Numrich v. JPMorgan Chase Bank N.A.
Filing
63
OPINION and ORDER - JPMorgan's requests 23 and 45 and Numrich's requests 48 , 52 and 56 for judicial notice are GRANTED with regard to the contents of, but not the factual assertions contained in, the state and federal court documents submitted to the court. JPMorgan's motion 21 to dismiss is GRANTED with prejudice and without leave to amend. Dated this 30th day of May, 2012, by U.S. Magistrate Judge John V. Acosta. (peg)
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
Case No.: 3:1l-CV-1254-AC
EDGAR T. NUMRICI-I,
OPINION AND ORDER
Plaintiff,
v.
JPMORGAN CHASE BANK, N.A.,
Defendant.
ACOSTA, Magistrate Judge:
Introduction
Plaintiff Edgar T. Numrich ("Numrich") filed this action against defendant JPMorgan Chase
Bank, N.A. ("JPMorgan"), seeking to recover damages he suffered when JPMorgan attempted to
collect on a debt Numrich owed Washington Mutual Bank (the "Bank") after JPMorgan entered into
an agreement to purchase the Bank.
In the pro se complaint filed on October 18, 2011,
("Complaint") Numrich alleges JPMorgan fraudulently represented it had the authority to collect on
Page 1 - OPINION AND ORDER
{SIB}
· ,
the debt. Numrich asserts claims for common-law fraud and for violations of the Racketeer
Influenced and Corrupt Organizations Act ("RICO") based on the predicate acts of mail and wire
fraud. JPMQrgan moves to dismiss this action in deference to a similar state action between the
parties that has been pending for nearly a year. AItematively, JPMorgan moves to dismiss the
complaint for failure to state a claim under FED. R. CIV. P. 12(b)(6), for failure to provide a short
and plain statement of the claim under FED. R. CIV. P. Sea), and for failure to allege fraud with the
paliicularity required by FED. R. CIV. P. 9(b). The comi finds that Numrich has failed to allege he
was ignorant of the falsity of the misrepresentations or that he relied on the misrepresentations to his
detriment as required under both claims, and that Numrich is unable to cure these deficiencies by
amendment. Accordingly, the court dismisses the Complaint with prejudice.
Background
Numrich alleges in the Complaint that he opened a personal checking account ("Account")
with the Bank in December 2003. (Compl.
~
13.) At some point, Numrich overdrew the Account
and placed it in a negative balance. (Compl.
~
14.) In November 2005, the sum of $536.16 was
credited to the Account as a "deposit" and "Total Amount Due Washington Mutual". (Compl. ~ 14.)
Numrich alleges the final account statement for the Account, which was dated November 22,2005,
showed an ending balance of zero. (Compl.
~
14.) However, Nunn'ich later alleges the Bank
"charged off' the Account. (Compl. ~ 40.) The Bank did not make any claim against Numrich with
regard to the Account after December 8, 2005. (Compl.
~
90.)
On September 25, 2008, the United States Office of Thrift Supervision seized the Bank and
placed it into receivership under the Federal Deposit Insurance Corporation ("FDIC"). (Compl.
16.) The same day, the FDIC sold the Bank to JPMorgan. (Compl.
Page 2 - OPINION AND ORDER
~
~
20.) Numrich alleges that to
{SIB}
the extent the Bank carried the Account as a liability, it was not purchased by JPMorgan as part of
the purchase of the Bank, or otherwise. (Compl." 56.)
JPMorgan reopened the Bank branch offices the next day under the "Chase" name. (Compl.
~ 20.)
Washington Mutual Inc., the holding company that previously owned the Bank ("Mutual"),
filed for Chapter 11 bankruptcy on September 26, 2008, as well. (Compl. ,,22.) Numrich alleges
that neither the sale nor the bankruptcy have been fully resolved and closed, that JPMorgan did not
purchase the unsecured debt or equity claims of the Bank, that JPMorgan concedes it did not become
the Bank's successor in interest, and that the FDIC has remained in control of the Bank since its
initial closure. (Compl. ~~ 21-23,93-95.) He fmiher asserts that JPMorgan has wrongfully received
billions of dollars in tax refunds earned by the Bank and Mutual from 2003 to the present and will
receive additional tax refunds, tax credits, and other tax benefits through the Bank and Mutual.
