Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-00970/USCOURTS-azd-2_05-cv-00970-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Fraud

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Michael H. Lynn, a single man, 

Plaintiff, 

vs.

Robert L. Earle and Joy Earle, husband

and wife and Phillip Dyson and Jane Doe

Dyson, husband and wife, 

Defendants. 

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No. CV05-970-PHX-DGC

ORDER

Pending before the Court are Defendants’ motions to dismiss for lack of jurisdiction,

Defendants Robert and Joy Earle’s request for sanctions, Plaintiff’s motion for leave to file

a second amended complaint, and Defendants’ motions to strike. Doc. ##12-14, 27, 35. The

Court will dismiss the case for lack of jurisdiction, deny Plaintiff’s motion to amend, and

deny Defendants’ request for sanctions and motions to strike. 

BACKGROUND

Plaintiff commenced this action by filing a pro se complaint against Defendants on

March 31, 2005. Doc. #1. Plaintiff alleged various state law claims including fraud,

conspiracy to commit fraud, misrepresentation, negligence, breach of contract, breach of

fiduciary duty, and malpractice. Doc. #11. Plaintiff filed a first amended complaint on

December 16, 2005. Id. 

Defendants Philip and Liane Dyson filed a motion to dismiss for lack of jurisdiction

and a motion to strike the first amended complaint on January 5, 2006. Doc. ##13-14.

Case 2:05-cv-00970-DGC Document 37 Filed 04/19/06 Page 1 of 5
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Defendants Robert and Joy Earle filed a motion to dismiss for lack of jurisdiction and a

request for Rule 11 sanctions on January 6, 2006. Doc. #12. Defendants argued that the case

lacks diversity jurisdiction because the parties are not completely diverse. See Doc. ##12,

14. 

Plaintiff responded by seeking leave to file a second amended complaint. Doc. #27.

Plaintiff apologized for his mistake in asserting diversity jurisdiction and asserted that the

Court could exercise federal question jurisdiction based on implied rights of action under 18

U.S.C. §§ 1341 (mail fraud) and 1343 (wire fraud), both of which are criminal statutes.

Doc. #27 at 9-11. 

Defendants replied by arguing that no private rights of action exist under §§ 1341 and

1343. Docs. ##28 at 1-2, 29 at 2, 30 at 1. Plaintiff filed a further reply, which Defendants

Robert and Joy Earle moved to strike. Docs. ##34-35. 

DISCUSSION

I. Diversity Jurisdiction.

Plaintiff asserts in his first amended complaint that the Court has diversity jurisdiction

pursuant to 28 U.S.C. § 1332. For such jurisdiction to exist, diversity must be complete.

Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996). The citizenship of each plaintiff must be

diverse from the citizenship of each defendant. Id.

Plaintiff and Defendants Robert and Joy Earle are residents of Arizona, a fact not

disputed by Plaintiff. Docs. ##11, 27. Because the parties are not completely diverse, the

Court lacks diversity jurisdiction. See Tosco Corp. v. Cmty. for a Better Env’t, 236 F.3d 495,

502 (9th Cir. 2001) (affirming district court’s dismissal because complete diversity did not

exist).

II. Plaintiff’s Motion for Leave to File a Second Amended Complaint.

Plaintiff seeks leave to file a second amended complaint to cure the jurisdictional

defect. Doc. #27. Federal Rule of Civil Procedure 15 declares that leave to amend shall be

freely given when justice so requires, and the Supreme Court has instructed that “this

mandate is to be heeded.” Foman v. Davis, 371 U.S. 178, 182 (1962). “A district court may,

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however, take into consideration such factors as . . . “futility of the amendment, and whether

the party has previously amended his pleadings.’” Morris v. District Court, 363 F.3d 891,

894 (9th Cir. 2004) (quoting Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995)). 

In this case, Plaintiff’s attempt to cure the jurisdictional defect is futile. Plaintiff’s

proposed second amended complaint seeks to establish a federal question basis for

jurisdiction by asserting claims for mail and wire fraud under 18 U.S.C. §§ 1341 and 1343.

These federal criminal statutes do not, however, create private causes of action.

At least three circuits have held that the mail fraud statute – § 1341 – does not create

an implied private right of action. See Wisdom v. First Midwest Bank of Popular Bluff, 167

F.3d 402, 407 (8th Cir. 1999); Ryan v. Ohio Edison Co., 611 F.2d 1170, 1179 (6th Cir.

