Anderson v. Louden, LLC

Filing 21

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND by Hon. William Alsup granting 17 Motion to Dismiss.(whalc4, COURT STAFF) (Filed on 12/6/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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JAMES E. ANDERSON SR.,

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For the Northern District of California

United States District Court

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Plaintiff,

No. C 13-04159 WHA

v.
LOUDEN, LLC, and DOES 1–100,
inclusive,

ORDER GRANTING
MOTION TO DISMISS
WITH LEAVE TO AMEND

Defendants.
/

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INTRODUCTION

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In this debt collection and credit reporting action, defendants move to dismiss the

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complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which

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relief can be granted. For the reasons set forth below, the motion is GRANTED.

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STATEMENT

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Pro se plaintiff, James E. Anderson, rented a residential home from defendants, Louden,

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LLC, and Doe employees 1–100. Some time later, plaintiff petitioned for bankruptcy before the

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United States Bankruptcy Court Northern Division of California (Compl. 3). Upon learning of

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plaintiff’s petition, Louden petitioned for, and was granted, an order for relief from an automatic

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stay by the bankruptcy court (Dkt. No. 17-1 Exh. 5).

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According to this complaint, the bankruptcy court granted Louden’s petition with the

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provision that Louden not seek pre-petition claims from plaintiff. Louden allegedly willfully
ignored this provision of the order and proceeded to serve plaintiff with a three-day notice to pay

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rent or quit (Compl. 3). A few days later, Louden filed an unlawful detainer action against

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plaintiff. Plaintiff brought a state court action objecting to Louden’s actions, arguing that they

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violated the bankruptcy court’s order. The California superior court agreed and found that

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plaintiff’s filing of the petition in the bankruptcy court suspended his obligation to pay pre-

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petition rent. The superior court also found, however, that the later dismissal of plaintiff’s

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petition revived plaintiff’s obligation to pay the pre-petition rent, and that Louden was free to re-

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serve the three-day notice to pay rent or quit (Dkt. No. 17-2 Exh. 7).

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On September 9, 2013, plaintiff filed this complaint against Louden and its Doe

Fair Credit Reporting Act (“FCRA”); and (3) Intentional Infliction of Emotion Distress (“IIED”).

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For the Northern District of California

employees, alleging violations of: (1) the Fair Debt Collection Practices Act (“FDCPA”); (2) the

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United States District Court

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On October 30, defendants moved to dismiss the complaint pursuant to FRCP 12(b)(6), failure to

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state a claim upon which relief can be granted. Plaintiff’s response was due November 13; none

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was filed. On November 22, plaintiff was ordered to show cause why the motion to dismiss

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should not be granted. Plaintiff was warned that a failure to timely respond to the order may

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result in defendants’ motion being granted. Again, plaintiff failed to respond. A hearing was

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then held. Plaintiff did not appear at the hearing.

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ANALYSIS

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A complaint may be dismissed for failure to state a claim upon which relief can be granted

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under Rule 12(b)(6) of the Federal Rules of Civil Procedure. “The purpose of a motion to dismiss

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under Rule 12(b)(6) is to test the legal sufficiency of the complaint.” N. Star. Int'l v. Ariz. Corp.

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Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). In ruling on a motion to dismiss under Rule

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12(b)(6), the Court takes “all allegations of material fact as true and construe(s) them in the lights

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most favorable to the non-moving party.” Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484

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(9th Cir. 1990). The complaint need not contain “detailed factual allegations,” but must allege

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facts sufficient to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal,

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556 U.S. 662, 663 (2009). Pro se pleadings must be interpreted liberally. See Hughes v. Rowe,

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449 U.S. 5, 9 (1980). “Dismissal with prejudice and without leave to amend is not appropriate

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unless it is clear . . . that the complaint could not be saved by amendment.” Eminence Capital,

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LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
THE FAIR DEBT COLLECTION PRACTICES ACT.

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Under the FDCPA, debt collectors are prohibited “from making false or misleading

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representations and from engaging in various abusive and unfair practices.” Donohue v. Quick

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Collect, Inc., 592 F.3d 1027, 1030 (9th Cir. 2010); 15 U.S.C. 1692. To establish a violation of the

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FDCPA, Plaintiff must show: (1) he was a consumer (2) who was the object of a collection

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activity arising from a consumer debt, and (3) the defendant is a “debt collector” as defined by the

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FDCPA, (4) who engaged in an act or omission prohibited by the FDCPA. Turner v. Cook,

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For the Northern District of California

United States District Court

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362 F.3d 1219, 1227–28 (9th Cir. 2004).
Plaintiff’s first claim for relief fails to allege what act or omission defendants performed

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contrary to the FDCPA. The complaint alleges that plaintiff was a consumer within the meaning

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of the FDCPA and that he was the object of a collection activity arising from a consumer debt.

