Machinski v. Ally Bank et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
ROBERT MACHINSKI,
Plaintiff,
v.
ALLY BANK, et al.,
Defendants.
REPORT AND RECOMMENDATION
GRANTING [71] MOTION TO
DISMISS AND DENYING [77]
MOTION TO AMEND BUT
GRANTING PLAINTIFF LEAVE TO
FILE A SECOND AMENDED
COMPLAINT CONSISTENT WITH
THIS RULING
Case No. 2:25-cv-00292-AMA-CMR
Judge Ann Marie McIff Allen
Magistrate Judge Cecilia M. Romero
This case is referred to the undersigned pursuant to 28 U.S.C. § 636(b)(1)(B) (ECF 61).
Before the court is Defendant Ally Bank’s (Defendant or Ally Bank) Motion to Dismiss (Motion
to Dismiss) (ECF 71) regarding Plaintiff Robert Machinski’s (Plaintiff) First Amended Complaint
(ECF 15), Plaintiff’s Opposition (ECF 74), and Defendant’s Reply (ECF 76). Also before the court
is Plaintiff’s Motion for Leave to File Second Amended Complaint (ECF 77) (Motion to Amend),
Defendant’s Opposition (ECF 79), and Plaintiff’s Reply (ECF 81). Having carefully considered
the relevant filings, the undersigned finds that oral argument is not necessary and decides this
matter on the written memoranda. See DUCivR 7-1(g). For the reasons below, the undersigned
RECOMMENDS that the court GRANT Defendant’s Motion to Dismiss (ECF 71), DENY
Plaintiff’s Motion to Amend (ECF 72), but grant Plaintiff leave to file a Second Amended
Complaint consistent with the ruling below.
I. 	BACKGROUND
These facts are gathered from Plaintiff’s Amended Complaint (ECF 15) (Am. Compl.).
Plaintiff, a California resident (id. ¶ 17), has had a personal spending account (hereinafter, the
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Account) with Ally Bank since May 15, 2018 (id. ¶ 28). On October 1, 2024, Plaintiff
electronically deposited the two following checks into the Account: (1) check in the amount of
$12,681.28 issued from Santander Bank, N.A. (Santander Bank), for proceeds from an estate
settlement mailed directly to Plaintiff from a probate attorney; and (2) check in the amount of
$3,000 issued by a personal account holder and drawn from Chase Bank (id. ¶¶ 31–33). Within
two or three business days, the checks cleared, and for over a week, Plaintiff had access to the
funds without incident (id. ¶ 35).
Unexpectedly, on October 10, 2024 (after having access to the funds for roughly 9 days),
Plaintiff, while trying to make a purchase with his Ally Bank debit card, was notified that the
purchase was declined (id. ¶ 36). After being unable to access the Account, Plaintiff contacted
Ally Bank and was directed to its fraud department, where he was told that the Account had been
locked for fraud and was under investigation (id. ¶ 37). Plaintiff was given no timeline for when
the investigation would be completed or when the Account would be unlocked (id.). For two
weeks, Plaintiff contacted Ally Bank’s fraud department multiple times to get updates (id. ¶ 38).
On October 17, 2024, Plaintiff spoke to Tim Doe, an agent of Ally Bank’s fraud department, who
told Plaintiff that an investigation was triggered because it was suspected that the two checks
deposited on October 1, 2024, were fraudulent (id. ¶ 39). On October 21, 2024, Plaintiff spoke
with Tim Doe again, and after a “heated back and forth,” Tim Doe agreed to release the lock on
the Account, and shortly after, Plaintiff was able to access the Account online (id. ¶ 40).
Later that same day (October 21, 2024), Plaintiff, under the assumption that the Account
was unlocked, went with his daughter to purchase groceries using the Ally Bank debit card, but
the transaction was declined (id. ¶ 41). The next day, Plaintiff spoke with Tim Doe again, who
indicated that his supervisor, Mariah Doe, told him to place the lock back on Plaintiff’s Account
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until the investigation was completed (id. ¶ 42). Tim Doe told Plaintiff that Ally Bank had reached
out to Santander Bank on October 20, 2024, to validate the deposit of the estate settlement check,
in the amount of $12,681.28, and was awaiting a response (id.). Feeling like he had no other
recourse, and still without access to his Account, Plaintiff brought this action against Ally Bank,
Tim Doe, and Mariah Doe on October 25, 2024 (id.). A day after Plaintiff filed his lawsuit, on
October 26, 2024, Ally Bank released the lock on Plaintiff’s Account (id. ¶ 47). Plaintiff originally
brought this action in California, but the case was transferred from the United States District Court
for the Northern District of California on April 16, 2025 (ECF 58).
