Banks v. ACS Educ. Corp.

ALFRED BANKS, Plaintiff,

v.ACS EDUCATION CORP., et al., Defendants.

Civil No. 10cv1886 AJB (CAB)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

DATED: March 26, 2012

ORDER GRANTING MOTIONS TO

DISMISS SECOND AMENDED

COMPLAINT; GRANTING MOTION

TO COMPEL ARBITRATION;

AND DENYING MOTION FOR

DEFAULT

[Doc. Nos. 96, 98, 102, 103, 115, 119, 121,

194, 201, 203, 204, 227, 234, 240 and 256]

Presently before the Court are twelve motions to dismiss Plaintiffs' Second Amended Complaint ("SAC"),¹ filed by the following Defendants:

1. Experian Information Solutions, Inc. ("Experian") (Doc. No. 96);

2. Trans Union LLC ("Trans Union") (Doc. Nos. 98 and 201);

3. National University (Doc. 102);

4. Coast Professional Inc., Shelley Johnston ("Coast" and "Johnston" respectively) (Doc. No. 103);5. Catherine Barnhill ("Barnhill") (Doc. No. 115);

6. ACS College Loan Corp., ACS Education ("ACS"); and ACS Employees "Lotoya" and "Justin" (Doc. No. 119);

7. California Student Aid Commission (Doc. No. 203);

8. Educational Credit Management Corporation ("ECMC") (Doc. No. 204);

9. Equifax Information Services LLC ("Equifax") (Doc. Nos. 121 and 234);²

10. JPMorgan Chase & Co. ("JPMorgan") (Doc. No. 240).

Also before the Court is the motion to compel arbitration by Defendants First Bank of Delaware, Tribute and Jefferson Capital Systems, LLC (Doc. No. 227). For the reasons set forth below, the Court GRANTS the Defendants' motions to dismiss the SAC and the motion to compel arbitration

Procedural Background

On September 10, 2010, Plaintiff sought and received leave to file a complaint against several defendants including Experian.³ (Doc. No. 2.) Plaintiff's original complaint alleged constitutional violations under 42 U.S.C. § 1983 and racketeering or debt collection activity in violation of 18 U.S.C. § 1962 of the federal Racketeer Influenced and Corrupt Organizations Act ("RICO"). Defendants filed motions to dismiss Plaintiff's complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. Nos. 5, 6, 11.) While those motions were pending, Plaintiff filed a motion for leave to file an amended complaint and the Court granted Plaintiff's motion. (Doc. No. 84.) Plaintiff filed his First Amended Complaint ("FAC") on February 15, 2011. (Doc. No. 88.)

Plaintiff's FAC alleges violations of the Fair Credit Reporting Act as well as a RICO claim. [Doc. No. 88.] On March 2, 2011, the Court ordered Plaintiff to effectuate proper service on anydefendant not previously served within 60 days.⁴ [Doc. No. 100.] On May 24, 2011, the Court issued an Order to Show Cause to the Plaintiff to appear on June 7, 2011, before Judge Battaglia and show cause why the Court should not dismiss his case against any Defendant not properly served in accordance with Rule 4 of the Federal Rules of Civil Procedure and the Court's March 2, 2011 Order. At the hearing, the Plaintiff failed to demonstrate that he had effectuated proper service with regard to several Defendants,⁵ and the Court dismissed those Defendants without prejudice for want of prosecution. [Doc. No. 167].

On July 13, 2011, the Court issued an Order, [Doc. No. 178], in which the Court informed Plaintiff that his service of the FAC on many of the Defendants previously identified by the Court was insufficient as a matter of law. The Court reminded the Plaintiff that he had already been warned twice by the Court regarding his failure to properly serve Defendants, and the Court gave Plaintiff thirty (30) days, or until August 12, 2011, to file and properly serve a SAC. The Court warned that any further failure to comply with Rule 4 and effectuate proper service on any of the previously dismissed Defendants would result in the Plaintiff's claims against these Defendants being DISMISSED WITH PREJUDICE, without further motion by Defendants.

On July 19, 2011, with the Court's leave, the Plaintiff filed a SAC, [Doc. No. 179], against twenty Defendants.⁶ The SAC did not alter the claims from the FAC,⁷ but merely added new Defendants, as well as Defendants previously dismissed by the Court for want of prosecution. Prior to the filing of the SAC, certain Defendants had filed motions to dismiss the FAC, [Doc. Nos. 96, 98, 102,103, 115, 119, 121] and because the motions were pending when Plaintiff filed his SAC and there was no material change made to the claims from the FAC, the Court construed these motions as being directed to the SAC. Additional Defendants filed motions to dismiss the SAC. [Doc. Nos. 201, 203, 204, 234 and 240.] Defendants Jefferson Capital Systet, First Bank of Delaware, and Tribute filed a motion to compel arbitration. [Doc. No. 227.]

