United States District Court, M.D. North Carolina
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For JAMES DILLON, Plaintiff: DARREN T. KAPLAN, LEAD ATTORNEY, CHITWOOD HARLEY HARNES LLP, NEW YORK, NY; F. HILL ALLEN, IV, LEAD ATTORNEY, THARRINGTON SMITH, RALEIGH, NC; HASSAN A. ZAVAREEI, LEAD ATTORNEY, JEFFREY D. KALIEL, TYCKO & ZAVAREEI LLP, WASHINGTON, DC; JEFFREY M. OSTROW, LEAD ATTORNEY, KOPELOWITZ OSTROW P. A., FT. LAUDERDALE, FL; JOHN AUSTIN MOORE, NORMAN E. SIEGEL, STEVE SIX, LEAD ATTORNEYS, STUEVE SIEGEL HANSON LLP, KANSAS CITY, MO.
For BMO HARRIS BANK, N.A., Defendant: DEBRA BOGO-ERNST, LUCIA NALE, LEAD ATTORNEYS, MATTHEW C. SOSTRIN, MAYER BROWN, LLP, CHICAGO, IL; KEVIN S. RANLETT, LEAD ATTORNEY, MAYER BROWN, LLP, WASHINGTON, DC; MARY KATHRYN MANDEVILLE, LEAD ATTORNEY, ALEXANDER RICKS PLLC, CHARLOTTE, NC.
For FOUR OAKS BANK & TRUST, Defendant: CARL N. PATTERSON, JR., CLIFTON LENNIS BRINSON, LEAD ATTORNEYS, ISAAC AUGUSTIN LINNARTZ, SMITH ANDERSON BLOUNT DORSETT MITCHELL & JERNIGAN, L.L.P., RALEIGH, NC.
For GENERATIONS FEDERAL CREDIT UNION, Defendant: REID CALWELL ADAMS, JR., LEAD ATTORNEY, GARTH A. GERSTEN, JONATHAN REID REICH, WOMBLE CARLYLE SANDRIDGE & RICE, PLLC, WINSTON-SALEM, NC; ERIC A. PULLEN, ETAN TEPPERMAN, LESLIE S. HYMAN, PULMAN, CAPPUCCIO, PULLEN, BENSON & JONES, LLP, SAN ANTONIO, TX.
For BAY CITIES BANK, Defendant: MARK VASCO, LEAD ATTORNEY, BRYAN CAVE, LLP, CHARLOTTE, NC; ANN W. FEREBEE, MICHAEL P. CAREY, BRYAN CAVE LLP, ATLANTA, GA; ERIC RIEDER, BRYAN CAVE LLP, NEW YORK, NY.
MEMORANDUM OPINION AND ORDER
CATHERINE C. EAGLES, UNITED STATES DISTRICT JUDGE.
This matter is before the Court on motions to dismiss for failure to join an indispensable party and failure to state a claim filed by defendants BMO Harris Bank, Bay Cities Bank, and Four Oaks Bank & Trust. Defendant Generations Community Federal Credit Union has joined these motions. Also pending are BMO Harris's motion to sever and motion to transfer.
The Court will deny the motions to dismiss for failure to join an indispensable party, the motion to sever, and the motion to transfer. The Court will grant in part and deny in part the motions to dismiss for failure to state a claim. Specifically, the Court will grant the motions to dismiss Mr. Dillon's usury and money had and received claims as to all defendants and will grant the motions to dismiss Mr. Dillon's Consumer Finance Act (" CFA" ) claim as to defendants BMO Harris, Generations, and Four Oaks. The motion to dismiss the CFA claim will be denied as to defendant Bay Cities. The Court will deny the motions to dismiss as to Mr. Dillon's
Racketeer Influenced and Corrupt Organizations Act (" RICO" ), Unfair and Deceptive
Trade Practices Act (" UDTPA" ), and unjust enrichment claims as to all Defendants.
According to the complaint, plaintiff James Dillon, a North Carolina resident, obtained five loans over the internet from lenders based offshore or on Indian reservations. The loans carried interest rates ranging from 139% to over 700% and, in some cases, thousands of dollars in finance charges. According to Mr. Dillon, these loans violate North Carolina's usury statute and various other state laws.
Mr. Dillon has not, however, sued these internet lenders. Instead, he has brought suit against the banks which served as Originating Depository Financial Institutions (" ODFIs" ) in connection with transactions related to the loans. To electronically deposit the loan proceeds and then to debit Mr. Dillon's bank account for repayments, the lenders needed access to the Automated Clearing House (" ACH" ) Network. The defendant banks here, in their role as ODFIs, provided that access by " originating" debits and credits on the ACH Network for the lenders. NACHA, a non-profit association, oversees the ACH Network and has mandatory rules for ODFIs using the ACH Network. Under NACHA rules, ODFIs must enter into an origination agreement with the party seeking to access the ACH Network or use a Third-Party Sender that already has such an agreement. ODFIs are responsible for all entries they originate and are required to ensure that entries comply with applicable state and federal laws. In this way, ODFIs are the " gatekeepers" of the ACH Network.
Mr. Dillon alleges that the defendant ODFIs knew or should have known that the lenders were engaged in making payday loans in states where the loans were unlawful and that they violated RICO by knowingly facilitating the collection of usurious loans through the ACH Network . Mr. Dillon also asserts various claims pursuant to North Carolina law.
I. Motion to Dismiss for Failure to Join an Indispensable Party
The defendants contend that Mr. Dillon's case must be dismissed because he failed to join his lenders as party-defendants. It is the defendants' burden to demonstrate that the lenders are indispensable parties under Rule 19. The
defendants must show: first, that the lenders are " required" parties as defined by Rule 19(a); second, that the lenders cannot be joined; and third, that the action should not, " in equity and good conscience," proceed without the lenders, considering the factors set forth in Rule 19(b). This burden is a high one, as " [d]ismissal for non-joinder is a remedy employed extremely reluctantly, 'only when the defect cannot be cured and serious prejudice or inefficiency will result.'" 
Under Rule 19(a), a person is a " required party" if one of three factual situations is present. They are:
(1) " in [the] person's absence, the court cannot accord complete relief among existing parties" ; or
(2) " that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may . . . as a practical matter impair or impede the person's ability to protect the interest" ; or
(3) " that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may . . . leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise ...