Jonak v. John Hancock Mut. Life Ins. Co.

Decision Date04 January 1985
Docket NumberNo. CV84-L-523.,CV84-L-523.
Citation629 F. Supp. 90
PartiesIsadore JONAK and Marilyn Jonak, Plaintiffs, v. JOHN HANCOCK MUTUAL LIFE INSURANCE CO., Roger E. Johnon, and Daryl L. Nielsen, Defendants.
CourtU.S. District Court — District of Nebraska


Isadore Jonak and Marilyn Jonak, pro se.

John P. Heil of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim, Omaha, Neb., for defendants.


URBOM, Chief Judge.

Two motions to dismiss have been filed on behalf of the defendants, filings 8 and 9, on the grounds of lack of subject matter jurisdiction and failure to state a claim upon which relief could be granted, and a motion for summary judgment, filing 14. The plaintiffs have filed a motion for summary or default judgment, filing 11. Although I recently have had occasion to consider the sufficiency of several complaints remarkably similar to the one here and have dismissed a similar complaint by these plaintiffs against different defendants, Jonak v. Sherman County Bank, CV84-L-522 (memorandum and order, January 3, 1985), I must address the present complaint on its own merits.

The focus of the complaint is a set of loans and security agreements between the plaintiffs and the defendant insurance company in 1974, 1978, and 1982. In addition to a variety of allegations about why the transactions are invalid or rescindable, the plaintiffs allege a threatened "nonjudicial foreclosure sale" without a hearing.

In ruling on a motion to dismiss, whether on the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action, the allegations of the complaint must be construed favorably to the pleader, and the complaint should not be dismissed on the latter ground unless it appears beyond doubt that the plaintiffs can prove no set of facts in support of their claim that would entitle them to relief. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). The burden of demonstrating the existence of federal jurisdiction is on the pleader. Johnsrud v. Carter, 620 F.2d 29, 33 (3d Cir.1980). However, when a statute provides the basis for both the subject matter jurisdiction of the federal court and the plaintiff's substantive claim for relief, the claim may be dismissed for lack of subject-matter jurisdiction—rather than for failure to state a claim—only when the allegations of the complaint are frivolous. Black v. Payne, 591 F.2d 83, 86 (9th Cir.1979). In regard to their motion for summary judgment, the defendants bear the burden of showing that there is no genuine issue as to any material fact and that they are entitled to judgment as a matter of law. All doubts are to be resolved against the moving party, and the non-moving party is to receive the benefit of all favorable inferences that reasonably may be drawn from the evidence. Walling v. Fairmont Creamery Co., 139 F.2d 318, 322 (8th Cir. 1943); Ramsouer v. Midland Valley R. Co., 135 F.2d 101, 106 (8th Cir.1943).

The plaintiffs purport to bring this action as a class action, claiming that they represent a class of farmers and farming corporations who have borrowed money from the defendants for the purpose of purchasing land and farm equipment and other agricultural and non-agricultural purposes. However, the complaint does not adequately allege the prerequisites to use of the class action required by Rule 23 of the Federal Rules of Civil Procedure. For instance, there is no allegation that the class of farmers borrowing from the defendants "is so numerous that joinder of all member is impracticable." Also, I cannot find that the plaintiffs, acting pro se, can fairly and adequately protect the interests of the class, particularly in light of the manner in which the complaint was drafted. Therefore, I shall treat the complaint as affecting only the interests of the named parties.

In light of the facts pleaded, many of the cited grounds for relief are utterly lacking in merit, as I have said repeatedly in similar cases. Among the statutes upon which the plaintiffs rely are:

