# WANG v. DENG

> District Court, M.D. North Carolina · December 11, 2024

URL: https://www.frixlaw.com/law-library/cases/10760489

## Case

- **Court:** District Court, M.D. North Carolina
- **Decided:** December 11, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10760489

## How later opinions describe it (automated extraction)

- explaining that federal courts possess independent obligation to assess subject- matter jurisdiction
- explaining that party asserting federal jurisdiction must show it exists
- 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)

## Opinion text

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
2
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.”).
3
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.
4
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

5
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.
6
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.
7
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.
8
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
10
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

11
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
12
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

13

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
16
“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

17

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
18
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).

19
(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

20

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

21

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10760489. Public record. Not legal advice.