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Leato v. Horizon Bank

United States District Court, W.D. Arkansas, Fayetteville Division

March 4, 2019




         John and Laurina Leato have filed this lawsuit under the diversity of citizenship statute, 28 U.S.C. § 1332. They proceed pro se and have sought leave to proceed in forma pauperis (“IFP”). The Plaintiffs have named as Defendants Horizon Bank and Horizon Bankcorp, Inc. Both entities were formed under the law of the State of Indiana. The case is before the Court for screening pursuant to 28 U.S.C. § 1915(e)(2).


         According to the allegations of the Complaint and attachments thereto, the dispute between Plaintiffs and Horizon Bank arose out of a closed-end note, disclosure, loan and security agreement the Plaintiff signed on December 6, 2013. Plaintiffs assert that Horizon Bank and its collection attorney broke “every consumer law on the books from robo-calling consumers, to illegally conducting [a] deposition.[1]” According to Plaintiffs, on June 25, 2015, “Transunion[2]and collection attorneys started a conflict with transunion and since then has banished o[u]r credit report.” Plaintiffs further allege Horizon Bank and TransUnion have repeatedly violated the Dodd-Frank Wall Street and Consumer Protection Act, Pub. L. No. 111-302, 124 Stat. 1376 (codified in various sections of Titles 7, 12, and 15).

         On October 17, 2017, [3] Plaintiffs indicate they won a verdict of $100, 000 against Defendants in Allen County, Indiana.[4] Plaintiffs maintain that if Horizon Bank had paid the $100, 000 on October 17, 2017, they may not have had to file bankruptcy on October 31, 2017. Plaintiffs filed bankruptcy in Indiana and indicate they listed the judgment against Horizon Bank as a potential claim against a third party.

         On May 10, 2018, Plaintiffs retained a class action law firm to pursue a “robo calling” lawsuit against the Defendants. Plaintiffs also agreed to act as class representatives.

         On January 5, 2019, class action counsel wrote to Horizon Bank in care of its attorney. The letter sought: (1) payment of the $100, 000 judgment; (2) the removal of the Plaintiffs as “debtors” in a bankruptcy “involving” Horizon Bank; (3) and a settlement in the amount of $6 million for the proposed class action lawsuit the Plaintiffs were considering filing against Horizon Bank. Presumably, Horizon Bank did not respond favorably to the letter since Plaintiffs filed this lawsuit on February 8, 2019.

         In this case, Plaintiffs are seeking injunctive relief from the Court to order Horizon Bank to pay the $100, 000 judgment and to pay them $6 million to drop the class action lawsuit. Furthermore, they ask that Horizon Bank convince Transunion to “unsuppress” their credit profiles or pay an additional $10 million in damages.


         The Court is obligated to screen an IFP case prior to service of process being issued. A claim is frivolous when it "lacks an arguable basis either in law or fact." Neitzke v. Williams, 490 U.S. 319, 325 (1989). A claim fails to state a claim upon which relief may be granted if it does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The Court bears in mind, however, that when "evaluating whether a pro se plaintiff has asserted sufficient facts to state a claim, we hold ‘a pro se complaint, however inartfully pleaded, . . . to less stringent standards than formal pleadings drafted by lawyers.'" Jackson v. Nixon, 747 F.3d 537, 541 (8th Cir. 2014) (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007)).

         (1). The Judgment

         Plaintiffs initially seek to have this Court enforce the judgment entered in Allen County, Indiana, against Horizon Bank.[5] To enforce a judgment in a different district, Plaintiff must register the judgment in the district in which they seek enforcement. For certain federal judgments, this is done by utilizing 28 U.S.C. § 1963. This statute allows a litigant who has obtained a valid judgment, who wants to recover money or property in another district, to register the judgment by filing a certified copy of the judgment in the district where the money or property is. Once registered in this district, the judgment has the same effect as if the judgment were entered in this district. See e.g., Home Port Rentals, Inc. v. Int'l Yachting Group, Inc., 252 F.3d 399, 404 (5th Cir. 2001); Stanford v. Utley, 341 F.2d 265, 270 (8th Cir. 1965). However, the judgment Plaintiff seeks to enforce was entered in state court. The “registration procedures” set forth in 28 U.S.C. § 1963 “prohibit a federal district court from registering and subsequently enforcing a state court judgment.” Euro-American Coal Trading, Inc. v. James Taylor Mining, Inc., 431 F.Supp.2d 705, 707 (E.D. Ken. 2006).

         Instead, Plaintiff must register the judgment under the laws of the state in which they seek enforcement. Arkansas has adopted the Uniform Enforcement of Foreign Judgments Act codified at Ark. Code Ann. §§ 16-66-601 et seq. This provides a procedural method of registration and does not create a separate cause of action. See e.g., May v. May, 944 S.W.2d 550, 551 ...

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