Greene II v. Discover Bank

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 TODD CLAY GREENE II, Case No. 23-cv-04825-SVK 8 Plaintiff, ORDER GRANTING 9 v. MOTION TO DISMISS 10 DISCOVER BANK, Re: Dkt. No. 5 11 Defendant. 12 Pro se Plaintiff Todd Greene II attempted to pay off the outstanding balance on his credit13 card account by mailing Defendant Discover Bank (“Discover”) a copy of his account summary 14 on which he had written that Discover should pay off his balance. Plaintiff included no cash in his 15 mailing, he did not provide any information about a bank account or credit card from which 16 payment would be made and the document he mailed was not a check. Unsurprisingly, Discover 17 did not accept a bare piece of paper as payment, and the balance on Plaintiff’s account remained. 18 After repeated attempts to pay off his balance in similar fashion failed, Plaintiff 19 commenced this action to recover for the alleged financial harm he consequently suffered. See 20 Dkt. 1 (the “Complaint”). Discover now moves to dismiss. Dkt. 5 (the “Motion”). Plaintiff filed 21 an opposition. Dkt. 9 (the “Opposition”). Discover filed a reply. Dkt. 11. Plaintiff and Discover 22 have consented to the jurisdiction of a magistrate judge. Dkts. 7-8. The Court has determined that 23 the Motion is suitable for resolution without oral argument. See Civil Local Rule 7-1(b). After 24 considering the Parties’ briefing, relevant law and the record in this action, and for the reasons that 25 follow, the Court GRANTS the Motion and DISMISSES all of Plaintiff’s claims WITHOUT 26 LEAVE TO AMEND. 27 /// 1. BACKGROUND The following discussion of background facts is based on the allegations contained in the [2] Complaint, the truth of which the Court accepts for purposes of resolving the Motion. See Boquist [3] v. Courtney, 32 F 4th 764, 772 (9th Cir. 2022). Plaintiff opened a credit-card account with [4] Discover in September 2022. See Complaint 6-8. The “Cardmember Agreement” governing [5] his account provided the following payment instructions: “You must pay in U.S. dollars.... All [6] checks must be drawn on funds on deposit in the U.S.” /d., Ex. 1 at 7. In compliance with these [7] instructions, in March and May 2023, Plaintiff successfully made payments from his Wells Fargo [8] bank account to his Discover credit-card account. See id. J§ 9-10; id., Ex. 2. Then, in June 2023, [9] Plaintiff attempted to pay the outstanding balance on his account by mailing Discover the [10] following copy of his account summary on which he had written that payment should be made on [11] demand: —_____ - —— . : Aa, EO . ye Hes ao “otler: Seareverse side ler Important information © ASCOUNTUMBER EROINGINGHDS 5 Detach at perforation above and return with check payableto 2 □□□ Balance : 38,649.77 oy 14 " Discover, Do not fold, etlp, staple or send cash. Ae 2B So ete Se oe Minimum. Payment Due Ma ag □□□□□□□ & Bee oat: 2 He Eh 1D i _. Payment Due Date woes : Ee □□□□□ Eight thousand Sik hundred for} none and fo Spremmmeremnmmmnmmmm sy □□□ 77 cENE | ee Bee : | tars ee 6 £51 Didcovencem %,. □□□□□□□□□□ A 16 qe □□ : : i wpe EA ee ge MOUNTAIN VIEW CA 94041-1658 i gees AE EP ES ee ee oes ee Fa bose POBOXAS9N9 7 18 : pes SANFRANCISCO CA 94145-0909 Pad to The order of beaver; Poy on demand . ee easel 20 || See id. § 11; id., Ex. A. Plaintiff included a cover letter in this mailing that instructed Discover “to 21 apply the principal’s [7.e., Plaintiff's] balance to the principal’s account.” See id. § 12; id., Ex. B. 22 || Defendant did not accept this submission as payment on his account and did not respond to 23 Plaintiffs letter. See id. J] 17-18. 24 Between June and August 2023, Plaintiff continued to mail account summaries and cover 25 letters to Discover in repeated attempts to pay his outstanding balance, and Discover continued to 26 || ignore him. See id. 9] 20-25, 27-32, 38-43. Plaintiff subsequently commenced this action to 27 || recover for the alleged financial harm he suffered as a result of Discover’s failure to accept his 28 || mailings as payments (e.g., late fees, negative impact on his credit score). See id. § 52. II. LEGAL STANDARD [1] Under Federal Rule of Civil Procedure 12(b)(6), a court must dismiss a complaint if it [2] “fail[s] to state a claim upon which relief can be granted.” To survive a Rule 12(b)(6) motion, a [3] plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. [4] Corp. v. Twombly, 550 U.S. 544, 570 (2007). This facial-plausibility standard requires a plaintiff [5] to allege