Finch v. Transworld Systems Incorporated

• Court: District Court, D. Arizona
• Decided: April 19, 2023
• Docket: 2:21-cv-01236
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Millard Charles Finch, Jr., et al., No. CV-21-01236-PHX-SMB

10 Plaintiffs, ORDER

11 v.

12 Transworld Systems Incorporated, et al.,

13 Defendants. 14 15 Pending before the Court is Defendant Transworld Systems Incorporated’s (“TSI”) 16 Motion to Dismiss Plaintiffs Millard Charles Finch. Jr. (“Charles”) and Samantha Finch’s 17 (“Samantha”) (collectively “Plaintiffs”) First Amended Complaint. (Doc. 67.) Plaintiffs 18 filed a Response (Doc. 69), and TSI filed a Reply (Doc. 71). The Court exercises its 19 discretion to resolve this Motion without oral argument. See LRCiv 7.2(f) (“The Court 20 may decide motions without oral argument.”). After reviewing the briefing and relevant 21 law, the Court will grant TSI’s Motion in part for the reasons discussed below. 22 Also before the Court is an issue to be addressed sua sponte. On January 25, 2023, 23 the Court acknowledged that nearly all documents filed by “Plaintiffs” lacked Charles’ 24 signature as required by Federal Rule of Civil Procedure 11(a). (Doc. 100 at 2.) Most 25 importantly, Charles has not signed the operative Complaint. (See Doc. 52-1 at 70–71.) 26 Instead of immediately dismissing Charles, the Court provided him an opportunity to cure 27 any Rule 11(a) deficiencies by filing an affidavit attesting to his retroactive signing of the 28 numerous documents cited in the Court’s Order. (See Doc. 100 at 2.) Charles has not filed 1 such an affidavit, nor has he signed any filings since the Court’s issuing the January 25 2 Order. The Court will therefore dismiss Charles without prejudice for failure to sign the 3 First Amended Complaint and strike all of Plaintiffs’ documents cited in the Court’s Order 4 (id.) to the extent they are attributed to Charles. See Fed. R. Civ. P. 11(a) (“The court must 5 strike an unsigned paper unless the omission is promptly corrected after being called to the 6 . . . party’s attention.”). Despite Charles’ dismissal, the Court will nonetheless analyze the 7 substance of TSI’s Motion as applied to both Plaintiffs. 8 I. BACKGROUND 9 This case involves TSI’s alleged improper receipt of money from Charles’ retired 10 military pay account. (Doc. 67 at 2.) Plaintiffs’ original complaint named two defendants: 11 TSI and the Army, Air Force and Exchange Service (“AAFES”). (Doc. 1 at 1.) The Court 12 dismissed AAFES in March 2022 for lack of jurisdiction. (See Doc. 38 at 7–8.) In May 13 2022, Plaintiffs filed their First Amended Complaint, which again listed TSI and AAFES 14 as the two Defendants. (Doc. 52 at 1.) Plaintiffs allege many claims, some with multiple 15 counts, in their 131-page First Amended Complaint.1 (See Docs. 52; 52-1.) TSI now 16 moves to dismiss the First Amended Complaint under Federal Rule of Civil Procedure 17 12(b)(6). (Doc. 67 at 1.) 18 II. LEGAL STANDARD 19 To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet the 20 requirements of Rule 8(a)(2). See Fed. R. Civ. P. 12(b)(6). Rule 8(a)(2) requires “a short 21 and plain statement of the claim showing that the pleader is entitled to relief,” as to “give 22 the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell 23 Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007) (cleaned up). Dismissal under Rule 24 12(b)(6) “can be based on the lack of a cognizable legal theory or the absence of sufficient 25 facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 26 F.2d 696, 699 (9th Cir. 1988). A complaint will survive a motion to dismiss if its claims

