Shahadi v. Navy Federal Credit Union

• Court: District Court, D. Arizona
• Decided: October 9, 2025
• Docket: 2:25-cv-03363
• Status: Unknown

Opinion

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

9 Mary Shahadi, No. CV-25-03363-PHX-SMB

10 Plaintiff, ORDER

11 v.

12 Navy Federal Credit Union,

13 Defendant. 14 15 Pending before the Court is pro se Plaintiff Mary Shahadi’s Complaint (Doc. 1), 16 and Application for Leave to Proceed In Forma Pauperis (Doc. 2). After screening 17 Plaintiff’s Complaint pursuant to 28 U.S.C. § 1915(e)(2), the Court dismisses the 18 Complaint for the reasons explained below. 19 I. LEGAL STANDARD 20 When a plaintiff seeks to proceed in forma pauperis the Court must review the 21 complaint to determine whether the action: (i) is frivolous or malicious; (ii) fails to state a 22 claim on which relief may be granted; or (iii) seeks monetary relief against a defendant 23 who is immune from such relief. See 28 U.S.C. § 1915(e)(2)(B). Additionally, Rule 8(a) 24 of the Federal Rules of Civil Procedure requires that: A pleading that states a claim for relief must contain: (1) a short and plain 25 statement of the grounds for the court’s jurisdiction, unless the court already 26 has jurisdiction and the claim needs no new jurisdictional support; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; 27 and (3) a demand for the relief sought, which may include relief in the 28 alternative or different types of relief. 1 Although Rule 8 does not demand detailed factual allegations, “it demands more 2 than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 3 556 U.S. 662, 678 (2009). “Threadbare recitals of the elements of a cause of action, 4 supported by mere conclusory statements, do not suffice.” Id. A complaint “must contain 5 sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its 6 face.” Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim 7 is plausible “when the plaintiff pleads factual content that allows the court to draw the 8 reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing 9 Twombly, 550 U.S. at 556). A complaint that provides “labels and conclusions” or “a 10 formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. 11 at 555. Nor will a complaint suffice if it presents nothing more than “naked assertions” 12 without “further factual enhancement.” Id. at 557. 13 II. DISCUSSION 14 Plaintiff asserts the following counts against Defendant: (1) violation of the Fair 15 Debt Collection Practices Act (“FDCPA”); (2) violation of the Fair Credit Reporting Act 16 (“FCRA”); (3) negligence/breach of privacy; (4) spoliation of evidence/obstruction; and 17 (5) intentional infliction of emotional distress (“IIED”). (Doc. 1 at 2.) The Court finds 18 Plaintiff fails to state a claim for relief as to each count. 19 A. FDPA 20 The FDCPA prohibits abusive collection tactics by debt collectors. See 15 U.S.C 21 §§ 1692–1692o. Debt collectors are strictly liable for FDCPA violations. Clark v. Cap. 22 Credit & Collection Servs., Inc., 460 F.3d 1162, 1175 (9th Cir. 2006); see Kaiser v. 23 Cascade Cap., LLC, 989 F.3d 1127, 1135 (9th Cir. 2021) (“The FDCPA makes debt 24 collectors strictly liable for misleading and unfair debt collection practices.”). “To prevail 25 on a FDCPA claim, a plaintiff must sufficiently allege that (1) he was the object of 26 collection activity arising from a consumer debt as defined by the FDCPA; (2) the 27 defendant is a debt collector as defined by the FDCPA; and (3) the defendant engaged in 28 an act or omission prohibited by the FDCPA.” Hamilton v. Tiffany & Bosco PA, No. 1 CV-14-00708-PHX-GMS, 2015 WL 11120694, at *2 (D. Ariz. Feb. 10, 2015), aff’d, 713 2 F. App’x 674 (9th Cir. 2018). 3 Here, Plaintiff alleges Defendant “attempted to collect disputed debts without 4 validation, sent improper settlement offers, and engaged in deceptive and unfair practices.” 5 (Doc. 1 at 2.) The Court finds Plaintiff fails to state a claim under the FDCPA. 6 First, Plaintiff fails to establish that the subject debt is covered by the FDCPA. “As 7 a threshold matter, a suit brought under the FDCPA must involve a ‘debt’ within the 8 meaning of the statute.” Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009). Under the 9 FDCPA, a “debt” is an obligation incurred “primarily for personal, family or household 10 purposes.” 15 U.S.C. § 1692a(5). Thus, the FDCPA “applies to consumer debts and not 11 business loans.” Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1068 (9th Cir. 1992). When 12 making this threshold determination, “courts may look to the ostensible purpose for which 13 the obligation was entered into, but it is the funds’ actual use that is paramount.” Davis v. 14 Hollins L., 968 F. Supp. 2d 1072, 1077 (E.D. Cal. 2013). Plaintiff does not plead any facts 15 explaining the purpose of the debt or how she used the funds. Without any further facts, 16 the Court cannot “determine whether the transaction was primarily consumer or 17 commercial in nature.” Bloom, 972 F.2d at 1068 (citation modified); Harper v. Collection 18 Bureau of Walla Walla, Inc., No. C06-1605-JCC, 2007 WL 4287293, at *4 (W.D. Wash. 19 Dec. 4, 2007) (stating that “[t]he FDCPA does not protect every imaginable debt”). 20 Second, a debt collector can seek payment without first validating the debt. See 21 Randolph v. IMBS, Inc., 368 F.3d 726, 729 (7th Cir. 2004) (“Courts do not impute to debt 22 collectors other information that may be in creditors’ files—for example, that debt has been 23 paid or was bogus to start with. This is why debt collectors send out notices informing 24 debtors of their entitlement to require verification and to contest claims.”). Therefore, 25 Plaintiff’s allegation that Defendant failed to verify a disputed debt is not actionable under 26 the FDCPA. 27 Third, the Court is unaware how sending “improper settlement offers” violates the 28 FDCPA. Without more information, the Court is unsure if the Plaintiff is alleging that 1 these offers were fraudulent (potentially actionable) or if Plaintiff just did not like the offer 2 (not actionable). Plaintiff must describe why these settlement offers were “improper;” the 3 Court will not speculate otherwise. See Aunhkhotep v. Thomas, No. 4:24-cv-01551-HEA, 4 2025 WL 328057, at *1 (E.D. Mo. Jan. 29, 2025) (“The Court will not supply additional 5 facts or construct legal theories to support the plaintiff’s claims.”). 6 Fourth, Plaintiff’s remaining allegation that Defendant “engaged in deceptive and 7 unfair practices” is too conclusory to support a cause of action under the FDCPA. See 8 Iqbal, 556 U.S. at 678. Plaintiff fails to allege “sufficient factual matter” to demonstrate 9 that it is “plausible” that Defendant engaged in such deceptive and unfair practices. Id. 10 Accordingly, Plaintiff fails to state a claim under the FDCPA, and the Court 11 dismisses the count with leave to amend. 12 B. FCRA 13 Congress enacted the FCRA “to ensure fair and accurate credit reporting, promote 14 efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. 15 v. Burr, 551 U.S. 47, 52 (2007). The FCRA regulates credit reporting agencies (“CRAs”) 16 and those furnishing information to CRAs. 15 U.S.C. § 1681(b); § 1681s-2. A furnisher 17 has a duty to report accurate information to CRAs and investigate consumer disputed 18 information when a CRA notices the furnisher of the dispute. § 1681s-2(a), (b). 19 “The purpose of § 1681s-2(b) is to require furnishers to investigate and verify that 20 they are in fact reporting complete and accurate information to the CRAs after a consumer 21 has objected to the information in his file.” Gorman v. Wolpoff & Abramson, LLP, 584 22 F.3d 1147, 1164 (9th Cir. 2009). After conducting a reasonable investigation, “the 23 furnisher must correct or delete inaccurate information.” Gross v. CitiMortgage, Inc., 33 24 F.4th 1246, 1251 (9th Cir. 2022). However, before a court considers the reasonableness of 25 the furnisher’s procedures, the consumer must make a prima facie showing of inaccuracy 26 in the credit report. See id. “[I]f there is no inaccuracy, then the reasonableness of the 27 investigation is not in play.” Id. 28 In sum, to establish a claim under § 1682s-2(b), a plaintiff must show “(1) a credit 1 reporting inaccuracy existed on plaintiff’s credit report; (2) plaintiff notified the consumer 2 reporting agency that plaintiff disputed the reporting as inaccurate; (3) the consumer 3 reporting agency notified the furnisher of the alleged inaccurate information of the dispute; 4 and (4) the furnisher failed to investigate the inaccuracies or further failed to comply with 5 the requirements in 15 U.S.C. 1681s-2(b)(1)(A)–(E).” Clifford v. LexisNexis Risk Data 6 Mgmt. LLC, No. CV-21-01145-PHX-DJH, 2023 WL 2478864, at *5 (D. Ariz. Mar. 13, 7 2023). 