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Nwachukwu v. Liberty Bank

United States District Court, D. Connecticut

July 5, 2017

ANTHONY NWACHUKWU, Plaintiff,
v.
LIBERTY BANK, Defendant

          RULING ON PLAINTIFF'S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

          CHARLES S. HAIGHT, JR. Senior United States District Judge

         This case is before the Court on Plaintiff's motion (Doc. 31) for an order of the Court granting Plaintiff leave to file a Second Amended Complaint against Defendant in the form attached to the motion papers. Plaintiff's motion to amend is made under Rule 15(a) of the Federal Rules of Civil Procedure. Defendant resists this motion to amend and reiterates an earlier contention that Plaintiff's initial complaint should be dismissed. See Docs. 20, 32. This Ruling resolves Plaintiff's motion to amend his complaint.

         I. INTRODUCTION

         In January and June, 2013, Plaintiff Anthony Nwachukwu opened three personal deposit and checking accounts with Defendant Liberty Bank ("Liberty" or "the Bank"). In April 2016, an officer of the Bank advised Plaintiff that the Bank was closing his accounts. Plaintiff objected to the closing, but could not prevent it, and on May 6, 2016 instructed Liberty to wire his funds to the Bank of New York Mullen, which was done.

         On May 9, 2016, Plaintiff filed his initial complaint (Doc. 4) in this Court against Liberty. The case is based on the premise that the Bank's conduct in closing Plaintiff's accounts violated his legal rights. Plaintiff coupled his complaint with a motion for a temporary restraining order and preliminary injunction (Doc. 1). The Court denied all preliminary relief in an oral ruling from the bench after a hearing on May 16. See Minute Entry, Doc. 16; Transcript, Doc. 17.

         There ensued some occasionally disjointed activities addressed to the filings, which need not be recounted in detail. It is sufficient for present purposes to say that Plaintiff, having previously availed himself of the ability to amend his complaint once as of right, is now required, by Defendant's forcefully expressed refusal of consent, to apply to the Court for leave to file a second amended complaint. That application forms the subject matter of the present motion, which this Ruling decides.

         The proposed Second Amended Complaint ("SAC") contains nine counts. They all arise out of the same nexus of fact: The closing by the Bank, in April 2016, of Plaintiff's accounts, against Plaintiff's will and in disregard of his protest. The nine counts may be summarized as follows:

* First Count: breach of contract.
* Second Count: breach of implied duty of good faith and fair dealing
* Third Count: negligent infliction of emotional distress.
* Fourth Count: intentional infliction of emotional distress.
* Fifth Count: violation of Connecticut Unfair Trade Practices Act.
* Sixth Count: violation of 42 U.S.C. § 1981.
* Seventh Count: violation of 42 U.S.C. § 1982.
* Eighth Count: violation of 42 U.S.C. § 1983.
* Tenth Count: violation of the OCC of the U.S. Department of the Treasury.[1]

         The Second Amended Complaint groups the First through Fifth Counts under the caption "State Claims." The remaining Counts are grouped under the caption "Federal Claims - Civil Rights Violations." Plaintiff's present motion, opposed by Defendant in its entirety, seeks a Court order granting Plaintiff leave to file an amended complaint asserting those claims in that order.

         II. STANDARD FOR GRANTING LEAVE TO AMEND THE COMPLAINT

         In cases like the one at bar, where a party is not entitled to amend its pleading as of right, Rule 15(a)(2) provides that "a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires." Fed.R.Civ.P. 15(a)(2).

         The leading case on the propriety of amendment of pleadings by leave of court is Foman v. Davis, 371 U.S. 178 (1962). The Supreme Court stated generally that "the purpose of pleading is to facilitate a proper decision on the merits." 371 U.S. at 182 (citing and quoting Conley v. Gibson, 355 U.S. 41, 48 (1957)). Foman then voices this oft-quoted guidance:

In the absence of any apparent or declared reason - such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. - the leave sought [to amend] should, as the rules require, be "freely given."

371 U.S. at 182.

         Instructed by Foman, federal trial courts are lenient in allowing amendments to pleadings, but they are not supine. If the party opposing amendment demonstrates the presence of one or more of the negative factors listed in Foman, the amendment will not be allowed, for in that circumstance the cause of justice would not be served.

         In the following Parts of this Ruling, I will consider whether any of the "apparent or declared reasons" for refusing amendment articulated in Foman are present in this case. The final and most extended discussion relates to the last preclusive circumstance Foman enumerates: the "futility of amendment." The other Foman factors require less analysis.

