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Snelling v. HSBC Card Services, Inc.

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

June 9, 2015

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


CATHERINE D. PERRY, District Judge.

This case comes before me on a second motion to dismiss filed by HSBC Card Services, Inc. After ruling on the first motion, I granted plaintiff Lonnie Snelling the opportunity to amend his fraud and Missouri Merchandising Practices Act (MMPA) claims. In addition to amending those claims, Snelling added a count for unjust enrichment, which will be dismissed under Rule 41(b) as requested by HSBC. Snelling's fraud claims will also be dismissed for failure to state a claim. Snelling's breach of contract and MMPA counts do state plausible claims and are timely, however, so HSBC's motion to dismiss will be denied as to those counts.

I. Background

Pro se plaintiff Lonnie Snelling sued HSBC Card Services, Inc. (HSBC), its parent company HSBC Holdings, plc, and the Eastman Kodak Company (Kodak) in state court, asserting a number of claims related to his purchase of a Kodak inkjet printer with a Visa credit card serviced by HSBC. HSBC removed, and all claims against Kodak were stayed pending resolution of bankruptcy proceedings.

The First Amended Petition, [1] filed January 17, 2014, alleged that Visa television advertisements aired "in the 2007s" stated that buyers making purchases with Visa credit cards would be protected from fraud and given an extended warranty. Between 1990 and 2007, Snelling disputed several charges with sellers; these were resolved with the assistance of the credit card company. HSBC acquired Snelling's credit card contract sometime in 2007. Under that contractual relationship, Snelling would use the Visa card to purchase goods from vendors and make payments to HSBC at the end of a billing period.

HSBC began enforcing a policy under which purchases made more than 100 miles from the cardholder's home would not receive fraud protections or assistance with vendor disputes. However, Snelling alleges the 100-mile limit was neither disclosed at the time HSBC notified Snelling that it was taking over his account nor during the airing of television commercials between 2007 and 2008. HSBC also failed to disclose the new policy when it assisted Snelling with several charge disputes between 2007 and 2008. In December 2008, Snelling purchased a defective printer from Kodak. After exchanging several letters, HSBC declined to assist Snelling with his dispute. Snelling alleged this breached the duties HSBC owed to Snelling as well as its contractual obligations.

The precise claims asserted in the First Amended Petition were difficult to ascertain. For example, Count I presented claims for "fraudulent inducement to contract/concealment of a material fact/breach/credit card user law/punitive damages." Allegations supporting those claims were strewn throughout the petition.

HSBC moved to dismiss the fraud, Missouri Merchandising Practices Act (MMPA), negligence, and negligent infliction of emotional distress claims presented in the First Amended Petition. This court dismissed with prejudice Snelling's claims for negligence and negligent infliction of emotional distress, because he failed to allege a duty independent of his credit card contract. See Order, Feb. 3, 2015, ECF No. 38. It also dismissed without prejudice the fraud and MMPA claims for failure to specify when and who aired the advertisements or any connection with HSBC. Snelling was afforded the opportunity to amend his pleadings "for the limited purpose of attempting to bring his fraud and Missouri Merchandising Practices Act claims into conformity with the heightened pleading requirements of Rule 9(b), if possible." See Order, Feb. 3, 2015, ECF No. 38 at p. 27.

On February 24, 2015, Snelling filed his Second Amended Complaint. ECF No. 43. This pleading amended his fraud and MMPA claims. Snelling also added a claim for unjust enrichment and set forth his breach of contract claim in a separate count.

Snelling's Second Amended Complaint sets forth a broader picture of what he alleged transpired. He again alleges that from the 1990s through 2006, television commercials advertised that purchases made with a Visa card would be protected from fraud and granted a one-year extended warranty. Snelling obtained a Visa card through "Direct Merchants Bank, " which he used from 2003 through 2006. During that time, Direct Merchants assisted Snelling with several vendor charge disputes.

In 2007, HSBC acquired Snelling's Visa contract. The notice that future payments on Snelling's Visa card should be directed to HSBC failed to mention that HSBC would begin enforcing a mileage limit on disputed charges. Purchases made more than 100 miles from a cardholder's residence would no longer receive fraud or charge dispute protections. Visa television commercials aired on behalf of HSBC on KMOV Channel 4 in St. Louis County, Missouri, from 2006 through December 2008. These commercials, which featured voice-over actors Keeley Hawnes, Morgan Freeman, and Samuel L. Jackson, also did not disclose the 100mile policy. In October 2008, Snelling had a dispute with a vendor over a defective cooker purchased with his Visa card; HSBC intervened without mentioning the 100-mile radius limitation. Neither was the 100-mile limitation ever mentioned during Snelling's interactions with Direct Merchants from 2003 through 2006.