Factual Background

Plaintiff contends that, between August 2004 and September 2010, all Defendants knowingly and willfully conspired with each other to violate the Fair Debt Collection Practices Act ("FDCPA") and the Fair Credit Reporting Act ("FCRA") by acting in concert to perform several acts pertaining to Plaintiffs credit information. The Plaintiff alleges that the conspiracy to violate these acts also constituted violations of the RICO Act. (SAC, pp. 5-6.) Plaintiff alleges that Defendants made negative credit reports regarding debts owed by Plaintiff. (SAC, p. 5.) Plaintiff contends that these debts were disputed and that certain Defendants were therefore in violation of the FDCPA for reporting them to credit agencies. (SAC, pp. 6-34.) The Plaintiff also contends that the Defendants who are named as credit reporting agencies breached their obligations under the FCRA to investigate Plaintiffs complaints about inaccuracies in the credit reports they created and published. The Plaintiff alleges that the Defendant Credit Reporting Agencies also failed to correct errors and to record the fact that the debts were disputed. (SAC, pp. 6-34.) The Plaintiff also sets out the alleged history of his attempts to get the information deleted from his credit reports. (SAC, pp. 7-34.)

The Plaintiff asserts his credit has been damaged, which has resulted in the denial of unemployment benefits. He also attributes the death of his sister and brother in Africa to the negative credit reports. The Plaintiff contends that due to the negative credit information, he was not able to get a loan that would enable him to travel to Africa to help his family and pay hospital bills. (SAC, pp. 13, 14, & 33.) The SAC alleges that negative credit reports caused the Plaintiff to slip into depression and to lose self-confidence and self-esteem. (SAC, pp. 12-13, 34.) The Plaintiff states that he needed help to pay rent in order to avoid becoming homeless. (SAC, p. 13.) The Plaintiff also claims he has lost profits in his business as a result of Defendants' actions. (SAC, p. 20.)

SAC Claims

Plaintiff's first claim alleges Defendants "conspired and agreed among themselves to violate" several statutes. (SAC at p. 5.) The SAC alleges several Defendants negatively reported credit balances of varying amounts, and continued to provide negative reports "after all money had been paid in full." (Id. at pp. 5-7.) The SAC alleges these defendants "[p]resented an inaccurate negative report" to Experian as well as consumer reporting agencies Experian, Trans Union and Equifax. (Id.) On June 14, 2010, the SAC alleges, Plaintiff wrote to Experian, Trans Union and Equifax requesting a reinvestigation of at least one negative report item. (Id. at p. 7.) Plaintiff alleges defendants "have a policy, custom [a]nd practice" of violating the federal Fair Credit Reporting Act and "Continue Negative Reporting intentional to cost damage to Plaintiff's record" (sic). (Id. at p. 6.)

Plaintiff's second claim appears to arise from disputes with defendant Coast Professional and possibly defendant National University regarding a consolidation/refinance of student loans. (Id. at pp. 7-11.) Rather, Plaintiff's second claim appears to allege violations by Coast Professional such as "fail[ing] to keep their promise [that] All the Negatives credit reports related to the Student Loan will be deleted and plaintiff will be able to get new loan to continue his Education" (sic). (Id. at p. 10.)

The paragraphs styled as Plaintiff's third claim for relief set forth miscellaneous facts regarding matters including Plaintiff's family, the dispute with Coast Professional that forms the basis of Plaintiff's second claim, and charges for insufficient funds and late payments imposed by an unnamed bank.

Plaintiff's fourth claim appears to arise from disputes with individual consumer lenders regarding account balances, late payment fees, over limit fees, finance charges and other fees. (Id. at pp. 14-15.) This claim also references a negative report by Continental Finance, see SAC at p.16.

Plaintiff's fifth claim alleges he disputed negative items with Experian, Trans Union and Equifax because Plaintiff's creditors "agree[d] to delete all negative report[s] if payment is made in full." (FAC at p. 16.) Plaintiff wrote letters to Experian, Trans Union and Equifax stating, "I never sign[ed] four Student Loan check[s]," and requesting copies of unspecified cancelled checks. (Id. at pp. 16-17.)

Plaintiff's sixth claim alleges Defendants engaged in a "pattern of racketeering activity." (Id. at p. 19.) Referencing the allegations in his first through fifth claims, Plaintiff alleges Defendants' conduct"was done on the basis of the fact that Plaintiff is Black and is representing himself." (Id.) Plaintiff alleges Defendants engaged in a "continuing conspiracy" in violation of RICO, 18 U.S.C. §§ 1962(a)-(d). (Id.) Subsequent pages of the SAC are styled as a "RICO Case Statement" pursuant to a general order which, at least at the present time, does not exist within this district. (Id. at pp. 20-33.) This portion of the SAC appears to reallege the same matter pled in the first through fifth claims, this time with citations to 18 U.S.C. § 1961(6), which defines "unlawful debt" for purposes of RICO. (E.g., Id. at p. 23.)

The Plaintiff seeks $12...