1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 REGINALD SMITH, Case No. 1:23-cv-01474-JLT-BAM 12 Plaintiff, FINDINGS AND RECOMMENDATIONS

REGARDING DISMISSAL OF ACTION

13 v. (Doc. 5) 14 ROBERT B. CROWL, et al.,

FOURTEEN-DAY DEADLINE

15 Defendants. 16 17 Plaintiff Reginald Smith (“Plaintiff”), proceeding pro se and in forma pauperis, initiated 18 this civil action on October 16, 2023. (Doc. 1.) On November 29, 2023, the Court screened 19 Plaintiff’s complaint and granted him leave to amend. (Doc. 4.) Plaintiff’s first amended 20 complaint, filed on January 2, 2024, is currently before the Court for screening. (Doc. 5.) 21 I. Screening Requirement and Standard 22 The Court screens complaints brought by persons proceeding in pro se and in forma 23 pauperis. 28 U.S.C. § 1915(e)(2). Plaintiff’s complaint, or any portion thereof, is subject to 24 dismissal if it is frivolous or malicious, if it fails to state a claim upon which relief may be 25 granted, or if it seeks monetary relief from a defendant who is immune from such relief. 28 26 U.S.C. § 1915(e)(2)(B)(ii). 27 A complaint must contain “a short and plain statement of the claim showing that the 28 pleader is entitled to relief . . . .” Fed. R. Civ. P. 8(a)(2). Detailed factual allegations are not 1 required, but “[t]hreadbare recitals of the elements of a cause of action, supported by mere 2 conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell 3 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). While a plaintiff’s allegations are taken as 4 true, courts “are not required to indulge unwarranted inferences.” Doe I v. Wal-Mart Stores, Inc., 5 572 F.3d 677, 681 (9th Cir. 2009) (internal quotation marks and citation omitted). 6 To survive screening, Plaintiff’s claims must be facially plausible, which requires 7 sufficient factual detail to allow the Court to reasonably infer that each named defendant is liable 8 for the misconduct alleged. Iqbal, 556 U.S. at 678 (quotation marks omitted); Moss v. U.S. Secret 9 Serv., 572 F.3d 962, 969 (9th Cir. 2009). The sheer possibility that a defendant acted unlawfully 10 is not sufficient, and mere consistency with liability falls short of satisfying the plausibility 11 standard. Iqbal, 556 U.S. at 678 (quotation marks omitted); Moss, 572 F.3d at 969. 12 II. Summary of Plaintiff’s Allegations 13 Plaintiff drafted his amended complaint using the form provided by this Court. Both the 14 caption and the section of the form listing the parties to this action identify Robert B. Crowl as the 15 sole defendant. (See Doc. 5 at pp. 1, 2.) However, in a separate section of the form, Plaintiff 16 identifies Flagship Credit Acceptance as an additional defendant. (Id. at p. 5.) 17 Plaintiff identifies the basis of this Court’s jurisdiction as both federal question and 18 diversity of citizenship. (Id. at p. 3.) In the section in which he is asked to indicate which of his 19 federal constitutional or federal statutory rights have been violated, he lists the Federal Reserve 20 Act and the Bills of Exchange Act. (Id. at p. 4.) In the section regarding diversity of citizenship, 21 Plaintiff indicates that he is a citizen of California, defendant Crowl is a citizen of Pennsylvania, 22 and defendant Flagship Credit Acceptance is incorporated under the laws of the State of Delaware 23 and has its principal place of business in Pennsylvania. (Id. at pp. 4-5.) In the section in which 24 he is asked to specify the amount in controversy, Plaintiff states, “Under Federal Reserve Act 25 Section 29 civil money penalty this violation is in the Third tier.” (Id. at p. 5.) 26 Plaintiff forwards two separate claims. In the first claim, Plaintiff alleges as follows:

27 On 7/11/2023 I entered into a Consumer credit transaction. I contracted with flagship credit acceptance with my Cesti Que trust, my consumer tax payer entity 28 REGINALD DOMINICK SMITH. The principal REGINALD DOMINICK 1 SMITH my Birst Certificate shows Iam the title and owner which Smith Reginald D is the Agent for and being the owner of that contract I have 2 Rights,Interest,equity that’s guaranteed to the principal. The federal reserve act section 16-1and 2 states any application that you put your legal person on there 3 with your social security number for any amount will be granted America is operating under bankruptcy there no lawful money I sent my tender of payment 4 9/25/2023 performing my obligation I sent a power of attorney letting the chief financial officer know I’m the agent for the principal REGINALD SMITH with 5 my endorse bill gave instructions to transfer the principal balance to the principal account,if there a problem with this negotiable instrument or any defects reply 6 within five business days I sent certified mail with tracking no response I sent another tender of payment opportunity to cure 9/30/2023 giving instructions again 7 if there any defect in my performance please reply no response gave five more business days no response then on 10/13/2023 I sent a Default Judgment notice 8 for failure of non performance of obligation denying the guarantee interest due to the principal in the contract which I AM the owner of the account. 9 10 (Id. at p. 6) (unedited text). 11 In the second claim, Plaintiff alleges as follows:

