Darrin v. Bank of America, N.A.

Filing 21

MEMORANDUM AND ORDER signed by Judge Morrison C. England, Jr. on 10/19/2012 GRANTING 16 Motion to Dismiss Plaintiff's 15 First Amended Complaint WITH LEAVE TO AMEND; ORDERING Plaintiff to file an Amended Complaint within 20 days. (Michel, G)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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JUDE DARRIN,

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No. 2:12-cv-00228-MCE-KJN
Plaintiff,

v.

MEMORANDUM AND ORDER

BANK OF AMERICA, N.A.,

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Defendant.

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Plaintiff Jude Darrin (“Plaintiff”) seeks redress from Defendant Bank of America,

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N.A. (“Defendant”) based on alleged violations of the Fair Credit Reporting Act. Plaintiff

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also seeks redress for multiple claims brought under California state law. Presently

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before the Court is Defendant’s Motion to Dismiss Plaintiff’s First Amended Complaint for

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failure to state a claim upon which relief may be granted, pursuant to Federal Rule of

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Civil Procedure 12(b)(6).1 (ECF No. 16.) Defendant’s Motion was filed on August 13,

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2012. Plaintiff filed a timely opposition on September 7, 2012. (ECF No. 17). For the

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reasons stated below, Defendant’s Motion to Dismiss is GRANTED with leave to

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amend.2

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All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless
otherwise noted.
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Because oral argument was not of material assistance, the Court ordered this matter submitted
on the briefs. E.D. Cal. Local Rule 230(g).

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BACKGROUND3

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In 2004, Plaintiff refinanced her mortgage for property located at 884 Waggoner

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Road, Paradise, California, through Countrywide. At that time, her mortgage payments

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were approximately $800 per month.

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In 2009, when Defendant acquired Countrywide, Plaintiff’s mortgage payments

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increased to nearly $1,100.00 per month. At this time, Plaintiff applied for a loan

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modification through the federal Home Affordable Modification Program (“HAMP”) to get

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the monthly mortgage payments lowered. Plaintiff alleges that on December 4, 2009,

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she received a letter from Defendant “directing” her to stop making her existing mortgage

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payments and to instead pay $675.87 beginning on that date. Plaintiff made a payment

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in that amount to Defendant on or about December 7, 2009.

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On December 28, 2009, Plaintiff received a Home Affordable Modification Period

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Plan Agreement (“Agreement”) from Defendant, effective January 1, 2010. Under the

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Agreement, Plaintiff agreed to pay $675.87 for the months of January through March

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2010. Plaintiff also received four “payment coupons” in the amount of $675.87 each, to

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use for the months of December 2009 through March 2010. In April 2010, Plaintiff sent

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a payment of $675.87 to Defendant.

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A few days after sending her payment, Plaintiff received a letter from Defendant

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dated April 1, 2010, approving a permanent loan modification set at $790.10. Plaintiff

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alleges the letter instructed her to send no payment for April, but she had already done

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so. The April 1 letter stated that the modification would become permanent beginning

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May 1, 2010, if Defendant received a signed and notarized agreement by April 11, 2010.

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Plaintiff signed the Permanent Modification Agreement in front of a notary on April 8,

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2010.

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The factual assertions in this section are taken from Plaintiff’s First Amended Complaint. (ECF

No. 15.)

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On May 1, 2010, Plaintiff paid $114.23—the difference between the original loan

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modification and the new agreement—which posted on or about May 3, 2010.

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Defendant signed the Permanent Modification Agreement on or about May 28, 2010.

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Because Plaintiff had questions regarding the modification, she called Defendant

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and was allegedly told by Defendant’s employee that she should send in the $114.23

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difference between her payment for April 2010 and the modified amount for May 2010.

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Plaintiff asserts that she has made all of her mortgage payments on time, both to

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Countrywide and to Defendant. However, in the summer of 2011, when Plaintiff checked

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her credit report, she found that Defendant was reporting her mortgage late to credit

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agencies for the months of November 2009 through September 2010 and June 2011.

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Plaintiff was unaware of any allegedly late payments and asserts that she never

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received any notification from Defendant that she was late on any of her mortgage

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payments. Plaintiff also alleges that she received credit under the “Pay for Performance”

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program, which rewards individuals for paying mortgages on time by giving credit to pay

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down principal.

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On or about September 15, 2011, Plaintiff wrote a letter to Defendant asking it to

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contact the credit reporting agencies to get the late payment misinformation corrected.

