Grantham v. Bank of America, National Association

Filing 20

ORDER by Judge Maria-Elena James granting in part and denying in part 15 Motion for Judgment on the Pleadings (cdnS, COURT STAFF) (Filed on 11/26/2012)

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1 2 3 UNITED STATES DISTRICT COURT 4 Northern District of California 5 6 SHIRLEY GRANTHAM, No. CV12-1960 MEJ Plaintiff, 7 v. ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR JUDGMENT ON THE PLEADINGS 8 BANK OF AMERICA, N.A., 9 10 Defendant. _____________________________________/ Re: Docket No. 15 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 Plaintiff Shirley Grantham has sued Bank of America, N.A. (BofA) for allegedly failing to 13 remove past due payment notations that were reported after she filed a petition for bankruptcy, and 14 for failing to report that Grantham disputed the account information. Grantham alleges nine causes 15 of action under (1) the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681s–2(b); (2) the 16 California Song–Beverly Credit Card Act of 1971, Cal. Civ. Code § 1747; (3) the California 17 Consumer Credit Reporting Agencies Act (CCRAA), Cal. Civ. Code § 1785.25(a); (4) California’s 18 Unfair Competition Law (UCL), Bus. & Prof. Code § 17200; (5) libel, Cal. Civ. Code § 45; (6) 19 intentional infliction of emotional distress; (7) negligent infliction of emotional distress; (8) deceit, 20 Cal. Civ. Code § 1710; and (9) constructive fraud, Cal. Civ. Code § 1573. BofA moves for 21 judgment on the pleadings pursuant to Federal Rule of Civil Procedure (Rule) 12(c). Dkt. No. 15. 22 Pursuant to Civil Local Rule 7-1(b), the Court finds a hearing unnecessary and VACATES the 23 December 13, 2012 hearing. After consideration of the parties’ papers, relevant legal authority, and 24 good cause appearing, the Court hereby GRANTS IN PART and DENIES IN PART BofA’s motion 25 for the reasons set forth below. 26 27 28 BACKGROUND On September 17, 2010, Grantham filed for bankruptcy, including the debt related to her two BofA credit card accounts ending in numbers 9098 and 1051, in the amounts of $5,987.00 and 1 $941.00, respectively. Compl. ¶¶ 12, 14, 16, Not. of Rem., Ex. A., Dkt. No. 1. On January 4, 2011, 2 Grantham received a discharge of all dischargeable debts, including the BofA Accounts. Id. ¶ 15. 3 In February 2011, Grantham sent a dispute letter to Experian requesting an investigation of 4 the 1051 Account, disputing the alleged delinquencies reported in her credit report while her 5 bankruptcy petition was pending.1 Id. ¶ 16. On February 28, 2011, Grantham received a credit 6 report from Experian which showed that the delinquencies had been removed. Id. ¶ 17, Ex. C; Pl.’s 7 Opp’n, Ex. A, Dkt. No. 16. The Experian report for the 1051 Account reports that it was 8 “Discharged through Bankruptcy Chapter 7,” and “Debt included in Chapter 7 Bankruptcy.” 9 Compl., Ex. C; Pl.’s Opp’n, Ex. A. It also reports the 1051 Account with a $0 balance as of October account as 30 days late in November 2010 and reported the account as “charged-off” as of 12 For the Northern District of California 2010. Compl., Ex. C; Pl.’s Opp’n, Ex. A. However, the report indicates that BofA reported the 11 UNITED STATES DISTRICT COURT 10 December 2010. Compl., Ex. C; Pl.’s Opp’n, Ex. A. 13 On March 26, 2012, Grantham filed this action in San Mateo County Superior Court. BofA 14 subsequently removed the case to this Court on April 19, 2012. Dkt. No. 1. BofA filed the present 15 Motion on October 25, 2012. Dkt. No. 15. Grantham filed her Opposition on November 8, 2012 16 (Dkt. No. 16), and BofA filed its Reply on November 15, 2012 (Dkt. No. 19). 17 DISCUSSION 18 In its Motion, BofA moves to dismiss Grantham’s first and third causes of action on the 19 grounds that: (1) the credit reporting information in her credit reports establishes that BofA 20 furnished only accurate information regarding her bankruptcy and the payment history of the BofA 21 accounts; and (2) a credit furnisher is not precluded from reporting information to credit bureaus 22 regarding delinquencies that occurred prior to the discharge of the underlying debt in bankruptcy. 23 Mot. at 1. BofA moves to dismiss Grantham’s second and fourth through ninth causes of action on 24 the grounds that they are preempted by the FCRA. Id. 25 BofA also moves to dismiss Grantham’s fourth cause of action for violation of the UCL 26 27 28 1 Although Grantham’s Complaint refers to a dispute for both BofA accounts, she states in her Opposition that the account ending in 9098 is not at issue. Opp’n at 9. 