(Compl.
~~
20, 29, 35-39.)
Beginning in April 2009, various collection agencies contacted Nunn'ich in attempt to collect
a debt on behalf of JPMorgan. (Compl. ~ 62). Numrich consistently denied having any relationship
with JPMorgan or owing JPMorgan the sum or $536.16, or any lesser amount. (Compl
~
62.)
Between March and August of 2010, Numrich opened three checking accounts (two personal and.
one business) with JPMorgan ("JPMorgan Accounts"). (Compl. § 63.) Between August 5 and
August 10,2010, JPMorgan, without the authorization ofNumrich, "swept" all funds out of the
JPMorgan Accounts, in the total amount of $143.41, listing the transactions as a "withdrawal to
another account".
(Compl..~
65.) Numrich closed the JPMorgan Accounts on August 10, 2010.
(Compl. ~ 66.) Nunn'ich continued to receive communications from JPMorgan, through various
collections agencies, attempting to collect the sum of$392.75 on behalf of JPMorgan and Numrich
Page 3 - OPINION AL'lD ORDER
{SIB}
continued to deny the existence of the obligation. (CompJ. '1167.)
Numrich asserts that JPMorgan made numerous fraudulent representations to him while
attempting to collect on the Account and that he relied on such representations to his detriment.
(CompI. '11'11 70-74.) He also alleges that JPMorgan conspired with one or more enterprises and
engaged in at least two acts of mail and/or wire fraud while attempting to collect on the Account,
thereby engaging in a pattem of racketeering activity in violation of RICO. (Comp!. '11'1175-87.)
Numrich seeks economic damages in the amount of$1 00,000, non-economic damages in the amount
of$1 ,000,000, and an injunction prohibiting JPMorgan from engaging in any further attempt collect
on the Account. (CompI. '11137,143.)
JPMorgan moves the court to dismiss this action in deference to a similar state action that
has been pending between it and Numrich for nearly a year. Altematively, JPMorgan moves to
dismiss the complaint for failure to state a claim under FED. R. ClV. P. 12(b)(6), for failure to
provide a short and plain statement of the claim under FED. R. Cry. P. 8(a), and for failure to allege
fi'aud with the particularity required by FED. R. Cry. P. 9(b).
Preliminary Proceduralll1atter
In support of the motion to dismiss based on the pendency of related litigation, JPMorgan
asks the comi to take judicial notice of numerous documents. In the initial motion for judicial
notice, JPMorgan seeks judicial notice of the court docket sheet for the case of Edgar T. Numrich
v. JP }"forgan Chase Bank, NA., Case No. 1102-01673, filed in the Circuit Comi for the State of
Oregon for the County ofMultnomah (the "State Action"), and various documents filed in the State
Action, including the complaint, two summmy judgment motions, a motion for entJy of limited
judgment, and a motion for abatement, along with the opposition and reply briefs and suppOliing
Page 4 - OPINION AND ORDER
{SIB}
documentation, and the court orders on all but the last motion for summary judgment. In a
supplemental motion for judicial notice, JPMorgan offers the court order on the last motion for
summaty judgment in the State Action for consideration by the court. Similarly, Numrich asks the
court to take judicial notice of a number of court documents. In his second' request for judicial
Notice, Numrich seeks judicial notice of two documents filed in the matter of In Re Checking
Account Overdraft Litigation, Case No. I :09-MD-02036-JLK, filed in the United States District
COUli for the Southem District of Florida ("Overdraft Litigation"), including the Notice of
Anticipated Settlement and the Order Suspending Revised Scheduling Order Pending Filing of
Anticipated Settlement Agreement, as well as an opinion of the United States Supreme COUli issued
in Boyle v. United States, No. 07-1309. In his third request for judicial notice, he asks the court to
consider a brief in support of his amended motion to compel filed in the State Action. Finally, in
his fOUlih request, Numrich seeks judicial notice of a complaint for violation of federal securities
laws filed in the United States District COUli for the Southem District of New York in Saratoga
Advantage Trust - Financial Services Portfolio v. JPiVforgan Chase, No. 12-CV-3879 (the
"Securities Action"). Neither patiy objects to the court taking judicial notice of the existence of
these COUll documents
01'
the content of those documents, but they do object to the court taking
judicial notice of the contents of the documents as true or legally established.
