Sport Collectors Guild Inc. v. United States
| Decision Date | 29 December 2020 |
| Docket Number | No. CV-19-04573-PHX-MTL,CV-19-04573-PHX-MTL |
| Parties | Sport Collectors Guild Incorporated, et al., Plaintiffs, v. United States of America, et al., Defendants. |
| Court | U.S. District Court — District of Arizona |
Before the Court is Defendant Bank of America, N.A.'s ("Bank of America") Motion to Dismiss for Failure to State a Claim (Doc. 57) and Defendant United States of America's ("United States") Motion to Dismiss for Lack of Jurisdiction (Doc. 58). For the reasons set forth below, both motions are granted.1
This Court previously set forth this case's background in detail. (Doc. 52.) For that reason, this section will be limited to the essential facts.
Plaintiff Sport Collectors Guild, Inc., which was owned by Plaintiff Patrice Lagnier (collectively, "Sport Collectors"), "was a leading manufacturer of sports replicas." (Doc. 55 ¶ 12.) In 2003, Bank of America extended to Sport Collectors a business loan through a United States Small Business Administration ("SBA") program called SBAExpress. (Id. ¶¶ 12-15.) Bank of America understood that Sport Collectors"would accept its offer of a line of credit" if Sport Collectors was eligible for the loan and "Sepideh Lagnier (Plaintiff Lagnier's former spouse) [was] a co-guarantor on the loan agreement." (Id. ¶ 16.) After making several payments, Sport Collectors defaulted on the loan. (Id. ¶¶ 21-22.) Bank of America then accelerated the loan's maturity date and demanded immediate payment. (Id. ¶ 22.) In 2010, the bank placed Sport Collectors "in liquidation status" and filed a collection action in Arizona Superior Court. (Id. ¶ 23.) Eventually, the Arizona Court of Appeals ruled that the dispute is subject to an arbitration agreement. (Id. ¶ 26.) In 2014, Sport Collectors then amended its "answer to include four counterclaims" against Bank of America, including "breach of the implied covenant of good faith and fair dealing." (Id. ¶ 31; Doc. 62 at 6.)2 Rather than arbitrate that dispute, Bank of America billed SBA, which had guaranteed the loan through its SBAExpress program. (Doc. 55 ¶ 27.) SBA paid Bank of America. (Id. ¶ 28.) The United States Department of the Treasury attempted to collect from Sport Collectors, but eventually stopped because Sport Collectors disputed the debt. (Id. ¶¶ 28-30.) SBA then billed Bank of America to claw back the money it had paid the bank. (Id. ¶ 30.)
Sport Collectors later sued Bank of America in Arizona Superior Court on the same loan, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, abuse of process, and intentional inflection of emotional distress. (Doc. 62 at 6.) The bank removed to federal court. (16-CV-02229-PHX-ROS, Doc. 1-2 at 2.)3 Sport Collectors filed a motion to amend its complaint to add a fraudulent misrepresentation and fraudulent concealment claim, but the Court denied that motion because these proposed amendments were futile. (16-CV-02229-PHX-ROS, Doc. 72.) This Court then entered summary judgment in Bank of America's favor on all claims. (16-CV-02229-PHX-ROS, Doc. 102.)
After Sport Collectors exhausted its administrative remedies, it filed the instantsuit against SBA and the United States. (Doc. 1; Doc. 55 ¶ 36.) This time, Sport Collectors alleged two causes of action against the United States and SBA: (1) negligence under the Federal Tort Claims Act ("FTCA") and (2) violation of the Administrative Procedure Act. (Id.) The United States moved to dismiss the original complaint. (Doc. 15.) Sport Collectors then filed a First Amended Complaint adding Bank of America as a defendant.4 (Doc. 19.) The United States and Bank of America each moved to dismiss. (Doc. 22; Doc. 34.)
This Court granted both the United States' and Bank of America's motion to dismiss with leave to amend. (Doc. 52.) This Court also dismissed SBA as a party and held that Sport Collectors' fraudulent inducement claim did not allege a concrete injury to have Article III standing. (Id. at 1, 5-6.) This Court also found that Sport Collectors' FTCA cause of action "failed to establish the state-law duty necessary to bring either of [its] negligence claims." (Id. at 7.) This led to Sport Collectors filing a Second Amended Complaint. (Doc. 55.) The United States and Bank of America then filed the pending motions to dismiss. (Doc. 57; Doc. 58.)
