Kraft v. Office of Comptroller of Currency

Decision Date05 April 2021
Docket Number4:20-CV-04111-RAL
CourtU.S. District Court — District of South Dakota

Rune Kraft (Kraft) filed this pro se lawsuit against the Office of the Comptroller of Currency (the OCC) and Wells Fargo Bank, N.A. (Wells Fargo). Doc. 1. In his complaint, Kraft alleges a First Cause of Action for "Equal Protection, Declaratory and Equitable Relief" and a Second Cause of Action for "Declaratory and Equitable Relief" and attached multiple documents to his complaint. See Doc. 1 at 26-27; Doc. 1-1. In brief, Kraft claims restitution under a consent order between the OCC and Wells Fargo, see Doc. 1-1 at 47-72, and he seeks declaratory judgment to that effect, Doc. 1. Both the OCC and Wells Fargo have filed motions to dismiss. Docs. 15, 20. For the reasons stated herein, both motions to dismiss are granted without prejudice to Kraft refiling a claim against Wells Fargo for negligence, if he so wishes.

I. Facts Alleged1

Kraft alleges that in 2007 and 2008, certain individuals2 opened six different bank accounts at Wells Fargo on behalf of three different companies belonging to Kraft: ServicePartner, Inc., the 24-7 Group of Companies, Inc., and Artesia, Inc. Doc. 1 at 3-5; Doc. 1-1-at 5-10, 15-20, 25-30, 35-46. Kraft's complaint states that these three companies were merged into one company, Pacific Equipment Management Company, and that company's rights were assigned to Kraft. Doc. 1 at 6.

Kraft alleges that Wells Fargo failed to verify that the individuals had the authority to open bank accounts on behalf of his companies. Doc. 1 at 3-5, 10-11. Kraft points to Wells Fargo's policy to review both a company's articles of incorporation and a corporate resolution to verify that the individual opening a corporate account has the authority to do so. Doc. 1 at 3, 8; Doc. 1-1 at 3. Kraft alleges that Wells Fargo only reviewed the articles of incorporation of each of his companies and did not require that the individuals produce a corporate resolution. Doc. 1 at 3-5, 10-11. The articles of incorporation attached to the complaint do not reference any of the individuals who opened these accounts.3 Doc. 1 at 3-5, 11; Doc. 1-1 at 11-14, 21-24, 31-34. In other words, Kraft claims that Wells Fargo did nothing to verify that the individuals were authorized to open accounts or even affiliated with the companies. Doc. 1 at 3-5, 11. Kraft alleges that about $1.3 million of his companies' funds were deposited into these accounts and that theseindividuals either transferred or withdrew monies from the accounts without authorization.4 Doc. 1 at 3, 11.

Then in 2016, Wells Fargo made national headlines for its banking practices. The OCC found that Wells Fargo and its employees were opening deposit accounts and making related transfers without authorization from its customers. Doc. 1 at 11. The OCC identified "(1) deficiencies and unsafe or unsound practices in the Bank's risk management and oversight of the Bank's sales practices, and (2) unsafe or unsound sales practices by the Bank." Doc. 1 at 13; Doc. 1-1 at 48. Pursuant to its authority under 12 U.S.C. § 1818 (b)(1), the OCC instituted a cease and desist proceeding. Doc. 1-1 at 62, 67. Wells Fargo ultimately entered into a settlement with the OCC and executed a Stipulation and Consent to the Issuance of a Consent Order. Doc. 1 at 11-12; Doc. 1-1 at 47-72. Under the Consent Order between the OCC and Wells Fargo, the OCC ordered Wells Fargo to pay restitution to those harmed by such practices. Doc. 1-1 at 58-59; see also 12 U.S.C. § 1818(b)(6)(A). The chairman and chief executive officer of Wells Fargo have since testified before Congress and stated that Wells Fargo had "accepted responsibility and would make restitution." Doc. 1 at 16; see also Doc. 1-1 at 74-78. Wells Fargo also ran a nationwide campaign promising to "refund all customers and make things right." Doc. 1 at 16.