2 1 because she lacks standing to assert a UCL claim and her predicate claims fail. Id. at 2. BofA 2 further argues that Grantham’s sixth cause of action, for intentional infliction of emotional distress, 3 fails on the ground that she does not allege conduct sufficiently extreme or outrageous to permit 4 recovery under this theory. Id. BofA also moves to dismiss Grantham’s seventh cause of action, for 5 negligent infliction of emotional distress, on the ground that California does not recognize such a 6 cause of action. Id. And finally, BofA moves to dismiss Grantham’s ninth cause of action for 7 constructive fraud on the grounds that she has failed to allege a fiduciary relationship between 8 herself and BofA, and she has failed to plead the claim with the requisite particularity. Id. information reported during her bankruptcy: (1) BofA reported overdue payments to Experian while 11 at the same time reporting that she made timely payments during this period; and (2) BofA labeled 12 For the Northern District of California In response, Grantham argues that she has identified two factual inaccuracies with the 10 UNITED STATES DISTRICT COURT 9 the account as charged off after she filed for bankruptcy, which she contends is inaccurate because it 13 indicates that BofA wrote off the account at the time of bankruptcy when it had not done so. Opp’n 14 at 8. 15 A. Legal Standard 16 Rule 12(c) provides that “[a]fter the pleadings are closed—but early enough not to delay 17 trial—a party may move for judgment on the pleadings.” The legal standard applied under Rule 18 12(c) is “virtually identical to the standard for a motion to dismiss under Rule 12(b)(6).” Costa v. 19 Travelers Commercial Ins. Co., 2012 WL 3670653 (N.D. Cal. Aug. 24, 2012) (citing Dworkin v. 20 Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)). 21 A complaint must contain a “short and plain statement of the claim showing that the pleader 22 is entitled to relief.” Fed. R. Civ. P. 8(a). On a motion under Rule 12(b)(6) for failure to state a 23 claim, dismissal is appropriate only when the complaint does not give the defendant fair notice of a 24 legally cognizable claim and the grounds on which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 25 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the Court will 26 take all material allegations as true and construe them in the light most favorable to the plaintiff. NL 27 Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). However, this principle is inapplicable to 28 3 1 legal conclusions; “threadbare recitals of the elements of a cause of action, supported by mere 2 conclusory statements,” are not taken as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing 3 Twombly, 550 U.S. at 555). 4 Although the Court is generally confined to consideration of the allegations in the pleadings, 5 when the complaint is accompanied by attached documents, such documents are deemed part of the 6 complaint and may be considered in evaluating the merits of a Rule 12(b)(6) motion. Durning v. 7 First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). 8 When granting a motion to dismiss, the Court is generally required to grant the plaintiff leave Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 246-47 (9th Cir. 1990). 11 In determining whether amendment would be futile, the court examines whether the complaint could 12 For the Northern District of California to amend, even if no request to amend the pleading was made, unless amendment would be futile. 10 UNITED STATES DISTRICT COURT 9 be amended to cure the defect requiring dismissal “without contradicting any of the allegations of 13 [the] original complaint.” Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). 14 B. Application to the Case at Bar 15 1. 16 Grantham’s first cause of action is for violation of the FCRA. Congress enacted the FCRA, 17 15 U.S.C. §§ 1681 et seq., in 1970 “to ensure fair and accurate credit reporting, promote efficiency 18 in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 19 (2007). To ensure that credit reports are accurate, the FCRA imposes certain duties on the 20 furnishers that provide credit information to credit reporting agencies. Gorman v. Wolpoff & 21 Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009). 22 Fair Credit Reporting Act Section 1681s-2(a) describes the “[d]uty of furnishers to provide accurate information,” and 23 subsection (b) establishes the duties of furnishers after receiving notice of a dispute. 15 U.S.C. § 24 1681s-2. Among other responsibilities, subsection (a) prohibits furnishers from reporting 25 information with actual knowledge of errors and requires furnishers to correct and update 26 information, and provide notice of disputes and closed accounts. 