White v. National Credit Systems Incorporated et al

Filing 32

ORDER: IT IS HEREBY ORDERED that Plaintiffs Motion for Sanctions (Doc. 20 ) is DENIED. IT IS FURTHER ORDERED that Plaintiffs Motion to Dismiss Defendant MEBs Amended Counterclaim (Doc. 23 ) is DENIED.. Signed by Judge Cindy K Jorgenson on 9/14/2011. (ALS)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 ) ) ) Plaintiff, ) ) vs. ) ) NATIONAL CREDIT SYSTEMS, INC. ) ) and MORRISON, EKRE & BART ) MANAGEMENT SERVICES, INC., ) ) Defendants. ) ) DAMIAN WHITE, No. CV-10-607-TUC-CKJ ORDER 16 Pending before the Court is Plaintiff’s Motion for Sanctions [Doc. 20] and Motion to 17 Dismiss Defendant MEB’s Amended Counterclaim [Doc. 23].1 On January 25, 2011, 18 Defendant MEB filed its Response to Motion to Dismiss MEB’s Amended Counterclaim 19 [Doc. 26]. Plaintiff has filed his reply. In its discretion, the Court finds this case suitable for 20 decision without oral argument. See LRCiv. 7.2(f). The Parties have adequately presented 21 the facts and legal arguments in their briefs and supporting documents, and the decisional 22 process would not be significantly aided by oral argument. 23 24 25 26 27 28 1 Plaintiff initially filed a Motion to Dismiss Counterclaim [Doc. 12]; however, Defendant MEB subsequently filed its Amended Counterclaim [Doc. 14]. This amendment was timely filed pursuant to Rule 15(a)(1), Federal Rules of Civil Procedure. As such, Plaintiff’s initial Motion to Dismiss [Doc. 12] is now moot. Ferdik v. Bonzelet, 963 F.2d 1258, 1262 (9th Cir. 1992) (an amended complaint supersedes the original complaint and after amendment the court will treat the original complaint as nonexistent). 1 I. FACTUAL BACKGROUND 2 Plaintiff’s claims arise from a lease agreement at the Summit Ridge Complex located 3 at 1252 South Craycroft Road, Tucson, Arizona 85711. Pl.’s Compl., Exh. “A” to 4 Defendant’s Notice of Removal [Doc. 1]. Plaintiff signed a written lease agreement 5 regarding his occupancy at the subject property. Def. MEB’s Amended Counterclaim [Doc. 6 14]. Defendant MEB was the property manager for the Summit Ridge complex. Pl.’s 7 Compl. [Doc. 1] at ¶ 10. 8 On May 24, 2009 at approximately 10 p.m., a fire was started on the stove in the 9 apartment, allegedly causing $2,007.00 in damages to the apartment. Id. at ¶ 11. Plaintiff 10 and Defendant MEB dispute who is responsible for the cost of repairing the apartment. 11 Plaintiff filed his Complaint in state court claiming that the debt is void and alleging a 12 defamation claim against Defendant MEB for false reporting of the debt to a collections 13 agency. Id. Defendant National Credit Systems, Inc. removed this cause of action based 14 upon federal question jurisdiction, 28 U.S.C. § 1331, arising from the claims brought 15 pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. 16 Defendant MEB filed its counterclaim against Plaintiff alleging a breach of the signed 17 lease agreement. Def. MEB’s Amended Counterclaim [Doc. 14]. Defendant MEB avers that 18 Plaintiff was responsible for any damages to the unit, and by failing to pay for such damage, 19 Plaintiff breached the lease agreement. Plaintiff seeks dismissal of the counterclaim, and 20 sanctions pursuant to Rule 11, Federal Rules of Civil Procedure. 21 II. STANDARD OF REVIEW 22 The matter currently pending before the Court is Plaintiff’s motion to dismiss 23 Defendant MEB’s counterclaim for failure to state a claim upon which relief can be granted. 24 A complaint is to contain a "short and plain statement of the claim showing that the pleader 25 is entitled to relief[.]" Rule 8(a), Fed. R. Civ. P. While Rule 8 does not demand detailed 26 factual allegations, “it demands more than an unadorned, the-defendant-unlawfully-harmed- 27 me accusation.” Ashcroft v. Iqbal, – U.S. –, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). 