5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON 7 AT SEATTLE 8 EDWIN B. STEARNS, JR., Case No. C22-1579-RSL 9
10 Plaintiff, ORDER OF DISMISSAL 11 v. 12 KATHERINE R. STEARNS, et al., 13 Defendants. 14 15 On December 21, 2022, the Court ordered pro se plaintiff Edwin B. Stearns, Jr. to show 16 cause why his complaint should not be dismissed for lack of subject matter jurisdiction. Dkt. 17 # 13. On January 13, 2023, Mr. Stearns filed his Response to the Order to Show Cause. Dkt. 18 # 24.1 On January 17, 2023, Mr. Stearns filed an Addendum to his Response. Dkt. # 26. Having 19 reviewed the Response, Addendum, and the remainder of the record, the Court finds as follows: 20 Pursuant to Federal Rule of Civil Procedure 8(a), a complaint shall include “(1) a short 21 and plain statement of the grounds for the court’s jurisdiction . . . , (2) a short and plain 22 statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the 23 relief sought . . . .” Fed. R. Civ. P. 8(a). “Each allegation must be simple, concise, and direct.” 24 Id. 8(d)(1). Although pro se complaints are to be construed liberally, see Haines v. Kerner, 404 25 U.S. 519, 520-21 (1972); Bernhardt v. L.A. Cnty., 339 F.3d 920, 925 (9th Cir. 2003) (“Courts 26 have a duty to construe pro se pleadings liberally, including pro se motions as well as 27
28 1 Plaintiff has requested oral argument. Dkt. # 24. The Court concludes that oral argument is 1 complaints.”), the court may not supply essential elements that are not pled, Ivey v. Bd. of 2 Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). 3 As the plaintiff, Mr. Stearns has the burden of alleging facts which give rise to federal 4 jurisdiction. See, e.g., Warth v. Seldin, 422 U.S. 490, 518 (1975) (“It is the responsibility of the 5 complainant to clearly allege facts demonstrating that he is a proper party to invoke judicial 6 resolution of the dispute and the exercise of the court’s remedial powers.”). “Federal district 7 courts are courts of limited jurisdiction, possessing only that power authorized by Constitution 8 and statute. We presume that a cause lies outside this limited jurisdiction, and the burden of 9 establishing the contrary rests upon the party asserting jurisdiction.” K2 Am. Corp. v. Roland Oil 10 & Gas, LLC, 653 F.3d 1024, 1027 (9th Cir. 2011) (citations and internal quotation marks 11 omitted). “A judge . . . may dismiss an action sua sponte for lack of jurisdiction.” Franklin v. 12 State of Or., State Welfare Div., 662 F.2d 1337, 1342 (9th Cir. 1981); see also Fed. R. Civ. P. 13 12(h)(3). 14 The gravamen of plaintiff’s Amended Complaint is that plaintiff’s sister, Katherine 15 Stearns, and financial advisor Melissa Cournyer have acted tortiously in the administration of 16 assets belonging to the estate of plaintiff and Ms. Stearns’s father. See generally Dkt. # 7. In his 17 Amended Complaint, plaintiff alleged that federal subject matter jurisdiction existed for his 18 claims under 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1332 (diversity 19 jurisdiction). Dkt. # 7 at 1-2. However, because plaintiff had not established complete diversity, 20 Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996) (meaning “the citizenship of each plaintiff is 21 diverse from the citizenship of each defendant”), and the Amended Complaint appeared to only 22 allege violations of state tort law (as well as allegations relating to the ongoing state probate 23 process), the Court raised the issue of subject matter jurisdiction sua sponte in an Order to Show 24 Cause. Dkt. # 13. In his Response to the Order to Show Cause, plaintiff concedes that diversity 25 jurisdiction does not exist. Dkt. # 24 at 2. Instead, plaintiff asserts that federal question 26 jurisdiction exists under “the tort of conversion,” “the Securities Exchange Act of 1934,” and 12 27 U.S.C. § 66. Id. at 3. 28 1 Federal question jurisdiction exists where the case “aris[es] under the Constitution, laws, 2 or treaties of the United States.” 28 U.S.C. § 1331. “A case arise[es] under federal law within 3 the meaning of § 1331 . . . if a well-pleaded complaint establishes either that federal law creates 4 the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a 5 substantial question of federal law.” Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 6 677, 689-90 (2006) (internal quotation marks omitted). 7 Here, plaintiff first contends that the “tort of conversion” provides a basis for federal 8 question jurisdiction. Dkt. # 24 at 3. However, his conversion claim sounds in state tort law and 9 does not provide a basis for federal question jurisdiction. 10 Plaintiff next contends that the “Securities Exchange Act of 1934” provides a basis for 11 federal question jurisdiction. Id. The Securities Exchange Act of 1934 regulates “transactions in 12 securities as commonly conducted upon securities exchanges and over-the-counter markets.” 15 13 U.S.C. § 78b. Here, even construing the complaint liberally, as the Court must do for a pro se 14 litigant, the Court finds plaintiff has failed to allege facts giving rise to a violation of the 15 Securities Act of 1934. It appears that plaintiff is alleging fraud under the Act, as his Response 16 indicates he believes his signature on certain forms was “extorted” through “deceit,” thereby 17 permitting the “embezzlement” of funds plaintiff believes he is entitled to. Dkt. # 24 at 3-4. 18 However, the Act prohibits fraud “in connection with the purchase or sale of any security 19 registered on a national securities exchange.” 15 U.S.C. § 78j(b). Here, the only allegation 20 plaintiff makes regarding securities is that “Defendant Cournyer held and managed stock from 21 plaintiff’s father.” Dkt. # 24 at 3. Plaintiff does not allege that any defendant participated in the 22 purchase or sale of a security with regard to the alleged conduct in the complaint. Because 23 plaintiff has not alleged facts giving rise to a plausible inference that he has alleged a securities 24 Act claim, the Act cannot provide the basis for federal question jurisdiction. 25 Finally, plaintiff contends that federal question jurisdiction exists under 12 U.S.C. § 66.