8 Here, Plaintiff fails to identify a specific inaccuracy on her credit report. 9 “[I]nformation is inaccurate for purposes of 15 U.S.C. § 1681s-2(b) where it either is 10 ‘patently incorrect’ or is ‘misleading in such a way and to such an extent that it can be 11 expected to adversely affect credit decisions.’” Shaw v. Experian Info. Sols., Inc., 891 F.3d 12 749, 756 (9th Cir. 2018) (quoting Gorman, 584 F.3d at 1163). Plaintiff merely states 13 “Defendant reported false information to credit bureaus.” (Doc. 1 at 2.) This statement is 14 conclusory and fails to inform Defendant which information is patently incorrect or 15 misleading. See Twombly, 550 U.S. at 555. Therefore, Plaintiff fails to state a claim under 16 the FCRA, and the Court dismisses the count with leave to amend. 17 C. Negligence/Breach of Privacy 18 Here, Plaintiff alleges Defendant “mailed to Plaintiff confidential financial and legal 19 records of another NFCU member, including documents authored by that member’s 20 retained counsel.” (Doc. 1 at 1.) Plaintiff states “[t]hese records contained highly sensitive 21 personal identifiers and privileged attorney-client communications,” and argues that this 22 “disclosure constitutes a serious breach of privacy and negligence, exposing plaintiff to 23 liability for handling information she never should have received.” (Id.) Therefore, 24 Plaintiff alleges two claims within this count: breach of privacy, and negligence. Both 25 implicate threshold standing issues. 26 The Court’s jurisdiction is limited to cases and controversies. Raines v. Byrd, 521 27 U.S. 811, 818 (1997). To show that a case or controversy exists, a plaintiff must establish 28 that she has standing to bring her alleged claims. Lujan v. Defs. of Wildlife, 504 U.S. 555, 1 560–61 (1992). To establish standing, “a plaintiff must demonstrate (1) that he or she 2 suffered an injury in fact that is concrete, particularized, and actual or imminent, (2) that 3 the injury was caused by the defendant, and (3) that the injury would likely be redressed 4 by the requested judicial relief.” Thole v. U.S. Bank N.A., 590 U.S. 538, 540 (2020). As 5 to Plaintiff’s negligence claim, she fails to plead an imminent injury in fact. And, as to 6 Plaintiff’s breach of privacy claim, she fails to establish she has third-party standing to 7 assert the privacy interests of another. 8 1. Injury in Fact 9 Plaintiff alleges Defendant violated “reasonable duties of care” by “disclosing to 10 Plaintiff the confidential financial and legal dispute records of another member.” (Doc. 1 11 at 2.) She states Defendant’s negligent disclosure injured her because it exposed her “to 12 liability for handling information she never should have received.” (Id. at 1.) Plaintiff’s 13 alleged future injury “is too speculative to invoke the jurisdiction of an Art. III court.” 14 Whitmore v. Arkansas, 495 U.S. 149, 157 (1990). 15 “A party facing prospective injury has standing to sue where the threatened injury 16 is real, immediate, and direct.” Davis v. Fed. Election Comm’n, 554 U.S. 724, 734 (2008). 17 “Although imminence is concededly a somewhat elastic concept, it cannot be stretched 18 beyond its purpose, which is to ensure that the alleged injury is not too speculative for 19 Article III purposes—that the injury is certainly impending.” Clapper v. Amnesty Int’l 20 USA, 568 U.S. 398, 409 (2013) (emphasis in original) (quoting Defs. of Wildlife, 504 U.S. 21 at 565 n.2). This means the future injury cannot be conjectural or hypothetical. See Defs. 22 of Wildlife, 504 U.S. at 560. 