1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Judy Podgorny, et al., No. CV-21-00288-PHX-DJH
10 Plaintiffs, ORDER
11 v.
12 Ally Finance,
13 Defendant. 14 15 Pending before the Court is Defendant’s Motion to Dismiss Second Amended 16 Complaint or, in the Alternative, to Compel Arbitration (Doc. 25). Pro se Plaintiffs have 17 not filed a response, although they have subsequently filed a Third Amended Complaint 18 (Doc. 26). Also pending before the Court is Defendant’s Motion to Strike the Third 19 Amended Complaint (Doc. 27). Three months after Defendant filed its Motion to Dismiss, 20 pro se Plaintiffs filed a brief (Doc. 28), which the Court construed as Response and struck 21 as untimely. (Doc. 29) (citing LRCiv. 7.2). 22 I. Background 23 Plaintiffs filed their original Complaint on February 16, 2021. (Doc. 1). Defendant 24 was served on March 12, 2021. (Doc. 21). Shortly thereafter, Plaintiffs filed a First 25 Amended Complaint (“FAC”) on March 30, 2021. (Doc. 13). Defendant then filed a 26 Motion to Dismiss, which the Court granted. (Doc. 21). Plaintiffs have since filed their 27 Second Amended Complaint (“SAC”) (Doc. 24) and an additional Third Amended 28 Complaint (“TAC”) (Doc. 26). 1 As alleged in the SAC and TAC, Plaintiffs Alan and Judy Podgorny purchased a car 2 in 2020 and sought to finance the purchase with a loan from Defendant Ally Finance 3 Corporation. (Docs. 24 at 2; 26 at 3). During the contract negotiations, Plaintiffs claim 4 they reserved their rights under “U.C.C. 1-308.” (Id.) Plaintiffs then asked Defendant to 5 “offset the book’s entries on the liability’s (accounts payable)” in order “to balance the 6 books.” (Docs. 24 at 3; 26 at 3). Plaintiffs allege that Defendant denied this request. (Id.) 7 Although it is nowhere stated explicitly, the Court infers that Plaintiffs are bringing claims 8 of breach of contract and fraud against Defendant. 9 Defendant’s Motion to Dismiss argues that the SAC must be dismissed with 10 prejudice for several reasons: (1) it fails to state a claim, (2) it is “indecipherable and 11 prolix,” and (3) it fails to comply with the Court’s prior Order that explained what was 12 required in an amended pleading. (Doc. 25 at 2). In the alternative, Defendant argues that 13 any disputes arising from the loan are subject to an arbitration agreement. Furthermore, 14 Defendant’s Motion to Strike seeks to strike the TAC for failing to abide by the Federal 15 Rules of Civil Procedure. (Doc. 27 at 2). 16 II. Defendant’s Motion to Strike (Doc. 27) 17 The Court will first address Defendant’s Motion to Strike. Defendant argues that 18 because Plaintiffs did not obtain Defendant’s consent or Court leave to file the TAC, it is 19 impermissible under Federal Rule of Civil Procedure 15(a)(2). Under Rule 15, a party may 20 only amend its pleadings on its own once. Fed. R. Civ. P. 15(a). After that, the party must 21 either seek the consent of the other party or leave of court to file amended pleadings. Id. 22 Here, Plaintiffs amended their pleadings as a matter of course when they filed their 23 FAC. (Doc. 13). Although the Court granted leave for Plaintiffs to file the SAC, it has not 24 granted leave to file the TAC. Defendant, likewise, has not consented to the TAC’s filing. 25 Therefore, the Court will grant Defendant’s Motion and strike the TAC for failing to follow 26 the Federal Rules of Civil Procedure. 27 III. Defendant’s Motion to Dismiss 28 The Court turns to Defendant’s Motion to Dismiss. 1 a. Legal Standard 2 A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of a claim. 3 Cook v. Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011). Complaints must make a short and 4 plain statement showing that the pleader is entitled to relief for its claims. Fed. R. Civ. P. 5 8(a)(2). This standard does not require “‘detailed factual allegations,’ but it demands more 6 than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 7 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 8 There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. 