Tassio v. Onemain Fin., Inc.

• Decision Date: 03 February 2016
• Docket Number: CIVIL ACTION NO. 4:15-CV-00484
• Parties: STEPHEN CHARLES TASSIO, Plaintiff, v. ONEMAIN FINANCIAL, INC., and CHRISTI MERRITT, Defendants.
• Court: U.S. District Court — Eastern District of Texas

STEPHEN CHARLES TASSIO, Plaintiff, v. ONEMAIN FINANCIAL, INC., and CHRISTI MERRITT, Defendants.

CIVIL ACTION NO. 4:15-CV-00484

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

February 3, 2016

REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Now before the Court is Defendants' Motion to Dismiss Plaintiff's Complaint Under Rule 12(b)(6) (Dkt. 5). As set forth fully below, the Court finds that it should be GRANTED and that this case should be dismissed for failure to state a claim.

Pro se Plaintiff filed this suit against Defendants OneMain Financial, Inc. ("OneMain") and Christi Merritt on July 16, 2015. Plaintiff argues that Defendant OneMain improperly accounted for and applied Plaintiff's payments on his personal loan from OneMain (the "Loan"). According to Plaintiff, Defendant Merritt is the branch manager of OneMain's McKinney, Texas office. Under his claims for relief, Plaintiff asserts violations of "18 U.S.C. § 1962(c) and (d) RICO Statutes." Dkt. 1 at 9.

In their motion to dismiss, Defendants argue "Plaintiff grossly exaggerates the scope of the dispute by referencing previous federal fines assessed against OneMain's corporate parent and OneMain's filings with the Securities and Exchange Commission and claiming that Defendants' attempt to collect on the Loan amounts to mail fraud and credit collection by extortionate means in violation of the Racketeer Influenced and Corrupt Organizations Act ('RICO')." Dkt. 5 at 1. Defendants seek dismissal of Plaintiff's RICO claim for failure to state a plausible RICO claim. Specifically, Defendants argue that Plaintiff failed to plead a RICO person; that Plaintiff failed to sufficiently plead a pattern of racketeering in his allegations of mail fraud or credit collection by extortionate means; that Plaintiff failed to plead a pattern of predicate acts; that Plaintiff failed to plead a RICO enterprise; and that Plaintiff failed to plead a subsection (d) RICO claim. Defendants also argue that, to the extent Plaintiff seeks to assert a cause of action under the Truth in Lending Act, he has failed to state a plausible right to relief.

STANDARD FOR MOTION TO DISMISS

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides that a party may move for dismissal of an action for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). The Court must accept as true all well-pleaded facts contained in the plaintiff's complaint and view them in the light most favorable to the plaintiff. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). A claim will survive an attack under Rule 12(b)(6) if it "may be supported by showing any set of facts consistent with the allegations in the complaint." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563, 127 S. Ct. 1955, 1969, 167 L. Ed.2d 929 (2007). In other words, a claim may not be dismissed based solely on a court's supposition that the pleader is unlikely "to find evidentiary support for his allegations or prove his claim to the satisfaction of the factfinder." Id. at 563 n.8.

Although detailed factual allegations are not required, a plaintiff must provide the grounds of his entitlement to relief beyond mere "labels and conclusions," and "a formulaic recitation of the elements of a cause of action will not do." Id. at 555. The complaint must be factually suggestive,so as to "raise a right to relief above the speculative level" and into the "realm of plausible liability." Id. at 555, 557 n.5. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S. Ct. 1955)). For a claim to have facial plausibility, a plaintiff must plead facts that allow the court to draw the reasonable inference that the defendant is liable for the alleged misconduct. Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). Therefore, "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not shown - that the pleader is entitled to relief." Id. (internal quotations omitted).

Moreover, as to allegations involving fraud, Rule 9(b) of the Rules of Federal Civil Procedure requires that a party alleging fraud must state with particularity the circumstances constituting the fraud. FED. R. CIV. P. 9(b).

ANALYSIS

The Court first addresses Plaintiff's "Claim for Relief: 18 U.S.C. § 1962(c) and (d) RICO Statutes." Dkt. 1 at 9. Specifically, Plaintiff alleges that Defendants violated § 1962(c) and (d) through actions constituting mail fraud under 18 U.S.C. § 1341 and collection of credit transactions through extortionate means under 18 U.S.C. § 894.