As a result of having his Account locked, Plaintiff alleges seven causes of action against
Defendant: (1) violation of the Electronic Funds Transfer Act (EFTA) (15 U.S.C. § 1693); (2)
violation of the Expedited Funds Availability Act (EFAA) (12 U.S.C. § 4001); (3) negligence; and
(4) breach of contract and breach of the covenant of good faith and fair dealing; (5) negligent
misrepresentation and concealment; (6) intentional misrepresentation; and (7) unfair competition
(Cal. Bus. & Prof. Code § 17200) (id. ¶¶ 48–98). Defendant, by filing the present Motion, seeks
dismissal of all causes of action for failure to state a claim under Federal Rule of Civil Procedure
12(b)(6) (ECF 71). Plaintiff has since filed a Motion to Amend (ECF 77), which Defendant also
opposes, asserting that amendment would be futile (ECF 79).
II. 	LEGAL STANDARDS
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court may dismiss a
complaint for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6).
To survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim for relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals
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of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). In this review, a “court accepts as true
well-pleaded factual allegations and views the allegations in the light most favorable to the
plaintiff, drawing all reasonable inferences in the plaintiff’s favor.” Hendershot v. Gurstel L. Firm,
P.C., No. 2:20-cv-00118-DBB-DAO, 2020 WL 8083573, at *2 (D. Utah Dec. 17, 2020) (citing
Wilson v. Montano, 715 F.3d 847, 852 (10th Cir. 2013)), report and recommendation adopted,
2021 WL 76163 (D. Utah Jan. 8, 2021).
Because Plaintiff is acting pro se, his filings are liberally construed and held “to a less
stringent standard than formal pleadings drafted by lawyers.” Hall v. Bellmon, 935 F.2d 1106,
1110 (10th Cir. 1991). Still, a pro se plaintiff must “follow the same rules of procedure that govern
other litigants.” Garrett v. Selby, Connor, Maddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005)
(quoting Nielsen v. Price, 17 F.3d 1276, 1277 (10th Cir. 1994)). However, it is not the court’s
function to assume the role of advocate on behalf of pro se litigants. See Hall, 935 F.2d at 1110.
The court “will [also] not supply additional factual allegations to round out a plaintiff’s complaint
or construct a legal theory on a plaintiff’s behalf.” Whitney v. New Mexico, 113 F.3d 1170, 1175
(10th Cir. 1997).
III. 	DISCUSSION
A. Federal Claims
i. 	First Cause of Action: Violations of the Electronic Fund Transfer Act
Plaintiff’s First Cause of Action alleges that Defendant violated EFTA, 15 U.S.C. § 1693
et seq., and its implementing regulation, 12 C.F.R. § 1005 or Regulation E (Regulation E) (Am.
Comp. ¶¶ 48–55). EFTA is the federal statute that safeguards consumer rights regarding electronic
fund transfers by imposing specific rules and procedures that financial institutions must follow
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when a consumer engages in an electronic fund transfer. 15 U.S.C. § 1693(b). Regulation E is the
Consumer Financial Protection Bureau’s regulation that enforces and interprets EFTA. 12 C.F.R.
§ 1005.1(b) (stating that Regulation E “carries out the purposes of [EFTA]”). Consequently, EFTA
and Regulation E are often cited interchangeably.
Plaintiff claims that the two check deposits in question qualify as electronic fund transfers,
warranting EFTA protections (Am. Comp. ¶¶ 48–55). According to Plaintiff, because the checks
were covered by EFTA, Defendant violated various EFTA provisions by failing to provide access
to Plaintiff’s account and failing to conduct a good faith investigation (id.). Defendant contends
that the Amended Complaint fails to state a claim because EFTA “does not apply to checks,” and
even if it did apply to Plaintiff’s check deposits, EFTA does not apply to “account freezes pending
an investigation” (ECF 71 at 13–15). The undersigned agrees that EFTA does not apply based on
the facts alleged.
