Frierson v. States Recovery Systems

Filing 11

MEMORANDUM AND ORDER signed by Senior Judge William B. Shubb on 6/12/17 ORDERING that Defendant's MOTION to dismiss Plaintiff's Complaint 4 is GRANTED. Plaintiff's Complaint is DISMISSED WITHOUT PREJUDICE. Plaintiff has twenty days from the date this Order is signed to file an amended Complaint, if she can do so consistent with this Order. (Mena-Sanchez, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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HEATHER FRIERSON,
Plaintiff,

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CIV. NO. 2:17-0781 WBS EFB

v.

MEMORANDUM AND ORDER RE: MOTION
TO DISMISS

STATES RECOVERY SYSTEMS,

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Defendant.

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Plaintiff Heather Frierson brought this action against

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defendant States Recovery Systems, alleging that defendant

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violated federal and California law when it reported her unpaid

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utility bills to a credit reporting agency as two separate debts,

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instead of one.

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defendant’s Motion to dismiss plaintiff’s Complaint.

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Mot. (Docket No. 4).)

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I.

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(Compl. (Docket No. 1).)

Before the court is
(Def.’s

Factual and Procedural Background
From June through August 2015, plaintiff incurred

$127.92 in charges to the Sacramento Municipal Utility District
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(“SMUD”).

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(Docket No. 5-1).)

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SMUD referred the charges to defendant for collection.1

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Compl. ¶ 9.)

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(See Compl. ¶¶ 6, 17; Pl.’s Opp’n Ex. A, SMUD Bill
After plaintiff failed to pay such charges,
(See

In or around August 2016, plaintiff attempted to open a

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new account with SMUD at a new address.

(See id. ¶¶ 11-12.)

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that time, SMUD informed her that she had an unpaid balance of

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$127.92 remaining on her previous account.

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then obtained a copy of her credit report and saw that defendant

(See id.)

At

Plaintiff

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had reported her SMUD debt to a credit reporting agency.

(Id. ¶

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13.)

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tradelines2--one for $58.06 and one for $69.86, corresponding to

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charges plaintiff incurred for the June through July and July

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through August 2015 billing cycles, respectively.

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Bill.3)

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one, plaintiff alleges, lowered her credit score.

The debt was listed on the credit report as two separate

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(See id.; SMUD

Reporting her SMUD debt as two tradelines instead of
(Compl. ¶ 19.)

Plaintiff thereafter filed this action, alleging that

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defendant made a “false, deceptive, or misleading representation”

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under the federal Fair Debt Collection Practices Act (“federal

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Plaintiff refers to the charges as an “alleged debt”
throughout her Complaint. (See Compl. ¶¶ 6-9, 17.) She does not
allege that she did not incur or paid such charges, however. The
court’s understanding is that plaintiff does not dispute that she
owes the charges.
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“A ‘tradeline’ is an entry for a debt which is listed
in a consumer credit report.” Kohut v. Trans Union LLC, No. 04 C
2854, 2004 WL 1882239, at *1 (N.D. Ill. Aug. 11, 2004).
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Plaintiff incurred $67.92 in charges for the June
through July 2015 billing cycle. (SMUD Bill.) The tradeline
corresponding to that cycle appears to have applied two lowincome tax credits that plaintiff received in determining
plaintiff’s debt for that cycle to be $58.06. (See id.)
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FDCPA”), 15 U.S.C. § 1692e, and California Fair Debt Collection

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Practices Act (“California FDCPA”), Cal. Civ. Code § 1788.17,

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when it reported her SMUD debt to a credit reporting agency as

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two tradelines instead of one.

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causes of action against defendant for unlawful debt collection

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practice under the federal FDCPA and California FDCPA.4

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id.)

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Federal Rule of Civil Procedure 12(b)(6).

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II.

(See Compl. at 4-5.)

She brings

(See

Defendant now moves to dismiss plaintiff’s Complaint under
(Def.’s Mot.)

Legal Standard

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On a Rule 12(b)(6) motion, the inquiry before the court

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is whether, accepting the allegations in the complaint as true

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and drawing all reasonable inferences in the plaintiff’s favor,

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the plaintiff has stated a claim to relief that is plausible on

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its face.

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Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).

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tenet that a court must accept as true all of the allegations

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contained in a complaint is inapplicable to legal conclusions.”

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Iqbal, 556 U.S. at 67.