Kraft asserts that Wells Fargo violated federal law, namely 31 C.F.R. § 1020.220, when it failed to properly verify those individuals' authority to open bank accounts on behalf of his companies and withdraw or transfer money from such accounts. Doc. 1 at 9-11. He also claims that this incident entitles him to restitution from Wells Fargo based on the Consent Order between Wells Fargo and the OCC as well as Wells Fargo's promises to Congress and the public. Doc. 1at 11-20. To date Kraft has received no restitution from Wells Fargo. Doc. 1 at 6, 20. Kraft now seeks declaratory judgment from the Court that: (1) Kraft has a right to have the OCC make Wells Fargo pay him restitution; (2) Kraft has a right to receive restitution from Wells Fargo; and (3) Kraft has a right to receive punitive damages from Wells Fargo. Doc. 1 at 28. Although Kraft's complaint is no model of clarity, he does not claim negligence under state law or breach of any account agreement.5 Rather, Kraft invokes 42 U.S.C. § 1983 and federal question jurisdiction and mentions diversity jurisdiction only in passing and not as part of articulating any claims based on state law. Doc. 1 at 1-31. Both Wells Fargo and the OCC have moved to dismiss Kraft's complaint based on lack of subject matter jurisdiction and failure to state a claim. Docs. 15, 20.

II. Standards of Review
A. Lack of Subject Matter Jurisdiction

On a motion to dismiss under Rule 12(b)(1), the standard of review depends on whether the defendant is making a facial attack or factual attack on subject matter jurisdiction. Stalley v. Catholic Health Initiatives, 509 F.3d 517, 520-21 (8th Cir. 2007). Where the defendant makes a facial attack to challenge whether the facts alleged in the complaint establish subject matter jurisdiction under Rule 12(b)(1), the plaintiff is afforded similar safeguards as in a Rule 12(b)(6) motion. Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990). Namely, the Court must "accept as true all factual allegations in the complaint, giving no effect to conclusory allegations of law," and determine whether the plaintiff's alleged facts "affirmatively and plausibly suggest"that jurisdiction exists. Stalley, 509 F.3d at 521. The Court's review is limited to the face of the pleadings. Branson Label, Inc. v. City of Branson, Mo., 793 F.3d 910, 914 (8th Cir. 2015).

On the other hand, where the defendant attacks the factual basis for subject matter jurisdiction, the court can consider matters outside the pleadings, and the nonmoving party does not have the benefit of 12(b)(6) safeguards. Id. at 914-15; Osborn, 918 F.2d at 729 n.6. "A factual attack occurs when the defendant challenges the veracity of the facts underpinning subject matter jurisdiction." Davis v. Anthony, Inc., 886 F.3d 674, 679 (8th Cir. 2018) (cleaned up and citation omitted). In that case, "no presumptive truthfulness attaches to the plaintiff's allegations," and a court is "free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Osborn, 918 F.3d at 730 (citation omitted). Here, the motions to dismiss appear to be a facial attack on whether the facts alleged in the complaint state a claim within this Court's jurisdiction, so the protections of Rule 12(b)(6) apply.

B. Failure to State a Claim

On a motion to dismiss under Rule 12(b)(6), courts must accept a plaintiff's factual allegations as true and construe all inferences in the plaintiff's favor, but need not accept a plaintiff's legal conclusions. Retro Television Network, Inc. v. Luken Commc'ns, LLC, 696 F.3d 766, 768-69 (8th Cir. 2012). To survive a motion to dismiss for failure to state a claim, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Although detailed factual allegations are unnecessary, the plaintiff must plead enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged," Iqbal, 556 U.S. at678, "even if it strikes a savvy judge that actual proof of those facts is improbable, and 'that a recovery is very remote and unlikely,'" Twombly, 550 U.S. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). Still, "conclusory statements" and "naked assertion[s] devoid of further factual enhancement" do not satisfy the plausibility standard. Iqbal, 556 U.S. at 678 (alteration in original) (citation and internal marks omitted).

The Eighth Circuit requires district courts to construe pro se complaints liberally. Stone v. Harry, 364 F.3d 912, 914 (8th Cir. 2004). This means "that if the essence of an allegation is discernible, even though it is not pleaded with legal nicety, then the district court should construe the complaint in a way that permits the layperson's claim to be considered within the proper legal framework." Id. at 915. This rule of liberal construction, however, does not excuse a pro se plaintiff from alleging enough facts to support his claims. Id. at 914. That is, even though a plaintiff is proceeding pro se, the district court will not "assume facts that are not alleged, just because an additional factual allegation would have formed a stronger complaint." Id. at 915.

III. Discussion
A. Wells Fargo's Motion to Dismiss

Wells Fargo has moved to dismiss Kraft's complaint for lack of subject matter jurisdiction and failure to state a claim under Federal Rules of Civil Procedure 12(b)(1) and. 12(b)(6). Doc. 15. Wells Fargo first asserts that Kraft has failed to state a claim because he is not authorized to bring a private cause of action under the Bank Secrecy Act or the USA PATRIOT...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT