Huffman v. JP Morgan Chase Bank, NA

1 WO — 2 — — 3 — — 4 — — 5 — 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA — 8 — 9 Bruce E. Huffman, No. CV-22-00903-PHX-JJT 10 Plaintiff, ORDER 11 v. 12 JP Morgan Chase Bank, NA, et al., 13 Defendants. — 14 — 15 At issue is Defendant Goodman Holmgren Law Group, LLP’s (“Goodman Law”) 16 Motion to Dismiss (Doc. 16, GLMTD), to which Plaintiff Bruce E. Huffman filed a 17 Response (Doc. 24), and Goodman Law filed a Reply (Doc. 28). Also at issue is Defendant 18 JPMorgan Chase Bank, N.A.’s (“Chase Bank”) Motion to Dismiss (Doc. 15, CBMTD), to 19 which Plaintiff filed a Response (Doc. 27),1 and Chase Bank filed a Reply (Doc. 36). 20 Finally, the Court considers Defendant Magic Ranch Estates Homeowners’ Association’s 21 (“Magic Ranch”) Motion for Summary Judgment (Doc. 29, MSJ), supported by a 22 Statement of Facts (Doc. 30, DSOF), to which Plaintiff filed a Response (Doc. 42), 23 supported by a Response in Opposition to Magic Ranch’s Statement of Facts (Doc. 43, 24 PRSOF) and a Responsive Statement of Facts (Doc. 43, PSSOF), and Magic Ranch filed a 25 Reply (Doc. 44.) The Court finds these matters suitable for resolution without oral 26 argument. See LRCiv 7.2(f). — 27 — 28 1 To the extent it was unclear, the Court’s Order (Doc. 34) discharging its Order to Show Cause accepted Plaintiff’s late Response. 1 I. BACKGROUND 2 Plaintiff resides in Arizona in Magic Ranch Estates, which has a Homeowners’ 3 Association that can collect fines from residents. (Doc. 1, Compl. ¶ 16; PSSOF ¶¶ 1–2.) 4 Magic Ranch hired Goodman Law to collect $1,200.00 in fines from Plaintiff. (Compl. 5 ¶ 17; PSSOF ¶¶ 3–4.) On May 26, 2021, Goodman Law served a writ of garnishment on 6 Chase Bank for $60,597.25 for the fines and over $57,000.00 in attorneys’ fees. (Compl. 7 ¶ 18; PSSOF ¶ 5.) 8 On July 12, 2021, the Superior Court of Pinal County held a hearing, and the parties 9 stipulated that all funds deposited in the bank account were Social Security benefits, but 10 Goodman Law insisted that the funds were not exempt from garnishment. (Compl. 11 ¶¶ 22-24; PSSOF ¶¶ 6–7.) The Superior Court then granted a writ of garnishment for 12 $60,597.25. (Compl. ¶ 25; PSSOF ¶ 8.) Plaintiff alleges that after the hearing, he asked 13 Goodman Law multiple times to release the funds, but Goodman Law declined to do so. 14 (Compl. ¶¶ 26–27.) 15 Plaintiff then obtained counsel, who filed a Motion for Reconsideration, which the 16 Superior Court granted on January 11, 2022. (Compl. ¶¶ 28–29; PSOF ¶¶ 9–10.) The 17 Superior Court found that the account was not subject to garnishment because it contained 18 exclusively Social Security benefits. (Compl. ¶ 29; PSSOF ¶ 10.) 19 Plaintiff alleges that on that same day, the Superior Court sent copies of the ruling 20 to Chase Bank. (Compl. ¶ 30.) Plaintiff further alleges that on January 20, 2022, he visited 21 a branch and was told that Chase Bank had no record of the ruling. (Compl. ¶ 31.) Plaintiff 22 alleges that he then emailed a copy of the ruling directly to a branch employee that day. 23 (Compl. ¶ 32.) After receipt of the ruling, Chase Bank told Plaintiff his funds would be 24 released in five business days, but the funds were not released until March 21, 2022. 25 (Compl. ¶¶ 33, 35; PSSOF ¶ 17.) Plaintiff alleges that while Chase Bank refused to release 26 the funds, he followed up with them five times. (Compl. ¶ 34.) — 27 — — 28 — 1 II. LEGAL STANDARDS 2 A. Motion to Dismiss 3 Rule 12(b)(6) is designed to “test[] the legal sufficiency of a claim.” Navarro v. 4 Block, 250 F.3d 729, 732 (9th Cir. 2001). A dismissal under Rule 12(b)(6) for failure to 5 state a claim can be based on either: (1) the lack of a cognizable legal theory; or (2) the 6 absence of sufficient factual allegations to support a cognizable legal theory. Balistreri v. 7 Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). When analyzing a complaint for 8 failure to state a claim, the well-pled factual allegations are taken as true and construed in 9 the light most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063 , 1067 10 (9th Cir. 2009). A plaintiff must allege “enough facts to state a claim to relief that is 11 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has 12 facial plausibility when the plaintiff pleads factual content that allows the court to draw the 13 reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 14 Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556 ). “The plausibility 15 standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer 16 possibility that a defendant has acted unlawfully.” Id. 17 “While a complaint attacked by a Rule 12(b)(6) motion does not need detailed 18 factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief 19 requires more than labels and conclusions, and a formulaic recitation of the elements of a 20 cause of action will not do.” Twombly, 550 U.S. at 555 (cleaned up and citations omitted). 21 Legal conclusions couched as factual allegations are not entitled to the assumption of truth 22 and therefore are insufficient to defeat a motion to dismiss for failure to state a claim. Iqbal, 23 556 U.S. at 679–80. However, “a well-pleaded complaint may proceed even if it strikes a 24 savvy judge that actual proof of those facts is improbable, and that ‘recovery is very remote 25 and unlikely.’” Twombly, 550 U.S. at 556 (quoting Scheuer v. Rhodes, 416 U.S. 232 , 236 26 (1974)). — 27 — — 28 — 1 B. Motion for Summary Judgment 2 Under Federal Rule of Civil Procedure 56(a), summary judgment is appropriate 3 when the movant shows that there is no genuine dispute as to any material fact and the 4 movant is entitled to prevail as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. 