Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-00862/USCOURTS-azd-2_08-cv-00862-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 42:206 Social Security Benefits

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WO

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Larry C. Christensen and Jacklyn

Christensen, husband and wife, 

Plaintiffs, 

vs.

Arizona Central Credit Union; Chief

Justice Honorable Ruth V. McGregor;

Minnie Uribe, Clerk of the Justice Court

of East Phoenix #1; Lois Fregoso, Clerk

of the Justice Court of East Phoenix #2;

Michael K. Jeanes, Clerk of the Superior

Court of Maricopa County; Unifund

CCR Partners; Felicia A. Rotellini,

Superintendent of Financial Institutions;

Barry Bursey; John H. Buschorn; Bursey

and Associates, P.C., 

Defendants. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

No. CV-08-0862-PHX-FJM

ORDER

The court has before it five motions to dismiss: (1) one filed by the Chief Justice of

the Arizona Supreme Court, Ruth V. McGregor (“McGregor”) and Michael K. Jeanes, Clerk

of the Superior Court of Arizona in Maricopa County (“Jeanes”) (doc. 19); (2) one filed by

Minnie Uribe, clerk of the Justice Court of East Phoenix one, and Lois Fregoso, clerk of the

Justice Court of East Phoenix two (collectively “Uribe and Fregoso”) (doc. 16); (3) one filed

by the Arizona Central Credit Union (“Credit Union”) (doc. 22); (4) one filed by Felicia A.

Rotellini, Superintendent of Financial Institutions (“Rotellini”) (doc. 24); and (5) one filed

by Barry Bursey and Bursey & Associates, P.C. (collectively “the Bursey defendants”) (doc.

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 1 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

On October 29, 2008, Unifund CCR Partners filed a motion to dismiss, which, of

course, is not yet at issue.

2

The Bursey defendants did not file a reply. 

3

Plaintiffs acknowledge, however, that on two occasions they deposited outside funds

into their account to avoid overdraft fees after a writ of garnishment had been issued.

Complaint at 9-10.

- 2 -

41).1

 Also before the court are plaintiffs Larry and Jacklyn Christensen’s responses (docs.

35, 29, 34, 36, and 46 respectively), and defendants’ replies (docs. 39, 33, 42, and 40

respectively).2

I-Background

Plaintiffs receive monthly social security benefits which are directly deposited into

their account at the Credit Union. They claim that at all times their account has held only

social security benefits, which are exempt from garnishment under 42 U.S.C. § 407(a).3

Complaint at 8. In March 2005, October 2005, and November 2006, writs of garnishment

were issued against plaintiffs’ account and served on the Credit Union. The writs were

issued by Uribe, Fregoso, and Jeanes respectively. Unifund CCR Partners (“Unifund”),

represented by the Bursey defendants, caused both the March 2005 and November 2006 writs

to be served. In each instance the Credit Union froze plaintiffs’ account until the writs had

been quashed.

 Plaintiffs bring this action alleging: (1) a violation of 42 U.S.C. § 407(a) (count one);

(2) a violation of 42 U.S.C. § 407(a) under 42 U.S.C. § 1983 (count two); (3) breach of

contract by the Credit Union (count three); and (4) conversion by the Credit Union (count

four). Plaintiffs seek a declaration that each defendant violated the plaintiffs’ rights under

42 U.S.C. § 407(a), 42 U.S.C. § 1983, the Due Process Clause of the Fourteenth Amendment,

and the Due Process Clause under Article II § 4 of the Arizona Constitution, and that

McGregor, Rotellini, Jeanes, Uribe and Fregoso “violated plaintiffs’ rights” under the

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 2 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

While plaintiffs include various constitutional claims in their prayer for relief, it is

unclear from the complaint whether plaintiffs allege that their constitutional rights were

violated as part of their section 1983 action or as an independent claim. In either case,

plaintiffs have failed to articulate anything more than mere conclusory allegations. Because

plaintiffs have failed to allege a claim that is plausible on its face, we dismiss plaintiffs’

claims under the Due Process Clause of the United States Constitution, the Due Process

Clause of the Arizona Constitution, and the Supremacy Clause of the United States

Constitution as to all defendants.

- 3 -

Supremacy Clause of the United States Constitution.4

 Plaintiffs ask that the Arizona

garnishment statute, A.R.S. § 12-1570 et seq., be declared unconstitutional “so far as it

requires or permits the freezing of depository accounts that contain only electronically

deposited social security funds that are exempt from attachment.” Complaint at 18. Finally,

plaintiffs seek an injunction requiring defendants to create procedures so that accounts

containing only exempt funds will not be frozen. Id. at 18-19. Defendants move to dismiss

the complaint for lack of subject matter jurisdiction and failure to state a claim upon which

relief can be granted. Fed. R. Civ. P. 12(b)(1), (6). 

