Stephenson v. Murray et al

Filing 3

REPORT AND RECOMMENDATION in that it is RECOMMENDED that this case be DISMISSED. The Court GRANTS the Motion to Proceed In Forma Pauperis and this case is CONSOLIDATED with 2:14-cv-2350 for all further proceedings. Objections to R&R due by 12/29/2014. Signed by Magistrate Judge Terence P Kemp on 12/11/14. (sem1)(This document has been sent by the Clerks Office by regular mail to the party(ies) listed in the NEF that did not receive electronic notification.)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
William Stephenson,

:

Plaintiff,

:

v.

Case No. 2:14-cv-1755

:

Jacqueline P. Murray, et al., :
Defendants.

William Stephenson,

JUDGE MICHAEL H. WATSON
Magistrate Judge Kemp

:

:

Plaintiff,

:

v.

Case No. 2:14-cv-2350

:

Jacqueline P. Murray, et al., :
Defendants.

JUDGE MICHAEL H. WATSON
Magistrate Judge Kemp

:

REPORT AND RECOMMENDATION
On September 30, 2014, Plaintiff William Stephenson filed a
motion for leave to proceed in forma pauperis and a proposed
civil complaint seeking relief against defendants Jacqueline P.
Murray, Morris Stephenson, and Maurice Stephenson.

On November

24, 2014, he filed another such motion, attaching another
proposed complaint against the same defendants.

The allegations

in the two complaints are similar, as are the legal theories
advanced, and both appear to relate to the same trust.

The Court

finds that the cases involve common questions of law and fact and
that consolidation of the cases is appropriate under Fed.R.Civ.P.
42(a).

The Court therefore ORDERS the cases to be consolidated

for all further proceedings.

After reviewing the financial information submitted in the
motions for leave to proceed in forma pauperis, the Court
determines that Mr. Stephenson qualifies financially for a waiver
of the filing fee, and the two motions to proceed in forma
pauperis (Doc. 1 in each case) are GRANTED.

Because Mr.

Stephenson is not paying a filing fee, however, his complaints
are subject to an initial screening pursuant to 28 U.S.C.
§1915(e)(2) and 28 U.S.C. §1915(a).

For the following reasons,

based on the Court’s review of the two complaints, it will be
recommended that both cases be DISMISSED.
I.

Factual Background

In his first complaint, Mr. Stephenson generally alleges
breach of fiduciary duty, willful damage, and theft relating to a
trust.

In the second action, he repeats these allegations with

greater specificity.

The Court considers both complaints in

setting out the factual background which Mr. Stephenson alleges
in support of his claims.
Although not entirely clear, Mr. Stephenson’s allegations
appear to relate to a trust that was created to benefit him.

Mr.

Stephenson alleges that he was the sole beneficiary of the trust
and that his mother, defendant Jacqueline Murray, despite being a
fiduciary, did not inform him of the existence of the
“inheritance, Business, Trust Fund Accounts, Shares, Assets and
Property” which were held in his name.

Mr. Stephenson alleges

that Ms. Murray improperly gained access to his assets without
knowledge or his consent while he was incarcerated from 1992
until 2002.

Mr. Stephenson asserts that his mother improperly

used the trust funds for her benefit and for the benefit of his
minor children, who are also named as defendants in both cases.
Mr. Stephenson also alleges that defendants filed false tax
information and that Ms. Murray improperly used a credit card
held in his name.
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In his original complaint, Mr. Stephenson brings a claim for
breach of fiduciary duty under 15 U.S.C. §80a-35.

Mr. Stephenson

also cites 29 U.S.C. §1103 relating to the “establishment of
trust.”

In his second complaint, Mr. Stephenson alleges that

defendants acted in “clear violation” of the following:
18 U.S. Code § 1028A - Aggravated identity theft and
18 U.S. CODE § 1708 – THEFT OR RECEIPT OF STOLEN MAIL
15 U.S. Code § 80a-35 - Breach of fiduciary duty.
Local Rules:
5810.01 BREACH OF TRUST
5808.02 Duty of loyalty to beneficiary
5808.10 Adequate records of administration
5808.13 Keeping Beneficiary Involved
5810.02 Liability to beneficiary for Breach & Contribution.
1121.16 Fiduciary Capacity for Holding Money and Property
5810.06 Trustee reliance on terms of trust
5808.04 Duty to act as prudent person
The Court first considers Mr. Stephenson’s claims to the extent
that they arise under federal law.