         III. FACTORS RELEVANT TO REFUSING LEAVE TO AMEND

         A. Undue Delay, Undue Prejudice

         While undue delay in bringing a motion to amend is one of the factors, as enumerated by Foman, to consider in determining whether leave to amend will be extended, "[m]ere delay, . . . absent a showing of bad faith or undue prejudice, does not provide a basis for a district court to deny the right to amend." State Teachers Ret. Bd. v. Fluor Corp., 654 F.2d 843, 856 (2d Cir. 1981). See also Middle Atl. Utils. Co. v. S. M. W. Dev. Corp., 392 F.2d 380, 384 (2d Cir. 1968) ("The three-year delay . . . is an inadequate basis for denying a motion to amend. It may be a factor to be considered but unless the motion either was made in bad faith or will prejudice defendant, delay by itself is not enough to deny the requisite relief"). The party opposing amendment must show it has been prejudiced by its adversary's delay in seeking leave. In this Circuit,

In determining what constitutes "prejudice, " we consider whether the assertion of the new claim would: (i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; (ii) significantly delay the resolution of the dispute; or (iii) prevent the plaintiff from bringing a timely action in another jurisdiction.

Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993).

         In the case at bar, Plaintiff's present motion to amend his complaint is not preceded by significant delay. The first motion to amend (Doc. 19) was filed on May 27, 2016. After some procedural uncertainties, the present motion to amend was filed on July 29, 2016. That is not an inordinate interval of time. The timing of this motion for leave to file a Second Amended Complaint does not present any of the significant measures of prejudice to Defendant enumerated by Block as reasons to disallow amendment. There has been no showing by Defendant that the new complaint will require it to expend significant additional resources, nor that the amendment will cause significant delay. (Indeed, the proposed Second Amended Complaint has only nine counts to the First Amended Complaint's ten.) Accordingly, the Court is satisfied that neither undue delay nor undue prejudice to the opposing party provides a viable ground upon which to deny this motion for leave to amend.

         B. Bad Faith, Dilatory Motive, Repeated Failure to Cure

         Plaintiff has made two prior inadequate attempts to put forward this amendment, and the Court's denial of the first attempt gave Plaintiff's counsel ample notice of the Rule 15(a) standard to be met. See Doc. 25, at 2. Plaintiff's counsel, nonetheless, made a second, more egregious error in the second effort to amend, by misstating and mis-characterizing Rule 15(a). See Memorandum of Law in Support of Plaintiff's Second Amended Complaint, Doc. 29-2 at 2; Doc. 30. However, the Court takes Plaintiff's counsel at his word when he says, on the second page of his latest memorandum of law, that regarding his mistake of law, "there was no intent at 'slight-of-hand' or any attempt to disregard the rule." Doc. 31-1 at 2 n.1.

         This is not a case like Denny v. Barber, 576 F.2d 465 (2d Cir. 1978), where the district judge, in dismissing the initial complaint, put plaintiff on notice as to the defects of his complaint, and plaintiff sought leave to file a second amended complaint after a first amended complaint that had likewise been dismissed. In the case at bar, Plaintiff does, as discussed infra, state claims meeting the federal pleading standard, and has made prompt attempts to cure the defects in his motions. Accordingly, the Court fails to find any bad faith or dilatory motive on the part of this Plaintiff in proffering this second amended complaint, and regards Plaintiff's isolated prior curative failure an insufficient ground on which to deny the instant motion for leave to amend.

         C. Futility

         1. Preliminary Considerations

         Although, under ordinary circumstances, leave to amend must be freely given, denial is proper where the proposed amendment would be "futile." Foman, 371 U.S. at 182. An amendment is considered "futile" if the amended pleading fails to state a claim, or would be subject to a successful motion to dismiss on some other basis. See, e.g., Lucente v. Int'l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002) ("An amendment to a pleading is futile if the proposed claim could not withstand a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6)"); Donovan v. Am. Skandia Life Assur. Corp., 217 F.R.D. 325, 325 (S.D.N.Y. 2003) ("Where a proposed amended complaint cannot itself survive a motion to dismiss, leave to amend would be futile and may clearly be denied"), aff'd, 96 F.App'x 779 (2d Cir. 2004), cert. denied sub nom Hendrickson v. Am. Skandia Life Assur. Corp., 543 U.S. 1146 (2005); Bentley v. Greensky Trade Credit, LLC, 156 F.Supp.3d 274, 283 (D. Conn. 2015), reconsideration denied sub nom. Bentley v. Tri-State of Branford, LLC, No. 3-cv-141157, 2016 WL 2626805 (D. Conn. May 6, 2016).

