WANG v. DENG

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

ZHEHAO WANG, )

)

Plaintiff, )

)

v. ) 1:24cv1018

)

ZHIYANG DENG, )

)

)

Defendant. )

MEMORANDUM OPINION, ORDER, AND RECOMMENDATION

OF UNITED STATES MAGISTRATE JUDGE

This matter comes before the undersigned United States

Magistrate Judge on the Application to Proceed in District Court

Without Prepaying Fees or Costs (Docket Entry 1) (the

“Application”) filed by Zhehao Wang (the “Plaintiff”) in

conjunction with his pro se complaint (Docket Entry 2) against

Zhiyang Deng (the “Defendant”). The undersigned will grant the

Application for the limited purpose of recommending dismissal of

this action.

APPLICABLE LEGAL PRINCIPLES

“The federal in forma pauperis statute, first enacted in 1892

[and now codified at 28 U.S.C. § 1915], is intended to guarantee

that no citizen shall be denied access to the courts solely because

his poverty makes it impossible for him to pay or secure the

costs.” Nasim v. Warden, Md. House of Corr., 64 F.3d 951, 953 (4th

Cir. 1995) (en banc) (internal quotation marks omitted).

“Dispensing with filing fees, however, [i]s not without its

problems. . . . In particular, litigants suing in forma pauperis

d[o] not need to balance the prospects of successfully obtaining

relief against the administrative costs of bringing suit.” Nagy v.

FMC Butner, 376 F.3d 252, 255 (4th Cir. 2004). To address this

concern, the in forma pauperis statute provides that “the [C]ourt

shall dismiss the case at any time if the [C]ourt determines that

. . . the action . . . (i) is frivolous or . . . (ii) fails to

state a claim on which relief may be granted.” 28 U.S.C.

§ 1915(e)(2)(B).

The United States Supreme Court has explained that “a

complaint . . . is frivolous where it lacks an arguable basis

either in law or in fact.” Neitzke v. Williams, 490 U.S. 319, 325

(1989). “The word frivolous is inherently elastic and not

susceptible to categorical definition. . . . The term’s

capaciousness directs lower courts to conduct a flexible analysis,

in light of the totality of the circumstances, of all factors

bearing upon the frivolity of a claim.” Nagy, 376 F.3d at 256-57

(internal quotation marks omitted). In assessing such matters, the

Court may “apply common sense.” Nasim, 64 F.3d at 954.

“[The C]ourt may consider subject matter jurisdiction as part

of the frivolity review.” Overstreet v. Colvin, No. 4:13cv261,

2014 WL 353684, at *3 (E.D.N.C. Jan. 30, 2014) (citing Lovern v.

Edwards, 190 F.3d 648, 654 (4th Cir. 1999)); see also Lovern, 190

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F.3d at 654 (“[T]he absence of jurisdiction may be raised at any

time during the case, and may be based on the court’s review of the

evidence. Determining the question of subject matter jurisdiction

at the outset of the litigation is often the most efficient

procedure.” (citation omitted)). Indeed, even absent Section

1915(e)(2)(B), the Court possesses “an independent obligation to

determine whether subject-matter jurisdiction exists,” Hertz Corp.

v. Friend, 559 U.S. 77, 94 (2010). See Constantine v. Rectors &

Visitors of George Mason Univ., 411 F.3d 474, 480 (4th Cir. 2005)

(“A federal court has an independent obligation to assess its

subject-matter jurisdiction, and it will ‘raise a lack of

subject-matter jurisdiction on its own motion.’”). This obligation

arises because federal courts constitute courts of limited

jurisdiction, “constrained to exercise only the authority conferred

by Article III of the Constitution and affirmatively granted by

federal statute.” In re Bulldog Trucking, Inc., 147 F.3d 347, 352

(4th Cir. 1998). As such, no presumption of jurisdiction applies,

see Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir.

1999); instead, federal courts must determine if a valid

jurisdictional basis exists and “dismiss the action if no such

ground appears,” Bulldog Trucking, 147 F.3d at 352; see also Fed.

R. Civ. P. 12(h)(3) (“If the court determines at any time that it

lacks subject-matter jurisdiction, the court must dismiss the

action.”).