As stated above, the purpose of EFTA and Regulation E is to protect consumers engaging
in electronic fund transfers. 15 U.S.C. § 1693. EFTA provides specific procedures and rules that
financial institutions must follow when a consumer engages in an electronic fund transfer, and
failure to comply subjects the financial institution to civil liability. 15 U.S.C. § 1693m (“[A]ny
person who fails to comply with any provision of this subchapter with respect to any consumer . .
. is liable to such consumer. . .”). Thus, to determine whether a financial institution violated EFTA,
the complaint must sufficiently allege that the plaintiff/consumer engaged in an electronic fund
transfer as defined by EFTA. Electronic fund transfers are defined in 12 C.F.R. § 1005.3(b).1 12
C.F.R. § 1005.3(c) details which transactions are excluded from coverage, and specifically states
that “[t]he term ‘electronic fund transfer’ does not include . . . [a]ny transfer of funds originated
1 See also 15 U.S.C. § 1693a(7).
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by check, draft, or similar paper instrument; or any payment made by check, draft, or similar paper
instrument at an electronic terminal.” 12 C.F.R. § 1005.3(c)(1).2 Here, the only electronic fund
transfers alleged in the Amended Complaint are two transfers originated by check (Am. Compl.
¶¶ 31–33); as such, EFTA does not apply.
Despite EFTA’s clear language, the Amended Complaint alleges that the two check
deposits were electronic fund transfers because they were “conveyed as an image through a
computer terminal” (id. ¶ 31). While the definition of an electronic fund transfer “means any
transfer of funds that is initiated through an electronic terminal,” 12 C.F.R. § 1005(b)(1), as stated
above, EFTA does not cover “any transfer of funds originated by check . . . at an electronic
terminal.” 12 C.F.R. § 1005.3(c)(1). Thus, the two checks in question are excluded from EFTA
protections, even if initiated through an electronic terminal.
Moreover, Defendant argues that even if ETFA applied, it does not apply to account freezes
nor has Plaintiff identified a qualifying error (ECF 74 at 14 (citing Hardin v. Bank of America,
N.A., No. 2:22-CV-10023, 2022 WL 3568568, at *3 (E.D. Mich. Aug. 18, 2022) (noting that
“EFTA does not regulate account freezes…” such as when access to an account is restricted
“pending an investigation”); Fuller v. BMO Bank, No. CV 24-1800-CBM-KSX, 2024 WL
4403875, at *3 (C.D. Cal. Aug. 16, 2024) (“‘errors’ for purposes of 12 C.F.R. § 205.11 and the
EFTA do not include the [] account freezes….”)). Although the above cases cited by Defendant
are non-binding, the undersigned finds them persuasive.
Plaintiff, in his Opposition (ECF 74), contends that EFTA and Regulation E mandate that
financial institutions conduct a reasonable and prompt investigation in good faith when a consumer
reports an error (ECF 74 at 9). Specifically, Plaintiff cites to Regulation E, Section 1005.11
2 See also 12 C.F.R. § 1005.3(b)(1) (indicating that an electronic fund transfer “means any transfer of funds, other
than a transaction originated by check, draft, or similar paper instrument . . .”) (emphasis added).
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“Procedures for resolving errors,” claiming that Defendant failed to comply with Regulation E’s
procedures (id.). Here, while the Amended Complaint sufficiently pleads that Plaintiff contacted
Defendant on multiple occasions and conveyed to Defendant that he believed the account freeze
was an error, this is not a qualifying error under Regulation E. Regulation E procedures are
triggered by notice of an alleged Regulation E error, not merely by any account dispute.
Regulation E’s procedures for resolving errors apply when a qualifying “error” is identified
by the financial institution or the consumer. See 12 C.F.R. § 1005.11. Regulation E provides a
closed list of what constitutes an “error.” 12 C.F.R. § 1005.11(a)(1)(i)–(vii).3 A consumer is
statutorily permitted to provide oral or written notice of error, and the consumer is only required
to indicate “a belief that an error occurred.” 12 C.F.R. § 1005.11(b)(1)(iii). If a consumer provides
adequate oral notice, the financial institution must comply with Regulation E’s procedures for
resolving errors. 12 C.F.R. § 1005.11(b)(1) (“A financial institution shall comply with the
requirements of this section with respect to any oral or written notice of error from the consumer.
