Arruda v. Sears, Roebuck & Company, C.A. 99-170 L (D. R.I. 2/__/2002)
| Decision Date | 01 February 2002 |
| Docket Number | C.A. 99-170 L.,C.A. 99-351 L.,C.A. 00-447 L.,C.A. 99-355 L.,C.A. 99-367 L. |
| Parties | DOROTHY ARRUDA and MELANIE VELLECO Plaintiffs, v. SEARS, ROEBUCK & COMPANY and SEARS NATIONAL BANK Defendants. DOROTHY ARRUDA Plaintiff, v. SEARS, ROEBUCK & COMPANY and SEARS NATIONAL BANK Defendants. MELANIE VELLECO Plaintiff, v. SEARS, ROEBUCK & COMPANY and SEARS NATIONAL BANK Defendants. BLANCHE SROKA Plaintiff, v. SEARS, ROEBUCK & COMPANY and SEARS NATIONAL BANK Defendants. VINCENT KOWAL and KATHLEEN KOWAL Plaintiffs, v. SEARS, ROEBUCK & COMPANY; SEARS NATIONAL BANK; STEPHEN J. SHECHTMAN; SHECHTMAN & HALPERIN; PRESTON W. HALPERIN; JOSEPH S.U. BODOFF; DOUGLAS A. GIRON; THOMAS S. CARLOTTOL HOLLY L. RAIANO; DYKEMA GOSSETT, PLLC Defendants. |
| Court | U.S. District Court — District of Rhode Island |
This action originally consisted of five different complaints that, after multiple consolidations, have merged into one. The central claim before the Court, and the claim common to all plaintiffs, stems from Title 11 of the United States Bankruptcy Code. Bankruptcy Reform Act of 1978, 11 U.S.C. § 524 (1994). Plaintiffs, five individuals, all former customers of Sears Roebuck & Co. and former debtors in bankruptcy, claim that defendants Sears Roebuck & Co. and Sears National Bank (both hereinafter "Sears") violated Title 11 by entering into redemption agreements with them without bankruptcy court approval and after each had been discharged from his or her bankruptcy. Two plaintiffs (the Kowals) make additional claims under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692a, and state law. Plaintiffs claim to represent an, as yet, uncertified class.
Defendants have moved for dismissal pursuant to Rule 12(b)(6) on all claims and have also presented a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction all state law claims. This Court holds that the redemption agreements did not violate the Bankruptcy Code or any discharge order. Additionally, the Court holds that bankruptcy court
approval of the redemption agreements was not required by the Bankruptcy Code. The Court further holds that plaintiffs have failed to present an actionable FDCPA claim. Defendants' motion to dismiss is granted as to all federal claims. With the federal claims dismissed, the Court declines to assume supplemental jurisdiction over any remaining state law issues. Therefore, the state law claims are dismissed, without prejudice, for lack of subject matter jurisdiction.
Pursuant to 28 U.S.C. § 1334, this Court has jurisdiction over all civil proceedings arising under, arising in or related to cases under Title 11. 28 U.S.C. § 1334(b); Bessette v. Avco Fin. Servs. Inc., 240 B.R. 147, 152-53 (D.R.I. 1999) aff'd in part, vacated in part, 230 F.3d 439 (1st Cir. 2000). Federal district courts have original, but not exclusive, jurisdiction over bankruptcy cases. 28 U.S.C. § 1334(b). Jurisdiction is shared with the bankruptcy court, an arm of the district court, although the bankruptcy court can only hear cases that derive from the federal district court's bankruptcy jurisdiction. 28 U.S.C. § 1334(b); 28 U.S.C. § 157. Although cases are often referred to the bankruptcy court for resolution, the district court may withdraw its reference to the bankruptcy court and hear the case itself. 28 U.S.C. § 157(d). Because the complaints raise issues of bankruptcy law, this Court has jurisdiction.
The FDCPA has its own specific jurisdictional provision, stating that an action to enforce liability under its provisions may be brought in United States District Court. 15 U.S.C. § 1692k(d). The state law claims are brought as a matter of supplemental jurisdiction. 28 U.S.C. § 1367.
In ruling on a motion to dismiss for failure to state a claim upon which relief can be granted, the Court construes the complaint in the light most favorable to plaintiff, taking all well-pleaded allegations as true and giving plaintiff the benefit of all reasonable inferences. Fed. R. Civ. P. 12(b)(6); Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 52 (1st Cir. 1990). Because a 12(b)(6) motion often comes in the early stages of the litigation, dismissal under Rule 12(b)(6) is appropriate only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Judge v. City of Lowell, 160 F.3d 67, 72 (1st Cir. 1998) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).
