Renner v. Bank of America NA

Filing 43

ORDER denying 40 Motion to Dismiss for Failure to State a Claim. Defendant shall answer the second amended complaint within ten (10) days. (See attached Order). Signed by Senior Judge James A Teilborg on 8/26/2014.(TLB)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Patrick Renner,

No. CV-14-08051-PCT-JAT
Plaintiff,

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v.

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ORDER

Bank of America, N.A.,

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Defendant.

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Previously in this case, Defendant moved to dismiss Plaintiff’s first amended

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complaint. In response to that motion to dismiss, Plaintiff moved to file a second

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amended complaint. Defendant opposed the motion to amend on futility grounds. The

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Court’s analysis of Plaintiff’s motion to amend, including Defendant’s futility argument,

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is repeated below:

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III.

MOTION TO AMEND WITH LEAVE OF COURT
Plaintiff filed his Motion to Amend with the purpose of “correct[ing]
deficiencies and add[ing] clarity” to his complaint. (Doc. 25 at 1). The
Lodged SAC includes additional facts that the Court recounts below.
From July 1, 2011 until March 15, 2013, Defendant serviced
Plaintiff’s mortgage, originally obtained from Countrywide Home Loans,
Inc. in December 2006. (Doc. 26 at 1). In September 2012, Plaintiff became
aware of alleged inaccuracies in his credit history when BBVA Compass
Bank denied his application to refinance his mortgage due to “negative
items” in Plaintiff’s credit history. (Id. at 2). In particular, Defendant
reported that: (1) Plaintiff’s mortgage was “part of a Chapter 13
bankruptcy”; (2) “the account was delinquent”; (3) “the account was
closed”; and (4) the account had no payment history. (Id.).
Plaintiff filed complaints with multiple CRAs stating that the