. .”). At first glance, it appears that Plaintiff has alleged he provided adequate oral notice by calling
Defendant on multiple occasions to indicate that the account freeze was in error. Plaintiff’s notice,
however, is insufficient to invoke Regulation E’s procedures because oral notice must still relate
to a transaction that, if proven, would constitute an “error” as defined in § 1005.11(a). Otherwise,
any account complaint could invoke Regulation E’s error procedures, effectively nullifying
Regulation E’s enumerated list of covered errors.
Here, Plaintiff contacted Defendant regarding an error arising from an investigation into
two previously deposited checks. Under these facts, Plaintiff has not sufficiently alleged that he
provided adequate oral notice of error to invoke Regulation E’s error procedures. Any other finding
3 See also 15 U.S.C. § 1693f(f)(1)–(7).
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would impermissibly expand Regulation E’s error procedures to “transfer of funds originated by
check,” which are expressly excluded from Regulation E’s framework. Accordingly, the Amended
Complaint fails to allege sufficient facts indicating that Defendant was required to comply with
Regulation E’s procedures.
In summary, even if the facts in the Amended Complaint are true, Plaintiff fails to state an
EFTA violation claim because: (1) his two check-based transactions are not classified as electronic
fund transfers covered by EFTA; and (2) even if EFTA applied, Defendant was not obligated to
follow EFTA’s error resolution procedures because Plaintiff has not pleaded an “error” that
invokes those procedures. Accordingly, the undersigned recommends that Plaintiff’s First Cause
of Action be dismissed without prejudice for failure to state a claim.
ii. 	Second Cause of Action: Violations of the Expedited Funds Availability Act
Plaintiff’s Second Cause of Action asserts violations of EFAA, 12 U.S.C. § 4001, and its
implementing regulation, 12 C.F.R. Part 229 (Regulation CC) (Am. Compl. ¶ 59). EFAA and
Regulation CC are cited interchangeably for the same reasons EFTA and Regulation E are. See
supra part III(A)(i). EFAA is the federal statute that governs when deposits, including deposits
originating from checks, must be made available for withdrawal (see 12 U.S.C. § 4002), and
Regulation CC is the Board of Governors of the Federal Reserve System’s regulation that enforces
and interprets EFAA. 12 C.F.R. Part 229.1(a)(1) (stating that the purpose of Regulation CC is to
implement the Expedited Funds Availability Act).
Plaintiff specifically asserts that, under Regulation CC, for deposits over $5,525, banks
may not take more than 7 business days to clear the deposit regardless of form (id. ¶ 62). If such a
hold is placed, the bank shall notify the account holder of the reason for the hold and state when
the funds will be made available (id.). Plaintiff claims that Defendant violated Regulation CC by
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taking “26 days to clear two routine and ordinary deposits” (id. ¶ 63). Defendant argues that
Plaintiff has failed to state a claim for a Regulation CC violation because this case does not involve
a deposit hold (ECF 71 at 15–16). Defendant points out that the Amended Complaint specifically
alleges that the two checks “cleared” and that Plaintiff had access to those funds “[f]or over a week
. . . without inciden[t].” (ECF 71 at 16 (quoting Am. Compl. ¶¶ 31, 35)). It wasn’t until ten days
after the checks were deposited into Plaintiff’s Account that Defendant initiated a fraud
investigation, resulting in Plaintiff losing access to the funds and his Account (Id. (citing Am.
Compl. ¶¶ 37–39, 47)). Defendant asserts that because the checks were cleared within the requisite
time frame under Regulation CC, the subsequent account freeze was not a violation of Regulation
CC (id.).
To support the position, Defendant cites to the Little Donkey, a case where the Ninth Circuit
held that “[m]erely placing a hold on or freezing funds in an account after [a] deposit [has] been
made available is not a violation of the [EFAA] and thus does not support a claim for civil liability
under 12 U.S.C. § 4010.” Little Donkey Enterprises Washington, Inc. v. U.S. Bancorp, 136 F.
