BATCHELDER, Circuit Judge.
Plaintiff John Begala filed his first lawsuit against PNC Bank on January 23, 1997. The lawsuit was based upon allegations that PNC violated the Truth-in-Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., as well as various state laws by offering "payment holidays" to its loan customers without fully disclosing the additional interest that those customers would incur by accepting PNC's offer. Defendant PNC sought dismissal under Fed.R.Civ.P. 12(b)(6), and the district court dismissed plaintiff's TILA claims on July 30, 1997.
Begala again filed suit against PNC in the same federal court on August 5, 1997, while the appeal in Begala I was still pending. In the second suit, Begala alleged the same facts he had pled in Begala I, but this time he alleged violations not only of TILA and the same assortment of state laws but also the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962, and the National Bank Act ("NBA"), 12 U.S.C. §§ 85 and 86. PNC again moved for dismissal arguing that the duplicative claims in second suit were barred by res judicata and that the new claims failed to state a claim upon which relief could be granted under Fed.R.Civ.P. 12(b)(6). In response to PNC's motion, Begala amended his complaint to add two new plaintiffs, Stephen Borchers and Cynthia Edwards. PNC countered by again moving to dismiss the amended complaint citing res judicata and failure to state a claim under Fed.R.Civ.P. 12(b)(6).
On March 6, 1998, the district court dismissed all of plaintiffs' federal claims, finding that Begala's individual claims were barred by the doctrine of res judicata and that the remaining claims were insufficient under Fed.R.Civ.P. 12(b)(6).
I. FACTUAL BACKGROUND
The facts in this case are generally undisputed. Plaintiffs Begala, Borchers and Edwards all took out installment loans with PNC's predecessor in interest. After PNC acquired the loans, PNC sent periodic letters to these (and other similar) debtors offering a "payment holiday." The terms of the letter indicated that the customer would be allowed to skip a payment now in return for the customer's agreement (1) to pay an "extension fee" in place of the monthly payment and (2) to pay an additional payment at the end of the loan.
We review de novo a district court's dismissal for failure to state a claim. Sistrunk v. City of Strongsville, 99 F.3d 194, 197 (6th Cir. 1996). To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a "complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988) (internal quotation marks and citations omitted).
Bower v. Federal Express Corp., 96 F.3d 200, 203 (6th Cir. 1996) (citations omitted). "Although this standard for Rule 12(b)(6) dismissals is quite liberal, more than bare assertions of legal conclusions is ordinarily required to satisfy federal notice pleading requirements." Scheid, 859 F.2d at 436 (citing 5A C. WRIGHT & A. MILLER, FEDERAL PRACTICE & PROCEDURE § 1357, at 596 (1969)). In addition, we review de novo district court dismissals of cases on res judicata grounds. Gargallo v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 918 F.2d 658 (6th Cir. 1990).
A. RES JUDICATA
The district court concluded that named-plaintiff Begala's individual federal claims in this action were barred by res judicata because the claims of Begala I were dismissed under Fed.R.Civ.P. 12(b)(6) and Begala simply reasserted the same facts in the present lawsuit. The doctrine of res judicata has four elements:
Sanders Confectionery Prods., Inc. v. Heller Financial, Inc., 973 F.2d 474, 480 (6th Cir. 1992).
Begala's individual claims, previously dismissed by a court of competent jurisdiction, make essentially the same factual allegations between the same parties as did his claims in Begala I; therefore, his individual claims are precluded. See City of Canton v. Maynard, 766 F.2d 236, 239 (6th Cir. 1985) (per curiam) (affirming district
Plaintiffs Borchers and Edwards claim that PNC violated its duty under TILA to disclose the fact that additional finance charges would be assessed due to the payment holidays, as well as the amount of such charges. Begala made this very argument in his first lawsuit. The district court dismissed it for failure to state a claim, and we affirmed. See Begala I, 163 F.3d at 951-52. The only basis that plaintiffs advance for distinguishing this action from the first lawsuit is an allegation in which named-plaintiff Borchers claims that PNC granted him a payment holiday on one occasion without his authorization. Plaintiffs contend that this factual difference brings the current action within the scope of Travis v. Boulevard Bank, N.A., 880 F.Supp. 1226 (N.D.Ill. 1995), a case which we distinguished but nevertheless spoke approvingly of in affirming the dismissal of Begala I. Specifically, we said of Travis:
Begala I, 163 F.3d at 951 n. 1.
Plaintiffs make much of the fact that PNC's alleged actions, like those of the bank in Travis, were unilateral. That, however, is not the basis on which we distinguished Travis. We held in Begala I that payment deferrals cannot be construed as new credit transactions, and Travis was distinguishable because the bank in that case had increased the principal amount of the plaintiff's indebtedness. See id. In this case, there is no allegation that the principal amount of the loans increased and, accordingly, no basis for distinguishing the present case from Begala I. Thus, the district court properly dismissed plaintiffs' TILA claims.
