2012 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-18-2012

Larry Rader v. ING Bank fsb

Precedential or Non-Precedential: Non-Precedential

Docket No. 12-1603

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Recommended Citation

"Larry Rader v. ING Bank fsb" (2012). 2012 Decisions. Paper 427.

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1

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

_____________

Nos. 10-3071, 10-3072, 10-3164, 10-3165, 11-2089, 11-3916 & 12-1603

_____________

LARRY W. RADER

Appellant in 10-3164

v.

ING GROEP NV; ING USA HOLDING CORPORATION;

ING DIRECT BANCORP; ING BANK FSB;

SHAREBUILDER SECURITIES CORPORATION;

RICHARD MONTGOMERY DONALDSON; PAUL SWEGLE,

ING Direct Bancorp;

ING Bank fsb;

ShareBuilder Securities Corporation,

Appellants in 10-3071

_____________

LARRY W. RADER

Appellant in 10-3165

 

v.

SHAREBUILDER SECURITIES CORPORATION; WILLIAM A. KINSEL; 

KINSEL LAW OFFICES PLLC; ING BANK FSB,

ShareBuilder Securities Corporation;

ING Bank fsb,

Appellants in 10-3072

_____________
2

LARRY W. RADER,

Appellant in 11-2089

v.

SHAREBUILDER CORPORATION; ING BANK FSB; 

SHAREBUILDER SECURITIES CORPORATION

_____________

LARRY W. RADER,

Appellant in 11-3916 & 

12-1603

v.

ING BANK FSB; SHAREBUILDER SECURITIES CORPORATION

_____________

On Appeal from the United States District Court

for the District of Delaware

District Court Nos. 1-09-cv-00340; 1-09-cv-00544; 1-09-cv-00781; 1-10-cv00398; 2-11-cv-02576

District Judge: The Honorable Leonard P. Stark

 

Submitted Pursuant to Third Circuit L.A.R. 34.1(a)

September 13, 2012

Before: SMITH and CHAGARES, 

and ROSENTHAL, 

Circuit Judges

District Judge

(Filed: September 18, 2012)

_____________________

 OPINION

_____________________ 

 

The Honorable Lee H. Rosenthal, United States District Judge for the United 

States District Court for the Southern District of Texas, sitting by designation.
3

SMITH, Circuit Judge.

Larry W. Rader has filed four separate lawsuits against multiple entities

arising out of a failed attempt to purchase stock using an account that he had 

created with ShareBuilder Securities Corporation (“ShareBuilder”)1

—an online 

broker-dealer located in the state of Washington. ShareBuilder filed a 

counterclaim seeking damages for a breach of contract. The District Court either 

dismissed or entered summary judgment against Rader on all of his claims, and 

awarded ShareBuilder $378,260.55 for fees and costs. Rader appeals from the 

disposition of his claims and from the judgment entered against him. For the 

following reasons, we will affirm the judgment of the District Court. 2

I.

We write exclusively for the parties, who are familiar with the factual 

context and complicated legal history of this case. Therefore, we provide only an 

abbreviated summary of the facts essential to our disposition. 

On January 2, 2009, Rader applied to open an investment account with 

ShareBuilder. In the process of opening his account, Rader acceded to the 

ShareBuilder Account Agreement (the “Agreement”). The Agreement specified 

 1 We refer to all of the defendants collectively as “ShareBuilder.”

2 The District Court had diversity jurisdiction over Rader’s four lawsuits pursuant 

to 28 U.S.C. § 1332(a)(1). We have jurisdiction over this appeal pursuant to 28 

U.S.C. § 1291.
4

that it would be governed by Washington law. Additionally, the Agreement 

provided that the investor (here, Rader) warranted that the information provided as 

part of the account application was accurate. The Agreement further provided that 

the investor “agree[s] to indemnify and hold ShareBuilder and its affiliates 

harmless from and against any and all damage, cost, judgment . . . of any nature, 

and claims therefore (collectively ‘Losses’) arising out of or relating to your failure 

to provide accurate information on your [account application] . . . .” App’x 171a. 

Finally, the Agreement stated that “ShareBuilder shall have no liability for and [the 

investor] agree[s] to reimburse, indemnify and hold ShareBuilder . . . harmless 

from all expenses . . . , Losses or damages that result from: . . . (e) your failure to 

provide accurate information on your [account application] . . . .” Id.

On January 5, 2009, Rader used ShareBuilder’s online order form to 

purchase 280 shares of stock in Cisco Systems (“Cisco”). Rader indicated on the 

form that he would pay for the transaction using funds from his bank account, and 

provided ShareBuilder with what he claimed to be the account number and routing 

number for his savings account at U.S. Bank. 