5 Catrett, 477 U.S. 317 , 322–23 (1986). “A fact is ‘material’ only if it might affect the 6 outcome of the case, and a dispute is ‘genuine’ only if a reasonable trier of fact could 7 resolve the issue in the non-movant’s favor.” Fresno Motors, LLC v. Mercedes Benz USA, 8 LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 9 242, 248 (1986)). The court must view the evidence in the light most favorable to the 10 nonmoving party and draw all reasonable inferences in the nonmoving party’s favor. 11 Torres v. City of Madera, 648 F.3d 1119, 1123 (9th Cir. 2011). 12 The moving party “bears the initial responsibility of informing the district court of 13 the basis for its motion, and identifying those portions of [the record] . . . which it believes 14 demonstrate the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 232 . 15 When the moving party does not bear the ultimate burden of proof, it “must either produce 16 evidence negating an essential element of the nonmoving party’s claim or defense or show 17 that the nonmoving party does not have enough evidence of an essential element to carry 18 its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Cos., — 19 — 210 F.3d 1099, 1102 (9th Cir. 2000). If the moving party carries this initial burden of 20 production, the nonmoving party must produce evidence to support its claim or defense. — 21 — Id. at 1103 . Summary judgment is appropriate against a party that “fails to make a showing 22 sufficient to establish the existence of an element essential to that party’s case, and on 23 which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322 . 24 In considering a motion for summary judgment, the court must regard as true the 25 non-moving party’s evidence, as long as it is supported by affidavits or other evidentiary 26 material. Anderson, 477 U.S. at 255 . However, the non-moving party may not merely rest 27 on its pleadings; it must produce some significant probative evidence tending to contradict 28 the moving party’s allegations, thereby creating a material question of fact. Id. at 256–57 1 (holding that the plaintiff must present affirmative evidence in order to defeat a properly 2 supported motion for summary judgment); see also Taylor v. List, 880 F.2d 1040 , 1045 3 (9th Cir. 1989) (“A summary judgment motion cannot be defeated by relying solely on 4 conclusory allegations unsupported by factual data.” (citation omitted)). 5 III. ANALYSIS 6 A. Goodman Law’s Motion to Dismiss 7 Goodman Law moves to dismiss Plaintiff’s claims against it for conversion and 8 intentional infliction of emotional distress (“IIED”), arguing that they are barred under 9 Arizona’s common law litigation privilege. However, Plaintiff contends that his claims are 10 based on Goodman Law’s improper litigation-related conduct, which is not covered by the 11 litigation privilege. 12 Arizona’s litigation privilege protects the speech of “judges, parties, lawyers, 13 witnesses and jurors.” Green Acres Tr. v. London, 688 P.2d 617, 621 (Ariz. 1984). 14 Communications related to judicial proceedings are protected to promote “the fearless 15 prosecution and defense of claims which leads to complete exposure of pertinent 16 information for a tribunal’s disposition.” Id. (citing Prosser, Law of Torts (4th ed. 1971) 17 § 114 p. 777–81). Though traditionally the litigation privilege has been used to shield those 18 involved in judicial proceedings from defamation actions, Arizona has extended the 19 privilege to other claims. See, e.g., Linder v. Brown & Herrick, 943 P.2d 758, 766 (Ariz. 20 Ct. App. 1997) (fraud and IIED claims). The existence of the privilege is a question of law 21 for courts to decide. Green Acres, 688 P.2d at 621 (citing Restatement (Second) of Torts, 22 § 619). 23 1. Conduct or Communication 24 While some jurisdictions have expressly extended litigation privilege to conduct, 25 see, e.g., Mantia v. Hanson, 79 P.3d 404, 411 (Or. Ct. App. 2003), Arizona has not done 26 so. Consequently, under current Arizona law, if a party’s claim is supported by factual 27 allegations that qualify as conduct—not communication—then Arizona’s litigation 28 privilege does not apply. 1 First, Plaintiff alleges that Goodman Law served a writ of garnishment upon Chase 2 Bank. (Compl. ¶ 18.) This is communication; the content of a document and the method of 3 delivery are treated the same for purposes of the privilege. See Goldman v. Sahl, 462 P.3d 4 1017, 1033 (Ariz. Ct. App. 2020) (“The superior court concluded that there was no relevant 5 distinction in Arizona law between the content of a bar charge and the act of filing a bar 6 charge.”). 7 Plaintiff next alleges that at the hearing, Goodman Law argued that Plaintiff’s funds 8 were not exempt from garnishment despite acknowledging the account held Social Security 9 benefits. (Compl. ¶ 23–24.) The litigation privilege clearly covers statements made in 10 court. 11 Additionally, Plaintiff alleges that after the hearing but before the Superior Court 12 ultimately granted his Motion for Reconsideration and quashed the writ, he informed 13 Goodman Law that the bank account only contained Social Security benefits, and 14 Goodman Law refused to release the funds. (Compl. ¶¶ 26–27.) Failure to communicate is 15 covered under the litigation privilege. See Lewis v. Swenson, 617 P.2d 69, 73 (Ariz. Ct. 16 App. 1980 ) (finding the privilege applies in an action against an attorney who failed to 17 prevent a witness from discussing malpractice insurance); Linder, 943 P.2d at 765–66 18 (finding that plaintiffs cannot bring a fraud claim premised on opposing counsels’ failure 19 to produce documents); cf. Janus v. Am. Fed’n of State, Cnty., and Mun. Emps., Council 20 31, 138 S. Ct. 2448, 2463 (2018) (noting that under First Amendment law, speaking is 21 treated the same as refusing to speak). Plaintiff’s allegation essentially amounts to refusing 22 to communicate with Chase Bank and/or the Court. Accordingly, the Court finds that this 23 allegation is covered by the litigation privilege as well. 24 Finally, to the extent Plaintiff further alleges that Goodman Law opposed his Motion 25 for Reconsideration, again, arguments made in court, whether though filings or during a 26 court hearing, are covered by the litigation privilege. — 27 — — 28 — 1 2. Improper Litigation Conduct 2 However, even if Arizona’s litigation privilege would typically protect 3 communications, it “does not preclude an action for improper litigation conduct.” 