II-McGregor and Jeanes

A party seeking to invoke the jurisdiction of a federal court must show that he has

standing to sue within the meaning of Article III. To establish standing, a plaintiff must

show that: (1) he has suffered an “injury in fact;” (2) the injury is “fairly traceable” to the

defendant’s action; and (3) the injury can likely be redressed by the cause of action. Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 2136 (1992). The parties

agree that plaintiffs have alleged a sufficient injury in fact--the freezing of their exempt

social security benefits. However, McGregor and Jeanes argue that plaintiffs have failed to

show that their injury is “fairly traceable” to the approval and issuance of the garnishment

forms and instructions. McGregor and Jeanes Motion at 6-7. We agree. 

To show their alleged “injury in fact” is “fairly traceable” to the defendants, plaintiffs

must allege more than mere speculation that absent the defendants’ conduct their federal

rights would not have been violated. Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 42-

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 3 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 4 -

43, 96 S. Ct. 1917, 1926 (1976). While plaintiffs allege that the garnishment forms lack

clarity, they do not allege that the garnishment forms require or even permit the freezing of

exempt property. Nor do plaintiffs aver that their checking account was garnished because

of or in conformity with the challenged forms. Complaint at 11. 

 Based on the facts alleged in the complaint, plaintiffs’ injury was not caused by

approval or issuance of garnishment forms but by the possible misuse of those forms by a

third party. Thus, their injury is not “fairly traceable” to McGregor and Jeanes’ actions.

Because plaintiffs’ claims against McGregor and Jeanes must be dismissed on standing

grounds, we need not reach their other defenses.

III-Uribe and Fregoso

Although defendants Uribe and Fregoso do not raise the issue of standing, federal

courts have “both the power and the duty to raise the adequacy of standing sua sponte.”

D’Lil v. Best Western Encina Lodge & Suites, 538 F.3d 1031, 1035 (9th Cir. 2008) (citation

omitted). Plaintiffs’ claim against Uribe and Fregoso, like the claim against Jeanes, rests on

their issuance of writs of garnishment. For the same reasons, plaintiffs have failed to show

that their injury is “fairly traceable” to the issuance of the garnishment forms. Plaintiffs,

therefore, lack standing to bring this action against defendants Uribe and Fregoso. As a

result, we need not reach their other defenses.

IV-The Credit Union

The Credit Union also moves to dismiss plaintiffs’ complaint for a lack of standing.

The Credit Union contends that plaintiffs’ injury is not “fairly traceable” to it because it was

acting in accordance with writs of garnishment issued under Arizona law. The Credit Union

Reply at 9. We disagree. Plaintiffs have sufficiently alleged that the Credit Union was

responsible for freezing their account. Even if the Credit Union’s actions were compelled

by state law, they were the immediate cause of plaintiffs’ injury. Plaintiffs have proper

standing to bring this action against the Credit Union. 

The Credit Union also argues that plaintiffs’ claims are moot because they do not

currently have a writ of garnishment issued against them. Although a writ of garnishment

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 4 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 5 -

is not pending, plaintiffs’ claims are not moot because they fall within the “capable of

repetition yet evading review” exception to the mootness doctrine. See Southern Pac.

Terminal Co. v. ICC, 219 U.S. 498, 515, 31 S. Ct. 279 (1911). “The exception applies only

where ‘(1) the duration of the challenged action is too short to allow full litigation before it

ceases, and (2) there is a reasonable expectation that the plaintiffs will be subjected to it

again.’” Biodiversity Legal Found. v. Badgley, 309 F.3d 1166, 1173 (9th Cir. 2002) (quoting

Greenpeace Action v. Franklin, 14 F.3d 1324, 1329 (9th Cir. 1993)). This case is capable

of repetition and, given the very tight time deadlines for exemption hearings, see A.R.S.

§ 12-1580, it may evade review. Moreover, plaintiffs have a reasonable expectation that they

will be subject to a writ of garnishment in the future. They remain judgment debtors and are

currently subject to a collection action. Complaint at 7-8. 

Because jurisdiction exists as to the Credit Union, we must address their Rule 12(b)(6)

arguments. A complaint must contain “a short and plain statement of the claim showing that

the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). To avoid dismissal, a complaint

must plead “enough facts to state a claim to relief that is plausible on its face,” Bell Atlantic

Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007), and not speculative. Id. at 1964-65.