facts resulting in “more than a sheer possibility that a defendant has acted unlawfully.” [6] Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). [7] In ruling on a motion to dismiss, a court may consider only “the complaint, materials [8] incorporated into the complaint by reference, and matters [subject to] judicial notice.” UFCW [9] Loc. 1500 Pension Fund v. Mayer, 895 F.3d 695, 698 (9th Cir. 2018) (citation omitted). A court [10] must also presume the truth of a plaintiff’s allegations and draw all reasonable inferences in his [11] favor. See Boquist, 32 F.4th at 773. However, a court need not accept as true “allegations that are [12] merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Khoja v. [13] Orexigen Therapeutics, Inc., 899 F.3d 988, 1008 (9th Cir. 2018) (citation omitted). [14] If a court grants a motion to dismiss, it may exercise discretion to grant or deny leave to [15] amend the complaint, and it “acts within its discretion to deny leave to amend when amendment [16] would be futile, when it would cause undue prejudice to the defendant, or when it is sought in bad [17] faith.” Nat’l Funding, Inc. v. Com. Credit Counseling Servs., Inc., 817 F. App’x 380 , 383 (9th [18] Cir. 2020) (citation omitted). [19] III. DISCUSSION [20] Plaintiff asserts five causes of action in the Complaint, all of which stem from Discover’s [21] failure to accept his mailings as payments on his account: [22]  Breach of the Cardholder Agreement. [23]  Violation of the Federal Deposit Insurance Act (the “FDIA”). [24]  Violation of the Federal Reserve Act (the “FRA”). [25]  Violation of 17 C.F.R. Section 240.10b-5 (“Rule 10b-5”). [26]  Violation of 15 U.S.C. Section 1615 . [27] None of these claims survives scrutiny under Rule 12(b)(6). A. Plaintiff Has Not Sufficiently Alleged That 1 Discover Breached The Cardholder Agreement 2 Delaware law governs the Cardholder Agreement. See Complaint, Ex. 1 at 9 (“This 3 Agreement is governed by applicable federal law and by Delaware law.”). “In order to survive a 4 motion to dismiss for failure to state a breach of contract claim [under Delaware law], the plaintiff 5 must demonstrate: first, the existence of the contract, whether express or implied; second, the 6 breach of an obligation imposed by that contract; and third, the resultant damage to the plaintiff.” 7 VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003) (citations omitted). 8 Here, Plaintiff has not sufficiently alleged breach by Discover of an obligation imposed by the 9 Cardholder Agreement. The agreement requires payment in the form of U.S. dollars; it does not 10 permit payment in the form of an account summary on which Plaintiff wrote that payment should 11 be made on demand. Discover, therefore, did not breach the Cardholder Agreement by failing to 12 accept such a document as payment on Plaintiff’s account. Accordingly, Plaintiff’s claim for 13 breach of the Cardholder Agreement fails. 14 B. Plaintiff Has Not Sufficiently Alleged That He Is Entitled To Relief Under The FDIA [15] Plaintiff seeks to recover civil penalties under Section 8(i)(2) of the FDIA. See Complaint [16] ¶ 55. That provision of the statute permits recovery of civil penalties where an “insured [17] depository institution” or “any institution-affiliated party,” inter alia, (1) “violates any law or [18] regulation,” (2) “violates any written agreement between such depository institution and [a federal [19] banking] agency” or (3) “breaches any fiduciary duty.” See 12 U.S.C. § 1818 (i)(2). In terms of [20] violations of laws or regulations, Plaintiff bases his FDIA claim on Discover’s alleged violation of [21] 15 U.S.C. Section 1615 . See Complaint ¶ 55. As discussed below, however, Plaintiff does not [22] sufficiently allege that Discover violated that statute. See Section III.E, infra. In terms of [23] violations of a written agreement, Plaintiff has not sufficiently alleged breach of the Cardholder [24] Agreement, which in any event was not entered into between Discover and a federal banking [25] agency. See Section III.A, supra. In terms of breaches of fiduciary duties, Discover was under no [26] duty to accept Plaintiff’s mailing as payment on his account. See id. Accordingly, Plaintiff’s [27] 1 claim for civil penalties under the FDIA fails.1 2 C. Plaintiff May Not Recover Under The FRA 3 Plaintiff seeks to recover civil penalties under Section 29 of the FRA. See Complaint ¶ 58. 