(PC) Witkin v. Blackwell

[7] 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA [10] 11 MICHAEL AARON WITKIN, No. 2:17-cv-2692 DAD AC P 12 Plaintiff, 13 v. ORDER AND FINDINGS AND RECOMMENDATIONS 14 D. BLACKWELL, et al., 15 Defendants. [16] 17 Plaintiff, a former state inmate proceeding without an attorney, seeks relief pursuant to 42 18 U.S.C. § 1983 . Currently pending before the court is defendants’ motion to dismiss pursuant to [19] 28 U.S.C. § 1915 (e)(2)(A). ECF No. 31. The motion is fully briefed. See ECF No. 35, 36. For 20 the reasons explained below, the undersigned recommends the court deny defendants’ motion. 21 I. Background 22 A. Complaint and In Forma Pauperis (“IFP”) Application 23 On December 26, 2017, while plaintiff was an inmate in state custody, he filed a 24 complaint initiating this case. ECF No. 1. On January 4, 2018, plaintiff filed a motion to 25 proceed IFP. ECF No. 3. In his IFP application, signed December 14, 2014, plaintiff declared 26 under penalty of perjury that: he was “unable to pay the fees for these proceedings or give 27 security therefor”; he had not “received any money from the following sources over the last 28 twelve months,” including “[a]ny other sources”; and that he did not have any assets. Id. at 1-2 . 1 Plaintiff attached a “CDCR Inmate Statement Report” with his application, which indicated that 2 he had a “Current Available Balance” of $0.00 and $2,535.00 in “PLRA” obligations for seven 3 separate cases. Id. at 3 . 4 On July 8, 2019, the court granted plaintiff’s IFP application, but dismissed the complaint 5 and gave plaintiff leave to amend. ECF No. 7. Plaintiff’s first amended complaint was similarly 6 dismissed. ECF Nos. 12, 13. On March 20, 2020, plaintiff filed the second amended complaint 7 (“SAC”), which is the operative complaint, alleging constitutional violations based on events that 8 occurred on October 25, 2016, and in November 2016. ECF No. 16 at 4-10, 14. 9 B. Motion to Dismiss for Fraudulent IFP 10 On March 7, 2024, defendants filed a motion to dismiss plaintiff’s case with prejudice 11 under 28 U.S.C. § 1915 (e)(2), arguing that plaintiff made false allegations of poverty in bad faith 12 on his IFP application. ECF No. 31. Defendants claim that plaintiff made two false allegations: 13 (1) that he had no income in the twelve months prior to filing his IFP application, and (2) that he 14 had no assets. ECF No. 31 at 14-16. Defendants assert that plaintiff made these false allegations 15 in bad faith because he is an experienced litigator who intentionally diverted settlement funds to 16 conceal money from the court and intentionally failed to disclose that he had access to a trust 17 account (the “Witkin Trust Account”) that contained over $12,000 in assets. Id. at 16-19 . In 18 support of their position, defendants heavily rely on two other cases where plaintiff was found to 19 have made false allegations in bad faith: Witkin v. Sloan, No. 2:16-cv-2950 JAM EFB P, 2019 20 WL 6918216 , at *6, 2019 U.S. Dist. LEXIS 218427 , at *15-17 (E.D. Cal. Dec. 19, 2019), 21 findings and recommendations adopted 2020 WL 2193608 , 2020 U.S. Dist. LEXIS 80058 (E.D. 22 Cal. May 6, 2020), and Witkin v. Lee, No. 2:17-cv-0232 JAM EFB P, 2020 WL 2512383 , at *6, [23] 2020 U.S. Dist. LEXIS 86104 , at *15-17 (E.D. Cal. May 15, 2020), findings and 24 recommendations adopted 2020 WL 4350094 , 2020 U.S. Dist. LEXIS 134631 (E.D. Cal. July 29, 25 2020). Id. at 10-12, 14-15, 17-19 . 26 Defendants alternatively seek dismissal without prejudice or for the court to revoke 27 plaintiff’s IFP status and require him to pay the full filing fee or submit a new IFP application. [28] Id. at 20 . If plaintiff submits a new IFP application, defendants ask that they be given an 1 opportunity to respond considering a recent decision in this court finding that plaintiff 2 intentionally misrepresented his post-parole poverty status in bad faith. Id. at 20-21 . 3 C. Opposition to Motion to Dismiss 4 Plaintiff responds that he did not disclose the $1,200 on his IFP application in this case 5 because he mistakenly thought he had received it thirteen months before he filed the IFP instead 6 of eleven months; he has never had access to the Witkin Family Trust account; and his parents 7 loaned him money from the Witkin Family Trust account to help cover the cost of a deposition in 8 another case. ECF No. 35. 