IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF INDIANA

FORT WAYNE DIVISION

MICHAEL BRAUN, )

 )

Plaintiff, ) 

v. ) NO. 1:15-CV-173

 )

IRL F. ENGELHARDT, RICHARD )

M. WHITING, MARK N. )

SCHROEDER, and CHRISTOPHER )

K. KNIBB, )

)

Defendants. )

OPINION AND ORDER

This matter is before the Court on the Petition to Proceed

without Pre-Payment of Fees and Costs, filed by plaintiff, Michael

Braun, on July 6, 2015. (DE #2.) For the reasons set forth below,

the Court:

(1) DISMISSES the complaint (DE #1); 

(2) DENIES Plaintiff’s request to proceed in forma pauperis;

(3) GRANTS Plaintiff until January 18, 2016, to submit an

amended complaint along with payment of the filing fee; and 

(4) CAUTIONS Plaintiff that if he does not do so by that

deadline, this case will be dismissed without further notice. 

Plaintiff filed a complaint and a motion to proceed in forma

pauperis (“IFP”) on July 6, 2015. (See DE #1 & DE #2.) The IFP

statute, 28 U.S.C. section 1915, allows an indigent plaintiff to

commence a civil action without prepaying the administrative costs

(e.g. filing fee) of the action. See 28 U.S.C. section 1915(a)(1);
see also Denton v. Hernandez, 504 U.S. 25, 27 (1992). When

presented with an IFP application, the district court makes two

determinations: (1) whether the suit has sufficient merit; and (2)

whether the plaintiff's poverty level justifies IFP status. See 28

U.S.C. section 1915(e)(2); Denton, 504 U.S. at 27; Smith-Bey v.

Hosp. Adm’r, 841 F.2d 751, 757 (7th Cir. 1988). If a court finds

that the suit lacks sufficient merit or that an inadequate showing

of poverty exists, the court must deny the IFP petition. See

Smith-Bey, 841 F.2d at 757. 

A court must dismiss a case at any time, notwithstanding any

filing fee that may have been paid, if it determines that the suit

is frivolous, malicious, or fails to state a claim upon which

relief may be granted. 28 U.S.C. § 1915(e)(2)(B). An action is

frivolous if “it lacks an arguable basis either in law or in fact.” 

Neitzke v. Williams, 490 U.S. 319, 325 (1989). A claim that “no

reasonable person could suppose to have any merit” is considered

frivolous. Lee v. Clinton, 209 F.3d 1025, 1026 (7th Cir. 2000). 

To determine whether the suit states a claim under 28 U.S.C.

section 1915(e)(2)(B)(ii), a court applies the same standard as it

would to a motion to dismiss filed pursuant to Federal Rule of

Civil Procedure 12(b)(6). DeWalt v. Carter, 224 F.3d 607, 611 (7th

Cir. 2000). In deciding a motion to dismiss under Rule 12(b)(6),

a court must accept all well-pleaded factual allegations as true

and view them in the light most favorable to the plaintiff. 

Luevano v. WalMart Stores, Inc., 722 F.3d 1014, 1027 (7th Cir.

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2013). To survive dismissal, a “complaint must contain sufficient

factual matter, accepted as true, to state a claim to relief that

is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (internal quotation marks and citation omitted). A

plaintiff “must plead some facts that suggest a right to relief

that is beyond the ‘speculative level.’” Atkins v. City of

Chicago, 631 F.3d 823, 832 (7th Cir. 2011). “This means that the

complaint must contain allegations plausibly suggesting (not merely

consistent with) an entitlement to relief.” Lavalais v. Village of

Melrose Park, 734 F.3d 629, 632-33 (7th Cir. 2013) (internal

quotation marks and citation omitted). However, “[a] document

filed pro se is to be liberally construed, and a pro se complaint,

however inartfully pleaded, must be held to less stringent

standards than formal pleadings drafted by lawyers.” Erickson v.

Pardus, 551 U.S. 89, 94 (2007) (internal quotation marks and

citation omitted). 

In this case, as to the financial prong of the analysis,

Plaintiff indicates that he is unemployed but receives $1,000.00 in

social security disability payments per month. (DE #2.) He states

that he is financially dependent on his father, Joseph Braun, for

support, but he does not indicate the extent of his father’s

financial help. (Id.) He indicates that he has $200 in a checking

account, $1,000 in other property or investments, and no

dependents. (Id.)

The federal poverty guideline for a household of one living in

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Indiana is $11,770. ANNUAL UPDATE OF THE HHS POVERTY GUIDELINES, 80 Fed.

Reg. 3237 (Jan. 22, 2015). The annualized value of Plaintiff’s

social security disability benefit income alone is $12,000, which

is above the federal poverty guideline. Thus, the Court finds that

Plaintiff is not financially eligible to proceed IFP in this case. 

As to the sufficiency prong of the analysis, in his complaint,

Plaintiff takes issue with the actions of several corporate

defendants. Specifically, Plaintiff alleges that Richard M.

Whiting wrote a letter dated May 22, 2012, that overstated Patriot

Coal Corporation’s financial position and “implied he was going to

be there through everything!” (DE #1, p. 1.) According to

Plaintiff, several days later, Richard M. Whiting “flew the coup

out of the blue” and resigned his position with the company. (Id.) 