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reported information was inaccurate. (Id.). In October 2012, the CRAs
notified Plaintiff that Defendant verified the information reported and
determined it was correct. (Id.). Plaintiff wrote numerous letters to
Defendant documenting why the information was allegedly inaccurate and
incomplete. (Id.). Twice more Plaintiff filed complaints with the CRAs. (Id.
at 2–3). Both times the CRAs responded that Defendant had verified the
information being reported as correct. (Id.). In September 2013, J.P.
Morgan Chase Bank denied Plaintiff’s application to refinance his
mortgage due to negative information in his credit history. (Id. at 3).
Plaintiff now seeks to amend the FAC pursuant to Fed. R. Civ. P.
15(a)(2) by including the above-stated facts related to Plaintiff’s FCRA
claim. (See Doc. 25).
A.
Legal Standard
A party may amend a pleading once as a matter of course within 21
days after serving it or within 21 days of service of, among others, a Rule
12(b)(6) motion. Fed. R. Civ. P. 15(a)(1). In all other circumstances, a
party must seek leave to amend from the court. Fed. R. Civ. P. 15(a)(2).
“The court should freely give leave when justice so requires.” Id.
Additionally, there is a “longstanding rule that ‘[l]eave to amend should be
granted if it appears at all possible that the plaintiff can correct the defect.’
” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (quoting Balistreri,
901 F.2d at 701). In determining whether to grant a motion to amend, a
court should consider five factors: “(1) bad faith; (2) undue delay; (3)
prejudice to the opposing party; (4) futility of amendment; and (5) whether
the plaintiff has previously amended his complaint.” Nunes v. Ashcroft, 375
F.3d 805, 808 (9th Cir. 2004). “Significantly, ‘[t]he party opposing
amendments bears the burden of showing prejudice,’ futility, or one of the
other permissible reasons for denying a motion to amend.” Farina v.
Compuware Corp., 256 F. Supp. 2d 1033, 1060 (D. Ariz. 2003) (quoting
DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987)).
Additionally, the Ninth Circuit Court of Appeals recognizes that the
complaint of a pro se plaintiff may be dismissed “only where ‘it appears
beyond doubt that the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief.’ ” Franklin v. Murphy, 745 F.2d
1221, 1228 (9th Cir. 1984) (quoting Haines v. Kerner, 404 U.S. 519, 521
(1972)); see also Weilburg v. Shapiro, 488 F.3d 1202, 1205 (9th Cir. 2007)
(“Dismissal of a pro se complaint without leave to amend is proper only if
it is absolutely clear that the deficiencies of the complaint could not be
cured by amendment.”) (quoting Schucker v. Rockwood, 846 F.2d 1202,
1203–04 (9th Cir. 1988)).
B.
Analysis
Here, Plaintiff has already amended the Complaint as a matter of
right pursuant to Rule 15(a)(1) and seeks the Court’s leave to amend his
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complaint pursuant to Rule 15(a)(2). (Doc. 25 at 1). Defendant argues that
the Court should not grant Plaintiff’s Motion to Amend because of
Plaintiff’s prior amendment (Doc. 23 at 5) and futility of amendment (Doc.
27 at 1–2).
1.
Prior Amendments
Defendant first argues that the Court should deny Plaintiff’s Motion
to Amend because “Plaintiff has already had one opportunity to amend his
Complaint.” (Doc. 23 at 5).
The Court’s discretion to deny an amendment is “particularly broad”
where a plaintiff has previously amended his complaint. Allen v. City of
Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990). The presence of prior
amendments may persuade a court to deny leave, even in absence of the
four other factors “when the movant present[s] no new facts but only new
theories and provide[s] no satisfactory explanation for his failure to fully
develop his contentions originally.” Id. at 374.
The Lodged SAC provides nearly two pages of additional facts. (See
Doc. 26 at 1–3). Moreover, the Lodged SAC provides no additional legal
theories. (See id. at 1–5). Because Plaintiff’s overwhelming purpose in
seeking leave of court to amend is to add clarity to his existing claim, the
presence of a prior amendment does not weigh against granting Plaintiff’s
Motion to Amend.
2.
Futility
Defendant next argues that the Court should deny Plaintiff’s Motion
to Amend because the Lodged SAC is futile. (Doc. 27 at 1–2).
Futility alone is enough to deny a motion for leave to amend. Nunes,
375 F.3d at 808. A proposed amendment is futile only if “no set of facts can
be proved under the amendment to the pleadings that would constitute a
valid and sufficient claim.” Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214
(9th Cir. 1988). Additionally, futility may be found where proposed
amendments are “either duplicative of existing claims or patently frivolous,
or both.” Bonin v. Calderon, 59 F.3d 815, 846 (9th Cir. 1995). The party
opposing amendment bears the burden of proving futility. Rodriguez v. City
of Phoenix, No. CV-11-01992-PHX-JAT, 2014 WL 1053602, at *3 (D.
Ariz. Mar. 19, 2014).
Once a plaintiff alleges that a CRA sent notice of a plaintiff’s
consumer dispute to the furnisher, the FCRA creates a private right of
action, enabling consumer suits for willful (§ 1681(n)) and/or negligent (§
1681(o)) noncompliance with the duties enumerated in § 1681s-2(b).