App’x 91, 92 (9th Cir. 2005). Defendant also cites three other cases that stand for the same
proposition: Nix v. NASA Fed. Credit Union, 200 F. Supp. 3d 578, 587 (D. Md. 2016) (“Multiple
courts . . . have held that merely placing a hold on or freezing funds in an account after deposits
have been made available is not a violation of the EFAA and does not support a claim for civil
liability.”); Gaskin v. BMO Harris Bank NA, No. CV-23-01919-PHX-SMB, 2024 WL 1961843,
at *3 (D. Ariz. May 3, 2024) (“However’ the EFAA does not prohibit account freezes resulting
from suspicious activity, and a bank is not liable under the EFAA for freezing an account.”);
DriverDo LLC v. JP Morgan Chase Bank, N.A., No. 20 C 5046, 2022 WL 3645909, at *6 (N.D.
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Ill. Aug. 24, 2022) (“[Plaintiff] was unable to withdraw or transfer any funds whatsoever due to a
freeze on the account. [Reg CC] is therefore inapplicable.”) (id.).
Plaintiff, in his Opposition, correctly highlights that the cases cited by Defendant are non-
binding, Little Donkey is an unpublished opinion, and that the other three cases cited by Defendant
all “point back” to Little Donkey (ECF 74 at 10). Plaintiff further attempts to distinguish Little
Donkey by asserting that the plaintiff in Little Donkey “failed to SPECIFICALLY identify check
deposits which were held beyond the EFAA requirement. On the contrary, Plaintiff Machinski in
this underlying matter has specifically identified two checks that were placed on excessive holds
by Ally Bank” (id.). While Plaintiff is correct that the cases provided by Defendant are non-
binding, the undersigned finds them persuasive and informative, and Plaintiff’s attempt to
distinguish Little Donkey falls short.
As stated above, EFAA and Regulation CC govern when funds from deposited checks must
be made available for withdrawal. See 12 C.F.R. § 229.1. Regulation CC requires that funds
deposited in an account by check be made available for withdrawal within a specified
schedule/timeframe. 12 C.F.R. § 229.12. Plaintiff, in his Statement of Facts, pleads that the funds
from the two checks were cleared and made available “[w]ithin two or three business days” and
that he had access to the funds “[f]or over a week . . . without inciden[t].” (Am. Compl. ¶¶ 31, 35).
Plaintiff appears to have no issue with the time it initially took for the funds to be deposited and
made available for withdrawal, especially since the Amended Complaint asserts that “under
Regulation CC, for deposits over $5,525, banks may not take more than 7 business days to clear
the deposit regardless of form” (id. ¶ 62). Given the facts as alleged in the Amended Complaint,
Plaintiff indicates that the funds were timely deposited and “business was per usual” (Am. Compl.
¶ 35). Plaintiff’s main contention is that his account was frozen roughly 10 days after the funds
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were made available, and because of this, Plaintiff asserts that the funds took “26 days to clear,”
violating Regulation CC’s allowed schedule (Am. Compl. ¶ 63). Plaintiff, however, incorrectly
alleges that a subsequent account freeze converts a completed deposit into a violation of
Regulation CC’s allowed schedule.
As multiple courts have held, and consistent with the undersigned’s interpretation of
Regulation CC, a later account freeze, occurring after a deposit, does not qualify as a “deposit
hold” and cannot retroactively convert a completed deposit into a violation of Regulation CC. See
DriverDo LLC v. JP Morgan Chase Bank, N.A., No. 20 C 5046, 2021 WL 3487331, at *4 (N.D.
Ill. Aug. 9, 2021) (“Numerous courts have held, however, that placing a hold on or freezing an
account after deposits have been made does not violate the EFAA.” (citing Frost Nat’l Bank v.
Parker, No. 95-2150, 1999 WL 33438078, at *14 (C.D. Ill. Feb. 26, 1999))).4 Therefore, Plaintiff’s
attempt to reframe a later account freeze as an extended deposit hold is legally incorrect and would
unfairly broaden Regulation CC beyond its intended scope. Accordingly, the undersigned
recommends that Plaintiff’s Second Cause of Action be dismissed without prejudice for failure to
state a claim.
