Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_10-cv-00218/USCOURTS-azd-4_10-cv-00218-2/pdf.json

Nature of Suit Code: 430
Nature of Suit: Banks and Banking
Cause of Action: 28:1983 Civil Rights

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Plaintiff did not seek leave to file a response to Defendant’s reply. Given Plaintiff’s

pro se status and Defendant’s lack of objection to the filing of the document, the Court will

consider Plaintiff’s Response to Defendant’s Reply (Doc. 37).

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

John H. Azeltine, Jr., 

Plaintiff, 

vs.

Bank of America, 

Defendant. 

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No. CV 10-218-TUC-JGZ (HCE)

REPORT & RECOMMENDATION

Pending before the Court is Defendant’s Motion to Dismiss Amended Complaint for

Lack of Subject-Matter Jurisdiction and Failure to State a Claim (Doc. 33) (hereinafter

“Defendant’s Motion”), Plaintiff has filed a Response (Doc. 35), Defendant has filed a Reply

(Doc. 36), and Plaintiff has filed a Response to Defendant’s Reply (Doc. 37).1

 For the

following reasons, the Magistrate Judge recommends that the District Court grant in part and

deny in part Defendant’s Motion to Dismiss (Doc. 33).

I. FACTUAL & PROCEDURAL BACKGROUND

Plaintiff initiated this pro se action on April 16, 2010. (Doc. 1). On April 18, 2011,

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This matter was susbsequently reassigned to the Honorable Jennifer G. Zipps.

(October 28, 2011 docket entry).

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the Honorable Raner C. Collins2 adopted the undersigned Magistrate Judge’s

recommendation, inter alia, to grant Defendant’s Motion to Dismiss for Lack of SubjectMatter Jurisdiction and For Failure to State a Claim and to grant Plaintiff leave to amend his

Complaint with regard to the breach of contract claim. (See Doc. 29 (Order) & Doc. 23

(Report and Recommendation)). Thereafter Plaintiff filed an Amended Complaint (Doc. 31)

and Defendant filed the instant Motion.

II. DISCUSSION

Defendant moves for dismissal pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject

matter jurisdiction and pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim.

Defendant argues that, like Plaintiff’s original Complaint, Plaintiff’s Amended Complaint

fails to state a claim for relief under any of the federal statutes on which he relies, and

therefore, the Court lacks federal question jurisdiction over Plaintiff’s claims. Defendant

also argues that Plaintiff has not set forth facts sufficient to invoke diversity jurisdiction

and/or to establish a breach of contract claim. Defendant also requests the imposition of

sanctions in the form of attorney’s fees and costs.

A. Standards

1. Dismissal for Lack for Subject Matter Jurisdiction

Pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, dismissal is

appropriate when the court lacks subject matter jurisdiction over a claim. Fed. R. Civ.

12(b)(1). Subject matter jurisdiction involves the power of the court to hear the plaintiff’s

claims in the first place, and therefore, imposes upon courts an affirmative obligation to

ensure that they are acting within the scope of their jurisdictional power. Because federal

courts are courts of limited jurisdiction, it is presumed that a cause lies outside the

jurisdiction of federal courts unless proven otherwise. Kokkonen v. Guardian Life Ins. Co.,

511 U.S. 375, 377 (1994). Where the complaint fails to reflect federal jurisdiction, it must

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be dismissed. Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984). The plaintiff bears the

burden of establishing that jurisdiction exists. Thornhill Publishing Co. v. General

Telephone & Electronics Corp., 594 F.2d 730, 733 (9th Cir. 1979). 

“‘A motion to dismiss for lack of subject matter jurisdiction may either attack the

allegations of the complaint or may...’” attack the existence of subject matter jurisdiction as

a matter of fact. National Union Fire Insur. Co. v. ESI Ergonomic Solutions, LLC., 342

F.Supp.2d 853, 861 (D. Ariz. 2004) (quoting Thornhill Publishing Co., 594 F.2d at 733).

"When a motion to dismiss attacks the allegations of the complaint as insufficient to confer

subject matter jurisdiction, all allegations of material fact are taken as true and construed in

the light most favorable to the nonmoving party." Id. (citing Federation of African Amer.

Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir. 1996)). Where the jurisdictional

issue is separable from the merits of the case, the court may consider the evidence presented

with respect to the jurisdictional issue, resolving factual disputes if necessary. Thornhill, 594

F.2d at 733. "When the motion is a factual attack on subject matter jurisdiction, a defendant

may 'rely on affidavits or any other evidence properly before the Court.'" National Union

Fire Insur. Co., 342 F.Supp.2d at 861 (citing St. Clair v. City of Chico, 880 F.2d 199, 201

(9th Cir. 1989)). In the instance of a factual challenge, no presumption of truthfulness

attaches to the plaintiff's allegations, and the existence of disputed material facts will not

preclude the court from evaluating the merits of jurisdictional claims. Thornhill, 594 F.2d

at 733.

When a motion to dismiss is based on more than one ground, the court should

consider the Rule 12(b)(1) challenge first because the other grounds will become moot if the

court lacks subject matter jurisdiction. 5 Charles Alan Wright & Arthur R. Miller, Federal

Practice & Procedure, §1350 (2004 ed.).

2. Standard for Dismissal for Failure to State a Claim

“‘To survive a motion to dismiss, a complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is plausible on its face;’ that is, plaintiff must

‘plead[ ] factual content that allows the court to draw the reasonable inference that the

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defendant is liable for the misconduct alleged.’” Telasaurus VPC, LLC. v. Power, 623 F.3d

998, 1003 (9th Cir. 2010), cert. denied, __ U.S. __, 132 S.Ct. 95 (2011), (quoting Ashcroft v.

Iqbal, 556 U.S. 662, __, 129 S.Ct. 1937, 1949 (2009)). The court must first separate factual

allegations from legal conclusions. Iqbal, 556 U.S. at___, 129 S.Ct. at 1949-1950; see also

Telasaurus, 623 F.3d. at 1003 (the court begins its review “‘by identifying pleadings that,

because they are no more than conclusions, are not entitled to the assumption of truth.’”

(quoting Iqbal, 556 U.S. at __, 129 S.Ct. at 1950). Thus, “[t]hreadbare recitals of the

elements of a cause of action, supported by mere conclusory statements, do not suffice.”

Iqbal, 556 U.S . at___, 129 S.Ct. at 1949. After eliminating such unsupported legal

conclusions, the court will next identify “‘well-pleaded factual allegations,’ which we assume

to be true, ‘and then determine whether they plausibly give rise to an entitlement to relief.’”

Telasaurus, 623 F.3d. at 1003 (quoting Iqbal, 556 U.S. at __, 129 S.Ct. at 1950).

Determining plausibility is a “context-specific task...” that requires the court to “draw on its

judicial experience and common sense.” Iqbal, 556 U.S. at __, 129 S.Ct. at 1950. A

complaint cannot survive dismissal where the court can only infer that a claim is merely

possible rather than plausible. Id.

As a general rule, the district court may not consider any material beyond the

pleadings when resolving a motion to dismiss for failure to state a claim. Lee v. City of Los

Angeles, 250 F.3d 668, 688 (9th Cir. 2002), impliedly overruled on other grounds as

discussed in Gallardo v. DiCarlo, 203 F.Supp.2d 1160, 1162 n.2(C.D. Cal. 2002). However,

the court may consider material submitted as part of the complaint, such as the exhibits which

Plaintiff herein has attached to his Amended Complaint. Id.

B. Analysis

Plaintiff’s Complaint arises from his allegations that Defendant Bank of America,

where Plaintiff banked, either sold to or shared his non-public information (hereinafter

“NPI”) with Cross Country Home Services (hereinafter “CCHS”) which ultimately resulted

in CCHS withdrawing funds from Plaintiff’s checking account which, in turn, caused an

insufficient balance in Plaintiff’s account and incurred other fees charged to Plaintiff because

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Plaintiff was granted leave to file this action in forma pauperis. (Doc. 9).

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of the insufficient balance. (Amended Complaint, pp. 2-7). Plaintiff contends that Defendant

targeted him “because he is a likely prospect for overdrafts under these circumstances....” and

threatened to cause him economic ruin. (Id. at p. 7). Plaintiff alleges that Defendant: (1)

breached its policy against disclosure of NPI with non-affiliates by selling or sharing

Plaintiff’s NPI with CCHS; (2) “assisted and allowed [CCHS] to withdraw funds directly

from the Plaintiff’s [c]hecking [a]ccount”, resulting in “facilitation of theft and conspiracy

to commit fraud and conversion” in violation of 15 U.S.C. §1692, et. seq.; (3) “assisted and

encouraged [CCHS] to contact the Plaintiff” , resulting in facilitation of telemarketing fraud

in violation of 15 U.S.C. §§ 6101-6108; and (4) violated “Bus. & Prof. Code §17200, et.

seq....” (Id.) (capitalization in original omitted). Plaintiff claims actual damages in the

amount of $120.26, court costs in the amount of $350,3

 and damages for “breach of contract

and tortious criminal acts” in the amount of $1,000,000. (Id. at p.8) (capitalization in original

omitted).