Plaintiffs contend that PNC bank working in concert with its affiliated agencies and others have violated federal law by granting payment holidays and then collecting the additional interest and fees from unsuspecting debtors. Specifically, the ninth claim for relief in plaintiffs' complaint reads in pertinent part:
Under RICO, an enterprise is prohibited from engaging in a coordinated effort to collect an unlawful debt. Specifically, the RICO statute provides:
18 U.S.C. § 1962(c).
Plaintiffs' complaint fails adequately to allege the existence of a RICO enterprise, although not entirely for the reasons cited by the district court. The district court held that the complaint had failed to allege an enterprise distinct from PNC because all of the entities listed in the complaint were subdivisions or agents of PNC. Under RICO, a corporation cannot be both the "enterprise" and the "person" conducting or participating in the affairs of that enterprise. See, e.g., Puckett v. Tennessee Eastman Co., 889 F.2d 1481, 1489 (6th Cir. 1989). Under the "non-identity" or "distinctness" requirement, a corporation may not be liable under section 1962(c) for participating in the affairs of an enterprise that consists only of its own subdivisions, agents, or members. An organization cannot join with its own members to undertake regular corporate activity and thereby become an enterprise distinct from itself. See United States v. Computer Sciences Corp., 689 F.2d 1181, 1190 (4th Cir.1982).
It is not clear from the pleadings, however, that the "dealers" (to take one example) are subdivisions, agents or members of PNC, and to so conclude requires that an inference be drawn against Begala, the non-moving party. Drawing that inference would violate established practice under Fed.R.Civ.P. 12(b)(6) and the rule that RICO pleadings are to be liberally construed. See United States v. Qaoud, 777 F.2d 1105, 1116 (6th Cir. 1985).
Plaintiffs' complaint is nonetheless defective because plaintiffs have wholly failed to plead an association-in-fact. A properly pled RICO claim must cogently allege activity "that would show ongoing, coordinated behavior among the defendants that would constitute an association-in-fact." Frank v. D'Ambrosi, 4 F.3d 1378, 1386 (6th Cir. 1993). In this case, the complaint essentially lists a string of entities allegedly comprising the enterprise, and then lists a string of supposed racketeering activities in which the enterprise purportedly engages. Although the plaintiff may allege the separate elements of "enterprise" and "pattern of racketeering activity" through the same facts, see Qaoud, 777 F.2d at 1115, the
The plaintiffs contend that PNC violated the National Bank Act ("NBA") by charging excessive interest in connection with the payment holidays. Because PNC is a nationally chartered bank, it is governed by the NBA, 12 U.S.C. §§ 38 et seq. (1988). The NBA and its accompanying regulations allow nationally chartered banks to charge interest up to the maximum amount permitted to the most-favored state-chartered banks in the state in which they are operating. It provides in relevant part:
12 U.S.C. § 85. This statute has been interpreted by the United Sates Supreme Court, under the Most Favored Lender Doctrine, to allow banks to charge the rate allowed to the "most favored lenders" under state law. Marquette Nat'l Bank v. First of Omaha Serv. Corp., 439 U.S. 299, 314 n. 26, 99 S.Ct. 540, 58 L.Ed.2d 534, (1978) (citing 12 C.F.R. § 7.7310(a)). Therefore, the question becomes one of Ohio state banking law, and the maximum interest rate allowed to banks under Ohio law determines whether PNC has charged excessive interest in this case. See Kenty v. Bank One, Columbus, N.A., 92 F.3d 384, 393 (6th Cir. 1996).
Ohio law allows "building and loan associations" as well as "savings banks" to charge unlimited dues, fines, interest and premiums on loans made. See Ohio Rev. Code Ann. §§ 1151.21, 1161.28 (Anderson 1996). Therefore, under the Most Favored Lender doctrine, PNC may also charge unlimited interest on its loans made.
Plaintiffs rely heavily upon our earlier decision, Kenty v. Bank One, Columbus, N.A., 92 F.3d 384 (6th Cir. 1996). In Kenty, the plaintiffs obtained car loans from the defendant national bank on the understanding that if they did not purchase auto insurance, the bank would purchase it for them. If the bank did purchase this insurance, the funds to pay the insurance were advanced by the bank and then added to the debtors' loans. The Kenty plaintiffs claimed that adding the premiums to their automobile loans constituted excessive interest and violated federal law. The bank countered by arguing that adding the premiums to the loan balance was an advancement of funds that constituted "loans made" and because the Most Favored Lender doctrine allowed the bank to charge any amount of interest on its "loans made;" these charges did not violate the NBA. The Kenty court agreed with the bank and concluded that advancing funds to pay the insurance premiums constituted a "loan made." See Kenty, 92 F.3d at 393-94.
Plaintiffs misread Kenty to require that additional interest charges must be part of a new loan made before a national bank may charge unlimited interest. Kenty did not so hold. Kenty merely recognized that for the unlimited interest provisions of Ohio Revised Code §§ 1151.21 and 1161.28 to be applicable, the interest must be charged as part of a "loan made." The significant issue before the Kenty court was whether the additional funds advanced by the bank to pay the debtors' car insurance premiums were "loans made."
For each of the loans at issue, PNC made one initial advancement of funds. There is no question that this action constituted a "loan made" as that term is used in Ohio Revised Code §§ 1151.21 and 1161.28. The plaintiffs participated in payment holidays that were not new credit transactions, but simply an increase of fees and interest on that original loan made. Because in Ohio selected banks can charge unlimited fees and interest on loans made, the additional fees and interest charged to the plaintiffs by PNC do not violate the NBA. Plaintiffs' complaint failed to state a cause of action upon which relief can be granted, and their claims under the NBA were properly dismissed.
E. Mr. Borcher's Unauthorized Payment Holiday Claim
The district court analyzed each allegation in plaintiffs' complaint, but did not explicitly discuss Mr. Borcher's unauthorized payment holiday claim. The district court apparently viewed the narrow allegation that PNC Bank imposed a payment holiday upon Mr. Borcher without his authorization as a claim sounding in state law and dismissed it with the plaintiffs' other state law claims. We think the district court's view was sound. However, to the extent that Mr. Borcher's claim might be argued as stating a cause of action under federal law, we have reviewed the applicable provisions of TILA and NBA and conclude that Mr. Borcher's allegation has no basis in federal law and is a state law claim only. Therefore, this claim was also properly dismissed by the district court.
F. Request to Amend Complaint
In connection with their failed RICO claim, plaintiffs argue on appeal that the district court erred in refusing to allow them to amend their complaint. We review for abuse of discretion a district court's denial of a motion to amend. See LRL Properties v. Portage Metro Housing Auth., 55 F.3d 1097, 1104 (6th Cir.1995).
The district court, on April 13, 1998, ten days after a notice of appeal had been filed, set out appropriate light on its actions in denying this motion:
Plaintiffs argued in their brief that "there was no justification for denying plaintiffs the right to amend." The motion for clarification, as pointed out by the district court, was not a motion to amend; it was an effort to obtain an advisory opinion from the court. Plaintiffs state in their brief in Case No. 98-3360 that they "were never given an opportunity to further clarify their allegations with evidence." (Br. at 24.) Of course, the granting of a defendant's motion to dismiss does not ordinarily afford the unsuccessful plaintiffs any "opportunity to further clarify their allegations" with proof and evidence. What plaintiffs may have stated, almost as an aside, to the district court in a memorandum in opposition to the defendant's motion to dismiss is also not a motion to amend.
The district court did not err or abuse its discretion in denying the post-judgment action of plaintiffs (post notice of appeal) which they characterize as their attempt "to obtain, via the procedure outlined in First National Bank of Salem v. Hirsch, 535 F.2d 343 (6th Cir. 1976), the right to amend they have sought and still seek." As pointed out by defendant in response, this was a second lawsuit by plaintiffs' lawyers "arising out of the same factual allegations." This effort, in our view, was also a second effort to relitigate that which might have been asserted in a complaint, a proposed amended complaint, or in a formal motion to amend prior to an adverse judgment and certainly before filing of a notice of appeal. We do not believe that Hirsch constitutes authority to find the district court's decisions to be erroneous nor a basis for a new round of allegations based upon the same factual scenario which resulted in our first decision found in Begala I, 163 F.3d at 948.
For the foregoing reasons, we AFFIRM the judgment of the district court.
PNC Bank would like to help you accumulate some extra cash during the vacation season by giving you an opportunity to postpone one loan payment.
Here's how it works. The authorization form attached below lists a loan extension fee, which is the payment you make now in order to postpone your regular payment. Simply sign the authorization and forward it along with your extension fee payment. Your loan term will automatically be extended by the one payment you're postponing now.
That's all there is to it. This offer is good until July 31, 1993 so you can postpone your June or July payment.
If you'd like to take advantage of this offer, here's your chance. Remember, just sign and detach the authorization provided below and return it with your extension payment in the enclosed envelope. We must receive your authorization and extension payment prior to your regular payment due date in the month during which you wish to postpone a payment.
If you have any questions regarding this offer please call 651-TALK.