A plaintiff bringing a claim under the RICO statute, 18 U.S.C. § 1961, et seq., must allege and show the following: (1) a person who engages in (2) a pattern of racketeering activity, and (3) connected to the acquisition, establishment, conduct, or control of an enterprise. 18 U.S.C. § 1962;St. Germain v. Howard, 556 F.3d 261, 263 (5th Cir. 2009). A pattern of racketeering activity consists of two or more predicate criminal acts that are (1) related and (2) amount to or pose a threat of continued criminal activity. Id. An enterprise under RICO is a group of persons or entities associating together for the common purpose of engaging in a course of conduct, and an enterprise may be a legal entity or any union or group of individuals associated in fact. Whelan v. Winchester Prod. Co., 319 F.3d 225, 229 (5th Cir. 2003) (citing 18 U.S.C. § 1961(4)) (emphasis added).

Racketeering Activity

The Court first looks at whether Plaintiff has sufficiently alleged a racketeering activity in support of his RICO claims. A pattern of racketeering activity "consists of two or more predicate criminal acts that are (1) related and (2) amount to or pose a threat of continued criminal activity." Zastrow v. Houston Auto Imports Greenway Ltd., 789 F.3d 553, 560 (5th Cir. 2015) (internal citations omitted). 18 U.S.C. § 1961(1) sets forth the specific predicate acts that constitute "racketeering activity." Id.

Here, Plaintiff alleges the following predicate acts: mail fraud, in violation of 18 U.S.C. §1341, and credit collection by extortionate means, in violation of 18 U.S.C. § 894. Defendants argue that Plaintiff has failed to sufficiently plead the necessary elements of these predicate acts. The Court agrees.

A plaintiff alleging RICO mail fraud must allege the following "1) a scheme to defraud by means of false or fraudulent representation, 2) interstate or intrastate use of the mails to execute the scheme, 3) the use of the mails by the defendant connected with scheme, and 4) actual injury to the plaintiff." In re Burzynski, 989 F.2d 733, 742 (5th Cir. 1993). Federal Rule of Civil Procedure9(b)'s pleading requirements apply to RICO claims resting on allegations of fraud, and a plaintiff must plead his fraud-based RICO claims with particularity. See Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997); Walsh v. Am.'s TeleNetwork Corp., 195 F. Supp. 2d 840, 846 (E.D. Tex. 2002). "To properly plead RICO claims under Rule 9(b), [a plaintiff] must plead the time, place and contents of the false representations, as well as the identity of the person making the misrepresentations and what the person obtained by the representations." Id. Here, Plaintiff has not stated the fraudulent representation made by Defendants. Specifically, Plaintiff has not stated with particularity any payment demands by Defendants on the Loan or how they were false or constituted misrepresentations as to the payments owed under the Loan. Mail fraud has not been adequately stated.

As to the alleged credit collection by extortionate means, such a claim requires an allegation of extortionate means which is defined as "[a]n extortionate means is any means which involves the use, or an express or implicit threat of use, of violence or other criminal means to cause harm to the person, reputation, or property of any person." 18 U.S.C. § 891(7). Plaintiff's complaint does not allege any violence or threats of harm to Plaintiff by Defendants. That Plaintiff received demands for payment on the Loan - even if he disputes the amount demanded - does not amount to violence or threats of harm, nor are Plaintiff's conclusory allegations of "harassment, intimidation etc." or "loansharking tactics", see Dkt. 1 at 7, enough to state extortionate means.

Plaintiff has simply not alleged any predicate acts sufficient to plead a pattern of racketeering under RICO. Moreover, Plaintiff's allegations do not state a pattern of predicate acts or the continuity required to state a RICO claim. As recently explained by the Fifth Circuit:

"To establish continuity, plaintiffs must prove 'continuity of racketeering activity, or its threat.'" Word of Faith World Outreach Ctr. Church, Inc. v. Sawyer, 90 F.3d 118, 122 (5th Cir. 1996) (quoting H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 241, 109 S. Ct. 2893, 106 L .Ed.2d 195 (1989)). "This may be shown by either a closed period of repeated conduct, or an open-ended period of conduct that 'by its nature projects into the future with a threat of repetition.'" Id. (quoting H.J. Inc., 492 U.S. at 241, 109 S.Ct. 2893). Continuity over a closed period requires proof of "a series of related predicates extending over a substantial period of time." H.J. Inc., 492 U.S. at 242, 109 S.Ct. 2893. "Predicate acts extending over a few weeks or months and threatening no future criminal conduct do not satisfy this requirement...." Id. Continuity over an open period requires "a threat of continued racketeering activity." Id. This may be established where the predicate acts "themselves involve a distinct threat of long-term racketeering activity" or "are part of an ongoing entity's regular way of

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