Greene II v. Discover Bank

Background

Todd Clay Greene II, who represented himself, opened a Discover credit-card account in September 2022. The cardmember agreement required payment in U.S. dollars and stated that checks had to be drawn on funds deposited in the United States. Greene successfully made payments from his Wells Fargo bank account in March and May 2023.

In June 2023, Greene tried to pay the remaining balance by mailing Discover a copy of his account summary on which he wrote that payment should be made on demand. He did not include cash, information for a bank account or credit card, or a check. He also sent a cover letter instructing Discover to apply the principal balance to his account. Discover did not accept the mailing as payment or respond to the letter. Greene sent similar mailings from June through August 2023. He alleged that Discover’s failure to accept them caused financial harm, including late fees and a negative effect on his credit score.

Discover moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not state a claim for which relief can be granted. The court considered the complaint and materials incorporated into it, treated the complaint’s factual allegations as true for purposes of the motion, and drew reasonable inferences in Greene’s favor.

Claims and Analysis

Breach of the cardholder agreement. The agreement selected Delaware law. The court explained that a breach-of-contract claim requires a contract, a breach of a contractual obligation, and resulting damages. It held that Greene had not adequately alleged a breach because the agreement required payment in U.S. dollars and did not permit payment through an account summary on which Greene wrote that payment should be made on demand. Discover therefore did not breach the agreement by refusing to accept that document as payment.

Federal Deposit Insurance Act. Greene sought civil penalties under Section 8(i)(2) of the Federal Deposit Insurance Act. He based that claim on Discover’s alleged violation of 15 U.S.C. § 1615, breach of the cardholder agreement, and breach of fiduciary duties. The court concluded that Greene had not adequately alleged a § 1615 violation or a breach of the cardholder agreement. It also held that the agreement was not between Discover and a federal banking agency and that Discover had no duty to accept Greene’s mailing as payment. The court did not decide Discover’s argument that the Federal Deposit Insurance Act provides no private right of action to Greene. In a footnote, the court also stated that Greene appeared to have manufactured a quotation from a cited decision and admonished him.

Federal Reserve Act. Greene sought civil penalties under Section 29 of the Federal Reserve Act. The court held that individuals do not have a private right of action under that provision, so this claim failed.

Securities fraud. Greene alleged a violation of Securities and Exchange Commission Rule 10b-5, which prohibits fraud or materially misleading statements or omissions in connection with the purchase or sale of a security. The court held that Greene had not alleged any purchase or sale of a security.

15 U.S.C. § 1615. This statute requires a creditor to promptly refund any unearned portion of an interest charge when a consumer prepays in full the financed amount in a consumer-credit transaction. The court found Greene’s allegations unclear concerning Discover’s supposed failure to acknowledge his rights and interests, and stated that § 1615 did not require Discover to provide that acknowledgment. Greene also did not allege that Discover charged him interest in connection with the March and May payments. To the extent he relied on the later account-summary mailings, the court held that those mailings were not payments under the cardmember agreement.

Leave to Amend and Disposition

The court declined to allow Greene to amend his complaint. It found amendment futile because the central allegation—that Discover failed to accept account summaries marked as payment—could not be cured by adding more allegations. The court also stated that Greene appeared to be acting in bad faith because he knew how to make payments through a method that had previously worked.

Judge Susan Van Keulen granted Discover’s motion and dismissed all of Greene’s claims without leave to amend. The opinion does not state that the court dismissed the claims with or without prejudice; its stated disposition was dismissal without leave to amend.