The Court is obligated to construe pro se pleadings liberally. Haines v. Kerner, 404

U.S. 519, 520-21 (1971). Further, a pro se litigant must be given leave to amend his or her

complaint unless it is absolutely clear that the deficiencies of the complaint could not be

cured by amendment. Noll v. Carlson, 809 F.2d 1446, 1447 (9th Cir. 1987), superseded on

other grounds by statute as stated in Lopez v. Smith, 203 F.3d 1122 (9th Cir. 2000) (en banc).

1. Plaintiff’s claims based on violation of federal statutes

a. Facilitation of theft and conspiracy to commit fraud and

conversion in violation of 15 U.S.C. § 1692, et seq.

Plaintiff alleges that Defendant:

assisted and allowed [CCHS] to withdraw funds directly from Plaintiff’s

Checking Account. Violating [the Fair Debt Collection Practices Act

(hereinafter “FDCPA”)] 15 U.S.C. § 1692 et. seq. [w]hich provides for a

Private Cause of Action when GLBA Laws are [v]iolated.

(Amended Complaint, p. 7).

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The FDCPA defines the term “creditor” as:

any person who offers or extends credit creating a debt or to whom a debt is

owed, but such term does not include any person to the extent that he receives

an assignment or transfer of a debt in default solely for the purpose of

facilitating collection of such debt for another. 

15 U.S.C. §1692a(4).

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The FDCPA defines the term “debt” as:

any obligation or alleged obligation of a consumer to pay money arising out

of a transaction in which the money, property, insurance, or services which are

the subject of the transaction are primarily for personal, family, or household

purposes, whether or not such obligation has been reduced to judgment. 

15 U.S.C. §1692a(5). See also Bloom v. I.C. Sys. Inc., 972 F.2d 1067, 1068-69 (9th Cir.

1992) (the FDCPA applies to debts incurred for personal rather than commercial reasons).

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Defendant contends that this claim must be dismissed because Defendant is not a

“creditor”4

 within the meaning of the FDCPA and there was no “debt”5 as that term is

statutorily defined. (Defendant’s Motion, pp. 7-8). Defendant also contends that Plaintiff

did not have overdraft protection on his checking account and, even if he did, such protection

would not fall within the FDCPA. (Defendant’s Reply, pp, 8-9). Plaintiff counters that

Defendant offered and extended credit to Plaintiff as part of his checking account which

provided for overdraft protection and that the use of overdraft protection constitutes a loan.

(Plaintiff’s Response, p.5; see also Amended Complaint, ¶14 (alleging that Plaintiff had

overdraft protection at the relevant time)). 

The purpose of the FDCPA is:

to eliminate abusive debt collection practices by debt collectors, to insure that

those debt collectors who refrain from using abusive debt collection practices

are not competitively disadvantaged, and to promote consistent State action to

protect consumers against debt collection abuses.

15 U.S.C. §1692(e) (emphasis added). “Ordinarily, the FDCPA protects consumers against

only those entities that collect debts for third parties.” Fleeger v. Bell, 95 F.Supp.2d 1126,

1130 (D. Nev. 2000)(citing Romine v. Diversified Collection Servs., Inc., 155 F.3d 1142,

1146 (9th Cir. 1998)). However, the FDCPA does provide that: “any creditor who, in the

process of collecting his own debts, uses any name other than his own which would indicate

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The letter indicates it is from: “Bank of America Customer Service”. (Amended

Complaint, Exh. 7). Bank of America’s name and Phoenix, Arizona, return address also

appear on the Exhibit. (Id.).

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that a third person is collecting or attempting to collect such debts.” 15 U.S.C. §1692a(6).

The allegations of the Amended Complaint are clear that Plaintiff received from

Defendant statements and notices reflecting insufficient funds in his account and the

imposition of “NSF fees” on the account. (Amended Complaint, ¶¶ 14, 15 (citing Amended

Complaint Exh. 7), 16 (citing Amended Complaint, Exh. 8); see also Amended Complaint

Exhs. 5, 6). Plaintiff also alleges that he received a letter from Defendant6

 stating, in pertinent

part, that Plaintiff’s account:

has been overdrawn since 11/17/2009....Your business is important to us:

please resolve the situation without further delay. If you do not make a deposit

immediately, we may transfer funds from other accounts you have with Bank

of America or be forced to close your account, an action we do not want to

take. 

