Robinette v. Griffith

• Decision Date: 10 September 1979
• Docket Number: Civ. A. No. 79-0066(D).
• Citation: Robinette v. Griffith, 483 F.Supp. 28 (W.D. Va. 1979)
• Parties: Martha J. ROBINETTE, Plaintiff, v. Clifford GRIFFITH, t/a Griffith Auto Repair and Virginia National Bank, Defendant.
• Court: U.S. District Court — Western District of Virginia

483 F. Supp. 28

Martha J. ROBINETTE, Plaintiff, v.Clifford GRIFFITH, t/a Griffith Auto Repair and Virginia National Bank, Defendant.

Civ. A. No. 79-0066(D).

United States District Court, W. D. Virginia, Danville Division.

September 10, 1979.

Charles M. Stone, Stone, Joyce, Worthy & Stone, Martinsville, Va., for plaintiff.

J. Randolph Smith, Jr., Martinsville, Va., for Griffith.

Douglas K. Frith, Martinsville, Va., Glen W. Hampton, Kaufman & Oberndorfer Norfolk, Va., for Virginia Nat. Bank.

MEMORANDUM OPINION

DALTON, District Judge.

On November 14, 1978plaintiffMartha J. Robinette purchased a 1970 Toyota automobile from Clifford Griffith trading as Griffith Auto Repair.To complete this sale, defendant Griffith arranged for financing with Virginia National Bank.Plaintiff has filed this suit alleging that in arranging such credit defendants Griffith and Virginia National Bank failed to comply with the Regulation Z promulgated under the Consumer Protection Act(15 U.S.C. 1601 et seq.)Jurisdiction is claimed under 15 U.S.C. § 1640(e).

Plaintiff also alleges that defendant Griffith fraudulently failed to disclose the true mileage on this automobile or to disclose that the true mileage was unknown to him as required by the Federal Motor Vehicle Information and Cost Savings Act(15 U.S.C. § 1901 et seq.)Jurisdiction is claimed pursuant to 15 U.S.C. § 1989(b).

Defendant Griffith has answered and filed a motion to dismiss count one of the complaint alleging that it fails to state a claim against him upon which relief can be granted and that it improperly joins him as a partydefendant.Griffith moves that count two also be dismissed for failure to state a claim upon which relief can be granted and for failure of the complaint to aver the circumstances constituting fraud with the particularity required by Rule 9(b).Defendant Griffith then filed a cross claim against defendantVirginia National Bank asserting that Virginia National Bank handled all disclosures required by the Federal Truth-in-Lending Act and that Virginia National Bank may be liable to defendant Griffith on any claims asserted against them by plaintiff.

Defendant Virginia National Bank has responded to plaintiff's complaint with a motion for a more definite statement pursuant to Rule 12(e) of the Federal Rules of Civil Procedure contending that count one of the complaint is deficient in that it fails to set forth facts apprising defendant of the nature of plaintiff's claim and due to such vagueness defendant is unable to prepare a responsive pleading.Defendant also filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(3) asserting that venue is improper under 12 U.S.C. § 94.Defendant requested and was granted an extension of time to answer Griffith's cross claim until the court has ruled on its pending motion.The motions filed by defendants raise multiple legal and factual issues, and the court will consider these individually.

I.Defendant Griffith's Motions

Defendant moved for dismissal of count one for failure to state a claim upon which relief can be granted and for misjoinder of defendant Griffith as a party to count one.Although the exact basis of plaintiff's claim is not apparent, a complaint should not be dismissed for insufficiency unless it appears to a certainty that plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim.Johnson v. Mueller,415 F.2d 354(4th Cir.1969).The prohibitions of the Consumer Protection Act as promulgated in Regulation Z were enacted for the purpose of assuring that every customer who has need for consumer credit is given meaningful information with respect to the cost of that credit.12 C.F.R. § 226.1(a)(2).The disclosure provisions of the regulation apply to all persons who in the ordinary course of business regularly extend, or offer to extend, or arrange, or offer to arrange, for the extension of consumer credit.12 C.F.R. § 226.1(a)(1).These protective provisions have been held to apply to automobile dealers in some circumstances.See, e. g., Gonzales v. Schmerler Ford,397 F.Supp. 323(D.C.Ill.1975).The court is thus unable to determine as a matter of law that plaintiff has failed to state a claim upon which relief can be granted, and defendant's motion must be denied.Since defendant may be subject to liability under count one, his joinder as a partydefendant cannot be said to be improper.Rule 20(a) Federal Rules of Civil Procedure.Although defendant Griffith's motion to dismiss is hereby denied, the court expressly reserves the right to reconsider the motion after the case is fully developed on its merits.