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The complaint also states that Louden violated the FDCPA through “false representation of the

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character, amount, or legal status of any debt” and by “communicating information which is

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known to be false” (Compl. 4). Plaintiff is obligated, however, to provide more “than mere labels

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and conclusions.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Plaintiff fails to explain

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what false representations Louden made or what information was falsely communicated.

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“Formulaic recitation of the elements of a cause of action,” will not do. Id. at 555. If plaintiff has

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knowledge as to what misrepresentations Louden made as to the “character, amount or legal

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status of any debt,” he must state so in the complaint. Accordingly, plaintiff’s first claim for

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relief must be DISMISSED.

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2.

THE FAIR CREDIT REPORTING ACT.

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Congress enacted the Fair Credit Reporting Act (“FCRA”) in 1970 “to ensure fair and

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accurate credit reporting, promote efficiency in the banking system, and protect consumer

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privacy.” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009);

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15 U.S.C. 1681. In addition to imposing duties on credit reporting agencies, “the FCRA imposes

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some duties on the sources that provide credit information to reporting agencies, called

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‘furnishers’ in the statute.” Ibid.

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The complaint alleges that Louden violated the FCRA in two ways: First, plaintiff alleges

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that Louden failed to provide accurate credit reporting, in violation of Section 1681s-2(a);

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Second, Louden was provided notice that plaintiff disputed his debt and Louden violated the

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FCRA by failing to “adequately conduct an investigation with respect to the disputed

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information,” and did not report the dispute to the credit reporting agencies, as required by

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Section 1681s-2(b)(1) (Compl. 5). The claims will be discussed in turn.

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Section 1681s-2(a).

Section 1681s-2(a) requires furnishers “to provide accurate information.”

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For the Northern District of California

United States District Court

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A.

15 U.S.C. 1681s-2(a). Specifically, subsection (a) prohibits furnishers from reporting information

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with actual knowledge of errors, requires furnishers to correct and update information, and

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requires furnishers to provide notice of disputes and closed accounts, among other requirements.

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15 U.S.C. 1681s-2(a)(1)–(3). The information is “inaccurate or incomplete” within the meaning

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of the statute if it is “patently incorrect, or because it is misleading in such a way and to such an

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extent that it can be expected to adversely affect credit decisions.” Gorman, 584 F.3d at 1163.

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Duties imposed on furnishers under subsection (a) are enforceable only by federal or state

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agencies. Id. at 1154.

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Plaintiff’s claim under Section 1681s-2(a) is barred, as there is no private cause of action

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for such violations. As discussed above, duties imposed on furnishers under this subsection are

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enforceable only by federal or state agencies. Ibid.; see also 15 U.S.C. 1681s-2(d) (limiting

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enforcement to federal and state agencies). Thus, to the extent that plaintiff bases his FCRA

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claim upon violations of Section 1681s-2(a), the claim is DISMISSED WITH PREJUDICE.

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B.

Section 1681s-2(b).

Section 1681s-2(b) establishes the duties of furnishers after receiving notice of a dispute.

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15 U.S.C. 1681s-2(b). Upon receiving notice of a dispute from a credit report agency, the

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furnisher shall: (1) conduct an investigation of the disputed information; (2) review all relevant

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information provided by the agency; (3) report the results of the investigation to the agency; (4) if
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the results of the investigation reveal that the information is incomplete or inaccurate, report those

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results to all other credit reporting agencies to which the person furnished information; and (5) if

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an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot

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be verified after reinvestigation, for purposes of reporting to a consumer reporting agency only, as

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appropriate, modify, delete, or permanently block reporting of that item of information. 15

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U.S.C. 1681s-2(b)(1).

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The FCRA confers a private right of action upon consumers and allows them to sue a

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furnisher of credit information if such furnisher willfully or negligently fails to comply with any

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of the duties enumerated in Section 1681s-2(b). See Gorman, 584 F.3d at 1154; 15 U.S.C. 1681n,
1681o. A furnisher’s duties “arise only after the furnisher receives notice of dispute from a

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For the Northern District of California

United States District Court

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[credit reporting agency].” Gorman, 584 F.3d at 1154.