4 Goldman, 462 P.3d at 1033 . 5 Citing to Goldman, Plaintiff argues that his claims can proceed because Goodman 6 Law’s actions were improper. However, in Goldman, the court clarified that this exception 7 is for specific causes of action. Id. at 1029 n.5 (clarifying that the court uses the term 8 “improper litigation conduct” to refer to claims for “wrongful use of a civil proceeding, 9 malicious prosecution, and abuse of process”); id. at 1033–34 (discussing cases permitting 10 these specific claims). Thus, Arizona courts dismiss claims that do not fall within this 11 exception. See Linder, 943 P.2d at 766 (finding that plaintiffs’ fraud and IIED claims 12 “against opposing counsel fail to comprise recognized causes of action”). 13 Plaintiff also likens his situation to that in Tucson Airport Auth. v. Certain 14 Underwriters at Lloyd’s, London, 918 P.2d 1063 (App. 1996). In Tucson Airport Authority, 15 the plaintiff brought bad faith claims against insurers after the insurers threatened that they 16 would not defend the plaintiff in litigation if the plaintiff contested the insurers’ filings in 17 another case. Id. at 1065 . The plaintiff followed the insurers’ instructions, the insurers 18 obtained judgment in their favor, and then the insurers used the judgment and plaintiff’s 19 failure to contest the filings to argue that the insurers did not have to pay insurance claims. — 20 — Id. 21 The court determined that the litigation privilege did not apply to the bad faith claim, 22 finding that the basis for the “bad faith claim is not a communication, but a course of 23 ‘wrongful and tortious’ conduct evidenced by the insurers’ actions and communications 24 during the coverage actions.” Id. at 1066 . The court reasoned that an insurer’s duty to its 25 insured “would be rendered meaningless if . . . the litigation privilege could be employed 26 to excuse a breach of the duties.” Id. 27 The circumstances in this case are distinguishable. The exception in Tucson Airport 28 Authority is limited. Lory v. Fed. Ins. Co., 122 Fed. Appx. 314, 319 (9th Cir. 2005) (stating 1 that Tucson Airport Authority’s exception is restricted to bad faith claims and refusing to 2 apply the exception to an IIED claim against an insurer); see also Linder, 943 P.2d at 768 3 (permitting sanctions after finding that the plaintiff’s reliance on Tucson Airport Authority 4 was “wholly misplaced” because unlike insurers and their insured, no fiduciary duties exist 5 between a party and opposing counsel). Here, Plaintiff does not bring a bad faith claim, 6 Goodman Law is not an insurer, and there is no alleged fiduciary relationship between 7 Plaintiff and Goodman Law. 8 Plaintiff also cites to three other cases, but the Court does not find them persuasive 9 because they are out-of-state cases that do not discuss Arizona’s litigation privilege, and 10 on this issue, the Court is bound to apply Arizona law as it stands. See Fed. R. Evid. 501 11 (“[I]n a civil case, state law governs privilege regarding a claim or defense for which state 12 law supplies the rule of decision.”); Mason and Dixon Intermodal, Inc. v. Lapmaster Intern. 13 LLC, 632 F.3d 1056, 1060 (9th Cir. 2011) (“When a district court . . . hears state law claims 14 based on supplemental jurisdiction, the court applies state substantive law to the state law 15 claims.”). 16 Because all the factual allegations supporting Plaintiff’s state claims are covered by 17 Arizona’s litigation privilege, Plaintiff cannot sustain an action for conversion or IIED 18 against Goodman Law. Consequently, these claims must be dismissed. 19 B. Chase Bank’s Motion to Dismiss 20 Chase Bank moves to dismiss all claims against it. Plaintiff brings claims under the 21 Social Security Act and Federal Banking Regulations and state-law claims for unjust 22 enrichment, conversion, and IIED. For the following reasons, the Court will dismiss all 23 claims except Plaintiff’s claims for conversion and unjust enrichment to the extent they are 24 based on Chase Bank’s alleged failure to release the funds after January 11, 2022. 25 1. Private Right of Action 26 Chase first argues that neither § 207(a) of the Social Security Act, codified at — 27 — 42 U.S.C. § 407 (a), nor 31 C.F.R. Part 212 of the Federal Banking Regulations creates a 28 private right of action. “[T]he fact that a federal statute has been violated and some person 1 harmed does not automatically give rise to a private cause of action in favor of that person.” 2 Cannon v. Univ. of Chi., 441 U.S. 677, 688 (1979). “Instead, the statute must either 3 explicitly create a right of action or implicitly contain one.” Diaz v. Davis (In re Digimarc 4 Corp. Derivative Litig.), 549 F.3d 1223, 1230 (9th Cir. 2008). To determine whether an 5 implicit private right of action exists, courts must therefore ask whether Congress intended 6 to create such a right. Touche Ross & Co. v. Redington, 442 U.S. 560, 568 (1979). Not only 7 must plaintiffs show that Congress intended to create a private right, but they must also 8 show that Congress intended to create a private remedy. Alexander v. Sandoval, 532 U.S. 9 275, 286 (2001) (citing Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11 , 15 10 (1979)). The party seeking a private right of action bears the burden to demonstrate that 11 one exists. Northstar Fin. Advisors, Inc. v. Schwab Invs., 615 F.3d 1106, 1115 (9th Cir. 12 2010) (citing Opera Plaza Residential Parcel Homeowners Ass’n v. Hoang, 376 F.3d 831 , 13 835 (9th Cir. 2004)). 