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under a cognizable legal theory” is grounds for dismissal under

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Rule 12(b)(6).

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696, 699 (9th Cir. 1988).

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See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
“[T]he

An “absence of sufficient facts alleged

Balistreri v. Pacifica Police Dep’t, 901 F.2d

Plaintiff brings two causes of action under the federal
FDCPA--one under subsection (2) of 15 U.S.C. § 1692e (“section
1692e”) and another under subsection (8) of that statute.
(Compl. at 4.) The court construes and will refer to the two
causes of action as a single cause of action under section 1692e,
as subsections (2) and (8) of section 1692e provide nonexhaustive examples of violations of section 1692e, and plaintiff
appears to refer to section 1692e generally in her Complaint.
(See id. ¶¶ 1, 25.)
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III. Discussion

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15 U.S.C. § 1692e (“section 1692e”) prohibits debt

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collectors from making “false, deceptive, or misleading

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representation[s] . . . in connection with the collection of any

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debt.”

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“collection of any debt” to encompass reporting debts to credit

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reporting agencies.

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No. 2:14-CV-1453 ODW EX, 2014 WL 2115210, at *4 (C.D. Cal. May

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21, 2014); Akalwadi v. Risk Mgmt. Alternatives, Inc., 336 F.

Courts in this circuit and others have interpreted

See Gustafson v. Experian Info. Sols. Inc.,

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Supp. 2d 492, 503 n.4 (D. Md. 2004).

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question with respect to plaintiff’s federal FDCPA claim, and, by

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extension, plaintiff’s California FDCPA claim,5 is whether

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defendant made a “false, deceptive, or misleading representation”

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under section 1692e when it reported plaintiff’s SMUD debt to a

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credit reporting agency as two tradelines instead of one.

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Def.’s Mot., Mem. at 6-7 (Docket No. 4-1); Pl.’s Opp’n at 6-7

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(Docket No. 5).)

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Thus, the dispositive

(See

Plaintiff does not cite, and the court is not aware of,

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a case that has held that reporting multiple tradelines for debt

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incurred from a single billing account is, without more, “false,

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deceptive, or misleading.”

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cases that have ruled on section 1692e claims involving multiple

The court is only aware of three

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The parties agree that plaintiff’s California FDCPA
claim is derivative of plaintiff’s federal FDCPA claim. See
(Def.’s Mot., Mem. at 3 (Docket No. 4-1); Pl.’s Opp’n at 11 n.2
(Docket No. 5)); Cal. Civ. Code § 1788.17 (requiring that debt
collectors comply with “Sections 1692b to 1692j . . . of, Title
15 of the United States Code”).
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tradelines being reported for a single billing account.6

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those cases supports, or is consistent with, the proposition that

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where multiple tradelines are reported for a single billing

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account, but the information reported in such tradelines is

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accurate, no section 1692e claim is established.

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Each of

In Kohut v. Trans Union LLC, No. 04 C 2854, 2004 WL

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1882239 (N.D. Ill. Aug. 11, 2004), a debtor sued a debt collector

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for reporting a second tradeline on a loan he defaulted on after

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his loan holder had already reported a tradeline on that loan.

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Id. at *1.

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stating the same balance the first had stated.

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Acknowledging that the practice of reporting multiple tradelines

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on loans “is detrimental to consumers [because] credit scoring

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systems assess the total number of tradelines when calculating

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credit scores,” the Kohut court nevertheless dismissed the

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debtor’s section 1692e claim because the debtor did “not claim

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that the information [in the second tradeline] was itself

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inaccurate . . . instead [claiming only] that the effect of that

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report--the double entry--was inaccurate.”

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The second tradeline was a duplicate of the first,
Id.

Id. at *1-3.

In Gustafson v. Experian Info. Sols. Inc., No. 2:14-CV-

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01453 ODW EX, 2015 WL 3477071 (C.D. Cal. June 2, 2015), a debtor

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sued a debt servicer for reporting two tradelines on a credit

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card account she defaulted on--one on behalf of the debtor’s

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original creditor, and another on behalf of another creditor who

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Plaintiff cites Morris v. Risk Mgmt. Alternatives,
Inc., 203 F.R.D. 336 (N.D. Ill. 2001) for the proposition that
reporting multiple tradelines for a single billing account
violates section 1692e. Morris dealt only with class
certification and did not rule on the merits of a section 1692e
claim. See id. at 345.
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purchased the debtor’s account from the original creditor.