A Rule 12(b)(6) motion to dismiss must be read in conjunction with Rule (8)(a), setting forth the federal system of notice pleading. In most instances, notice pleading requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a). Allegations of fraud or mistake, however, must be pled with
particularity. Fed. F. Civ. P. 9(b); see also Langadinos v. American Airlines, Inc., 199 F.3d 68, 73 (1st Cir. 2000) (). The complaint, as a precursor to discovery, need not state all the possible facts at issue. As with any document filed with the Court, the complaint must adhere to the standards of Rule 11. Fed. R. Civ. P. 11(b). The attorney must attest that he or she has a good faith basis for making allegations after a reasonable inquiry. Id.
In a Rule 12(b)(6) motion, the Court may examine only the pleading itself. In a notice pleading system, the pleading serves to inform the defendant of the claims made against him or her. Langadinos, 199 F.3d at 72-73. It need not state every possible issue or fact. If the pleading is simply inartful or in improper form, a Rule 12(b)(6) motion is inappropriate. If the pleading is so vague that a party cannot reasonably respond, in keeping with Rule 8(a)'s thrust of notice pleading, the proper recourse would be a motion for a more definite statement. Fed. R. Civ. P. 12(e). Although a pleading serves primarily to put the other party on notice, a plaintiff must rely on more than subjective characterizations or conclusory descriptions. See Correa-Martinez, 903 F.2d at 52-53. Additionally, the Court need not accept unsupported conclusions or interpretations of law. Washington Legal Found. v. Massachusetts Bar Found., 993 F.2d
962, 971 (1st Cir. 1993). If the pleading fails to make out a legal claim upon which relief can be granted or fails to allege any facts that would support a legal claim, the pleading is insufficient and should be dismissed. See Correa-Martinez, 903 F.2d at 52-53.
Since a Rule 12(b)(6) motion usually comes at the outset of litigation, the Court is often hesitant to grant dismissal. If more discovery is necessary to develop a factual record, dismissal under Rule 12(b)(6) would be premature. See Washington Legal Found., 993 F.2d at 971. If the factual record fails to develop, the Court may, upon petition, grant a motion for summary judgement, dismissing all or part of the case. See Fed. R. Civ. P. 56. Simply because the Court is hesitant to dismiss a claim in the early states of litigation, however, does not mean that there are not circumstances where the Court can and should act. Rule 12(b)(6) weeds out those allegations that, even with further factual development, will never grow into sustainable claims under the law. As the First Circuit stated, "[i]n the menagerie of the Civil Rules, the tiger patrolling the courthouse gates is rather tame, but `not entirely . . . toothless.'" Correa-Martinez, 903 F.2d at 52 (quoting Dartmouth Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir. 1989)). Therefore, the Court must determine whether plaintiffs' complaint is sufficient to get them through the courthouse gates.
This action originally consisted of five separate actions that now have been consolidated. Plaintiffs Arruda, Velleco, and Sroka, each individually filed a complaint in the Bankruptcy Court of this District alleging violations of the Bankruptcy Code and a claim of unjust enrichment. Arruda and Velleco together filed additional claims in this Court alleging Racketeer Influenced and Corrupt Organizations Act ("RICO") and state law violations. In August, 1999, the individual Arruda and Velleco bankruptcy complaints were consolidated with their jointly filed RICO claims. In September, 1999, Sroka's complaint was also consolidated with the Arruda and Velleco actions. Upon motion by defendants, the Court withdrew the reference to the Bankruptcy Court.
In a December 1, 2000 order, the Court dismissed all claims in the Arruda/Velleco action arising under RICO, as well as all state law claims. The dismissed state law claims include Count III, an unjust enrichment claim, in the Arruda/Velleco/Sroka complaints originally filed in Bankruptcy Court. Therefore, as to Arruda, Velleco and Sroka, the only remaining claims trace back to Counts I and II of their original complaints filed in the Bankruptcy Court.
The Kowals' amended complaint was filed directly in this Court. The Kowals claim violations of the Bankruptcy Code, the
FDCPA and state law. On December 1, 2000, this Court consolidated the Arruda/Velleco/Sroka action with the Kowals' case.
Prior to the last consolidation, defendants filed a motion to dismiss the Kowals' amended complaint. Subsequent to the consolidation order, defendants filed a motion to dismiss the remaining bankruptcy claims in the Arruda/Velleco/Sroka action. On April 10, 2001, the Court held a hearing on both motions to dismiss. Those motions to dismiss are now in order for resolution.
On a Rule 12(b)(6) motion, the Court may only consider the facts that the plaintiff alleges in the complaint. Correa-Martinez, 903 F.2d at 52. Here are the facts as plaintiffs allege...
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