On December 8, 2008, Snelling saw a television advertisement for a Kodak printer and placed an order by telephone. The printer was subject to a thirty-day return policy. After discovering that the printer would not work with his computer, Snelling requested a return label on December 23, 2008. He also telephoned HSBC to report that he was disputing the charge. Between December 26, 2008 and January 23, 2009, Snelling and HSBC exchanged letters regarding the Kodak printer dispute. The January 23 letter from HSBC requested additional information related to Snelling's return of the printer to Kodak. The letter stated that HSBC would consider the matter resolved unless it received a written response within ten days. On February 23, 2009, Snelling wrote a letter to HSBC memorializing conversations he had with "Gii Gii" and "Christina" from the HSBC dispute department. This letter references a conversation between Snelling and Christina, who, on February 3, 2009, informed Snelling that the charge "would be taken care of."

Snelling appears to assert four classes of claims against HSBC. Count I alleges fraudulent inducement and fraudulent concealment claims based on the television advertisements, 100-mile policy, and Christina's statement. Count II asserts a breach of contract claim. Count III presents a claim under the Missouri Merchandising Practices Act. Count IV alleges for the first time a claim for unjust enrichment.

HSBC moves to dismiss the entire complaint under Rule 41(b), arguing that Snelling disregarded this court's Order of February 3 by submitting Counts II and IV. It also moves to dismiss each count against it for failure to state a claim and for failure to file within the statutory limitations period.

II. Discussion

A. Request for Dismissal under Rule 41(b)

HSBC first moves for dismissal of this action under Rule 41(b) of the Federal Rules of Civil Procedure. It contends Snelling added claims for unjust enrichment and breach of contract in direct defiance of this court's Order of February 3, 2015. See ECF No. 38. Snelling responds that the breach of contract claim was set forth in Count I of his First Amended Petition and so is not new. He also argues that his earlier pleadings should be construed to have presented an unjust enrichment claim.

Rule 41(b) allows a defendant to seek dismissal of all or part of the claims against it in the event that a plaintiff fails to comply with an order of court. Fed.R.Civ.P. 41(b). The Rule promotes the expeditious handling of cases and protects opposing parties from prejudice arising from vexatious and dilatory conduct. Vasquez v. Hill, No. 4:11CV01561AGF, 2012 WL 4936085, at *2 (E.D. Mo. Oct. 17, 2012) (citing Hutchins v. A.G. Edwards & Sons, Inc., 116 F.3d 1256, 1260 (8th Cir. 1997)). Dismissal with prejudice under Rule 41(b) "is an extreme sanction' that should only be available for willful disobedience of a court order or where a litigant exhibits a pattern of intentional delay.'" Siems v. City of Minneapolis, 560 F.3d 824, 826 (8th Cir. 2009) (quoting Hunt v. City of Minneapolis, 203 F.3d 524, 527 (8th Cir. 2000)). A defendant seeking dismissal under Rule 41(b) need not actually show bad faith, but must show that the plaintiff acted voluntarily and purposefully. See Hunt, 203 F.3d at 527.

Several considerations must be addressed when gauging the propriety of dismissal under Rule 41(b). First, the court weighs the need to advance its docket against the irrevocable extinguishment of a litigant's claim. See Doe v. Cassel, 403 F.3d 986, 990 (8th Cir. 2005). It then considers the proportionality of the sanction in light of the litigant's transgressions. Smith v. Gold Dust Casino, 526 F.3d 402, 405 (8th Cir. 2008) (citing Rodgers v. Curators of Univ. of Mo., 135 F.3d 1216, 1219 (8th Cir. 1998). Finally, it gauges whether a less severe sanction could remedy the prejudice to the opposing party. See id. at 406.

This court's Order of February 3 afforded Snelling the opportunity to amend his First Amended Petition a second time "for the limited purpose of attempting to bring his fraud and Missouri Merchandising Practices Act claims into conformity with the heightened pleading requirements of Rule 9(b), if possible."[2] That Order did not grant Snelling leave to assert additional claims. Snelling's addition of an unjust enrichment claim constitutes the voluntary and purposeful defiance of this court's Order. ...

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