Silence Is Not Acceptance; Unilateral UCC-1 Filings Cannot Create Security Interests; and Courts May Dismiss as Frivolous Before Deciding IFP: Third Circuit’s Non-Precedential Affirmance in Nah v. Carvana

Case: Albert Nah v. Carvana Co.

Court: United States Court of Appeals for the Third Circuit

Date: October 20, 2025

Panel: Shwartz, Montgomery-Reeves, and Scirica, Circuit Judges (per curiam)

Disposition: Affirmed (non-precedential)

Introduction

This non-precedential Third Circuit decision arises from a pro se effort by Albert Nah to enforce what he claimed was a purchase contract with Carvana Co., an online used car retailer, for a 2024 Porsche Cayenne. Nah mailed Carvana a suite of documents—styled as a “Vehicle Purchase Agreement & Security Agreement,” a “Notice of Tender of Performance,” a “Notice of Intent to Establish Power of Attorney,” a “Durable Power of Attorney,” and a purported “negotiable instrument with a restrictive indorsement” as payment—and then unilaterally filed a UCC-1 financing statement in New Jersey, purporting to perfect a security interest in the vehicle. Carvana did not respond. Nah sued for breach of contract and breach of the implied covenant of good faith and fair dealing, seeking specific performance and damages.

The District Court, before determining whether Nah qualified to proceed in forma pauperis (IFP), screened the complaint and dismissed it with prejudice as frivolous under 28 U.S.C. § 1915(e)(2)(B)(i). Nah appealed. The Third Circuit affirmed, holding there was no enforceable contract under New Jersey law because Carvana neither accepted Nah’s offer nor engaged in conduct implying acceptance; silence does not ordinarily manifest acceptance. Without a contract, the implied covenant claim failed. The court also noted the attempted security interest was invalid absent an underlying agreement, and it confirmed that district courts may dismiss actions as frivolous “at any time” under § 1915(e)(2), even before resolving IFP status.

While non-precedential under the Third Circuit’s Internal Operating Procedures (I.O.P. 5.7), the opinion offers clear guidance on three recurring points: contract formation by silence, misuse of UCC-1 filings to fabricate security interests, and early screening dismissals under § 1915(e)(2).

Summary of the Opinion

Jurisdiction and standard of review: The Third Circuit had appellate jurisdiction under 28 U.S.C. § 1291 and reviewed the sua sponte dismissal for frivolousness de novo.
IFP screening before fee decision: Relying on Brown v. Sage, the court reiterated that § 1915(e)(2) authorizes dismissal “at any time,” even if the district court has not yet decided IFP eligibility or the filing fee remains unpaid.
No contract under New Jersey law: The court held that a contract requires offer and acceptance sufficiently definite to determine performance obligations with reasonable certainty. Carvana’s silence and lack of signature or conduct indicating assent meant no acceptance and no contract.
Silence not acceptance: The court rejected Nah’s contention that Carvana’s silence constituted acceptance; silence is generally not assent absent special circumstances or a benefit accepted by the offeree.
Implied covenant claim fails: Without a valid contract, there can be no breach of the implied covenant of good faith and fair dealing.
Invalid security interest: Because no agreement existed, Nah’s unilaterally filed UCC-1 financing statement did not create a security interest in the vehicle.
No new issues on appeal: The court declined to consider new federal and constitutional claims raised for the first time on appeal.
Futility of amendment: Amendment would be futile; thus, dismissal with prejudice was proper.
Procedural note: The motion for expedited review was denied.