Should we have to close your account, we may send a report to ChexSystems

Inc., an account verification service. Reports submitted to ChexSystems may

result in your being unable to establish an account with any financial

institution for up to five years, even though you repay the debt, thereby

causing you great inconvenience. We may also refer your account to a

collection agency and any balance owed may be subject to a collection fee

and/or interest charge. 

(Amended Complaint Exh. 7; see also Amended Complaint ¶15). Plaintiff generally alleges

that Defendant violated the FDCPA and does not cite any specific provision(s) of the Act.

The Court views Plaintiff’s factual allegations as true and in his favor.

Even if Defendant was a creditor under the FDCPA collecting upon a debt as defined

by the Act, Plaintiff fails to allege any conduct by Defendant constituting a violation of the

FDCPA. The crux of Plaintiff’s FDCPA claim is that Defendant attempted to collect an

outstanding debt owed to it, and using its own letterhead, “threatened” to report Plaintiff to

ChexSystems, Inc. (Amended Complaint, p. 7 & Exh. 7). Plaintiff’s allegations do not

establish that Defendant is a “debt collector” within the meaning of the FDCPA. See Owusu

v. New York State Insur., 655 F.Supp.2d 308 (S.D.N.Y. 2009) (“Since HSBC’s letter was

sent in its own name...it cannot be held liable under the FDCPA.”); Fleeger, 95 F.Supp.2d

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at 1130 (dismissing FDCPA claim where plaintiff failed to allege “false suggestion of thirdparty debt collection required by §1692a(6)(A) to bar self-help efforts of a creditor.”); Fonua

v. First Allied Funding, 2009 WL 816291 (N.D. Cal. Mar. 27, 2009)(granting motion to

dismiss FDCPA claim against creditor acting on its own behalf); Showalter v. Chase

Manhattan/Providian, 2005 WL 2000943 (N.D. Cal. Aug. 19, 2005) (same). Consequently,

Plaintiff fails to state a claim under the FDCPA. 

b. Facilitation of telemarketing fraud in violation of 15 U.S.C.

§§6101-6108

Plaintiff claims that Defendant “assisted and encouraged [CCHS] to contact the

Plaintiff” by telephone in violation of the Telemarketing and Consumer Fraud and Abuse

Prevention Act (hereinafter “TCFPA”), 15 U.S.C. §§6101-6108, and 16 C.F.R. §310.

(Amended Complaint, ¶¶1, 6-9, 19, & p.7). 

Defendant points out that this claim is similar to that advanced in Plaintiff’s original

complaint which the Court dismissed because Plaintiff’s alleged actual damages were below

the minimum actual damages required by the TCFPA. (Defendant’s Motion, p. 8; see also

Report and Recommendation (Doc. 23), pp. 11-12). 

The Report and Recommendation recommending dismissal of Plaintiff’s TCFPA

claim pointed out in pertinent part:

Under the TCFPA, a private person may bring an action in district court

against one who assists in deceptive or abusive telemarketing acts, only if,

inter alia, “the amount in controversy exceeds the sum or value of $50,000 in

actual damages for each person adversely affected by such telemarketing.” 15

U.S.C. § 6104(a). Plaintiff alleges actual damages of $120.26. (Complaint,

p.11). Plaintiff’s alleged actual damages, then, are below the minimum actual

damages amount required by the statute. Consequently, even construing

Plaintiff’s allegations as true, Plaintiff fails to satisfy the requirements

necessary to bring a private action under the TCFPA in this Court. See 15

U.S.C. §6104(a). Nor does Plaintiff’s reliance on 16 C.F.R. §310 save his

claim. The regulations at 16 C.F.R. § 310 merely serve to “implement[] the

Telemarketing and Consumer Fraud and Abuse Prevention Act,” as codified

at 15 U.S.C. §§6101 through 6108, and does not alter the actual damages

requirement set forth in the statute for private causes of action. 16 C.F.R. §

310.1; see also 16 C.F.R. §310.7. Therefore, Defendant is correct that Plaintiff

fails to state a claim under the TCFPA. 

(See Report and Recommendation (Doc. 23), pp. 11-12) (footnote omitted). 

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Plaintiff had the opportunity to file an objection to the Report and Recommendation

on this issue. (See Report & Recommendation (Doc. 23), p.18 (advising parties of the right

to file objections); Plaintiff’s Objection (Doc. 24)). After review of Plaintiff’s Objection, the

District Court adopted the recommendation that Plaintiff’s TCFPA claim be dismissed.