9 D. Reply to Opposition 10 In their reply, defendants argue that plaintiff has not shown that he did not have access to 11 the Witkin Family Trust account and that plaintiff’s “new excuse” contradicts a prior excuse 12 provided in a different case for why he did not disclose the settlement funds on his IFP 13 application. ECF No. 36 at 1-3, 6. Defendants also renew their arguments that plaintiff is an 14 experienced litigator who knew what he was doing when he diverted the funds to his mother, and 15 had plaintiff not diverted the funds, his prison trust account would have shown that he had $4,000 16 remaining from the settlement funds when he filed for IFP in this case. Id. at 4-6 . 17 E. Plaintiff’s Other Cases Dismissed for Fraudulent IFP 18 In Sloan and Lee, plaintiff signed IFP applications on December 5, 2016, which he later 19 filed, declaring under penalty of perjury that he had no assets and that in the past twelve months 20 he had no income. Sloan, 2019 WL 6918216 at *1, 2019 U.S. Dist. LEXIS 218427 at *1; Lee, [21] 2020 WL 2512383 at *1, 2020 U.S. Dist. LEXIS 86104 at *1. The defendants sought to dismiss 22 those cases based on fraudulent IFPs. Id. The court took judicial notice of: (1) the settlement 23 agreement in Witkin v. Swarthout, No. 2:13-cv-1931 GEB KJN, where plaintiff agreed to settle 24 the case for $10,625 and use approximately $4,700 of the settlement to pay off restitution fines 25 and asked that the remaining amount be sent to his mother; (2) the settlement conference in 26 Witkin v. Solis, No. 1:12-cv-1256 AWI MJS, in which plaintiff agreed to settle the case for 27 $1,200 and asked the full amount be sent to his mother; and (3) a “Notice of Proof of Availability 28 of Funds for Plaintiff’s Deposition of Dr. B. Barnett” in Witkin v. Lotersztain, Case No. 2:15-cv1 0638 MCE KJN, which showed the “Witkin Family Trust” account held $12,205.10 in assets and 2 $6,200.76 in debts. Id. 3 With respect to false allegations, the court found that “[e]ven disregarding the Witkin 4 Family Trust, which plaintiff claims he only has access to when permitted by his parents, plaintiff 5 received $5,666.09 in November 2016, less than a month before he averred that he had received 6 no income from any source in the prior 12 months,” and that because “[t]he settlement was made 7 with him, to compensate him, and it was at his direction that the money was sent to his mother” he 8 was obligated to disclose it as income. Sloan, 2019 WL 6918216 at *5, 2019 U.S. Dist. LEXIS 9 218427 at *13 (emphasis in original); Lee, 2020 WL 2512383 at *5, 2020 U.S. Dist. LEXIS 10 86104 at *13. The court further found that the situation was akin to that in Cuoco v. U.S. Bureau 11 of Prisons, 328 F. Supp. 2d 463 (S.D.N.Y. Aug. 2, 2004), in which plaintiff had prevented checks 12 from being deposited in her trust account and had diverted settlement funds to her mother to 13 perpetuate a negative balance in her prison account The court rejected plaintiff’s argument that 14 because the settlement funds were used to repay a loan to her parents, she did not have to claim it 15 as income. Id. 16 The court also found that plaintiff had made the false allegations in Sloan and Lee in bad 17 faith because the timeline of relevant events and the fact that plaintiff was an experienced litigator 18 showed plaintiff had engaged in deceptive conduct. Sloan, 2019 WL 6918216 at *6, 2019 U.S. 19 Dist. LEXIS 218427 at *15-17 (emphasis in original); Lee, 2020 WL 2512383 at *6, 2020 U.S. 20 Dist. LEXIS 86104 at *15-17 In reaching this conclusion the court inferred that at the time 21 plaintiff decided to divert the funds to his mother, he knew he was going to file additional 22 litigation based on conduct that had already occurred. Id. 23 II. Legal Standard 24 Under the Prison Litigation Reform Act of 1995 (“PLRA”) an inmate may proceed in 25 federal court without paying filing fees if the inmate “submits an affidavit that includes a 26 statement of all assets such [inmate] possesses” and a prison trust account statement for the six 27 months prior to the filing of the complaint, establishing that the inmate “is unable to pay such fees 28 or give security thereof.” 28 U.S.C. § 1915 (a). If at any point in the litigation the court 1 determines that the allegations of poverty were untrue, the court must dismiss the case. 28 U.S.C. 2 § 1915(e)(2)(A). 