B. State Law Claims: Causes of Action Three through Seven
Plaintiff’s remaining causes of action assert claims arising under state law: Negligence
(Third Cause of Action), Breach of Contract and Breach of the Covenant of Good Faith and Fair
Dealing (Fourth Cause of Action), and Violation of Various California Statutes (Fifth, Sixth, and
Seventh Causes of Action) (Am. Compl. ¶¶ 66–98). Before addressing Plaintiff’s state law claims
4 See, e.g., Houston v. JP Morgan Chase & Co., No. 23 CV 2792, 2026 WL 26129, at *11 (N.D. Ill. Jan. 5, 2026);
Gaskin v. BMO Harris Bank N.A., No. 2:23 cv 01919, 2024 WL 1882606 (D. Ariz. May 3, 2024); Vanco v. JPMorgan
Chase Bank, N.A., No. ELH 16 3682, 2017 WL 1505968 (D. Md. Apr. 14, 2017); Nix v. NASA Fed. Credit Union,
200 F. Supp. 3d 578, 587 (D. Md. 2016); Anderson v. USAA Federal Savings Bank, No. 8:13 cv 1316, 2013 WL
4776728, at 2 (D.S.C. Sept. 4, 2013).
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(Causes of Action 3–7), the undersigned determines whether subject-matter jurisdiction exists. See
Mocek v. City of Albuquerque, 813 F.3d 912, 934 (10th Cir. 2015) (finding that courts have an
“independent obligation to determine whether subject matter exists” that extends to “any stage in
the litigation” (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 506 (2006))).
Because Plaintiff has failed to plead violations of the above-referenced federal statutes, the
court lacks federal-question jurisdiction over this case, but diversity jurisdiction under 28 U.S.C.
§ 1332(a)(1) exists here. Subject matter jurisdiction under 28 U.S.C. § 1332(a) requires, in addition
to diversity of citizenship, an amount in controversy in excess of “$75,000, exclusive of interest
and costs.” McPhail v. Deere & Co., 529 F.3d 947, 952 (10th Cir. 2008) (quoting 28 U.S.C. §
1332(a)(1)). Plaintiff is a resident of California, and Defendant is a resident of Utah, so diversity
is satisfied. The amount in controversy is also satisfied because in Plaintiff’s original civil cover
sheet, he alleges that the amount in controversy is $75,001 (ECF 1-1). Accordingly, the
undersigned determines that subject matter jurisdiction under 28 U.S.C. § 1332(a) is satisfied and
proceeds to consider Plaintiff’s remaining causes of action.
Plaintiff initially filed the action under the belief that California law applied to his state law
claims (id. at 6 (“Furthermore, Machinski brings this diversity civil case against Ally Bank because
of their Breach of Contract, Breach of the Implied Covenant of Good Faith and Fair Dealing,
Negligence, Intentional and Negligent Misrepresentation Concealment, Unfair Competition, all in
violation of California state laws.”)). Accordingly, all the state law claims asserted in the Amended
Complaint are alleged to violate various California statutes; however, as Defendant points out,
under the choice-of-law provision in the Deposit Agreement, Utah law governs those claims (ECF
71 at 17). As such, Defendant asserts that Plaintiff has failed to plead viable state law claims
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because they are governed by Utah law (id.). Defendant then argues that the state law claims would
fail even if brought under Utah law (id. at 17–26).
In response, Plaintiff concedes that because the “‘implied’ forum selection clause required
this case be transferred and litigated in Utah, the California claims may or may not be moot,” and
he requests that, instead of dismissing the claims with prejudice, he be granted leave to file an
amended complaint that includes corresponding Utah law (ECF 74 at 11).5 Plaintiff has since filed
a Motion to Amend (ECF 77), which includes as an attachment Plaintiff’s Proposed Second
Amended Complaint (ECF 77-2) (Proposed Second Amended Complaint). Plaintiff claims that the
Motion to Amend was brought “to address potential deficiencies raised” by Defendant’s Motion
to Dismiss, including amending the claims to assert viable legal theories under Utah Law (ECF 77
at 2). Defendant opposes the Motion to Amend, claiming undue delay, undue prejudice, and futility
(ECF 79 at 6–10).
