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Nix v. Nasa Federal Credit Union

United States District Court, D. Maryland

July 29, 2016

JEFFREY NIX, Plaintiff,
v.
NASA FEDERAL CREDIT UNION, et al., Defendants.

          MEMORANDUM OPINION

          PETER J. MESSITTE UNITED STATES DISTRICT JUDGE

         In March 2015, pro se Plaintiff Jeffrey Nix, [1] a self-employed computer repairman, paid thirty dollars to open an online checking account with Defendant NASA Federal Credit Union (“NASA FCU”). Two months later, the Internal Revenue Service apparently made a direct deposit of over half a million dollars into Nix’s account. A few days after the deposit, Nix made thousands of dollars in online payments to creditors. Becoming suspicious, NASA FCU stopped the withdrawals and froze the account, and eventually returned the money to the IRS.

         Nix has sued NASA FCU and four of its employees - Douglas Allman, Rhonda Bazey, Michelle Cochran, and Jennifer Walge - alleging that their conduct violated the Expedited Funds Availability Act (EFAA), 12 U.S.C. § 4001 et seq., the U.S. Privacy Act, 5 U.S.C. § 552a, Article I § 10 of and the Fourth, Fifth and Fourteenth Amendments to the Federal Constitution, U.S. Const art. I, § 10, amends. IV, V, XIV, the Universal Declaration of Human Rights (UDHR), G.A. Res. 217A(III), U.N. GAOR, 3d Ses., U.N. Doc A/810, at 74, and multiple other statutes. NASA FCU has filed a Motion to Dismiss all Counts of the Complaint (ECF No. 10). Because Nix’s allegations state no plausible claims for relief, NASA FCU’s Motion is GRANTED, and the Court will sua sponte dismiss all claims against the individual Defendants.[2]

         I. FACTS[3]

         On March 31, 2015, Nix opened a checking account with NASA FCU over the internet and deposited $30.00 to activate it. Compl. ¶ 4. No further deposits were made until more than two months later, on June 19, 2015, when an electronic tax refund from the U.S. Treasury in the amount of $544, 387.99 was deposited into the account directly. Id.

         Ten days later, on June 29, 2015, Nix scheduled payments to his creditors through an online bill payment system, totaling $38, 327.99 payable to, among others, BMW, Visa MasterCard, and the U.S. Department of Education. Id. ¶ 7; Compl. Ex. A, ECF No. 1-2. A “Rush Payment Fee” of $14.95 was also withdrawn. Id.

         The next day, on June 30, 2015, NASA FCU, suspicious of the size of the transfer and payments given the history of the account, stopped those payments. Compl. ¶ 4, 8; Compl. Exs. A, A-1, E, ECF Nos. 1-2, 1-3, 1-8. That same day, NASA FCU compliance officer Michelle Cochran called Nix to inform him about the hold on his account. Compl. Ex. E at 1, ECF No. 1-7. Cochran documented the call in a letter she later sent to Nix, dated June 30, in which she explained the hold in the following terms:

The recent IRS tax refund of $544, 387.99 was much larger than is typical of our personal household accounts. Additionally, there were bill payments created to move funds out of your newly established account. These factors raised some concerns and our first priority was to protect you and your account. We needed to ensure these were, in fact, your transactions and secondly we needed to verify funds with the IRS to ensure no error had occurred. As I mentioned, if there was a processing error, the IRS would collect the full amount from the Credit Union whether the funds were in the account or not.

Id. Nix also spoke on June 30 with Jennifer Walge, regulatory and compliance supervisor for NASA FCU. As Nix reported in later correspondence, Walge told him that “internal policies require large deposits such as the one deposited to Mr. Nix’s account [to] be placed on hold to check for errors.” Compl. Ex. D at 2, ECF No. 1-6. Nix told Walge he could not log into his account online. Id. Walge said she would look into it, and on July 2, 2015, left a message on Nix’s phone that his inability to log on was related to the hold on the account. Id.

         On July 7, 2015, Nix purportedly contacted the IRS to verify the status of his refund. Compl. ¶ 14. According to Nix, a customer service agent there told him that his refund was “true, correct, and approved.”[4] Id.

         On July 8, 2015, Nix wrote to Douglas Allman, Chief Executive Officer of NASA FCU, Rhonda Bazey, Vice President and Chief Financial Officer of NASA FCU, Walge, Cochran, and the National Credit Union Administration’s (NCUA’s) Office of Consumer Protection. Compl. ¶¶ 14, 16; Compl. Ex. D at 1, ECF No. 1-6. In his letter, Nix claimed that NASA FCU’s actions violated several statutory and constitutional provisions, requested certain information about Cochran, and demanded proof that he had signed an agreement allowing NASA FCU to place a hold on his account. Id. He recounted his conversations with Cochran and Walge, and described his call with the IRS in which the representative reportedly told him there were no errors. Id. at 2. Nix signed off, threatening to sue NASA FCU and its staff in this Court. Id. at 3-4.

         On July 15, 2015, Cochran wrote to Nix informing him that, when he opened the account, he agreed to NASA FCU’s Member Services Agreement (MSA), which provides that if NASA FCU believes there is suspicious activity concerning an account, it may “freeze the funds in the account pending resolution of the dispute or activity to our satisfaction.”[5] Compl. Ex. C, ECF No. 1-5. Cochran told Nix that the IRS had requested additional information about the deposit, said its review could take an extra fifteen days, and asked NASA FCU to hold the funds in the meantime. Id. Cochran pointed out that, under Section D.17 of the MSA, NASA FCU could withhold account payments if it receives notice of any “proceeding relating to the account.” Id. Cochran told Nix the funds would be held “until they are either reclaimed by the IRS or until we receive notice from the IRS satisfactory to us that the funds can be released and that they will not be reclaimed.” Id.