23 Here, Plaintiff does not allege that the apparent liability she faces is real or certainly 24 impending—she simply states that she faces liability. Yet, such liability is hypothetical at 25 best. Plaintiff does not allege that any party has initiated proceedings against her. Nor 26 does she allege that such proceedings are on the horizon. It is no surprise that Plaintiff fails 27 to make this showing because she did not intentionally view another’s private information. 28 In Arizona, a person is liable for invading the privacy of another when he or she 1 “intentionally intrudes” upon the “private affairs or concerns” of another, and if such 2 intrusion “would be highly offensive to a reasonable person.” Hart v. Seven Resorts Inc., 3 947 P.2d 846, 853 (Ariz. Ct. App. 1997) (quoting Restatement (Second) of Torts § 652B 4 (A.L.I. 1977)). Plaintiff alleges Defendant exposed her to another’s private information; 5 she did not intentionally intrude upon another’s private affairs. Thus, any “liability” is a 6 speculative possibility. See Whitmore, 495 U.S. at 158. (“[W]e have said many times 7 before and reiterate today: Allegations of possible future injury do not satisfy the 8 requirements of Art. III.”). Accordingly, the Court does not have jurisdiction over 9 Plaintiff’s negligence claim because she does not establish standing. 10 2. Third-Party Standing 11 In addition to Article III standing, “[p]rudential limitations on federal court 12 jurisdiction dictate that . . . a party must assert his or her own legal rights and interests, not 13 those of others.” Washington v. Trump, 145 F.4th 1013, 1024 (9th Cir. 2025). “This rule 14 assumes that the party with the right has the appropriate incentive to challenge (or not 15 challenge) governmental action and to do so with the necessary zeal and appropriate 16 presentation.” Kowalski v. Tesmer, 543 U.S. 125, 129 (2004). However, a party may have 17 standing to sue on behalf of a third party if “three important criteria are satisfied”: (1) “[t]he 18 litigant must have suffered an injury in fact, thus giving him or her a sufficiently concrete 19 interest in the outcome of the issue in dispute”; (2) “the litigant must have a close relation 20 to the third party”; and (3) “there must exist some hindrance to the third party’s ability to 21 protect his or her own interests.” Powers v. Ohio, 499 U.S. 400, 410–11 (1991) (citation 22 modified). 23 Here, Plaintiff does not contend Defendant impermissibly disclosed any of her own 24 private information to a third party. Rather, Plaintiff alleges Defendant disclosed another’s 25 information to her, constituting “a serious breach of privacy.” (Doc. 1 at 1.) Therefore, 26 Plaintiff attempts to assert the privacy rights and interests of a third party. However, 27 Plaintiff lacks standing to do so. Plaintiff does not allege a close relation to this other 28 individual or that the individual is unable to protect his or her own interests. As such, the 1 Court finds no reason Plaintiff should assert the legal interests of this third party. 2 Accordingly, the Court does not have jurisdiction over Plaintiff’s breach of privacy claim 3 because Plaintiff does not establish that she has standing. See Coal. of Clergy, L., & 4 Professors v. Bush, 310 F.3d 1153, 1164 (9th Cir. 2002) (finding no third-party standing 5 where a party fails to demonstrate a close relationship with the third party). 6 D. Spoliation of Evidence/Obstruction 7 Plaintiff alleges Defendant “deleted Plaintiff’s internal account communications 8 from its online platform after litigation was reasonably foreseeable.” (Doc. 1 at 2.) Thus, 9 Plaintiff brings a state claim for “spoliation of evidence.” (Id.) 10 Plaintiff places the cart before the horse. “Spoliation is the destruction or significant 11 alteration of evidence, or the failure to preserve property for another’s use as evidence in 12 pending or reasonably foreseeable litigation.” Compass Bank v. Morris Cerullo World 13 Evangelism, 104 F. Supp. 3d 1040, 1051–52 (S.D. Cal. 2015). However, Arizona does not 14 recognize “a distinct cause of action” for first-person spoliation. Lips v. Scottsdale 15 Healthcare Corp., 229 P.3d 1008, 1009 (Ariz. 2010); Liberti v. City of Scottsdale, No. 1 16 CA-CV 22-0599, 2023 WL 4078539, at *2 (Ariz. Ct. App. June 20, 2023) (“The Arizona 17 Supreme Court has repeatedly declined to recognize spoliation as an independent tort.”). 