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She then sent an email to Defendant’s CEO and President. On September 27, Plaintiff

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states she was contacted by a “customer advocate” for Defendant who allegedly

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promised to “fix everything” within two business days.

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When Plaintiff did not hear back from the “customer advocate,” she called

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Defendant and spoke with an employee who advised her that Defendant was correct in

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its reporting to the credit agencies because her May 2010 payment had not been

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received until June 4, 2010. Subsequently, Plaintiff spoke almost daily with

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representatives of Defendant, for an indeterminate amount of time, trying to correct the

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alleged credit reporting errors. Although Defendant repeatedly told Plaintiff that the

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errors would be corrected, they never were.

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On or about September 15, 2011, Plaintiff sent a complaint and a request for

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investigation to each of the three credit reporting agencies. Each credit agency advised

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her that Defendant had confirmed the late payment information. Plaintiff sent another

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letter to the credit reporting agencies in October 2011 but received the same response.

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On or about September 27, 2011, Plaintiff filed a customer complaint with the

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Office of the Comptroller of the Currency (“OCC”), which detailed her situation with

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Defendant and the credit reporting agencies. The next day, she wrote a letter to

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Defendant, demanding written documentation showing that she had been late on her

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mortgage payments. While Defendant acknowledged receipt of her letter in a letter

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dated November 4, 2011, Defendant allegedly failed to provide her with the requested

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written documentation within sixty days.

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Plaintiff alleges that she could not obtain a particular home loan because of

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Defendant’s credit reporting errors and experienced various emotional and psychological

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repercussions as a result.

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Plaintiff contends that in October of 2011, she engaged in a series of

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communications with Defendant’s representatives regarding the allegedly late payments

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and the OCC complaint. During these communications, Defendant’s employee informed

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Plaintiff that the May 2010 payment had been misapplied to the principal, rather than

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being applied as a mortgage payment and discussed the process for correcting this

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issue. The employee advised Plaintiff that to correct the misinformation in her credit file,

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Defendant would need to send Plaintiff her check, which Plaintiff would deposit, and the

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Plaintiff would send her own check back to Defendant for the same amount. However,

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Defendant advised Plaintiff that she would need to send them a completed Internal

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Revenue Service (“IRS”) Form W-9 before they could start the process. Plaintiff wrote a

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letter to Defendant, informing the employee that she felt uncomfortable submitting the

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W-9 because she did not want the check sent by Defendant to be construed as income

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by the IRS.

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In November 2011, Plaintiff received a letter from Defendant advising her that the

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May 2010 payment error had been corrected and that the corrected information had

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been sent to the three credit reporting agencies. However, Plaintiff received a letter from

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Defendant dated November 21, 2011, advising her that because she had not sent the

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W-9, her account would continue to show as past due. Further, the letter stated that

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Plaintiff had been delinquent since May 2010 and because Defendant had not received

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all of her payments on the first of the month in 2010, Plaintiff had not, and would not,

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receive credit for the “Pay for Performance” plan for 2011. Plaintiff disputes this

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statement and asserts that she had been receiving full credit for the “Pay for

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Performance” plan throughout 2010 even though none of her payments for that year had

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been received on the first day of the month. Plaintiff contends that it was only after her

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communication with Defendant about its reporting errors that she was informed that she

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would no longer receive credit for her timely mortgage payments. Plaintiff states she

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sent Defendant a letter on or about November 22, 2011, requesting an itemized

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statement of her mortgage, along with an explanation of all the data. Plaintiff also

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contends that in 2011, she received a report from Equifax that continued to erroneously

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show late payments.

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On or about January 23, 2012, Plaintiff received a “Notice of Intent to Accelerate”

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from Defendant. The notice stated that her loan was in default because, as of

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December 2011, she was $1,617.04 behind in her payments. The notice further stated

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that Plaintiff had the right to cure the default by February 16, 2012, but that if the default

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was not cured by that date, all future payments would be accelerated, making the full

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amount of the mortgage due. Foreclosure proceedings would then follow. On

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January 26, 2012, Plaintiff sent a check for $1,617.04 to Defendant and faxed the W-9 to

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Defendant as well. An employee of Defendant allegedly confirmed receipt of the W-9 by

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leaving a phone message for Plaintiff.

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Plaintiff states that in February 2012, she received a letter from Defendant

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confirming that it had corrected the credit misinformation to each of the three credit

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reporting agencies for the months of November 2009 through April 2010.