         It is therefore appropriate for the Court to consider which, if any, of the claims alleged in the Second Amended Complaint would survive a motion to dismiss under Rule 12(b)(6), if that pleading were to be filed. Because an amended claim's futility under Rule 15(a) depends upon whether it would be dismissed under Rule 12(b)(6), we ask of each claim Plaintiff that alleges in the SAC: Is this a claim upon which relief can be granted? - that being the touchstone of a motion to dismiss under Rule 12(b)(6). If a particular count in the proposed SAC does not state a claim upon which relief can be granted, the Court will not grant Plaintiff leave to amend his complaint to include that claim.

         While the following discussion of futility considers the nine pleaded counts seriatim for the most part, particular emphasis will be laid upon the later claims grouped in the SAC under the caption "Federal Claims." I do so because the original subject matter jurisdiction of this federal district court depends upon the presence of a justiciable federal question under 28 U.S.C. § 1331. This would not appear to be a case where subject matter jurisdiction may be derived from diversity of citizenship under § 1332.[2] If the proposed SAC were filed, and it should become apparent that Plaintiff asserted no viable federal claims, the Court would dismiss the entire case, the federal claims with prejudice, and the state claims without prejudice to assertion in a state court, the latter for the reason that I would decline to exercise supplemental jurisdiction under 28 U.S.C. § 1367 over the state claims. If, on the other hand, it should appear that the SAC contains at least one viable federal claim, I would exercise supplemental jurisdiction over the state claims. The question would then become, for Rule 15(a) purposes, whether each state claim survives Rule 12(b)(6) analysis. There is no point reaching that later stage unless at least one federal claim states a claim upon which relief can be granted, and in consequence cannot be discarded as futile, thereby establishing this Court's subject matter jurisdiction.

         2. Manifestly Futile Claims

         A detailed analysis of the futility of each count is not necessary. It is immediately apparent that the Eighth Count of the SAC does not and cannot state a claim.

         The count is captioned "Violation of 42 U.S.C. § 1983." Plaintiff's theory, as alleged in ¶ 69, is that the Bank's conduct in closing Plaintiff's accounts denied to Plaintiff "known constitutional rights to be free of discrimination and to equal treatment as do white people and those not of Nigerian descent, all in violation of 42 U.S.C. § 1983." There is no such thing as a "violation of 42 U.S.C. § 1983."

Section 1983 provides a civil claim for damages against any person who, acting under color of state law, deprives another of a right, privilege or immunity secured by the Constitution or the laws of the United States. Section 1983 itself creates no substantive rights; it provides only a procedure for redress for the deprivation of rights established elsewhere.

Sykes v. James, 13 F.3d 515, 519 (2d Cir. 1993) (citations omitted). "Section 1983 is not itself a source of substantive rights, but merely provides a method for vindicating federal rights elsewhere conferred." Albright v. Oliver, 510 U.S. 266, 271 (1994) (internal quotation marks omitted) (quoting Baker v. McCollan, 443 U.S. 137, 144 n.3 (1979). In the case at bar, the federal rights Plaintiff invokes are conferred by 42 U.S.C. §§ 1981 and 1982, pleaded in the Sixth and Seventh Counts respectively. No independent or separate claim lies under § 1983.

         In any event, Plaintiff could not utilize § 1983 as a vehicle for his claims against Liberty Bank because that section furnishes a means of redress only with respect to the conduct of those who act "under color of state law" - individuals who are, in case law vernacular, "state actors." Absent that element, no claim lies under § 1983. See, e.g., Hollander v. Copacabana Nightclub, 624 F.3d 30, 33 (2d Cir. 2010) ("To assert a Section 1983 claim, Den Hollander must plead that the Nightclubs' conduct was done under the color of state law. State action occurs where the challenged action is fairly attributable to the state" (citations and internal quotation marks omitted)). The closing of Plaintiff's accounts was the conduct of Liberty Bank, a private entity. Plaintiff does not allege, and no discernible basis exits for believing, that the Bank's action was fairly attributable to the State of Connecticut.

