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Liu v. Kell

United States District Court, W.D. Washington, Seattle

March 19, 2018

LI LIU, Plaintiff,
KEEGAN KELL, Defendant.



         This matter comes before the Court on Defendant's motion to dismiss and for discovery sanctions (Dkt. No. 44). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS in part and DENIES in part the motion for the reasons explained herein.

         I. BACKGROUND

         Plaintiff is a Chinese citizen and permanent U.S. resident. (Dkt. No. 35 at 1.) Defendant is a U.S. citizen. (Dkt. No. 35 at 1.) The two married in China in October 2013. (Dkt. No. 2 at 4.) Defendant then served as Plaintiff's immigration sponsor, signing a Form I-864EZ Affidavit of Support (“I-864 Affidavit”) in April 2014. (Id.); (see Dkt. No. 27-7 at 6.) Under the terms of the I-864 Affidavit, Defendant is obligated to provide sufficient financial support to Plaintiff to ensure she receives income equal to at least “125 percent of the Federal poverty line.” 8 U.S.C. § 1183a(a)(1)(A). This obligation began when Plaintiff became a lawful U.S. permanent resident and continues until Plaintiff: (1) becomes a U.S. citizen, (2) is credited with 40 quarters of coverage under the Social Security Act, (3) leaves the U.S. and terminates permanent resident status, (4) is the subject of a new affidavit of support, or (5) dies. 8 U.S.C. § 1183a(a)(2)-(3); 8 C.F.R. § 213a.2(e)(2)(i). Plaintiff obtained permanent resident status in the U.S. in May 2014. (Dkt. No. 2 at 5.)

         The parties separated in August 2014. (Dkt. No. 23-1 at 3.) Defendant petitioned for dissolution of the marriage in September 2014, alleging Plaintiff “made living with her so unpleasant and untenable that [Defendant] left her and filed for divorce.” (Dkt. No. 25 at 4); (see Dkt. No. 23-1 at 2). The divorce was finalized in November 2015, without an award of ongoing spousal maintenance. (Dkt. No. 23-8 at 2.) The divorce had no impact on Defendant's I-864 support obligation. (Dkt. No. 35 at 2.) At some point following the marital dissolution, Defendant stopped supporting Plaintiff. (Dkt. No. 2 at 5.) Plaintiff remarried in September 2017. (Dkt. No. 45-12 at 1.) Plaintiff did not notify Defendant of this change in marital status, which would have affected the amount of Defendant's I-864 support obligation due to Plaintiff's community property interest in her husband's earnings. See Erler v. Erler, 824 F.3d 1173, 1178 (9th Cir. 2016) (support obligation reduced by other sources of income). Defendant claims he only learned of the marriage through the efforts of a private investigator. (Dkt. No. 53 at 2.) Plaintiff confirmed the results of Defendant's investigation during a November 27, 2017 deposition. (Dkt. Nos. 45-17, 53 at 2.)

         Plaintiff brought an action to enforce the I-864 support obligation on April 24, 2017 and moved to proceed in forma pauperis. (Dkt. Nos. 1, 2.) The Court granted Plaintiff's motion to proceed in forma pauperis shortly thereafter. (Dkt. No. 6). Defendant now moves to dismiss and for discovery sanctions, alleging that Plaintiff misstated her finances on her application to proceed in forma pauperis and that she improperly withheld evidence regarding those finances during discovery. (See generally Dkt. No. 44.) Defendant further alleges Plaintiff acted in bad faith. (Id. at 9.) Plaintiff counters that her application to proceed in forma pauperis was a “good faith and accurate representation of her inability to pay the court filing fee” and that even if Plaintiff failed to make required disclosures during discovery, Defendant “demonstrates no prejudice” from this failure. (Dkt. No. 57 at 2, 8.)


         A. Motion to Dismiss

         1. Legal Standard

         The Court may waive the filing fee for a plaintiff who brings an action upon a showing that the plaintiff is “unable to pay.” 28 U.S.C. § 1915(a)(1). For the Court to consider such a request, a plaintiff must submit “an affidavit that includes a statement of all assets” and other information demonstrating that “the affiant cannot pay the court costs and still afford the necessities of life.” Escobedo v. Applebees, 787 F.3d 1226, 1234 (9th Cir. 2015). Once a court grants an application to proceed in forma pauperis, the case must be dismissed “any time” a court determines that an “allegation of poverty is untrue” and made in bad faith. 28 U.S.C. § 1915(e)(2)(A); Escobedo, 787 F.3d at 1232 n.8; see also Finan v. Good Earth Tools, Inc., 565 F.3d 1076, 1080 (8th Cir. 2009) (dismissal pursuant to § 1915(e)(2)(A) is at the discretion of the court); Thomas v. General Motors Acceptance Corp., 288 F.3d 305, 308 (7th Cir. 2001) (same); Mathis v. New York Life Insurance Company, 133 F.3d 546, 548 (7th Cir. 1998) (same).