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Generally, federal courts possess jurisdiction over “actions

arising under the Constitution, laws, or treaties of the United

States,” 28 U.S.C. § 1331, and actions involving citizens of

different states, 28 U.S.C. § 1332. Facts supporting jurisdiction

must appear in the complaint, see Pinkley, 191 F.3d at 399, and the

party asserting federal jurisdiction bears the burden of “show[ing]

that jurisdiction does, in fact, exist,” Davis v. Pak, 856 F.2d

648, 650 (4th Cir. 1988) (internal quotation marks omitted).

As for the second ground for Section 1915(e)(2)(B) dismissal,

a plaintiff “fails to state a claim on which relief may be

granted,” 28 U.S.C. § 1915(e)(2)(B)(ii), when the complaint does

not “contain sufficient factual matter, accepted as true, to ‘state

a claim to relief that is plausible on its face,’” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)). This standard “demands more

than an unadorned, the-defendant-unlawfully-harmed-me accusation.”

Id. In other words, “the tenet that a court must accept as true

all of the allegations contained in a complaint is inapplicable to

legal conclusions. Threadbare recitals of the elements of a cause

of action, supported by mere conclusory statements, do not

suffice.” Id.

In conducting this analysis, a pro se complaint must “be

liberally construed” and “held to less stringent standards than

formal pleadings drafted by lawyers.” Erickson v. Pardus, 551 U.S.

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89, 94 (2007) (internal quotation marks omitted). Nevertheless,

the Court “will not accept legal conclusions couched as facts or

unwarranted inferences, unreasonable conclusions, or arguments.”

United States ex rel. Nathan v. Takeda Pharms. N. Am., Inc., 707

F.3d 451, 455 (4th Cir. 2013) (internal quotation marks omitted);

see also Giarratano v. Johnson, 521 F.3d 298, 304 n.5 (4th Cir.

2008) (explaining that the United States Court of Appeals for the

Fourth Circuit has “not read Erickson to undermine [the]

requirement that a pleading contain more than labels and

conclusions” (internal quotation marks omitted)). The Court also

“put[s] aside any naked assertions devoid of further factual

enhancement.” SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d

412, 422 (4th Cir. 2015), as amended on reh’g in part (Oct. 29,

2015) (internal quotation marks omitted). “At bottom, determining

whether a complaint states . . . a plausible claim for relief . . .

will ‘be a context-specific task that requires the reviewing court

to draw on its judicial experience and common sense.’” Francis v.

Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Iqbal, 556

U.S. at 679).

BACKGROUND

Through his “Complaint/Urgent Motion for Temporary Restraining

Order” (Docket Entry 2 (the “Complaint”) at 1 (bold and all-cap

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font omitted)),1 Plaintiff, a “Citizen or Subject of a Foreign

Country” (Docket Entry 3 at 1), sued Defendant, also a “Citizen or

Subject of a Foreign Country” (id.), for alleged breach of contract

and other wrongdoing related to “a $49,966 loan” (Docket Entry 2 at

1). (See generally id. at 1-3.) As relevant here, the Complaint

states:

INTRODUCTION

1. Plaintiff[] . . . brings this action against

Defendant[] . . . for breach of agreement and financial

misconduct involving $49,996.

2. Plaintiff seeks immediate relief, including the

issuance of a Temporary Restraining Order (TRO) &

Preliminary Injunction, to prevent Defendant from leaving

the United States in mid-December 2024 (before this

lawsuit being resolved).

JURISDICTION AND VENUE

3.[ ]Venue is proper under 28 U.S.C. § 1391(b)(1) as

Defendant resides in Chapel Hill, North Carolina.

Jurisdiction is proper as Defendant is in suspicion of

violating the [I]nvestment [A]dvisers [A]ct of 1940, a

federal statute, for practicing as [an] investment

adviser without proper qualification, wherein a federal

question arises.

PARTIES

4. Plaintiff[] . . . resides [in] . . . Charlotte, North

Carolina.

5. Defendant[] . . . is believed to reside at his last

known address, [in] . . . Chapel Hill, North Carolina,

though it is unclear if this remains his current address.

Defendant holds passport number . . . and phone number

. . . . Defendant is graduating from the University of

1 Docket Entry page citations utilize the CM/ECF footer’s

pagination.

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North Carolina at Chapel Hill in December 2024 and is

preparing to leave the United States in mid-December

2024.

