Carter v. Wells Fargo & Company

Background

Darryl Chadwich Carter, representing himself, filed a complaint, an application to proceed without prepaying filing fees, and a motion concerning service of process. He later moved to amend and attached a first amended complaint. The court granted that motion and treated the first amended complaint as the operative pleading.

Carter alleged that he submitted two online disputes to Wells Fargo Bank, N.A. concerning an $8.71 transaction with X.com and a $45 transaction with Visible. He identified the dispute reason as goods or services not being as described and later described problems with Visible’s network integrity and service quality. He alleged that Wells Fargo did not investigate, closed the disputes, and told him that the transactions were authorized or that no processing error had occurred. He also reported the matter to the Consumer Financial Protection Bureau, which closed the complaint.

Carter asserted intentional misrepresentation and intentional infliction of emotional distress against Wells Fargo Bank, N.A. and its parent company, Wells Fargo & Company. He also named 25 unknown defendants employed by Wells Fargo. He sought $3 million in compensatory damages, punitive damages, and declaratory and injunctive relief.

Fee-waiver application and screening

The court granted Carter’s application to proceed without prepaying filing fees after finding that his financial affidavit satisfied the economic eligibility requirement. The court explained that granting this application did not prevent screening the complaint under 28 U.S.C. § 1915(e). Under that statute, a court must dismiss a fee-waived case that is frivolous, malicious, fails to state a claim, or seeks money from an immune defendant. The court also explained that such a dismissal would not be a decision on the merits and that the same complaint could still be filed by paying the filing fee.

Subject-matter jurisdiction

Carter relied on diversity jurisdiction under 28 U.S.C. § 1332 rather than alleging a federal-law violation. The court stated that Wells Fargo & Company was alleged to be a Delaware corporation with its principal place of business in California. It took judicial notice that Wells Fargo Bank, N.A.’s main office was in South Dakota, making the national bank a citizen of South Dakota for diversity purposes.

Although the amended complaint listed Carter’s current address as being in New York, it did not allege that New York was his permanent home or domicile. The court therefore found that Carter’s citizenship was not clearly pleaded and that complete diversity was not adequately shown. The court also found that Carter had not provided a factual basis for claiming $3 million in damages. Because the transactions totaled $53.71 and the claimed emotional-distress damages were not facially plausible at the claimed amount, the court found that the $75,000 amount-in-controversy requirement was not met. The court concluded that Carter had not pleaded subject-matter jurisdiction.

Failure to state a claim

The court separately held that, even if jurisdiction existed, the amended complaint did not adequately state either asserted claim.

For intentional misrepresentation under California law, the court required a material misrepresentation, knowledge of falsity or a duty to disclose, intent to induce reliance, justifiable reliance, and resulting harm. Because the claim involved alleged fraud, the circumstances had to be stated with particularity. The court found that Carter had not plausibly alleged that Wells Fargo misrepresented a material fact. It reasoned that Wells Fargo’s statement that the transactions were authorized or did not involve a processing error did not misstate the basis of Carter’s disputes about the quality of third-party goods or services. The court also stated that Carter had not explained why Wells Fargo had a legal duty to investigate those third-party goods or services.

For intentional infliction of emotional distress, the court required extreme and outrageous conduct, an intent to cause or reckless disregard for the probability of causing severe emotional distress, severe or extreme emotional distress, and actual and proximate causation. The court found that Carter had not explained why Wells Fargo had a legal duty to address his problems with the quality of third-party goods and services and had not alleged the required elements of this claim.

Disposition

Chief Magistrate Judge Donna M. Ryu granted the fee-waiver application and granted Carter’s motion to amend. The court found that the amended complaint failed to demonstrate subject-matter jurisdiction and failed to state a claim under 28 U.S.C. § 1915(e). It required Carter to file a second amended complaint addressing the identified deficiencies by December 10, 2024. The court denied the motion for service of process as moot, vacated the scheduled case-management conference, and stated that it would recommend dismissal if Carter did not timely file the required amendment. The opinion did not itself dismiss the action.