That same day, ShareBuilder purchased the requested shares in Cisco. As 

was its normal practice, ShareBuilder purchased the requested shares, and only 

later attempted to collect the funds required to pay for the transaction. In other 

words, ShareBuilder purchased the requested shares in Cisco using its own capital, 
5

and only later sought reimbursement. 

Unfortunately, when ShareBuilder attempted to access Rader’s savings

account, it discovered that Rader had not provided a correct account number. On 

January 8, 2009, ShareBuilder notified Rader that it could not access Rader’s listed 

savings account, and therefore could not recover payment for Rader’s order of 

Cisco shares. Additionally, between January 5, 2009 and January 8, 2009, Rader 

attempted four times to transfer money from his savings account to his 

ShareBuilder account. All of these transfer requests used the incorrect account 

number, and thus all of these transfer requests failed. 

On January 12, 2009, Rader sold his Cisco shares, again using 

ShareBuilder’s online system. Before disbursing the income from this transaction 

to Rader, ShareBuilder subtracted the amount that Rader owed. ShareBuilder 

ultimately disbursed a total of $19,589.35 to Rader’s then-corrected U.S. Bank 

account. 

The situation quickly disintegrated. There were a series of 

miscommunications between ShareBuilder and Rader in which Rader was 

apparently either inadequately apprised of, or misunderstood the situation and what 

he could do to rectify the problem. At one point, Rader apparently sent 

ShareBuilder a “Notice of Claim for $1,000,000.” App’x 180a. Pursuant to the 

Agreement, ShareBuilder decided to unilaterally terminate Rader’s account. On 
6

January 23, 2009, ShareBuilder disbursed approximately $6,000—the amount

remaining in Rader’s ShareBuilder account—to Rader and closed Rader’s account.

On May 12, 2009, Rader filed the first of his four federal lawsuits in the 

District of Delaware.

3

Rader also moved for relief from the District Court’s June 10, 2010 Order. 

On August 24, 2010, the District Court denied this motion. Rader timely appealed 

from this denial.

 The cases were referred to a Magistrate Judge. On April 7, 

2010, the Magistrate Judge issued a Report and Recommendation (the “R & R”), 

recommending, inter alia, that the District Court: (1) grant summary judgment 

against or dismiss all of Rader’s claims; (2) deny various discovery motions filed 

by Rader; and (3) deny Rader’s motion to disqualify ShareBuilder’s counsel and 

the Magistrate Judge. On June 10, 2010, the District Court adopted the Magistrate 

Judge’s R & R. Rader and ShareBuilder timely appealed from the June 10, 2010 

Order.

4

 3

 The distinctions between the four lawsuits are not material to this appeal. 

 We dismissed these two appeals for lack of appellate 

jurisdiction, because ShareBuilder’s counterclaim remained pending, and because 

the District Court had not expressly entered judgments as to Rader’s various 

claims.

4 After Rader appealed from the District Court’s June 10, 2010 Order, the 

Magistrate Judge who issued the R & R was elevated to the District Court bench. 

The cases were referred to the newly-appointed District Judge. 
7

On May 2, 2011, ShareBuilder moved for summary judgment in favor of its 

counterclaim. On May 27, 2011, Rader moved to disqualify and remove the 

District Judge presiding over his cases. On May 30, 2011, the District Court 

granted ShareBuilder’s motion for summary judgment in favor of its counterclaim, 

in the amount of $366,041.87 for attorneys’ fees and costs that accrued on or 

before May 2, 2011. In the same order, the District Court also denied Rader’s 

motion to disqualify. Rader timely appealed from the May 30, 2011 Order.

On October 14, 2011, ShareBuilder moved for supplemental attorneys’ fees

and for fees and costs that accrued after May 2, 2011. On February 6, 2012, the 

District Court awarded ShareBuilder a supplemental award of $12,218.68. In sum, 

the District Court awarded ShareBuilder $378,260.55 in fees and costs. Rader 

amended his notice of appeal to include the February 6, 2012 Order.

III.