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On January 28, 2012, Plaintiff filed a complaint in this Court on the basis of

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federal question jurisdiction with supplemental jurisdiction over the state law claims.

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(ECF No. 1.) Defendant filed a Motion to Dismiss on March 9, 2012. (ECF No. 7.) The

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Court granted Defendant’s Motion to Dismiss with leave to amend on July 9, 2012. (ECF

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No. 14). Plaintiff filed a First Amended Complaint (“FAC”) on the same bases as the

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original complaint on July 24, 2012. (ECF No. 15.) Plaintiff alleges violations of the Fair

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Credit Reporting Act, 15 U.S.C. § 1681s-2(b), as her sole federal claim. Plaintiff also

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brings the following state law claims: (1) violations of California’s Consumer Credit

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Reporting Agencies Act, California Civil Code (“Cal. Civ. Code”) § 1785.1 et seq.;

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(2) violations of the Rosenthal Act, Cal. Civ. Code § 1788 et seq.; (3) violations of the

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California Consumers Legal Remedies Act, Cal. Civ. Code § 1750 et seq.; (4) violations

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of California’s Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 et seq.;

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(5) defamation; (6) intentional infliction of emotional distress; and (7) conversion.

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Plaintiff seeks compensatory, statutory, and punitive damages, as well as injunctive

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relief, fees and costs, and any other relief the Court deems just and proper.

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STANDARD

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On a motion to dismiss for failure to state a claim under Rule 12(b)(6), all

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allegations of material fact must be accepted as true and construed in the light most

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favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38

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(9th Cir. 1996). Rule 8(a)(2) requires only “a short and plain statement of the claim

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showing that the pleader is entitled to relief” in order to “give the defendant fair notice of

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what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly,

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550 U.S. 544, 555 (2007) (internal citations and quotations omitted).
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Though “a complaint attacked by a Rule 12(b)(6) motion to dismiss does not require

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detailed factual allegations, a plaintiff’s obligation to provide the grounds of his

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entitlement to relief requires more than labels and conclusions, and a formulaic recitation

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of the elements of a cause of action will not do.” Id. (internal citations and quotations

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omitted). A court is not required to accept as true a “legal conclusion couched as a

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factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,

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550 U.S. at 555). “Factual allegations must be enough to raise a right to relief above the

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speculative level.” Twombly, 550 U.S. at 555 (citing 5 Charles Alan Wright & Arthur R.

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Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004) (stating that the

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pleading must contain something more than “a statement of facts that merely creates a

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suspicion [of] a legally cognizable right of action”)).

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Moreover, “Rule 8(a)(2) . . . requires a ‘showing,’ rather than a blanket assertion,

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of entitlement to relief. Without some factual allegation in the complaint, it is hard to see

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how a claimant could satisfy the requirements of providing not only ‘fair notice’ of the

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nature of the claim, but also ‘grounds’ on which the claim rests.” Twombly, 550 U.S. at

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555 n.3 (internal citations and quotations omitted). A pleading must contain “only

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enough facts to state a claim to relief that is plausible on its face.” Id. at 570; see also

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Iqbal, 556 U.S. at 677-79. If the “plaintiffs . . . have not nudged their claims across the

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line from conceivable to plausible, their complaint must be dismissed.” Twombly,

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550 U.S. at 570; Iqbal, 556 U.S. at 680.

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A court granting a motion to dismiss a complaint must then decide whether to

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grant leave to amend. Rule 15(a) empowers the court to freely grant leave to amend

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when there is no “undue delay, bad faith or dilatory motive on the part of the movant, . . .

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undue prejudice to the opposing party by virtue of allowance of the amendment, [or]

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futility of the amendment . . . .” Foman v. Davis, 371 U.S. 178, 182 (1962). Dismissal

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without leave to amend is proper only if it is clear that “the complaint could not be saved

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by any amendment.”

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Intri-Plex Techs. v. Crest Grp., Inc., 499 F.3d 1048, 1056 (9th Cir. 2007) (citing In re

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Daou Sys., Inc., 411 F.3d 1006, 1013 (9th Cir. 2005); Ascon Props., Inc. v. Mobil Oil Co.,

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866 F.2d 1149, 1160 (9th Cir. 1989) (“Leave need not be granted where the amendment

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of the complaint . . . constitutes an exercise in futility . . . .”)).

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ANALYSIS

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A.

Violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681s-2(b)

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Plaintiff’s first cause of action alleges that Defendant violated the Fair Credit

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Reporting Act (“FCRA”), 15 U.S.C. § 1681s-2(b), by failing and refusing to investigate or

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reinvestigate the disputed payment information after the credit reporting agencies

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notified Defendant of the disputes. (ECF No. 15 at 15.) Plaintiff contends that

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Defendant was obligated to conduct a reasonable, timely and thorough reinvestigation of

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the disputed amounts but failed to do so, causing damage to Plaintiff’s credit, as well as

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various other damages. (Id. at 15-16.)

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The FCRA requires consumer reporting agencies to “adopt reasonable

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procedures for meeting the needs of commerce for consumer credit.” 15 U.S.C.

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§ 1681(b). Section 1681s-2 states that companies shall not furnish information about a

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consumer to a credit reporting agency if they have reason to know, or do know, that the

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information is false. Id. § 1681s-2(a)-(b). The FCRA also requires that a plaintiff plead

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violations of the statute within two years of the date of the discovery, or within five years

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of the date “on which the violation that is the basis for such liability occurs.” Id. § 1681p.

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Here, Plaintiff’s FAC attempts to cure some of the deficiencies identified by the

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Court in its prior order dismissing Plaintiff’s Complaint. (See ECF No. 14.)

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There, the Court identified numerous deficiencies in Plaintiff’s pleadings, including the

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failure to plead facts indicating that Defendant alone furnished the information that

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negatively impacted Plaintiff’s credit; that the information Defendant submitted to the

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credit reporting agencies was false; and that Defendant knew, believed, or had reason to

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know that such information was false at the time they submitted it to the credit reporting

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agencies. (Id. at 11.) The Court also noted that Plaintiff’s allegation that Defendant

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failed to investigate or reinvestigate the disputed amounts was insufficient and

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conclusory and held that Plaintiff failed to comply with the pleading requirements of Rule

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8(a). (Id.)

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Plaintiff’s FAC is not substantively different from the original Complaint. Plaintiff

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now identifies the subject property address (ECF No. 15 at 2), and the loan number from

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her application for a loan modification (id. at 3). Plaintiff has also included letters from

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Defendant relating to the trial modification agreement, a copy of the Home Affordable

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Modification Period Plan Agreement from Defendant, and letters regarding Plaintiff’s

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requests for credit reporting adjustment as exhibits to the FAC.

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However, these changes fail to cure the deficiencies noted by the Court in its prior

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order. Plaintiff has still failed to plead facts indicating that Defendant alone furnished the

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information that negatively impacted her credit, or that any information that the bank did

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submit was false. Furthermore, Plaintiff again fails to provide sufficient facts for the

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Court to conclude that Defendant knew, or had reason to know, that the information was

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false. Plaintiff’s allegation that Defendant failed to investigate or reinvestigate the

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disputed amounts remains conclusory and therefore insufficient. Importantly, Plaintiff

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has still not pled any additional facts in the FAC, other than her contention that all her

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payments were timely, to show that Defendant failed to investigate the disputed

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amounts.

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Finally, Plaintiff has cured some of the deficiencies under Rule 8(a) that the Court

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noted in its prior order, as she has provided her address and a copy of the HAMP

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modification.
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However, Plaintiff has again failed to provide the terms of the original mortgage and

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other facts which would put Defendant and the Court on notice as to her claims.

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Because Plaintiff has failed to state a claim upon which relief may be granted,
Defendant’s Motion to Dismiss is granted as to this claim.

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B.

State Law Claims

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Having dismissed Plaintiff’s federal claim, the Court determines that the FAC
presents no basis for federal question jurisdiction or for diversity jurisdiction. 28 U.S.C.

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§§ 1331, 1332. The Court declines to exercise supplemental jurisdiction over these

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claims pursuant to 28 U.S.C. § 1367(c). Plaintiff’s remaining claims are therefore

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dismissed as moot.

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CONCLUSION

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As a matter of law, and for the reasons set forth above, Defendant’s Motion to

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Dismiss Plaintiff’s First Amended Complaint is GRANTED with leave to amend. Plaintiff

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shall file any amended complaint within twenty (20) days of the date this Order is filed

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electronically. If no amended complaint is filed within said twenty (20)-day period,

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without further notice to the parties, the causes of action dismissed by virtue of this

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Memorandum and Order will be dismissed with prejudice.

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IT IS SO ORDERED.
Dated: October 19, 2012
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MORRISON C. ENGLAND, JR
UNITED STATES DISTRICT JUDGE

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