3 In the Ninth Circuit, before dismissing, “a showing of bad faith is required, not merely 4 inaccuracy.” Escobedo v. Applebees, 787 F.3d 1226 , 1234 n.8 (9th Cir. 2015); Martinez v. 5 Baughman, No. 22-16750, 2024 WL 1300001 , at *1 (9th Cir. Mar. 27, 2024). Accordingly, the 6 two essential questions are whether (1) plaintiff made allegations of poverty that were untrue, and 7 if so, (2) whether plaintiff provided the false allegations of poverty in bad faith. If the court 8 concludes the answer to both questions is yes, the court must dismiss with prejudice. See 28 9 U.S.C. § 1915 (e)(2). If the court concludes that the plaintiff did not act in bad faith, a lesser 10 sanction, such as “revoking IFP and provid[ing] a window for the plaintiff to pay the filing fees, 11 or dismissing without prejudice,” is more appropriate. See Lee, 2020 WL 2512383 at *3, 2020 12 U.S. Dist. LEXIS 86104 at *7 (citing cases). 13 III. Analysis 14 A. Request for Judicial Notice 15 Defendants’ motion is accompanied by a request for judicial notice. ECF No. 31-2. They 16 request that the court take judicial notice of dockets, complaints, IFP applications, motions, 17 objections to findings and recommendations, and other filings in plaintiff’s other litigation before 18 this court. Id. at 2-3 . Plaintiff has not opposed this request. 19 For purposes of the present motion, the court takes judicial notice of the existence and 20 contents of the ten documents identified by defendants in their request. See Fed. R. Evid. 201; 21 see also United States v. Wilson, 631 F.2d 118, 119 (9th Cir. 1980) (“[A] court may take judicial 22 notice of its own records in other cases.” (citations omitted)). However, the court does not 23 assume the truth of the facts asserted. See Tri v. Gutierrez, No. 1:22-cv-0836 KES SKO PC, [24] 2024 WL 1801392 , at *3, 2024 U.S. Dist. LEXIS 75805 , at *6 (E.D. Cal. Apr. 25, 2024) (citing 25 M/V Am. Queen v. San Diego Marine Constr. Corp., 708 F.2d 1483, 1491 (9th Cir. 1983)). 26 B. Plaintiff Made False Allegations 27 Defendants argue that plaintiff made the following false allegations: (1) that he had not 28 received any income in the prior twelve months, which is untrue because he had received $1,200 1 on January 27, 2017 as part of his settlement in Solis; and (2) that he had no assets, which is 2 untrue because he had access to the Witkin Family Trust, containing over $12,000 in assets, 3 which he used to pay for a deposition in another case. ECF No. 31 at 14-16. In opposition, 4 plaintiff does not dispute that he received $1,200 in settlement fund within the timeframe at issue. 5 ECF No. 35 at 1-2. Instead, he argues that he did not disclose this amount because he mistakenly 6 thought he had received that amount thirteen months before he filed the IFP application, instead 7 of eleven months. Id. In reply, defendants argue that plaintiff’s “new excuse” that he “forgot” 8 when he received the settlement agreement contradicts his prior excuse in other litigation where 9 he said he did not think he needed to disclose settlement funds because the funds had been 10 diverted to his mother. ECF No. 36 at 1-3. Defendants also argue that plaintiff provides 11 insufficient evidence to show he did not have access to the Witkin Family Trust account. Id. at 612 7. 13 Defendants’ reply argument about the basis for plaintiff’s allegations is best addressed 14 regarding bad faith. The relevant question at this stage is whether plaintiff made allegations of 15 poverty that were untrue, and not why he made them. 16 The parties do not dispute that within the twelve months prior to plaintiff filing the IFP in 17 this case, plaintiff’s mother received $1,200 on plaintiff’s behalf for the Solis settlement. 18 Plaintiff’s failure to disclose this income constitutes a false allegation of poverty during the 19 relevant period. 