Defendant Griffith has also moved to dismiss count two for failure to state a claim upon which relief can be granted.Plaintiff has charged that defendant failed to disclose the true mileage on the automobile or that the mileage on the automobile was unknown to him.These allegations, if true, state a claim under 15 U.S.C. § 1988.However, to recover damages for this alleged violation, 15 U.S.C. § 1989 requires that defendant's violation must be with intent to defraud.Defendant contends that plaintiff's pleading is deficient in that it fails to aver the circumstances constituting fraud with the particularity required by Rule 9(b) of the Federal Rules of Civil Procedure.This court determines that defendant's motion to strike count two pursuant to Rule 9(b) is well taken.The plaintiff's complaint alleges none of the elements of fraud or circumstances which surrounded defendant's violation.A bare allegation of fraud does not satisfy the pleading requirements of Rule 9(b).See generally, 2A Moore's Federal Practice¶ 9.03(1978).Rule 9(b) is applicable to all claims of fraud including those in suits brought pursuant to § 1989.Levine v. MacNeil,428 F.Supp. 675(D.C.Mass.1975).Therefore, the court will grant defendant's motion to dismiss count two for failure to comply with Rule 9(b) while allowing plaintiff leave to amend his complaint, if possible, to aver circumstances constituting fraud with the particularity required by Rule 9(b).If the court has not received such pleading within fifteen days of this opinion, count two of plaintiff's complaint will be dismissed.

II.Defendant Virginia National Bank's Motions

Defendant Virginia National Bank's motion to dismiss for lack of proper venue presents a difficult legal issue never before addressed by this court or the U. S. Fourth Circuit Court of Appeals.Defendant, a national bank with its principal offices in Norfolk, Virginia, alleges venue is improper in this judicial district pursuant to 12 U.S.C. § 94 which states as follows:

Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases(emphasis added).

It is now well settled that § 94, despite its permissive language, is mandatory and, therefore, national banks may be sued only in those federal courts in the judicial district where the banks are established.Radzanower v. Touche Ross & Co.,426 U.S. 148, 96 S.Ct. 1989, 48 L.Ed.2d 540(1976).The lower federal courts appear to be unanimous in holding that a national bank, under § 94, is "established" only in the federal district that encompasses the place specified in the bank's charter.See, Citizens and Southern Nat'l. Bank v. Bougas,434 U.S. 35, 39, 98 S.Ct. 88, 54 L.Ed.2d 218(1977) and cases cited therein.The venue privilege, however, has been held to be a privilege personal to the bank, and to be subject to waiver.Citizens and Southern Nat'l. Bank v. Bougas,434 U.S. 35, 38, 98 S.Ct. 88, 54 L.Ed.2d 218(1977);citingCharlotte National Bank v. Morgan,132 U.S. 141, 145, 10 S.Ct. 37, 33 L.Ed. 282(1889);Mercantile Nat. Bank v. Langdeau,371 U.S. 555, 561, n. 12, 83 S.Ct. 520, 9 L.Ed.2d 523(1963).The plaintiff and defendant Griffith have submitted a brief in opposition to Virginia National Bank's motion to dismiss for lack of venue and Virginia National has filed reply memorandum supporting its motion.The parties have presented three issues to this court for consideration: 1) whether a national bank with only branch offices in this federal district is "established" here for the purposes of 12 U.S.C. § 94; 2) whether Virginia National Bank by establishing a branch bank in this district has waived the venue restrictions of § 94; 3) whether the cross claim filed against Virginia National Bank for indemnification in this action obviates any venue objections defendant may have under § 94.Before considering these questions, the court will briefly review the history and purposes of Section 94.

The origin of 12 U.S.C. § 94 is traced back to the National Bank Act of 1863, 12 Stat. 665.Section 59 of the 1863 Act, 12 Stat. 681, allowed suits in a federal court only "within the district in which the association was established."At the time this Act was passed, the activities of a national bank were restricted to one particular location.Citizens, supra434 U.S. at 42-43, 98 S.Ct. 88, 92.National banks (other, perhaps, than those that originally were state banks with existing branches) were not permitted to engage in branch banking until 1927, when the McFadden Act, 44 Stat., pt. 2, p. 1224, was passed.The McFadden Act allowed national banks to "establish" branches only if permitted by state law, and only within the limits of the city, town, or village in which said association was situated.It was not until 1933 that Congress, upon specified conditions, allowed national bank branches beyond the place named in the charter.48 Stat. 189-190.It is clear that when § 94 was enacted Congress did not contemplate today's national banking system, replete with...