United States District Court, D. Maryland
W. TITUS, UNITED STATES DISTRICT JUDGE
Eric Cade, proceeding pro se, filed a Complaint with
this Court on August 21, 2015, against Defendants Pepco
Holdings, Inc. (“PHI”) and three of its officers
making various allegations relating to a refused utility
payment. ECF No. 1. Cade filed a Motion to Proceed in
forma pauperis on that same day. ECF No. 2. PHI filed a
Motion to Dismiss on October 14, 2015, arguing numerous
grounds for dismissal. ECF No. 3. For the reasons that
follow, PHI’s Motion to Dismiss shall be granted.
of 2015, Cade attempted to pay his electric utility bill with
a check marked “Not for Deposit EFT Only Discharge of
Debt” in the amount of $3, 055.50. ECF No. 1-7;
see ECF No. 1, at 6. Cade’s electric service
provider did not credit Cade’s account with the
check’s value, which exceeded the account balance. ECF
No. 1, at 6-7. From this failure of payment, Cade asserts
claims of fraud, conversion, and violations of various
federal statutes. Id. at 7-12. In addition to
declaratory and injunctive relief, Cade seeks damages in the
amount of $100, 000, 000.00. Id. at 15. In support
of his Complaint, Cade includes an exhibit, labeled
“affidavit of fraud” that provides a flawed
history lesson that makes nonsensical claims, including
assertions that utility company invoices are actually
dividends to be paid to consumers, that money is not real,
and that the federal government is involved in a large-scale
conspiracy to defraud the American people of wealth. ECF No.
1-2. Further, as noted in their motion, PHI is not an
electric utility, thus not Cade’s service provider, but
rather holds stock in Cade’s electric provider, Potomac
Electric Power Company, and thus is an improper party. ECF
No. 3, at 3. Accordingly, the Complaint appears frivolous on
its face-one of its several infirmities.
This Court lacks subject matter jurisdiction because Cade has
failed to exhaust statutorily provided administrative
Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3), an
action must be dismissed when there is a lack of subject
jurisdiction. Cade attempts to establish this Court’s
original jurisdiction by invoking various federal statutes,
like the Electronic Funds Transfer Act, as the basis for his
claim. ECF No. 1; 15 U.S.C § 1693. Even if
the Complaint was not otherwise meritless, the cause of
action presents a state-based utility service dispute. The
Maryland legislature empowered the Maryland Public Service
Commission (“PSC”) with the supervision and
regulation of public service companies practicing in the
state. Md. Code, Pub. Util. §§ 2-112, 2-113. The
appeals process of decisions made by the PSC includes the
Maryland Circuit Court and Maryland Court of Special Appeals.
Md. Code, Pub. Util. §§ 3-204, 3-209; see
generally Md. Code, Pub. Util. §§ 3-202
(defining the judicial review process for claims). Cade has
not attempted to pursue the administrative resolution
process, and as such, this Court lacks jurisdiction to decide
this matter. See Bell Atl. of Maryland, Inc. v. Intercom
Sys. Corp., 782 A.2d 791, 796 (Md. 2001)
(“Consumers must exhaust the statutory remedies
provided therein [the Maryland Public Utility Code] before
pursuing available independent judicial relief in the form of
common law actions.”).
Cade’s filing appears to be the result of the
“EFT Scheme” financial scam.
“EFT Scheme” is a well-documented financial scam
inspired by the misinformation spread by a group called
“the Sovereign Citizens movement.” Individuals
involved in the scheme submit fraudulent checks from closed
bank accounts with notations similar to that of Cade’s
in the hopes that a creditor will be deceived and release the
debt without legal recourse. District courts throughout the
country repeatedly have denied relief for individuals engaged
in this ruse. See, e.g., Stine v. Groff,
No. 2:14-CV-235, 2015 WL 5053676, at *6 (D. Vt. Aug. 26,
2015) (identifying multiple district courts that did not
accept checks marked as “EFT ONLY FOR DISCHARGE OF
DEBT” as valid payment orders).
Cade has frequented this Court with similar frivolous
claims. On the same day as the Complaint in this
case was filed, Cade took similar action against Verizon.
Cade v. Verizon Fios & Wireless Commc’n,
No. 15-cv-02489-GJH (D. Md. Aug. 21, 2015), ECF No. 1, at 1.
Including as exhibits the same affidavit regarding utility
companies and another check marked “Not for Deposit EFT
Only Discharge of Debt, ” Cade’s Complaint sought
damages again in the amount of $100, 000, 000.00.
Id. at 10; Cade v. Verizon Fios & Wireless
Commc’n, No. 15-cv-02489-GJH, ECF Nos. 1-5, 1-6.
In a Complaint filed on August 10, 2015, Cade sought $7, 000,
000.00 in silver or gold bullion after his mortgage company
refused a similar check marked with the “EFT”
text. Cade v. Chase Bank Mortg. Co., No.
15-cv-02352-GJH (D. Md. Aug. 10, 2015) ECF Nos. 1, at 11;
1-1. In another complaint filed that same day, Cade sought
$50, 000, 000.00 against another mortgage company for
parallel allegations. Cade v. Ocwen Loan Serv., No.
15-cv-02354-PWG (D. Md. Aug. 10, 2015), ECF No. 1, at 17.
Cade appears to be making a practice of flooding the court
system with frivolous, and potentially self-incriminating,
Sanctions may be appropriate because the cause of action is
meritless and intended to harass.
will be required to show cause as to why sanctions are not
appropriate under (1) 15 U.S.C. § 1693m(f); (2) Federal
Rule of Civil Procedure 11(c)(3); or (3) under this
Court’s inherent authority. See Chambers v.
NASCO, 501 U.S. 32, 45-46 (1991). Under 15 U.S.C. §
1693m(f), a court “shall award to the defendant
attorney’s fees” upon the Court’s finding
that an unsuccessful civil action brought under the
Electronic Fund Transfers section was filed “in bad
faith or for harassment.” Cade’s repeated and
meritless filings-inapplicable under the EFTA, see
supra note 1-strongly indicate bad faith and harassment.
Second, as long as a court first issues a show cause order
against the party proposed to be sanctioned, Rule 11(c)
allows a court to impose a monetary sanction when a party
brings a claim for “any improper purpose, such as to
harass, ” a claim that is not warranted by existing
law, or a claim using frivolous argument to advocate for the
change of current or establishment of new law. Finally,
Federal courts retain inherent authority to sanction parties
that have “acted in bad faith, vexatiously, wantonly,
or for oppressive reasons.” Chambers, 501 U.S.
at 45-46 (quoting Alyeska Pipeline Service Co. v.
Wilderness Society, 421 U.S. 240, 258-259 (1975)).
“[I]f a court finds that fraud has been practiced upon
it, or that the very temple of justice has been defiled, it
may assess attorney’s fees against the responsible
party.” Id. at 46 (internal citations
the backdrop of the “EFT Scheme, ” it defies
logic that an individual would bring frivolous lawsuits for
millions of dollars when his fraudulent (and potentially
criminal) financial scams failed to deceive their
targets. These payments are not valid, and lawsuits
surrounding them harass businesses with the unnecessary
burden of defending against these actions in court. The Court
will neither be a party to nor will it promote this type of
extortionist behavior. Accordingly, without evidence to the
contrary, this Court will impose sanctions against Cade for
PHI’s attorneys’ fees associated with defending
Court is without jurisdiction to hear this case due to
Cade’s failure to exhaust the administrative dispute
resolution process, and therefore, the Complaint will be
dismissed. The Court further finds that the Complaint is
frivolous and intended to harass, and the Court will subject