18 Rather, Arizona courts “address such allegations in the underlying suit through sanctions.” 19 Lips, 229 P.3d at 1009; see also Fed. R. Civ. P. 37. Put simply, an allegation of spoliation 20 of evidence can accompany a cause of action, but it cannot stand in the place of that action. 21 Accordingly, the Court finds Plaintiff cannot state a claim for spoliation of evidence as a 22 standalone cause of action. 23 E. IIED 24 Under Arizona law, the “tort of intentional infliction of emotional distress [“IIED”] 25 requires” (1) “proof of extreme and outrageous conduct by the defendant”; 26 (2) “defendant’s intent to cause emotional distress or reckless disregard of the near 27 certainty that such distress will result from defendant’s conduct”; and (3) “resulting severe 28 emotional distress.” Wallace v. Casa Grande Union High Sch. Dist. No. 82 Bd. of 1 Governors, 909 P.2d 486, 495 (Ariz. Ct. App. 1995). “Extreme and outrageous conduct is 2 conduct so outrageous in character, and so extreme in degree, as to go beyond all possible 3 bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized 4 community.” Christakis v. Deitsch, 478 P.3d 241, 245 (Ariz. Ct. App. 2020) (citation 5 modified). 6 Here, Plaintiff alleges “Defendant’s conduct was extreme and outrageous” “causing 7 Plaintiff severe anxiety and emotional harm.” (Doc. 1 at 2.) Such threadbare recitals of an 8 IIED cause of action are insufficient to state a claim for relief. See Iqbal, 556 U.S. at 678. 9 III. LEAVE TO AMEND 10 “[A] district court should grant leave to amend even if no request to amend the 11 pleading was made, unless it determines that the pleading could not possibly be cured by 12 the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (citation 13 modified). The Court grants Plaintiff leave to amend all counts except for count four 14 (spoliation of evidence). Plaintiff’s amended complaint must address the deficiencies 15 identified above and should follow the form detailed in Rule 7.1 of the Local Rules of Civil 16 Procedure. Within thirty (30) days from the date of entry of this Order, Plaintiff may 17 submit a First Amended Complaint. Plaintiff must clearly designate on the face of the 18 document that it is the “First Amended Complaint.” The First Amended Complaint must 19 be retyped or rewritten in its entirety and may not incorporate any part of the original 20 Complaint by reference. 21 The Court draws attention to the District of Arizona’s Federal Court Advice Only 22 Clinic, Federal Court Advice Only Clinic - Phoenix | District of Arizona | United States 23 District Court (uscourts.gov). The Court also notes the E-Pro Se program which assists 24 litigants with creating a Complaint form, Welcome - eProSe (uscourts.gov). Lastly, the 25 Court advises Plaintiff that certain resources for self-represented parties, including a 26 handbook and the Local Rules, are available on the Court’s website, 27 www.azd.uscourts.gov, by following the link “Self-Represented Litigants.” 28 IV. CONCLUSION 2 Accordingly, 3 IT IS HEREBY ORDERED granting Plaintiff's Application to Proceed In Forma 4|| Pauperis (Doc. 2.) 5 IT IS FURTHER ORDERED that Plaintiff’s Complaint (Doc. 1) is dismissed 6 || with leave to file a First Amended Complaint within thirty (30) days of the date of this 7\| Order. 8 IT IS FURTHER ORDERED that if Plaintiff does not file a First Amended || Complaint within thirty (30) days of the date of this Order, the Clerk of Court shall dismiss 10 || this action without further order from the Court. 11 IT IS FURTHER ORDERED that if Plaintiff elects to file a First Amended || Complaint, it may not be served unless and until the Court issues an Order screening the 13 || First Amended Complaint pursuant to 28 U.S.C. § 1915(e)(2). 14 Dated this 8th day of October, 2025. 15 = . 16 SO ts 17 A lonorable Susan M. Brnovich United States District Judge 18 19 20 21 22 23 24 25 26 27 28

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