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at *1.

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the debtor’s account had been sold to the second creditor, and

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the second tradeline stated that the debtor owed a balance of

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$705.

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debt servicer on the debtor’s section 1692e claim on grounds that

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“[n]one of the credit reports submitted by [the debt servicer]

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report[ed] any inaccurate or misleading information.”7

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*6-7.

The first tradeline stated a balance of $0 and noted that

Id. at *1, 6.

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Id.

The Gustafson court granted judgment to the

Id. at

In Akalwadi v. Risk Mgmt. Alternatives, 336 F. Supp. 2d

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492, which plaintiff cites in her Opposition, a debtor sued a

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debt collector for reporting two tradelines on a debt he owed.

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Id. at 498.

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stating that the debtor owed a balance of $5,070.81.

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98.

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judgment on the debtor’s section 1692e claim.

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The court denied both parties’ motions on grounds that there was

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a triable issue of fact as to whether the amount of debt stated

The tradelines were duplicates of each other, each
Id. at 497-

The debtor and debt collector each moved for summary
Id. at 501-02.

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Plaintiff cites Gustafson v. Experian, 2014 WL 2115210,
an earlier decision in the Gustafson litigation that had denied
the debt servicer’s motion to dismiss the debtor’s section 1692e
claim, in her Opposition. (See Pl.’s Opp’n at 9.) That decision
is not inconsistent with the subsequent Gustafson decision
discussed in this Order, as the Gustafson court assumed as true
the debtor’s allegation that the information reported in the debt
servicer’s tradelines was false for purposes of the earlier
Gustafson decision. See Gustafson, 2014 WL 2115210, at *4. In
the subsequent Gustafson decision, the Gustafson court found that
the information reported in the debt servicer’s tradelines was,
in fact, accurate, and, accordingly, ruled for the debt servicer
on the debtor’s section 1692e claim. See Gustafson, 2015 WL
3477071, at *6-7.
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in the tradelines was accurate.8

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Id. at 502-03.

Kohut and Gustafson each support the proposition that

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where multiple tradelines are reported for a single billing

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account, but the information reported in the tradelines is

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accurate, no section 1692e claim is established.

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did not address that proposition because it found that the

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tradelines in question may have reported inaccurate information,

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it does not contradict that proposition.

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While Akalwadi

In view of the cases discussed above, the court finds

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that plaintiff has failed to state a section 1692e claim.

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Plaintiff claims that defendant reported two tradelines for her

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SMUD debt, but does not claim that the information reported in

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the tradelines--namely, that she incurred charges of $58.06 and

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$69.86 for the June through July and July through August 2015

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billing cycles and owes a total of $127.92 to SMUD--is

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inaccurate.

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plaintiff’s SMUD debt is, without more, insufficient to establish

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a section 1692e claim under Kohut and Gustafson.

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is not prepared to say that reporting multiple tradelines for a

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single billing account can never itself give rise to a section

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1692e claim, as Kohut and Gustafson appear to suggest, it does

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The fact that defendant reported two tradelines for

While the court

The Akalwadi court noted that the debt collector’s
“double reporting of the same debt . . . is a false
representation of the character and amount of [that] debt.”
Akalwadi, 336 F. Supp. 2d at 503. That comment appears to be
dictum, however, as it was not necessary to the Akalwadi court’s
denial of the debt collector’s motion, and the Akalwadi court did
not grant the debtor’s motion because there was a triable issue
of fact as to whether the debt collector implemented reasonable
procedures to avoid double reporting debts. See id. at 503-04.
In any event, plaintiff is not alleging that defendant “double
report[ed] . . . the same debt” in this case.
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find that doing so did not give rise to a section 1692e claim in

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this case, as the two tradelines reported in this case were based

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on separate bills incurred for separate billing cycles, a basis

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for separating tradelines that the court does not find to be

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“false, deceptive, or misleading.”

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failed to state a claim under section 1692e, and the court will

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dismiss her Complaint.

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Accordingly, plaintiff has

IT IS THEREFORE ORDERED that defendant’s Motion to
dismiss plaintiff’s Complaint be, and the same hereby is,
GRANTED.

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Plaintiff’s Complaint is DISMISSED WITHOUT PREJUDICE.
Plaintiff has twenty days from the date this Order is

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signed to file an amended Complaint, if she can do so consistent

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with this Order.

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Dated:

June 12, 2017

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