Rader v. Ally Fin., Inc.

• Decision Date: 30 January 2020
• Docket Number: Case No. 19-cv-1275 (NEB/TNL)
• Parties: Larry W. Rader, Plaintiff, v. Ally Financial, Inc., Defendant
• Court: U.S. District Court — District of Minnesota

Larry W. Rader, Plaintiff, v. Ally Financial, Inc., Defendant

Case No. 19-cv-1275 (NEB/TNL)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

January 30, 2020

REPORT & RECOMMENDATION

Larry W. Rader, 2411 Ridgeview Drive, Wausau, WI 54401 (pro se Plaintiff); and

Kristy A. Fahland and Lauren Hoglund, Messerli & Kramer PA, 100 South Fifth Street, Suite 1400, Minneapolis, MN 55402 (for Defendant).

I. INTRODUCTION

This matter is before the Court on pro se Plaintiff Larry W. Rader's motion to strike (ECF No. 6); motion for summary judgment (ECF No. 25); and motion to compel (ECF No. 55). The Court sua sponte also issued an Order to Show Cause (ECF No. 47), questioning whether Plaintiff properly invoked this Court's subject-matter jurisdiction. Motions in this matter have been referred to the undersigned for a report and recommendation to the district court, the Honorable Nancy E. Brasel, District Judge for the United States District Court for the District of Minnesota, under 28 U.S.C. § 636 and D. Minn. LR 72.1. (ECF No. 21.)

Because the Court concludes that Plaintiff has failed to meet his burden to prove the existence of subject-matter jurisdiction, IT IS HEREBY RECOMMENDED that this matter be DISMISSED WITHOUT PREJUDICE, and all motions be DENIED AS MOOT.

II. FACTUAL ALLEGATIONS

This case involves a dispute over a $1,994 extended warranty charged in connection with the purchase of a car that was financed under an installment contract. The total amount financed—including the price of the extended warranty—is $13,225.58.¹

Plaintiff,² a Wisconsin resident, brings this action against Defendant Ally Financial, Inc., "a foreign corporation licensed to[]do business in Minnesota." (Compl. ¶ 2 (emphasis removed), ECF No. 1.) Defendant is a Delaware corporation. (Am. Answer ¶ 2, ECF No. 45.) Plaintiff alleges that, in March 2019, he purchased a used car from a dealership located in Wausau, Wisconsin, and the dealership improperly charged him $1,994 for an extended warranty "without disclosing the new car warranty on the vehicle." (Compl. ¶¶ 2, 4.) Plaintiff alleges that Defendant purchased the financing contract from the dealership. Plaintiff additionally alleges that, at some point, the dealership sent Defendant a refund of the extended warranty price. Plaintiff alleges that, despite being notified of the improperextended warranty, Defendant has continued to charge interest on the amount of the extended warranty.

In the Complaint, Plaintiff alleges Defendant has (1) charged interest in violation of Wisconsin's usury law, Wis. Stat. § 138.05, and the federal criminal mail fraud statute, 18 U.S.C. § 1341, and (2) invaded his privacy. Plaintiff requests "compensatory damages and punitive damages, removal of [the] lien on his car title, and discharge of any claim for interest or principal under the alleged contract" as well as "costs and fees." (Compl. ¶ 8.) Plaintiff also requests $150,000 in punitive damages. (Compl. ¶ 8.)

III. PROCEDURAL HISTORY

Following a combined pretrial scheduling conference and motion hearing on August 1, 2019, the Court had cause to question whether subject-matter jurisdiction, particularly the $75,000 jurisdictional minimum under 28 U.S.C. § 1332(a), was satisfied in this case based on conflicting information in the record, including but not limited to statements Plaintiff made at the hearing "that this matter could have been brought in small-claims court and that his damages could be over $1 million." (Order to Show Cause at 5, ECF No. 47; see Aug. 1, 2019 Tr. 6:24-7:1, 9:16-20, ECF No. 80; see also Aug. 1, 2019 Tr. 8:11-11:19.³) The Court issued an Order to Show Cause, directing the parties to address the amount in controversy and setting the matter on for a hearing in conjunction with the October 31, 2019 hearing on Plaintiff's motion for summary judgment. (Order to Show Cause at 8-9; see ECF Nos. 25, 40, 41.)

On August 16, as part of another filing, Plaintiff referred back to a prior filing he made on July 25, wherein he stated in relevant part:

WHEREFORE, Plaintiff submits that the answer and the proposed amended answer of [Defendant] must be stricken with ENTRY for judgment of liability against [Defendant] for plaintiff on Counts 1 and 2, and for damages on Count 1 for plaintiff of $220,000 plus interest as shown on [8] to date of entry, plus costs, with 1 million dollars in damages for breach of privacy under Count 2 [27], or alternatively resolved by mediation or jury trial.

(ECF No. 53 at 1 (quoting ECF No. 35 at 1) (numerical insertions in original).)