The parties are offering materials outside ofthe pleadings in support of, or in opposition to,
a motion to dismiss. In general, material outside the pleadings may not be considered in ruling on
'Nunu'ich included a request for judicial notice of a recent decision by a federal bankruptcy
court in his response to JPMorgan's motion for extension of time filed on March 2, 2012. On March
6, 2012, the cOUli indicated that it would consider the decision when determining the merits of
JPMorgan's motion to dismiss.
Page 5 - OPINION AND ORDER
{SIB}
a motion to dismiss unless the motion is treated as one for summary judgment and the parties are
"given reasonable opportunity to present all materials made pertinent to such motion by Rule 56."
Jacobson v. AEG Captial Corp., 50 F.3d 1493, 1496 (9th Cir. 1995). There are two exceptions to
this mle. First, a court may consider "material which is properly submitted to the cOUli as part of
the complaint." Lee v. County a/Los Angeles, 240 F.3d 754, 774 (9th Cir. 2001). A document is
not "outside" the complaint if the complaint specifically refers to the document, its authenticity is
not questioned, and the plaintiffs complaint necessarily relies on it. Id. at 774. When the plaintiff
fails to introduce a pertinent document as part of his pleading, the defendant may introduce the
exhibit as part of his motion attacking the pleading. Cooper v. Pickett, 137 F.3d 616 (9th Cir. 1998).
The second exception is that under Rule 201 of the Federal Rules of Evidence, the court may
take judicial notice of "matters of public record." Lee, 240 F.3d at 774. Rule 201 allows judicial
notice of a fact "not subject to reasonable dispute in that it is either (1) generally known within the
territorial jurisdiction of the court or (2) capable of accurate and ready determination by resort to
sources whose accuracy cannot reasonably be questioned." A court may take judicial notice of
complaints and briefs filed in another case to detelmine what issues were before that cOUli and were
actually litigated. Reyn 's Pasta Bella, LLCv. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006).
However, a C01ui may not take judicial notice of facts presented in those documents or in court
opinions for the purpose of considering those facts to be established in the case cUlTently before
them. Wyatt v. Terhune, 315 F.3d 1108, 1114 (9th Cir. 2003)(citing lvl/V American Queen v. San
Diego l.Iarine Constr. Corp., 708 F.2d 1483, 1491 (9th Cir. 1983)("As a general rule, a cOUli may
not take judicial notice of proceedings or records in another case so as to supply, without formal
introduction of evidence, facts essential to support a contention in a cause before them.")).
Page 6 - OPINION AND ORDER
{SIB}
The state and federal court documents offered by JPMorgan and Numrich are undeniably
matters of public record appropriate for consideration by the comi for the limited purpose of
determining what issues are before the comi in the State Action, the Overdraft Litigation, and the
Securities Action. Accordingly, the C01ui will take judicial notice of the claims for negligence and
breach of contract based on the Bank's "high-to-low" sequencing of draft and debit charges asselied
by Numrich in the State Action, and the arguments made by the parties in motion practice, but will
not take judicial notice of the factual asseliions contained therein, or in the court orders. Similarly,
the comi will take judicial notice that the Overdraft Litigation and the Securities Action involve
claims against JPMorgan relating to the propriety of JPMorgan's overdraft policies and
representations regarding losses and risks ofloss to investors, and will consider the opinion of the
United States Supreme Court filed in Boyle v. United States, No. 07-1309, but will nottake judicial
notice of the facts contained in these federal filings. The court grants the pmiies' respective requests
for judicial notice of these comi documents and will consider the contents of the state and federal
court documents, where relevant, in ruling on the pending motion to dismiss.
Legal Standard
A well-pleaded complaint requires only "a Sh01i and plain statement of the claim showing
that the pleader is entitled to relief." FED. R. Cry. P. 8(a)(2)(2011). A federal claimant is not
required to detail all factual allegations: however, the complaint must provide "more than labels and
conclusions, and a fonnulaic recitation of the elements of a cause of action will not do." Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). "Factual allegations must be
enough to raise a right to relief above the speculative level." Id. While the court must assume that
all facts alleged in a complaint are true and view them in a light most favorable to the nonmoving
Page 7 - OPINION AND ORDER
{SIB}
party, it need not accept as true any legal conclusion set f01ih in the complaint. Ashcroft v. Iqbal,
556 U.S. 662,129 S. Ct. 1937, 1949 (2009). Additionally, a plaintiff must set forth a plausible claim
for relief - a possible claim for relief will not do. "In sum, for a complaint to survive a motion to
dismiss, the non-conclusory 'factual content,' and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief." },;foss v.