(Order (Doc. 29)). 

In his Amended Complaint,

Plaintiff argues that it is not and was not the intent of the FTC to allow

facilitators to assist others to the point of $50,000 in actual damages before a

private cause of action could be taken under 16 CFR 310(3)(b) Assisting and

Facilitation Telemarketing Fraud. Including 310.3(a) or 310.03(c), or Rule

4 of this Rule. 

To the best research and knowledge of the Plaintiff this situation has never

been tested in Federal Court.

(Amended Complaint, ¶19) (capitalization and emphasis in original omitted). Plaintiff

attaches to his Amended Complaint a December 2010 letter he sent to the Federal Trade

Commission, Bureau of Consumer Protection, indicating his “intention...to argue that 16

CFR 310.1 can be severed in part from the 15 USC [§] 6104 provision requiring $50,000 in

damages, contending that it is not the Commissions [sic] intent to sanction Facilitators after

the damage is already done, but to try to prevent it.” (Amended Complaint, Exh. 10).

Plaintiff’s allegation of actual damages in the Amended Complaint is the same as that alleged

in the original complaint: $120.26. (Amended Complaint, p.8; Complaint, p.11). 

Because Plaintiff alleges actual damages in the amount of $120.26, his Amended

Complaint does not fall within the purview of the TCFPA and such claim should be

dismissed. See 15 U.S.C. §6104(a). 

c. Violation of 15 U.S.C. § 6801 et seq.

Plaintiff “alleges a violation of 15 U.S.C. §6801, et seq....”, the Gramm-Leach-Bliley

Act (hereinafter “GLBA”). (Amended Complaint, ¶22) (capitalization and emphasis in

original omitted). As the basis for this claim, Plaintiff alleges that Defendant could only

disclose Plaintiff’s NPI to an agent or service provider to perform marketing of the financial

institution’s own products or services and only if the agent or service provider was not

authorized to directly initiate charges to Plaintiff’s account. (Id.). 

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The Report and Recommendation also noted that section 6805 was amended after

Plaintiff filed his original complaint but that such amendment did not alter the conclusion

that Plaintiff has no private cause of action for his GLBA claim. (Report and

Recommendation, p. 10 n.4). The amended version of the Act reads, in pertinent part, that

enforcement of the GLBA and regulations prescribed thereunder shall be “by the Federal

functional regulators, the State insurance authorities, and the Federal Trade Commission with

respect to financial institutions and other persons subject to their jurisdiction under applicable

law as...” set forth in subsection (a)(1)-(7). 15 U.S.C. §6805(a).

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Plaintiff’s original complaint also contained a GLBA claim. (Complaint, p.12). After

an opportunity for Plaintiff’s Objection and review of same, the District Court adopted the

Report and Recommendation to dismiss that claim because no private right of action is

provided under the GLBA. (Order (Doc. 29);Report and Recommendation (Doc. 23), pp. 9-

10 (citing 15 U.S.C. §6805 (the GLBA and the regulations prescribed thereunder “shall be

enforced by the Bureau of Consumer Financial Protection, the Federal functional regulators,

the State insurance authorities, and the Federal Trade Commission with respect to financial

institutions and other persons subject to their jurisdiction under applicable law....”); Dunmire

v. Morgan Stanley DW, Inc., 475 F.3d 956, 960 (8th Cir. 2007) (“No private right of action

exists for an alleged violation of the GLBA.”); Rowland v. Prudential Financial, Inc., 2007

WL 1893630, *6 (D. Ariz. July 2, 2007) (“[t]he provisions of the GLBA are to be enforced

by ‘the federal functional regulators, the State insurance authorities, and the Federal Trade

Commission.’”), aff’d 362 Fed.Appx. 596 (9th Cir.), cert. denied, __ U.S. __, 131 S.Ct. 473

(2010); In re Davis, 430 B.R. 902, 907 (D.Colo. 2010) (“By its terms, however, the [GLBA]

does not create a private cause of action, nor is one implied. No court has ruled to the

contrary.”(footnote omitted)); Menton v. Experian Corp, 2003 WL 21692820 (S.D.N.Y.

2003) (“the GLBA does not provide for a private right of action...”)).7

 

The Amended Complaint does not change the fact that there is no private right of

action under the GLBA. Plaintiff’s GLBA claim should be dismissed.