15 U.S.C. § 1681s–2(a)(1)(A), (2), 27 (3). Subsection (b) provides that the furnisher shall, after receiving notice of a dispute from the 28 4 1 credit reporting agency, conduct an investigation of the disputed information; review all relevant 2 information provided by the agency; report the results of the investigation to the agency; and, if the 3 investigation reveals that the information is incomplete or inaccurate, report those results to all other 4 credit reporting agencies to which the person furnished the information. 15 U.S.C. § 1681s-2(b)(1); 5 Gorman, 584 F.3d at 1154. 6 While the “[d]uties imposed on furnishers under subsection (a) are enforceable only by 7 federal or state agencies,” §§ 1681n and 1681o provide a limited private right of action that applies 8 to § 1681s-2(b)’s requirement to investigate disputes and report inaccuracies. Gorman, 584 F.3d at 9 1154 (citing 15 U.S.C. §§ 1681s–2(c) and (d)). 10 Here, there appears to be inaccurate reporting in that Grantham’s report from Experian provides that her 1051 account is 30 days overdue in November 2010, while at the same time 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 reporting a $0 balance for October and November 2010. Pl.’s Opp’n, Ex. A. BofA attempts to 13 circumvent this apparent inconsistency by arguing that the $0 balance reported in October and 14 November 2010 is “favorable credit information – not adverse information – so it cannot not [sic] be 15 the basis for any damages based on credit reporting claims under the FCRA or any other credit 16 reporting statute.” Mot. at 6. BofA’s argument misplaced. Grantham is not arguing that the $0 17 balance reporting is adverse information; rather, she argues that her report is inaccurate because it 18 lists an overdue payment while also reporting the balance of zero. Opp’n at 12-13. BofA also 19 appears to go beyond the pleadings and argues that “there is no inconsistency here because even 20 before Bank of America zeroed out Plaintiff’s Account balance, Plaintiff was in default because she 21 had not been making payments on the account, notwithstanding a reported ‘0’ balance.” Mot. at 6. 22 However, at this stage in the pleadings, the Court is required to take all material allegations as true 23 and construe them in the light most favorable to Grantham. Clearly, a reported overdue payment is 24 adverse information. Thus, while BofA is free to raise this argument in a motion for summary 25 judgment after further discovery into Grantham’s allegations, the Court DENIES its motion at this 26 stage. 27 28 5 1 2. California Consumer Credit Reporting Agencies Act 2 Grantham alleges a CCRAA claim under section 1785.25(a), which states, “A person shall 3 not furnish information on a specific transaction or experience to any consumer credit reporting 4 agency if the person knows or should know the information is incomplete or inaccurate.” Grantham 5 alleges that BofA “intentionally and knowingly reported inaccurate and false information regarding 6 delinquency in payment to credit reporting agencies and date of discharge in violation of California 7 Civil Code § 1785.25.” Compl. ¶ 48. Unlike the FCRA, the CCRAA includes a private right of 8 action to enforce the prohibition against supplying incomplete or inaccurate consumer credit 9 information. Cal. Civ. Code § 1785.25(g) (“A person who furnishes information to a consumer establishes by a preponderance of the evidence that, at the time of the failure to comply with this 12 For the Northern District of California credit reporting agency is liable for failure to comply with this section, unless the furnisher 11 UNITED STATES DISTRICT COURT 10 section, the furnisher maintained reasonable procedures to comply with those provisions.”). As discussed above, there appears to be inaccurate reporting in that Grantham’s report from 13 14 Experian provides that her 1051 account is 30 days overdue in November 2010, while at the same 15 time reporting a $0 balance for October and November 2010. Pl.’s Opp’n, Ex. A. Accordingly, 16 taking all material allegations as true and construing them in the light most favorable to Grantham, 17 the Court finds that she has stated a valid claim for relief. The Court therefore DENIES BofA’s 18 motion at this stage in the proceedings. 3. 19 Whether Grantham’s Second and Fourth Through Ninth Causes of Action are Preempted 20 As to Grantham’s remaining claims, BofA argues that these allegations all derive from issues 21 22 that are governed solely by the FCRA: BofA’s allegedly inaccurate reporting of information to 23 credit 24 bureaus and Bofa’s allegedly inadequate investigation in response to Grantham’s dispute regarding 25 the reporting of her Account. Mot. at 9-10. Except for her fourth cause of action under the 26 California Unfair Competition Law, Grantham’s Opposition does not address her remaining state 27 law claims. 