14 i. 42 U.S.C. 407(a) 15 Plaintiff brings a claim under § 407(a), alleging that Chase Bank violated the 16 statute’s anti-attachment provision, which states that Social Security benefits shall not “be 17 subject to execution, levy, attachment, garnishment, or other legal process . . . .” The Court 18 has not found, and the parties have not pointed to, any case where a court has addressed 19 the question and found that a private right of action under § 407(a) exists. Instead, courts 20 directly considering the issue—including this Court—have determined that it does not. See, 21 e.g., Galanova v. Portnoy, 432 F. Supp. 3d 433 , 446 (S.D.N.Y. 2020); Callahan v. 22 Bregman, No. 1:19-CV-1034, 2019 WL 9594163 , at *2 (W.D. Mich. Dec. 23, 2019), 23 adopted, 2020 WL 4464493 (August 4, 2020); Pearson v. Bank of Am., N.A., No. CV-1624 3402-JJT, 2016 WL 5871490 , at *1 (D. Ariz. October 7, 2016); Harris v. Prudential Ins. 25 Co. of Am., No. 3:09-CV-613, 2010 WL 918304 , at *5 (N.D. Ohio March 10, 2010). 26 But whether there is a private right of action of any kind under § 407(a) or not, there 27 is no private right of action for the private remedy that Plaintiff seeks. Plaintiff pursues 28 relief outside of the return of his benefits; they have already been released. Because “[t]he 1 protection afforded by § 407 is to ‘moneys paid,’” Philpott v. Essex Cnty. Welfare Bd., 409 2 U.S. 413, 416 (1973), it stands to reason that once the money has been returned to its proper 3 place, no action under § 407(a) can be maintained. See Tom v. First Am. Credit Union, 151 4 F.3d 1289, 1291 (10th Cir. 1998) (stating that after granting summary judgment on claims 5 for breach of contract, under § 407(a), and under the Civil Service Retirement Act, the 6 district court awarded damages for only the amount of money that was seized); Alexander 7 v. Bank of Am., No. 07-4039-CV-C-NKL, 2007 WL 3046637 , at *2 (W.D. Mo. Oct. 17, 8 2007) (finding that § 407(a) “would provide a defense” if the bank did not release the 9 benefits). Plaintiff has not pointed to any case law finding otherwise. 10 Moreover, the Social Security Administration has interpreted § 407(a) as an 11 affirmative defense to garnishment. See Program Operations Manual System, 12 GN 02410.001 Assignment of Benefits, available at 13 https://secure.ssa.gov/apps10/poms.nsf/lnx/0202410001 (“A beneficiary or recipient can 14 use [§ 407] as a personal defense if ordered to pay his or her payments to someone else, or 15 if his or her payments are ordered to be taken by legal process.”). 16 As support, Plaintiff cites to four cases where courts did not explicitly address the 17 issue of the existence of a private right of action. In both cited Supreme Court cases, a state 18 sued to obtain Social Security benefits of individuals, which was permitted under the state’s 19 reimbursement scheme. Bennett v. Arkansas, 485 U.S. 395, 396 (1988); Philpott, 409 U.S. 20 at 414–15. Addressing the use of the Social Security Act as a defense to stop the taking, 21 the Court found that the reimbursement scheme violated § 407(a) and consequently, the 22 Supremacy Clause. Bennett, 485 U.S. at 396–97; Philpott, 409 U.S. at 415, 417 . Likewise, 23 in Crawford v. Gould, patients of state psychiatric hospitals brought suit to challenge a 24 state’s reimbursement scheme, and the Ninth Circuit found that the scheme violated the 25 Supremacy Clause because it conflicted with § 407(a). 56 F.3d 1162, 1163 (9th Cir. 1995). 26 Lastly, in Gorstein v. World Savings Bank, an unpublished memorandum decision, the 27 Ninth Circuit found that a district court correctly dismissed a plaintiff’s § 407(a) claim 28 against a bank because the bank was not a proper defendant. 110 Fed. Appx. 9 , at *9–10 1 (9th Cir. 2004). None of these cases permitted the type of relief Plaintiff pursues here. In 2 all three cases where the courts found a violation of § 407(a), they relied on the statute to 3 stop ongoing takings. 4 Plaintiff also equates the question of whether a defendant is proper under § 407(a) 5 with the question of whether there is a private right of action. It is correct that courts, 6 including the Ninth Circuit, have used the proper defendant analysis to find that plaintiffs 7 cannot bring a claim against intermediaries. See, e.g., id. at 10; Christensen v. Ariz. Cent. 8 Credit Union, No. CV-08-0862-PHX-FJM, 2008 WL 4853414 , at *3 (D. Ariz. November 9 7, 2008). But again, in none of the cases cited were the plaintiffs allowed to proceed and 10 obtain the relief that Plaintiff seeks here. 11 Even if the Court were to sidestep the private right of action analysis and instead 12 use Plaintiff’s suggested approach, Chase Bank is not a proper defendant. Section 407(a) 13 “does not entitle beneficiaries to sue intermediaries who have done nothing more than 14 follow a court order that they had no role in obtaining.” Gorstein, 110 Fed. Appx. at 10 ; 15 see also Christensen, 2008 WL 4853414 , at *3 (“Because section 407(a) is meant to protect 16 social security recipients from creditors, plaintiffs have failed to state a claim against the 17 Credit Union under section 407(a).”). A bank or credit union that holds the account 18 containing benefits is a proper defendant only where it was also acting as a creditor. See, 19 e.g., Tom, 151 F.3d at 1293 (finding that a credit union violated § 407(a) by using Social 20 Security benefits in plaintiff’s bank account to offset unpaid loans). Here, Plaintiff does 21 not argue that Chase Bank was acting as a creditor. And though Chase Bank delayed 22 releasing Plaintiff’s Social Security benefits, there are no allegations in the Complaint that 23 Chase Bank used Plaintiff’s benefits to secure discharge of a liability that Plaintiff owed to 24 it. 25 ii. 21 C.F.R. Part 212 26 Nor does Part 212 create a private right of action. First, regulations cannot by 27 themselves create a private right of action. Alexander, 532 U.S. at 291 (“Language in a 28 regulation may invoke a private right of action that Congress through statutory text created, 1 but it may not create a right that Congress has not.”). Thus, for parties to invoke a right of 2 action through a regulation, they must attach the regulation to a statute that does create a 3 private right of action. Here, Plaintiff does not meet his burden to show there is a private 4 right of action because Plaintiff did not provide any statute whose private right of action 5 can be invoked through Part 212. 