2. State law claims

Plaintiff advances two state law claims: (1) violation of California’s Business and

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Professional Code § 17200 et seq.; and (2) breach of contract.

a. California Business and Professional Code

Plaintiff alleges that Defendant targeted him for fraud and that Defendant engaged in

unlawful, unfair, and fraudulent business practices under California’s Business and

Professional Code §17200. (Amended Complaint, p.7). Plaintiff also alleges that he is a

resident of Tucson, Arizona, and Defendant is a resident of Charlotte, North Carolina. (Id.

at p.1). Defendant argues that the statute does not apply to this action for several reasons,

including that Plaintiff is a resident of Arizona. (Defendant’s Motion, p. 9).

Under the California statute, any person who has performed, is performing or

proposing to perform, an act of unfair competition may be enjoined in any court of competent

jurisdiction. Cal. Bus. & Prof. Code § 17203. As used within the statute, the term “unfair

competition” includes “ any unlawful, unfair or fraudulent business act or practice and unfair,

deceptive, untrue or misleading advertising....” Cal. Bus. & Prof. Code § 17200.

“California law embodies a presumption against the extraterritorial application of its

statutes.” Churchill Village, L.L.C. v. General Elec. Co., 169 F.Supp.2d 1119, 1126 (N.D.

Cal. 2000) (citing Diamond Multimedia Systems, Inc. v. Superior Court, 80 Cal.Rptr.2d 828,

958 P.2d 539 (App. 1999)), aff’d on other grounds, 361 F.3d 566 (9th Cir. 2004). Moreover,

“section 17200 does not support claims by non-California residents where none of the alleged

misconduct or injuries occurred in California.” Id. (citing Norwest Mtg., Inc. v. Superior

Court, 85 Cal.Rptr.2d 18 (App. 1999)); see also Sullivan v Oracle Corp., 51 Cal. 4th 1192,

1297, 254 P.3d 237, 248 (2011) (when deciding certified question from the Ninth Circuit,

recognizing that “[n]either the language of [ section 17200 et seq.]...nor its legislative history

provides any basis for concluding the Legislature intended the [statute] to operate

extraterritorially. Accordingly, the presumption against extraterritoriality applies to [the

statute] in full force[]” and holding that the statute did not apply to non-California residents

performing work outside California for a California-based employer); Sullivan v. Oracle,

Corp., __ F.3d __, 2011 WL 615942 (9th Cir. Dec. 13, 2011) (conforming certified question

and stating that the California Supreme Court’s decision on the certified question in Sullivan

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“is conclusive.”). Plaintiff has alleged that he is a resident of Arizona. Further, Plaintiff has

not alleged that any of Defendant’s purported misconduct occurred in California.

Accordingly, even if federal jurisdiction could exist over such a claim, Plaintiff fails to state

a claim under section 17200 of the California Business and Professional Code.

2. Breach of contract

Similar to the allegations in his original complaint, Plaintiff alleges in his Amended

Complaint that Defendant breached its privacy policy regarding the selling or sharing of

customer information to outside marketers. (Amended Complaint, ¶¶20-21 & Exh. 11).

Plaintiff adds to his Amended Complaint the allegation that he read and relied upon

Defendant’s privacy policy when he decided to conduct business with Defendant. (Id. at

¶20). Defendant argues that the privacy policy does not constitute a contract with

Defendant’s customers and even if it did, Plaintiff fails to satisfy the amount in controversy

requirement for diversity jurisdiction. (Defendant’s Motion, pp. 3-7). Defendant also points

out that even though Plaintiff “purports to ‘[e]xert a claim for relief...on the grounds of

...breach of implied security’, (See Amended Complaint at page 8)[,] [n]o reported case has

recognized such a cause of action in Arizona or under federal law. To the extent that he

raises this as a cause of action, it should be dismissed.” (Defendant’s Motion, p. 3, n.2)

(capitalization in original omitted). Plaintiff mentions breach of implied security in

connection with his breach of contract claim. (See Amended Complaint, p.8). In that portion

of Plaintiff’s Amended Complaint setting out Plaintiff’s “CHARGES” against Defendant,

Plaintiff mentions breach of contract and violation of the federal statutes discussed supra, at

II.B.1.a.-c., but he does not include reference to a breach of implied security. (See Amended

Complaint, p. 7) (capitalization in original). Plaintiff does not address this issue in either of

his Responses. Plaintiff has not provided any support for such a cause of action under either

federal or state law. 