Us. Secret Service, 572 F.3d
962, 969 (9th Cir. 2009)( quoting Iqbal, 129 S. Ct. at 1949).
In cases involving a plaintiff proceeding pro se, the court construes the pleadings liberally
and affords the plaintiff the benefits of any doubt. Karim-Panahi v. Los Angeles Police Dept., 839
F.2d 621, 623 (9th Cir. 1988); see also Ferdik v. Bonzelet, 963 F.2d 1258, 1260-61 (9th Cir.
1992)("[F]ederal courts liberally to construe the 'inartful pleadings' of pro se litigants."). In other
words, courts hold pro se pleadings to a less stringent standard than those drafted by lawyers.
Haines v. Kerner, 404 U.S. 519, 520 (1972). In addition, apro se litigant is entitled to notice of the
deficiencies in the complaint and an 0pp01iunity to amend, unless the complaint's deficiencies
cannot be cured by amendment. Karim-Panahi, 839 F.2d at 623-624.
Discllssion
1. Duplicate Actions
JPMorgan moves to dismiss this action because there is another action pending between the
pmties on the same facts in state court. JPMorgan argues that the controlling issue in both the State
Action and this case is the right of JPMorgan to collect on the Account. Numrich disagrees and
asselis that the State Action is based on the Bank's "high-to-Iow" sequencing of draft and debit
charges and has nothing to do with JPMorgan.
Numrich contends the facts supp01iing the
allegations in the Complaint were unknown to him at the time he filed the State Action and the state
Page 8 - OPINION AND ORDER
{SIB}
court lacks jurisdiction over the federal claims at issue here.
JPMorgan relies on the federal first-to-file rule and the state rule found in OR. R. CIY. P.
21(A)(3). Neither rule is applicable to situation here, where the pending cases are in both state and
federal court, and JPMorgan seeks to dismiss the federal, not the state, action.
The federal first-to-file rule is a "generally recognized doctrine of federal comity which
pelmits a district court to decline jurisdiction over an action when a complaint involving the same
parties has already been filed in another district." Pacesetter Systems, Inc. v. lvfedtronic, Inc., 678
. F.2d 93, 94-5 (9th Cir. 1982).
The Ninth Circuit explained that the dictates of sound judicial
administration indicate that generally "when two identical actions are filed in courts of conCU11'ent
jurisdiction, the court which first acquiredjurisdiction should hy the lawsuit and no purpose would
be served by proceeding with a second action." Id. at 95. Judge Jelderks of this court refused to
apply the first-to-file rule where the initial complaint was filed in California state court, finding that
application of the rule is limited to multiple parallel actions filed in different federal cOUlis. Bcl/'hyte
Specialty Foods, Inc. v Acclltek Packaging Equip., Co., Inc., 2007 WL 2463244, at *5 (D. Or. Aug
28,2007); see also Colorado River Water Conservation District v. United States, 424 U.S. 800, 817
(1976)(recognizing the "difference in general approach between state-federal concurrent jurisdiction
and wholly federal concurrent jurisdiction" and refusing to apply rule that duplicative litigation
between federal district courts should be avoided in state-federal context). Judge Jelderks noted that
the parties did not cite, and he was unable to find, any cases "SuppOliing the conclusion that federal
cOUlis generally decline to assert jurisdiction based on the pendency of similar actions in state
courts." Id. He explained that:
[i]nstead, "the pendency of an action in the state court is no bar to proceedings
Page 9 - OPINION AND ORDER
{SIB}
concerning the same matter in the Federal court having jurisdiction," }.IcClellan v.
Carland, 217 U.S. 268, 282 (1910), and federal courts recognize a "virtually
unflagging obligation ... to exercise the jurisdiction given them. Colorado River
Water Conservation District v. United States, 424 U.S. 800, 817 (1976).
