; Thornton v. SW. Detroit
Hosp., 895 F.2d 1131, 1133 (6th Cir.1990) (quoting Franchise Tax Bd. v. Constr. Laborers
Vacation Trust, 463 U.S. 1, 27-28 (1983)).
Looking at Plaintiff’s First Amended Complaint, the Court determines that Counts
Four, Five and Six, alleging Negligence, Negligence per se and Respondeat Superior against
BANA, are affirmatively founded upon violations of the federal Bank Secrecy Act and the
Patriot Act. These Counts allege that the duty the Bank owed to Plaintiff arises out of the
obligations imposed by these federal laws. Moreover, Plaintiff alleges Corrupt Activities
(Count Seven) against the Tobias/Tobsal Defendants involving the commission of mail fraud
and wire fraud. Therefore, the Court finds that removal under federal question jurisdiction
was appropriate. Plaintiff’s Motion to Remand is denied.
Motion to Amend
Fed.R.Civ.P. 15(a)(2) reads in part, “The court should freely give leave [to amend]
when justice so requires.” However, this liberal amendment policy is not without limits. The
Sixth Circuit has observed: “A motion to amend a complaint should be denied if the
amendment is brought in bad faith, for dilatory purposes, results in undue delay or prejudice
to the opposing party, or would be futile.” Colvin v. Caruso, 605 F.3d 282, 294 (6th
Cir.2010) (citing Crawford v. Roane, 53 F.3d 750, 753 (6th Cir.1995)). In the case at bar,
BANA does not charge Plaintiff with bad faith or dilatory motivations.
Delay, by itself, “does not justify denial of leave to amend.” Morse v. McWhorter,
290 F.3d 800 (6th Cir.2002). In addition, when discovery is in the early stages, any prejudice
from entertaining an amended pleading is minimal. Addressing the contention that an
amendment might necessitate another dispositive motion, the Sixth Circuit also noted that
“another round of motion practice ... does not rise to the level of prejudice that would warrant
denial of leave to amend.” Morse, 290 F.3d at 801.
“In determining what constitutes prejudice, the court considers whether the assertion
of the new claim or defense would: require the opponent to expend significant additional
resources to conduct discovery and prepare for trial; significantly delay the resolution of the
dispute; or prevent the plaintiff from bringing a timely action in another jurisdiction.” Phelps
v. McClellan, 30 F.3d 658, 663 (6th Cir.1994). In the instant situation, the Court believes that
these factors weigh in favor of allowing Plaintiff to amend.
Defendants insist that Plaintiff’s proposed Amended Complaint is futile. Plaintiff
offers the affidavit of the Company president, Mark Powers (ECF DKT #8-1, Exhibit A); and
Plaintiff seeks leave to incorporate the recently discovered facts into an amended pleading.
Powers avers that he called a BANA representative, instructed the representative that BANA
should not process the wire transaction and said that “something fraudulent was happening.”
(Id. at ¶ 5). Plaintiff contends that BANA’s duty to act arises out of that conversation.
In light of the proposed amendment to the facts, the Court declines to deny
amendment as futile. Moreover, the Court is mindful that “federal courts have a strong
preference for trials on the merits.” Clark v. Johnston, 413 F.App’x 804, 819 (6th Cir.2011).
Therefore, Plaintiff’s Motion for Leave to Amend (ECF DKT #8) is granted. In view
of the Court’s ruling, BANA’s Motion to Dismiss is denied.
For these reasons, the Motion (ECF DKT #5) of Defendant, Bank of America, N.A.
(“BANA”), to Dismiss is denied; the Motion (ECF DKT #7) of Plaintiff, Towne Auto Sales,
LLC, to Remand is denied; and the Alternative Motion (ECF DKT #8) for Leave to Amend
the Complaint is granted. Plaintiff shall file its Second Amended Complaint on or before
May 17, 2017.
IT IS SO ORDERED.
s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge
Dated: May 4, 2017
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