15 U.S.C. §§ 77 et seq. Securities Act of 1935 (§ 77 is the last section of a series of statutes dealing with international trade, and no Securities Act was passed in 1935; the Securities Act of 1933, 15 U.S.C. §§ 77a to 77aa, regulates transactions involving the sale of securities) 15 U.S.C. §§ 78 et seq., 78h, 78cc (no § 78 exists, but other sections are part of the Securities Exchange Act of 1934, regulating marketing of securities)
15 U.S.C. § 78ccc (part of the Securities Investor Protection Act of 1970, § 78ccc creates a nonprofit corporation)
15 U.S.C. §§ 79g, 79h, 79z-1 (parts of the Public Utility Holding Company Act of 1935, 15 U.S.C. §§ 79 to 79z-6, regulating holding companies owning gas or electric utilities)
15 U.S.C. §§ 80a-35 et seq., 80a-46 (parts of the Investment Company Act of 1940, 15 U.S.C. §§ 80a-1 to 80a-64, regulating investment companies, from the definition of which insurance companies are excluded, § 80a-3(c)(3))
15 U.S.C. §§ 89 et seq. (§§ 81 to 134, dealing with trademarks, were repealed in 1946 and their provisions assigned to other portions of Title 15)
15 U.S.C. §§ 1716, 1719 (parts of the Interstate Land Sales Full Disclosure Act; § 1716 prohibits misrepresentations to prospective purchasers of lots in subdivisions about the effect of registering the subdivision with the Secretary of Housing and Urban Development and § 1719 creates judicial jurisdiction of violations of the Act)
15 U.S.C. § 1733 (nonexistent)
the Fourth, Fifth, Seventh and Fourteenth Amendments to the Constitution of the United States (none of which provide any cause of action against private individuals or corporations not acting under color of state or federal law)
the State Constitution and statutes of Nebraska (no federal cause of action arises under a state constitution or legislation, and no diversity jurisdiction exists)
42 U.S.C. Chap. 21 (without identifying specific provisions of any of the civil rights statutes in the chapter; no facts are alleged to establish the state action or color of state law requirements or any other basis of federal jurisdiction)
15 U.S.C. §§ 630, 631 et seq., 636(h), 637(h) (§§ 631 to 647 make up the Small Business Act, which regulates companies licensed by the Small Business Administration to make loans to small businesses; there is no § 630 or 637(h); § 636(h) empowers the Small Business Administration to make loans to handicapped persons and organizations for the handicapped, but makes no mention of a three-year deferral with the approval of the president)
15 U.S.C. §§ 1691(d), 1691(e) (parts of the Equal Credit Opportunity Act: § 1691(d) sets a time limit for creditors to give notice of the reasons for adverse actions on credit applications; there is no § 1691(e), but § 1691e provides jurisdiction for suits based on violations of the Act, but it sets a limitations period of two years) 15 U.S.C. § 1693 et seq. (part of the Electronic Fund Transfer Act, which regulates the rights and liabilities of financial institutions and consumers regarding transfers of funds through electronic means)
15 U.S.C. §§ 2001 et seq. (authorizing the Secretary of Transportation to set standards for improving automotive efficiency)
12 U.S.C. §§ 221 et seq., 226 (§ 226 is merely the short title provision of the Federal Reserve Act; §§ 221 to 522 create the Federal Reserve System and defines the powers of banks and other components of the system; an insurance company is neither a national bank nor a member of the System)
7 U.S.C. § 1421 (the opening section of the Agricultural Act of 1949; § 1421 gives certain authority and duties to the Secretary of Agriculture for setting commodity price supports)

Many of these provisions have absolutely nothing to do with the facts alleged. Others provide rules of law which would be helpful to the plaintiffs' claims, except for the fact that their applicability is limited by express provisions or by context to subjects totally unrelated to the facts alleged in the complaint. In addition, the allegations concerning aspects of contract law, equity, and various other matters involving state statutory or case law are matters which state a claim, if at all, under state law, not federal law. As such, this court lacks jurisdiction over those claims absent diversity of citizenship under 28 U.S.C. § 1332. However, the complaint defeats diversity jurisdiction by alleging that the plaintiffs and at least one of the defendants are Nebraska residents. Nondiversity between any one plaintiff and any one defendant defeats diversity jurisdiction despite the diverse citizenships of other parties. Pendent jurisdiction over a state law claim requires the existence of a related federal claim.

The remaining federal statutes upon which the plaintiffs rely also are inapplicable, but I shall discuss them more fully.

Federal courts are willing to grant to farmers whatever relief the law allows. For example, several courts have enjoined the Secretary of Agriculture from foreclosing farm loans extended by the Farmers Home Administration because the Secretary had failed to develop a policy for deferring principal and interest payments or foregoing foreclosure, as required by 7 U.S.C. § 1981a. E.g., Allison v. Block, 723 F.2d 631 (8th Cir.1983); Coleman v. Block, 580 F.Supp. 194 (D.N.D.1984). However, § 1981a is expressly limited to loans "made, insured, or held by the Secretary under this chapter 7 U.S.C. Ch. 50, or under the provisions of any other law administered by the Farmers Home Administration." Nothing in the complaint or the attached exhibits indicates any material connection between the loans from the insurance company and any of the FmHA loan programs covered by § 1981a.

The plaintiffs allege that the defendants are subject to the rules and regulations established under the Farm Credit Act, 12 U.S.C. §§ 2001 et seq., and, in particular, 12 C.F.R. § 614.4510(d). However, the...

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