         Given these deficiencies, the Eighth Count in the SAC could not survive a motion to dismiss it. Consequently, the Court will not grant leave to include that count in an amended complaint Comparable deficiencies exist with respect to the Tenth Count of the SAC, in which Plaintiff alleges at ¶ 63 that Defendant Liberty Bank "is a member of the OCC of the U.S. Department of the Treasury, and as such is required to give fair access and equal treatment to its customers and to comply with all consumer laws and regulations." Plaintiff's theory is that Liberty Bank violated the OCC.

         That claim was included in an earlier version of the complaint, which the Bank moved to dismiss (Doc. 20). The Bank's brief in support of that motion (Doc. 21), at 7-8, argued with respect to the OCC claim that "the Office of the Comptroller of Currency ('OCC') is a [U.S.] government agency"; Plaintiff had cited to no authority enabling the Court to substantiate the claim or grant any relief to Plaintiff; and "Liberty is a state-chartered mutual bank, not regulated by the OCC, and therefore no cognizable legal theory exists in respect to this Tenth Claim." There have been subsequent exchanges of briefs of counsel, but Plaintiff has never quarreled with Defendant's dismissive arguments concerning the OCC claim, or cited any authority in support of that claim. The OCC claim may fairly be regarded as abandoned by Plaintiff. In any event it has no merit in law, and leave will not be granted to include the Tenth Count in an amended complaint.

         3. Standard of Review on Futility of Claims

         As noted supra, leave to amend a pleading under Rule 15(a) will be denied if a claim sought to be added by amendment would be dismissed under Fed.R.Civ.P. 12(b)(6).

         Rule 12(b)(6) allows defendants to assert by motion the defense of a plaintiff's "failure to state a claim upon which relief can be granted." In analyzing whether a plaintiff states a claim upon which relief can be granted, a court must accept as true all facts alleged in the complaint. Hill v. Curcione, 657 F.3d 116, 122 (2d Cir. 2011) (citing Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002)). Claims set forth by the plaintiff in the complaint must be facially plausible. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim has "facial plausibility 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).

         A reviewing court need not credit "legal conclusions" or "[t]hreadbare recitals of the elements of a cause of action supported by mere conclusory statements." Id. To survive a motion to dismiss, a complaint "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Instead, plaintiffs must allege "enough facts to state a claim to relief that is plausible on its face, " which is to say, facts sufficient to "nudge[] their claims across the line from conceivable to plausible." Id. at 570.

         In the case at bar, a claim Plaintiff asserts in his proposed Second Amended Complaint that does not meet those standards would not survive a motion to dismiss the claim under Rule 12(b)(6). Accordingly, to that extent the Court will not allow the amendment, since to do so would be futile.

         Before considering the Plaintiff's claims seriatim, it is necessary to add some qualifying comments with respect to the pleading and proof of two of those claims: the Sixth Count and the Seventh Count. In the Sixth Count, Plaintiff alleges that Liberty Bank's conduct in closing his accounts violated 42 U.S.C. § 1981. The Seventh Count alleges that the same conduct violated 42 U.S.C. § 1982. §§ 1981 and 1982 are codifications of what, in their original forms, were parts of the Civil Rights Act of 1866, enacted by Congress in the immediate aftermath of the Civil War to prohibit racial discrimination in specified areas of human endeavor. This historical background is recited by the Supreme Court in Runyon v. Fairfax-Brewster School, Inc., 427 U.S. 160, 167-74 (1976).

         The Civil Rights Act of 1964 included, in Title VII, prohibitions against discrimination in various aspects of employment. Title VII has been a fertile ground of federal litigation. Beginning with McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), and in a line of subsequent cases, [3]the Supreme Court fashioned a protocol for the pleading and proof of a Title VII employment discrimination claim. This is the now familiar McDonnell Douglas framework which the Second Circuit summarized recently in Littlejohn v. City of New York, 795 F.3d 297 (2d Cir. 2015). An employment discrimination plaintiff establishes a prima facie case if the plaintiff can show that he or she is a member of a protected class; was qualified for employment in the position in question; suffered an adverse employment action; and there is "some minimal evidence suggesting an inference that the employer acted with discriminatory motivation." Littlejohn, 795 F.3d at 307 (citing Supreme Court decisions). Those showings, if made, raise a temporary presumption of discriminatory motivation, which shifts the burden of production to the employer to come forward with a non-invidious justification for the adverse employment action. If the employer presents evidence for that justification, "joining issue on plaintiff's claim of discriminatory motivation, " the presumption vanishes, and the burden shifts back to plaintiff, who must demonstrate that the employer's proffered reason was not the true, or in any event the sole, reason for the employment decision, a burden that "merges with plaintiff's ultimate burden of showing that the defendant intentionally discriminated against her." Id. at 307-08.

