Washington v. Pac. Credit Exch.

Full title: RICHARD WASHINGTON, Plaintiff, v. PACIFIC CREDIT EXCHANGE, et al…

Court: United States District Court, Northern District of California

Date published: Nov 17, 2021

21-cv-02374-JCS (N.D. Cal. Nov. 17, 2021)

Opinion

21-cv-02374-JCS

11-17-2021

RICHARD WASHINGTON, Plaintiff, v. PACIFIC CREDIT EXCHANGE, et al. Defendants.

JOSEPH C. SPERO, Chief Magistrate Judge.

REPORT AND RECOMMENDATION FOR DISMISSAL UNDER 28 U.S.C. § 1915 RE: DKT. NO. 8

JOSEPH C. SPERO, Chief Magistrate Judge.

I. INTRODUCTION

Plaintiff Richard Washington, pro se, asserts claims under the Truth in Lending Act (“TILA”) and the Fair Debt Collection Practices Act (“FDCPA”) against Defendants Pacific Credit Exchange (“PCE”) and James Schaffer. The case involves efforts to collect a debt that Washington purportedly owed to Phantom Motors, which purportedly assigned the debt to PCE. The undersigned magistrate judge previously granted Washington's application to proceed in forma pauperis and ordered him to show cause why his complaint should not be dismissed as frivolous and for failure to state a claim under 28 U.S.C. § 1915(e)(2)(B). Washington filed an amended complaint in response to that order. Because the amended complaint repeats the defects of the original complaint, the undersigned finds that further leave to amend would be futile, and recommends that the case be DISMISSED with prejudice.

Because not all parties have appeared and consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636(c), this case will be reassigned to a United States district judge for all further proceedings, including action on the recommendation of this report. Washington may file an objection to this recommendation no later than December 1, 2021.

The case management conference previously set for November 19, 2021 is VACATED.

II. BACKGROUND

A. Previous Order to Show Cause

The undersigned previously ordered Washington to show cause why his complaint should not be dismissed because it did “not provide a short and plain statement of his claim that would put PCE on notice of either the conduct through which it allegedly violated TILA and the FDCPA or the provisions of those statutes it purportedly violated.” Order to Show Cause (“OSC, ” dkt. 7) at 6. The undersigned noted that Washington relied on conclusory assertions of PCE accessing “personal information, ” opening unauthorized accounts, fabricating contracts, and providing false information, without meaningful explanation. Id. While Washington asserted that PCE's communications contained “profane and obscene language, ” none of the communications attached to his complaint met that description. Id.

It was “not entirely clear whether Washington disputes that he incurred the debt or that PCE was authorized to collect it, or if his claims are based solely on the manner in which PCE has attempted to do so, ” and Washington's complaint generally failed to “tie any of PCE's alleged misconduct to any particular provision of law.” Id. The attachments to his complaint included a large number of statutory citations in Washington's various administrative complaints, and marked up on his communications from PCE and underlying loan documents, but they generally “appear[ed] to provide no basis for a claim: as a few examples, 15 U.S.C. § 1601 is a declaration of purpose with no specific requirements, 15 U.S.C. § 1602 is a list of definitions, and 12 C.F.R. § 1026.61 concerns ‘hybrid prepaid-credit cards'—not the purported automotive loan at issue in this case.” Id. at 7. The undersigned determined that “Washington's scattershot approach to largely inapplicable legal authority in the exhibits to his complaint” and “failure to cite any particular provision in the complaint itself would leave a reasonable defendant guessing as to the asserted basis for liability.” Id.

