Ewing v. Wells Fargo Bank NA et al

Filing 28

ORDER granting 24 Defendants' Motion to Dismiss Second Amended Complaint with prejudice. This case is dismissed in its entirety. Signed by Judge James A Teilborg on 10/2/12.(DMT)

Download PDF
1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Plaintiff, 10 11 12 No. CV 11-8194-PCT-JAT Marilynn J. Ewing, ORDER v. Wells Fargo Bank and Wells Fargo Financial Agency Co., 13 Defendants. 14 15 16 Currently pending before the Court is Defendants’ Motion to Dismiss Second Amended Complaint (Doc. 24). The Court now rules on the Motion. 17 I. 18 The Court assumes the facts alleged in the Second Amended Complaint (the 19 “SAC”) are true for purposes of deciding the pending Motion to Dismiss. On August 14, 20 2009, Plaintiff Marilynn Ewing applied for a home equity line of credit from Wells Fargo 21 Bank, N.A. (“Wells Fargo”) to consolidate credit card debt. She was pre-approved for 22 the home equity line of credit by Wells Fargo on August 14, but was denied later the 23 same day. BACKGROUND 24 On August 21, 2009, Wells Fargo made a credit report inquiry on Plaintiff. On 25 that same day, Wells Fargo reported to Transunion a second denial of a loan request, but 26 Plaintiff did not make a second loan request. Wells Fargo allegedly made over 40 credit 27 report inquiries on Plaintiff in less than a year. 28 Plaintiff notified Wells Fargo in writing of the impermissible credit report inquiry 1 and of the erroneous report of a denial of credit. Plaintiff also notified Transunion that 2 Wells Fargo’s credit report to Transunion was in error and that she had never made a 3 second loan application. Plaintiff filed a police report for identity theft regarding the 4 alleged application for credit on or around August 21, 2009. 5 Plaintiff filed a complaint in state court on August 15, 2011, alleging claims under 6 the Fair Credit Reporting Act (the “FCRA”). (Doc. 1-1.) Defendants removed to this 7 Court on December 8, 2011. (Doc. 1.) Defendants filed a Motion to Dismiss Plaintiff’s 8 Complaint on December 15, 2011. (Doc. 4.) 9 Plaintiff filed both a Response to the Motion to Dismiss (Doc. 11) and an 10 Amended Complaint (Doc. 12) on January 26, 2012. Plaintiff filed her Amended 11 Complaint without leave of Court, but because Defendants consented, the Court treated 12 the Amended Complaint as the operative pleading in this case. The Court therefore 13 denied the original Motion to Dismiss (Doc. 4) as moot because it did not respond to the 14 operative pleading. 15 Defendants filed a Motion to Dismiss Amended Complaint (Doc. 14) pursuant to 16 Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. When Plaintiff did 17 not respond to that Motion within the allotted time, Defendants filed a Motion for 18 Summary Disposition (Doc. 15) on March 8, 2012. Plaintiff filed an untimely Response 19 to the Motion to Dismiss on March 27, 2012. (Doc. 16.) Because Defendants filed a 20 Reply to the Response without objection, the Court treated Plaintiff’s Response as timely 21 and denied the Motion for Summary Disposition as moot. 22 The Court granted Defendants’ Motion to Dismiss Amended Complaint on May 23 21, 2012. (Doc. 18.) The Court found that Plaintiff failed to sufficiently allege a claim 24 for false reporting or for an improper credit inquiry under the FCRA. But the Court sua 25 sponte gave Plaintiff leave to file a Second Amended Complaint. The Court cautioned 26 Plaintiff that she would not get another bite at the apple. The Court need not allow a 27 party to amend its pleading if the party repeatedly has failed to cure the deficiencies in 28 the pleading. McGlinchy v. Shell Chem. Co., 845 F.2d 802, 809-810 (9th Cir. 1988). -2- 1 Plaintiff filed the SAC on July 2, 2012. (Doc. 23.) Plaintiff added allegations to 2 her previous FCRA claims for false reporting and improper credit inquiry. Defendants 3 filed the pending Motion to Dismiss Second Amended Complaint on July 19, 2012, 4 arguing that the additional allegations do not cure the deficiencies of Plaintiff’s claims. 5 (Doc. 24.) 