12 Security fraud acquired when I entered into contract as the owner of the contract I did my performance on 09/13/2023-09/30/2023-10/13/2023 Claiming my interest 13 that’s guaranteed to the principal and was held out of my own account by the chief financial officer I received a response finally from them stating they don’t 14 take that type of payment and that I altered the interest coupon to resemble a check trying to turn it into a negotiable instrument, threatening to take the 15 collateral from me the (car) when I clearly did my performance as the Agent for the Consumer REGINALD D SMITH which I hold the title of ownership the 16 Birth Certificate this have effect my mental and cause stress receiving repeated back to back calling from flagship credit acceptance asking for payment. when I 17 endorsed my bill each and ever bill statement 9-252023, 10-25-2023. 11-25-2023 and sent certified mail to chief financial officer Robert b crowl, with holding my 18 securities never returning them or responding that their a defect in my endorsement. 19 20 (Id. at p. 7.) 21 As relief, Plaintiff asks to collect his “interest and equity that’s owed to the principal.” 22 (Id. at p. 8.) He also indicates that under “federal reserve act Section 29, civil money penalty for 23 breach of fiduciary duty I’m allowed 1,000,000 a day I would ask for 5,000,000 for punitive 24 damages.” (Id.) 25 III. Discussion 26 A. Federal Rule of Civil Procedure 8 27 Pursuant to Federal Rule of Civil Procedure 8, a complaint must contain “a short and 28 plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a). 1 Detailed factual allegations are not required, but “[t]hreadbare recitals of the elements of a cause 2 of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 3 (citation omitted). Plaintiff must set forth “sufficient factual matter, accepted as true, to ‘state a 4 claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. 5 at 570, 127 S.Ct. at 1974). While factual allegations are accepted as true, legal conclusions are 6 not. Id.; see also Twombly, 550 U.S. at 556–557. 7 Plaintiff’s complaint is not a plain statement of his claims. While short, Plaintiff’s 8 complaint does not clearly state what happened. Although Plaintiff identifies a consumer credit 9 transaction, he does not provide any details about the nature of that transaction. He also does not 10 include sufficient factual allegations to state a claim for relief that is plausible on its face. 11 “The court may ... dismiss a claim as frivolous where it is based on an indisputably 12 meritless legal theory or where the factual contentions are clearly baseless.” Howell v. Johnson, 13 et al., No. 2:21-cv-00997-CKD, 2021 WL 3602139, at *1 (E.D. Cal. 2021) (citing Neitzke v. 14 Williams, 490 U.S. 319, 327 (1989)). “The critical inquiry is whether a ... claim, however 15 inartfully pleaded, has an arguable legal and factual basis.” Id. (citations omitted). Here, 16 Plaintiff appears to support his claims by asserting that he has endorsed his bill statements and 17 attempted to return them to defendants as a form of payment. As Plaintiff notes, defendants 18 described Plaintiff’s actions as altering the interest coupon to resemble a check trying to turn it 19 into a negotiable instrument. These allegations and statements suggest that Plaintiff’s amended 20 complaint lacks an arguable legal or factual basis. 21 B. Breach of Contract 22 In California, “[t]o be entitled to damages for breach of contract, a plaintiff must plead 23 and prove (1) a contract, (2) plaintiff's performance or excuse for nonperformance, (3) 24 defendant’s breach, and (4) damage to plaintiff.” First Am. Com. Bancorp, Inc. v. Vantari 25 Genetics, LLC, No. 2:19-cv-04483-VAP-FFM, 2020 WL 5027990, at *3 (C.D. Cal. Mar. 12, 26 2020) (quoting Walsh v. W. Valley Mission Cmty. Coll. Dist., 66 Cal. App. 4th 1532, 1545 27 (1998)). Plaintiff does not adequately identify the relevant contract, nor does he allege his 28 performance or excuse for non-performance, the terms of the contract that were allegedly 1 breached, or any specific facts showing how the alleged contract was breached. 