27 1 The Court dismissed AAFES from this case on March 25, 2022. (Doc. 38.) Despite amending their Complaint, Plaintiffs did not omit their claims against AAFES. (See Docs. 28 52; 52-1.) The Court will consider no allegation, claim, or argument made against AAFES in the First Amended Complaint. 1 contain sufficient factual assertions, which if accepted as true, “state a claim to relief that 2 is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 3 550 U.S. at 570). Facial plausibility exists if the complaint contains “factual content that 4 allows the court to draw the reasonable inference that the defendant is liable for the 5 misconduct alleged.” Id. “Threadbare recitals of the elements of a cause of action, 6 supported by mere conclusory statements, do not suffice.” Id. Plausibility does not equal 7 “probability,” but requires “more than a sheer possibility that a defendant has acted 8 unlawfully.” Id. “Where a complaint pleads facts that are ‘merely consistent’ with a 9 defendant’s liability, it ‘stops short of the line between possibility and plausibility of 10 ‘entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557). 11 III. ANALYSIS 12 In its Motion, TSI contends: (1) Plaintiffs’ Privacy Act claims do not apply to 13 private entities like TSI; (2) Plaintiffs allege many claims with no private right of action; 14 and (3) Samantha Finch has no standing to bring claims under the Fair Debt Collection 15 Practices Act (“FDCPA”) or breach of contract; and (4) many of Plaintiffs’ claims are 16 insufficient under Rule 8. (Doc. 67 at 3–8.) 17 A. Privacy Act 18 TSI argues Plaintiffs’ claims under the Privacy Act do not apply to private entities. 19 (Id. at 6.) The Court agrees. Claims 4 and 5 of the First Amended Complaint allege 20 fourteen total counts of alleged violations of the Privacy Act. (See Doc. 52 at 29–47.) 21 While the Privacy Act offers broad protections, “its civil remedy provision is far less 22 expansive.” Dittman v. California, 191 F.3d 1020, 1026 (9th Cir. 1999). The Privacy 23 Act’s civil remedy provisions do not apply to private entities, like TSI. See id.; see also 24 Unt v. Aerospace Corp., 765 F.2d 1440, 1447 (9th Cir. 1985) (interpreting 5 U.S.C. 25 § 552a(g)(1) as limiting private civil actions to only those against United States 26 government agencies). Plaintiffs do not dispute that TSI, a private corporate defendant, is 27 not a government agency. (See Docs. 15 at 1; 52 at 1.) As such, the Court will dismiss 28 Claims 4 and 5 with prejudice. 1 B. Private Rights of Action 2 TSI cites multiple cases to assert that some of Plaintiffs’ claims lack a private right 3 of action. (See Doc. 67 at 7–8.) Among their many claims, Plaintiffs allege TSI violated: 4 A.R.S. § 13-1802 (theft & embezzlement); 18 U.S.C. § 1951—the Hobbs Act (affecting 5 interstate commerce and extortion through fear); 18 U.S.C. § 1341 (mail fraud); and 18 6 U.S.C. § 1343 (wire fraud). (Doc. 52-1 at 19–28, 51–54, 61–65 (Claims 7–8, 13, and 18– 7 19.)) 8 In Chabrowski on behalf of ARTBE Enters., LLC v. Litwin, another court in this 9 district concluded that A.R.S. § 13-1802 provides no private right of action by civil 10 litigants. No. CV-16-03766-PHX-DLR, 2017 WL 2841212, at *2 (D. Ariz. Jan. 19, 2017). 11 Courts may not infer a private right of action “based on a criminal statute where there is no 12 indication whatsoever that the legislature intended to protect any special group by creating 13 a private cause of action by a member of that group.” Phx. Baptist Hosp. & Med. Ctr., 14 Inc., v. Aiken, 877 P.2d 1345, 1350 (Ariz. Ct. App. 1994) (quoting Ward v. Fireman’s Fund 15 Ins. Cos., 731 P.2d 106, 111 (Ariz. Ct. App. 1986)). Without any indication that the 16 Arizona legislature meant to protect a special group of people in A.R.S. § 13-1802, 17 Plaintiffs have no private right of action as civil litigants. Chabrowski, 2017 WL 2841212, 18 at *2 (citing Ariz. Green Party v. Bennett, No. CV-10-1902-PHX-DGC, 2010 WL 19 3614649, at *4 (D. Ariz. Sept. 9, 2010) (holding Arizona criminal statutes have no private 20 right of action absent the requisite legislative intent)). 21 In Abcarian v. Levine, the Ninth Circuit Court of Appeals interpreted whether the 22 Hobbs Act’s language creates a private remedy. 972 F.3d 1019, 1025–26 (9th Cir. 2020). 