The Credit Union argues that the complaint does not provide adequate notice that it

was being sued under 42 U.S.C. § 407(a) (count one) and 42 U.S.C. § 1983 (count two). To

be sure, the complaint does not include the Credit Union as one of the named defendants

under counts one or two and does not make specific allegations against the Credit Union in

those sections. However, later on in the complaint, relief is requested against the Credit

Union for violations “of 42 U.S.C. § 407(a), 42 U.S.C. § 1983, the Due Process Clause of

the Fourteenth Amendment to the United States Constitution, and the Due Process Clause

of Article II, § 4 of the Arizona State Constitution.” Complaint at 18. Assuming, without

deciding, that notice was adequate under Rule 8(a)(2), Fed. R. Civ. P., counts one and two

nevertheless fail to state claims against the Credit Union.

Social security benefits are not “subject to execution, levy, attachment, garnishment,

or other legal processes, or to the operation of any bankruptcy or insolvency law.” 42 U.S.C.

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 5 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 6 -

§ 407(a). Section 407(a) protects social security funds from attachment by creditors without

the recipient’s consent. Philpott v. Essex County Welfare Bd., 409 U.S. 413, 93 S. Ct. 590

(1973); Lopez v. Washington Mut. Bank, FA, 302 F.3d 900, 903 (9th Cir. 2002) (“Section

407(a) was designed ‘to protect social security beneficiaries and their dependents from the

claims of creditors.’ ”) (citation omitted). Neither party has provided, nor have we found,

any case that holds a third party garnishee liable under section 407(a). All cases cited by

plaintiffs involve claims in which a banking institution was acting as a creditor. Because

section 407(a) is meant to protect social security recipients from creditors, plaintiffs have

failed to state a claim against the Credit Union under section 407(a).

Plaintiffs also fail to state a claim against the Credit Union pursuant to 42 U.S.C. §

1983. A section 1983 claim requires, “(1) that a person acting under color of state law

committed the conduct at issue, and (2) that the conduct deprived the claimant of some right,

privilege, or immunity protected by the Constitution or laws of the United States.” Leer v.

Murphy, 844 F.2d 628, 632-33 (9th Cir.1988). Not only have plaintiffs failed to sufficiently

allege a violation of their federal rights, but they cannot show that the Credit Union was

acting under color of state law. 

We begin with the presumption that private conduct is not government action;

something more than acting pursuant to generally applicable state law is required for a

private entity to be considered acting under color of law. Sutton v. Providence St. Joseph

Med. Ctr., 192 F.3d 826, 836 (9th Cir. 1999). Plaintiffs claim that the Credit Union’s fear

of liability if it did not freeze their account is sufficient to show that it was acting under color

of state law. But “[p]rivate misuse of a state statute does not describe conduct that can be

attributable to the state.” Lugar v. Edmondson Oil Co., Inc. 457 U.S. 922, 941, 102 S. Ct. 2744,

2756 (1982). Even had the Credit Union’s actions been compelled by Arizona law, “the mere

fact that the government compelled a result does not suggest that the government’s action is

‘fairly attributable’ to the private defendant.” Sutton, 192 F.3d at 838. Thus, plaintiffs have

failed to show state action sufficient to maintain a section 1983 claim. 

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 6 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 7 -

Counts one and two of the complaint, alleging violations of section 407(a) and section

1983, must be dismissed as to the Credit Union. Because plaintiffs have decided not to

pursue their conversion claim, count four is also dismissed. Response at 2. The Credit

Union, however, has not provided any argument regarding plaintiffs’ breach of contract

claim. Its motion to dismiss is therefore denied as to count three of the complaint.

V-Rotellini

Plaintiffs allege that Rotellini violated federal law by failing to monitor the Credit

Union and enforce 42 U.S.C. § 407(a) under the authority given her as the Superintendent

of Financial Institutions. Like McGregor and Jeanes, Rotellini argues that plaintiffs lack

standing and that their claims are barred by the Eleventh Amendment. 

The Eleventh Amendment prohibits actions by private litigants against the state, its

agencies, or its employees in their official capacities. Edelman v. Jordan, 415 U.S. 651, 663,

94 S. Ct. 1347, 1356 (1974). However it does not protect state officials from federal claims

for which a plaintiff seeks only prospective equitable relief, as here, if the official has “some

connection with the enforcement of the act” so that he or she is not being sued as a mere

representative of the state. Ex Parte Young, 209 U.S. 123, 157, 28 S. Ct. 441, 453 (1908).

