Filed: Sep. 18, 2012
Latest Update: Mar. 26, 2017
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ Nos. 10-3071, 10-3072, 10-3164, 10-3165, 11-2089, 11-3916 & 12-1603 _ LARRY W. RADER Appellant in 10-3164 v. ING GROEP NV; ING USA HOLDING CORPORATION; ING DIRECT BANCORP; ING BANK FSB; SHAREBUILDER SECURITIES CORPORATION; RICHARD MONTGOMERY DONALDSON; PAUL SWEGLE, ING Direct Bancorp; ING Bank fsb; ShareBuilder Securities Corporation, Appellants in 10-3071 _ LARRY W. RADER Appellant in 10-3165 v. SHAREBUILDER SECURITIES CORP
Summary: NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _ Nos. 10-3071, 10-3072, 10-3164, 10-3165, 11-2089, 11-3916 & 12-1603 _ LARRY W. RADER Appellant in 10-3164 v. ING GROEP NV; ING USA HOLDING CORPORATION; ING DIRECT BANCORP; ING BANK FSB; SHAREBUILDER SECURITIES CORPORATION; RICHARD MONTGOMERY DONALDSON; PAUL SWEGLE, ING Direct Bancorp; ING Bank fsb; ShareBuilder Securities Corporation, Appellants in 10-3071 _ LARRY W. RADER Appellant in 10-3165 v. SHAREBUILDER SECURITIES CORPO..
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
Nos. 10-3071, 10-3072, 10-3164, 10-3165, 11-2089, 11-3916 & 12-1603
_____________
LARRY W. RADER
Appellant in 10-3164
v.
ING GROEP NV; ING USA HOLDING CORPORATION;
ING DIRECT BANCORP; ING BANK FSB;
SHAREBUILDER SECURITIES CORPORATION;
RICHARD MONTGOMERY DONALDSON; PAUL SWEGLE,
ING Direct Bancorp;
ING Bank fsb;
ShareBuilder Securities Corporation,
Appellants in 10-3071
_____________
LARRY W. RADER
Appellant in 10-3165
v.
SHAREBUILDER SECURITIES CORPORATION; WILLIAM A. KINSEL;
KINSEL LAW OFFICES PLLC; ING BANK FSB,
ShareBuilder Securities Corporation;
ING Bank fsb,
Appellants in 10-3072
_____________
1
LARRY W. RADER,
Appellant in 11-2089
v.
SHAREBUILDER CORPORATION; ING BANK FSB;
SHAREBUILDER SECURITIES CORPORATION
_____________
LARRY W. RADER,
Appellant in 11-3916 &
12-1603
v.
ING BANK FSB; SHAREBUILDER SECURITIES CORPORATION
_____________
On Appeal from the United States District Court
for the District of Delaware
District Court Nos. 1-09-cv-00340; 1-09-cv-00544; 1-09-cv-00781; 1-10-cv-
00398; 2-11-cv-02576
District Judge: The Honorable Leonard P. Stark
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
September 13, 2012
Before: SMITH and CHAGARES, Circuit Judges
and ROSENTHAL, District Judge*
(Filed: September 18, 2012)
_____________________
OPINION
_____________________
*
The Honorable Lee H. Rosenthal, United States District Judge for the United
States District Court for the Southern District of Texas, sitting by designation.
2
SMITH, Circuit Judge.
Larry W. Rader has filed four separate lawsuits against multiple entities
arising out of a failed attempt to purchase stock using an account that he had
created with ShareBuilder Securities Corporation (“ShareBuilder”) 1—an online
broker-dealer located in the state of Washington. ShareBuilder filed a
counterclaim seeking damages for a breach of contract. The District Court either
dismissed or entered summary judgment against Rader on all of his claims, and
awarded ShareBuilder $378,260.55 for fees and costs. Rader appeals from the
disposition of his claims and from the judgment entered against him. For the
following reasons, we will affirm the judgment of the District Court. 2
I.
We write exclusively for the parties, who are familiar with the factual
context and complicated legal history of this case. Therefore, we provide only an
abbreviated summary of the facts essential to our disposition.
On January 2, 2009, Rader applied to open an investment account with
ShareBuilder. In the process of opening his account, Rader acceded to the
ShareBuilder Account Agreement (the “Agreement”). The Agreement specified
1
We refer to all of the defendants collectively as “ShareBuilder.”
2
The District Court had diversity jurisdiction over Rader’s four lawsuits pursuant
to 28 U.S.C. § 1332(a)(1). We have jurisdiction over this appeal pursuant to 28
U.S.C. § 1291.