28 “Threadbare recitals of the elements of a cause of action, supported by mere conclusory -2- 1 statements, do not suffice.” Id. Dismissal is appropriate where a plaintiff has failed to "state 2 a claim upon which relief can be granted." Rule 12(b)(6), Fed. R. Civ. P. “To survive a 3 motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 4 ‘state a claim to relief that is plausible on its face.’” Ashcroft, 129 S.Ct. at 1949 (quoting Bell 5 Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 6 (2007)). Further, “[a] claim has facial plausibility when the plaintiff pleads factual content 7 that allows the court to draw the reasonable inference that the defendant is liable for the 8 misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but 9 it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citations 10 omitted). Additionally, the Court takes “all allegations of material fact as true and 11 construe[s] them in the light most favorable to the nonmoving party.” Parks School of 12 Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995) (citations omitted). 13 III. ANALYSIS 14 A. Motion to Dismiss 15 Plaintiff avers that Defendant MEB has failed to state a claim for breach of contract 16 based upon the doctrine of impossibility.2 In Arizona, “to state a claim in contract, the 17 complaint must disclose an agreement, a right thereunder in the party seeking relief and a 18 breach by the defendant.” City of Tucson v. Superior Court of Pima County, 116 Ariz. 322, 19 324, 569 P.2d 264, 266 (Ct. App. 1977). “Ordinarily, a court may only look at the face of 20 the complaint to decide a motion to dismiss.” Van Buskirk v. Cable News Network, Inc., 284 21 F.3d 977, 980 (9th Cir. 2002). Although the doctrine of “incorporation by reference” allows 22 the Court to look beyond the pleadings, e.g., those documents either attached to the 23 complaint or public record, without converting the motion to dismiss to one for summary 24 judgment; the referenced documents must be accepted by all parties as authentic. Id. 25 26 27 28 2 In his reply brief, Plaintiff also asserts that the lease agreement is a contract of adhesion and therefore unforceable as to him. The Court declines to address this argument, but notes that it fails for the same reason as Plaintiff’s other arguments. Graves v. Arpaio, 623 F.3d 1043,1048 (arguments raised for the first time in reply are deemed waived). -3- 1 Here, Defendant MEB’s counterclaim alleges a lease agreement, a breach of one of 2 the provisions of that agreement by Plaintiff and subsequent damage to MEB. Plaintiff’s 3 reliance on the police report to allege that Plaintiff had nothing to do with the fire and 4 therefore could not have breached the lease agreement is inadequate for purposes of a motion 5 to dismiss. Although entries in a police report based on an officer’s personal observations 6 may be admissible, other statements are inadmissible hearsay. Colvin v. U.S., 479 F.2d 998, 7 1003 (9th Cir. 1993). Plaintiff’s argument that he did not breach the lease agreement due to 8 impossibility is premised upon the fact that he had nothing to do with starting the fire, but 9 Defendant MEB disputes this fact. Additionally, discovery has not yet begun in this case. 10 The Court finds that because Defendant MEB has stated a claim, and there are disputed facts 11 surrounding that counterclaim, dismissal is inappropriate at this time. 12 Plaintiff’s Motion to Dismiss is denied. 13 B. Motion for Sanctions 14 Plaintiff seeks sanctions pursuant to Rule 11, Fed. R. Civ. P., against Defendant MEB 15 for the filing of its counterclaim. As with his motion to dismiss, Plaintiff relies on the 16 doctrine of impossibility and the police and fire reports to assert that Defendant MEB’s claim 17 is baseless. 18 unsustainable upon further discovery, at this juncture it has stated a valid cause of action. 19 As such, sanctions are unwarranted and Plaintiff’s motion for sanctions is denied. Accordingly, As discussed previously, although Defendant MEB’s claims may be 20 Accordingly, IT IS HEREBY ORDERED that Plaintiff’s Motion for Sanctions [Doc. 21 20] is DENIED. IT IS FURTHER ORDERED that Plaintiff’s Motion to Dismiss Defendant 22 MEB’s Amended Counterclaim [Doc. 23] is DENIED. 23 DATED this 14th day of September, 2011. 24 25 26 27 28 -4-

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