20 With respect to the assets in the Witkin Family Trust, the court finds that defendants have 21 not established that plaintiff had access to the account. That plaintiff had used the account as 22 proof of available funds to cover a deposition in another case does not in and of itself establish 23 access. Defendants’ rely on Kennedy v. Huibregtse, 831 F.3d 441 (7th Cir. 2016) to suggest 24 otherwise, but this reliance is misplaced. In Kennedy, the trust account was created and managed 25 for the plaintiff. Kennedy, 831 F.3d at 443 . Here, there is no evidence that the Witkin Family 26 Trust account was created or managed for plaintiff. Additionally, the court finds it misleading for 27 the defendants to emphasize the assets in the Witkin Family Trust while leaving out the fact that 28 the same trust includes a debt for more than half the asset amount. ECF No. 31-2 at 19. Such 1 exclusion effectively exaggerates the amount of money plaintiff allegedly concealed. The 2 defendants also fail to explain how a bank statement for a period ending a year before plaintiff 3 signed the IFP application in this case establishes that these assets existed at the time plaintiff 4 signed the IFP application, creating an obligation to disclose, much less that the account is 5 plaintiff’s or managed for plaintiff. Without more, the court cannot conclude that plaintiff had 6 assets that he was required to but failed to disclose. 7 Defendants’ reliance on a telephone call between plaintiff and his mother eleven months 8 before signing the IFP application, in which plaintiff referred to a “specific figure” that he has, 9 fares no better. See ECF No. 31 at 10; ECF No. 31-1 at 13. During the same call, plaintiff 10 indicated that the Attorney General understood that plaintiff could either pay for the deposition 11 himself or “can get somebody to pay it.” Id. The use of the Witkin Family Trust account as 12 proof of ability to pay for the deposition in another case does not help identify who paid for the 13 deposition and who the funds belonged to. 14 For the reasons discussed above, the court finds that plaintiff made false allegations of 15 poverty when he failed to disclose the $1,200 in income earned during the prior twelve months, 16 but defendants have not established that plaintiff made false allegations concerning his assets. 17 C. Defendants Have Not Established That Plaintiff Acted in Bad Faith 18 Defendants argue that plaintiff’s intent to deceive and/or mislead the court is evidenced by 19 the following : (1) he clearly had access to the Witkin Family Trust to pay for the filing fee, 20 because he had used the same trust to pay for a deposition in another case earlier that year; (2) as 21 an experienced litigator with extensive knowledge and familiarity with the IFP system, he 22 attempted to conceal from the court the settlement amounts in Swarthout and Solis by diverting 23 the money to his mother instead of his prison trust account; and (3) this court has already found 24 that he acted in bad faith when he diverted the settlement funds to improve his chances of 25 obtaining IFP status in Sloan and Lee. Id. at 16-19. 26 Plaintiff responds that he did not make false allegations about his income or assets in bad 27 faith because his failure to disclose the $1,200 was an honest mistake in remembering when the 28 check was issued, and he does not actually have access to the Witkin Family Trust account, which 1 belongs to his parents. ECF No. 35. 2 In reply, defendants argue that plaintiff has not shown that he did not have access to the 3 Witkin Family Trust account, and that plaintiff’s “new excuse” that he “forgot” when he received 4 the Solis settlement funds contradicts his prior excuse in other litigation where he said he did not 5 think he needed to disclose the settlement funds because the funds were diverted to his mother. 6 ECF No. 36 at 1-3. Defendants also argue that at the time plaintiff diverted his settlement funds 7 to his mother, he was an experienced litigator who knew he planned to bring this lawsuit based on 8 events that had already taken place and intentionally diverted the settlement funds so that he 9 would not have to pay the filing fee for his new case. Id. at 4. Defendants claim that had plaintiff 10 not diverted settlement funds in November of 2016 and January of 2017 to his mother, his trust 11 account would still have had over $4,000 remaining after paying off his $2,535 debt in filing fee 12 obligations. Id. at 5. Defendants claim that the IFP application in this case was filed 13 contemporaneously with the IFP applications that judges in other cases had determined contained 14 false allegations made in bad faith, id. at 1-4,1 and that plaintiff’s behavior is similar to the 15 deceitful behavior in Cuoco, 328 F. Supp. 2d 463 . Id. Defendants further argue that whether or 16 not plaintiff would have been entitled to proceed IFP regardless of his inaccurate representation is 17 irrelevant. Id. at 6-7. 