         2. Plaintiff's Affidavit of Poverty Contains Bad-Faith Misrepresentations

         Defendant's I-864 support obligation is reduced by the extent of other sources of income. See Erler, 824 F.3d at 1178 (9th Cir. 2016). Therefore, the amount and source of Plaintiff's income is a key issue in this case. Accordingly, Defendant received a variety of Plaintiff's financial records throughout discovery and deposed Plaintiff on various financial matters. (See generally Dkt. Nos. 45, 47, 48, 49, 50, 51, 63, 64.) Based on the information Defendant gathered, he concluded that Plaintiff misrepresented her income, assets, and living expenses to the Court when preparing her affidavit of poverty. (Dkt. No. 44 at 2.) On this basis, Defendant moves to dismiss. (Id.) The Court reviewed the briefing and exhibits relating to Defendant's motion to dismiss and was unable to reconcile the amounts Plaintiff reported in her affidavit of poverty with the financial activity occurring in her monthly bank and credit card statements. The Court then sought additional briefing from Plaintiff to address this issue. (See Dkt. No. 65.) Based on the totality of evidence before it, the Court concludes that Plaintiff's affidavit of poverty contained bad-faith misrepresentations rather than mere inaccuracies.

         Plaintiff's affidavit of poverty, prepared on April 22, 2017 and filed by counsel two days later, stated that Plaintiff had: no cash no hand; a checking account balance of $900; $23, 000 in in a brokerage account that was “on loan from [her] parents” that she was obligated to return “once [she] become[s] more financially stable;” income over the last twelve months under $10, 000, with the majority being gifts; and monthly living expenses just over $1, 000 per month. (Dkt. Nos. 1 at 1-2, 58 at ¶ 6.) The Court cannot reconcile these amounts with Plaintiff's financial records and her deposition testimony, which indicate significantly higher income and assets and significantly lower living expenses.

         For example, Plaintiff claimed on her affidavit of poverty that she received $6, 000 in gifts during the twelve month period ending on April 22, 2017. (Dkt. No. 1 at 2.) Yet Plaintiff made ATM deposits during this period of $26, 401. (Dkt. No. 65 at 3-4.) Plaintiff claims that of this amount only $6, 181.09 were gifts. (Dkt. No. 67 at 5.) She claims $6, 220 of ATM deposits represented a loan from her parents and that she “used only a small amount.” (Dkt. No. 67 at 3.) But according to Plaintiff's affidavit of poverty, she had no cash on hand and an $800 checking account balance on April 22, 2017 (Dkt. No. 1 at 2). Plaintiff does not account for where this “loaned” cash went if she did not spend it and it was not in her bank account. Plaintiff further claims that $6, 169 of the ATM deposits represent reimbursements from her now husband, Adam Higley, for items that he purchased using her credit card in order to improve her credit score. (Dkt. No. 67 at 5-6.) Plaintiff admits she “did benefit from and use some of these items” but “did not think this is a money gift.” (Dkt. No. 67 at 4.) Examples of items purchased on her credit card and then reimbursed by Mr. Higley, which Plaintiff did not report as gifts, include a “dress for me to wear to my best friend's wedding, ” frequent meals, groceries, and other retail purchases. (Dkt. No. 67 at 4); (see Dkt. Nos. 64-4 at 2-4; 67-1-67-7). Further, the meals, groceries, and purchases on Plaintiff's credit card are in addition to similar purchases Mr. Higley made on his own credit card. (See Dkt. Nos. 64-2 at 3-6). Many of the purchases Mr. Higley made on Plaintiff's behalf appear to be gifts, yet Plaintiff reported none. Further, Plaintiff's affidavit of poverty does not reflect payments Mr. Higley made on Plaintiff's behalf on a vehicle she later admits he leased and insured for her, or $800 in monthly gifts Mr. Higley admits he made to her during a portion of the period at issue. (See Dkt. Nos. 63-2 at 1, 64-3 at 3.) Finally, ...

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