2 C. Federal Reserve Act 3 Plaintiff’s complaint identifies the Federal Reserve Act and claims an entitlement to civil 4 penalties under “section 29” because Defendants committed a violation in the “third tier.” (Doc. 5 5 at p. 5.) Section 29 of the Federal Reserve Act, 12 U.S.C. § 504, provides for a civil penalty of 6 $5,000 per day for violations of certain provisions of the Federal Reserve Act. Plaintiff also 7 suggests a violation of sections 16-1 and 2 of the Federal Reserve Act. Section 16 of the Federal 8 Reserve Act, 12 U.S.C. § 411-21, relates to federal reserve notes. Sections 16 and 29 of the 9 Federal Reserve Act do not create a private cause of action. See Smith v. Osvaldik, et al., No. 10 1:23-cv-01488-HBK, 2023 WL 8698359, at *4 (E.D. Cal. Dec. 15, 2023) (concluding Section 29 11 does not imply any private cause of action); Morton v. Wells Fargo Home Mortg., No. 6:23-cv- 12 04568-BHH-JDA, 2023 WL 8768432, at *5 (D.S.C. Nov. 21, 2023) (“It is well settled that 13 Sections 16 and 29 of the Federal Reserve Act do not create a private cause of action . . . .”); 14 White v. Lake Union Ga Partners LLC, No. 1:23-cv-02852-VMC, 2023 WL 6036842, at *2 15 (N.D. Ga. July 14, 2023) (collecting cases). Plaintiff’s amended complaint therefore fails state a 16 claim under the Federal Reserve Act. 17 D. Bills of Exchange Act 18 Plaintiff complaint also identifies the Bills of Exchange Act. However, Plaintiff does not 19 identify any provision of the Bills of Exchange Act that Defendants allegedly violated. The 20 Court cannot infer any cause of action based on the Bills of Exchange Act and his citation 21 thereto appears legally frivolous. See, e.g., Davis v. ACEF Martin Folsom LLC, No. 2:23-cv- 22 2816-TLN-KJN PS, 2023 WL 8477987, at *2 (E.D. Cal. Dec. 7, 2023) (determining citation to 23 “Bills of Exchange Act of 1882” appeared legally frivolous on its face in pro se complaint 24 involving alleged contractual arrangement). 25 E. Securities Fraud 26 Plaintiff appears to claim defendants are liable for securities fraud. The required 27 elements of a private securities fraud action are: “(1) a material misrepresentation or omission of 28 fact, (2) scienter, (3) a connection with the purchase or sale of a security, (4) transaction and loss 1 causation, and (5) economic loss.” Metzler Inv. GMBH v. Corinthian Colleges, Inc., 540 F.3d 2 1049, 1061 (9th Cir. 2008) (citation omitted). Plaintiff’s complaint does not allege any facts to 3 support these elements of a securities fraud claim. Despite being provided with the relevant 4 standard, Plaintiff has been unable to cure this deficiency. 5 IV. Conclusion and Recommendation 6 Plaintiff’s complaint fails to comply with Federal Rule of Civil Procedure 8 and fails to 7 state a cognizable claim for relief. Despite being provided with the relevant pleading and legal 8 standards, Plaintiff has been unable to cure the deficiencies in his complaint. Further leave to 9 amend is not warranted. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). 10 Accordingly, for the reasons stated above, IT IS HEREBY RECOMMENDED that this 11 action be dismissed, with prejudice, for failure to comply with Federal Rule of Civil Procedure 8 12 and failure state a cognizable claim upon which relief may be granted. 13 These Findings and Recommendation will be submitted to the United States District 14 Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(l). Within 15 fourteen (14) days after being served with these Findings and Recommendation, Plaintiff may 16 file written objections with the Court. The document should be captioned “Objections to 17 Magistrate Judge’s Findings and Recommendation.” Plaintiff is advised that failure to file 18 objections within the specified time may result in the waiver of the “right to challenge the 19 magistrate’s factual findings” on appeal. Wilkerson v. Wheeler, 772 F.3d 834, 839 (9th Cir. 20 2014) (citing Baxter v. Sullivan, 923 F.2d 1391, 1394 (9th Cir. 1991)). 21

IT IS SO ORDERED.

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23 Dated: January 11, 2024 /s/ Barbara A. McAuliffe _

UNITED STATES MAGISTRATE JUDGE

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