On September 20, Defendant responded to the Order to Show Cause, asserting that Plaintiff had not met his burden to show the existence of subject-matter jurisdiction. (See generally Def.'s Resp. to Order to Show Cause, ECF No. 68.)

On September 24, Plaintiff replied with a memorandum, stating among other things:

Forgive me, but Plaintiff believes we are still focused-on a federal claim exceeding $75000 to sustain jurisdiction under 28 USC 1332, notwithstanding that the issue is moot as plaintiff has shown in his prior filings here and in the 8^th Circuit, 19-2942,⁴ citing the [Defendant] violation of the Fair Debt Collection Practices Act, 15 USC 1692, as well as his right to a jury trial under the 7^th Amendment to the U.S. Constitution.

(ECF No. 69 at 1.) Plaintiff also included as an exhibit six pages of information regarding Defendant, including historical information, sponsorships, and a 2013 settlement regardinga discriminatory pricing system that resulted in higher interest rates on auto loans for certain borrowers. (See generally ECF No. 70.)

On October 11, four days after the deadline for Plaintiff's reply, Plaintiff filed "Plaintiff's Offer of Proof & Exhibits on Hearing set for 10/31/2019" ("Offer of Proof") (ECF No. 71). In this filing, Plaintiff asserted that Defendant charged usurious interest without a valid assignment and that this conduct resulted in "personal injury strife and emergency hospital medical expenses" as well as "related emergency expenses" (collectively, "medical expenses"). (Offer of Proof at 1-2 (emphasis removed).) With respect to the calculation of his damages, Plaintiff submitted in relevant part:

[Defendant] thus intentionally made daily entries of interest of $4.05 per day and late penalties for 241 days to the day of this hearing on plaintiff's pseudo account made case-public herein causing personal injury strife and emergency hospital medical expenses of $13238.29 per medical records exhibit #101, and related emergency expenses (ambulance service, car tow and storage fee, and repairs of near $800.

. . . [Defendant] has also withheld the car title and unlawfully placed a lien on title as well as [Defendant's] claim to insurance coverage on the vehicle paid by plaintiff—also a Breach of Privacy.

. . .

DAMAGES: As the complaint and motion for default judgment, alternatively as the summary judgment alleges, plaintiff seeks damages collectively calculated at $2000 per day for these special damages labeled as punitive damages, presently $482,000, for Recidivist daily acts by [Defendant], plus a claim for [Defendant's] daily on-going Breach of Privacy.

Since Recidivist claims are dominant here, plaintiff made claim of $150000 for punitive and special damages under a demand of $2000 per day plus the separate Breach of Privacy claim all under a demand for judgment as demanded in the "Wherefore demand" at [35, 53, 58].

Under 28 USC 1332 causes of action can be combined to arrive at the $75000.01 floor with the Breach of Privacy claim and also its punitive damages.

(Offer of Proof at 2 (numerical insertions in original) (emphasis removed); see also id. at 1 (describing issue as whether Plaintiff is "entitle[d] . . . to Judgment as calculated daily by plaintiff at $2000 for combined special compensatory damages which include personal injury strife, daily interest, and recidivist punitive damages as supplemented since complaint, for 241 days, to 10/31/19 for $482000, plus, one million dollars for daily intrusion of plaintiff's Breach of Privacy" (emphasis removed).) Plaintiff also asserted that Defendant had withheld certain documents from him. Attached to this filing were letters from Defendant to the dealership and Plaintiff regarding the financing contract; an approval by Defendant related to that contract; and medical records related to a hospital stay by Plaintiff between April 1 and 5.

At the hearing on October 31, Plaintiff orally moved to amend the Complaint in accordance with the Offer of Proof. (Oct. 31, 2019 Tr. 3:23-25, ECF No. 78.⁵) Defendant objected to the Offer of Proof as untimely filed, orally moved to strike it, and asserted that any motion to amend needed to be properly brought in accordance with the deadline foramending the pleadings in the Pretrial Scheduling Order and the Local Rules of this District. (Oct. 31, 2019 Tr. 5:5-21.)

IV. ANALYSIS

As this Court previously stated, "'[f]ederal courts are courts of limited jurisdiction,' possessing 'only that power authorized by Constitution and statute.'" Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). And, this Court has an obligation to ensure that it has jurisdiction over this matter. See, e.g., Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006) ("[C]ourts, including this Court, have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party."). "[W]hen a federal court concludes that it lacks subject-matter jurisdiction, the court must dismiss the complaint in its entirety." Id.; see Fed. R. Civ. P. 12(h)(3).

A. Subject-Matter Jurisdiction

"The basic statutory grants of federal-court subject-matter jurisdiction are contained in 28 U.S.C. §§ 1331 and 1332. Section 1331 provides for '[f]ederal-question' jurisdiction, § 1332 for '[d]iversity of citizenship' jurisdiction." Arbaugh, 546 U.S. at 513 (alteration in original). In...