6 Plaintiff filed her Response to the Motion to Dismiss Second Amended Complaint 7 on July 31, 2012. (Doc. 25.) Along with the Response, Plaintiff filed an Affidavit 8 containing additional facts. (Doc. 26.) The Court will not consider Plaintiff’s Affidavit 9 because the Court does not review matters outside the pleadings when deciding a Rule 10 12(b)(6) motion to dismiss for failure to state a claim. Huynh v. Chase Manhattan Bank, 11 465 F.3d 992, 1003-04 (9th Cir. 2006) (Review of a 12(b)(6) motion is limited to the 12 complaint). 13 II. LEGAL STANDARD 14 The Court may dismiss a complaint for failure to state a claim under Federal Rule 15 of Civil Procedure 12(b)(6) for two reasons: 1) lack of a cognizable legal theory and 2) 16 insufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police 17 Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). 18 To survive a 12(b)(6) motion for failure to state a claim, a complaint must meet 19 the requirements of Federal Rule of Civil Procedure 8(a)(2). Rule 8(a)(2) requires a 20 “short and plaint statement of the claim showing that the pleader is entitled to relief,” so 21 that the defendant has “fair notice of what the . . . claim is and the grounds upon which it 22 rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. 23 Gibson, 355 U.S. 41, 47 (1957)). 24 Although a complaint attacked for failure to state a claim does not need detailed 25 factual allegations, the pleader’s obligation to provide the grounds for relief requires 26 “more than labels and conclusions, and a formulaic recitation of the elements of a cause 27 of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). The factual 28 allegations of the complaint must be sufficient to raise a right to relief above a -3- 1 speculative level. Id. Rule 8(a)(2) “requires a ‘showing,’ rather than a blanket assertion, 2 of entitlement to relief. Without some factual allegation in the complaint, it is hard to see 3 how a claimant could satisfy the requirement of providing not only ‘fair notice’ of the 4 nature of the claim, but also ‘grounds’ on which the claim rests.” Id. (citing 5 C. Wright 5 & A. Miller, Federal Practice and Procedure §1202, pp. 94-95 (3d ed. 2004)). 6 Rule 8’s pleading standard demands more than “an unadorned, the defendant- 7 unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(citing 8 Twombly, 550 U.S. at 555). A complaint that offers nothing more than naked assertions 9 will not suffice. To survive a motion to dismiss, a complaint must contain sufficient 10 factual matter, which, if accepted as true, states a claim to relief that is “plausible on its 11 face.” Iqbal, 556 U.S. at 678. Facial plausibility exists if the pleader pleads factual 12 content that allows the court to draw the reasonable inference that the defendant is liable 13 for the misconduct alleged. Id. Plausibility does not equal “probability,” but plausibility 14 requires more than a sheer possibility that a defendant acted unlawfully. Id. “Where a 15 complaint pleads facts that are ‘merely consistent’ with a defendant’s liability, it ‘stops 16 short of the line between possibility and plausibility of entitlement to relief.’” Id. (citing 17 Twombly, 550 U.S. at 557). 18 In deciding a motion to dismiss under Rule 12(b)(6), a court must construe the 19 facts alleged in the complaint in the light most favorable to the drafter of the complaint 20 and the court must accept all well-pleaded factual allegations as true. See Shwarz v. 21 United States, 234 F.3d 428, 435 (9th Cir. 2000). Nonetheless, courts do not have to 22 accept as true a legal conclusion couched as a factual allegation. Papasan v. Allain, 478 23 U.S. 265, 286 (1986). 24 III. ANALYSIS AND CONCLUSION 25 Defendants argue that even with the SAC’s additional allegations, Plaintiff still 26 has not stated a claim under the FCRA for false reporting or for improper credit inquiry. 27 The Court agrees. 28 -4- 1 A. False Reporting 2 Congress enacted the FCRA to ensure fair and accurate credit reporting, to 3 promote efficiency in the banking system, and to protect consumer privacy. Gorman v. 4 Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009). To ensure accurate 5 credit reporting, the FCRA imposes some duties on the sources that provide information 6 to credit reporting agencies or “furnishers,” as they are called in the statute. Id. Section 7 1681s-2 prescribes two categories of responsibility for furnishers of information to credit 8 reporting agencies. Id. at 1564. 