2007 WL 2463244, at *5. Judge Jelderks did recognize the judicially created abstention doctrine
which allows dismissal of a federal action in light of the earlier filing of a state action under
exceptional circumstances, such as when the action requires resolution of unsettled issues of state
law or where the dispute involves impOliant state regulatory concerns, but then found that none of
the circumstances applied to the commercial dispute pending before him. Id.
This court finds Judge Jelderks's reasoning and conclusions to be sound and adopts them as
its own. The first-to-file rule does not apply to this action as the initial complaint was filed in state,
not federal court. Also, Numrich asserts claims for common law fraud and violations of federal
RICO provisions. Nothing in the Complaint implicates unsettled issues of state law or important
state regulatOlY concerns. Accordingly, the abstention doctrine does not apply here, either.
Oregon allows for the dismissal of an action when "there is another action pending between
same parties for the same cause." OR. R. CIV. P. 21(A)(3) (2011). All of the cases relied on by
JPMorgan in support of the argument that this state rule applies here involved two state couti
actions. JP Morgan has not cited, and this court has not been able to find, any cases in which a
federal court has dismissed a federal action in light of the pendency of a related state action under
this state rule. In light of the clear mandate that federal courts should retain jurisdiction unless
important or unsettled state issues are raised, and in the apparent absence of any case law to the
contrmy, this couti finds that OR. R. CIV. P. 21(A)(3) does not divest this court of jurisdiction over
Numrich's claims for fraud and RICO violation despite the fact that a related action existed in the
Page 10 - OPINION AND ORDER
{SIB}
state court at the time this action was filed.
JPMorgan's motion to dismiss for lack of jurisdiction under the first-to-file rule and OR. R.
ClY. P. 21(A)(3) is denied. This is not to say, however, that this court would not consider the
doctrines of claim or issue preclusion in the future should the state court rule on any matter relevant
to the issues or claims before this court in light of the fact that Numrich could have asserted his fraud
and RICO claims in the State Action. See T(ifjlin v. Levitt, 493 U.S. 455, 799 (1990)("[W]e hold
that state comis have concurrent jurisdiction to consider civil claims arising under RICO.").
II. Fraud Claim
JPMorgan moves to dismiss Numrich's fraud claim arguing that he has failed to allege the
prima facie elements of the claim, that the claim is barred by the applicable two-year statutes of
limitation, and that Numrich has failed to provide a "Shmi and plain" statement of his claim in
violation of FED. R. CIY. P. 8. In the alternative, JPMorgan asserts that Numrich failed to allege his
fraud claim with the patiicularity required by FED. R. CIY. P. 9(b).
In Oregon, the prima facie elements of a common-law fraud claim are: (1) a representation;
(2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth;
(5) the speaker's intent that the representation should.be acted upon by the listener in the manner
reasonably contemplated; (6) the listener's ignorance ofthe representation's falsity; (7) the listener's
reliance on the truth of the representation; (8) the listener's right to rely thereon; and (9) the listener's
consequent and proximate injury. Webb v. Clark, 274 Or. 387, 391 (1976). "If anyone of these
elements is not established by clear and convincing evidence, plaintiffs case must fail." Id. "Clear
and convincing evidence means that the truth of the facts asserted is highly probable. Coy v.
Starling, 53 Or. App. 76, 80 (1981).
Page II - OPINION AND ORDER
{SIB}
Numrich generally alleges that JPMorgan made false representations which were material,
JPMorgan was aware of the falsity of such representations and intended Numrich to rely on the
representations, and Numrich was ignorant of the falsity and relied on the truth ofthe representations
to his detriment. However, these allegations are nothing more than mere labels and conclusions a fonllulaic recitation of the elements of the prima facie elements of a claim for fraud - and are
insufficient unless supported with factual allegations sufficient to raise Numrich's right to relief
above a speculative level.
Viewing the allegations of the Complaint as a whole, it is evidentthat Nurmich's fraud claim
is based on JPMorgan's representation that it had the authority to collect on the Account. Numrich
alleges that JPMorgan did not have such authority for various reasons, including the improper
purchase of the Bank by JPMorgan based on JPMorgan' s receipt of billions of dollars of tax refunds,
tax credits and other tax benefits paid to the Bank or Mutual in 2008 and 20 I 0, which were unearned
by JPMorgan; the incomplete status of the purchase of the Bank and the bankruptcy of Mutual,
which Numrich alleges have not been completed or otherwise resolved; and the failure ofJPMorgan
to obtain ownership of the Bank's liabilities, including the Account, as part of the purchase of the
Bank, or otherwise.
