Martin V Redstone Federal Credit Union

Key Facts

Transaction Type

Issues

• Whether defendant's motion to dismiss all of plaintiff's claims should be granted, including claims for breach of fiduciary duty, trust fraud, UCC violations, trespass, and constitutional rights violations.
• Whether the plaintiff should be granted leave to amend the complaint, considering the court's conclusion that the complaint could not be cured by amendment due to futility.
• Whether the plaintiff's complaint should be dismissed because it relies on 'sovereign citizen' theories that have been widely rejected by courts as frivolous, including claims based on Cestui Que Vie Trust, UCC financing statements, and related legal theories.
• Whether the plaintiff's complaint and amended complaint violate Federal Rule of Civil Procedure 11 due to the use of non-existent case citations, including eight fake citations in the original complaint and five non-existent cases in the amended complaint.

Holdings

• The court granted defendant's motion to dismiss plaintiff's complaint in its entirety and denied leave to amend, concluding that the complaint could not be cured by amendment because it relied on frivolous sovereign citizen theories, contained non-existent case citations in violation of Rule 11, and made no cognizable legal claims.
• Counts V (Trespass and Unreasonable Conduct) and VI (Violation of Constitutional Rights) were dismissed because Redstone Federal Credit Union is a private entity and cannot be sued for constitutional violations under 42 U.S.C. § 1983 or otherwise, and there were no trust funds or property of which plaintiff could be deprived.
• The court dismissed Counts II (Trust Fraud and Malfeasance of Office), III (Default by Non-Response and Power of Attorney for Lien Filing), and IV (Violation of UCC § 9-201 — Enforcement of Security Agreement) because each is based on frivolous sovereign citizen theories rather than cognizable legal claims, including reliance on fictional trust arrangements and non-existent case citations.
• Count I was dismissed because Alabama law establishes that a bank-customer relationship is a creditor-debtor relationship that does not impose a fiduciary duty on the bank, and Redstone's denial of plaintiff's loan application does not support a claim of breach of fiduciary duty.

Remedies

• The court denied plaintiff's request to amend the complaint, finding the claims could not be cured by amendment and were subject to dismissal due to futility.
• The court granted defendant Redstone Federal Credit Union's motion to dismiss all of plaintiff's claims in civil action 5:25-cv-00548-CLS, including breach of fiduciary duty, trust fraud, UCC violations, trespass, and constitutional rights violations, as the complaint relied on frivolous sovereign citizen theories and contained non-existent case citations.

Legal Principles

• Section 1983 claims for constitutional violations cannot be brought against private entities; the Fourteenth Amendment does not shield against merely private conduct. Federal Rule of Civil Procedure 11 requires parties to certify that legal contentions are warranted by existing law; citing non-existent cases violates this duty of candor.
• Under Alabama law, the relationship between a bank and its customer is a creditor-debtor relationship that does not impose a fiduciary duty on the bank, absent special circumstances. A plaintiff must show (1) existence of fiduciary duty, (2) breach of that duty, and (3) damages suffered as a result of the breach to prevail on a breach of fiduciary duty claim.
• Federal Rule of Civil Procedure 12(b)(6) permits dismissal for failure to state a claim. Pleadings must contain a short and plain statement showing entitlement to relief. Complaints must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. The plausibility standard requires more than a sheer possibility that defendant acted unlawfully.

Precedent Name

• Bell Atlantic Corp. v. Twombly
• Hoefling v. City of Miami
• Tannenbaum v. United States
• Burger King Corp. v. Weaver
• Shelley v. Kraemer
• Regions Bank v. Lowery
• Avirgan v. Hall
• Ashcroft v. Iqbal
• Rollins v. Premier Motorcar Gallery, Inc.

Cited Statute

• Federal Rule of Civil Procedure 11(b)
• Federal Rule of Civil Procedure 12(b)(6)
• 42 U.S.C. § 1983
• 18 U.S.C. § 1961 et seq.
• 28 U.S.C. § 1331
• Federal Rule of Civil Procedure 8(a)(2)

Passage Text

• Of the twelve citations to legal authority contained in the complaint, eight are "fake." Further, all five cases cited in plaintiff's amended complaint do not exist. A Westlaw search of that citation leads to People v. Xinos, a case that involves a motion to suppress information obtained from a criminal defendant's "event data recorder" in a vehicular manslaughter case.
• For all of the foregoing reasons, Redstone's motion to dismiss is due to be granted. Further, upon review of the pleadings, Redstone's motions to dismiss, and plaintiff's responses, the court concludes that plaintiff's complaint could not be cured by amendment. See Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 (11th Cir. 1999) ("[D]enial of leave to amend is justified by futility when the complaint as amended is still subject to dismissal.")
• Upon review of plaintiff's complaint, the court concludes that Counts II ("Trust Fraud and Malfeasance of Office"), III ("Default by Non-Response and Power of Attorney for Lien Filing"), and IV ("Violation of UCC § 9-201 — Enforcement of Security Agreement") of plaintiff's complaint are due to be dismissed because each is based upon frivolous, sovereign citizen theories, as opposed to cognizable legal claims.