After doing so, the Court

discusses Mr. Stephenson’s state law claims.
II. Legal Standard
The ability to proceed in forma pauperis was established by
Congress under 28 U.S.C. §1915 in order to provide greater means
of access to the judicial system for the indigent.
Hernandez, 504 U.S. 25, 31 (1992).

Denton v.

The statute allows, with

proper showing of financial need, a petitioner to proceed in an
action “without prepayment of fees or security thereof.”
U.S.C. §1915(a)(1).

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However, 28 U.S.C. §1915(e)(2) requires the

Court to “dismiss the case at any time if the court determines
that ... (B) the action or appeal (I) is frivolous or malicious;
(ii) fails to state a claim on which relief may be granted; or
(iii) seeks monetary relief against a defendant who is immune
from such relief.”

A suit is frivolous if it lacks any arguable

foundation in either fact or law.

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Neitzke v. Williams, 490 U.S.

319, 325 (1989).

A complaint fails to state a claim upon which

relief can be granted, if, after accepting as true all wellpleaded allegations of the complaint, the allegations do not
“raise a right to relief above the speculative level.”
Corp. v. Twombly, 550 U.S. 544, 555 (2007).

Bell Atl.

The Court is mindful

that pro se complaints are to be construed liberally in favor of
the pro se party. Haines v. Kerner, 404 U.S. 519 (1972);

see

also Jourdan v. Jabe, 951 F.2d 108, 110 (6th Cir. 1991).

With

these standards in mind, the Court conducts an initial screening
of Mr. Stephenson’s complaints.
III. Discussion
As noted above, Mr. Stephenson claims that the federal
courts have jurisdiction over his claims under various federal
statutes, including 15 U.S.C. §80a-35, 29 U.S.C. §1103, 18 U.S.C.
§1028A, and 18 U.S.C. §1708.

As explained below, however, the

complaint does not state a plausible claim for relief under of
any of these laws.
First, in

The Court addresses each claim in turn.

both complaints, Mr. Stephenson alleges a

violation of 15 U.S.C. §80a-35, a provision of the Investment
Company Act of 1940, 15 U.S.C. § 80a–1 et seq. (“ICA”).
U.S.C. §80a-35(a):
The Commission is authorized to bring an action
... alleging that a person who is, or at the time
of the alleged misconduct was, serving or acting
in one or more of the following capacities has
engaged within five years of the commencement of
the action or is about to engage in any act or
practice constituting a breach of fiduciary duty
involving personal misconduct in respect of any
registered investment company for which such
person so serves or acts, or at the time of the
alleged misconduct, so served or acted–
(1) as officer,
advisory
board,
depositor; or

director, member of
investment
adviser,

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any
or

Under 15

(2)
as
principal
underwriter,
if
such
registered company is an open-end company,
unit
investment
trust,
or
face-amount
certificate company.
***
Further, 15 U.S.C. §80a-35(b) provides that the investment
adviser of a registered investment company “or any affiliated
person of such investment adviser, or any other person enumerated
in subsection (a)” shall be deemed to have a fiduciary duty in
certain circumstances.

Accordingly, the statute applies to

investment companies and their officers.

See Wilkerson v.

Gozdan, 2014 WL 4093279, at *4 (M.D. Ala. Aug. 19, 2014).
Because no defendant named by Mr. Stephenson is an investment
company or officer of an investment company, the statute is
inapplicable.

Further, Mr. Stephenson does not allege that he is

a shareholder in an investment company, and only the Commissioner
and shareholders have standing to sue under this statute.
Dandorph v. Fahnestock & Co., 462 F.Supp. 961 (D. Conn. 1979).
Consequently, Mr. Stephenson fails to state a claim under 15
U.S.C. §80a-35 for breach of fiduciary duty.
Next, in his original complaint, Mr. Stephenson asserts a
claim under 29 U.S.C. §1103, which is part of the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. §1001 et seq.
Section 1103, by its terms, applies to assets of “employee
benefit plans,” and ERISA defines an employee benefit plan as one
“which was heretofore or is hereafter established or maintained
by an employer or by an employee organization, or by both....” 29
U.S.C. §1002(1), (2).

Here, Mr. Stephenson does not allege that

the trust at issue is an employee benefit plan.
has not stated a plausible ERISA claim.

