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Snelling v. HSBC Card Services, Inc.

United States District Court, E.D. Missouri, Eastern Division

February 3, 2015

HSBC CARD SERVICES, INC., et al., Defendants.


CATHERINE D. PERRY, District Judge.

Pro se plaintiff Lonnie Snelling sued HSBC Card Services, Inc. ("HSBC"), its parent company HSBC Holdings plc ("HSBC Holdings"), and the Eastman Kodak Company ("Kodak"), asserting a number of claims related to his purchase of an inkjet printer with a Visa credit card. The case was removed to federal court, and it now comes before me on four motions. First, Snelling asks that I remand the case for lack of diversity jurisdiction. The parties are diverse and Snelling has alleged damages in excess of the $75, 000 jurisdictional threshold when considering his demand for punitive damages. The motion will be denied. Second, HSBC moves that I dismiss the case. I will grant the motion in part with prejudice as to the counts for negligence and negligent infliction of emotional distress, because Snelling has failed to establish any duty with respect to those causes of action. Snelling also fails to plead his counts for fraud and for violation of the Missouri Merchandising Practices Act with the level of particularity required by Rule 9(b) of the Federal Rules of Civil Procedure. However, the interests of justice require that he be allowed the opportunity to amend his pleadings, and so those claims will be dismissed without prejudice. The motion will otherwise be denied. Third, I will grant HSBC's motion to strike, because Snelling failed to obtain pre-approval by the court before filing surreplies. Fourth, I will deny Snelling's motion for a finding that HSBC Holdings made an entry of general appearance. That entity only consented to removal and has made no further filings such that it should be deemed to have entered a general appearance in this case. Finally, Kodak is in bankruptcy and so all claims against that entity will be stayed until notice is given that the bankruptcy proceedings have concluded.


Lonnie Snelling sued HSBC, HSBC Holdings, and Kodak in state court. Snelling alleges that "the HSBC defendants" purchased his Visa credit card contract sometime before 2007. Snelling states that "during television commercials in the 2007s, " it was advertised that purchases made with a Visa card would receive an extended warranty of one year beyond that issued by the seller/manufacturer of the purchased goods. It was also advertised that a buyer using a Visa credit card would be protected from fraud. Snelling alleges that the advertisements did not mention that the warranty and fraud protections would only apply if the purchases occurred within 100 miles of the purchaser's home.

Between 2007 and 2008, Snelling made several purchases using his Visa card and disputed the charges. On or about December 8, 2008, Snelling bought a Kodak printer by telephone with the Visa card and was unable to get the printer to operate. On January 2, 2009, he placed the printer for return delivery to Kodak. Seventeen days later, Snelling requested a form with which to dispute the charges on his Visa card related to the printer purchase, and submitted it to HSBC. HSBC declined to assist with the dispute, invoking the restriction against purchases obtained more than 100 miles from the purchaser's home. Snelling ultimately paid $319.34, including a $55.04 finance charge.

Snelling filed the action in state court, asserting three counts against the HSBC defendants jointly and severally: Count I asserts claims for fraudulent inducement to contract and fraudulent concealment of a material fact; Count II asserts a claim for negligent concealment of material facts; and Count III asserts a claim for "unlawful merchandising practices."[2] In each of these counts, Snelling seeks nominal, actual, consequential, and compensatory damages in excess of $5761, or $17, 283 in total. He also requests punitive damages for each count. Snelling also asserts one count against the HSBC defendants and Kodak jointly and severally, Count VIII, for negligent infliction of emotional distress. Count VIII requests damages in excess of $12, 761, in addition to punitive damages.

Because Kodak had not yet been served, HSBC removed the case to federal court without obtaining its consent.[3] The Notice of Removal in this case asserts that the Court has removal jurisdiction over the action pursuant to 28 U.S.C. § 1441 and 28 U.S.C. § 1332 because the lawsuit is between citizens of different States and the matter in controversy exceeds the sum of $75, 000. The Notice alleges the citizenship of the parties: Snelling is a citizen of the State of Missouri; HSBC Holdings is a United Kingdom corporation; HSBC is organized under the laws of Delaware and maintains its principal place of business in Illinois; and Kodak is organized under the laws of New Jersey and maintains its principal place of business in New York. The Notice further states that HSBC is registered with the Missouri Secretary of State's office to conduct business in Missouri.

