United States District Court, D. Minnesota
ALBERT R. STEWARD, III, Plaintiff,
DISCOVER BANK, Defendant.
N. ERICKSEN UNITED STATES DISTRICT JUDGE
Albert R. Steward, III, alleged in his complaint that he had
entered into a contract with “DSV Holdings” for
the sale of “several internet websites.” Compl.
¶¶ 7, 9. DSV Holdings wrote Steward a check for
$289, 890.00, which Steward deposited with defendant Discover
Bank (“Discover”). Id. ¶ 9. At some
point after the deposit it is not clear exactly when Discover
learned that the check was fraudulent and refused payment.
Steward brings this action contending that Discover failed to
comply with 12 C.F.R. § 229.33(d), which requires that
“[i]f the depositary bank receives a returned check or
notice of nonpayment, it shall send or give notice to its
customer of the facts by midnight of the banking day
following the banking day on which it received the returned
check or notice, or within a longer reasonable time.”
did not pay the filing fee for this action, but instead
applied for in forma pauperis
(“IFP”) status. See ECF Nos. 2 & 7.
But much about the financial information provided by Steward
in his IFP applications failed to add up:
Steward's allegation of having no money whatsoever in
cash, checking accounts, or savings accounts remains
difficult to believe. Even harder to believe is that Steward
“operates several internet websites that offer unique
income generating opportunities and that specialize in custom
software development and applications, ” Compl. ¶
7 [ECF No. 1] a subset of which allegedly sold recently for
$1.5 million, compare Compl. ¶ 9; Decl. at 1
[ECF No. 6] yet has no income (and, for that matter, has
incurred no operating expenses) as a result of these
9 at 5-6. Refusing to allow this matter to go forward until
satisfied that Steward's claim of poverty was true,
Magistrate Judge Tony N. Leung ordered Steward to submit
specific evidence bearing on his eligibility for IFP status,
1. Statements from all checking, savings, brokerage, or
similar accounts to which Steward has had access for the
period of July 1, 2016 through the date of this order.
2. Copy of Steward's complete 2016 Federal income tax
returns and any amendments thereto.
3. The sales contract alleged in Paragraph 9 of the complaint
between Steward and DSV Holdings.
4. Evidence showing that Steward has “released the
websites and software” to DSV Holdings without payment
or hope of future payment, as alleged in Steward's
declaration. ECF No. 6 at 1-2.
Id. at 6. Steward was given 20 days from the date of
the June 7, 2017 order in which to submit the required
financial information, failing which it would be recommended
that ths action be dismissed without prejudice for failure to
prosecute. That deadline came and passed without a response
from Steward and so finally, on July 13, 2017, Magistrate
Judge Leung recommended dismissal for failure to prosecute.
See ECF No. 10 (citing Fed.R.Civ.P. 41(b)).
days after Magistrate Judge Leung's recommendation of
dismissal, Steward submitted further documentation.
See ECF No. 11. This submission fell far short of
what was previously ordered. Rather than providing
“[s]tatements from all checking, savings, brokerage, or
similar accounts to which Steward has had access for the
period of July 1, 2016 through [June 7, 2017], ” ECF
No. 9 at 6, Steward provided one-page summaries of two
accounts, as those accounts stood on a single day (June 25,
2017). See ECF No. 11-1 at 2; ECF No. 11-2 at 1.
Steward has not provided federal income tax returns for 2016,
nor has he submitted evidence that he has released the
websites and software at issue in this action to DSV Holdings
without hope of future payment. Finally, and perhaps most
alarmingly, Steward has refused to submit “an affidavit
declaring, under penalty of perjury, that the documents and
information contained in those documents is truthful and
complete to the best of Steward's knowledge, ” as
expressly required by Magistrate Judge Leung. ECF No. 9 at 6.
matter is now before the Court on the Report and
Recommendation (“R&R”) that this matter be
dismissed without prejudice for failure to prosecute.
See ECF No. 10. “A district court has
discretion to dismiss an action under Rule 41(b) for a
plaintiff's failure to prosecute, or to comply with the
Federal Rules of Civil Procedure or any court order.”
Henderson v. Renaissance Grand Hotel, 267
Fed.App'x 496, 497 (8th Cir. 2008) (per curiam). Steward
has failed to comply with Judge Leung's June 7, 2017
order, and he has provided no good reason for his failure to
comply. Dismissal for failure to prosecute is therefore
warranted, and the R&R will be adopted.
doing so, however, this Court notes that this lawsuit was
almost certainly doomed regardless of whether Steward
adequately prosecuted the action. Under 28 U.S.C. §
1915(e)(2)(B)(ii), an action may be dismissed when an IFP
applicant has filed a complaint that fails to state a cause
of action on which relief may be granted. See also
Atkinson v. Bohn, 91 F.3d 1127, 1128 (8th Cir. 1996)
(per curiam); Carter v. Schafer, 273 Fed. App'x
581, 582 (8th Cir. 2008) (per curiam) (“[C]ontrary to
plaintiffs' arguments on appeal, the provisions of 28
U.S.C. § 1915(e) apply to all persons proceeding IFP and
are not limited to prisoner suits, and the provisions allow
dismissal without service.”). In reviewing whether a
complaint states a claim on which relief may be granted, this
Court must accept as true all of the factual allegations in
the complaint and draw all reasonable inferences in the
plaintiff's favor. Aten v. Scottsdale Ins. Co.,
511 F.3d 818, 820 (8th Cir. 2008). Although the factual
allegations in the complaint need not be detailed, they must
be sufficient to “raise a right to relief above the
speculative level . . . .” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007). The complaint must
“state a claim to relief that is plausible on its
face.” Id. at 570. In assessing the
sufficiency of the complaint, the court may disregard legal
conclusions that are couched as factual allegations. See
Ashcroft v. Iqbal, 556 U.S. 662 (2009). Pro se
complaints are to be construed liberally, but they still must
allege sufficient facts to support the claims advanced.
See Stone v. Harry, 364 F.3d 912, 914 (8th Cir.
accepting as true Steward's allegation that Discover
failed to comply with § 229.33(d), damages for the
infraction are measured by “the amount of the loss
incurred, up to the amount of the check, reduced by the
amount of the loss that party would have incurred even if the
bank had exercised ordinary care.” 12 C.F.R. §
229.38(a). Steward alleges two kinds of damages resulting
from Discover's lack of care, but neither makes any
sense. First, Steward contends that he suffered damages in
the amount of the check written by DSV Holdings because he
was unable to draw upon that check. But Steward was unable to
draw on these funds not because of anything Discover did or
failed to do, but because the check was fraudulent.
The check would have been just as fraudulent and Discover
would have been just as entitled not to pay on that check had
Discover provided timely notice of nonpayment. See
12 U.S.C. § 4006(c)(2). Second, Steward alleges that DSV
Holdings has, in essence, breached the contract by refusing
to make further required payments under the
contract. Again, it is hard to see how this damage
can be pinned on Discover's failure to provide
timely notices to Steward; nothing about that failure
obviated DSV Holdings from its obligations under the
contract, and ...