Gorman, 584 F.3d at 1154. “The purpose of § 1681s-2(b) is to require
furnishers to investigate and verify that they are in fact reporting complete
and accurate information to the CRAs after a consumer has objected to the
information in his file.” Id. at 1164. As a result, after receiving a notice of a
consumer dispute from a CRA, a furnisher must pursue a “reasonable”
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investigation to determine whether the information is incomplete or
inaccurate. Id. at 1157.
Defendant alleges that Plaintiff’s SAC is futile because: (1) Plaintiff
“provide[s] nothing to suggest [Defendant] was negligent in its
investigation—except for the fact that [Defendant] disagreed with
[Plaintiff’s] dispute after conducting its own investigation”; (2) Plaintiff
suggests that Defendant “investigated the dispute and determined it was not
reporting inaccurate information”; and (3) Plaintiff “fails to allege how the
information [provided by Defendant] is inaccurate.” (Doc. 27 at 3).
i.
Plaintiff’s Failure to Allege a Negligent
Investigation
Defendant’s first argument is that the Lodged SAC is futile because
Plaintiff fails to provide support that Defendant conducted a negligent
investigation. This argument misstates Plaintiff’s burden under the FCRA.
To state a claim under the FCRA, Plaintiff must allege that Defendant
negligently and/or willfully violated the duties enumerated in § 1681s-2(b).
15 U.S.C. § 1681(n)-(o). Plaintiff alleges that he wrote “numerous letters”
to Defendant both before and after he filed complaints with the CRAs.
(Doc. 26 at 2–3). These letters contained “documented evidence that the
[reported] information was inaccurate and incomplete.” (Id. at 2). Even
after receiving this “documented evidence,” Defendant “continued to refuse
to make corrections.” (Id.). Pursuant to the FCRA, Plaintiff alleges that
Defendant willfully violated its duty to conduct a reasonable investigation,
as enumerated in § 1681s-2(b), by ignoring evidence showing that the
reported information was inaccurate and incomplete. As a result, Plaintiff’s
failure to allege that Defendant’s conducted a negligent investigation does
not make the claim futile.
ii.
Plaintiff’s Suggestion that Defendant
Conducted an Investigation
Defendant’s second argument is that the Lodged SAC is futile
because Plaintiff concedes that Defendant fulfilled its duties under the
FCRA by suggesting that Defendant performed an investigation. (Doc. 27
at 3). The FCRA requires furnishers “to conduct at least a reasonable, noncursory investigation.” Gorman, 584 F.3d at 1157. As a result, Defendant
could conduct an unreasonable investigation and still be in violation of the
FCRA. As a result, Plaintiff’s suggestion that Defendant conducted an
investigation does not necessarily render the Lodged SAC futile.
iii.
Plaintiff’s Failure to Allege How the
Reported Information was Inaccurate
Defendant’s third argument is that the Lodged SAC is futile because
Plaintiff “fails to allege how the information [reported by Defendant] was
inaccurate.” (Doc. 27 at 3). In the Lodged SAC, Plaintiff alleges that
Defendant’s information was inaccurate because Defendant reported that
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Plaintiff’s “mortgage was part of a Chapter 13 bankruptcy, [that the
account] was delinquent, that the account was closed, and [Defendant was]
not reporting any payment history.” (Doc. 26 at 2). These allegations
provide Defendant with sufficient notice of the information Plaintiff claims
to be inaccurate and incomplete. By specifying what reported information
was allegedly inaccurate or incomplete, Plaintiff pleads a set of facts that
constitutes a valid and sufficient claim under § 1681s-2(b). See Moulton v.
AmeriCredit Fin. Servs., 2005 WL 1522237, *3 (N.D. Cal. June 28, 2005)
(finding that a plaintiff pleaded sufficient facts to state a § 1681s-2(b) claim
despite failing to allege with specificity how an identified inaccuracy was
incorrect). As a result, the lack of specificity in how identified information
was inaccurate does not necessarily render the Lodged SAC futile.
Accordingly, the Court finds that the Lodged SAC is not futile.
Because Defendant argues no basis other than Plaintiff’s prior amendment
and futility of amendment for denying Plaintiff’s Motion to Amend,
Defendant has not met its burden.

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Doc. 35 at 4-9. In the conclusion of this Order, the Court ordered the Clerk of the Court

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to file the lodged second amended complaint (because it was not futile), and ordered the

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Defendant to answer.
Instead of answering, Defendant move to dismiss the second amended complaint,
re-urging all of its futility arguments in terms of failure to state a claim under Federal

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Rule of Civil Procedure 12(b)(6). For the reasons detailed by the analysis above, the
Court finds the second amended complaint states a claim. Accordingly,
IT IS ORDERED that the motion to dismiss (Doc. 40) is denied. Defendant shall

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answer the second amended complaint within 10 days.
Dated this 26th day of August, 2014.

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