A complaint must set forth a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "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.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). Only if the complaint fails to state a cognizable legal theory or fails to provide sufficient facts to support a claim is dismissal appropriate. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In deciding a Rule 12(b)(6) motion, the Court must take all allegations of material fact as true andconstrue them in the light most favorable to the nonmoving party. Marcus v. Holder, 574 F.3d 1182, 1184 (9th Cir. 2009) (citation omitted). Courts "are not bound to accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).
Motions to dismiss based on an exception to the FTCA's waiver of sovereign immunity are treated as motions to dismiss for lack of subject matter jurisdiction and reviewed under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Parker v. United States, No. CV 10-1407-PHX-SRB, 2011 WL 13189942, at *2 (D. Ariz. May 6, 2011); see also McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (). While the plaintiff has the burden of showing that it has alleged facts potentially within the FTCA's waiver of immunity, the United States bears the burden of proving the applicability of an exception to the waiver of immunity under the FTCA. Bailey v. United States, 623 F.3d 855, 859 (9th Cir. 2010); Prescott v. United States, 973 F.2d 696, 701-02 (9th Cir. 1992).
Finally, a complaint that fails to allege facts sufficient to establish "Article III standing requires dismissal for lack of subject matter jurisdiction" under Rule 12(b)(1). Satanic Temple, Inc. v. City of Scottsdale, 423 F. Supp. 3d 766, 772 (D. Ariz. 2019) (citing Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011)). It is also proper for a court to dismiss a cause of action with prejudice when a plaintiff lacks standing and further pleading amendments would be futile. See City of San Juan Capistrano v. Cal. Pub. Util. Comm'n, 937 F.3d 1278, 1280-82 (9th Cir. 2019).
Sport Collectors has asserted three causes of action in this case. First, Sport Collectors contends that Bank of America fraudulently induced it into accepting a loan that Bank of America knew could not have been administered. Second, Sport Collectors alleges that the United States failed to protect it against Bank of America's "wrongful actions." Third, Sport Collectors alleges that Bank of America breached the covenant ofgood faith and fair dealing. The Court will address each cause of action in turn.
This Court previously held that Sport Collectors lacks standing to bring its fraudulent inducement claim. (Doc. 57 at 2-3; Doc. 52 at 5-6.) Bank of America now renews its objection to Sport Collectors' standing. "To establish standing under Article III of the Constitution, a plaintiff must demonstrate (1) that he or she suffered an injury in fact that is concrete, particularized, and actual or imminent, (2) that the injury was caused by the defendant, and (3) that the injury would likely be redressed by the requested judicial relief." Thole v. U. S. Bank N.A, ___ U.S. ___, 140 S. Ct. 1615, 1618 (2020) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). "The party invoking federal jurisdiction bears the burden of establishing these elements." Lujan, 504 U.S. at 561. "Since they are not mere pleading requirements but rather an indispensable part of the plaintiff's case, each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of litigation." Id. "At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice." Id.
Bank of America contends that Sport Collectors has not alleged a "cognizable injury" and only added to its Second Amended Complaint a conclusory statement that Sport Collectors "suffered an injury in fact that is concrete." (Id.) Bank of America also points out that the Second Amended Complaint "simply attempts to re-cast the same allegations about SBA eligibility and Sepideh Lagnier's ability to guaranty the loan from the First Amended Complaint . . . into an assertion that these issues were 'conditions precedent' to [Bank of America's] loan." (Id. at 2-3.) Sport Collectors argues more generally that as a result of Bank of America's failure to disclose that certain conditions were not met before the loan was extended, Sport Collectors lost its line of credit with its previous bank and was "forced out of business." (Doc. 59 at 14 (citing Doc. 55 ¶ 52).)
Sport Collectors has not met its burden of establishing standing to bring this claim. Lujan, 504 U.S. at 561. In fact, Sport Collectors fails to substantively respond...
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