18 As an initial matter, because the court has determined that plaintiff did not make false 19 allegations concerning his assets, the court need not resolve the question whether plaintiff’s 20 failure to disclose the Witkin Family Trust account on his IFP application was in bad faith. 21 Accordingly, the issue here is whether plaintiff acted in bad faith when he failed to disclose the 22 $1,200 in income during the prior twelve months. For the reasons discussed below, the 23 undersigned cannot conclude that he did. 24 Despite their efforts, defendants fall short of establishing an ulterior motive for why [26] 1 The court notes that the Sloan and Lee IFP applications were not filed contemporaneously with the IFP in this case, but rather almost a year before the IFP application in this case. ECF No. 3 27 (plaintiff’s IFP application in this case, filed December 15, 2017); ECF No. 31-2 at 28-30 (plaintiff’s IFP application in Sloan, filed December 19, 2016), 33 (plaintiff’s IFP application in 28 Lee, filed February 2, 2017). 1 plaintiff failed to disclose the $1,200. First, it is not necessarily the case that plaintiff’s “new 2 excuse” contradicts his prior excuse. Plaintiff could have thought he did not need to disclose the 3 settlement funds in a prior IFP in a separate litigation because the funds were sent to his mother, 4 and a year later believed that he did not need to disclose those same funds in a subsequent IFP 5 because he believed more than twelve months had passed since the settlement funds were issued. 6 That other judges of this court have rejected the first reason does not mean that this court must 7 reject the second reason. 8 Second, defendants fail to provide evidence to support their assertion that had plaintiff not 9 diverted the settlement funds, he would still have had $4,000 in his trust account a year later. 10 Perhaps some, or even most, of those funds would have remained. However, it is not necessarily 11 so. The court cannot conclude that the funds would have been untouched in the ensuing six to 12 twelve months, such that the full amount would have been reflected in plaintiff’s prisoner trust 13 account statements at the time of his IFP application. 14 Third, although there appears to be no dispute that at the time plaintiff filed the present 15 action and IFP application, he was an experienced litigator with seven other pending civil rights 16 actions, see ECF No. 3 at 3 (prison trust account showing seven PLRA obligations); ECF No. 31 17 at 17-18; ECF No. 35; ECF No. 36 at 4, this alone will not suffice to rule out the possibility that 18 plaintiff made a mistake. Put differently, the court will not presume bad faith simply because 19 plaintiff is an experienced litigator—especially where there is no binding legal support for such 20 presumption. 21 Fourth, unlike in plaintiff’s prior cases, Sloan and Lee, the timeline in this case does not 22 support an inference of deceitful intent. In Sloan and Lee, the incidents that gave rise to the 23 litigation took place in 2015 and 2016. Sloan, 2019 WL 6918216 at *6, 2019 U.S. Dist. LEXIS 24 218427 at *16; Lee, 2020 WL 2512383 at *6, 2020 U.S. Dist. LEXIS 86104 at *16. Four to six 25 months later,2 when plaintiff settled Swarthout and diverted the settlement funds to his mother, [26] 2 Sloan and Lee refer to a four-month gap, but the gap in Sloan from February and March of 27 2016 to August 2016 is a five- to six-month gap. Sloan, 2019 WL 6918216 at *6, 2019 U.S. Dist. LEXIS 218427 at *16; Lee, 2020 WL 2512383 at *6, 2020 U.S. Dist. LEXIS 86104 at *16. The 28 exact length of the gap in Lee is unclear, as the court does not include the months and just refers 1 plaintiff likely had a very good idea of whether he was going to pursue the Sloan and Lee 2 litigation. Id. It is even more likely, if not almost certain, that when plaintiff settled Solis—eight 3 to nine months after the incidents giving rise to Sloan and Lee, and only a month before filing 4 Sloan and Lee—plaintiff knew he was going to file Sloan and Lee and intentionally diverted the 5 Solis settlement funds to avoid paying the filings fees in those cases. See id. The same cannot be 6 said about the present case. The incidents giving rise to the claims occurred in October and 7 November of 2016, and most of them occurred after the $1,200 Solis settlement agreement and 8 after plaintiff had already directed payment to his mother. See ECF No. 16 at 4-10, 14 (plaintiff’s 9 allegations of events); see also ECF No. 31-1 at 47-49 (Solis settlement agreement). 