Ricketts v. Midwest Nat. Bank

• Decision Date: 11 May 1989
• Docket Number: Nos. 88-1203,88-2302,s. 88-1203
• Citation: 874 F.2d 1177
• Parties: James H. RICKETTS, Sr., Plaintiff-Appellant, v. MIDWEST NATIONAL BANK, et al., Defendants-Appellees. James H. RICKETTS, Sr., Plaintiff-Appellant, v. SHARP INVESTMENT COMPANY, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1177

874 F.2d 1177

13 Fed.R.Serv.3d 1161

James H. RICKETTS, Sr., Plaintiff-Appellant, v. MIDWEST NATIONAL BANK, et al., Defendants-Appellees.

James H. RICKETTS, Sr., Plaintiff-Appellant, v. SHARP INVESTMENT COMPANY, et al., Defendants-Appellees.

Nos. 88-1203, 88-2302.

United States Court of Appeals,

Seventh Circuit.

Submitted Dec. 13, 1988.

Decided May 11, 1989.

James H. Ricketts, Sr., Indianapolis, Ind., for plaintiff-appellant.

David E. Wright and Ronald G. Sentman, Johnson Smith Densborn Wright & Heath, James G. McIntire and Thomas J. Costakis, Krieg DeVault Alexander & Capehart, Indianapolis, Ind., for defendants-appellees.

Before CUDAHY, FLAUM, and KANNE, Circuit Judges.

FLAUM, Circuit Judge.

James Ricketts has appealed pro se from the dismissals of two complaints he filed in the district court after being denied leave to prosecute them in forma pauperis. The district court dismissed the first complaint sua sponte six days after it was filed for failure to state a claim. A different district court judge dismissed the second complaint for want of subject matter jurisdiction in accordance with the substantiality doctrine. The second dismissal occurred after the judge had reviewed responsive pleadings and ordered the plaintiff to show cause why the case was meritorious. We have consolidated Ricketts' appeals because they raise a number of questions concerning the proper disposition of patently frivolous pro se filings.

I. Background

On December 18, 1987, Ricketts applied for leave to proceed in forma pauperis to prosecute two complaints against assorted defendants. In the first complaint ("the banking complaint"), Ricketts sought relief for various claims against defendants Midwest National Bank of Indiana ("Midwest"), the Indiana National Bank, the Ameritrust Corporation, the Federal Deposit Insurance Corporation, and the United States Treasury. Ricketts claimed that Midwest did not honor his 1973 request to make a small withdrawal from a savings account he had opened for a holding company of his called the A.L.F.E. Company. He alleged that he was the chairperson and executive director of Alfe Inc., a subsidiary of A.L.F.E., and that he and Charles Corbin Jr. opened a joint corporate checking account for Alfe Inc. at the American Fletcher Bank. Ricketts alleged that Midwest wrongfully paid the $30,267.00 balance of the A.L.F.E. savings account over to the other officers of Alfe, Inc. and then participated in executing "new banking resolutions" which did not name Ricketts as an officer of the corporation. In addition, Ricketts claimed that he was prevented from pursuing his claims because he had been involuntarily detained and drugged over a fifteen year period for suspected mental disorders. Ricketts argued that the foregoing transactions violated the Federal Tort Claims Act (FTCA) and various provisions of the Uniform Commercial Code. As relief, he seeks the return of his alleged assets along with fifteen years of accrued interest and an award of $1,000,000 as "restitution."

In his second complaint ("the insurance complaint"), Ricketts lumped together a number of disparate claims against defendants Sharp Insurance Co. ("Sharp") and four of its agents, the Jefferson Insurance Co., Indiana National Bank, two of his former attorneys, the Social Security Administration, the Federal Deposit Insurance Corporation and the United States Treasury. Ricketts' initial allegation is that Jefferson Insurance, the insurer of certain real estate property he had purchased from Sharp, did not honor his policy claims for damage to the property caused by a wind storm and acts of vandalism. He further alleged that in response to a garnishment order entered against him, the Indiana National Bank paid $602.09 to the "defendants" out of an account which was opened on his behalf. Finally, he contended that Sharp stole or converted personal property of his when it sold the real estate after obtaining a judgment against him. Ricketts argued that these acts violated the Federal Torts Claim Act and the "U.S.Code General Index for Insurance, Contracts, Real Estate Fraud & Fraud, and Torts, and Social Security." His prayer for relief in the amount of $67,359 is based upon his calculation of the total damages he incurred because of these acts.

