United States District Court, E.D. Pennsylvania
FLEETWOOD SERVICES, LLC, et al.
COMPLETE BUSINESS SOLUTIONS GROUP, INC. doing business as PAR FUNDING
R. SÁNCHEZ JUAN R. SÁNCHEZ, C. JUDGE
Fleetwood Services LLC, Robert Fleetwood, and Pamela
Fleetwood filed a Complaint alleging they were the victims of
a financial fraud perpetrated by Defendants Complete Business
Solutions Group, Inc. and John and Jane Doe investors.
Plaintiffs have moved to amend their Complaint. Among other
changes, they would like to add class claims, request
injunctive and declaratory relief, and include allegations
related to a Bloomberg article. While the Court will grant
leave to amend the Complaint, it will not allow the request
for injunctive and declaratory relief. The Court finds
amending the Complaint to seek injunctive and declaratory
relief would be futile.
Services is a golf course construction company owned by
Robert and Pamela Fleetwood. Complete Business is a company
that buys future receivables from small
businesses.In January 2017, Complete Business
allegedly approached Fleetwood Services with a plan to
consolidate Fleetwood Services' debt. Fleetwood Services
agreed to this consolidation plan. To implement the plan, the
two companies signed an agreement in which Complete Business
paid $370, 000.00 for $547, 600.00 of future receivables.
to Fleetwood Services, this agreement was not a purchase of
future receivables. Instead, Fleetwood Services alleges, the
agreement was actually a loan designed to keep Fleetwood
Services in never-ending debt. Plaintiffs allege Complete
Business demanded daily payments unrelated to any future
receivables. They also allege Complete Business charged
usurious interest rates and unauthorized fees. When Fleetwood
Services got behind on its payments, Complete Business
allegedly called Mr. and Mrs. Fleetwood and threatened to
take away their business and their personal assets if they
did not pay. In July 2017, Fleetwood paid back the money it
owed to Complete Business with a loan from another company.
January 22, 2018, Fleetwood Services and Mr. and Mrs.
Fleetwood filed a Complaint in this case. Complete Business
moved to dismiss. Plaintiffs responded to the motion to
dismiss by filing their First Amended Complaint. The First
Amended Complaint included claims for violations of Texas
usury laws, fraud, negligent misrepresentation, damages
pursuant to a term in the contract, and violations of the
Racketeer Influence and Corrupt Organizations Act (RICO).
Complete Business then moved to dismiss the First Amended
Complaint. On March 29, 2019, the Court dismissed the
contract claim in the First Amended Complaint, but allowed
the rest of the Complaint to go forward.
19, 2019, Plaintiffs sought leave to file a Second Amended
Complaint. The Second Amended Complaint included many of the
same claims as the First Amended Complaint: violations of
Texas usury law, fraud, and RICO. It also removed some of the
claims in the First Amended Complaint; it removed the
negligent misrepresentation claim and a claim relying on an
inapplicable Texas law. The Second Amended Complaint added a
new claim for attorneys' fees and a new request for
injunctive and declaratory relief. Finally, the Second
Amended Complaint included additional allegations such as:
facts tending to show the agreement the parties signed was
unconscionable; facts tending to show the agreement the
parties signed was a loan rather than a purchase agreement
for future receivables; and class action
allegations. To demonstrate that Complete Business
treated its agreements with businesses like loans instead of
purchases of future receivables, Plaintiffs included
allegations related to a Bloomberg article. This article
focused on Complete Business's “mob-like
intimidation tactics” when a business cannot pay.
Pl.'s Mot. for Leave to File Second Am. Compl. (Pl.'s
Mot.), Ex. A at ¶ 93. According to Plaintiffs, if the
agreements were actually for future receivables as they
purported to be, Complete Business would have contacted the
business's customers rather than the business itself.
explained in detail below, Complete Business opposes three of
the changes in the Second Amended Complaint. It urges the
Court to deny Plaintiffs leave to make those three changes.
The Court will allow Plaintiffs to make two of these three
changes, but the Court finds that the remaining change-the
new request for injunctive and declaratory relief-is futile.
may grant leave to amend a pleading under Federal Rule of
Civil Procedure 15(a)(2). This rule instructs a court to
“freely give leave [to amend] when justice so
requires.” Fed.R.Civ.P. 15(a)(2). A court can deny
leave to amend, however, when the amendment would be futile.
City of Cambridge Ret. Sys. v. Altisource Asset Mgmt.
Corp, 908 F.3d 872, 878 (3d Cir. 2018). An amendment is
futile when it “could not withstand a renewed motion to
dismiss.” Id. (internal quotations omitted). A
court may also strike allegations in a complaint when they
are “redundant, immaterial, impertinent, or
scandalous.” Fed.R.Civ.P. 12(f).
Business argues two changes in the proposed Second Amended
Complaint are futile: the new class action allegations and
the new request for declaratory and injunctive relief.
Complete Business also argues the allegations relying on the
Bloomberg article (in paragraph 91-97 of the Second Amended
Complaint) should be stricken under Rule 12(f) as
“immaterial, impertinent, or scandalous.” The
Court will address each of these proposed changes in turn.
amendment adding class allegations is not futile. Complete
Business makes two arguments to the contrary, but neither is
persuasive. First, Complete Business argues Plaintiffs cannot
represent the class because their claims are barred by
Texas's voluntary payment rule.Second, Complete Business
argues the class allegations are futile because of the class
action waiver in the parties' contract.
Business's voluntary payment argument fails because the
voluntary payment rule does not apply to the claims in this
case. The voluntary payment rule is a defense to equitable
claims for unjust enrichment. BMG Direct Mktg., Inc. v.
Peake, 178 S.W.3d 763, 768 (Tex. 2005). A defendant can
assert this defense when the plaintiff voluntarily pays money
“on a claim of right, with full knowledge of all the
facts, in the absence of fraud, deception, duress, or
compulsion.” Id. Because the voluntary payment
rule is an equitable defense, it does not apply to claims
based on a statutory scheme. Id. at 776 n. 9.
(“[T]he voluntary-payment rule would not apply to
situations in which the Legislature or commonlaw has provided
a right of recovery even though payment is
voluntary.”). In particular, this defense is not
available when a plaintiff brings a claim under Texas's
usury laws. Id. at 770 (explaining that, since 1890,
Texas courts have held the “usury statute prevented
[the] voluntary-payment defense”). Because the claims
in this case are under Texas's usury laws, the voluntary
payment defense does not apply here.
Business's argument that the class action waiver makes
the class claims futile is unpersuasive because Plaintiffs
plausibly allege the contract was unconscionable. Complete
Business correctly points out Plaintiffs waived their right
to bring a class action in the parties' contract. The
contract says “the parties hereto waive any right to
assert any claims against [an]other party as a representative
or member in any class or representative action, except where
such waiver is prohibited by law against public
policy.” Def.'s Resp. in Opp'n to Pl.'s
Mot. for Leave to File Second Am. Compl. (Def's Resp.),