FACTUAL ALLEGATIONS

6. Defendant proposed an arrangement to Plaintiff,

offering a 13% return within three months on a $49,966

loan. To secure Plaintiff’s trust, Defendant claimed to

have 1 million Chinese yuan in savings in China, assuring

that these funds would guarantee repayment in the event

of significant financial loss. Defendant further

explained that, given the bullish stock market conditions

at the time, he intended to trade on Plaintiff’s

brokerage account to achieve returns substantially

exceeding 13%. Based on these assurances and the

potential for higher profits, Plaintiff agreed to lend

Defendant $49,966 and granted him access to Plaintiff’s

stock brokerage account to execute trades.

7. In late April 2024, Defendant incurred significant

losses while trading stocks, rendering him unable to

fulfill the initial agreement to repay the $49,966

principal with 13% interest within three months. At that

time, Defendant revealed to Plaintiff that the previously

claimed 1 million Chinese yuan assurance fund, which he

had presented as a safety net for repayment, had actually

been used by his parents in China for other purposes.

Defendant then proposed a new repayment agreement to

address the debt. Out of sympathy, Plaintiff agreed to

the Defendant’s proposal. Under the new agreement,

Defendant committed to repaying $10,000 at the start of

every three months, beginning in May 2024, with the full

repayment of the $49,966 debt, plus an additional 15%

interest on the total principal amount, to be completed

by May 2025.

8. To date, Defendant has repaid $20,000 but failed to

make the required $10,000 payment due by November 1,

2024. This leaves an unpaid balance of $29,966 in

principal and $7,494.9 in accrued interest.

9. Defendant has ceased communication with Plaintiff and

is actively avoiding repayment obligations.

10. Defendant’s likely planned departure from the United

States in mid-December 2024 poses a significant risk of

irreparable harm to Plaintiff’s ability to recover funds.

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Defendant is unlikely to return to the U.S. after his

departure, suggesting an attempt to evade the debt

entirely.

LEGAL CLAIMS

Count 1: Breach of Contract

11. Defendant failed to honor repayment terms under the

renegotiated agreement with Plaintiff.

Count 2: Financial Misconduct

12. Defendant demonstrated financial misconduct by

soliciting funds and failing to fulfill repayment

obligations.

Count 3: Request for Injunctive Relief

13. Defendant’s imminent departure poses irreparable

harm, as recovery of funds will be significantly

obstructed if Defendant leaves the United States.

REQUEST FOR EQUITABLE RELIEF

Plaintiff respectfully requests that this Court:

1. Grant a Temporary Restraining Order (TRO) to

immediately prevent Defendant[] . . . from leaving the

United States.

2. Notify relevant authorities, including U.S. Customs

and Border Protection (CBP), to enforce the travel

restriction.

3. Schedule a Preliminary Injunction hearing as soon as

possible to determine whether the TRO should remain in

effect until resolution of this matter.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully requests:

1. A Temporary Restraining Order (TRO) and Preliminary

Injunction preventing Defendant from leaving the United

States.

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2. A judgment of $29,966 in unpaid principal and $7,494.9

in accrued interest.

3. Reimbursement of legal fees and costs.

4. Any other relief this Court deems just and proper.

(Id. (bold and all-cap font in original).)

Unlike the Application, which bears both an electronic and

handwritten signature (see Docket Entry 1 at 2), the Complaint

lacks any signature, electronic or handwritten (see Docket Entry 2

at 3). Relatedly, Plaintiff neither verified the Complaint (see

id. at 1-3) nor submitted any affidavit swearing to the truth of

its assertions (see Docket Entries dated Dec. 4, 2024, to present).

DISCUSSION

I. Pleading Requirements

As an initial matter, Rule 11 of the Federal Rules of Civil

Procedure (the “Rules”) obliges pro se litigants to sign “[e]very

pleading, written motion, and other paper.” Fed. R. Civ. P.

(a) .? Unlike his Application (see Docket Entry 1 at 2),

Plaintiff failed to sign his Complaint (see Docket Entry 2 at 3),

justifying its dismissal for failure to comply with Rule 11.°

Moreover, Rule 65 specifies that “[t]he [C]ourt may issue a

temporary restraining order without written or oral notice to the

2 Attorneys bear this obligation for materials they file on

behalf of their clients. See id.

3 Indeed, Rule 11 requires the Court to “strike an unsigned

paper unless the omission is promptly corrected after being called

to the [relevant] party’s attention.” Fed. R. Civ. P. l1l1l(a).

adverse party or its attorney only if,” as relevant here, “specific

facts in an affidavit or a verified complaint clearly show that

immediate and irreparable injury, loss, or damage will result to

the movant before the adverse party can be heard in opposition.”