6 Second, even if a regulation could create a private right of action, Part 212 could 7 not create one. The existence of one express method of enforcing a rule suggests that the 8 drafters intended to preclude all other methods. Id. at 290. And here, 31 C.F.R. 212.11(a) 9 expressly provides that “[f]ederal banking agencies will enforce compliance with this part.” 10 There is no other stated method of enforcement. Accordingly, there is no private right of 11 action to enforce Part 212. Hawes v. Stephens, 964 F.3d 412 , 416 n.3 (5th Cir. 2020) 12 (finding the same). 13 iii. Common Law Claims 14 Chase Bank also argues that Plaintiff’s common law claims must be dismissed 15 because they are simply a method to get around the lack of private right of action under § 16 407(a) and Part 212. 17 Under this “end-run” theory, courts have dismissed common law claims that rely 18 upon statutes that do not have a private right of action. See Wigod v. Wells Fargo Bank, 19 N.A., 673 F.3d 547, 581 (7th Cir. 2012) (discussing the theory); see e.g., Lil’ Man in the 20 Boat, Inc. v. City & Cty. of San Francisco, No. 17-CV-00904-JST, at *11–12, 2018 WL 21 4207260, at *4 (N.D. Cal. Sept. 4, 2018) (finding that plaintiffs “cannot argue around [a 22 lack of private right of action] by boostrapping” their cause of action to a common law 23 claim). 24 Assuming, without deciding, that the “end-run” theory is a valid theory of law,2 the 25 Court will not dismiss the claims under this theory. None of Plaintiff’s claims necessitate 26 finding that Chase Bank violated § 407(a) or Part 212. Generally, success on claims for 27 unjust enrichment, conversion, and IIED is not predicated on finding that a defendant 28 2 See Wigod, 673 F.3d at 584 (critiquing the “end-run” theory in part because it is “an ‘end run’ around well-established preemption doctrine”). 1 violated any other law. And the Complaint does not require a departure from the usual. 2 Typically, where courts have used the “end-run” theory to dismiss claims, plaintiffs 3 expressly tied violations of the statute without a private right of action into their common 4 law claims. See, e.g., Fossen v. Caring for Montanans, Inc., 993 F. Supp. 2d 1254 , 1265 5 (D. Mont. 2014) (dismissing breach of contract claim where the complaint alleged that 6 defendant breached its contracts by violating statutes that were incorporated into the 7 contract); Short v. Chase Home Fin. LLC, No. CV-11-133-PHX-DGC, 2011 WL 9160941 , 8 at *2–5 (D. Ariz. August 22, 2011) (listing allegations in the complaint that linked claims 9 to violations of a statute without a private right of action and dismissing those claims to the 10 extent they were based on that statute); Lil’ Man in the Boat, Inc., 2018 WL 4207260 , at 11 *4 (dismissing common law claims because they “expressly incorporate [the federal 12 claim], and ask the Court to find a violation”). Plaintiff did not do so here. The Court thus 13 will evaluate Plaintiff’s common law claims against Chase on their substance. 14 2. Unjust Enrichment 15 To establish an unjust enrichment claim under Arizona law, a plaintiff must 16 establish: “(1) an enrichment, (2) an impoverishment, (3) a connection between the 17 enrichment and impoverishment, (4) the absence of justification for the enrichment and 18 impoverishment, and (5) the absence of a remedy provided by law.” Wang Elec., Inc. v. 19 Smoke Tree Resort, LLC, 283 P.3d 45, 49 (Ariz. Ct. App. 2012) (quoting Freeman v. 20 Sorchych, 245 P.3d 927, 936 (Ariz. Ct. App. 2011)). Chase Bank brings arguments only 21 for the last two elements. 22 i. Absence of Legal Remedy 23 Chase Bank argues that Plaintiff does not meet the “absence of a legal remedy” 24 element because their relationship is governed by a contract and because Plaintiff did not 25 allege he had no legal remedy. Plaintiff does not respond to the contract argument and 26 instead argues that Plaintiff will have no remedy other than unjust enrichment if the Court 27 dismisses all other claims. — 28 — 1 The Court finds Plaintiff’s argument unavailing; Plaintiff’s argument is based on a 2 misunderstanding of the element. “[A] party’s right to seek unjust enrichment is not 3 controlled by whether the party has an ‘adequate’ remedy at law—in the sense of providing 4 all the relief the party desires—but by whether there is a contract which governs the 5 relationship between the parties.” Trustmark Ins. Co. v. Bank One, Ariz., NA, 48 P.3d 485 , 6 491 n.5 (Ariz. Ct. App. 2002). 7 But the Court is also not persuaded by Chase Bank’s assertion that Plaintiff does 8 not meet the “absence of a legal remedy” element. The Complaint does not allege the 9 existence of a contract, so the Court finds that Plaintiff has sufficiently alleged that he does 10 not have a legal remedy. And though Chase Bank asserts that there is a contract that 11 governs the relationship of the parties, the existence of a contract is not a fact at this phase 12 of the case. See Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007) (“In ruling on a 13 12(b)(6) motion, a court may generally consider only allegations contained in the 14 pleadings, exhibits attached to the complaint, and matters properly subject to judicial 15 notice.”). Further, the Court declines to infer Plaintiff’s lack of response to Chase Bank’s 16 argument as a concession that such a contract exists. 17 i. Absence of Justification 18 Chase Bank also argues that Plaintiff does not meet the “absence of justification” 19 element because the writ of garnishment justified the restriction of the benefits. “[A]n order 20 issued by a court with jurisdiction over the subject matter and person must be obeyed by 21 the parties until it is reversed by orderly and proper proceedings.” United States v. Mine 22 Workers, 330 U.S. 258, 293 (1947). Plaintiff cannot maintain an unjust enrichment claim 23 against Chase Bank for the time period in which a writ of garnishment was in place. 