Ricketts' two applications to proceed in forma pauperis and his accompanying complaints were given miscellaneous docket numbers and assigned to a district judge for review in accordance with the procedures suggested in our decision in Wartman v. Branch 7, Civil Division, County Court, 510 F.2d 130, 133 (7th Cir.1975). On January 12, 1988, the district court entered separate orders denying both applications. In reference to the banking complaint, the court held that the action was without reasonable basis in law or fact, and thus was frivolous within the meaning of 28 U.S.C. Sec. 1915(d). The court explicitly questioned the jurisdictional basis for Ricketts' claims under the FTCA since he did not allege any grounds which would give rise to a viable claim against the United States. The court also noted that the allegations in the banking complaint suffered from an obvious statute of limitations problem and that Ricketts was not the real party in interest capable of bringing the banking claims on behalf of the corporation.

Similarly, the court found that the insurance complaint was frivolous within the meaning of Sec. 1915(d). The court concluded that Ricketts did not allege facts that would give rise to a viable claim under the FTCA. The court also stressed that Ricketts' recourse in response to the garnishment action and the adverse state court judgment was to appeal those matters in state court.

Two days after the court denied these applications, Ricketts proceeded to pay the necessary filing fees and filed identical copies of both complaints with the district court. ¹ Summonses were issued, but on January 20, 1988, before the defendants had filed any pleading in response to the banking complaint, Judge Steckler, acting sua sponte, concluded that the "action was without a reasonable basis in law or fact" and dismissed the complaint for failure to state a claim. Ricketts responded to the court's dismissal order by filing a timely notice of appeal.

The disposition of the insurance complaint followed a different course. After each of the defendants were served and had filed an answer or responsive pleading, Judge Noland entered an order outlining the deficiencies in the allegations and directed Ricketts to show cause why his complaint should not be dismissed. After Ricketts failed to timely respond to the court's order, ² Judge Noland dismissed the entire action because it lacked the minimum degree of "plausibility" required to support federal subject matter jurisdiction. See Dozier v. Loop College, City of Chicago, 776 F.2d 752, 753 (7th Cir.1985). Ricketts filed a timely notice of appeal from this decision.

On appeal, Ricketts' arguments are not altogether clear since his briefs in both actions are discursive and admittedly difficult to follow. ³ It is clear, however, that he questions the district court's authority to dismiss his banking complaint sua sponte since he had paid his filing fees. As to the insurance complaint, Ricketts appears to argue that the court erred in its application of the substantiality doctrine because he provided adequate proof of the merits of his claims. We begin by addressing the latter argument about the substantiality doctrine since it directly involves the subject matter jurisdiction of the federal courts.

II. Analysis

As it relates to the original subject matter jurisdiction of the federal courts, the substantiality doctrine requires that a federal district court entertain a complaint seeking recovery under the Constitution or laws of the United States, unless the alleged federal claim either "clearly appears to be immaterial and solely made for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous." Bell v. Hood, 327 U.S. 678, 681-82, 66 S.Ct. 773, 775-76, 90 L.Ed. 939 (1946). When a district court determines that a complaint is undermined by either of these deficiencies, the complaint must be dismissed for want of federal subject matter jurisdiction. Id. As the Supreme Court has emphasized, "the federal courts are without power to entertain claims otherwise within their jurisdiction if they are 'so attenuated and unsubstantial as to be absolutely devoid of merit.' " Hagans v. Lavine, 415 U.S. 528, 536, 94 S.Ct. 1372, 1378, 39 L.Ed.2d 577 (1974) (quoting Newburyport Water Co. v. Newburyport, 193 U.S. 561, 579, 24 S.Ct. 553, 557, 48 L.Ed. 795 (1904)). Thus the determination of whether the merits of a complaint are sufficiently substantial is a threshold question which must be addressed by a district court before it can exercise jurisdiction and proceed to the legal determination under Fed.R.Civ.P. 12(b)(6) of whether the complaint states a claim. Bell v. Hood, 327 U.S. at 682-83, 66 S.Ct. at 776 ("Whether the complaint states a cause of action upon which relief can be granted is a question of law ... which must be decided after and not before the court has assumed jurisdiction over the controversy.").

The substantiality doctrine has a long and rich history as a statement of principle affecting the original jurisdiction of the federal courts over constitutional or federal statutory claims. Neitzke v. Williams, --- U.S. ----, n. 6, 109 S.Ct. 1827, n. 6, 104 L.Ed.2d 338 n. 6 2231, n. 6 (1989); Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 70, 98 S.Ct. 2620, 2628, 57 L.Ed.2d 595 (1978); Hagans, 415 U.S. at 538, 94 S.Ct. at 1379; Oneida Indian Nation v. County of Oneida, 414 U.S. 661, 666-67, 94 S.Ct. 772, 776-77, 39 L.Ed.2d 73 (1974); Bell, 327 U.S. at 681-82, 66 S.Ct. at 775-76; Ex Parte Poresky, 290 U.S. 30, 31-32, 54 S.Ct. 3, 4-5, 78 L.Ed. 152 (1933) (denial of leave...