Accordingly, while Numrich does not specifically identifY the false
representations made by JPMorgan he is relying on in support of his fraud claim, the oilly false
statement supported by the factual allegations in the complaint is that JPMorgan owned the Account
and had the right to collect the amount written off by the Bank, which was made by JPMorgan to
Numrich through the collection agency in an attempt to collect on the Account. This finding is also
justified by Numrich's opposition brief, in which he represents that he could not have brought the
fraud claim until after he became aware that the purchase ofthe Bank by JPMorgan never closed,
Page 12 - OPINION AND ORDER
{SIB}
that the purchase did not have anything to do with the Account or the JPMorgan Accounts, and that
the FDIC has never exited receivership of the Bank. (PI.'s Resp. in Opp'n to Def.'s Mot. to Dismiss
at 26.) All of this "newly discovered" infonnation upon which Numrich based his fraud claim relate
solely to JPMorgan's ownership of, and authority to collect on, the Account. Accordingly, the only
false statement supported by the Complaint and Numrich's briefing relates to JPMorgan's ownership
of, and authority to collect on, the Account.
Assuming that JPMorgan did not have authority to collect on the Account and that JPMorgan,
through its agents, falsely represented such authority to Numrich with the intent that Numrich act
on the misrepresentations, the factual allegations found in the Complaint establish that Numrich was
not ignorant of the falsity of the representations and did not rely on the misrepresentations in any
way. Numrich specifically alleges that when he began receiving demands from various collection
agencies attempting to collect on the Account for the benefit of JPMorgan, he denied the claims,
explained that he had no banking relationship with JPMorgan, indicated that JPMorgan's
representation that it was a creditor was false, and demanded that the agencies cease communication
with him. Even after Numrich opened, and then closed, the JPMorganAccounts, Numrich continued
to deny the existence of any valid claim by JPMorgan against him. NUlmich further alleges in the
Complaint that none of the claims made by the collection agencies "were relevant to, or agreed
obligations of, any banking contract or other activity between Plaintiff and Defendant" again
rejecting any authority of JPMorgan to collect on the Account. (Compl. '1168.) Additionally, it is
clear that Numrich did not voluntarily make any payments to JPMorgan, or take any other action,
in reliance on the representations that JPMorgan owned the Account or otherwise had the authority
to collect on the Account.
Page 13 - OPINION AND ORDER
{SIB}
Numrich has failed to allege the facts necessary to support a prima filcie claim for fraud.
Specifically, Numrich's allegations that he denied JPMorgan's allegedly false statements that it had
the right to collect on the Account, or that he had any obligations to JPMorgan at all, and his failure
to allege what actions he took in reliance on the false statements, make it clear that he is unable to
establish that he was ignorant of the statement's falsity or that he relied on the truth of the
representation. Accordingly, Numrich's fraud claim is dismissed.'
The court is aware of its obligation to afford a pro se plaintiff the opportunity to amend a
complaint, but such opportunity is appropriate only where amendment would cure the deficiencies
in the complaint. Here, in light of the allegations that establish that NUlmich was aware of the falsity
of the representations and refused to rely on the representations, Numrich can not amend the
Complaint to cure the deficiencies. Numl'ich's fraud claim is dismissed with prejudice and without
leave to amend.
III. RlCO Claim
JPMorgan moves to dismiss Numl'ich's RlCO claim arguing that he has failed to allege the
prima facie elements of the claim and has failed to provide a "short and plain" statement of in his
claim in violation of FED. R. CIY. P. 8. In the altemative, JPMorgan assel1S that Nurmich fails to
allege the fraud element of his RICO claim with the particularity required by FED. R. CIY. P. 9(b).
RICO "provides a private right of action for treble damages to '[a]ny person irDured in his
business or prOpelly by reason of violation' of the Act's criminal prohibitions." Bridge v. Phoenix
Bond & Inden1. Co., 553 U.S. 639, 641 (2008). The civil cause of action is codified at 18 U.S.C. §
'In light of the court's determination that Numrich failed to allege a prima filce claim for
fraud, JPMorgim's altemative statute oflimitations and declaratory judgment arguments need not,
and will not, be addressed.