3
that it would be governed by Washington law. Additionally, the Agreement
provided that the investor (here, Rader) warranted that the information provided as
part of the account application was accurate. The Agreement further provided that
the investor “agree[s] to indemnify and hold ShareBuilder and its affiliates
harmless from and against any and all damage, cost, judgment . . . of any nature,
and claims therefore (collectively ‘Losses’) arising out of or relating to your failure
to provide accurate information on your [account application] . . . .” App’x 171a.
Finally, the Agreement stated that “ShareBuilder shall have no liability for and [the
investor] agree[s] to reimburse, indemnify and hold ShareBuilder . . . harmless
from all expenses . . . , Losses or damages that result from: . . . (e) your failure to
provide accurate information on your [account application] . . . .” Id.
On January 5, 2009, Rader used ShareBuilder’s online order form to
purchase 280 shares of stock in Cisco Systems (“Cisco”). Rader indicated on the
form that he would pay for the transaction using funds from his bank account, and
provided ShareBuilder with what he claimed to be the account number and routing
number for his savings account at U.S. Bank.
That same day, ShareBuilder purchased the requested shares in Cisco. As
was its normal practice, ShareBuilder purchased the requested shares, and only
later attempted to collect the funds required to pay for the transaction. In other
words, ShareBuilder purchased the requested shares in Cisco using its own capital,
4
and only later sought reimbursement.
Unfortunately, when ShareBuilder attempted to access Rader’s savings
account, it discovered that Rader had not provided a correct account number. On
January 8, 2009, ShareBuilder notified Rader that it could not access Rader’s listed
savings account, and therefore could not recover payment for Rader’s order of
Cisco shares. Additionally, between January 5, 2009 and January 8, 2009, Rader
attempted four times to transfer money from his savings account to his
ShareBuilder account. All of these transfer requests used the incorrect account
number, and thus all of these transfer requests failed.
On January 12, 2009, Rader sold his Cisco shares, again using
ShareBuilder’s online system. Before disbursing the income from this transaction
to Rader, ShareBuilder subtracted the amount that Rader owed. ShareBuilder
ultimately disbursed a total of $19,589.35 to Rader’s then-corrected U.S. Bank
account.
The situation quickly disintegrated. There were a series of
miscommunications between ShareBuilder and Rader in which Rader was
apparently either inadequately apprised of, or misunderstood the situation and what
he could do to rectify the problem. At one point, Rader apparently sent
ShareBuilder a “Notice of Claim for $1,000,000.” App’x 180a. Pursuant to the
Agreement, ShareBuilder decided to unilaterally terminate Rader’s account. On
5
January 23, 2009, ShareBuilder disbursed approximately $6,000—the amount
remaining in Rader’s ShareBuilder account—to Rader and closed Rader’s account.
On May 12, 2009, Rader filed the first of his four federal lawsuits in the
District of Delaware.3 The cases were referred to a Magistrate Judge. On April 7,
2010, the Magistrate Judge issued a Report and Recommendation (the “R & R”),
recommending, inter alia, that the District Court: (1) grant summary judgment
against or dismiss all of Rader’s claims; (2) deny various discovery motions filed
by Rader; and (3) deny Rader’s motion to disqualify ShareBuilder’s counsel and
the Magistrate Judge. On June 10, 2010, the District Court adopted the Magistrate
Judge’s R & R. Rader and ShareBuilder timely appealed from the June 10, 2010
Order.
Rader also moved for relief from the District Court’s June 10, 2010 Order.
On August 24, 2010, the District Court denied this motion. Rader timely appealed
from this denial.4 We dismissed these two appeals for lack of appellate
jurisdiction, because ShareBuilder’s counterclaim remained pending, and because
the District Court had not expressly entered judgments as to Rader’s various
claims.
3
The distinctions between the four lawsuits are not material to this appeal.
4
After Rader appealed from the District Court’s June 10, 2010 Order, the
Magistrate Judge who issued the R & R was elevated to the District Court bench.
The cases were referred to the newly-appointed District Judge.
6
On May 2, 2011, ShareBuilder moved for summary judgment in favor of its
counterclaim. On May 27, 2011, Rader moved to disqualify and remove the
District Judge presiding over his cases. On May 30, 2011, the District Court
granted ShareBuilder’s motion for summary judgment in favor of its counterclaim,
in the amount of $366,041.87 for attorneys’ fees and costs that accrued on or
before May 2, 2011. In the same order, the District Court also denied Rader’s
motion to disqualify. Rader timely appealed from the May 30, 2011 Order.
On October 14, 2011, ShareBuilder moved for supplemental attorneys’ fees
and for fees and costs that accrued after May 2, 2011. On February 6, 2012, the
District Court awarded ShareBuilder a supplemental award of $12,218.68. In sum,
the District Court awarded ShareBuilder $378,260.55 in fees and costs. Rader
amended his notice of appeal to include the February 6, 2012 Order.
III.
