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Benson v. Energy Solutions, Inc.

United States District Court, D. Arizona

September 2, 2014

Rachel Benson, Plaintiff,
v.
Energy Solutions, Inc.; Law Office of James R. Vaughn, P.C.; TRS Financial Corporation; Victor and Jane Doe Gilgan, husband and wife; Robert Conti and Nikal Conti, husband and wife, Defendants.

ORDER

LAWRENCE O. ANDERSON, Magistrate Judge.

This action comes before the Court on Defendants' Motion to Dismiss the Complaint, pursuant to Rules 12(b)(1), 12(b)(5), and 12(b)(6), Federal Rules of Civil Procedure. (Doc. 22) Defendants move for dismissal of the First Amended Complaint ("FAC") on numerous grounds, including: 1) the District Court of Arizona lacks subject matter jurisdiction over this action due to the Rooker-Feldman doctrine; 2) and Plaintiff's claims are barred by the relevant statute of limitations; and 3) the FAC fails to state a plausible claim upon which relief can be granted. ( Id. ) Though Plaintiff has not asked for leave to amend the FAC, Defendants request dismissal with prejudice without leave to amend as any amendment would be futile.

After review of the parties' briefings and relevant authorities, the Court will grant Defendants' motion. The Court will dismiss this action with prejudice as a third amendment would be futile to state a plausible claim. The Court finds it unnecessary to address Defendants' other grounds for dismissal.

I. Background

This 2013 federal lawsuit arises out of a 2001 debt-collection action brought against Plaintiff in an Arizona justice court, resulting in a default judgment. Years later and twelve months after ESI garnished money in Plaintiff's bank accounts with Bank of America, Plaintiff commenced this federal action, on October 28, 2013, alleging multiple violations of the Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. §§ 1692 et seq., and the Arizona torts of Conversion and Intentional Infliction of Emotional Distress. (Doc. 1) Because the original Complaint failed to comply with several of the District Court of Arizona's Local Rules, the Court struck the Complaint without prejudice with leave to re-file by November 8, 2013. (Doc. 6) Plaintiff timely re-filed a nearly identical Complaint, and, on February 24, 2014, filed the verified FAC, adding five new defendants - TRS Financial Corporation; Victor Gilgan and Jane Doe Gilgan, husband and wife; Robert Conti and Nikal Conti, husband and wife. (Docs. 8; 18-2 at 1-20)

A. The State-Court Action

According to Arizona court documents[1] and undisputed allegations alleged in the FAC, the facts are as follows. On or about July 31, 1997, Plaintiff incurred a debt to Best Buy in the amount of $739.47. (Doc. 18-2, ¶ 13 at 4) Nearly four years later, on July 30, 2001, Defendant Energy Solutions, Inc. ("ESI"), the assignee of Household Bank ("HSBC"), filed a debt-collection action against Plaintiff in the Scottsdale Justice Court, Maricopa County, Arizona, CV 01-05236 ("the State-court action"). (Doc. 22-2, Exhibit ("Exh.") 2) In the State-court complaint, ESI alleged Plaintiff "entered into a contract for payment with assignor of ESI, " "defaulted in the payment obligation under the contract, " "the principal balance remaining due and unpaid [was] $739.47 plus interest at the rate of 18 per cent from July 31, 1997 until paid[, ]" and Plaintiff "failed to pay the indebtedness." ( Id., ¶¶ 2-4) ESI's complaint requested that judgment be entered in the amount of Plaintiff's debt to Best Buy, the accrued interest to date until paid, and ESI be awarded its reasonable attorneys' fees and court costs incurred. ( Id. at 3) ESI's counsel in the State-court action was James R. Vaughan, a non-defendant in this federal lawsuit and undisputed principal of Defendant Law Offices of James R. Vaughan, P.C. ("Vaughan"), an alleged professional corporation. (Doc. 18-2, ¶ 6 at 2)

Plaintiff admits in the verified FAC that she "does not recall ever being served with a summons and complaint or any other notice from either Defendant." (Docs. 18-2, ¶ 14 at 4) The process server's certified Affidavit of Service, however, confirms Plaintiff was personally served with the State-court's summons and complaint at 8:18 p.m. on August 13, 2001, at 4140 N. 78th St., #1149, Scottsdale, AZ 85251. (Doc. 22-3, Exh. 2) When Plaintiff failed to timely answer ESI's complaint, default was entered by the clerk and, more than 10 days later, a default judgment was entered on October 31, 2001, in favor of ESI and against Plaintiff. (Doc. 22-1, Exh. 1) The October 31, 2001 judgment was in the amount of "1, 943.99 plus interest on principal at 18% from October 26, 2001 until Judgment is entered. Interest on the Judgment [shall accrue] at the contract rate at 18% until paid." ( Id. ) Defendants note that "Plaintiff failed to challenge the final judgment in the justice court, or on appeal in the state courts of Arizona" and Plaintiff does not dispute this representation. (Doc. 22 at 3)