9 While courts do not generally require “heightened fact pleading of specifics,” a plaintiff 10 must allege facts sufficient to “raise a right to relief above the speculative level.” See 11 Twombly, 550 U.S. at 555. A complaint must “state a claim to relief that is plausible on its 12 face.” Id. at 570. “A claim has facial plausibility when the plaintiff pleads factual content 13 that allows the court to draw the reasonable inference that the defendant is liable for the 14 misconduct alleged.” Iqbal, 556 U.S. at 678. In addition, “[d]etermining whether a 15 complaint states a plausible claim for relief will . . . be a context-specific task that requires 16 the reviewing court to draw on its judicial experience and common sense.” Id. at 679. If 17 a plaintiff alleges fraud or mistake, the plaintiff “must state with particularity the 18 circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). 19 Dismissal of a complaint for failure to state a claim can be based on either the “lack 20 of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable 21 legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). In 22 reviewing a motion to dismiss, “all factual allegations set forth in the complaint ‘are taken 23 as true and construed in the light most favorable to the plaintiffs.’” Lee v. City of L.A., 250 24 F.3d 668, 679 (9th Cir. 2001) (quoting Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 25 (9th Cir. 1996)). But courts are not required “to accept as true a legal conclusion couched 26 as a factual allegation.” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 27 265, 286 (1986)). 28 / / / 1 b. Analysis 2 Generally, Plaintiffs allege Defendant did not “offset the book’s entries on 3 liabilities” upon Plaintiffs’ request. (Doc. 26 at 3). Defendant argues that Plaintiffs’ claims 4 are rooted in “unlawful money,” “sovereign citizen and redemptionist [sic] theories,” 5 which are frivolous legal arguments made in an attempt to avoid paying for the car. (Doc. 6 25 at 7–8). Many courts have encountered frivolous redemptionists theories, which 7 propound that through machinations of the Uniform Commercial Code, a citizen may 8 contract for debt but never have to pay anything. Monroe v. Beard, 536 F.3d 198, 203 (3d 9 Cir. 2008); Swain v. Dir. of Corr., 2019 WL 7020322, at *2 (N.D. Cal. Dec. 20, 2019); 10 McLaughlin v. CitiMortgage, Inc., 726 F. Supp. 2d 201, 210 (D. Conn. 2010); Ray v. 11 Williams, 2005 WL 697041, at *6 (D. Or. Mar. 24, 2005), report and recommendation 12 adopted, 2005 WL 1429907 (D. Or. June 16, 2005), aff'd, 234 F.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Judy Podgorny, et al., No. CV-21-00288-PHX-DJH
10 Plaintiffs, ORDER
11 v.
12 Ally Finance,
13 Defendant. 14 15 Pending before the Court is Defendant’s Motion to Dismiss Second Amended 16 Complaint or, in the Alternative, to Compel Arbitration (Doc. 25). Pro se Plaintiffs have 17 not filed a response, although they have subsequently filed a Third Amended Complaint 18 (Doc. 26). Also pending before the Court is Defendant’s Motion to Strike the Third 19 Amended Complaint (Doc. 27). Three months after Defendant filed its Motion to Dismiss, 20 pro se Plaintiffs filed a brief (Doc. 28), which the Court construed as Response and struck 21 as untimely. (Doc. 29) (citing LRCiv. 7.2). 22 I. Background 23 Plaintiffs filed their original Complaint on February 16, 2021. (Doc. 1). Defendant 24 was served on March 12, 2021. (Doc. 21). Shortly thereafter, Plaintiffs filed a First 25 Amended Complaint (“FAC”) on March 30, 2021. (Doc. 13). Defendant then filed a 26 Motion to Dismiss, which the Court granted. (Doc. 21). Plaintiffs have since filed their 27 Second Amended Complaint (“SAC”) (Doc. 24) and an additional Third Amended 28 Complaint (“TAC”) (Doc. 26). 