The undersigned further noted that PCE's “use of positive rather than negative numbers to indicate a debt” in its ledger was clear on its face and not misleading, and that Washington's social security card and government identification card were not “credit cards” within the meaning of 15 U.S.C. § 1602(l), because while they might be used “as identification in the context of obtaining credit, they do not exist for the purpose of obtaining credit.” OSC at 7-8. The undersigned concluded as follows:

It is not entirely clear that nothing in Washington's complaint could support a claim. That said, his conclusory assertions, attachments citing apparently inapplicable legal authority, reliance on untenable theories regarding the definition of a “credit card” and the significance of positive numbers, and failure to identify the legal theories he intends to pursue in this case, taken together, obscure any potential merit to his claims. As a whole, the complaint does not satisfy the requirements of Rule 8(a) and Iqbal to present a short and plain statement of Washington's claim, plausibly supported by factual allegations. Washington is therefore ORDERED TO SHOW CAUSE why his complaint should not be dismissed as frivolous and for failure to state a claim under 28 U.S.C. § 1915(e)(2)(B).

Id. at 8. The undersigned ordered Washington to file either an amended complaint or a response arguing that his original complaint was sufficient no later than October 18, 2021. Id.

B. Washington's Amended Complaint

Washington filed his amended complaint on October 15, 2021, which adds Schafer as a defendant. See generally Am. Compl. (dkt. 8-1). The amended complaint adds some of the statutory citations that previously appeared in attachments to the original complaint. Washington asserts that several aspects of his contract with Phantom Motors violated 15 U.S.C. § 1605(a), which provides a definition of the term “finance charge.” Am. Compl. ¶¶ 6-9. He asserts that he was not provided “right of recission paperwork” as purportedly required by 15 U.S.C. § 1635, and that the contract is void due to “illegal elements, failure to disclose material facts, mistakes, misrepresentations, fraud, and breach of contract.” Am. Compl. ¶¶ 10-11.

Washington contends that a “contract is not a validation of a debt obligation.” Id. ¶ 12. For reasons that are not clear, he recites a definition of federal obligations and securities. Id. ¶ 13. Some paragraphs of the complaint assert purported violations of generally accepted accounting principles. Id. ¶¶ 16, 17, 27.

Restating his theory of positive and negative numbers that the undersigned previously rejected, Washington asserts that it is “mathematically impossible to take a positive number or integer add it onto a positive number or integer and create subtraction, ” that he “cannot submit a negative payment, ” and that a “positive balance that displays in the positive is in fact representation of credit, and a debt owed should reflect in the negative.” Id. ¶¶ 12-15. He contends that although his contract called for a bank to lend him money, the positive numbers in the ledger show instead that “the bank accepted my promissory note or negotiable instrument as new money, as a deposit, just like depositing cash into your checking account.” Id. ¶ 18. Washington asserts that he “entered a dealership for a consumer credit transaction to extend credit to [him]self as the original creditor, ” and that any assignment of the contract without his consent was illegal and fraudulent. Id. ¶ 20.

Washington also reasserts his position that PCE's communications were obscene, profane, and abusive, contending that no one else “can suppose what I deem profane and obscene language, as it is not clearly defined in the FDCPA, ” although he does not identify any particular language that he believes warrants that characterization. Id. ¶¶ 22-23. He further reasserts that his social security number is a “credit card” within the meaning of § 1602(l). Am. Compl. ¶ 29.

The amended complaint also includes conclusory references to unauthorized calls, assertions that an “affidavit of truth” Washington sent to PCE must be treated as a judgment, and citations to authorities that have no apparent connection to Washington's claims, including the Coinage Act and the Book of Hebrews. Washington once again asserts claims under TILA and the FDCPA, once again failing to identify within those claims any particular provision of those statutes that Defendants purportedly violated. Id. ¶¶ 42-52.

III. ANALYSIS

A. Legal Standard

Where a plaintiff is found to be indigent under 28 U.S.C. § 1915(a)(1) and is granted leave to proceed in forma pauperis, courts must engage in screening and dismiss any claims which: (1) are frivolous or malicious; (2) fail to state a claim on which relief may be granted; or (3) seek monetary relief from a defendant who is immune from such relief. 28 U.S.C. § 1915(e)(2)(B); see Marks v. Solcum, 98 F.3d 494, 495 (9th Cir. 1996). Rule 8(a)(2) of the Federal Rules of Civil Procedure provides that a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” A complaint that lacks such statement fails to state a claim and must be dismissed.