23 The Abcarian Court held that “the text of the Hobbs Act merely defines a criminal offense 24 and the prescribed punishment for that offense” and contained no “rights-creating 25 language” that would permit victims of extortion to pursue civil claims under the Act. Id. 26 at 1026 (cleaned up). The Hobbs Act includes no explicit language to support a private 27 civil right of action. Id. 28 In Lynn v. Earle, another Court in this district concluded that neither 18 U.S.C. 1 §§ 1341 nor 1343 create private rights of action. No. CV05-970-PHX-DGC, 2006 WL 2 1030374, at *2 (D. Ariz. Apr. 18, 2006). Addressing a similar rationale to Chabrowski and 3 Abcarian, the Lynn Court noted that Congress would have needed to clearly indicate an 4 intent to create a private cause of action under the mail fraud and wire fraud statutes. Id. 5 But neither statute contained any such indication. Id. 6 The Court agrees with TSI that Claims 7–8, 13, and 18–19 must be dismissed 7 because the criminal statutes Plaintiffs cite provide no civil remedies. Although not 8 addressed in TSI’s Motion, the Court will also dismiss Claims 9–10, which Plaintiffs’ 9 assert under A.R.S. §§ 13-2310 (fraudulent schemes and artifices) and 13-1003 10 (conspiracy). Because Plaintiffs cannot maintain civil actions under these criminal statutes, 11 the Court need not address TSI’s alternative argument that Plaintiffs’ allegations fail to 12 specify which defendant committed the alleged harms. (See Doc. 67 at 8.) The Court will 13 dismiss these claims with prejudice. 14 C. Samantha Finch’s Standing 15 TSI raises three arguments challenging Samantha Finch’s standing. TSI generally 16 asserts that Samantha Finch lacks Article III standing because she cannot establish a 17 concrete, particularized injury. (Doc. 67 at 9–10.) TSI also asserts that Samantha Finch 18 lacks standing to bring claims under the FDCPA or breach of contract. (Doc. 67 at 8.) 19 The Court acknowledges that Plaintiffs’ claims from the alleged improper removal 20 of money from Millard Charles Minch, Jr.’s retirement military pay account (see Doc. 89 21 at 11 ¶ 10(e)) to recover an alleged debt in Millard’s name (see Doc. 52 at 3 ¶ 15). But the 22 Court will not dismiss Samantha for a general lack of standing because it is unknown at 23 this time whether Samantha has a community property interest in the retirement military 24 pay account. See 10 U.S.C. § 1408(c) (“[A] court may treat disposable retired pay payable 25 to a member for pay periods beginning after June 25, 1981, either as property solely of the 26 member or as property of the member and his spouse in accordance with the law of the 27 jurisdiction of such court.”) (emphasis added). Arizona law treats “military retirement pay 28 as community property to the extent that it was derived from community efforts.” Edsall 1 v. Superior Ct. in and for Pima County, 693 P.2d 895, 897 (Ariz. 1984). The Court will 2 afford Plaintiffs, as pro se litigants, the benefit of the doubt that Millard’s military 3 retirement pay account was derived from community efforts despite the First Amended 4 Complaint’s unspecific allegations to that effect. See Alvarez v. Hill, 518 F.3d 1152, 1158 5 (9th Cir. 2008). The Court will therefore only analyze Samantha’s standing under the two 6 more specific arguments in TSI’s Motion. 7 TSI argues Samantha cannot assert claims under the FDCPA because she is not a 8 “consumer” under the statute, nor is she obligated on the debt. (Doc. 67 at 9.) “The 9 FDCPA provides a cause of action for consumers who have been exposed to ‘abusive debt 10 collection practices by debt collectors.’” Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 11 2009) (quoting 15 U.S.C. § 1692(e)). “As a threshold matter, a suit brought under the 12 FDCPA must involve a ‘debt’ within the meaning of the statute.” Id. (citing Turner v. 13 Cook, 362 F.3d 1219, 1277 (9th Cir. 2004)). The FDCPA defines debt to include “any 14 obligation or alleged obligation of a consumer to pay money arising out of a transaction in 15 which the money, property, insurance, or services which are the subject of the transaction 16 are primarily for personal, family, or household purposes, whether or not such obligation 17 has been reduced to judgment.” 