Ortiz v. Diversified Consultants, Inc. et al

Filing 3

ORDER signed by Magistrate Judge Allison Claire on 07/27/17 ORDERING that the 2 Motion to Proceed IFP is GRANTED; the Complaint is DISMISSED WITH 30 DAYS LEAVE TO AMEND. (Benson, A.)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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RENE ORTIZ,

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No. 2:17-cv-0590 TLN AC
Plaintiff,

v.

ORDER

DIVERSIFIED CONSULTANTS, INC., et
al.,
Defendants.
Plaintiff is proceeding in this action pro se. This matter was accordingly referred to the

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undersigned by E.D. Cal. R. (“Local Rule”) 302(c)(21). Plaintiff has also requested leave to

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proceed in forma pauperis pursuant to 28 U.S.C. §1915. ECF No. 2. Plaintiff has submitted the

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affidavit required by § 1915(a) showing that plaintiff is unable to prepay fees and costs or give

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security for them. Id. Accordingly, the request to proceed in forma pauperis will be granted.

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28 U.S.C. § 1915(a).

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I. SCREENING STANDARDS
Granting IFP status does not end the court’s inquiry, however. The IFP statute requires

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federal courts to dismiss a case if the action is legally “frivolous” or fails to state a claim upon

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which relief may be granted. 28 U.S.C. § 1915(e)(2). Plaintiff must assist the court in

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determining whether the complaint is frivolous or not, by drafting the complaint so that it

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complies with the Federal Rules of Civil Procedure (“Fed. R. Civ. P.”). Under the Federal Rules
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of Civil Procedure, the complaint must contain (1) a “short and plain statement” of the basis for

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federal jurisdiction (that is, the reason the case is filed in this court, rather than in a state court),

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(2) a short and plain statement showing that plaintiff is entitled to relief (that is, who harmed the

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plaintiff, and in what way), and (3) a demand for the relief sought. Fed. R. Civ. P. (“Rule”) 8(a).

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Plaintiff’s claims must be set forth simply, concisely and directly. Rule 8(d)(1). The federal IFP

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statute requires federal courts to dismiss a case if the action is legally “frivolous or malicious,”

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fails to state a claim upon which relief may be granted, or seeks monetary relief from a defendant

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who is immune from such relief. 28 U.S.C. § 1915(e)(2).

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A claim is legally frivolous when it lacks an arguable basis either in law or in fact.

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Neitzke v. Williams, 490 U.S. 319, 325 (1989). In reviewing a complaint under this standard, the

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court will (1) accept as true all of the factual allegations contained in the complaint, unless they

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are clearly baseless or fanciful, (2) construe those allegations in the light most favorable to the

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plaintiff, and (3) resolve all doubts in the plaintiff’s favor. See Neitzke, 490 U.S. at 327;

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Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 960 (9th Cir. 2010),

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cert. denied, 564 U.S. 1037 (2011).

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The court applies the same rules of construction in determining whether the complaint

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states a claim on which relief can be granted. Erickson v. Pardus, 551 U.S. 89, 94 (2007) (court

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must accept the allegations as true); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (court must

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construe the complaint in the light most favorable to the plaintiff). Pro se pleadings are held to a

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less stringent standard than those drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520

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(1972). However, the court need not accept as true conclusory allegations, unreasonable

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inferences, or unwarranted deductions of fact. Western Mining Council v. Watt, 643 F.2d 618,

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624 (9th Cir. 1981). A formulaic recitation of the elements of a cause of action does not suffice

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to state a claim. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-57 (2007); Ashcroft v. Iqbal,

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556 U.S. 662, 678 (2009).

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To state a claim on which relief may be granted, the plaintiff must allege enough facts “to

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state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has

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facial plausibility when the plaintiff pleads factual content that allows the court to draw the
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reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at

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678.

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A pro se litigant is entitled to notice of the deficiencies in the complaint and an

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opportunity to amend, unless the complaint’s deficiencies could not be cured by amendment. See

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Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987).