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When a violation of Section 1681s-2(b) occurs, a plaintiff may base his allegations on

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negligent noncompliance and/or willful noncompliance. Under Section 1681o, a person who

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negligently violates the FCRA is liable in an amount equal to the sum of “any actual damages

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sustained by the consumer as a result of that violation” plus costs and attorney’s fees. Under

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Section 1681n, where a defendant “willfully” violates the FCRA, a plaintiff may seek either

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actual damages or “damages of not less than $100 and not more than $1,000,” as well as punitive

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damages and reasonable attorney’s fees. 15 U.S.C. 1681n(a)(1)(A).

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Plaintiff’s second claim for relief must also be dismissed for failure to meet the pleading

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standard. Nowhere in the complaint does plaintiff allege that he first reported an inaccuracy to a

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credit reporting agency, as required by Section 1681s-2(b)(1). Nor does the complaint allege that

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a credit reporting agency contacted Louden to report the dispute. Other than the recitation of the

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claim for relief, there is no allegation that Louden even had contact with a credit reporting

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agency. The complaint also fails to allege what improper information was communicated in this

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instance. Instead, plaintiff solely makes the conclusory allegation that “Louden, regularly in the

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course of business, furnishes information to one or more consumer reporting agencies about their

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transactions or experiences with any consumer” and that “Louden failed to conduct an

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investigation with respect to the disputed information” (Compl. 5). For plaintiff to state a claim
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under the FCRA, he must specifically allege that he or a credit reporting agency reported the

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inaccuracy to defendants and specify what dispute existed as to the accuracy or incompleteness of

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the information furnished. Because the complaint is lacking of these facts, plaintiff’s FCRA

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claim must be DISMISSED.

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3.

INTENTIONAL INFLICTION OF EMOTION DISTRESS.

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Under California law, the elements of an IIED claim are: (1) extreme and outrageous

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conduct by the defendants with the intention of causing, or reckless disregard of the probability of

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causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional distress; and

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(3) actual and proximate causation of the emotional distress by the defendants’ outrageous
conduct. Cervantez v. J.C. Penney Co., 24 Cal.3d 579, 593 (1979). To be considered

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For the Northern District of California

United States District Court

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“outrageous,” conduct must be so extreme as to exceed all bounds of conduct usually tolerated in

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a civilized community. Ibid.

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Plaintiff alleges that defendants’ conduct renders them liable for IIED. Specifically,

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plaintiff alleges that defendants engaged in extreme and outrageous conduct intended to “harass,

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belittle, confuse, mislead and threaten the Plaintiff, the purpose of which was to intimidate and

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coerce the Plaintiff into paying a debt which was not legitimately owed” (Compl. 6).

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Defendants argue that plaintiff fails to state an IIED claim because he fails to allege any

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conduct that could be considered outrageous. This order disagrees. Defendants’ alleged conduct

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could potentially rise to the level of IIED, however, plaintiff’s allegations are too conclusory to

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constitute a sufficient claim for relief. Plaintiff provides too few factual allegations as to how he

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was harassed and fails to plead with specificity the suffering or extreme emotional distress he was

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caused as a result of defendants’ allegedly outrageous conduct. Accordingly, plaintiff’s IIED

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claim is DISMISSED.
JUDICIAL NOTICE.

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4.

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Defendants have filed a request for judicial notice under FRCP 201. Defendants request

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that judicial notice be taken of various court filings, including: (1) the unlawful detainer

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complaint; (2) the motion to dismiss the bankruptcy petition; (3) defendants’ motion to dismiss

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plaintiff’s petition; (4) defendants’ motion for relief from the automatic stay; (5) the order
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granting the motion for relief from the automatic stay; (6) the order granting the motion to dismiss

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the bankruptcy petition; (7) the California superior court order sustaining the demurrer in part,

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with leave to amend.

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A court may judicially notice a fact that is not subject to reasonable dispute because it:

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“(1) is generally known within the trial court’s territorial jurisdiction; or (2) can be accurately and

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readily determined from sources whose accuracy cannot reasonably be questioned.” FRE 201(b).

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A court may take judicial notice of court filings and other matters of public record. See Reyn’s

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Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 n.6 (9th Cir. 2006). Accordingly,

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defendants’ request for judicial notice is GRANTED.

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For the Northern District of California

United States District Court

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CONCLUSION
As discussed above, defendants’ motion to dismiss the Fair Debt Collection Practices Act

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claim, the Fair Credit Reporting Act claim, and the Intentional Infliction of Emotional Distress

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claim are GRANTED. Plaintiff may seek to amend the complaint and will have until DECEMBER

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26 AT NOON to file a motion, noticed on the normal 35-day track, for leave to file an amended

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complaint. Plaintiff must append to his motion a proposed amended complaint. The motion

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should clearly explain how the amendments to the complaint cure the defects identified herein.

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IT IS SO ORDERED.

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Dated: December 6.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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