9 Subsection (a) outlines the furnishers’ duty to provide accurate information to 10 credit reporting agencies. Id; 15 U.S.C. §1681s-2(a). Subsection (b) imposes certain 11 obligations, including duties to investigate, that are triggered when a furnisher receives 12 notice from a credit reporting agency that the consumer disputes the information provided 13 by the furnisher. Id.; 15 U.S.C. §1681s-2(b). Subsection (b) duties arise only after the 14 furnisher receives notice of a dispute from a credit reporting agency; notice of a dispute 15 sent to the furnisher directly from the consumer does not trigger the duties. Gorman, 584 16 F.3d at 1154. 17 The FCRA expressly creates a private right of action for willful or negligent 18 noncompliance. Id. (citing 15 U.S.C. §§1681n & o). But section 1681s-2 limits this 19 private right of action to claims arising under subsection (b), the duties triggered upon 20 notice of a dispute from a credit reporting agency. 15 U.S.C. §1681s-2(c). Duties 21 imposed on furnishers under subsection (a) are enforceable only by government agencies. 22 Gorman, 584 F.3d at 1154. 23 Plaintiff alleges that Defendant Wells Fargo, who is a furnisher under the FCRA, 24 inaccurately reported to Transunion, a credit reporting agency, that Wells Fargo had 25 denied a second loan request from Plaintiff. Plaintiff alleges she never filled out a second 26 loan application. Plaintiff further alleges that she notified Wells Fargo of the erroneous 27 report of a denial of credit. In the SAC, Plaintiff alleges that she also notified Transunion 28 that Wells Fargo wrongfully reported the second loan denial. But Plaintiff again fails to -5- 1 allege that Transunion notified Wells Fargo of her dispute or that Wells Fargo failed to 2 properly investigate the dispute after receiving notice from Transunion. 3 Consumers have a private right of action under the FCRA against a furnisher for 4 false reporting only for violations of 15 U.S.C. §1681s-2(b). And a furnisher’s 5 subsection (b) duties are triggered only when the furnisher receives notice of a consumer 6 dispute from a credit reporting agency. Gorman, 584 F.3d at 1564; 15 U.S.C. §1681s- 7 2(b) (emphasis added). Because Plaintiff has not alleged that Transunion sent notice of 8 her consumer dispute to Wells Fargo, thereby triggering Wells Fargo’s duty to 9 investigate, her claim for false reporting against Defendants necessarily fails. The Court 10 therefore will grant Defendants’ Motion to Dismiss Second Amended Complaint with 11 respect to the false reporting claim. 12 B. 13 Defendants argue that Plaintiff again has failed to state a claim for an improper 14 credit inquiry because she has not alleged plausible factual allegations that Wells Fargo 15 obtained a credit report with no permissible purpose. 16 allegations in the SAC are consistent with Wells Fargo having permissible purposes for a 17 credit inquiry. 18 19 20 21 22 23 24 25 26 27 28 Improper Credit Report Inquiry Defendants contend that the The FCRA provides that a consumer reporting agency may furnish a consumer report under the following circumstances: (3) To a person to which it has reason to believe – (A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or .... (F) otherwise has a legitimate business need for the information – (i) in connection with a business transaction that is initiated by the consumer; or (ii) to review an account to determine whether the consumer continues to meet the terms of the account. -6- 1 15 U.S.C. §1681b(a)(3)(A),(F)(i)(ii). A consumer whose credit report is obtained for 2 reasons other than those allowed in the statute may recover actual and punitive damages 3 and attorneys’ fees and costs from the user of such information. Mone v. Dranow, 945 4 F.2d 306, 307-08 (9th Cir. 1991) (citing 15 U.S.C. §1681n). 5 Plaintiff alleges that, on August 21, 2009, after Wells Fargo had denied her a loan, 6 Wells Fargo reported an additional credit report inquiry even though it “had no 7 permissible purpose for obtaining a credit report.” (SAC, Doc. 23, ¶9.) In the SAC, 8 Plaintiff further alleges that Wells Fargo made “over 40 credit report inquiries in a span 9 of less than a year’s time.” (Doc. 23 ¶15.) Viewing these allegations in the light most 10 favorable to Plaintiff, Plaintiff alleges that because Wells Fargo had already denied her 11 loan application and because she did not make a second loan application, Wells Fargo no 12 longer had a permissible purpose for making a credit inquiry regarding the loan 13 application. 