Plaintiff's FAC acknowledges that "[o]n or about October 12, 2006, the McDowell Mountain Justice Court renewed Defendants' judgment in the amount of $3, 326.08." (Doc. 18-2, ¶ 18 at 5) On August 4, 2011, ESI again renewed the judgment for an additional five years in accordance with A.R.S. 12-1613. ( Id. at 5-6; doc. 18-5, Exh. 5 at 1)

According to court records from McDowell Mountain Justice Court, ESI served a writ of garnishment on October 15, 2012, in case number CV 01-05236, on Bank of America, garnishing $1, 596.48 from Plaintiff's bank accounts. (Docs. 22-4, Exh. 4 at 1; 22-5, Exh. 5 at 1-4) On November 19, 2012 and February 6, 2013, ESI subpoenaed documents from Bank of America, seeking information, such as, Plaintiff's bank statements, applications for credit; checking, savings, money market, and brokerage accounts; safe deposit boxes, and guaranteed investment certificates. (Docs. 22-6, Exh. 6 at 1-4; 22-7, Exh. 7 at 1-6) The November 19, 2012 subpoena certifies that ESI mailed a copy to Plaintiff's last known address, which was provided to ESI in Bank of America's October 25, 2012 Answer to Writ of Garnishment. (Doc. 22-6, Exh. 6 at 4) The February 6, 2013 subpoena reflects ESI's counsel mailed a copy to Plaintiff's California counsel, Mark W. Straface. (Doc. 22-7, Exh. 7 at 6) Eight months later, Plaintiff filed this federal lawsuit.

B. The District-Court Allegations

The FAC alleges, or purports to allege, nine causes of action or claims for relief: 1) Declaratory Relief to set aside judgment for lack of standing (Count One[2]); 2) Injunctive Relief for criminal violations - A.R.S. § 32-1055 (Count Two); 3) Violations of the Fair Debt Collection Practices Act (Counts Three, Four and Five); 4) Conversion (Count Six); Injunction for violations of the FDCPA (Count Seven); Equitable Relief for violations of the Federal Trade Commission Act ("FTCA") and FDCPA (Count Eight); and Intentional Inflection of Emotional Distress ("IIED") (Count Nine). (Doc. 18-2) In this federal action, Plaintiff requests judgment be entered against Defendants for, inter alia, a judicial declaration pursuant to 28 U.S.C. § 2201(a) that Defendants ESI and Vaughan were not proper parties to the State-court action rendering the State judgment against Plaintiff void ab initio; an injunction against Defendants for further criminal violations of A.R.S. § 32-1055; awarding Plaintiff general, special, statutory, and/or punitive damages against Defendants for violating multiple parts of the FDCPA and committing the torts of Conversion, and IIED; and award Plaintiff her costs and reasonable attorney's fees pursuant to 15 U.S.C. § 1692k(a)(3). ( Id. at 18-19)

Specifically, Count Three alleges that Defendants are "debt collectors" by 15 U.S.C. § 1692a(6) and violated the FDCPA, 15 U.S.C. § 1692d, "by engaging in conduct the natural consequence of which was to harass, oppress, or abuse Plaintiff by" the following:

A. initiating legal action against Plaintiff without standing;
B. failing to serve Plaintiff with a summons and complaint;
C. obtaining a state court judgment without standing;
D. failing to give Plaintiff notice of the default judgment;
E. failing to give Plaintiff notice of the judgment renewal in 2006;
F. failing to give Plaintiff notice of the second judgment renewal in 2011;
G. failing to give Plaintiff notice of the garnishment;
H. garnishing Plaintiff's bank without standing;
I. subpoenaing Plaintiff's bank records on November 15, 2012;
J. subpoenaing Plaintiff's bank records on February 5, 2013; and
K. filing the [Beneficial National Bank ("BNB")] cardholder agreement with the court, defendants falsely represented that the [cardholder agreement] permitted the collection of eighteen percent (18%) interest.

( Id. at 10-11)

Count Four alleges that Defendants violated the FDCPA, 15 U.S.C. § 1692e(1), by using "false, deceptive and misleading representations" and/or "deceptive means to collect or attempt to collect a debt or to obtain information concerning a consumer by" the following:

A. initiating legal action against Plaintiff without standing;
B. failing to serve Plaintiff with a summons and complaint;
C. obtaining a state court judgment without standing;
D. failing to give Plaintiff notice of the default judgment;
E. failing to give Plaintiff notice of the judgment ...

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