1979); Bell v. Health-Mor, Inc., 549 F.2d 342, 346 (5th Cir. 1977). The sparse legislative

history “indicates that the original impetus behind the mail fraud statute was to protect the

people from schemes to deprive them of their money or property.” McNally v. United States,

483 U.S. 350, 356 (1987). But “’the fact that a federal statute has been violated and some

person has been harmed does not automatically give rise to a private cause of action in favor

of that person.’” Opera Plaza Residential Parcel Homeowner’s Ass’n v. Hoang, 376 F.3d

831, 834 (9th Cir. 2004) (quoting Touch Ross & Co. v. Redington, 442 U.S. 560, 568

(1979)). There must be some indication that Congress intended to create a private cause –

“at least a statutory basis for inferring that a civil cause of action of some sort lay in favor

of someone.” Cort v. Ash, 422 U.S. 66, 79 (1975). In the case of § 1341, “[t]here is no clear

indication that Congress intended to create such a right.” Wisdom, 167 F.3d at 408.

The same is true of the wire fraud statute. At least two circuits have concluded that

§ 1343 creates no private right of action. See id.; Napper v. Anderson, Henley, Shields,

Bradford, & Pritchard, 500 F.2d 634, 636 (5th Cir. 1974). Defendant cites no contrary

authority.

The remainder of Plaintiff’s proposed second amended complaint asserts the same

state causes of action contained in his first amended complaint – fraud, misrepresentation,

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1 See, e.g., Lynn v. Western Health Ins., CV 94-00150-ROS; Lynn et al. v. Fann, CV

98-01016-EHC; Oxford Financial v. L&F Co., CV 96-00716-ROS (party); FDIC v. Boynton

Canyon Land, et al., CV 92-00805-DAE (party); Lynn v. MetWest Mortgage Scv., et al., CV

03-02164-DGC.

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negligence, breach of contract, breach of fiduciary duty, and malpractice. Doc. #27. These

claims provide no basis for federal question jurisdiction.

Because Plaintiff’s proposed second amended complaint does not present a valid

federal question, the Court concludes that amendment to cure the jurisdictional defect would

be futile. Plaintiff’s motion to amend will therefore be denied. 

Federal courts typically afford pro se plaintiffs notice of a complaint’s deficiencies

and an opportunity to amend. Lucas v. Dep’t of Corr., 66 F.3d 245, 248 (9th Cir. 1995). For

three reasons, Plaintiff need not be afforded an additional opportunity to amend in this case.

First, Plaintiff was apprized of the jurisdictional defect, acknowledged it, and

attempted to amend. The proposed amendment did not cure the lack of subject matter

jurisdiction. Thus, Plaintiff has been afforded notice and an opportunity to amend, and yet

has failed to identify a legitimate basis for federal court jurisdiction.

Second, although pro se, Plaintiff is a frequent litigant in this Court.1

 He understands

the rules and jurisdictional limits of federal court.

Third, the Court understands that Plaintiff is an attorney. He has previously

represented parties in this Court. Plaintiff is not a typical pro se litigant.

III. Rule 11 Sanctions.

Defendants Robert and Joy Earle ask the Court to grant sanctions against Plaintiff

pursuant to Rule 11. Doc. #12 at 4. Defendants, however, do not discuss Rule 11 or how

Plaintiff has violated it. They instead cite an Arizona case that concerns the award of

attorneys fees as damages in a conversion case, not sanctions under Rule 11. See Collins v.

First Financial Services, Inc., 815 P.2d 411, 416 (Ariz. Ct. App. 1991). Because Defendants

have identified no basis for Rule 11 sanctions, the Court will deny their request.

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IV. Defendants Motions to Strike.

The Court did not rely on the documents Defendants seek to strike. The Court

therefore will deny their motions as moot.

IT IS ORDERED:

1. Defendants’ motions to dismiss for lack of jurisdiction (Docs. ##12-14) are

granted.

2. Plaintiff’s motion for leave to file a second amended complaint (Doc. #27) is

denied.

3. Defendants Robert and Joy Earle’s request for Rule 11 sanctions against

Plaintiff (Doc. #12) is denied.

4. Defendants’ motions to strike (Docs. ##13, 35) are denied. 

5. The Clerk is directed to terminate this action.

DATED this 18th day of April, 2006.

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