4 But individuals lack a private right of action under Section 29. See Greathouse v. Hayes, No. 235 cv-00960-PLM, 2023 WL 6882227 , at *2 (W.D. Mich. Sept. 15, 2023), report and 6 recommendation adopted, 2023 WL 6880195 (W.D. Mich. Oct. 18, 2023); Murphy v. Cap. One, 7 23-cv-01120-HEA, 2023 WL 5929340 , at *3 (E.D. Mo. Sept. 12, 2023); Lucas v. New Am. 8 Funding LLC, No. 23-cv-02092-JPB, 2023 WL 7492203 , at *3 (N.D. Ga. Sept. 11, 2023), report 9 and recommendation adopted, 2023 WL 7492201 (N.D. Ga. Sept. 29, 2023). Accordingly, 10 Plaintiff’s claim for civil penalties under the FRA fails. 11 D. Plaintiff Has Not Sufficiently Alleged That Discover Violated Rule 10b-5 12 Rule 10b-5 prohibits using fraud or false or misleading statements or omissions “in 13 connection with the purchase or sale of any security.” See 17 C.F.R. § 240 .10b-5. But Plaintiff 14 has not alleged the purchase or sale of any security. Accordingly, Plaintiff’s claim for violation of 15 Rule 10b-5 fails. 16 E. Plaintiff Has Not Sufficiently Alleged That Discover Violated 15 U.S.C. Section 1615 [17] 15 U.S.C. Section 1615 obligates a creditor to “promptly refund any unearned portion of [18] [an] interest charge to [a] consumer” where a consumer “prepays in full the financed amount [19] under any consumer credit transaction.” See 15 U.S.C. § 1615 (a)(1). Plaintiff alleges Discover [20] violated this provision, because Plaintiff made payments on his account in March and May 2023, [21] and Discover “has yet to acknowledge Plaintiff’s rights and interest on the account and provide a [23] 1 While the Court does not evaluate Discover’s argument that the FDIA does not provide Plaintiff [24] with a private right of action (see Motion at 5), it observes that in responding to this argument, Plaintiff appears to have manufactured a quote from one of his cited authorities. In his [25] Opposition, Plaintiff asserts that in American Fair Credit Association v. United Credit National Bank, 132 F. Supp. 2d 1304 (D. Colo. 2001), the court “held that ‘Section 1818 (i)(2) provides a [26] private right of action to depositors who are injured by unfair and deceptive practices by insured depository institutions.’” Opposition at 8 (purporting to quote Fair Credit Association, 132 F. 27 Supp. 2d at 1311). No such language appears in that decision. The Court admonishes Plaintiff 1 refund to Plaintiff.” See Complaint ¶¶ 68, 78. It is not clear what Plaintiff means by Discover’s 2 alleged failure “to acknowledge” his “rights and interest on the account,” and in any event, Section 3 1615 does not require Discover to do so. Further, Plaintiff has not alleged that Discover charged 4 him any interest in connection with the payments he made in March and May 2023. To the extent 5 Plaintiff bases this claim on interest charged despite his attempts to pay his balance by mailing 6 Discover a copy of his account summary, these mailings did not constitute payments under the 7 Cardholder Agreement. Accordingly, Plaintiff’s claim for violation of 15 U.S.C. Section 1615 8 fails. 9 F. The Court Will Not Grant Plaintiff Leave To Amend His Complaint 10 The Court will not grant Plaintiff leave to amend his complaint, because (1) doing so 11 would be futile, and (2) it appears Plaintiff brings his claims in bad faith. 12 Futility. “An amendment is futile when ‘no set of facts can be proved under the 13 amendment to the pleadings that would constitute a valid and sufficient claim or defense.’” 14 Ultrasystems Env’t, Inc. v. STV, Inc., 674 F. App’x 645, 649 (9th Cir. 2017) (citation omitted). 15 Here, the gravamen of Plaintiff’s complaint is Defendant’s failure to accept as payment copies of 16 Plaintiff’s account summary on which he had written that payment should be made on demand. 17 The Court does not believe that any additional allegations on top of this fundamental allegation 18 will cure the deficiencies underlying any of Plaintiff’s claims. 19 Bad Faith. Under his own allegations, Plaintiff knows exactly how to properly make a 20 payment on his credit-card account—he did so in March and May 2023. See Section I, supra. His 21 desire to now recover for Discover’s rejection of his mailings therefore smacks of frivolity; if 22 Plaintiff genuinely wanted to pay off his balance, he could have made a payment using a 23 previously successful method. 24 /// 25 /// 26 /// 27 /// IV. CONCLUSION For the foregoing reasons, the Court GRANTS the Motion and DISMISSES all of [2] Plaintiff's clams WITHOUT LEAVE TO AMEND. [3] SO ORDERED. [4] Dated: January 8, 2024 [5] Season etl 7 SUSAN VAN KEULEN g United States Magistrate Judge [10] 1] [16] Z 18