         On July 21, 2015, Nix wrote again to Allman, Bazey, Cochran, and Walge, repeating much of what he had written in previous letters and once more threatening to sue. Compl. Ex. F at 1-3, ECF No. 1-8. In response to Cochran’s July 15 letter, Nix argued that the MSA provisions regarding suspicious activity did not apply when the U.S. Treasury deposits funds, and claimed that, as a member of NASA FCU, he should have been copied on correspondence between NASA FCU and the IRS regarding his account. Id. at 3.

         On July 23, 2015, Cochran wrote to Nix explaining that “[t]he IRS contacted the Credit Union via e-mail on July 22, 2015 and requested the full amount of the tax refund be returned [to it]. A check was issued to the Department of the Treasury in the amount of $544, 387.99 the same day.” Compl. Ex. G, ECF No. 1-9. Cochran provided Nix a reference number and said he should contact the IRS if he had questions. Id.[6]

         On July 22, 2015, the entire balance of Nix’s account, or $544, 372.10, was withdrawn by check. Compl. Ex. A, ECF No. 1-2.

         On July 27, 2015, Nix wrote again to Allman, Bazey, Walge, Cochran, and the NCUA, complaining that his funds were “seized” when NASA FCU issued the check to the IRS, and demanding written confirmation that certain procedures were followed. Compl. Ex. H at 2, ECF No. 1-10.

         Despite Nix’s requests, NASA FCU did not provide him with copies of e-mails between NASA FCU and the IRS, nor did it show him a court order or warrant authorizing seizure of his account. Compl. ¶¶ 29-31. Further, Nix says, NASA FCU did not fully disclose its practices when verifying his tax refund; nor did it provide him with proof of the “wet-ink” membership agreement he allegedly signed. Id. ¶¶ 30, 33. There are no legal judgments against Nix, nor has a levy been issued by the IRS. Compl. ¶¶ 23-24.

         On the basis of the above facts, [7] Nix has sued NASA FCU, Allman, Bazey, Cochran, and Walge, claiming that they have: refused to make funds available to him in violation of the EFAA, 12 U.S.C. §§ 4001-4010, and its implementing regulations, 12 C.F.R. §§ 229.10 et seq. (Count I); disclosed his personal identifying information to a third party without his consent in violation of the U.S. Privacy Act of 1974, 5 U.S.C. § 552a (Count II);[8] interfered with his “right to contract”, and violated his Fourth, Fifth and Fourteenth Amendment rights (Counts II, III and IV); arbitrarily deprived him of property in contravention of the Universal Declaration of Human Rights (Count V); and breached their fiduciary duty to him under provisions of the Investment Company Act of 1940, 15 U.S.C. § 80a-35, and the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1105(b)(c), § 1109(a) (Count V). Compl. ¶¶ 34-49. He claims that because of the Defendants’ actions, he was unable to pay his creditors and has suffered “prejudice and injury” as a result. Id. ¶ 14. Nix seeks injunctive and equitable relief against Defendants, and actual, compensatory, punitive, and treble damages in the total amount of around $3.33 million. Compl. at 10.A-E.[9]

         NASA FCU has moved to dismiss all counts, arguing pursuant to Federal Rule of Civil Procedure 12(b)(6)[10] that Nix has failed to state a claim upon which relief can be granted.[11]

         II. STANDARDS OF LAW

         Federal Rule of Civil Procedure 8(a) prescribes “liberal pleading standards, ” requiring only that a plaintiff submit a “short and plain statement of the claim showing that [he or she] is entitled to relief.” Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (citing Fed.R.Civ.P. 8(a)(2)). To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff must plead facts sufficient to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 554, 570 (2007). This standard requires “more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although a court will accept factual allegations as true, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Indeed, the court need not accept legal conclusions couched as factual allegations or “unwarranted inferences, unreasonable conclusions, or arguments.” E. Shore Markets, Inc. v. J.D. Associates Ltd. P’ship, 213 F.3d 175, 180 (4th Cir. 2000). In the end, the complaint must contain factual allegations sufficient to apprise a defendant of “what the . . . claim is and the grounds upon which it rests.” Twombly, 550 U.S. at 555 (internal quotations and citations omitted). A district court may sua sponte dismiss a complaint for failure to state a claim, and where the face of a complaint plainly fails to state a claim for relief, the district court has “no discretion but to dismiss it.” Eriline Co. S.A. v. Johnson, 440 F.3d 648, 655 n.10 (4th Cir. 2006) (internal quotations omitted).

         While federal courts are obliged to liberally construe a pro se litigant’s claims in applying the above analysis, this requirement “does not transform the court into an advocate.” United States v. Wilson, 699 F.3d 789, 797 (4th Cir. 2012) (internal quotations and citations omitted). The Fourth Circuit has noted that “[w]hile pro se complaints may ‘represent the work of an untutored hand requiring special judicial solicitude, ’ a district court is not required to recognize ‘obscure or extravagant claims defying the most concerted efforts to unravel them.’” Weller v. Dep’t of Soc. Servs., 901 F.2d 387, 391 (4th Cir. 1990) (quoting Beaudett v. City of Hampton, 775 F.2d 1274, 1277 (4th Cir. 1985), cert. denied, 475 U.S. 1088 (1986)).

         III. ...


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