28 6 1 “Through the FCRA, Congress has established a scheme of uniform requirements regulating 2 the use, collection and sharing of consumer credit information.” Roybal v. Equifax, 405 F. Supp. 2d 3 1177, 1178 (E.D. Cal. 2005). “In order to maintain this uniformity, Congress included express 4 preemption clauses in the FCRA relating to various aspects of consumer credit reporting.” Id. 5 Among the claims expressly preempted are any state law claims regulating credit information 6 furnishers which relate to activity governed by section 1681s-2 of the FCRA.2 15 U.S.C. § 7 1681t(b)(1)(F). Specifically, section 1681t(b)(1)(F)(ii) states: “No requirement or prohibition may 8 be imposed under the laws of any State . . . with respect to any subject matter regulated under . . . 9 section 1681s-2, relating to the responsibilities of persons who furnish information to furnishers’ “reporting [of] information with actual knowledge of errors” and their investigatory 12 For the Northern District of California consumer reporting agencies[.]” 15 U.S.C. § 1681t(b)(1)(F). Section 1681s-2 governs credit 11 UNITED STATES DISTRICT COURT 10 duties upon receiving notice of a dispute from a credit bureau. 15 U.S.C. § 1681b-2(a)-(b). 13 Here, Grantham’s state law claims are all based upon the allegation that BofA furnished 14 inaccurate credit information about her accounts. As these allegations all derive from issues that are 15 governed solely by the FCRA, they are preempted by the FCRA. See El-Aheidab v. Citibank (South 16 Dakota), N.A., 2012 WL 506473, at *7-8 (N.D. Cal. Feb. 15, 2012) (“The only circuit courts to have 17 considered the question have adopted the total preemption approach, ruling that § 1681t(b)(1)(F) 18 preempts both state statutory and common law causes of action.”). Accordingly, the Court 19 GRANTS BofA’s Motion as to the following causes of action: (2) the California Song–Beverly 20 Credit Card Act of 1971, Cal. Civ. Code § 1747; (5) libel, Cal. Civ. Code § 45; (6) intentional 21 infliction of emotional distress; (7) negligent infliction of emotional distress; (8) deceit, Cal. Civ. 22 Code § 1710; and (9) constructive fraud, Cal. Civ. Code § 1573. 23 However, as to Grantham’s fourth cause of action under the UCL, she alleges that BofA’s 24 acts “were unlawful under the California Civil Code § 1785.25(a) and therefore constitute 25 misleading and unfair practices within the meaning of Business and Professions Code § 17200.” 26 27 28 2 Section 1681s-2(a) of the FCRA “imposes a duty on ‘furnishers of information’ to provide accurate information to consumer reporting agencies.” 15 U.S.C. § 1681s-2(a). 7 1 Compl. ¶ 62. In El–Aheidab, another judge in this district ruled that, to the extent the plaintiff based 2 his UCL claim solely on violations of section 1785.25(a), such a claim is not preempted by the 3 FCRA because it does not impose any additional substantive duties on the defendant and is merely 4 an additional procedural vehicle for enforcement. 2012 WL 506473, at *6; see also Mortimer v. JP 5 Morgan Chase Bank, Nat. Ass’n, 2012 WL 3155563, at *6 (N.D. Cal. Aug. 2, 2012) (“[T]he fact that 6 the UCL provides for a cause of action does not demonstrate that the law itself imposes an additional 7 requirement. Thus, Mortimer’s UCL claim is not preempted.”). Thus, because Grantham bases her 8 UCL claim on violations of section 1785.25(a), it is not preempted by the FCRA and BofA’s Motion 9 as to this cause of action must be DENIED. 10 Based on the analysis above, the Court GRANTS IN PART and DENIES IN PART BofA’s 12 For the Northern District of California UNITED STATES DISTRICT COURT 11 CONCLUSION Motion. BofA’s Motion is GRANTED as to the following causes of action: (2) the California 13 Song–Beverly Credit Card Act of 1971, Cal. Civ. Code § 1747; (5) libel, Cal. Civ. Code § 45; (6) 14 intentional infliction of emotional distress; (7) negligent infliction of emotional distress; (8) deceit, 15 Cal. Civ. Code § 1710; and (9) constructive fraud, Cal. Civ. Code § 1573. Because amendment 16 would be futile, leave to amend is DENIED. 17 BofA’s Motion is DENIED as to the following causes of action: (1) the Fair Credit Reporting 18 Act, 15 U.S.C. § 1681s–2(b); (3) the California Consumer Credit Reporting Agencies Act, Cal. Civ. 19 Code § 1785.25(a); and (4) California’s Unfair Competition Law, Bus. & Prof. Code § 17200. 20 IT IS SO ORDERED. 21 22 Dated: November 26, 2012 _______________________________ Maria-Elena James Chief United States Magistrate Judge 23 24 25 26 27 28 8

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