14 But, as the Court pointed out in its May 21 Order granting the Motion to Dismiss, 15 there could have been many other permissible reasons for Wells Fargo to have made 16 credit inquiries regarding Plaintiff. For instance, Wells Fargo could have made credit 17 inquiries on Plaintiff in order to review an account she had with Defendants. 18 The Court does not have to presume Plaintiff’s legal conclusion that Wells Fargo 19 “had no permissible purpose for obtaining a credit report” is true. And the Court 20 explained to Plaintiff in its May 21 Order that she must do more than simply make that 21 bald allegation to survive a motion to dismiss. The Court instructed Plaintiff to make 22 plausible factual allegations, not legal conclusions, in her SAC demonstrating that Wells 23 Fargo did not have a permissible purpose for making the credit inquiries. 24 In the SAC, Plaintiff does not allege that she had no open accounts with 25 Defendants or that Defendants did not have any of the other permissible purposes listed 26 in 15 U.S.C. §1681b(a)(3) for requesting her credit report. She did add an allegation in 27 the SAC that Defendants made over 40 credit inquiries on her in less than a year. But if 28 Defendants had permissible purposes for making the credit inquiries, it does not matter -7- 1 how many credit inquiries they made. The FCRA does not place a limit on the number of 2 credit reports a reporting agency can furnish on a consumer, the Act just limits the 3 purposes for which the reporting agencies can furnish credit reports. 4 Because, despite the Court’s instruction in its prior Order, Plaintiff still has not 5 done more than make a bald allegation that Defendants had no permissible purpose for 6 making their multiple credit inquiries, she has again failed to state a claim that 7 Defendants made improper credit inquiries. The Court therefore will grant Defendants’ 8 Motion to Dismiss Second Amended Complaint with regard to Plaintiff’s impermissible 9 credit inquiry claim as well. 10 In its May 21 Order dismissing the Amended Complaint, the Court sua sponte 11 gave Plaintiff leave to amend. In allowing Plaintiff leave to amend, the Court cited Ninth 12 Circuit Court of Appeals case law instructing district courts to grant leave to amend, sua 13 sponte, when dismissing a case for failure to state a claim, unless the court determines 14 that the pleading could not possibly be cured by the allegation of other facts. Lopez v. 15 Smith, 203 F.3d 1122, 1127 (9th Cir. 2000)(quoting Doe v. United States, 58 F.3d 494, 16 497 (9th Cir. 1995)). The Court may have granted leave to amend unnecessarily because 17 a recent decision by the Ninth Circuit possibly calls into question prior precedent 18 requiring district courts to grant sua sponte leave to amend when granting a motion to 19 dismiss. Lacey v. Maricopa County, __F.3d __, 2012 WL 3711591 *19 (9th Cir. August 20 29, 2012) (citing prior precedent that courts must grant leave to amend sua sponte unless 21 a pleading could not possibly be cured by the allegation of other facts and that, under the 22 old version of Federal Rule of Civil Procedure 15, parties had leave to amend as of right 23 even upon dismissal prior to the filing of an answer, then noting that under the current 24 version of Rule 15 “parties have 21 days from both responsive pleadings and motions to 25 dismiss to amend as of right, so the situation has changed.”) (internal citations omitted). 26 Regardless, the Court cautioned Plaintiff that the SAC would be her last bite at the 27 apple. The Court can deny leave to amend when a party repeatedly fails to cure the 28 deficiencies of her pleading. McGlinchy, 845 F.2d at 809-810. Plaintiff has not sought -8- 1 leave to amend the SAC and the Court will not grant her leave to amend because she 2 repeatedly has failed to cure the deficiencies in her pleading. 3 Accordingly, 4 IT IS ORDERED GRANTING Defendants’ Motion to Dismiss Second Amended 5 6 Complaint (Doc. 24) with prejudice. This case is dismissed in its entirety. Dated this 2nd day of October, 2012. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9-

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?