A District Court judge in Arizona has granted a defendant’s motion to dismiss a lawsuit accusing a lender of breach of contract and violating the Fair Debt Collection Practices Act and the Fair Credit Reporting Act after the plaintiffs’ vehicle was repossessed, rejecting arguments built on a legal theory “commonly used by those associated with the sovereign citizen movement.”
The background: A pair of plaintiffs financed the purchase of a luxury SUV, agreeing to make 72 monthly payments of about $1,569.
- When signing the contract, the plaintiffs endorsed it with the notation “UCC 1-308, Without Recourse,” which they claimed made their obligations conditional and reserved their rights and defenses.
- The plaintiffs made a down payment and a handful of partial payments before payments stopped, and the defendant repossessed the vehicle.
- The plaintiffs, representing themselves, sued the defendant, filing a complaint that spanned 218 pages, or 953 pages with exhibits. The judge struck it as impossible to follow, noting the court “is not compelled to sift through Plaintiffs’ incomprehensible complaint” to sort out allegations related to a simple vehicle repossession.
- The plaintiffs’ amended complaint alleged breach of contract, violations of the FDCPA and FCRA, and conversion of personal property
The ruling: Judge Michael T. Liburdi of the District Court for the District of Arizona granted the motion, dismissing every claim and giving the plaintiffs one narrow opportunity to replead a single credit reporting claim.
- The breach of contract claim rested entirely on the “without recourse” endorsement, which Judge Liburdi noted does not alter a borrower’s obligations. He observed that courts have routinely rejected such arguments as “wholly frivolous” and that raising them is now the basis for serious sanctions against civil litigants.
- The FDCPA claim failed because the defendant is a creditor, not a debt collector, and it took assignment of the contract at inception, when the plaintiffs concede they were not in default.
- Two of the FCRA claims were dismissed permanently: one because the permissible purpose provision governs credit reporting agencies rather than furnishers, and another because consumers cannot personally sue a furnisher for providing inaccurate information under that section of the statute.
- The claim that the defendant failed to investigate disputes survived only barely; the plaintiffs pointed to “inconsistent payment history dates” and delinquency amounts without identifying any of them, and the judge gave them one chance to replead with specifics.
