Reynolds, et al. v. CFX Mortgage, et

2000 DNH 020

• Court: District Court, D. New Hampshire
• Decided: January 26, 2000
• Docket: CV-98-649-M
• Status: Published

Opinion

Reynolds, et a l . v . CFX Mortgage, et CV-98-649-M 01/26/00 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

David C . and Kathryn Reynolds, Individually and as Shareholders and Principals of Misfits, Inc., a/k/a Craney Hill Restaurant & Lounge, Gas Pump Alley, Inc., and Dave and Kay Leasing, LLC, Plaintiffs

v. Civil N o . 98-649-M Opinion N o . 2000 DNH 020 CFX Mortgage, Inc., CFX Bank, and Bank of New Hampshire Corporation, Defendants

O R D E R

Having considered the Magistrate Judge’s Report and

Recommendation (document n o . 49) and the objections thereto

(document n o . 5 0 ) , I approve the report and accept the

recommendations in part, and sustain the objection in part, as

explained below.

I note, first, that plaintiffs’ ADA claim is dismissed as

recommended, but not for want of federal subject matter

jurisdiction. Rather that claim is dismissed for failure to exhaust administrative remedies. The requirement that an

administrative claim be filed before a federal court can

entertain an ADA claim is in the nature of an exhaustion

prerequisite, but it is not jurisdictional. See Bonilla v .

Muebles J.J. Alvarez, Inc., 194 F.3d 275 (1st Cir. 1999).

Plaintiff’s objection to the Report and Recommendation vaguely

hints at the existence of some justifiable reason or special

circumstance warranting excusal of the exhaustion requirement,

but he does not argue what they might be or what authority might

support his entitlement to avoid the requirement. Accordingly,

normal governing rules apply, and the count must be dismissed.

Next, I agree that the Rehabilitation Act count fails to

describe a colorable claim arising under federal law. As a

matter of law, the defendant bank is not a “recipient of federal

financial assistance” simply because the Small Business

Administration guaranteed the loans at issue. That count is

dismissed as recommended.

However, plaintiffs’ objection to the Magistrate Judge’s

recommendation to dismiss Count X I I , the Expedited Funds

2 Availability Act (EFAA) claim, has merit. The Magistrate Judge

recommended dismissal on grounds that plaintiffs failed to plead

facts sufficient to confer federal jurisdiction, in that they

failed to plead facts showing that their EFAA claim arose within

one year of the complaint’s filing. The EFAA (12 U.S.C.

§ 4010(d)) provides a civil action may be brought “within one

year after the date of the occurrence of the violation involved.”

That provision operates as a statute of limitations, not a

jurisdictional prerequisite, and plaintiffs are not obligated to

affirmatively plead facts bringing their claim within the one

year statute of limitations. See Beffa v . Bank of West, 152 F.3d

1174 (9th Cir. 1998); Betten v . Citibank, F.S.B., 1995 WL 387802

(N.D.Ill., 1995) (facts showing EFAA claim satisfies one year

requirement of § 4010(d) need not be pled to state a cause of

action). Defendants have raised the statute of limitations as a

defense in their Answer (paragraph 1 6 0 ) , but have not moved to

dismiss Count XII.

Construing Count XII liberally, it describes a violation of

the EFAA in that plaintiffs state, albeit in broad terms, that at

3 some point they deposited cash with the defendant bank and, in

violation of the Act, that cash was not available for withdrawal

on the next business day. They also claim actual and statutory

damages. To be sure, most significant details are missing, but

the bare facts (deposit of cash and next day unavailability) are

adequately pled, at least adequately to avoid sua sponte

dismissal.

However, another difficulty with plaintiffs’ pleadings is

apparent. The EFAA claim is a narrow one, circumscribed by the

statute creating i t . It does not appear that the EFAA claim, the

only remaining federal claim, will support this court’s exercise

of supplemental jurisdiction over the numerous state causes of

action asserted by plaintiffs. The EFAA claim may have to stand

alone.

In order for supplemental jurisdiction to attach, the state

law causes of action and the EFAA claim must arise from a “common

nucleus of operative facts,” such that plaintiffs “would

ordinarily be expected to try them all in a single judicial

proceeding.” United Mine Workers of America v . Gibbs, 383 U.S.

4 715, 725 (1966). The federal and state claims must “form part of

the same case or controversy under Article III of the United

States Constitution.” 28 U.S.C. § 1367(a). And, the exercise of

supplemental jurisdiction is discretionary – “depending on a host

of factors including the circumstances of the particular case,

the nature of the state law claims, the character of the

governing state law, and the relationship between the state and

federal claims.” City of Chicago v . International College of

Surgeons, 522 U.S. 156, 118 S.Ct. 523, 534 (1997).

It is difficult to assess the propriety of exercising

supplemental jurisdiction since the facts underlying the

plaintiffs’ EFAA claim remain undisclosed. Accordingly,

plaintiffs shall show cause within thirty (30) days of the date

of this order why the court should exercise discretionary

supplemental jurisdiction over the numerous state law claims

described in the complaint, given that the EFAA claim is the only

remaining federal cause of action.

Accordingly, the Report and Recommendation is approved in

part and rejected in part. Defendants’ motion for injunctive or

5 receivership type relief (document n o . 42) is denied.

Plaintiff’s ADA claim is dismissed, without prejudice, for

failure to exhaust administrative remedies. Plaintiff’s

Rehabilitation Act claim is dismissed, with prejudice, for

failure to state a claim upon which relief can be granted (banks

making loans guaranteed by the Small Business Administration do

not receive “federal financial assistance” within the meaning of

the Rehabilitation A c t ) . Plaintiff’s EFAA claim is not

dismissed. However, plaintiffs shall show cause within thirty

(30) days of the date of this order why the court should exercise

asserted in the complaint.

SO ORDERED.

Steven J. McAuliffe United States District Judge

January 2 6 , 2000

cc: Stephen H. Roberts, Esq. John D. Frumer, Esq. William S . Gannon, Esq.