15 U.S.C. § 1692a(5). While the First Amended 18 Complaint broadly asserts Samantha is a consumer (see Doc. 52 at 3 ¶ 9(d)), no other 19 allegations support that claim. See Twombly, 550 U.S. at 555–56 (“[A] plaintiff’s 20 obligation to provide the grounds of his entitlement to relief requires more than labels and 21 conclusions.”) (cleaned up). Plaintiffs allege that the relevant credit account—the “military 22 star card”—was opened in Millard Finch’s name. (See Doc. 52 at 3 ¶ 15, 20 ¶ 161, 32 23 ¶ 275.) The First Amended Complaint contains no allegations that Samantha ever had a 24 “consensual obligation” that could constitute a debt under the FDCPA. The Court thus 25 agrees that Samantha Finch is precluded from asserting FDCPA claims (Claim 6) and will 26 dismiss this claim with prejudice. See Fleming, 581 F.3d at 926. 27 Similar to its FDCPA arguments, TSI contends Samantha cannot assert claims for 28 breach of contract because she was neither a party to nor in privity with any contract that 1 gives rise to Plaintiffs’ claims. (Doc. 67 at 10–11.) Generally, “only the parties and privies 2 to a contract may enforce it.” Treadway v. W. Cotton Oil & Ginning Co., 10 P.2d 371, 375 3 (Ariz. 1932). Plaintiffs’ “breach of contract” claim contains five counts, including claims 4 for unjust enrichment against AAFES, unjust enrichment against TSI, AAFES’ breach of 5 the duty of loyalty, breach of the covenant of good faith and fair dealing, and breach of 6 confidentiality. (Doc. 52-1 at 65–70.) While these claims do not represent standard breach 7 of contract claims, the Court notes that the alleged contract at issue does not permit 8 Samantha to maintain these claims. The “contract” described is the credit card agreement 9 Millard entered into for the military star card. (See id. at 69 ¶¶ 1210–13.) Nothing in the 10 First Amended Complaint suggests Samantha was a party to any agreement, let alone the 11 relevant credit card agreement, and Plaintiffs make no allegations that Samantha has privity 12 with the parties to warrant the assertion of contract claims. The Court thus agrees with TSI 13 that these claims (Claim 20) should be dismissed, but the Court will provide Samantha 14 another opportunity to cure these deficiencies, because it is currently unknown whether 15 Samantha had sufficient privity to bring this claim. See Lopez v. Smith, 203 F.3d 1122, 16 1127 (9th Cir. 2000) (“[A] district court should grant leave to amend even if no request to 17 amend the pleading was made, unless it determines that the pleading could not possibly be 18 cured by the allegation of other facts.”). 19 D. Rule 8 20 TSI argues the First Amended Complaint does not comply with Rule 8 because 21 Plaintiffs fail to specify which defendant—AAFES or TSI—is responsible for the alleged 22 harm in many of their claims. (Id. at 5.) TSI continues that “Plaintiffs’ First Amended 23 Complaint so intertwines the claims, counts, and allegations alleged against both AAFES 24 and TSI [that] the complaint unanswerable by . . . TSI.” (Id.) 25 TSI contends Claim 1, counts 1–3 does not explain whether AAFES or TSI is the 26 alleged wrongdoer. (Id.) The Court agrees. “[L]umping together . . . multiple defendants 27 in one broad allegation fails to satisfy [the] notice requirement of Rule 8(a)(2).” Gen- 28 Probe, Inc. v. Amoco Corp., Inc., 926 F. Supp. 948, 961 (S.D. Cal. 1996). The allegations 1 in these counts describe the relationship between Charles and TSI, a debt collector, and 2 some actions TSI took to collect a debt. (See Doc. 52 at 9–11.) But none of these counts 3 asserts which defendant committed the violation associated with the count’s subheading. 4 (See id.) Vagueness is particularly problematic here because AAFES is a dismissed 5 party—TSI is currently unable to discern the alleged misconduct for which it may be liable. 6 See Iqbal, 556 U.S. at 678. As for Claim 1, counts 4–6, TSI contends Plaintiffs make 7 allegations against TSI and AAFES as a group, failing to allege TSI’s role in the alleged 8 harm. (Doc. 67 at 5.) Plaintiffs assert “AAFES and TSI” violated a separate statute for 9 each count. (See Doc. 52 at 12–17.) The Court reiterates the above-described confusion 10 from the First Amended Complaint’s failure to identify the allegedly guilty party. The 11 Court will thus dismiss Claim 1 without prejudice and extend another opportunity to amend 12 the operative complaint. 