                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


12-16-2005

Azubuko v. Eastern Bank
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-2039




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"Azubuko v. Eastern Bank" (2005). 2005 Decisions. Paper 98.
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                                                            NOT PRECEDENTIAL

                      UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT

                                    NO. 05-2039
                                 ________________

                            CHUKWUMA E. AZUBUKO,

                                           Appellant

                                           v.

                                  EASTERN BANK

                     ____________________________________

                   On Appeal From the United States District Court
                             For the District of Delaware
                            (D.C. Civ. No. 05-cv-00031)
                     District Judge: Honorable Sue L. Robinson
                   _______________________________________


                   Submitted Under Third Circuit LAR 34.1(a)
                              December 14, 2005
     Before: SLOVITER, SMITH AND VAN ANTWERPEN, CIRCUIT JUDGES

                             (Filed December 16, 2005 )
                             _______________________

                                    OPINION
                             _______________________

PER CURIAM

      In the United States District Court for the District of Delaware, Chukwuma

Azubuko filed a complaint against Eastern Bank, which financed two of his car loans.

                                           1
He claimed that Eastern Bank, relying on purportedly inaccurate information in his credit

report, charged him interest so high as to be usurious and refused his request for

refinancing. He additionally contended that pursuant to one loan agreement, he was

entitled to, but did not receive, an amount equal to two years of interest payments after he

paid off his loan early. He also made a broad claim of negligence arising from the same

facts and circumstances. As a basis for federal jurisdiction, Azubuko cited 42 U.S.C.

§ 1981 (noting, on page 4 of his complaint, that the relevance of § 1981 could not be

over-emphasized), as well as the Sherman and Clayton Antitrust Acts.1

       The District Court dismissed the complaint, holding that Azubuko had failed to

state a claim under § 1981, or, in the alternative, that if he had stated a claim, the District

Court did not have personal jurisdiction over Eastern Bank. The complaint was

dismissed with prejudice on the ground that amendment was futile. Azubuko appeals.2

       We have appellate jurisdiction pursuant to 28 U.S.C. § 1291. Our review of the

District Court’s order dismissing Azubuko’s complaint pursuant to 28 U.S.C.

§ 1915(e)(2) is plenary. See Allah v. Seiverling, 229 F.3d 220, 223 (3d Cir. 2000). We

review the dismissal of the state law claims pursuant to 28 U.S.C. § 1367(c) for abuse of


       1
        Although he mentions antitrust laws, Azubuko makes no allegations of antitrust
violations.
       2
       Previously, Azubuko’s appeal was dismissed pursuant to LAR 3.3 and LAR
Misc. 107.1(a) because he did not pay the filing and docketing fees or request in forma
pauperis status with the time period permitted. However, we later granted his motion to
reopen his appeal as well as his motion to proceed in forma pauperis.

                                               2
discretion. Cf. De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 311 (3d Cir. 2003). For

the reasons set forth below, we will affirm in part and vacate in part.

           The District Court properly held that Azubuko did not state a claim under

§ 1981. Section § 1981 forbids discrimination on the basis of race in the making of

public and private contracts. See St. Francis College v. Al-Khazraji, 481 U.S. 604, 609

(1987); Pamintuan v. Nanticoke Mem’l Hosp., 192 F.3d 378, 385 (3d Cir. 1999).

Although his complaint is not a model of clarity, Azubuko appears to primarily protest

the inclusion of inaccurate information in his credit report by entities not a party to his

lawsuit. Even read broadly, his allegations that Eastern Bank subjected him to a

“constructive peonageism” and “constructive enslavement” when it would not refund the

interest to which Azubuko believed he was entitled (Appendix, Ex. 2 at 4) do not make

out a claim of discrimination in violation of § 1981.

       The District Court also properly declined to consider Azubuko’s state law contract

or tort claims,3 by deciding against exercising its supplemental jurisdiction over these

state law claims that remained after his federal claim had been dismissed. See 28 U.S.C.

§ 1367(c); De Asencio, 342 F.3d at 309.

       However, the District Court erred in dismissing Azubuko’s complaint with

prejudice. Amendment should be permitted unless it would be inequitable or futile. See


       3
        Azubuko may not be able to recover for the same injury under contract and tort
theories. However, the Federal Rules of Civil Procedure permit pleading in the
alternative. Fed. R. Civ. P. 8.

                                              3
Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002). Although it is likely

that Azubuko will not be able to allege all that is necessary to state a claim for the

violation of his federal rights, it is not clear that amendment would be futile. He alludes

to race-based discrimination in his complaint (e.g. “constructive enslavement,”

(Appendix, Ex. 2 at 4)) and through a newspaper article about increased loan costs for

Black borrowers attached to a motion he filed in the District Court (Plaintiff’s Motion for

Court to Determine What Prevailed - Plaintiff’s First Motion for Reconsideration and

Notice of Appeal, Ex. 1).

       Furthermore, in ruling that leave to amend would be futile, the District Court

apparently relied in part on its sua sponte determination that it lacked personal

jurisdiction over Eastern Bank. This Court has held that “because personal jurisdiction

may be conferred by consent of the parties, expressly or by failure to object, . . . a court

may not sua sponte dismiss for want of personal jurisdiction, at least where a defendant

has entered an appearance by filing a motion.” See Zelson v. Thomforde, 412 F.2d 56,

59 (3d Cir. 1969). Most federal appellate courts concur that a sua sponte dismissal for

lack of personal jurisdiction is error. See, e.g., Uffner v. La Reunion Francaise, S.A.,

244 F.3d 38, 41 (1st Cir. 2001); Buchanan v. Manley, 145 F.3d 386, 388 (D.C. Cir.

1998) (concluding that such a sua sponte dismissal is error with the potential to be

considered harmless error if an appellant has an opportunity to present evidence for the

first time and otherwise challenge the ruling on appeal); Williams v. Life Sav. & Loan,


                                              4
802 F.2d 1200, 1203 (10th Cir. 1986) (per curiam) (holding that a district court may not

dismiss an action for lack of personal jurisdiction, unless a default judgment is about to

be entered). Cf. Lipofsky v. New York State Workers Compensation Bd., 861 F.2d

1257, 1259 (11th Cir. 1988) (permitting a district court to evaluate, sua sponte, the issue

of personal jurisdiction, in the absence of waiver, but disallowing a court from

dismissing without giving the parties an opportunity to present evidence). In Uffner, the

court explained why the ability to waive the defense of personal jurisdiction should

remain with the parties:

       Unlike subject-matter jurisdiction, which is a statutory and constitutional
       restriction on the power of the court, see U.S. Const. art. III, § 1, personal
       jurisdiction arises from the Due Process Clause and protects an individual
       liberty interest. Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee,
       456 U.S. 694, 702, 72 L. Ed. 2d 492, 102 S. Ct. 2099 (1982). The ability to
       waive this right thus reflects the principle that “the individual can subject
       himself to powers from which he may otherwise be protected.” Id. at 703 n.10.

244 F.3d at 41. Therefore, even though Eastern Bank had not entered an appearance, the

District Court should not have sua sponte considered lack of personal jurisdiction as a

basis for dismissing Azubuko’s complaint or for ruling that amendment was futile.

       In conclusion, because the District Court abused its discretion, we will vacate the

District Court’s order to the extent that the District Court denied Azubuko leave to

amend his complaint. In all other respects, we will affirm the District Court’s order. We

remand this matter to the District Court for further proceedings consistent with this

opinion.


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