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Kelly v. Alley Bank, Inc.

United States District Court, Ninth Circuit

October 15, 2013

ALLEY BANK, INC., Defendant.


KEITH STRONG, Magistrate Judge.


Mr. Kelly is suing Defendant Valley Bank for failing to honor checks written on a business checking account and credit line. He seeks leave to proceed in forma pauperis. As criminal charges have been filed against Mr. Kelly regarding the checks at issue, the Court must abstain from hearing Mr. Kelly's claims. Mr. Kelly's IFP motion is granted, but his case should be dismissed without prejudice.


Mr. Kelly filed this action in federal court, in the Helena Division of the District of Montana. (Doc. 2). Venue is proper as the alleged wrongs were committed in Lewis and Clark County, Montana. Local Rule 3.2(b)(1). The Court has personal jurisdiction over the parties, all of whom are found in Montana. Fed.R.Civ.P. 4(k)(1)(A); Mont. R. Civ. P. 4(b). Mr. Kelly attempts to allege a violation under 12 U.S.C. § 3420, invoking subject matter jurisdiction. 28 U.S.C. § 1331. The case was assigned to Hon. Donald W. Molloy, United States District Court Judge, and referred to the undersigned. Local Rule 72.2(a)(1).


Mr. Kelly submitted a declaration sufficient to make the showing required by 28 U.S.C. §1915(a). Accordingly, the request to proceed in forma pauperis will be granted. 28 U.S.C. § 1915(a).


As Mr. Kelly is proceeding in forma pauperis, his Complaint must be reviewed to determine if the allegations are frivolous or malicious, fail to state a claim upon which relief may be granted, or seek monetary relief from a defendant who is immune from such relief. If so, the Complaint must be dismissed. 28 U.S.C. § 1915(e)(2). This is the review.


A. Stating a claim

A complaint must allege sufficient factual matter to "state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Plausibility is less than probability, but requires "more than a sheer possibility that a defendant has acted unlawfully." Id. Pleadings that are no more than conclusions are not entitled to the presumption of truth and may be disregarded. Id. at 679. A plaintiff must plead the essential elements of a claim to avoid dismissal for failure to state a claim. Ivey v. Board of Regents, 673 F.2d 266, 268 (9th Cir. 1982).

B. Leave to amend

The court liberally construes pro se pleadings. Eldridge v. Block, 832 F.2d 1132, 1137 (9th Cir. 1987). "Unless it is absolutely clear that no amendment can cure the defect... a pro se litigant is entitled to notice of the complaint's deficiencies and an opportunity to amend prior to dismissal of the action." Lucas v. Dep't of Corr., 66 F.3d 245, 248 (9th Cir. 1995).

Leave to amend a complaint should be given freely "when justice so requires." Fed.R.Civ.P. 15. However, a district court should dismiss a complaint without granting leave to amend if amendments would be futile. Klamath Lake Pharmaceutical Ass'n v. Klamath Medical Services Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983). "Leave to amend need not be given if a complaint, as amended, would be subject to dismissal." Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 538 (9th Cir. 1989).

C. The Younger Abstention Doctrine

Challenges to ongoing criminal proceedings are barred by the doctrine set forth in Younger v. Harris, 401 U.S. 37 (1971). There is a strong policy against federal intervention in state judicial processes in the absence of great and immediate irreparable injury to the federal plaintiff. Younger, 401 U.S. at 45; see also Gooding v. Hooper, 394 F.2d 146 (9th Cir. 1968), cert. denied 391 U.S. 917 (1968). Younger directs federal courts to abstain from granting injunctive or declaratory relief that would interfere with pending state judicial proceedings. Martinez v. Newport Beach City, 125 F.3d 777, 781 (9th Cir. 1997) overruled on other grounds Green v. City of Tucson, 255 F.3d 1086 (9th Cir. 2001) (citing Younger, 401 U.S. at 40-41). Abstention also applies to federal civil actions requesting money damages where the ongoing state action is a criminal prosecution. Martinez, 125 F.3d at 781 ( citing Mann v. Jett, 781 F.2d 1448 (9th Cir. 1986)). Federal courts may raise the issue of Younger abstention sua sponte. Martinez, 125 F.3d at 781 n.3 ( citing Bellotti v. Baird, 428 U.S. 132, 143-44 n.10 (1976)); see also San Remo Hotel v. City and County of San Francisco, 145 F.3d 1095, 1103 n. 5 (9th Cir. 1998)(noting that the district and appellate courts can raise the issue sua sponte).

A federal court must abstain under Younger if four requirements are met: (1) a state initiated proceeding is ongoing; (2) the proceeding implicates important state interests; (3) the federal plaintiff is not barred from litigating federal constitutional issues in the state proceeding; and (4) the federal court action would enjoin the proceeding or have the practical effect of doing so, i.e., would interfere with the state proceeding in a way that Younger disapproves. Gilbertson v. Albright, 381 F.3d 965, 978 (9th Cir. 2004) (en banc); AmerisourceBergen Corp. v. Roden ("ABC"), 495 F.3d 1143, 1149 (9th Cir. 2007).