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5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON 7 AT SEATTLE 8 EDWIN B. STEARNS, JR., Case No. C22-1579-RSL 9
10 Plaintiff, ORDER OF DISMISSAL 11 v. 12 KATHERINE R. STEARNS, et al., 13 Defendants. 14 15 On December 21, 2022, the Court ordered pro se plaintiff Edwin B. Stearns, Jr. to show 16 cause why his complaint should not be dismissed for lack of subject matter jurisdiction. Dkt. 17 # 13. On January 13, 2023, Mr. Stearns filed his Response to the Order to Show Cause. Dkt. 18 # 24.1 On January 17, 2023, Mr. Stearns filed an Addendum to his Response. Dkt. # 26. Having 19 reviewed the Response, Addendum, and the remainder of the record, the Court finds as follows: 20 Pursuant to Federal Rule of Civil Procedure 8(a), a complaint shall include “(1) a short 21 and plain statement of the grounds for the court’s jurisdiction . . . , (2) a short and plain 22 statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the 23 relief sought . . . .” Fed. R. Civ. P. 8(a). “Each allegation must be simple, concise, and direct.” 24 Id. 8(d)(1). Although pro se complaints are to be construed liberally, see Haines v. Kerner, 404 25 U.S. 519, 520-21 (1972); Bernhardt v. L.A. Cnty., 339 F.3d 920, 925 (9th Cir. 2003) (“Courts 26 have a duty to construe pro se pleadings liberally, including pro se motions as well as 27
28 1 Plaintiff has requested oral argument. Dkt. # 24. The Court concludes that oral argument is 1 complaints.”), the court may not supply essential elements that are not pled, Ivey v. Bd. of 2 Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). 3 As the plaintiff, Mr. Stearns has the burden of alleging facts which give rise to federal 4 jurisdiction. See, e.g., Warth v. Seldin, 422 U.S. 490, 518 (1975) (“It is the responsibility of the 5 complainant to clearly allege facts demonstrating that he is a proper party to invoke judicial 6 resolution of the dispute and the exercise of the court’s remedial powers.”). “Federal district 7 courts are courts of limited jurisdiction, possessing only that power authorized by Constitution 8 and statute. We presume that a cause lies outside this limited jurisdiction, and the burden of 9 establishing the contrary rests upon the party asserting jurisdiction.” K2 Am. Corp. v. Roland Oil 10 & Gas, LLC, 653 F.3d 1024, 1027 (9th Cir. 2011) (citations and internal quotation marks 11 omitted). “A judge . . . may dismiss an action sua sponte for lack of jurisdiction.” Franklin v. 12 State of Or., State Welfare Div., 662 F.2d 1337, 1342 (9th Cir. 1981); see also Fed. R. Civ. P. 13 12(h)(3). 14 The gravamen of plaintiff’s Amended Complaint is that plaintiff’s sister, Katherine 15 Stearns, and financial advisor Melissa Cournyer have acted tortiously in the administration of 16 assets belonging to the estate of plaintiff and Ms. Stearns’s father. See generally Dkt. # 7. In his 17 Amended Complaint, plaintiff alleged that federal subject matter jurisdiction existed for his 18 claims under 28 U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1332 (diversity 19 jurisdiction). Dkt. # 7 at 1-2. However, because plaintiff had not established complete diversity, 20 Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996) (meaning “the citizenship of each plaintiff is 21 diverse from the citizenship of each defendant”), and the Amended Complaint appeared to only 22 allege violations of state tort law (as well as allegations relating to the ongoing state probate 23 process), the Court raised the issue of subject matter jurisdiction sua sponte in an Order to Show 24 Cause. Dkt. # 13. In his Response to the Order to Show Cause, plaintiff concedes that diversity 25 jurisdiction does not exist. Dkt. # 24 at 2. Instead, plaintiff asserts that federal question 26 jurisdiction exists under “the tort of conversion,” “the Securities Exchange Act of 1934,” and 12 27 U.S.C. § 66. Id. at 3. 28 1 Federal question jurisdiction exists where the case “aris[es] under the Constitution, laws, 2 or treaties of the United States.” 