1 As alleged in the SAC and TAC, Plaintiffs Alan and Judy Podgorny purchased a car 2 in 2020 and sought to finance the purchase with a loan from Defendant Ally Finance 3 Corporation. (Docs. 24 at 2; 26 at 3). During the contract negotiations, Plaintiffs claim 4 they reserved their rights under “U.C.C. 1-308.” (Id.) Plaintiffs then asked Defendant to 5 “offset the book’s entries on the liability’s (accounts payable)” in order “to balance the 6 books.” (Docs. 24 at 3; 26 at 3). Plaintiffs allege that Defendant denied this request. (Id.) 7 Although it is nowhere stated explicitly, the Court infers that Plaintiffs are bringing claims 8 of breach of contract and fraud against Defendant. 9 Defendant’s Motion to Dismiss argues that the SAC must be dismissed with 10 prejudice for several reasons: (1) it fails to state a claim, (2) it is “indecipherable and 11 prolix,” and (3) it fails to comply with the Court’s prior Order that explained what was 12 required in an amended pleading. (Doc. 25 at 2). In the alternative, Defendant argues that 13 any disputes arising from the loan are subject to an arbitration agreement. Furthermore, 14 Defendant’s Motion to Strike seeks to strike the TAC for failing to abide by the Federal 15 Rules of Civil Procedure. (Doc. 27 at 2). 16 II. Defendant’s Motion to Strike (Doc. 27) 17 The Court will first address Defendant’s Motion to Strike. Defendant argues that 18 because Plaintiffs did not obtain Defendant’s consent or Court leave to file the TAC, it is 19 impermissible under Federal Rule of Civil Procedure 15(a)(2). Under Rule 15, a party may 20 only amend its pleadings on its own once. Fed. R. Civ. P. 15(a). After that, the party must 21 either seek the consent of the other party or leave of court to file amended pleadings. Id. 22 Here, Plaintiffs amended their pleadings as a matter of course when they filed their 23 FAC. (Doc. 13). Although the Court granted leave for Plaintiffs to file the SAC, it has not 24 granted leave to file the TAC. Defendant, likewise, has not consented to the TAC’s filing. 25 Therefore, the Court will grant Defendant’s Motion and strike the TAC for failing to follow 26 the Federal Rules of Civil Procedure. 27 III. Defendant’s Motion to Dismiss 28 The Court turns to Defendant’s Motion to Dismiss. 1 a. Legal Standard 2 A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of a claim. 3 Cook v. Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011). Complaints must make a short and 4 plain statement showing that the pleader is entitled to relief for its claims. Fed. R. Civ. P. 5 8(a)(2). This standard does not require “‘detailed factual allegations,’ but it demands more 6 than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 7 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 8 There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. 9 While courts do not generally require “heightened fact pleading of specifics,” a plaintiff 10 must allege facts sufficient to “raise a right to relief above the speculative level.” See 11 Twombly, 550 U.S. at 555. A complaint must “state a claim to relief that is plausible on its 12 face.” Id. at 570. “A claim has facial plausibility when the plaintiff pleads factual content 13 that allows the court to draw the reasonable inference that the defendant is liable for the 14 misconduct alleged.” Iqbal, 556 U.S. at 678. In addition, “[d]etermining whether a 15 complaint states a plausible claim for relief will . . . be a context-specific task that requires 16 the reviewing court to draw on its judicial experience and common sense.” Id. at 679. If 17 a plaintiff alleges fraud or mistake, the plaintiff “must state with particularity the 18 circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). 19 Dismissal of a complaint for failure to state a claim can be based on either the “lack 20 of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable 21 legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). In 22 reviewing a motion to dismiss, “all factual allegations set forth in the complaint ‘are taken 23 as true and construed in the light most favorable to the plaintiffs.’” Lee v. City of L.A., 250 24 F.3d 668, 679 (9th Cir. 2001) (quoting Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 25 (9th Cir. 1996)). But courts are not required “to accept as true a legal conclusion couched 26 as a factual allegation.” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 27 265, 286 (1986)). 28 / / / 1 b. Analysis 2 Generally, Plaintiffs allege Defendant did not “offset the book’s entries on 3 liabilities” upon Plaintiffs’ request. (Doc. 26 at 3). Defendant argues that Plaintiffs’ claims 4 are rooted in “unlawful money,” “sovereign citizen and redemptionist [sic] theories,” 5 which are frivolous legal arguments made in an attempt to avoid paying for the car. (Doc. 6 25 at 7–8). Many courts have encountered frivolous redemptionists theories, which 7 propound that through machinations of the Uniform Commercial Code, a citizen may 8 contract for debt but never have to pay anything. Monroe v. Beard, 536 F.3d 198, 203 (3d 9 Cir. 2008); Swain v. Dir. of Corr., 2019 WL 7020322, at *2 (N.D. Cal. Dec. 20, 2019); 10 McLaughlin v. CitiMortgage, Inc., 726 F. Supp. 2d 201, 210 (D. Conn. 2010); Ray v. 11 Williams, 2005 WL 697041, at *6 (D. Or. Mar. 24, 2005), report and recommendation 12 adopted, 2005 WL 1429907 (D. Or. June 16, 2005), aff'd, 234 F. App’x 570 (9th Cir. 2007). 13 The Court finds that Plaintiffs’ SAC fails to state a plausible claim. The primary 14 injury alleged in the SAC occurred when Defendant declined to “offset the book’s entries 15 on the liabilities . . . .” (Doc. 24 at 3). Plaintiffs claim they have do not have to pay “the 16 alleged debt” and they have “a right to discharge the debt” so they are “asking for defendant 17 Ally Finance to report” that their “vehicle is paid in full.” (Id. at 3, 10). Plaintiffs have 18 stated no plausible reason why they are entitled to such relief. 19 The Court finds that SAC is ultimately rooted in frivolous redemptionist theories. 20 For example, the SAC makes the legal claim that: 21 Ally Finance is in violation fo Judy Podgorny rights where she did sign the contract under U.C.C. 1-308, U.C.C. 1-306.6 law that protects her right not 22 to perform “without prejudice Judy Podgorny reserve my right to be 23 compelled to perform under any contract or commercial agreement that I did not enter knowingly, voluntarily and intentionally. 24 (Doc. 24 at 5). The SAC carries on in this matter making nonsensical arguments and citing 25 to the Uniform Commercial Code for the proposition that Plaintiffs do not need to pay their 26 car loan. (Doc. 24 at 110–11). Such allegations show Plaintiffs’ claims are based on 27 frivolous theories, not plausible legal claims. 28 For these reasons, the Court will grant Defendant’s Motion to Dismiss and dismiss 1|| Plaintiffs’ SAC. In addition, the Court will dismiss Plaintiffs’ claims with prejudice and without leave to amend. Although the Federal Rules of Civil Procedure require leave to || amend when justice so requires, justice does not so require here. See Fed. R. Civ. P. 15(a)(2). A review of Plaintiffs’ TAC shows Plaintiffs persist to in making frivolous legal 5 || claims, which the Court will not tolerate by permitting Plaintiffs another chance to amend 6|| their pleadings. (See Doc. 26). 7 Accordingly, 8 IT IS HEREBY ORDERED that Defendant’s Motion to Strike (Doc. 27) is GRANTED. The Clerk of Court shall strike Plaintiffs’ Third Amended Complaint (Doc. 26) for failing to comply with the Federal Rules of Civil Procedure. 11 IT IS FINALLY ORDERED that Defendant’s Motion to Dismiss □□□□□□□□□□□ Second Amended Complaint (Doc. 25) is GRANTED. Plaintiffs’ Second Amended 13 |} Complaint (Doc. 24) is dismissed with prejudice. The Clerk of Court shall kindly terminate this matter. 15 Dated this 7th day of March, 2022. 16 17 oC. . fo L □ 18 norable'Diang4. Huretewa 19 United States District Judge 20 21 22 23 24 25 26 27 28
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