Rader raises a host of meritless arguments on appeal. First, Rader argues 

that the District Court erred when it granted ShareBuilder’s motion for summary 

judgment against various claims in Rader’s first complaint. We review de novo, 

applying the same standard as the District Court. Viera v. Life Ins. Co. of N. Am., 

642 F.3d 407, 413 (3d Cir. 2011). For substantially the same reasons offered by 

the Magistrate Judge in his April 7, 2009 R & R, we will affirm the District 

Court’s entry of summary judgment against Rader’s claims. We agree with the 
8

District Court that Rader entered into an electronic contract with ShareBuilder 

when he electronically signed the Agreement. By virtue of this contract, Rader 

was obligated to correctly enter his savings account number. He failed to do so, 

and is liable for his mistake and the damage resulting therefrom. Despite Rader’s 

protests to the contrary, he has not raised a genuine issue of material fact as to 

whether he electronically signed the Agreement. 

Second, Rader argues that the District Court erred by granting 

ShareBuilder’s motions to dismiss other claims in his various complaints. We 

review de novo. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 230 (3d Cir. 

2008). We agree with the District Court that Rader’s claims for libel, slander, and 

breach of privacy fail because of Delaware’s absolute litigation privilege. See 

Barker v. Huang, 610 A.2d 1341, 1345 (Del. 1992). Additionally, we agree that 

ShareBuilder did not violate 12 U.S.C. § 3401, et seq., because it is a private party, 

not a “Government authority.” See 12 U.S.C. § 3401(3) (defining “Government 

authority”). We also agree with the District Court that Rader has not stated a 

cognizable claim for attempted blackmail or extortion. The District Court 

correctly concluded that these causes of action are criminal, rather than civil, and 

that even if they could serve as the basis for a civil claim, Defendants’ settlement 

offer was insufficient to state a claim under either legal theory. We thus agree with 
9

the District Court’s decision to grant ShareBuilder’s motions to dismiss.5

Third, Rader argues that the District Court erred by setting aside the default 

of Defendant ING Groep, N.V. We review for an abuse of discretion. See Budget 

Blinds, Inc. v. White, 536 F.3d 244, 251 (3d Cir. 2008). We see no abuse of 

discretion here, where the District Court concluded that default was entered 

erroneously based on a misrepresentation made by Rader.

Fourth, Rader argues that the District Court erred by dismissing his motion 

to disqualify the District Judge under 28 U.S.C. § 455, because he held an online 

savings account with an institution that is a party to Rader’s lawsuits. We review 

for an abuse of discretion. Securacomm Consulting, Inc. v. Securacom Inc., 224 

F.3d 273, 278 (3d Cir. 2000). We see no abuse of discretion here—Rader has not 

shown that the District Judge had a “financial interest” in his bank, as that phrase is 

defined in § 455(d)(4).

6

Finally, Rader argues that the District Court erred by granting 

ShareBuilder’s motion for summary judgment in favor of its counterclaim. We see 

 5 Rader raises additional arguments concerning additional claims in his various 

complaints. We have considered all of these arguments, and find them meritless.

6 Rader also cites as a basis for recusal the District Judge’s supposed ex parte

conversation with defense counsel. The District Court explained, however, that no 

ex parte conversation took place. Rader’s “evidence” of an ex parte

conversation—a vague, shorthand phrase in a billing entry—is insufficient to show 

that the District Court abused its discretion in failing to recuse on this basis. Rader 
10

no error. We agree with the District Court that the Agreement is governed by 

Washington law, and that it assigns liability to the investor for inaccurate 

information provided by the investor. In this case, Rader entered an inaccurate 

savings account number. The Agreement therefore requires Rader to indemnify 

“ShareBuilder, its affiliates and their partners, directors, officers and employees 

and any person controlled by or controlling ShareBuilder [for] . . . all expenses 

(including legal expenses and reasonable attorney’s fees), Losses or damages that 

result from . . . [his] failure to provide accurate information on [his] ShareBuilder 

Account Application[.]” App’x 171a. We see no error in the District Court’s 

calculation of the $378,260.55 judgment in ShareBuilder’s favor. We will 

therefore affirm the District Court’s decision to enter summary judgment against 

Rader on ShareBuilder’s counterclaim, in the amount of $378,260.55.7

For the foregoing reasons, we will affirm the judgment of the District Court.

 

also seeks to disqualify ShareBuilder’s counsel on the basis of the same supposed 

ex parte conversation. We reject that argument for the same reason.

7 ShareBuilder has filed a cross-appeal arguing that if we reverse the District 

Court’s entry of summary judgment in favor of its counterclaim, we should also 

reverse the District Court’s denial of ShareBuilder’s motion for sanctions under 

Federal Rule of Civil Procedure 11. ShareBuilder concedes, however, that “[i]f the 

District Court’s award of contractual fees and costs is sustained, then the crossappeal will be moot and it need not be considered.” ShareBuilder Br. at 28. 

Because we will affirm the District Court’s award of fees and costs, this argument 

is moot.