In determining whether a plaintiff fails to state a claim, the court assumes that all factual allegations in the complaint are true. Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). However, “the tenet that a court must accept a complaint's allegations as true is inapplicable to legal conclusions” and to “mere conclusory statements.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (quoting Twombly, 550 U.S. at 555). The pertinent question is whether the factual allegations, assumed to be true, “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570.

Where the complaint has been filed by a pro se plaintiff, as is the case here, courts must “construe the pleadings liberally . . . to afford the petitioner the benefit of any doubt.” Hebbe v. Pliler, 627 F.3d 338, 342 (9th Cir. 2010) (citations omitted). “A district court should not dismiss a pro se complaint without leave to amend unless ‘it is absolutely clear that the deficiencies of the complaint could not be cured by amendment.'” Akhtar v. Mesa, 698 F.3d 1202, 1212 (9th Cir. 2012) (quoting Schucker v. Rockwood, 846 F.2d 1202, 1203-04 (9th Cir. 1988) (per curiam)).

Although courts generally must accept a plaintiff's factual allegations as true even if they appear to be unlikely, the Supreme Court has made clear that a complaint may be dismissed as “frivolous” under § 1915 where it is based on “fanciful factual allegation.” Neitzke v. Williams, 490 U.S. 319, 325 (1989) (superseded by statute on other grounds as recognized in Lopez v. Smith, 203 F.3d 1122, 1126-27 (9th Cir. 2000)).

B. Washington's Complaint Remains Insufficient

Washington once again fails to provide anything more than the sort of conclusory assertions of liability and formulaic recitations of causes of action that Iqbal and Twombly held insufficient. He once again relies on statutory authority that provides no basis for liability—for example, misconstruing a statute that merely defines the term “finance charge, ” 15 U.S.C. § 1605(a), as instead imposing substantive obligations to return a down payment and provide insurance, or as prohibiting PCE from collecting late fees incurred after the loan was issued. See Am. Compl. ¶¶ 6-9. His reliance on 15 U.S.C. § 1635 as requiring disclosure of a right of recission is similarly misguided, as that statute by its terms applies only to loans where a security interest is “acquired in any property which is used as the principal dwelling of the person to whom credit is extended, ” which does not apply to the car loan at issue. 15 U.S.C. § 1635(a); see Am. Compl. ¶ 10.

Washington reasserts theories that the undersigned previously rejected, including implausible interpretations of positive numbers in a ledger, untenable characterization of his social security number as a “credit card, ” and vague and unsubstantiated assertions of profane language.¹Nothing in the amended complaint alters the undersigned's previous conclusions as to those theories.

1 The only specific communication Washington identifies in this context is a statement that PCE “would take legal action if not for the statute of limitations.” Am. Compl. ¶ 49. There is nothing profane or obscene about such a statement.

The amended complaint clarifies the primary theory of Washington's claim: that despite a contract identifying him as the recipient of a loan, the positive numbers in a ledger indicate that he was instead the creditor, and that he “extend[ed] credit to [him]self as the original creditor.” Am. Compl. ¶ 20. This theory is implausible—it is contradicted by both common sense and the documents attached to Washington's amended complaint, which make clear that he was the debtor in the transaction at issue, not the creditor.

Washington's complaint does not put Defendants on notice of any plausible claim against them. The undersigned concludes that this action is frivolous, and that further leave to amend would be futile. The undersigned therefore recommends that the case be DISMISSED with prejudice.

IV.CONCLUSION

For the reasons discussed above, the undersigned recommends that this case be DISMISSED under 28 U.S.C. § 1915(e)(2)(B), with prejudice, as frivolous and for failure to state a claim. Washington may file an objection to this recommendation no later than December 1, 2021.

Washington is encouraged to contact the Federal Pro Bono Project's Pro Se Help Desk for assistance. Lawyers at the Help Desk can provide basic assistance to parties representing themselves but cannot provide legal representation. Although in-person appointments are not currently available due to the COVID-19 public health emergency, Washington may contact the Help Desk at (415) 782-8982 or FedPro@sfbar.org to schedule a telephonic appointment. / / / Dated: November 17, 2021