Fed. R. Civ. P. 65(b)(1)(A). Here, Plaintiff filed neither an

affidavit nor a verified Complaint. (See Docket Entries dated Dec.

4, 2024, to present; see also Docket Entry 2 at 1-3.) Accordingly,

under Rule 65, the Court cannot issue the requested TRO, see Fed.

R. Civ. P. 65(b)(1)(A), and could, at best, entertain “issu[ing] a

preliminary injunction only on notice to [Defendant],” Fed. R. Civ.

P. 65(a)(1). However, this Court’s Local Rules oblige litigants to

file any request for a temporary restraining order or preliminary

injunction by separate motion, rather than merely including them as

part of their complaints. See M.D.N.C. LR 7.3(a) (“All motions,

unless made during a hearing or at trial, shall be in writing and

shall be accompanied by a brief except [in circumstances not

relevant here]. Each motion shall be set out in a separate

document.”); M.D.N.C. LR 65.1(a) (“A prayer for a temporary

restraining order or preliminary injunction set forth in a pleading

will not bring the issue before the Court prior to the time of

trial.”). Plaintiff failed to comply with this requirement (see

Docket Entries dated Dec. 4, 2024, to present), further justifying

denial of Plaintiff’s TRO request, see, e.g., M.D.N.C. LR 83.4(a)

(authorizing entry of any just order as sanction for failure to

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comply with Court’s Local Rules, including order striking filing

“or dismissing the action or any part thereof”).

These failures independently justify denial of Plaintiff’s TRO

request and dismissal of Plaintiff’s Complaint. In addition,

Plaintiff’s Complaint falls short under Rule 8, as discussed below.

II. Subject-Matter Jurisdiction

Per Rule 8, every complaint “must contain,” inter alia, “a

short and plain statement of the grounds for the [C]ourt’s

jurisdiction.” Fed. R. Civ. P. 8(a)(1); see also Pinkley, 191 F.3d

at 399 (observing that jurisdictional facts must appear in

complaint). In turn, Rule 12 requires the Court to dismiss an

action “[i]f the [C]ourt determines at any time that it lacks

subject-matter jurisdiction.” Fed. R. Civ. P. 12(h)(3). According

to the Complaint, the Court possesses federal question jurisdiction

over this action because “Defendant is in suspicion of violating

the [I]nvestment [A]dvisers [A]ct of 1940, a federal statute, for

practicing as investment adviser without proper qualification.”

(Docket Entry 2 at 1.) As discussed more fully below, though, the

Complaint fails to raise a claim under the Investment Advisers Act

of 1940, 15 U.S.C. § 80b-1 et seq. (at times, the “IAA”). See,

e.g., Transamerica Mortg. Advisors, Inc. (TAMA) v. Lewis, 444 U.S.

11, 24 (1979) (“hold[ing] that there exists a limited private

remedy under the Investment Advisers Act of 1940 to void an

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investment advisers contract, but that the [IAA] confers no other

private causes of action, legal or equitable”).

The Court also lacks diversity jurisdiction over this action.

Under 28 U.S.C. § 1332, federal courts possess jurisdiction over

“civil actions where the matter in controversy exceeds the sum or

value of $75,000, exclusive of interest and costs, and [the parties

qualify as diverse].” 28 U.S.C. § 1332(a). “Thus, in the event

jurisdiction is based on diversity, the pleader must allege

citizenship and the amount in controversy must exceed $75,000.00.

Both the requisite amount in controversy and the existence of

diversity must be affirmatively established on the face of [the

Complaint].” Denny v. Orient Lines, 375 F. Supp. 2d 1320, 1322

(D.N.M. 2005) (internal quotation marks omitted); see also

Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 200 (4th

Cir. 2008) (observing that “a plaintiff’s complaint sufficiently

establishes diversity jurisdiction if it alleges that the parties

are of diverse citizenship and that the matter in controversy

exceeds, exclusive of interest and costs, the sum specified by 28

U.S.C. § 1332” (brackets and internal quotation marks omitted)).

“It is the firmly established general rule of the federal

courts that the plaintiff’s claim is the measure of the amount in

controversy and determines the question of jurisdiction . . . .”

McDonald v. Patton, 240 F.2d 424, 425 (4th Cir. 1957). Thus, “the

sum claimed by the plaintiff [in the Complaint] controls if the

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claim is apparently made in good faith.” St. Paul Mercury Indem.