The Eleventh Amendment requisite connection and Article III standing analyses are closely

related and often overlapping inquiries. Culinary Workers Union, Local 226 v. Del Papa,

200 F.3d 614, 619 (9th Cir. 1999). Whether Rotellini is sufficiently connected to

enforcement of the garnishment statute for purposes of the Ex Parte Young exception or

standing are questions we need not decide. Even if we assume that plaintiffs can overcome

the Eleventh Amendment and Article III hurdles, they have nevertheless failed to state claims

against Rotellini upon which relief may be granted. 

Plaintiffs assert claims against Rotellini under 42 U.S.C. § 407(a) and 42 U.S.C. §

1983. First, because Rotellini is not a creditor, plaintiffs have not stated a cause of action

against her under 42 U.S.C. § 407(a). Rotellini did not engage a legal procedure, as required

by section 407(a), or exercise any independent control over plaintiffs’ exempt funds.

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 7 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 8 -

Plaintiffs do not claim that Rotellini even had knowledge of the proceedings which allegedly

violated the federal statute.

Plaintiffs have also failed to establish a section 1983 violation by Rotellini. Even if

we assume that Rotellini was acting under color of law, plaintiffs have not sufficiently

alleged that Rotellini’s conduct deprived them of a federal right. Plaintiffs have not stated

a cause of action against Rotellini under 42 U.S.C. § 407(a), and plaintiffs’ bald assertion

that Rotellini violated their rights under the Due Process Clause and Supremacy Clause of

the United States Constitution is insufficient to state a claim for relief that is plausible on its

face. Twombly, 127 S. Ct. at 1974. Rotellini’s motion to dismiss is granted.

VI-The Bursey Defendants

The Bursey defendants, who represented Unifund in securing the March 2005 and

November 2006 writs, join in defendants McGregor and Jeanes’ standing arguments, yet fail

to address how these arguments apply to them. Bursey Motion at 1. The Bursey defendants

caused the March 2005 and November 2006 writs of garnishment to be issued and aided

Unifund in seeking control over the plaintiffs’ exempt funds. We conclude that plaintiffs’

alleged injury is “fairly traceable” to the Bursey defendants’ actions. 

The Bursey defendants argue that plaintiffs have failed to state a claim against them

under 42 U.S.C. § 407(a) (count one) and 42 U.S.C. § 1983 (count two). We disagree as to

count one but agree as to count two. The Bursey defendants, in securing a writ of

garnishment, exercised independent control over plaintiffs’ account. They participated in

securing the writs which led to plaintiffs’ account being frozen. Plaintiffs have sufficiently

alleged that the Bursey defendants knew or should have known that the funds they sought

to garnish were exempt social security benefits and nevertheless proceeded. Therefore, we

deny the Bursey defendants’ motion to dismiss plaintiffs claims under 42 U.S.C. § 407(a).

Defendants argue that they are not liable under section 1983 because they were not

acting under color of state law. Plaintiffs concede that they are unable to establish any nexus

between state action and the Bursey defendants. Response at 7. Plaintiffs have failed to

sufficiently allege anything more than misuse of the Arizona garnishment statute against the

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 8 of 9
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

- 9 -

Bursey defendants. Because plaintiffs challenge only private conduct, they have failed to

state a claim under section 1983.

Therefore we deny the Bursey defendants’ motion to dismiss as to count one of the

complaint, but grant their motion as to count two and all other claims. 

VII-Conclusion

Accordingly, IT IS ORDERED GRANTING the defendants McGregor and

Jeanes’ motion to dismiss (Doc. 19).

IT IS FURTHER ORDERED GRANTING Uribe and Fregoso’s Motion

to Dismiss (Doc. 16).

IT IS FURTHER ORDERED GRANTING IN PART AND DENYING

IN PART the Credit Union’s motion to dismiss (Doc. 22). Plaintiffs’ breach of contract

claim, count three, remains as to the Credit Union. 

IT IS FURTHER ORDERED GRANTING Rotellini’s motion to dismiss

(Doc. 24).

IT IS FURTHER ORDERED GRANTING IN PART AND DENYING

IN PART the Bursey defendants’ motion to dismiss (Doc. 41). Plaintiffs’ claims based

on 42 U.S.C. § 407(a) survive as to the Bursey defendants. 

The claims remaining in this case, as to the moving defendants, are plaintiffs’

breach of contract claim (count three) as to the Credit Union, and plaintiffs’ 42 U.S.C. §

407(a) claim (count one) against the Bursey defendants.

DATED this 7th day of November, 2008.

Case 2:08-cv-00862-FJM Document 59 Filed 11/10/08 Page 9 of 9