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II. THE COMPLAINT

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The complaint alleges multiple violations of the Fair Credit Reporting Act (FCRA),

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15 U.S.C. § 1681 et seq. and the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §1692 et

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seq. ECF No. 1 at 3 ¶ A, 5 ¶ III. These statutes are asserted as the basis for federal question

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jurisdiction. Id.

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Plaintiff alleges generally that he “never conducted business with defendants, Diversified

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Consultants, Inc.,” or its owners Charlotte L. Zehner and Christopher Zehner, yet defendants

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“reported to the credit bureaus an alleged debt/account” that plaintiff owes defendants. ECF

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No. 1 at 5 ¶ III. Plaintiff then specifies 24 discrete statutory violations1 without, for the most part,

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identifying which acts violated which statute. Some of the acts are alleged to have been

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performed by DCI as a creditor, and others are alleged to have been performed by DCI as a debt

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collector. Id. No information is provided about the nature of DCI’s business, and there are no

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factual allegations from which DCI’s status as a putative creditor or as a debt collector can be

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inferred. The complaint states that all alleged violations occurred on January 10, 2017, when the

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disputed debt was reported to the credit bureaus, id., but does not provide any other information

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about the debt. Neither amount of the reported debt nor the date associated with the debt itself is

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specified. There is no recitation of the information that was reported to the credit bureaus, or that

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appears on plaintiff’s credit history as the result of DCI’s reporting. Furthermore, the complaint

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does not state how and when plaintiff learned of the error in his credit report, or whether and how

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Plaintiff alleges that defendants failed to provide him “with 30 days to dispute an alleged debt
and reported the alleged debt to [his] credit file,” “reported an invalid debt [and account],”
“refused to cease and desist (C/D) by reporting a disputed debt to [the credit bureaus],”
“misrepresented itself [] when it reported an invalid debt [and account],” among a myriad of other
violations. Id.
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he notified defendants and/or the credit reporting agencies that the information was erroneous.

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Nor does the complaint provide any background facts about plaintiff’s interactions with

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defendants, if any, prior to the reporting of the debt.2

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In its current form, the complaint does not satisfy the requirements of Rule 8. Because the

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complaint contains no facts other than the date of reporting that might identify the disputed debt,

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it fails to provide defendants with fair notice of the claims against them and sufficient information

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to respond to the complaint. See McKeever v. Block, 932 F.2d 795, 798 (9th Cir. 1991) (Rule 8

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requires “sufficient allegations to put defendants fairly on notice of the claims against them.”).

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The complaint must, among other things, identify the disputed debt with sufficient detail that

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defendants will be able to readily identify the matter at issue. The amount of the disputed debt,

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and the circumstances and date of its origin (if known to plaintiff), would help identify the debt

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for purposes of satisfying Rule 8, but this information is missing.

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Moreover, the complaint lacks facts necessary to determine whether plaintiff states a

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claim under the statutes on which he relies. As noted above, the complaint does not specify

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which alleged wrongful act violated which statute. Also, the complaint lacks facts necessary to

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demonstrate that the FDCA applies at all. The Fair Debt Collection Practices Act applies only to

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debt collectors as defined by the Act. Schlegel v. Wells Fargo Bank, NA., 720 F.3d 1204, 1208

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(9th Cir. 2013); 15 U.S.C. § 1692(e), (f)). The complaint does not contain any facts that support

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an inference DCI is a debt collector within the meaning of the FDCPA. Plaintiff’s conclusory use

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of the term “debt collector” is not sufficient.