Analysis

Precedents Cited and Their Role

Brown v. Sage, 941 F.3d 655, 659–60 (3d Cir. 2019) (en banc): The Third Circuit reaffirmed Brown’s construction of § 1915(e)(2) that courts may dismiss a case “at any time,” including before the fee status is resolved. This supported the District Court’s screening and dismissal even though it could not yet determine Nah’s IFP eligibility.
Allah v. Seiverling, 229 F.3d 220, 223 (3d Cir. 2000); Dooley v. Wetzel, 957 F.3d 366, 373–74 (3d Cir. 2020): These cases establish plenary (de novo) review for dismissals under § 1915(e)(2).
Mitchell v. Horn, 318 F.3d 523, 530 (3d Cir. 2003) (quoting Neitzke v. Williams, 490 U.S. 319, 327–28 (1989)): A claim is “frivolous” if it relies on an indisputably meritless legal theory or clearly baseless facts. The court applied this standard to characterize Nah’s contract theories—predicated on silence and unilateral documents—as indisputably meritless under New Jersey law.
Weichert Co. Realtors v. Ryan, 608 A.2d 280, 284–85 (N.J. 1992): Under New Jersey law, enforceable contracts require sufficiently definite offer and acceptance; acceptance may be by words (express) or conduct (implied-in-fact). Although silence may in rare circumstances signal assent, those circumstances—such as acceptance of a benefit—were absent here.
Graziano v. Grant, 741 A.2d 156, 162 (N.J. Super. Ct. App. Div. 1999): An offer must be accepted unqualifiedly; “Silence alone does not ordinarily manifest acceptance.” This directly defeated Nah’s “silence equals assent” claim.
Cumberland Farms, Inc. v. N.J. Dep’t of Envtl. Prot., 148 A.3d 767, 779 (N.J. Super. Ct. App. Div. 2016): Without a contract, there is no implied covenant of good faith and fair dealing claim. The court used this to dispose of Nah’s second cause of action.
First County Nat’l Bank & Tr. Co. v. Canna, 305 A.2d 442, 444 (N.J. Super. Ct. App. Div. 1973): A security interest cannot attach absent an agreement; thus, Nah’s UCC-1 filing did not create any security interest in the vehicle.
Stephens v. Clash, 796 F.3d 281, 289 (3d Cir. 2015): A federal court sitting in diversity applies the forum state’s substantive law. This supported the application of New Jersey contract principles.
Kobell v. Suburban Lines, Inc., 731 F.2d 1076, 1079 n.3 (3d Cir. 1984): The appellate record is limited to what was before the district court. The court declined to consider a version of the agreement that Nah produced on appeal (and, in any event, it lacked Carvana’s signature).
Delaware Nation v. Pennsylvania, 446 F.3d 410, 416 (3d Cir. 2006): Absent exceptional circumstances, issues raised for the first time on appeal are not considered. This foreclosed Nah’s new federal and constitutional theories at the appellate stage.
LaSpina v. SEIU Pa. State Council, 985 F.3d 278, 291 (3d Cir. 2021): Leave to amend is not required where amendment would be futile or inequitable. Given the dispositive lack of acceptance, amendment was futile; thus, dismissal with prejudice was appropriate.

Legal Reasoning

The court’s reasoning proceeds in three steps: screening authority, contract formation, and consequences for derivative claims and remedies.

Screening authority under § 1915(e)(2): Even though the District Court could not determine IFP eligibility from Nah’s application, it retained statutory authority to screen and dismiss the complaint “at any time.” Brown v. Sage, as an en banc decision, squarely permitted the court to dismiss for frivolousness before resolving the filing fee status. This underpins docket management and curbs abusive or meritless suits at inception.
No contract formed under New Jersey law: Contract formation requires an offer and an acceptance that is definite enough to ascertain performance obligations. Acceptance may be through explicit words or conduct manifesting assent; silence is not acceptance unless special circumstances create a duty to speak or the offeree accepts a benefit. The documents attached to Nah’s complaint—including an unsigned “Vehicle Purchase Agreement & Security Agreement”—did not contain any manifestation of assent by Carvana, whether by signature or conduct (e.g., taking the instrument “for value or collection”). Nah conceded Carvana did not respond. Without acceptance, there was no contract and thus no breach.
Derivative claims and remedies fail: - Implied covenant: The implied covenant of good faith and fair dealing exists only where a valid contract exists. Absent a contract, the covenant claim fails as a matter of law.
- Security interest theory: Nah’s attempt to file a UCC-1 financing statement before Carvana even received his package could not create a security interest. Under New Jersey law, and as reflected in Article 9 of the UCC, attachment requires an agreement. No agreement existed; therefore, no security interest attached, and “perfection” cannot cure lack of attachment.
- Futility and with prejudice: Given the foundational defect—no acceptance—no amendment could cure the absence of a contract. Dismissal with prejudice was therefore proper under LaSpina.
- New issues on appeal: Nah’s late-raised federal and constitutional claims were not considered, preserving the principle that appeals are confined to issues presented below absent exceptional circumstances.