13 TSI argues Plaintiffs’ other claims are similarly defective and “so intertwine[] the 14 claims, counts, and allegations alleged against both AAFES and TSI together” that the 15 claims are unanswerable by TSI alone. (Doc. 67 at 5.) Of Plaintiffs’ remaining claims2, 16 only Claim 14 (tortious interference with a contract) satisfies Rule 8. (See Doc. 52-1 at 17 54–56.) The other claims either fail to distinguish whether AAFES or TSI is the 18 responsible party, identify no obvious defendant at all, or do not allege claims against TSI 19 at all. For example, Claims 2, 11–12, and 15–16 all intertwine allegations against AAFES 20 and TSI such that is undiscernible if TSI is the offending party. (See Docs. 52 at 17–20; 21 52-1 at 45–51, 56–60.) Claims 3 and 17 do not even address TSI. (See Docs. 52 at 21; 52- 22 1 at 60–61.) The Court will thus dismiss these claims without prejudice and provide 23 Samantha an opportunity to cure these factual deficiencies. See Lopez, 203 F.3d at 1127. 24 E. Samantha’s Response 25 In her Response3, Samantha presents many legal concepts in no coherent manner. 26 2 Because the Court concludes that Plaintiffs are unable to maintain claims under the 27 Privacy Act or the many criminal statutes cited in the First Amended Complaint, the Court will only address whether Plaintiffs’ other claims satisfy Rule 8. 28 3 Consistent with the Court’s January 25, 2023 Order, the Court will attribute the Response only to the signing party—Samantha. (See Doc. 100 at 2–3.) 1 (See Doc. 69 at 2–3.) Samantha also seems to suggest an entitlement to amend the First 2 Amended Complaint by right under Rule 15(a)(1). (Id. at 1, 5.) The deadline to amend 3 pleadings by right has long passed. However, the Court will be dismissing the First 4 Amended Complaint without prejudice as to Claims 1–3, 11–12, 15–17, and 20. 5 Samantha’s Second Amended Complaint must address the deficiencies identified above 6 and should follow the form detailed in Rule 7.1 of the Local Rules of Civil Procedure. 7 Samantha will have twenty-one (21) days from the date of entry of this Order to submit 8 another amended complaint, which must clearly designate on the fact of the document that 9 it is the “Second Amended Complaint.” The Second Amended Complaint must be retyped 10 or rewritten in its entirety and may not incorporate any part of the original complaint or 11 First Amended Complaint by reference. Rule 8 requires pleadings to be short, concise, and 12 direct. See Carrigan v. Cal. State Legislature, 263 F.2d 560, 565 (9th Cir. 1959). In 13 contrast to Rule 8’s instruction, the 131-page First Amended Complaint was neither short 14 nor concise. Should Samantha choose to file a Second Amended Complaint, she must 15 comply with Rule 8’s mandate for brevity. 16 IV. CONCLUSION 17 Accordingly, 18 IT IS ORDERED dismissing Millard Charles Finch, Jr. for failure to sign nearly 19 all of Plaintiffs’ filings in this case (see Doc. 100 at 2 (denoting the documents not signed 20 by Charles)), failure to sign the Second Amended Complaint (see Doc. 52-1 at 70–71), and 21 failure to comply with the Court’s January 25, 2023 Order (see generally Doc. 100). 22 IT IS ORDERED granting in part TSI’s Motion to Dismiss but denying TSI’s 23 Motion as to Claim 14. (Doc. 67.) 24 IT IS FURTHER ORDERED dismissing without prejudice Claims 1–3, 11–12, 25 15–17, and 20. (Docs. 52 at 7–28; 52-1 at 45–51, 56–61, 65–70.) The Court grants 26 Samantha leave to amend her Complaint within 21 days. Samantha shall not reassert 27 claims or allegations against AAFES that address AAFES’ potential liability or 28 wrongdoing—the Second Amended Complaint is to make references to AAFES only as 1 || necessary to support Samantha’s claims against TSI. The Second Amended Complaint || must comply with Rule 8’s requirement to be short, concise, and direct. 3 IT IS FURTHER ORDERED dismissing with prejudice Claims 4-10, 13, and 18- 19. (Docs. 52 at 29-60; 52-1 at 1-45, 51-54, 61-65.) 5 Dated this 19th day of April, 2023. 6 —_>

8 Aonorable Susan M; Brnovich 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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