28 U.S.C. § 1331. “A case arise[es] under federal law within 3 the meaning of § 1331 . . . if a well-pleaded complaint establishes either that federal law creates 4 the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a 5 substantial question of federal law.” Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 6 677, 689-90 (2006) (internal quotation marks omitted). 7 Here, plaintiff first contends that the “tort of conversion” provides a basis for federal 8 question jurisdiction. Dkt. # 24 at 3. However, his conversion claim sounds in state tort law and 9 does not provide a basis for federal question jurisdiction. 10 Plaintiff next contends that the “Securities Exchange Act of 1934” provides a basis for 11 federal question jurisdiction. Id. The Securities Exchange Act of 1934 regulates “transactions in 12 securities as commonly conducted upon securities exchanges and over-the-counter markets.” 15 13 U.S.C. § 78b. Here, even construing the complaint liberally, as the Court must do for a pro se 14 litigant, the Court finds plaintiff has failed to allege facts giving rise to a violation of the 15 Securities Act of 1934. It appears that plaintiff is alleging fraud under the Act, as his Response 16 indicates he believes his signature on certain forms was “extorted” through “deceit,” thereby 17 permitting the “embezzlement” of funds plaintiff believes he is entitled to. Dkt. # 24 at 3-4. 18 However, the Act prohibits fraud “in connection with the purchase or sale of any security 19 registered on a national securities exchange.” 15 U.S.C. § 78j(b). Here, the only allegation 20 plaintiff makes regarding securities is that “Defendant Cournyer held and managed stock from 21 plaintiff’s father.” Dkt. # 24 at 3. Plaintiff does not allege that any defendant participated in the 22 purchase or sale of a security with regard to the alleged conduct in the complaint. Because 23 plaintiff has not alleged facts giving rise to a plausible inference that he has alleged a securities 24 Act claim, the Act cannot provide the basis for federal question jurisdiction. 25 Finally, plaintiff contends that federal question jurisdiction exists under 12 U.S.C. § 66. 26 This statute, part of the National Bank Act, provides: 27 the Persons holding stock as executors, administrators, guardians, or 28 trustees, shall not be personally subject to any liabilities as stockholders; 1 the same extent as the testator, intestate, ward, or person interested in such trust funds would be, if living and competent to act and hold the stock in his 2 own name. 3 12 U.S.C. § 66. In other words, the statute limits liability for persons holding national 4 bank shares as executors, administrators, guardians, or trustees. See Pufahl v. Parks’ Est., 5 299 U.S. 217 (1936); Schram v. Kaplan, 45 F. Supp. 628 (E.D. Mich. 1942). Here, 6 plaintiff has not alleged that anyone (including his father’s estate) holds national bank 7 shares, nor that they are facing personal liability as a result of their stockholder status. 8 Thus, the statute is irrelevant to plaintiff’s pleaded allegations and cannot serve as the 9 basis for subject matter jurisdiction. 10 Although plaintiff states that he “realizes that the only issues that he prays the 11 federal court will hear are the issues regarding federal securities and that probate issues 12 are a state court matter,” Dkt. # 7 at 2, he fails to identify any federal securities issues – 13 or any other basis for federal question jurisdiction – in either his Amended Complaint or 14 Response to the Order to Show Cause. Accordingly, the Court DISMISSES plaintiff’s 15 Amended Complaint for lack of subject matter jurisdiction. 16 For all the foregoing reasons, the Court sua sponte DISMISSES the Second 17 Amended Complaint without prejudice for lack of subject matter jurisdiction. The Court 18 GRANTS plaintiff thirty (30) days from this Order to file an amended complaint curing 19 the pleading deficiencies identified above. If plaintiff fails to cure the identified 20 deficiencies in his second Amended Complaint, the Court will dismiss with prejudice. 21 IT IS SO ORDERED. 22
23 DATED this 23rd day of January, 2023. 24
25 A 26 Robert S. Lasnik 27 United States District Judge 28