24 However, after receiving a copy of the state court ruling overturning the 25 garnishment, Chase Bank did not release the Social Security benefits for more than two 26 months, and Chase Bank did not explain the delay in release. Whether Chase Bank was 27 still operating within the scope of the writ is, at the very least, debatable. Thus, construing 28 the allegations as true and in Plaintiff’s favor, the Court finds that Plaintiff’s unjust 1 enrichment claim survives for the time between the Superior Court’s ruling on the motion 2 for reconsideration on January 11, 2022 and the release of funds on March 21, 2022. 3 3. Conversion 4 Conversion is “an intentional exercise of dominion or control over a chattel which 5 so seriously interferes with the right of another to control it that the actor may justly be 6 required to pay the other the full value of the chattel.” Restatement (Second) of Torts 7 § 222(A)(1); see also Universal Mktg. and Ent., Inc. v. Bank One of Ariz., 53 P.3d 191 , 193 8 (Ariz. Ct. App. 2002). 9 Chase Bank first argues that it cannot be liable for conversion because it was acting 10 pursuant to a court order. Under the Restatement (Second) of Torts § 266, “[o]ne is 11 privileged to commit acts which would otherwise be a trespass to a chattel or a conversion 12 when he acts pursuant to a court order which is valid or fair on its face.” Courts have found 13 that plaintiffs cannot state a claim for conversion where a defendant garnished money 14 pursuant to court order. E.g., Bromfield v. HSBC Bank Nev., No. 3:13-CV-462-SI, 2013 15 WL 3929846 , at *6 (D. Or. July 29, 2013); Taylor v. Gelfand, 505 S.E.2d 222, 224 (Ga. 16 Ct. App. 1998). Likewise, the Court finds that Chase Bank cannot be held liable for 17 conversion during the time that a writ of garnishment was in place. 18 Again, Chase Bank did not release the funds for more than two months after the 19 court’s ruling reversed the garnishment. Thus, as the Court noted above with respect to 20 Plaintiff’s unjust enrichment claim, it is at least debatable whether Chase Bank was 21 operating pursuant to the writ during this time. 22 Chase Bank also argues that Plaintiff did not have a right to the funds at the time of 23 the conversion. “To maintain an action for conversion, a plaintiff must have had the right 24 to immediate possession of the personal property at the time of the alleged conversion.” 25 Case Corp. v. Gehrke, 91 P.3d 362, 365 (Ariz. Ct. App. 2004) (citing Sears Consumer Fin. 26 Corp. v. Thunderbird Prods., 802 P.2d 1032, 1034 (Ariz. Ct. App. 1990) and Empire Fire 27 & Marine Ins. Co. v. First Nat’l Bank of Ariz., 546 P.2d 1166, 1168 (Ariz. Ct. App. 1976)). 28 But once the garnishment was lifted, Plaintiff arguably had a right to his benefits, and 1 Chase Bank continued to prevent Plaintiff from accessing his funds. Accordingly, Plaintiff 2 can state a claim for conversion for this time period, just as he can for unjust enrichment 3 Last, Chase Bank argues that the claim for conversion cannot be maintained because 4 the funds have been released. However, Chase Bank provides no supporting law that 5 indicates that the return of funds precludes an action for conversion. And the fact that 6 Arizona permits recovery for damages other than simply the value of the garnished money, 7 see Strawberry Water Co. v. Paulsen, 207 P.3d 654, 666 (Ariz. Ct. App. 2008) (stating that 8 damages for conversion can include incidental and consequential damages), suggests 9 otherwise. 10 4. IIED 11 Three elements are necessary to establish a claim of IIED: “(1) the defendant’s 12 conduct must be capable of being characterized as ‘extreme and outrageous’; (2) the 13 defendant must either intend to cause emotional distress or recklessly disregard the near 14 certainty that distress will result from his conduct; and (3) the defendant’s conduct must 15 have caused severe emotional distress.” Lucchesi v. Frederic N. Stimmell, M.D., Ltd., 716 16 P.2d 1013 , 1015–16 (Ariz. 1986) (citing Watts v. Golden Age Nursing Home, 619 P.2d 17 1032, 1035 (Ariz. 1980)). 18 Chase Bank argues that its conduct does not meet the high “extreme and outrageous” 19 standard. To meet the “extreme and outrageous” element, a plaintiff must show that the 20 defendant’s conduct was “so outrageous in character and so extreme in degree, as to go 21 beyond all possible bounds of decency, and to be regarded as atrocious and utterly 22 intolerable in a civilized community.” Mintz v. Bell Atl. Sys. Leasing Int’l, Inc., 905 P.2d 23 559, 563 (Ariz. Ct. App. 1995) (citing Cluff v. Farmers Ins. Exchange, 460 P.2d 666 , 668 24 (Ariz. 1969)). “Even if a defendant’s conduct is unjustifiable, it does not necessarily rise 25 to the level of ‘atrocious’ and ‘beyond all possible bounds of decency’ that would cause an 26 average member of the community to believe it was ‘outrageous.’” Nelson v. Phoenix 27 Resort Corp., 888 P.2d 1375, 1386 (Ariz. Ct. App. 1994) (quoting Ford v. Revlon, Inc., — 28 — 734 P.2d 580, 585 (Ariz. 1987); Lucchesi, 716 P.2d at 1015) (remaining citations omitted). 1 “It is for the court to determine, in the first instance, whether the defendant's conduct may 2 reasonably be regarded as so extreme and outrageous as to permit recovery.” Watts, 619 3 P.2d at 1035 (citing Restatement (Second) of Torts § 46 cmt. h). 