All the elements of Younger abstention are established in this case. First, as alleged in the Complaint, criminal charges have been initiated against Mr. Kelly, therefore there are ongoing state criminal proceedings. Secondly, these proceedings revolve around important state interests to enforce the local and state laws. See Younger, 401 U.S. at 43-44. The State of Montana, through its state and local prosecuting offices, has a significant state interest in prosecuting conduct that constitutes a criminal offense under the laws of Montana. This Court may not interfere with those interests when the prosecutorial process is ongoing. Third, Mr. Kelly has an adequate opportunity in the state district court to raise federal questions and concerns that affect his federal rights. Mr. Kelly has opportunities under Montana law, and the laws and rules of criminal procedure set forth in Title 46, Mont. Code Ann., to file motions, or to request certain forms of relief from the state court to address the alleged violations of his federal rights relative to his prosecution. Fourth, this action would unduly interfere with the state criminal proceeding in a way Younger disapproves. Any decisions regarding whether or not Valley Bank properly or improperly refused to honor Mr. Kelly's checks would interfere with the state criminal proceeding. Accordingly, all four prongs of the Younger test have been satisfied and the Court must abstain from adjudicating Mr. Kelly's claims under Younger, 401 U.S. 37. Where injunctive and declaratory relief is sought, a dismissal of those claims is appropriate. Gilbertson v. Albright, 381 F.3d 965, 981 (9th Cir. 2004).


The Court must abstain from exercising jurisdiction over this action. As such, the Complaint should be dismissed without prejudice.

Certification Regarding Appeal

The Federal Rules of Appellate Procedure provide as follows:

[A] party who was permitted to proceed in forma pauperis in the district-court action, or who was determined to be financially unable to obtain an adequate defense in a criminal case, may proceed on appeal in forma pauperis without further authorization, unless:
(A) the district court-before or after the notice of appeal is filed-certifies that the appeal is not taken in good faith or finds that the party is not otherwise entitled to proceed in forma pauperis and states in writing its reasons for the certification or finding;

Fed. R.App. P. 24(a)(3)(A).

Analogously, 28 U.S.C. § 1915(a)(3) provides "[a]n appeal may not be taken in forma pauperis if the trial court certifies in writing that it is not taken in good faith." The good faith standard is an objective one. See Coppedge v. United States, 369 U.S. 438, 445 (1962). A plaintiff satisfies the "good faith" requirement if he or she seeks review of any issue that is "not frivolous." Gardner v. Pogue, 558 F.2d 548, 551 (9th Cir. 1977) ( quoting Coppedge, 369 U.S. at 445). For purposes of section 1915, an appeal is frivolous if it lacks any arguable basis in law or fact. Neitzke v. Williams, 490 U.S. 319, 325, 327 (1989); Franklin v. Murphy, 745 F.2d 1221, 1225 (9th Cir. 1984).

The finding that the Court must abstain from hearing Mr. Kelly's claims regarding his ongoing criminal prosecution is so clear no reasonable person could suppose an appeal would have merit. Therefore, the Court should certify that any appeal of this matter would not be taken in good faith.

Address Change

At all times during the pendency of this action, Mr. Kelly SHALL IMMEDIATELY ADVISE the Court of any change of address. Failure to file a NOTICE OF CHANGE OF ADDRESS may result in the dismissal of the action for failure to prosecute pursuant to Fed.R.Civ.P. 41(b). It is ORDERED:

1. Mr. Kelly's Motion to Proceed in Forma Pauperis (Doc. 1) is granted.

2. The Clerk shall edit the text of the docket entry for the Complaint (Doc. 2) to remove the word "LODGED" and the Complaint is deemed filed on October 9, 2013.


1. This matter should be dismissed without prejudice pursuant to the Younger doctrine.

2. The Clerk of Court should be directed to have the docket reflect that the Court certifies pursuant to Rule 24(a)(3)(A) of the Federal Rules of Appellate Procedure that any appeal of this decision would not be taken in good faith. No reasonable person could suppose an appeal would have merit.


Pursuant to 28 U.S.C. § 636(b)(1), Mr. Kelly may serve and file written objections to these Findings and Recommendations within fourteen (14) days of the date this Order and Findings and Recommendations was served which is the date entered as indicated on the Notice of Electronic Filing. Any such filing should be captioned "Objections to Magistrate Judge's Findings and Recommendations."

If Mr. Kelly files objections, he must itemize each factual finding to which objection is made and identify the evidence in the record relied on to contradict that finding. In addition, he must itemize each recommendation to which objection is made and set forth the authority relied on to contradict that recommendation.

Failure to assert a relevant fact or argument in objections to these Findings and Recommendations may preclude Mr. Kelly from relying on that fact or argument at a later stage of the proceeding. A district judge will make a de novo determination of those portions of the Findings and Recommendations to which objection is made. The district judge may accept, reject, or modify, in whole or in part, the Findings and Recommendations. Failure to timely file written objections may bar a de novo determination by the district judge and/or waive the right to appeal. This order is not immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Fed.R.App.P. 4(a), should not be filed until entry of the District Court's final judgment.

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