Snelling has filed a motion to remand this case to state court on two grounds. First, Snelling argues that HSBC is a Missouri corporation, because it is registered in that state, and therefore the parties are not diverse. Second, Snelling argues that the amount in controversy is less than the jurisdictional threshold. HSBC contends that Snelling's motion to remand should be denied because it is noncompliant with a local rule requiring that each motion be accompanied by a memorandum in support thereof. It also argues that the requirements for diversity jurisdiction have been met.

HSBC has also filed a motion to dismiss. The motion argues that Snelling's tort claims are preempted by federal law; that his allegations do not provide him with any rights under 15 U.S.C. § 1666i; that his fraud claim is barred by the statute of limitations; that he fails to state a claim for negligence and emotional distress, and that his fraud and Missouri Merchandising Practices Act claims do not satisfy the heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure. HSBC asks, in the alternative to dismissing for failure to state a claim, that Snelling be required to plead his claims more definitely.

Two additional motions were filed. First, Snelling asks that this court find that the unserved defendant HSBC Holdings has entered a general appearance in this case. Second, HSBC moves to strike a surreply and a supplemental memorandum in support that Snelling filed in response to two of the above motions. I will reach these latter motions after addressing the motions to remand and dismiss.


A. Motion to Remand for Lack of Subject-Matter Jurisdiction

As a preliminary matter, I disagree with HSBC's contention that Snelling's pro se motion to remand should be denied because it lacks a memorandum. Unless otherwise ordered by the court, Local Rule 7-4.01 requires that a movant must file a memorandum in support of the motion "including any relevant argument and citations to any authorities on which the party relies." Although Snelling's motion does not include a separate memorandum, the motion does provide some argument and cites to the statutes governing diversity jurisdiction and removal, as well as some case law. See Plaintiff's Mot. Remand, ECF. Doc. 12. Snelling has provided the court with sufficient bases for proceeding to the merits of his motion, and I will treat the filing as if it complied with the rule.[4]

1. Legal Standards for Diversity Jurisdiction

This federal court is a court of limited jurisdiction. The diversity statute, 28 U.S.C. § 1332(a), grants jurisdiction over cases where the matter in controversy is greater than $75, 000 and the dispute is between "(1) citizens of different States; (2) citizens of a State and citizens or subjects of a foreign state; (3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and (4) a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States." Wu v. Ryder Truck Rental, Inc., 561 F.Supp.2d 1061, 1062 (E.D. Mo. 2008) (quoting 28 U.S.C. § 1332(a)). The same statute also sets forth the citizenship qualifications for a corporation, which "shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business." 28 U.S.C. § 1332(c)(1). "It is well established that diversity jurisdiction attaches only when all parties on one side of the litigation are of different citizenship from all of those on the other." Stouffer Corp. v. Breckenridge, 859 F.2d 75, 79 (8th Cir. 1998).

The party seeking the federal forum has the burden of pleading diversity of citizenship of the parties, Walker v. Norwest Corp., 108 F.3d 158, 161 (8th Cir. 1997), and also bears the burden of establishing diversity jurisdiction by a preponderance of the evidence. Sheehan v. Gustafson, 967 F.2d 1214, 1215 (8th Cir. 1992). "[A]ll doubts about federal jurisdiction [are resolved] in favor of remand." Transit Cas. Co v. Certain Underwriters at Lloyd's of London, 119 F.3d 619, 625 (8th Cir. 1997).

2. Diversity Analysis

Though the Notice of Removal states that HSBC is a Delaware corporation with a principal place of business in Illinois, Snelling contends that the entity shares Missouri citizenship with him and so the parties are not diverse. Snelling does not challenge the location of HSBC's principal place of business, but instead argues that HSBC is a Missouri corporation because it is registered to do business in that state.

When diversity jurisdiction is challenged, it ordinarily would be the defendant's burden - as it is the entity desirous of this court's jurisdiction - to give evidence of the parties' citizenship. See Sheehan v. Gustafson, 967 F.2d 1214, 1215 (8th Cir. 1992). However, plaintiff's own exhibit shows that HSBC is a Delaware entity. See Pl.'s Mot. Remand Reply Br., Ex. 1, ECF. No. 25.

So far as Snelling argues that registering with the Missouri Secretary of State to do business is the same as being incorporated in Missouri, that argument fails. Merely being registered to conduct business in a state will not confer jurisdiction under 28 U.S.C. § 1332. Cf. Kingsland Invs., L.P. v. Schaefer Grp., Inc., No. 4:09CV1804CDP, 2010 WL 147811, at *2 (E.D. Mo. Jan. 11, 2010) (evaluating business registration as one component of the "total activity test" to determine principal place of business); Randazzo v. Eagle-Picher Indus., Inc., 117 F.R.D. 557, 558 (E.D. Pa. 1987) ("The allegation that defendant has a "registered office" in Pennsylvania is not equivalent to an allegation that defendant's principal place of business is in Pennsylvania."); Carter v. Clear Fir Sales Co., 284 F.Supp. 386, 387 (D. Or. 1967) ("The fact that a corporation may be incorporated in more than one state, under the provisions of § 1332(c), does not mean that a corporation becomes a citizen of every state which requires it to secure a license or to domesticate itself, in order to do business in that state.").

Snelling is a citizen of Missouri; Kodak is a citizen of New Jersey and New York; and the HSBC defendants are citizens of the United Kingdom, Delaware, and Illinois. The parties are diverse.

3. Amount-in-Controversy Analysis

Where diversity forms the basis for removal, the removing party must also prove by a preponderance of the evidence that the amount in controversy exceeds $75, 000. In re Minn. Mut. Life Ins. Co. Sales Practices. Litig., 346 F.3d 830, 834 (8th Cir. 2003). If "it appears to a legal certainty" that the value of the plaintiff's claim is less than that amount, the complaint will be dismissed. Trimble v. Asarco, Inc., 232 F.3d 946, 959 (8th Cir. 2000). The precise issue for the court to determine "is not whether the damages are greater than the requisite amount, but whether a fact finder might legally conclude that they are: In other words, an amount that a plaintiff claims is not in controversy' if no fact finder could legally award it." Kopp v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002). Ordinarily, the amount claimed by the plaintiff controls in determining whether diversity jurisdiction exists. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938); see also Zunamon v. Brown, 418 F.2d 883, 885 (8th Cir. 1969). However, the plaintiff's allegations of the jurisdictional amount are not necessarily dispositive of the issue. See Zunamon, 418 F.2d at 885.

"Punitive damages, of course, may be used to establish diversity jurisdiction." Crawford v. F. Hoffman-La Roche Ltd., 267 F.3d 760, 766 (8th Cir. 2001). Fraud is an intentional tort, Werremeyer v. K.C. Auto Salvage Co., Inc., 134 S.W.3d 633, 636 (Mo. banc 2004), and as such, Missouri allows for an award of punitive damages should the complaining party make a submissible case. See Perkins v. Dean Machinery Co., 132 S.W.3d 295, 300 (Mo.Ct.App. 2004). To obtain punitive damages, the plaintiff must show that the defendant had a culpable mental state, "either by a wanton, willful or outrageous act or reckless disregard (from which evil motive is inferred) for an act's consequences." Id. (quoting Fabricor, Inc. v. E.I. DuPont de Nemours & Co., 24 S.W.3d 82, 96-97 (Mo.Ct.App. 2000)).

Snelling's count for fraudulent inducement and concealment alleges that the HSBC defendants knew the warranties and anti-fraud representations were deceptive and that they intended for consumers to rely upon them. Although the specific damages in this case do not amount to more than $75, 000, at this point in the proceedings, it is plausible that a jury might award punitive damages.

Given the extent of the alleged damages, the claim for punitive damages, and the fact that there is no indication plaintiff intends to seek or limit his recovery to $75, 000 or less, the court cannot say that it appears to a legal certainty this action fails to meet ...

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