4 It was not extreme and outrageous for Chase Bank to comply with a writ of 5 garnishment and freeze Plaintiff’s account. Additionally, taking approximately two months 6 after receipt of a court order releasing the garnishment does not fall “at the very extreme 7 edge of the spectrum of possible conduct.” Id. at 1035; see, e.g., Haney v. ACE Am. Ins. 8 Co., No. CV-13-02429-PHX-DGC, 2014 WL 1230503 , at *3 (D. Ariz. March 25, 2014) 9 (finding that repeated underpayment and delays of insurance benefits, even with 10 defendant’s knowledge that plaintiff was injured and vulnerable, is not extreme and 11 outrageous); Wilson v. GMAC Mortg., LLC, No. CV 11–00546–PHX–FJM, 2011 WL 12 4101668, at *5 (D. Ariz. Sep. 13, 2011) (finding that rejection of loan modification four 13 days after foreclosure and five months after application began is not extreme and 14 outrageous).3 15 C. Magic Ranch’s Motion for Summary Judgment 16 Magic Ranch moves for summary judgment on all claims against it. As noted, 17 Plaintiff brings claims against Magic Ranch under the Social Security Act and the Fair 18 Debt Collection Practices Act (“FDCPA”) and for conversion and IIED. For the following 19 reasons, the Court finds summary judgment is appropriate against Plaintiff on each of these 20 claims. 21 1. 42 U.S.C. § 407 (a) 22 Like Chase Bank, Magic Ranch argues that there is no private right of action under 23 § 407(a). To respond to Magic Ranch’s Motion, Plaintiff brings the same arguments and 24 cites to the same cases that he does in his Response to Chase Bank’s Motion. For the 25 reasons explained above in the Court’s analysis of the Chase Bank Motion, Plaintiff fails — 26 — 27 3 Chase Bank also argues that Plaintiff’s IIED claim is barred under the economic loss doctrine, but because the Court finds that Plaintiff did not meet the extreme and outrageous 28 element, the Court will not address this additional argument. 1 to meet his burden here that § 407(a) creates a private right of action for Plaintiff’s 2 requested remedy.4 3 2. FDCPA 4 Magic Ranch argues that it cannot be held liable under the FDCPA because it does 5 not collect debts and is not a “debt collector” under the Act. Under the FDCPA: 6 The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of 7 which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or 8 due another. 9 15 U.S.C. § 1692a(6). 10 Though Plaintiff disputes Magic Ranch’s assertion that it does not qualify as a debt 11 collector, Plaintiff does not provide any evidence supporting his position.5 Nor does 12 Plaintiff assert that Magic Ranch is itself a debt collector. Instead, Plaintiff only argues that 13 Magic Ranch can be held vicariously liable as a debt collector through the actions of 14 Goodman Law, which Plaintiff has alleged is a debt collector. 15 The question of whether an entity is a debt collector precedes the question of 16 whether it can be held vicariously liable for another’s actions. McAdory v. M.N.S. & 17 Assocs., LLC, 952 F.3d 1089, 1096 (9th Cir. 2020). Only debt collectors, as defined by the 18 statute itself, can be held liable—including vicariously liable—under the FDCPA. Pollice 19 v. Nat’l Tax Funding, L.P., 225 F.3d 379 , 404–05 (3d Cir. 2000) abrogated on other 20 grounds by Henson v. Santander Consumer USA Inc., LLC, 137 S. Ct. 1718, 1721 (2017); 21 Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir. 1996); e.g., Caron v. 22 Maxwell, 48 F. Supp. 2d 932, 936 (D. Ariz. 1999) (dismissing a plaintiff’s vicarious 23 liability FDCPA claim after the plaintiff failed to allege the defendant was a debt collector). — 24 — 4 However, though the Court alternatively found that Chase Bank is not a proper defendant, 25 the Court does not reach the proper defendant issue here. 26 5 Magic Ranch asserts that it is not a debt collector, is not subject to the FDCPA, and does not collect debts. (DSOF ¶ 2.) Plaintiff disputes the entire paragraph and notes that “Magic 27 Ranch has stated a legal conclusion without any factual support.” (PRSOF ¶ 2.) Plaintiff is correct as to Magic Ranch’s first two assertions. However, Magic Ranch’s third assertion— 28 that it does not collect debts—is a factual statement supported by its property manager’s declaration (DSOF, Ex. 1), and Plaintiff has provided no conflicting evidence. 1 Thus, left with no other argument or evidence in favor of finding Magic Ranch a 2 debt collector, Plaintiff cannot resist summary judgment for Magic Ranch on his FDCPA 3 claim. The Court will grant the Motion as to this claim. 4 3. Liability for Goodman Law’s Actions 5 Plaintiff alleges that Magic Ranch is liable for Goodman Law’s actions. Magic 6 Ranch argues that Goodman Law is an independent contractor and that Magic Ranch 7 cannot be held liable for Goodman Law’s actions. Plaintiff does not dispute that Goodman 8 Law is an independent contractor but argues that it is an agent, so Magic Ranch can be held 9 liable. Because the Court has found that Magic Ranch is not liable under either of Plaintiff’s 10 federal claims, the only claims that remain are state claims. Consequently, though 11 Plaintiff’s arguments are based on federal law,6 the Court must apply Arizona law. See 12 Dominguez v. City of Scottsdale, 587 F. Supp. 3d 914 , 937–38 (D. Ariz. 2022) (applying 13 Arizona law on vicarious liability to state-law claims). 14 Under Arizona law, it is well-established that lawyers are independent contractors, 15 but are also agents—the terms are not mutually exclusive. Wiggs v. City of Phoenix, 10 16 P.3d 625, 628 (Ariz. 2000); Green Acres Tr. v. London, 688 P.2d 658, 664 (Ariz. Ct. App. 17 1983), aff’d on this ground and rev’d on other grounds, 688 P.2d 617 (Ariz. 1984); Balmer 18 v. Gagnon, 504 P.2d 1278, 1280 (Ariz. 1973). Consequently, a principal can be held liable 19 for its lawyer’s actions, and general agency law applies. See Green Acres, 688 P.2d at 664– 20 65. The party asserting a principal’s liability has the burden to prove it. Id. 21 A principal can be liable for its agent’s tortious actions if the principal authorized 22 or ratified the conduct, Restatement (Third) of Agency § 7.04, or if the agent acted with 23 apparent authority, Restatement (Third) of Agency § 7.08. See Green Acres, 688 P.2d at 24 665 (stating that clients “would be vicariously liable for the allegedly defamatory — 25 — — 26 — 6 However, Magic Ranch cites in part to Arizona law, and Arizona, like the Ninth Circuit, 27 typically follows the Restatements of Agency, to which Plaintiff repeatedly cited. See Fid. & Deposit Co. of Md. v. Bondwriter Sw., Inc., 263 P.3d 633, 639 (Ariz. Ct. App. 2011) 28 (“Arizona courts generally follow the Restatement of Agency.” (quoting Ruesga v. Kindred Nursing Ctrs., L.L.C., 161 P.3d 1253 , 1261 n.5 (Ariz. Ct. App. 2007)). 