Co. v. Red Cab Co., 303 U.S. 283, 288 (1938) (footnote omitted);

accord Choice Hotels Int’l, Inc. v. Shiv Hosp., L.L.C., 491 F.3d

171, 176 (4th Cir. 2007) (“The black letter rule has long been to

decide what the amount in controversy is from the complaint itself,

unless it appears or is in some way shown that the amount stated in

the complaint is not claimed in good faith.” (internal quotation

marks omitted)); see also Hunt v. Washington State Apple Advert.

Comm’n, 432 U.S. 333, 347 (1977) (“In actions seeking declaratory

or injunctive relief, it is well established that the amount in

controversy is measured by the value of the object of the

litigation.”).

Here, the Complaint seeks repayment of “an unpaid balance of

$29,966 in principal and $7,494.9 in accrued interest,” as well as

an injunction preventing Defendant from leaving the United States

during the pendency of this lawsuit to ensure “recovery of [those]

funds.” (Docket Entry 2 at 2; see id. at 3.) As the Complaint

seeks recovery of less than $37,500 (see id. at 3), it fails to

clear the $75,000 amount in controversy threshold for diversity

jurisdiction. See Burdick v. Teal, No. 1:02cv727, 2003 WL 1937118,

at *1 (M.D.N.C. Apr. 22, 2003) (“[W]here the amount in controversy

is clearly and unambiguously set forth in good faith on the face of

the complaint, that amount should control.”). This failure alone

precludes diversity jurisdiction. See Denny, 375 F. Supp. 2d at

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1323 (explaining that “[b]oth elements are necessary to invoke a

district court’s diversity Jurisdiction” and dismissing action for

want of jurisdiction where “the amount in controversy is less than

the jurisdictional requirement”).

Additionally, Plaintiff and Defendant both qualify as foreign

nationals. (See Docket Entry 3 at 1.) However, “[d]Jiversity

jurisdiction does not encompass foreign plaintiffs suing foreign

defendants.” Cheng v. Boeing Co., 708 F.2d 1406, 1412 (9th Cir.

1983); see also 28 U.S.C. § 1332(a) (1)-(4). The Court therefore

lacks diversity jurisdiction over this action, necessitating its

dismissal. See Fed. R. Civ. P. 12(h) (3); see also Davis, 856 F.2d

at 650 (explaining that party asserting federal jurisdiction must

show it exists); Constantine, 411 F.3d at 480 (explaining that

federal courts possess independent obligation to assess subject-

matter jurisdiction).

III. Investment Advisers Act of 1940

As noted, the Complaint relies on the IAA for its

jurisdictional basis. (See Docket Entry 2 at 1.) “The [IAA] was

enacted to deal with abuses that Congress had found to exist in the

investment advisers industry.” TAMA, 444 U.S. at 12-13. “The IAA

is the last in a series of Acts designed to eliminate certain

abuses in the securities industry which were found to have

contributed to the stock market crash of 1929 and the depression of

the 1930's.” NexPoint Diversified Real Est. Tr. v. Acis Cap.

14

Mgmt., L.P., 80 F.4th 413, 417 (2d Cir. 2023) (ellipsis and

internal quotation marks omitted). “It generally governs the

conduct of investment advisers and vests regulatory and enforcement

authority in the Securities and Exchange Commission. Two sections

of the IAA al[ppear] relevant here.” Id. (parenthetical omitted).

First, “[Section] 206 establishes ‘federal fiduciary

standards’ to govern the conduct of investment advisers.” ‘TAMA,

444 U.S. at 17. “[TA] broad antifraud provision[,]” Section 206

“makes it unlawful for any investment adviser to, inter alia,

‘employ any device, scheme, or artifice to defraud any client or

prospective client;’ or ‘engage in any transaction, practice, or

course of business which operates as a fraud or deceit upon any

client or prospective client.’” NexPoint, 80 F.4th at 417 (quoting

15 U.S.C. §§ 80b-6(1), (2)).* “The Supreme Court concluded in TAMA

that Congress did not intend [Section] 206 to be enforced through

private litigation.” Id. at 420; see also TAMA, 444 U.S. at 24

(“Section 206 of the [IAA] here involved concededly was intended to

protect the victims of the fraudulent practices it prohibited. But

the mere fact that the statute was designed to protect advisers’

clients does not reguire the implication of a private cause of

action for damages on their behalf. The dispositive question

remains whether Congress intended to create any such remedy.