10 Timing and knowledge of impending new litigation appear to be critical in finding bad 11 faith in diversion of settlement fund cases. See Sloan, 2019 WL 6918216 at *6, 2019 U.S. Dist. 12 LEXIS 218427 at *16; Lee, 2020 WL 2512383 , at *6, 2020 U.S. Dist. LEXIS 86104 at *16; see 13 also Cuoco, 328 F. Supp. 2d at 467-68 (finding bad faith where plaintiff accepted an offer of 14 judgment for $10,000 three weeks before filing the present action, and settled another suit for 15 $3,500 one week before filing the present action, and directed the funds to her mother instead of 16 her prison trust account to perpetuate a negative balance in her account). Because plaintiff is 17 unlikely to have known with certainly that he would be pursuing future litigation in this case, the 18 court is not persuaded that plaintiff failure to disclose the $1,200 in this case reflects bad faith. 19 In sum, although the findings of plaintiff’s bad faith misrepresentations in other cases 20 raise legitimate suspicions about his honesty regarding eligibility for IFP status, there is 21 insufficient evidence here to support a finding of bad faith in relation to the false statements on 22 the IFP application in this case. 23 Accordingly, the court recommends denial of defendants’ motion to dismiss and 24 imposition of a lesser sanction for plaintiff’s failure to disclose the $1,200 Solis settlement 25 amount on his IFP application. The recommended sanction is that plaintiff be ordered to pay the [26] to incidents that occurred in 2015 and 2016. Lee, 2020 WL 2512383 at *6, 2020 U.S. Dist. 27 LEXIS 86104 at *16. Nonetheless, given that the incidents occurred in 2015 and 2016 and the court references a four-month period, it is reasonable to conclude there was at least a four-month 28 gap between the last incident alleged in Lee and the August 2016 settlement. 1 | $405.00 filing fee in full or file a new application to proceed IFP within thirty days of the court’s 2 || order adopting these findings and recommendations. If plaintiff elects to file a new IFP 3 || application, he must provide a complete picture of his current financial situation, including an 4 || explanation as to his ability to provide basic necessities for himself, and must include any 5 || information relating to any financial assistance he receives, the amount of this assistance, and the 6 || name of the person or entity providing this assistance. Additionally, defendants should have an 7 || opportunity to respond to any future IFP application filed in this case. 8 IV. Conclusion 9 In accordance with the above, IT IS HEREBY ORDERED that Defendants’ request for 10 || judicial notice (ECF No. 31-2) is GRANTED. 11 IT IS RECOMMENDED that: 12 1. Defendants’ motion to dismiss pursuant to 28 U.S.C. § 1915 (e)(2) (ECF No. 31) be 13 | DENIED; 14 2. Plaintiff be ordered to pay the $405.00 filing fee in full or file a new application to 15 || proceed in forma pauperis within thirty days from any order by the district court adopting these 16 | findings and recommendations, or face dismissal; and 17 3. Ifplaintiff files a new application to proceed in forma pauperis, defendants be given 18 || an opportunity to respond. 19 These findings and recommendations are submitted to the United States District Judge 20 || assigned to the case, pursuant to the provisions of 28 U.S.C. § 636 (b)(I1). Within fourteen days 21 || after being served with these findings and recommendations, plaintiff may file written objections 22 || with the court. The document should be captioned “Objections to Magistrate Judge’s Findings 23 || and Recommendations.” Plaintiff is advised that failure to file objections within the specified 24 || time waives the right to appeal the District Court’s order. Martinez v. YIst, 951 F.2d 1153 (9th 25 | Cir. 1991). 26 || DATED: January 21, 2025 Z □ fl / 27 ALLISON CLAIRE 3g UNITED STATES MAGISTRATE JUDGE