         The McDonnell Douglas proof and burden-shifting framework is invariably applied in Title VII employment discrimination cases, the land of its birth, where McDonnell Douglas procedures in the district courts must be regarded as compulsory. However, the Second Circuit has made use of the framework in other contexts as well. In Huntley v. Community School Board of Brooklyn, New York School District No. 14, 543 F.2d 979 (2d Cir. 1976), an African American school principal challenged his termination as racially motivated, in violation of §§ 1981 and 1983, but did not assert a claim under Title VII. The Second Circuit applied McDonnell Douglas, reasoning that "[a]lthough McDonnell dealt with questions of the order and nature of proof in actions under the Civil Rights Act of 1964, by analogy the principles there enunciated are applicable here." 543 F.2d at 983 n.6 (citation omitted). In Sorlucco v. New York City Police Department, 888 F.2d 4 (2d Cir. 1989), the court of appeals said: "By analogy, the [McDonnell Douglas] analysis applies to claims under section 1983." 888 F.2d at 7. In Lizardo v. Denny's, Inc., 270 F.3d 94, 103 (2d Cir. 2001), the Second Circuit applied McDonnell Douglas burden-shifting to a § 1981 complaint brought by African American and Asian American restaurant patrons. In Back v. Hastings on Hudson Union Free School District, 365 F.3d 107, 123 (2d Cir. 2004), the court applied McDonnell Douglas in a § 1983 employment discrimination case where there was no Title VII claim. In Ruiz v. City of Rockland, 609 F.3d 486, 491 (2d Cir. 2010), the Second Circuit considered Title VII, § 1981, and §1983 claims together, and applied the McDonnell Douglas framework to all of them.

         In Littlejohn, 795 F.3d 297, an employment case where the plaintiff employee coupled a Title VII claim with claims under 42 U.S.C. §§ 1981 and 1983, the Second Circuit said, at 312: "Littlejohn's disparate treatment claim under Title VII, § 1981, and § 1983 is subject to the burden-shifting evidentiary framework set forth in McDonnell Douglas." Judge Droney's opinion cited Ruiz for that inclusive proposition. Id.

         Equally instructive is the Second Circuit's most recent decision on the point: Doe v. Columbia University, 831 F.3d 46 (2d Cir. 2016). The plaintiff in Doe, a male student at the defendant university, claimed that the university acted with sex bias in investigating and suspending him for alleged sexual assault, in violation of Title IX of the Education Amendments of 1972, 20 U.S.C. § 1681 et seq. No employment claims were involved. The district court dismissed Doe's action under Rule 12(b)(6). The Second Circuit reversed. Judge Leval's opinion poses the question as:

whether the burden-shifting framework established by the McDonnell Douglas line of cases for claims of discrimination on account of race, religion, or national origin under Title VII, and the associated pleading burden we articulated in Littlejohn, apply also to Title IX claims alleging discrimination on account of sex in education programs or activities that receive federal support.

831 F.3d at 55. The Second Circuit answered that question in the affirmative. "These claims, " it reasoned, "have so much in common that, at least on certain sorts of facts, that rules the Supreme Court established for Title VII litigation appear to apply also to such similar claims of sex discrimination under Title IX." Id.

         In Doe, the Second Circuit said that a pleading "is sufficient with respect to the element of discriminatory intent" if it "pleads specific facts that support a minimal plausible inference of such discrimination." Id. at 56. The Doe opinion's use of the adjective "plausible" reflects the clear import of reading Littlejohn and Doe together: on a motion to dismiss under Rule 12(b)(6), the criteria articulated in Iqbal apply to discrimination claims, which must also be evaluated in accordance with the McDonnell Douglas framework. The Second Circuit observed in Doe that "In Littlejohn, we clarified that Iqbal applies to employment-discrimination complaints brought under Title VII, " with the practical effect that,

at the 12(b)(6) stage of a Title VII suit, allegation of facts supporting a minimal plausible inference of discriminatory intent suffices as to this element of the claim because this entitles the plaintiff to the temporary presumption of McDonnell Douglas until the defendant ...

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