Page 14 - OPINION AND ORDER
{SIB}
1964(c), which reads:
Any person injured in his business or property by reason of a violation of section
1962 of this chapter may sue therefor in any appropriate United States district court
and shall recover the damages he sustains and the cost of the suit, including a
reasonable attorney's fee ....
Id. "The elements of a civil RICO claim are simple enough: (I) conduct (2) of an enterprise (3)
tluough a pattern (4) of racketeering activity (known as 'predicate acts') (5) causing injUly to the
plaintiffs 'business or property. '" Grimmett v. Brown, 75 F.3d 506, 510 (9th Cir. 1996)(quoting 18
U.S.C. §§ 1964(c), (1962(c); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985).
Numrich alleges that JPMorgan and the collection agencies engaged in racketeering activity
when they "mailed, or directed and caused to be mailed by others, bank statements and letters
demanding payments of unlawful claims," and "entered, or caused to be entered,
telecommunications, including by use of the internet, to enter and record unlawful seizure and claim
to Plaintiffs money deposits with Defendant." (Compl
n 78-9.) Accordingly, Numrich is alleging
that JPMorgan engaged in the predicate acts of mail fraud and wire fraud in attempting to collect the
amounts due on the Account, including the involuntary transfer of the $143.41 in the JPMorgan
Accounts.
The predicate acts of mail and wire fraud require a showing thatthe defendant: "(1) engaged
in a scheme or artifice to defraud; (2) used or caused the use of the mails or wires in furtherance of
the scheme; and (3) had specific intent to defraud. United States v.Sullivan, 522 F.3d 967,974 (9th
Cir. 2008)( citing U.S.C. §§ 1341, 1343). "The gravamen ofthe offense is the scheme to defraud."
Bridge, 553 U.S. at 647. Allegations of wire or mail communications that fmiher the essential part
of the underlying scheme are sufficient even when the communications themselves do not contain
Page 15 - OPINION AND ORDER
{SIB}
false information.
Id. (citing Schmuck v. United States, 489 U.S. 705, 712, 715 (1989)).
Additionally, allegations that a plaintiff relied on a defendant's alleged misrepresentations are not
necessary where the RICO scheme is based on misrepresentations made to, and detrimental reliance
on such representations by, a third party. Bridge, 553 U.S. at 656-59. However, a plaintiff asseliing
a RICO claim must show that someone, either themselves or a third party, relied on the
misrepresentations and that such reliance caused plaintiffs injury. },;jartinelli v. Petlane/, Inc., 274
F.R.D. 658,661 (D. Az. 2011)(quoting Bridge, 553 U.S. at 658-9)("The 'complete absence of
reliance [will] prevent [Plaintiffs] from establishing proximate cause."').
JPMorgan asserts that if the court finds Numrich has failed to state a viable claim for
common-law fraud, the comi should dismiss the RICO claim for failing to allege actionable
predicate acts. The court has found that Numrich's fraud claim must be dismissed because the
allegations in the Complaint establish that Numrich knew the statements were false and did not rely
on the tmth of the statements to his detriment. Numrich does not allege that JPMorgan or its agents
made false statements to anyone other than Numrich in their attempt to collect on the Account.
Therefore, Numrich's RICO claim is necessarily based on false statements made by JPMorgan,
through its agents, to Numrich. Because NU1l11'ich's RICO claim relies solely on false statements
made to him, and not to a third party, Numrich must establish that he relied on the false statements.
This court's finding that NU1l11'ich did not rely on the misrepresentations is fatal to his RICO claim
based on the predicate acts of mail and wire fraud. As noted above, Nunn'ich is unable to cure this
deficiency. Accordingly, his RICO claims must be dismissed with prejudice.
Conclusion
JPMorgan's requests (#23 and #45) and NU1l11'ich's requests (#48, #52, and #56) for judicial
Page 16 - OPINION AND ORDER
{SIB}
notice are GRANTED with regard to the contents of, but not the factual assertions contained in, the
state and federal court documents submitted to the court. JPMorgan's motion (#21) to dismiss is
GRANTED with prejudice and without leave to amend.
DATED this 30 th day of May, 2012.
United Stdtes Magistrate Judge
)
Page 17 - OPINION AND ORDER
{SIB}
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?