Impact

Although non-precedential, the opinion has several practical implications in the Third Circuit and beyond:

Contract formation with online retailers: Parties seeking to bind an online seller cannot unilaterally impose contract obligations by mailing self-styled “agreements” and “tenders.” Silence by the retailer, without more, will not create contractual liability. Businesses can safely decline to engage with pseudo-contractual documents without fear of creating contracts through silence.
Deterring pseudo-legal tactics: The court’s analysis discourages “paper terrorism”-style attempts to leverage UCC filings or restrictive endorsements to force transactions or cloud title. Filing a UCC-1 without an underlying security agreement does not grant any rights in the collateral. Courts will treat such claims as legally baseless at the screening stage.
Efficient case management under § 1915: District courts are reminded they may, and should, use § 1915(e)(2) to dismiss frivolous complaints “at any time,” even before deciding IFP status. This is especially pertinent for claims that are facially defective on well-settled legal grounds (e.g., no offer/acceptance).
Appellate practice: Pro se appellants cannot salvage dismissed state-law claims by injecting new federal theories on appeal. Nor can they expand the record by submitting new documents; appellate review is confined to the district court record.
New Jersey contract doctrine reaffirmed: The opinion reinforces that, under New Jersey law, acceptance requires an objective manifestation—words or conduct—not silence, absent special circumstances. It also reiterates the dependency of implied covenant claims on the existence of a valid contract.

Complex Concepts Simplified

In forma pauperis (IFP): A status allowing indigent litigants to proceed without prepaying filing fees. Under § 1915(e)(2), courts must dismiss IFP cases that are frivolous, fail to state a claim, or seek damages from immune defendants; importantly, dismissal can happen even before IFP status is finally resolved.
Frivolousness (legal standard): A claim is frivolous if it rests on an indisputably meritless legal theory or clearly baseless facts. For example, claiming a binding contract exists solely because a business did not respond to an unsolicited “agreement” is indisputably meritless under New Jersey law.
Acceptance and silence: A contract forms when an offeree accepts an offer—by words (e.g., “We accept”) or conduct (e.g., shipping goods, depositing payment). Silence usually is not acceptance unless specific circumstances create a duty to speak or the offeree knowingly accepts benefits from the offeror.
Implied-in-fact contract vs. implied covenant: An implied-in-fact contract arises from conduct showing mutual assent. The implied covenant of good faith and fair dealing is a duty implied into an existing contract, requiring honest performance; it cannot exist without a valid contract.
UCC-1 financing statement, attachment, and perfection: Filing a UCC-1 publicly gives notice of a security interest but does not itself create one. A security interest “attaches” only if there is an agreement granting the interest, the secured party gives value, and the debtor has rights in the collateral. Without attachment, “perfection” (often via filing a UCC-1) is meaningless.
Restrictive indorsement: A notation on a negotiable instrument (e.g., “for deposit only”) that limits how it can be negotiated or used. Mailing an instrument with restrictive indorsements does not compel the recipient to accept it or form a contract.
With prejudice vs. without prejudice: A dismissal “with prejudice” ends the case on the merits and bars refiling. Courts may dismiss with prejudice at screening when amendment would be futile—i.e., no set of additional facts could cure the legal defect.
Sua sponte: Court action taken on the court’s own initiative, without a motion by a party. Section 1915(e)(2) authorizes sua sponte screening and dismissal.

Conclusion

The Third Circuit’s per curiam decision in Nah v. Carvana—though non-precedential—delivers a clear, practical reaffirmation of core contract and commercial law principles under New Jersey law and of federal screening authority:

Silence is not acceptance; a unilateral, unsolicited “agreement” does not bind the recipient. Without acceptance, there is no contract.
Because there is no contract, an implied covenant claim necessarily fails.
Unilateral UCC-1 filings cannot create a security interest; attachment demands an actual agreement.
District courts may dismiss frivolous suits at any time under § 1915(e)(2), even before resolving IFP status, and may do so with prejudice when amendment would be futile.
Appellants cannot introduce new issues or new evidence on appeal absent exceptional circumstances.

For businesses, the decision underscores that non-responsiveness to unsolicited pseudo-contractual mailings does not expose them to contract liability. For litigants, it is a reminder that enforceable contracts require mutual assent, and that federal courts will promptly dismiss complaints built on meritless legal theories.

Finally, while the panel’s disposition is not binding precedent, it aligns tightly with established Third Circuit and New Jersey authority and thus offers a reliable roadmap for courts and practitioners confronting similar claims that attempt to manufacture contracts or security interests through silence and unilateral filings.