 Plaintiff alleges that the Court has diversity jurisdiction over this action because

Plaintiff and Defendant are “of diverse citizenship.” (Amended Complaint, p. 1 (citing 28

U.S.C. §1332(a)(1)). Diversity jurisdiction exists in an action between citizens of different

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states if the amount in controversy exceeds $75,000 exclusive of interest and costs. See 28

U.S.C. § 1332(a)(1). When, as here, “the plaintiff originally files in federal court, ‘the

amount in controversy is determined from the face of the pleadings.’” Geographic

Expeditions, Inc., v. Estate of Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir. 2010)

(quoting Crum v. Circus Circus Enters., 231 F.3d 1129, 1130 (9th Cir. 2000)). Moreover, 

[t]he amount in controversy alleged by the proponent of federal

jurisdiction-typically the plaintiff in the substantive dispute-controls so long

as the claim is made in good faith...[Crum, 231 F.3d at 1131)]. “To justify

dismissal, it must appear to a legal certainty that the claim is really for less

than the jurisdictional amount.” Id. (internal quotation omitted). This is called

the “legal certainty” standard, which means a federal court has subject matter

jurisdiction unless “upon the face of the complaint, it is obvious that the suit

cannot involve the necessary amount.” St. Paul Mercury Indemnity Co. v. Red

Cab Co., 303 U.S. 283, 292...(1938).

Id. See also Riggins v. Riggins, 415 F.2d 1259, 1269 (9th Cir. 1969) (“The basic rule is that,

for jurisdictional purposes, the amount in controversy is measured by the amount of the

claim....This rule is subject to the qualification that the amount of the claim must appear to

be in good faith and not fictitiously asserted simply to allege a sum sufficient for federal

jurisdiction.”).

Plaintiff attaches to his Amended Complaint a letter on Bank of America letterhead

from Derek Kaltenbach, “Officer/Customer Advocate[,]Office of the CEO and President”

indicating that:

we regret the challenges and any inconvenience you have experienced as a

result of the activity on [Plaintiff’s] account..., including the assessment of

overdraft fees. I have reviewed your account and appreciate this chance to

share my findings and resolution.

Although no bank error has been identified in this matter, I have refunded

$420.00 to [Plaintiff’s account], effective January 5, 2010, as a courtesy to

you. We hope you see this gesture as a reflection of our commitment to

service your financial needs. Our records show that the four $39.95 charges

applied by Cross Country Home Services (in August, September, October and

November) were refunded to the account as one credit for $159.80 on

December 11, 2009.

(Amended Complaint, Exh. 9). Plaintiff alleges $120.26 in actual damages. (Amended

Complaint, p. 8). He also alleges $350 in “court costs” even though the Court permitted him

to file this action without prepayment of fees. (Id.) (capitalization in original omitted);Doc.

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9). Plaintiff alleges $1,000,000 in damages resulting from breach of contract and tortious

criminal acts. (Id.). However, in light of the analysis supra, the only claim remaining is the

breach of contract claim. Plaintiff’s total demand for damages is: $1,000,470.26. (Id.). 

Court costs do not factor into the amount in controversy required for diversity

jurisdiction. See 28 U.S.C. §1332(a)(1). Plaintiff’s allegations of actual damages fall far

below the amount in controversy required for diversity jurisdiction. With regard to

Plaintiff’s claim for damages for breach of contract, Defendant points out that

“‘[c]onsequential damages are damages which arise naturally from the breach of a contract

that were within the parties’ contemplation.’” (Defendant’s Motion, p. 5 (quoting Ponderosa

Plaza v. Siplast, 181 Ariz. 128, 888 P.2d 1315, 1319 (App. 1993)). Further, the “the aim of

compensatory contract damages, the computation of which is hardly an exact science,...is to

yield the net amount of the losses caused and the gains prevented by the breach of the

contract, i.e., The expected additions to the plaintiff’s wealth and the actually resulting

subtractions therefrom.” A.R.A. Mfg. Co. v. Pierce, 86 Ariz. 136, 141, 341 P.2d 928, 932

(Ariz. 1959) (citations and internal quotation marks omitted). Moreover, “[p]unitive

damages are not usually awarded in contract actions, unless there is an accompanying tort.”

Miscione v. Bishop, 130 Ariz. 371, 374-375, 636 P.2d 149, 152-153 (App. 1981). 

“While a federal court must of course give due credit to the good faith claims of the

plaintiff, a court would be remiss in its obligations if it accepted every claim of damages at

face value, no matter how trivial the underlying injury. This is especially so when, after

jurisdiction has been challenged, a party has failed to specify the factual basis of his claims.”