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Consequently, he

Finally, in his second complaint, Mr. Stephenson asserts
claims under 18 U.S.C. §1028A and 18 U.S.C. §1708, both of which
are federal criminal statutes.

But a private person like Mr.

Stephenson cannot sue defendants civilly for violating criminal
statutes.

The law is clear that, absent unusual circumstances,

an individual possesses no private right of action based on
alleged violations of criminal statutes.

This Court has recently

said that “[a]s a general rule, a civil plaintiff has no standing
to assert a claim arising under a criminal statute.”

Easterling

v. Crawford, 2014 WL 428931, *11 (S.D. Ohio Feb. 4, 2014).

That

is not to say that such a claim can never be asserted, but in
order to find that a private right of action exists under a
federal criminal statute, the Court must conclude either from the
language of the statute itself, or from some other source, that
it was Congress’ intent to create such a claim.

That is, “in

determining whether a private right of action is implicit in a
statute, the ‘focal point is Congress' intent in enacting the
statute.’”

Ellison v. Cocke County, Tenn., 63 F.3d 467, 470 (6th

Cir. 1995), quoting Thompson v. Thompson, 484 U.S. 174, 179
(1988).

And, as the Supreme Court has said, that Court “has

rarely implied a private right of action under a criminal
statute, and where it has done so ‘there was at least a statutory
basis for inferring that a civil cause of action of some sort lay
in favor of someone.’” Chrysler Corp. v. Brown, 441 U.S. 281, 316
(1979), quoting Cort v. Ash, 422 U.S. 66, 79 (1975).
Neither of the two statutes cited by Mr. Stephenson suggest,
by their language, that Congress intended to permit private
parties to sue other private parties.

Section 1028A deals with

identity theft, and while it defines the crime, it says nothing
about enabling private citizens to sue for a violation of the
terms of the statute.
from the mail.

Section 1708 makes it a crime to steal

In that statute as well, the only consequences
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spelled out for violating the law are fine and imprisonment,
which are not civil remedies.

The Court is not aware of any case

implying a private right of action under either §1028A or §1708.
Consequently, Mr. Stephenson’s complaints do not state plausible
civil claims under those statutes.
Mr. Stephenson has also identified various provisions of
Ohio law which, in his view, the defendants have violated.
Because Mr. Stephenson and all of the defendants are residents of
the State of Ohio, the Court could exercise jurisdiction over
those claims only under 28 U.S.C. §1367, the supplemental
jurisdiction statute.

Under §1367(c)(3), the Court may decline

to exercise that jurisdiction if “the district court has
dismissed all claims over which it has original jurisdiction.”
That is the usual course of action when any federal claims
asserted in the case are insubstantial or are dismissed at an
early stage of the case.

See Parrish v. HBO & Co., 85 F.Supp. 2d

792, 799 (S.D. Ohio 1999).

That is what should happen here.

Consequently, the Court will recommend dismissal of both
complaints in their entirety.
IV. Recommended Disposition
Based upon the foregoing, it is recommended that the federal
claims asserted in both of Mr. Stephenson’s cases be dismissed
for failure to state a claim upon which relief may be granted,
and that any state law claims be dismissed without prejudice.
Should this recommendation be adopted, the Court should mail a
copy of the complaints, this Report and Recommendation, and the
Court’s order of dismissal to the defendants.
V. Procedure on Objections
If any party objects to this Report and Recommendation, that
party may, within fourteen days of the date of this Report, file
and serve on all parties written objections to those specific
proposed findings or recommendations to which objection is made,
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together with supporting authority for the objection(s).

A judge

of this Court shall make a de novo determination of those
portions of the report or specified proposed findings or
recommendations to which objection is made.

Upon proper

objections, a judge of this Court may accept, reject, or modify,
in whole or in part, the findings or recommendations made herein,
may receive further evidence or may recommit this matter to the
magistrate judge with instructions.

28 U.S.C. §636(b)(1).

The parties are specifically advised that failure to object
to the Report and Recommendation will result in a waiver of the
right to have a district judge review the Report and
Recommendation de novo, and also operates as a waiver of the
right to appeal the decision of the District Court adopting the
Report and Recommendation.

See Thomas v. Arn, 474 U.S. 140

(1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981).

/s/ Terence P Kemp
United States Magistrate Judge

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