4 Section 206 does not, however, specifically mention “proper

gqualification[s]” (Docket Entry 2 at 1) “for practicing as [an]

investment adviser” (id.). See 15 U.S.C. § 80b-6.

15

Having answered that question in the negative, our inquiry is at an

end.” (citations omitted)).

Second, Section 215 “provides that contracts whose formation

or performance would violate the [IAA] ‘shall be void . . . as

regards the rights of’ the violator and knowing successors in

interest.” TAMA, 444 U.S. at 16-17 (ellipsis in original).

According to the Supreme Court, Section 215 provides “a right to

specific and limited relief in a federal court,” id. at 18, namely

the ability to sue “for rescission or for an injunction against

continued operation of the contract, and for restitution,” id. at

19. Importantly, however, such restitution equals only “the

consideration given under the contract, less any value conferred by

the other party.” Id. at 24 n.14. It does not “include

compensation for any diminution in the value of the rescinding

party’s investment alleged to have resulted from the adviser’s

action or inaction,” as “[s]uch relief could provide by indirection

the equivalent of a private damages remedy that [the Supreme Court]

ha[s] concluded Congress did not confer.” Id. In other words, a

private litigant can, at most, pursue a claim to rescind an

investment contract and recover the fees paid pursuant to that

contract. See id. at 24 & n.14.

The Complaint does not even attempt to state such a claim.

(See Docket Entry 2 at 1-3.) To begin, the Complaint contains no

factual allegations supporting its conclusory assertion that

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“Defendant is in suspicion of violating the [IAA], a federal

statute, for practicing as [an] investment adviser without proper

qualification” (id. at 1). (See id. at 1-3 (lacking any factual

allegations regarding Defendant’s purported gualifications).) The

Court should thus disregard this bare assertion. See SD3, 801

F.3d at 422. Moreover, it does not appear that a lack of

qualifications, by itself, violates Section 206. See 15 U.S.C. §

80b-6. Additionally, the Complaint maintains that Defendant failed

to repay a loan — not that he acted improperly in serving as an

investment adviser — and seeks to enforce the alleged “repayment

terms under the renegotiated agreement” (Docket Entry 2 at 2),

rather than seeking to rescind the parties’ alleged agreement and

recoup fees that Plaintiff paid Defendant for investment services.

(See id. at 1-3.) Accordingly, to the extent the Complaint invokes

federal question jurisdiction, it fails to state a viable claim

under the IAA, see TAMA, 444 U.S. at 24 & n.14, necessitating

dismissal of any such claim pursuant to 28 U.S.C.

§ 1915 (e) (2) (B) (11).

Iv. State-law Claims

Liberally construed, the Complaint also raises claims for

breach of contract and breach of good faith and fair dealing and/or

fiduciary duty. (See Docket Entry 2 at 2.) These claims arise

under state law. See, e.g., Nadendla v. WakeMed, 24 F.4th 299,

307-08 (4th Cir. 2022) (analyzing breach of contract and breach of

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implied covenant of good faith and fair dealing claims under North

Carolina law); Broussard v. Meineke Disc. Muffler Shops, Inc., 155

F.3d 331, 345-49 (4th Cir. 1998) (analyzing breach of contract and

breach of fiduciary duty claims under North Carolina law); see also

Cardinal Energy, LLC v. Equitrans, LP, No. 1:16cv187, 2016 WL

7413501, at *8 (N.D. W. Va. Dec. 22, 2016) (explaining that “the

adjudication of tort and contract claims properly lies with the

state unless Congress clearly intends otherwise,” rejecting

contention that breach of contract and tort claims raised federal

question, and remanding case to state court). Given the absence of

diversity jurisdiction (and setting aside the absence of federal

question jurisdiction), supplemental jurisdiction under 28 U.S.C.

§ 1367 would provide the only possible basis for subject-matter

jurisdiction over Plaintiff’s state-law claims.