1 statements of their attorneys only if such statements were actually or apparently authorized 2 by them”). 3 i. Actual Authority 4 “An agent acts with actual authority when . . . the agent reasonably believes, in 5 accordance with the principal's manifestations to the agent, that the principal wishes the 6 agent so to act.” Restatement (Third) of Agency § 2.01; see also Ruesga, 161 P.3d at 1261 . 7 Actual authority includes both express and implied authority. Express authority may be 8 proved with direct evidence, and implied authority may be proved with facts implying 9 authority or through ratification. Ruesga, 161 P.3d at 1261 . “Ratification is the affirmance 10 of a prior act done by another, whereby the act is given effect as if done by an agent acting 11 with actual authority.” Restatement (Third) of Agency § 4.01(1). 12 Here, Plaintiff puts no facts forward that Magic Ranch expressly or impliedly 13 authorized Goodman Law’s actions, including those to obtain and continue garnishment of 14 Plaintiff’s bank account. Indeed, Magic Ranch states, and Plaintiff does not dispute, that 15 Magic Ranch did not “have any knowledge of that account.” (DSOF ¶ 8.) Plaintiff 16 repeatedly argues that Magic Ranch authorized Goodman Law’s conduct, but “[b]lanket 17 allegation[s]” of authorization are “insufficient to support a claim of client liability.” Green 18 Acres, 688 P.2d at 665 (quoting Williams v. Burns, 463 F. Supp. 1278, 1285 (D. Colo. 19 1979)). Thus, there is no genuine dispute of material fact as to whether Magic Ranch 20 authorized or ratified Goodman Law’s conduct. 21 ii. Apparent Authority 22 Under the doctrine of apparent authority, a principal can be held liable for actions 23 of an agent “when a third party reasonably believes the actor has authority to act on behalf 24 of the principal and that belief is traceable to the principal’s manifestations.” Restatement 25 (Third) of Agency, §§ 2.03, 7.08 cmt. b; see also Reed v. Gershweir, 772 P.2d 26, 28 (Ariz. 26 Ct. App. 1989). 27 Plaintiff argues that he only needs to show he reasonably believed that Goodman 28 Law had authority to act “and that this belief is traceable to something Goodman Law said 1 or did.” (Resp. at 8.) But “[a]pparent authority can never be derived from the acts of the 2 agent alone.” Reed, 772 P.2d at 28 . And hiring and using legal representation is an 3 insufficient manifestation by a client to hold the client liable for attorney actions. See Green 4 Acres, 688 P.2d at 665 (finding clients were not liable for their attorneys’ statements where 5 the plaintiff did not provide any allegations about the client’s actions). 6 Plaintiff has not provided any other facts which serve to infer that Magic Ranch 7 manifested that it authorized Goodman Law’s actions at issue here. As there is no question 8 of material fact and Plaintiff has failed to meet his burden, the Court finds Magic Ranch is 9 not liable for Goodman Law’s actions. 10 4. Common Law Claims 11 Magic Ranch argues that Plaintiff’s claims for conversion and IIED rest on imputing 12 Goodman Law’s actions to it. The Court agrees, and Plaintiff does not appear to argue 13 otherwise. Without the attribution of Goodman Law’s actions to Magic Ranch, the only 14 facts that Plaintiff brings concerning Magic Ranch are that it levied fines on Magic Ranch 15 residents, including Plaintiff, and Magic Ranch hired Goodman Law. (PSSOF ¶¶ 2–3.) 16 These facts cannot sustain a claim for conversion or IIED. 17 In his Response, Plaintiff also states that Magic Ranch was aware of Plaintiff’s 18 extreme emotional distress; however, this allegation is not in Plaintiff’s Statement of Facts 19 or attached Exhibit. Even if it was, Plaintiff is still unable to meet the “extreme and 20 outrageous” conduct element of IIED. Summary judgment is appropriate in favor of Magic 21 Ranch. 22 IT IS THEREFORE ORDERED granting Defendant Goodman Law’s Motion to 23 Dismiss (Doc. 16). Count Five (Conversion) and Count Seven (IIED) are dismissed as 24 against Defendant Goodman Law. Count Two (Violations of the Social Security Act)7 and 25 Count One (FDCPA) will proceed as against Defendant Goodman Law. — 26 — 7 As set forth above in Sections III.B.1 and III.C.1, the Court will grant Chase Bank’s 27 Motion to Dismiss and Magic Ranch’s Motion for Summary Judgment as to Plaintiff’s Social Security Act claims. Goodman Law did not similarly move for dismissal or 28 summary judgment as to Plaintiff’s Social Security Act claims against it pursuant to Fed. R. Civ. P 12(b), 12(c) or 56. Thus, the claim as to Goodman Law survives presently. 1 IT IS FURTHER ORDERED granting in part and denying in part Defendant || Chase Bank’s Motion to Dismiss (Doc. 15). Count Two (Violations of the Social Security || Act), Count Three (Violations of Federal Banking Regulations), and Count Seven (IIED) 4|| are dismissed as against Defendant Chase Bank. Count Five (Conversion) and Count Six 5 || (Unjust Enrichment) will proceed as against Defendant Chase Bank but only for the time 6|| period after January 11, 2022. 7 IT IS FURTHER ORDERED granting Defendant Magic Ranch’s Motion for 8 || Summary Judgment (Doc. 29) on all of Plaintiff's claims pending against it. The Clerk of 9|| the Court shall enter judgment accordingly. 10 IT IS FURTHER ORDERED that the Court will set a case management 11 || conference by separate Order. 12 Dated this 29th day of March, 2076 13 “wok: 14 wefhelee— Unig StatesDistrict Judge — 15 — — 16 — — 17 — — 18 — — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — — 25 — — 26 — — 27 — — 28 — -22-