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Simms v. Schwab

United States District Court, W.D. Washington, Tacoma

August 9, 2019

CHARLES R. SCHWAB, et al., Defendants.



         Plaintiff, who proceeds pro se and is currently incarcerated, requests to proceed in forma pauperis (“IFP”) in this civil matter alleging federal question jurisdiction. Pursuant to Amended General Order 02-19, the District Court has referred plaintiff's application to the undersigned.

         Plaintiff claims that various Charles Schwab entities and employees conspired with his wife-whom he is also suing-to open joint accounts in his and his wife's names, which allowed her to drain the accounts of funds that plaintiff alleges were his separate property. He alleges violations of a myriad of federal and state laws by eleven identified defendants and one hundred unknown defendants.

         Because plaintiff relies on federal criminal statutes that do not provide private causes of action and because he fails to state cognizable claims of securities fraud, “federal common law fraud, ” and violation of the Racketeering Influenced and Corrupt Organizations Act (“RICO”), plaintiff's proposed complaint does not sufficiently allege any federal claim upon which relief could be granted. Nor will this Court exercise supplemental jurisdiction over his state law claims absent a cognizable claim based on federal law. Therefore, the undersigned dismisses plaintiff's proposed complaint from his IFP application without prejudice. If plaintiff wishes to proceed with this matter, he must file a proposed amended complaint that adequately states a claim on or before September 6, 2019. Failure to comply with this Court's order will result in the undersigned recommending dismissal of this matter.


         Plaintiff, who is incarcerated at the Clallum Bay Corrections Center, initiated this matter by filing an IFP motion in July 2019. See Dkt. 1. His application includes a proposed complaint, which brings a variety of claims against Tracy Simms (his wife), five Charles Schwab corporate entities, two corporate officers (Charles Schwab and Walter Bettinger II), a Charles Schwab “Client Advocacy Team, ” Michael Campion (allegedly the Senior Manager of the Compliance Department of Charles Schwab Enterprises), “Daniel” Doe (a Charles Schwab Enterprises employee), and 100 unknown employees of Charles Schwab Enterprises. See Dkt. 1-1, at 2-3.

         Plaintiff alleges that defendant Simms owed him $20, 000 and that he and defendant Simms had a prenuptial agreement stating that all funds earned before their marriage were considered separate. See Dkt.1-1, at 5, 7, 50. According to plaintiff, he and defendant Simms agreed to open a “Joint ‘convenience' Account, ” which would allow defendant Simms to “withdraw funds [only] at Plaintiff's direction or for Plaintiff's benefit.” Dkt. 1-1, at 6-7. Apparently, defendant Simms had plaintiff's power of attorney at the time that she went to open the account. See Dkt. 1-1, at 9.

         However, plaintiff alleges that defendant Simms, defendant Doe, and other, unknown defendant employees instead opened joint brokerage and bank accounts in plaintiff's and his wife's names and without his knowledge or authorization to open joint accounts. See Dkt. 1-1, at 7. Plaintiff alleges that unlike a “convenience” account, the joint accounts gave defendant Simms the right to withdraw plaintiff's funds without his consent or agreement. See Dkt. 1-1, at 7-8.

         Plaintiff alleges that he was unaware of the true nature of the accounts opened and that defendant Simms not only failed to repay the existing $20, 000 debt but also withdrew $33, 245.96 of his own, separate money that he transferred to the accounts. See Dkt. 1-1, at 9. Subsequently, plaintiff alleges that the defendant companies changed his address without informing him of the change, causing him to “lose track of his funds” when he stopped receiving account statements. Dkt. 1-1, at 11. He alleges that defendants ignored his requests to change the address back, allowing defendant Simms to withdraw an additional $5, 000 without plaintiff's knowledge. See Dkt. 1-1, at 13.

         Plaintiff alleges that the Charles Schwab entity defendants and defendant Client Advocacy Team received his request to provide monthly statements and responded by warning defendant Simms that they would close his accounts-allowing defendant Simms to “drain” the accounts. See Dkt. 1-1, at 14, 16. Plaintiff alleges that he attempted to initiate a proceeding in state court for protection of a vulnerable adult-himself-but that defendants' failure to provide him with monthly transaction statements thwarted his attempt. See Dkt. 1-1, at 15, 19.

         After more requests to have the address changed back and to receive his financial statements, plaintiff then alleges that he contacted various state and federal agencies, to no avail. See Dkt. 1-1, at 25. He claims that defendants made false statements about plaintiff-namely that he had failed to disclose that he was incarcerated when he opened the accounts-to these agencies, causing most of the agencies to close his complaints without action. See Dkt. 1-1, at 31. Plaintiff alleges that he wrote to the Charles Schwab defendants demanding certain disclosures but that they did not respond. See Dkt. 1-1, at 39-40.

         Based on these allegations, plaintiff seeks thirty million dollars in damages. See Dkt. 1-1, at 53.


         I. Legal Principles

         When a plaintiff wishes to proceed IFP, “[n]otwithstanding any filing fee, or portion thereof, that may have been paid, the court shall dismiss the case at any time if the court determines that . . . the action or appeal . . . (i) is frivolous or malicious; (ii) fails to state a claim upon which relief may be granted; or (iii) seeks monetary relief against a defendant who is immune from such relief.” 28 U.S.C. § 1915(e)(2).

         A pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). This requirement demands “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The complaint must provide more than “‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action[.]'” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Moreover, the complaint “must contain ...

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