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The Fair Credit Reporting Act imposes a set of duties upon consumer reporting agencies

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(none of whom are named as defendants here), and a more limited set of duties upon persons who

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furnish information to reporting agencies. See Gorman v. Wolpoff & Abramson, LLP, 584 F.3d

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1147, 1153 (9th Cir. 2009); 15 U.S.C. § 1681(a)(3)-(4), § 1681s-2(a), (b). The duties that are

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imposed on “furnishers” of information, including creditors, depend on whether the consumer has

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disputed the information with the creditor prior to its reporting, or with the consumer reporting

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Plaintiff’s allegation that he “never conducted business with defendants” does not support an
inference that he had no dealings with them that led to the financial dispute.
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agency subsequently. Id. Because the complaint does not say whether plaintiff disputed the

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existence of the debt with defendants prior to its reporting, or with the credit bureaus

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subsequently (resulting in notification from the reporting agency to the furnisher of the

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information that it had been disputed by the consumer), it is impossible to determine whether any

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of the alleged violations come within the scope of the statute.

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Because the complaint does not comport with Rule 8 for the reasons identified above, and

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therefore does not permit determination whether plaintiff has stated a claim for relief under the

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FDCPA or the FCRA, the complaint will be dismissed with leave to amend.

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III. AMENDING THE COMPLAINT
The amended complaint must contain a short and plain statement of plaintiff’s claims.

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That is, it must state what the defendant did that harmed the plaintiff. The amended complaint

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must not force the court and the defendants to guess at what is being alleged against whom. See

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McHenry v. Renne, 84 F.3d 1172, 1177 (9th Cir. 1996) (affirming dismissal of a complaint where

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the district court was “literally guessing as to what facts support the legal claims being asserted

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against certain defendants”). To the extent possible, plaintiff should provide the information

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identified as missing above.

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In setting forth the facts, plaintiff must not go overboard, however. He must avoid

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excessive repetition of the same allegations. He must avoid narrative and storytelling. That is, the

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complaint should not include every detail of what happened, nor recount the details of

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conversations (unless necessary to establish the claim), nor give a running account of plaintiff’s

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hopes and thoughts. Rather, the amended complaint should contain only those facts needed to

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show how the defendant legally wronged the plaintiff.

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Also, the amended complaint must not refer to a prior pleading in order to make plaintiff’s

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amended complaint complete. An amended complaint must be complete in itself without

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reference to any prior pleading. Local Rule 220. This is because, as a general rule, an amended

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complaint supersedes the original complaint. See Pacific Bell Telephone Co. v. Linkline

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Communications, Inc., 555 U.S. 438, 456 n.4 (2009) (“[n]ormally, an amended complaint

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supersedes the original complaint”) (citing 6 C. Wright & A. Miller, Federal Practice &
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Procedure § 1476, pp. 556-57 (2d ed. 1990)). Therefore, in an amended complaint, as in an

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original complaint, each claim and the involvement of each defendant must be sufficiently

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alleged.

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IV.

PLAIN LANGUAGE SUMMARY FOR PRO SE PLAINTIFF

Your application to proceed in forma pauperis will be granted, but your complaint is being

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dismissed and you are being given an opportunity to submit and amended complaint within 30

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days. The amended complaint should include more information about the disputed debt, such as

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the amount and the date(s) the debt was incurred or the account became overdue according to

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defendants. Other problems with the original complaint that you will have the chance to correct

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are: (1) it provides no facts about what DCI does that show DCI qualifies as a “debt collector”

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under the FDCPA; (2) it does not specify which of the alleged violations are violations of the

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FDCPA and which are violations of the FCRA; (3) it gives no background information about

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your interactions with DCI before or after the disputed debt was reported; (4) it does not say what

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you did to dispute the debt with DCI, or whether you disputed the report of the debt with the

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credit bureaus. An amended complaint should briefly provide the necessary information,

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following the directions above.

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V. CONCLUSION

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For the reasons explained above, IT IS HEREBY ORDERED that:

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1. Plaintiff’s request to proceed in forma pauperis (ECF No. 2) is GRANTED;

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2. The complaint (ECF No. 1), is DISMISSED with leave to amend;

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3. Plaintiff may file an amended complaint within 30 days of the date of this order. If

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plaintiff files an amended complaint, he must comply with the instructions given

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above. If plaintiff fails to timely comply with this order, the undersigned may

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recommend that this action be dismissed for failure to prosecute.

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DATED: July 27.2017.

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