Western Sky Fin., LLC v. Maryland Comm'r of Fin. Regulation

• Decision Date: 09 April 2012
• Docket Number: CIVIL NO.: WDQ-11-1256
• Parties: WESTERN SKY FINANCIAL, LLC, et al., Plaintiffs, v. MARYLAND COMMISSIONER OF FINANCIAL REGULATION, Defendant.
• Court: U.S. District Court — District of Maryland

WESTERN SKY FINANCIAL,LLC, et al., Plaintiffs,

v. MARYLAND COMMISSIONER OFFINANCIAL REGULATION, Defendant.

CIVIL NO.: WDQ-11-1256

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND, NORTHERN DIVISION

Date: April 9, 2012

MEMORANDUM OPINION

Western Sky Financial, LLC, Great Sky Finance, LLC, PayDay Financial, LLC, and Martin A. Webb ("plaintiffs"), sued the Maryland Commissioner of Financial Regulation ("CFR"), for declaratory relief. For the following reasons, the plaintiffs' motion for reconsideration will be denied; their motion for leave to file an amended complaint will be granted.

I. Background¹

Martin Webb, a member of the Cheyenne River Sioux Tribe who lives on the Cheyenne River Reservation, owns Western Sky Financial, LLC, Great Sky Finance, LLC, and PayDay Financial,LLC, internet-based loan companies. ECF No. 1 ¶¶-2. All the plaintiffs live on the Reservation. Id. The three companies state in their loan agreements that: (1) the agreement is exclusively subject to the laws of the Cheyenne River Sioux Tribe, (2) the debtor consents to the exclusive jurisdiction of the Cheyenne River Sioux Tribal Court, (3) the agreement is governed by the Indian Commerce Clause of the U.S. Constitution and Cheyenne River Sioux Tribal laws, and (4) the company is subject to the laws of no state. ECF No. 1 ¶11.

The Maryland Office of the CFR ("OCFR") is an executive agency that enforces the Maryland Consumer Loan Law² ("MCLL") and regulates those who lend money to Maryland residents. Md. Code Ann. State Gov't § 8-201; Bus. Reg. § 2-108; Office of the Commissioner of Financial Regulation, http://www.dllr.state-.md.us/finance/ (last visited Oct. 4, 2011).

On February 15, 2011, after investigating several complaints about the plaintiff companies, the OCFR issued a summary cease and desist order ("the order") to the three companies and Martin Webb. ECF No. 1 Ex. 1. The order states that, after investigating the plaintiffs' business activities in Maryland, the OCFR concluded that the plaintiffs had engaged in "usurious and unlicensed lending to Maryland customers inviolation of Maryland law." Id. Ex. 1 at 2-3. In addition to requiring them to stop lending to Maryland residents, the order demanded that the plaintiffs provide the OCFR with records of all their loans to Maryland residents. Id. Ex. 1 at 24-26. The order cited the laws and regulations that the OCFR had found the plaintiffs had violated, and included the OCFR's findings of fact, and notice that the plaintiffs were entitled to a hearing to contest the findings.³ Id. Ex. 1 at 27.

On March 18, 2011, the plaintiffs removed the OCFR proceeding to this Court. No. ll-cv-0735-WDQ, ECF No. 1. On May 10, 2011, the plaintiffs began this proceeding for

declaratory relief declaring and holding that the Maryland Commissioner of Financial Regulation does not have any authority or power to prosecute his Summary Order to Cease and Desist and Order to Produce . . . against Plaintiffs because Plaintiffs are entitled to Tribal Immunity.

ECF No. 1. They alleged that the OCFR proceeding deprived them of a right secured by the Indian Commerce Clause and creates a claim under 42 U.S.C. § 1983 (2006). ECF No. 1 111.

On October 12, 2011, this Court remanded the OCFR proceeding to the OCFR, holding that removal was improperbecause the Court lacked subject matter jurisdiction over the proceeding. No. ll-cv-0735-WDQ, ECF No. 18. It dismissed the complaint in this proceeding for failure to state a claim. ECF No. 10. The Court held that the plaintiffs had not identified a treaty or statute that granted them immunity, and accordingly had not stated a claim. ECF No. 10 at 6-9.

On October 27, 2011, the plaintiffs moved for reconsideration of the dismissal and leave to file an amended complaint. ECF Nos. 11, 12. The CFR opposed the motions. ECF Nos. 13, 14. II. Discussion

A. The Plaintiffs' Motion for Reconsideration

1. Standard of Review

Motions for reconsideration of a final order are governed by Fed. R. Civ. P. 60(b). Under Rule 60(b), a court may grant relief from a judgment or order for: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud or misconduct by the opposing party; (4) voidness; (5) satisfaction; or (6) any other reason that justifies relief. Fed. R. Civ. P. 60(b). Correction of a pleading defect is not a reason listed in Rule 60(b). When a request for reconsideration merely asks the court to "change its mind," relief is not authorized. Pritchard v. Wal-Mart Stores, Inc., 3 F. App'x 52, 53 (4th Cir. 2001).

