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Damond v. Reedy

United States District Court, M.D. Louisiana

September 24, 2018




         Please take notice that the attached Magistrate Judge's Report has been filed with the Clerk of the U.S. District Court.

         In accordance with 28 U.S.C. § 636(b)(1), you have 14 days after being served with the attached report to file written objections to the proposed findings of fact, conclusions of law, and recommendations set forth therein. Failure to file written objections to the proposed findings, conclusions and recommendations within 14 days after being served will bar you, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the District Court.



         Plaintiff, Glenn Damond (“Plaintiff”), proceeding pro se, filed a complaint on June 22, 2018.[1] On July 5, 2018, and following an order granting Plaintiff leave to proceed in forma pauperis (“IFP”), [2] a hearing was held in this matter pursuant to Spears v. McCotter, [3] during which Plaintiff explained the bases for his claims. Following the hearing, Plaintiff submitted additional memoranda supporting his claims, [4] as well as an Amended Claim.[5] For the reasons set forth herein, the undersigned RECOMMENDS that Plaintiff's suit be DISMISSED with prejudice.

         I. Background

         Plaintiff's initial Complaint, [6] as well as his Amended Claim, [7] focus on Plaintiff's purchase of two vehicles in 2014 pursuant to two retail installment contracts (the “Installment Contracts”). Plaintiff contends that although he entered into the Installment Contracts, [8] the Installment Contracts were illegally “securitized” without his knowledge. In addition to generally arguing that securitization (which Plaintiff defines as “the practice of pooling together various types of debt instruments (assets) such as mortgages and other consumer loans and selling them as bonds to investors”)[9] is illegal, Plaintiff specifically asserts that he was fraudulently induced into entered the Installment Contracts because he did not know that the Contracts would be “monetized, ”[10] and that defendants improperly changed his name when defendants listed his name on the Installment Contracts in all capital letters rather than with only the beginning letter capitalized.[11]

         During the July 5, 2018 hearing, Plaintiff provided a Memorandum of Law setting forth the authority on which he relies for his position that defendants engaged in illegal securitization with respect to the two Installment Contracts.[12] Thereafter, Plaintiff filed a New Memorandum of Law, [13] as well as an “Amended Claim.”[14] Per Plaintiff's Amended Claim, Plaintiff seeks monetary damages for fraud and allegedly illegal securitization of the Installment Contracts, and asserts violations of the United States Constitution, Louisiana state law, the Federal Trade Commission Act (the “FTCA”), the Racketeer Influenced and Corrupt Organizations Act (“RICO”), and the Lanham Act.[15] Plaintiff asks this Court to “reverse” the Installment Contracts, “audit the defendants for tax evasion, ” order a forfeiture of “all assets accumulated by each of the listed defendants, ” and award compensatory and punitive damages as well as court costs.[16]

         II. Law and Analysis

         A. This Court Has Federal Question Subject Matter Jurisdiction

         Although Plaintiff asserts in his Amended Claim that this Court has jurisdiction pursuant to 28 U.S.C. § 1332, Plaintiff does not adequately allege the citizenship of any of the defendants.[17]However, because Plaintiff's Amended Claim asserts violations of various federal statutes and Constitutional provisions, this Court has original subject matter jurisdiction pursuant to 28 U.S.C. § 1331 and may exercise supplemental jurisdiction over Plaintiff's state law claims under 28 U.S.C. § 1367(a).

         B. Standard for Dismissal Under 28 U.S.C. § 1915

         On June 25, 2018, Plaintiff was granted leave to proceed IFP.[18] Pursuant to the provisions of 28 U.S.C. § 1915(e)(2)(B), this Court is authorized to dismiss an action brought in forma pauperis if satisfied that the action is frivolous or malicious.[19] An in forma pauperis suit is properly dismissed as frivolous if the claim lacks an arguable basis in either fact or in law.[20] A claim lacks an arguable basis in law when it is “based on an indisputably meritless legal theory.”[21]The Fifth Circuit has stated three standards which a district court may use to determine whether a claim is frivolous. “The first requires a determination of whether the IFP complaint has a realistic chance of ultimate success. The second requires that the complaint have ‘arguable merit ... in terms of the arguable substance of the claim presented, both in law and in fact.' The third prohibits dismissal ‘unless the court is satisfied ‘beyond doubt' that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'”[22] “Similarly, a court may dismiss sua sponte an in forma pauperis complaint which, while not technically frivolous, fails to state a claim upon which relief can be granted under either 28 U.S.C. § 1915(e)(2)(B) or Fed.R.Civ.P. 12(b)(6).”[23] “In making a determination as to whether an in forma pauperis complaint is frivolous or fails to state a claim, a court must construe the allegations of the pro se litigants liberally. Such litigants are held to less stringent standards than formal pleadings drafted by lawyers.”[24]

         C. Plaintiff Has Failed to State a Claim

         First, and as explained to Plaintiff during the July 5, 2018 hearing, the undersigned does not agree that the capitalization of Plaintiff's name in the Installment Contracts in any way affects the validity of those Contracts. The capitalization of every letter in Plaintiff's name (as opposed to capitalization of only the initial letter) “is a mere change of case with absolutely no auditory significance” and does nothing other than “to perhaps offend [Plaintiff's] aesthetic preferences.”[25]Plaintiff confirmed during the July 5, 2018 hearing that he entered into the Installment Contracts, and asserts in various affidavits attached to his pleadings as well as in his pleadings themselves that he signed the Installment Contracts.[26] To the extent that Plaintiff argues that the registration of his name in all capital letters with the Louisiana Secretary of State as a trade name precludes use of the “all-caps” version of his name in the Installment Contracts, the undersigned notes that such registration was recorded on September 25, 2016.[27] Even assuming arguendo that such registration properly conferred Plaintiff rights in a trade name, [28] Plaintiff signed the Installment Contracts in 2014, well before the registration of the trade name.[29]

         Second, although Plaintiff has provided lengthy memoranda purporting to support his claims, he has failed to provide any persuasive authority for his position that “securitization” is illegal. Courts considering similar arguments have uniformly rejected the position that securitization is illegal or requires notice to the debtor.[30] All of Plaintiff's specifically asserted causes of action are premised on Plaintiff's position that securitization is illegal. Because the undersigned finds that Plaintiff has failed to establish (and the undersigned's independent research has not revealed) any viable basis for the premise that securitization is illegal, the undersigned finds Plaintiff has failed to state a claim.[31]

         Finally, and setting aside the question of whether securitization is illegal, the undersigned finds that for other reasons, many of Plaintiff's claims have no arguable merit in law. Although Plaintiff alleges various Constitutional violations, [32] Plaintiff's nebulous assertions that Congress failed to create “sufficiently specific” or uniform laws with respect to securitization is insufficient to allege state action, [33] and “[t]here is nothing unconstitutional” about securitizing a loan or failing to inform Plaintiff about the securitization process.[34] Although Plaintiff's Amended Claim includes various references to fraud, under Louisiana law, “[t]he essential elements of a fraud claim are the intent to defraud or gain an unfair advantage, actual or potential loss or damage, and an element that courts have labeled ‘reliance, inducement or causation.'”[35] Here, Plaintiff has provided no arguable basis for this Court to find that Plaintiff was damaged by securitization of the Installment Contracts.[36] With respect to Plaintiff's claims asserted under the FTCA, “[t]he Federal Trade Commission Act (FTC Act) does not provide for private causes of action.”[37]Finally, while Plaintiff contends that defendants are “making a ...

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