Diefenthal v. C.A.B., 681, F.2d 1039, 1052 (5th Cir. 1982). As the party invoking this Court’s

jurisdiction, Plaintiff has the burden of establishing the factual basis of his claim. See id.

Neither the allegations of the Amended Complaint and documents attached thereto, nor

Plaintiff’s opposition to Defendant’s Motion, allege facts plausibly supporting in any way

a basis for damages satisfying the required amount for diversity jurisdiction. Upon review

of the instant record, it “‘appear[s] to a legal certainty that the claim is really for less than the

jurisdictional amount...’” and, thus, dismissal is justified. Geographic Expeditions, Inc., 599

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F.3d at 1106 (quoting Crum, 231 F.3d at 1131). Consequently, even if Plaintiff were able

to state a claim for breach of contract, his claim must be dismissed for lack of jurisdiction.

3. Defendant’s request for attorney’s fees

For the foregoing reasons, Plaintiff’s claims raised in his Amended Complaint should

be dismissed. Relying on Rule 11 of the Federal Rules of Civil Procedure, Defendant

requests that the Court award judgment against Plaintiff for Defendant’s attorney’s fees and

costs incurred in defending this matter. (Defendant’s Motion, pp. 9-10).

Under Rule 11, the Court may impose sanctions, including attorney’s fees and other

expenses, when a pleading is frivolous, legally unreasonable, without factual foundation, or

is brought for an improper purpose. See Fed.R.Civ.P. 11(b). “A motion for sanctions [under

Rule 11] must be made separately from any other motion....” Fed.R.Civ.P. 11(c)(2).

Additionally, before seeking Rule 11 sanctions from the court, the movant must first serve

the offending party and afford that party the opportunity to withdraw the frivolous or

meritless pleading. Id. Defendant has not filed a separate motion for sanctions but has

instead requested fees within its Motion to Dismiss. Moreover, there is no showing that

Defendant has complied with the safe harbor provision of Rule 11(c)(2). Because Defendant

has failed to comply with Rule 11(c)(2), Defendant’s request for attorney’s fees and costs

should be denied at this time.

III. CONCLUSION

Plaintiff’s has failed in his second attempt to invoke this Court’s federal question and

diversity jurisdiction with regard to the instant dispute. Despite the Court’s specific ruling

that Plaintiff did not meet the statutory damages requirement of the TCFPA, Plaintiff reurged a TCFPA claim even though he again alleged actual damages well under the specified

statutory amount. Despite the Court’s clear ruling that there was no private right of action

under the GLBA, Plaintiff nonetheless re-urged a claim under the GLBA. Further, Plaintiff’s

attempt to allege claims under federal statutes that were not invoked in his original complaint

also fails and given the allegations of the Amended Complaint, there appears no set of facts

upon which Plaintiff could state a claim under those statutes. This same conclusion holds

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true for Plaintiff’s attempt to invoke California’s Business and Professional Code §17200.

Moreover, despite being advised that the allegations of the original complaint did not support

a claim for damages that would allow diversity jurisdiction, Plaintiff’s Amended Complaint

fails to satisfy the amount in controversy requirement of 28 U.S.C. § 1332(a)(1). On the

instant record, further attempts at amendment would be futile and this action should be

dismissed. See Lopez, 203 F.3d at 1127; Noll, 809 F.2d at 1448(citing Broughton v. Cutter

Labs., 622 F.2d 458, 460 (9th Cir. 1980)). 

IV. RECOMMENDATION

For the foregoing reasons, the Magistrate Judge recommends that the District Court

grant in part and deny in part Defendant’s Motion to Dismiss Amended Complaint for Lack

of Subject-Matter Jurisdiction and Failure to State a Claim (Doc. 33). Defendant’s Motion

should be granted to the extent that Defendant seeks dismissal of this action. Defendant’s

Motion should be denied to the extent that Defendant requests sanctions.

Pursuant to 28 U.S.C. §636(b) and Rule 72(b)(2) of the Federal Rules of Civil

Procedure and LRCiv 7.2(e), Rules of Practice of the U.S. District Court for the District of

Arizona, any party may serve and file written objections within fourteen (14) days after being

served with a copy of this Report and Recommendation. A party may respond to another

party’s objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P.

72(b)(2). If objections are filed, the parties should use the following case number: CV 10-

218-TUC-JGZ.

Failure to file timely objections to any factual or legal determination of the Magistrate

Judge may be deemed a waiver of the party’s right to de novo review of the issues. See

United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.) (en banc), cert. denied, 540 U.S.

900 (2003).

DATED this 16th day of December, 2011.

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