2. Review of the Court's Dismissal Order

The plaintiffs seek review of the Court's order dismissing their complaint because they argue that they have now identified the treaty or federal statute that conferred rights needed to state a § 1983 claim. ECF No. 11 Attach. 1 at 1. Although curing a defect in the complaint may justify filing an amended complaint, it does not justify reconsideration. Cf. Mitchell-El v. Elswick, 225 F.3d 654 (Table), 2000 WL 1021265, *1 (4th Cir. 2000) (if the plaintiff could "save [an] action by merely amending his complaint," denial of reconsideration of dismissal is appropriate). The motion for reconsideration will be denied. B. The Plaintiffs' Motion to File an Amended Complaint

1. Standard of Review

Under Fed. R. Civ. P. 15(a), the plaintiff may amend his complaint more than 21 days after a Fed. R. Civ. P. 12(b) motion only if the opposing party gives written consent, or the Court permits the amendment. The Court will allow amendment when justice requires,⁴ but will not if the amendment would be prejudicial to the defendants or futile, or the movant has acted in bad faith with dilatory motive. Equal Rights Ctr. v. Niles Bolton Assocs., 602 F.3d 597, 603 (4th Cir. 2010). The Court will determine futility under the standard of Fed. R. Civ. P.12(b)(6). Adorno v. Crowley Towing & Transp. Co., 443 F.3d 122, 126 (1st Cir. 2006) .

Under Fed. R. Civ. P. 12(b)(6), an action may be dismissed for failure to state a claim upon which relief can be granted. Rule 12(b)(6) tests the legal sufficiency of a complaint, but does not "resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006).

The Court bears in mind that Rule 8(a)(2) requires only a "short and plain statement of the claim showing that the pleader is entitled to relief." Midgal v. Rowe Price-Fleming Int'l Inc., 248 F.3d 321, 325-26 (4th Cir. 2001). Although Rule 8's notice-pleading requirements are "not onerous," the plaintiff must allege facts that support each element of the claim advanced. Bass v. E.I. Dupont de Nemours & Co., 324 F.3d 761, 764-65 (4th Cir. 2003). These facts must be sufficient to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

This requires that the plaintiff do more than "plead[] facts that are 'merely consistent with a defendant's liability'"; the facts pled must "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 557). The complaint mustnot only allege but also "show" that the plaintiff is entitled to relief. Id. at 1950. "Whe[n] 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 quotation marks omitted).

2. The Plaintiffs' Amended Complaint

The plaintiffs contend that they are "entitled to have this Court enforce their Tribal Immunity under 42 U.S.C. § 1983." ECF No. 12 Attach. 1 113. Under § 1983, there is a cause of action in law or equity for a person within the jurisdiction of the United States against

[e]very person who, under color of any statute, ordinance, regulation, custom, or usage, of any State . . . subjects [the plaintiff] to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws [of the United States].

"Indian treaty rights . . . are protected by the United States Constitution"; the deprivation of those rights under color of state law gives rise to a § 1983 claim. Bowen v. Doyle, 880 F. Supp. 99, 130 (W.D.N.Y. 1995), aff'd, 230 F.3d 525 (2d Cir. 2000).⁵ Although a tribe is not a "person" under § 1983 and maynot bring a claim under the statute, a member of a tribe may bring a claim to redress a deprivation of his tribal treaty rights. Cnty. of Inyo v. Bishop Paiute Tribe, 538 U.S. 701, 712 (2003). The plaintiff must identify a treaty, or federal statute, that enumerates the right of which the state has deprived him—common law rights are insufficient.⁶ See Rice v. Rehner, 463 U.S. 713, 718 (1983).⁷

The plaintiffs contend that the Fort Laramie Treaty of 1868 and an Act of Congress enacted in 1889 grant them immunity, a right of which the CFR has deprived them. ECF No. 12 Attach. 1 ill.

The Fort Laramie Treaty, 15 Stat. 635, between the United States and the tribes of the Sioux Nation, "created the 'Great Reservation' for the Sioux and set off lands 'for the absolute and undisturbed use and occupation of the Indians.'" Calhoon v. Sell, 71 F. Supp. 2d 990, 999 (D.S.D. 1998) (quoting 15 Stat. 635).⁸ Under the treaty, States may not "interfere with reservation self-government" or tax on-reservation activities. Rice, 463 U.S. at 718. This gives tribes the power to regulate "the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements," but only when the "non-Indians [are] on their reservations." Id. at 565.⁹

A member of a tribe may bring a claim to redress a deprivation of other tribal treaty rights,¹⁰ but a company is not an enrolled member of an Indian Tribe simply because its owneris a member. Baraga Prods., Inc. v. Coram'r...