Rader raises a host of meritless arguments on appeal. First, Rader argues
that the District Court erred when it granted ShareBuilder’s motion for summary
judgment against various claims in Rader’s first complaint. We review de novo,
applying the same standard as the District Court. Viera v. Life Ins. Co. of N. Am.,
642 F.3d 407, 413 (3d Cir. 2011). For substantially the same reasons offered by
the Magistrate Judge in his April 7, 2009 R & R, we will affirm the District
Court’s entry of summary judgment against Rader’s claims. We agree with the
7
District Court that Rader entered into an electronic contract with ShareBuilder
when he electronically signed the Agreement. By virtue of this contract, Rader
was obligated to correctly enter his savings account number. He failed to do so,
and is liable for his mistake and the damage resulting therefrom. Despite Rader’s
protests to the contrary, he has not raised a genuine issue of material fact as to
whether he electronically signed the Agreement.
Second, Rader argues that the District Court erred by granting
ShareBuilder’s motions to dismiss other claims in his various complaints. We
review de novo. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 230 (3d Cir.
2008). We agree with the District Court that Rader’s claims for libel, slander, and
breach of privacy fail because of Delaware’s absolute litigation privilege. See
Barker v. Huang,
610 A.2d 1341, 1345 (Del. 1992). Additionally, we agree that
ShareBuilder did not violate 12 U.S.C. § 3401, et seq., because it is a private party,
not a “Government authority.” See 12 U.S.C. § 3401(3) (defining “Government
authority”). We also agree with the District Court that Rader has not stated a
cognizable claim for attempted blackmail or extortion. The District Court
correctly concluded that these causes of action are criminal, rather than civil, and
that even if they could serve as the basis for a civil claim, Defendants’ settlement
offer was insufficient to state a claim under either legal theory. We thus agree with
8
the District Court’s decision to grant ShareBuilder’s motions to dismiss. 5
Third, Rader argues that the District Court erred by setting aside the default
of Defendant ING Groep, N.V. We review for an abuse of discretion. See Budget
Blinds, Inc. v. White, 536 F.3d 244, 251 (3d Cir. 2008). We see no abuse of
discretion here, where the District Court concluded that default was entered
erroneously based on a misrepresentation made by Rader.
Fourth, Rader argues that the District Court erred by dismissing his motion
to disqualify the District Judge under 28 U.S.C. § 455, because he held an online
savings account with an institution that is a party to Rader’s lawsuits. We review
for an abuse of discretion. Securacomm Consulting, Inc. v. Securacom Inc., 224
F.3d 273, 278 (3d Cir. 2000). We see no abuse of discretion here—Rader has not
shown that the District Judge had a “financial interest” in his bank, as that phrase is
defined in § 455(d)(4). 6
Finally, Rader argues that the District Court erred by granting
ShareBuilder’s motion for summary judgment in favor of its counterclaim. We see
5
Rader raises additional arguments concerning additional claims in his various
complaints. We have considered all of these arguments, and find them meritless.
6
Rader also cites as a basis for recusal the District Judge’s supposed ex parte
conversation with defense counsel. The District Court explained, however, that no
ex parte conversation took place. Rader’s “evidence” of an ex parte
conversation—a vague, shorthand phrase in a billing entry—is insufficient to show
that the District Court abused its discretion in failing to recuse on this basis. Rader
9
no error. We agree with the District Court that the Agreement is governed by
Washington law, and that it assigns liability to the investor for inaccurate
information provided by the investor. In this case, Rader entered an inaccurate
savings account number. The Agreement therefore requires Rader to indemnify
“ShareBuilder, its affiliates and their partners, directors, officers and employees
and any person controlled by or controlling ShareBuilder [for] . . . all expenses
(including legal expenses and reasonable attorney’s fees), Losses or damages that
result from . . . [his] failure to provide accurate information on [his] ShareBuilder
Account Application[.]” App’x 171a. We see no error in the District Court’s
calculation of the $378,260.55 judgment in ShareBuilder’s favor. We will
therefore affirm the District Court’s decision to enter summary judgment against
Rader on ShareBuilder’s counterclaim, in the amount of $378,260.55. 7
For the foregoing reasons, we will affirm the judgment of the District Court.
also seeks to disqualify ShareBuilder’s counsel on the basis of the same supposed
ex parte conversation. We reject that argument for the same reason.
7
ShareBuilder has filed a cross-appeal arguing that if we reverse the District
Court’s entry of summary judgment in favor of its counterclaim, we should also
reverse the District Court’s denial of ShareBuilder’s motion for sanctions under
Federal Rule of Civil Procedure 11. ShareBuilder concedes, however, that “[i]f the
District Court’s award of contractual fees and costs is sustained, then the cross-
appeal will be moot and it need not be considered.” ShareBuilder Br. at 28.
Because we will affirm the District Court’s award of fees and costs, this argument
is moot.
10