The undersigned agrees that Utah law governs Plaintiff’s state law claims, but dismissing
the state law claims with prejudice would be unduly harsh given that they were brought under the
assumption that California law governed. And while the undersigned acknowledges that Plaintiff
has filed a Second Amended Complaint aimed at addressing various deficiencies in the Amended
Complaint, dismissing the Proposed Second Amended Complaint with prejudice would also be
5 In his Opposition, Plaintiff also claims that Defendant’s Motion should be converted to a motion for summary
judgment because the Motion relies on matters outside of the pleadings, namely, Exhibit 1 of the Motion, the alleged
Deposit Agreement dated January 7, 2017 (ECF 7 at 6–7). The Amended Complaint specifically refers to a contract
which includes the terms and conditions of Plaintiff’s account (Am. Compl. ¶ 72). “[I]f a plaintiff does not incorporate
by reference or attach a document to its complaint, but the document is referred to in the complaint and is central to
the plaintiff’s claim, a defendant may submit an indisputably authentic copy to the court to be considered on a motion
to dismiss.” Burke v. Holdman, 750 Fed. Appx. 616, 620 (10th Cir. 2018) (quoting GFF Corp. v. Associated Wholesale
Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997)). “If the rule were otherwise, a plaintiff with a deficient claim
could survive a motion to dismiss simply by not attaching a dispositive document upon which the plaintiff relied.” Id.
Because the Amended Complaint references a Deposit Agreement and alleges violations of said agreement, the
Deposit Agreement is central to Plaintiff’s claims. Accordingly, this court may consider it when reviewing
Defendant’s motion to dismiss without converting the Motion to a motion for summary judgment.
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unduly harsh, given that Plaintiff filed the Motion to Amend without having the benefit of this
ruling.6 Accordingly, the undersigned recommends that Plaintiff’s state law claims (Cause of
Action 3–7) be dismissed without prejudice, and that he be granted leave to file a Second Amended
Complaint addressing these deficiencies. Such a ruling is consistent with this court’s more lenient
standard applied to pro se parties and provides Plaintiff with time to evaluate if he still has viable
federal and state law claims in light of this recommendation.
In summary, the undersigned recommends that Defendant’s Motion to Dismiss be
GRANTED and that Plaintiff’s seven causes of action be dismissed without prejudice. The
undersigned also recommends that Plaintiff be granted leave to file a Second Amended Complaint,
which addresses the issues identified in this recommendation.
C. Plaintiff’s Motion to Amend
As discussed above, Plaintiff has filed a Motion to Amend (ECF 77), which includes
Plaintiff’s Proposed Second Amended Complaint (ECF 77-2). Defendant opposes Plaintiff’s
Motion to Amend, asserting that the Proposed Second Amended Complaint does not address, much
less correct, the deficiencies that Ally Bank raised in its motion to dismiss the First Amended
Complaint (ECF 79 at 6–10). While the undersigned agrees that the Proposed Second Amended
Complaint does not address many deficiencies raised by Defendant in its Motion to Dismiss,
Plaintiff did not have the benefit of this ruling, and under Rule 15, the court “should freely give
leave [to amend] when justice so requires.” Fed. R. Civ. P. (a)(2). Here, the undersigned finds that
justice requires that Plaintiff be granted leave to file a Second Amended Complaint with sufficient
time to determine whether he has any viable claims, considering the issues and deficiencies
addressed by the undersigned in this recommendation.
6 The undersigned’s reasoning for this recommendation is discussed further in Section C of this ruling, addressing
Plaintiff’s pending Motion to Amend.
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Therefore, the undersigned recommends that the court DENY Plaintiff’s Motion to Amend,
but grant Plaintiff leave to file a Second Amended Complaint. The undersigned understands that
such a ruling will place the burden on Defendant to file a renewed motion to dismiss or otherwise
respond to the new operative complaint, but given Plaintiff’s pro se status, justice is better served
by granting Plaintiff a final opportunity to sufficiently plead his case rather than dismissing his
claims with prejudice.
RECOMMENDATION
Based upon the foregoing, IT IS HEREBY RECOMMENDED that Defendant’s Motion to
Dismiss (ECF 71) be GRANTED, Plaintiff’s Motion to Amend (ECF 77) be DENIED, but Plaintiff
be granted twenty-eight days (28) from the date of the court’s ruling on this Report and
Recommendation to file a Second Amended Complaint.
NOTICE
Copies of this Report and Recommendation are being sent to all parties, who are hereby
notified of their right to object. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). The parties must file
any objection to this Report and Recommendation within 14 days after being served with a copy
of it. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). Failure to object may constitute a waiver of
objections upon subsequent review.
DATED this 2 February 2026.
Magistrate Judge Cecilia M. Romero
United States District Court for the District of Utah
Case 2:25-cv-00292-AMA-CMR Document 85 Filed 02/02/26 PageID.<pageID>
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