Plaintiff states that Irl F. Engelhardt subsequently “volunteere[d]

himself as CEO” and wrote a letter touting Patriot Coal

Corporation’s bright future. (Id.) Plaintiff alleges that these

actions were “false, fraudulent, and very misleading” because the

men were “secretly scheming” to set up shell corporations for the

“sole reason of a quick and dirty New York bankruptcy filing.” 

(Id.) Plaintiff alleges that Mark N. Schroeder, Patriot Coal

Corporation’s Chief Financial Officer, and Christopher K. Knibb,

Patriot Coal Corporation’s Chief Accountant, overstated the

company’s financial results and that Christopher K. Knibb

“deviously sold $53,000 worth of stock just months before

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bankruptcy he never bought a condo in Florida, his only alibi.” 

(Id. at 2.) In sum, Plaintiff alleges that:

Defendants (1.) violated Generally Accepted

Accounting Principles (“GAAP”). (2.)

Defendant’s expensed the ZVI technology costs

but then capitalized the remediation

obligations installation costs. (3.) The SEC

notified defendants of their GAAP Violations.

(4.) Defendants testified during the West

Virginia environmental litigation about

accounting expenses. (5.) Defendants possessed

a strong motive to commit fraud because of

their exorbitant salaries. (6.) Defendants

statements after the May 8, 2012 restatement

deceptively minimized the impact of the

restatement.1

(Id.) Plaintiff alleges that he has suffered damages as a result

of the defendants’ actions, and he feels like he “bought a used car

with the miles rolled way back.” (Id.) Plaintiff alleges that

“[t]his lawsuit is rightly filed in the United States District

Court for the Northern District of Indiana since it is for over

$75,000 and the defendants are in a different state.” (Id.) 

Although it is not entirely clear, based on the preceding

sentence, Plaintiff appears to be attempting to bring some sort of

state law claim based on diversity jurisdiction. However, he has

not adequately alleged diversity of citizenship between the parties

to ensure that this Court has jurisdiction over such an action. 

1

 Grammatical errors and stylistic differences aside, this paragraph is

essentially word for word identical to a paragraph in the Eighth Circuit Court

of Appeals’ opinion and order dated June 15, 2015, summarizing the plaintiffs’

arguments in opposition to dismissal; the plaintiffs’ arguments in that case

(which involved the same corporate entities and defendants) were ultimately

rejected by the Eighth Circuit Court of Appeals. See Podraza v. Whiting, 790

F.3d 828, 837 (8th Cir. 2015).

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Under 28 U.S.C. § 1332(a)(1), a federal district court has

“original jurisdiction of all civil actions where the matter in

controversy exceeds the sum or value of $75,000, exclusive of

interest and costs, and is between citizens of different States.”

(emphasis added). When a district court’s jurisdiction is based on

28 U.S.C. § 1332, there must be complete diversity between the

opposing parties. Schur v. L.A. Weight Loss Centers, Inc., 577

F.3d 752, 758 (7th Cir. 2009). In other words, the citizenship of

each plaintiff must be diverse from the citizenship of each

defendant. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). As

a general rule, when a court has jurisdiction under 28 U.S.C. §

1332, complete diversity must be established at the beginning of

the action and subsequent events do not affect the court’s

diversity jurisdiction. Johnson v. Wattenbarger, 361 F.3d 991, 993

(7th Cir. 2004). However, if an amended pleading is filed by a

party, the original pleading is irrelevant and the amended pleading

controls the court’s jurisdictional analysis. See Wellness Cmty.-

Nat’l v. Wellness House, 70 F.3d 46, 49 (7th Cir. 1995) (explaining

that the plaintiff’s first amended complaint controlled the court’s

jurisdictional inquiry, not the original complaint). 

Here, Plaintiff simply alleges that the “defendants are in a

different state.” This is not sufficient. See 28 U.S.C. § 1332;

Steigleder v. McQuesten, 198 U.S. 141, 143 (1905); Meyerson v.

Harrah’s E. Chicago Casino, 299 F.3d 616, 617 (7th Cir. 2002);

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Tylka v. Gerber Prods. Co., 211 F.3d 445, 448 (7th Cir. 2000). 

Plaintiff has not established that diversity jurisdiction exists,

and therefore his complaint must be DISMISSED. 

However, Plaintiff will be given an opportunity to amend his

complaint. Should Plaintiff choose to pay the filing fee and amend

his complaint, he must adequately allege diversity of citizenship

between the parties. Additionally, he should clarify the state law

theory under which he is asserting his claims.2 

CONCLUSION

For the foregoing reasons, the Court:

(1) DISMISSES the complaint (DE #1); 

(2) DENIES Plaintiff’s request to proceed in forma pauperis;

(3) GRANTS Plaintiff until January 18, 2016, to submit an

amended complaint along with payment of the filing fee; and 

(4) CAUTIONS Plaintiff that if he does not do so by that

deadline, this case will be dismissed without further notice. 

DATED: December 18, 2015 /s/RUDY LOZANO, Judge

United States District Court

2

 On the other hand, if Plaintiff is attempting to bring a federal

question action, he should clarify under what federal law or laws his claims

arise. As it stands, Plaintiff’s complaint fails to state a claim under any

theory. See generally Podraza v. Whiting, 790 F.3d 828 (8th Cir. 2015)

(dismissing the plaintiffs’ complaint involving the same corporate entities

and defendants for failing to meet the heightened requirement for pleading

scienter mandated by the the Private Securities Litigation Reform Act of 1995

(“PSLRA”), 15 U.S.C. section 78u-4). 

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