The Court should decline to exercise supplemental jurisdiction

over those claims. See 28 U.S.C. § 1367(c). Courts may decline to

exercise supplemental jurisdiction when they dismiss all federal

claims. See 28 U.S.C. § 1367(c)(3); Shanaghan v. Cahill, 58 F.3d

106, 110 (4th Cir. 1995) (“[T]rial courts enjoy wide latitude in

determining whether or not to retain jurisdiction over state claims

when all federal claims have been extinguished.”). Relevant

considerations in deciding whether to exercise supplemental

jurisdiction include “convenience and fairness to the parties, the

existence of any underlying issues of federal policy, comity, and

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considerations of judicial economy.” Shanaghan, 58 F.3d at 110.

Given these factors, even if federal question jurisdiction existed,

the Court should decline to exercise supplemental jurisdiction over

Plaintiff’s state-law claims. As a general rule, declining

supplemental jurisdiction best promotes comity, convenience,

judicial economy, and fairness upon the dismissal of all federal

claims early in litigation. See Carnegie-Mellon Univ. v. Cohill,

484 U.S. 343, 350 (1988); see also id. at 350 n.7 (“[I]n the usual

case in which all federal-law claims are eliminated before trial,

the balance of factors to be considered . . . — judicial economy,

convenience, fairness, and comity — will point toward declining to

exercise jurisdiction over the remaining state-law claims.”).

Therefore, even if the Court possessed federal question

jurisdiction over this action, it should decline to exercise

supplemental jurisdiction over Plaintiff’s state-law claims

pursuant to 28 U.S.C. § 1367(c).

V. Injunctive Relief

As a final matter, if Plaintiff had alleged a viable IAA

claim, he could only seek injunctive relief to prevent “continued

operation of the contract.” TAMA, 444 U.S. at 19. Rather than

rescission, Plaintiff seeks to enforce the parties’ alleged loan

repayment agreement, including recovery of “$29,966 in unpaid

principal and $7,494.9 in accrued interest” (Docket Entry 2 at 3).

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(See id. at 1-3.) The IAA precludes such relief. See TAMA, 444

U.S. at 24 & n.14.

Additionally, Plaintiff seeks injunctive relief “preventing

Defendant from leaving the United States.” (Docket Entry 2 at 3.)

“A court should not impose an injunction lightly, as it is an

extraordinary remedy involving the exercise of a very far-reaching

power, which is to be applied only in the limited circumstances

which clearly demand it.” Cantley v. West Va. Reg’l Jail & Corr.

Facility Auth., 771 F.3d 201, 207 (4th Cir. 2014) (internal

quotation marks omitted). Moreover, “any injunction must be

narrowly tailored to the facts of the case.” Bone v. University of

N.C. Health Care Sys., 678 F. Supp. 3d 660, 686 (M.D.N.C. 2023).

“An injunction is narrowly tailored when it is ‘no more burdensome

to the defendant than necessary to provide complete relief to the

plaintiff[].’”% Id. (quoting PBM Prods., LLC v. Mead Johnson & Co.,

639 F.3d 111, 128 (4th Cir. 2011)). As the Complaint seeks an

injunction precluding Defendant’s departure from the United States

following his graduation from university — a circumstance with

potential immigration consequences given Defendant’s status as a

foreign national, see, e.g., Guilford Coll. v. Wolf, No. 1:18cv891,

2020 WL 586672, at *1-*3 (M.D.N.C. Feb. 6, 2020) — the requested

injunction likely exceeds the scope of permissible relief.

See Hayes v. North State Law Enf’t Officers Ass’n, 10 F.3d 207, 217

(4th Cir. 1993) (“Although injunctive relief should be designed to

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grant the full relief needed to remedy the injury to the prevailing

party, it should not go beyond the extent of the established

violation.”).

CONCLUSION

The Court lacks both diversity and federal question

jurisdiction over this action. Alternatively, the Complaint and

TRO request violate the Rules and this Court’s Local Rules, seek

improper injunctive relief, and fail to state a viable claim under

the IAA. As such, even if federal question jurisdiction exists,

the Court should decline to exercise supplemental jurisdiction over

Plaintiff’s state-law claims.

IT IS THEREFORE ORDERED that Plaintiff’s Application (Docket

Entry 1) is GRANTED for the limited purpose of considering this

recommendation of dismissal.

IT IS RECOMMENDED that the Court dismiss without prejudice

this action for lack of subject-matter jurisdiction, or

alternatively, that the Court dismiss any claim under the IAA for

failure to state a claim and decline to exercise supplemental

jurisdiction over Plaintiff’s state-law claims.

This 11th day of December, 2024.

/s/ L. Patrick Auld

L. Patrick Auld

United States Magistrate Judge

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