Mortimer v. JP Morgan Chase Bank, National Association

Filing 22

ORDER by Judge Claudia Wilken GRANTING DEFENDANTS 5 MOTION TO DISMISS AND GRANTING LEAVE TO AMEND. (ndr, COURT STAFF) (Filed on 8/2/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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MARK MORTIMER,

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United States District Court
For the Northern District of California

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Plaintiff,
v.
JP MORGAN CHASE BANK, NATIONAL
ASSOCIATION an FDIC insured
corporation and DOES 1 through
100 inclusive,

No. C 12-1936 CW
ORDER GRANTING
DEFENDANT’S MOTION
TO DISMISS AND
GRANTING LEAVE TO
AMEND

Defendant.
________________________________/

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Plaintiff Mark Mortimer has sued Chase Bank USA, N.A., for

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allegedly furnishing inaccurate information concerning his credit

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card account to Experian, a credit reporting agency (CRA), and

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failing to investigate and correct the disputed information.

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also seems to complain that Chase failed to report to Experian

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that he continued to dispute information about his Chase account.

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Mortimer originally alleged nine causes of action under (1) the

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

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California Song-Beverly Credit Card Act of 1971, Civil Code

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section 1747; (3) the California Consumer Credit Reporting

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Agencies Act (CCRAA), Civil Code section 1785.25(a);

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(4) California’s Unfair Competition Law (UCL), Business and

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Professions Code section 17200; (5) libel, California Civil Code

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section 45; (6) intentional infliction of emotional distress;

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(7) negligent infliction of emotional distress; (8) deceit,

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California Civil Code section 1710; and (9) constructive fraud,

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California Civil Code section 1573.

He

Chase moves to dismiss the

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action.

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hearing, Mortimer filed a First Amended Complaint (1AC), alleging

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only FCRA, CCRAA and UCL causes of action.

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Docket No. 5.

Mortimer opposes the motion.

After the

Having considered all of the parties’ submissions and oral

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argument, Mortimer’s FCRA, CCRAA and UCL claims are dismissed with

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leave to amend.

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to amend.

The remaining claims are dismissed without leave

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BACKGROUND
Mortimer alleges the following.

As of November 2009, he held

United States District Court
For the Northern District of California

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a Chase credit card account.

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voluntary petition for Chapter 7 bankruptcy in the Northern

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District of California.

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discharge of debts pursuant to 11 U.S.C. § 727.

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B, Discharge of Debtor and Final Decree.

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On November 3, 2009, he filed a

On February 8, 2010, he was granted a
Compl., ¶ 15, Ex.

On April 21, 2011, Mortimer sent a letter to Experian stating

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that, among other items allegedly in error, the Chase account

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ending in the numbers 0032 “was included in [his] bankruptcy and

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should not be showing any lates.

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Compl., ¶ 16 and Ex. A, Dispute Letter.

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Remove these lates now.”

After receiving notice of Mortimer’s allegations from

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Experian, he complains, Chase failed to report that Mortimer

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disputed the account information.

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complains of this fact, given that it was Experian that told Chase

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that he disputed the reports of delinquencies.

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It is not clear why Mortimer

On May 10, 2011, Mortimer requested his Experian credit

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report to verify that the inaccuracies were corrected.

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Ex. C, Experian Report.

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the previously reported delinquencies and reported to Experian

Compl.

According to Mortimer, Chase had removed

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that his account was closed before he filed for bankruptcy.

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Compl., ¶ 17.

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inaccurately reported his account as closed.

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It is not clear whether he complains that Chase

On March 15, 2012, Mortimer received his Service 1st Credit

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Report, a compilation of credit reports from all three credit

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reporting agencies.

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alleges that Chase “re-reported the disputed information to

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Experian, that Plaintiff’s account was open and delinquent in

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December 2009 and January 2010 even though Plaintiff filed for

Compl., Ex. D (Service 1st Report).

United States District Court
For the Northern District of California

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bankruptcy.”

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to report that Mortimer continued to dispute this account

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information.

Mortimer

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Compl., ¶ 18.

Mortimer complains that Chase failed

Compl., ¶ 18.

It seems that the gravamen of Mortimer’s complaint is that

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Chase reported overdue payments on his account for two months

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after he filed for bankruptcy but before his debts had been

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discharged.

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matter of fact.

He does not allege that this was inaccurate as a

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LEGAL STANDARD
A complaint must contain a “short and plain statement of the

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claim showing that the pleader is entitled to relief.”

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Civ. P. 8(a).

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state a claim, dismissal is appropriate only when the complaint

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does not give the defendant fair notice of a legally cognizable

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claim and the grounds on which it rests.

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Twombly, 550 U.S. 544, 555 (2007).

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complaint is sufficient to state a claim, the court will take all

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material allegations as true and construe them in the light most

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favorable to the plaintiff.

Fed. R.

On a motion under Rule 12(b)(6) for failure to

Bell Atl. Corp. v.

In considering whether the

NL Indus., Inc. v. Kaplan, 792 F.2d
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896, 898 (9th Cir. 1986).

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to legal conclusions; “threadbare recitals of the elements of a

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cause of action, supported by mere conclusory statements,” are not

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taken as true.

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(citing Twombly, 550 U.S. at 555).

However, this principle is inapplicable

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

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When granting a motion to dismiss, the court is generally

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required to grant the plaintiff leave to amend, even if no request

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to amend the pleading was made, unless amendment would be futile.

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Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

United States District Court
For the Northern District of California

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F.2d 242, 246-47 (9th Cir. 1990).

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amendment would be futile, the court examines whether the

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complaint could be amended to cure the defect requiring dismissal

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"without contradicting any of the allegations of [the] original

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complaint."

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Cir. 1990).

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In determining whether

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th

Although the court is generally confined to consideration of

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the allegations in the pleadings, when the complaint is

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accompanied by attached documents, such documents are deemed part

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of the complaint and may be considered in evaluating the merits of

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a Rule 12(b)(6) motion.

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1265, 1267 (9th Cir. 1987).

Durning v. First Boston Corp., 815 F.2d

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DISCUSSION
I. Fair Credit Reporting Act

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Chase argues that Mortimer’s FCRA claim must be dismissed

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because he has failed to allege that Chase gave any inaccurate

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information to Experian.

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two separate violations of the statute, one claim concerning

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Chase’s failure to investigate the reported inaccuracy and another

Mortimer responds that he has alleged

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claim based on Chase’s alleged failure to report Mortimer’s

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continuing dispute of the claimed inaccuracy to Experian.

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Congress enacted the FCRA, 15 U.S.C. §§ 1681 et seq., in 1970

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“to ensure fair and accurate credit reporting, promote efficiency

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in the banking system, and protect consumer privacy.”

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Co. of Am. v. Burr, 551 U.S. 47 (2007).

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reports are accurate, the FCRA imposes certain duties on the

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furnishers that provide credit information to CRAs.

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Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009).

United States District Court
For the Northern District of California

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Safeco Ins.

To ensure that credit

Gorman v.

Section 1681s-2(a) describes the “[d]uty of furnishers to

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provide accurate information,” and subsection (b) establishes the

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duties of furnishers after receiving notice of a dispute.

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U.S.C. § 1681s-2.

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prohibits furnishers from reporting information with actual

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knowledge of errors and requires furnishers to correct and update

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information, and provide notice of disputes and closed accounts.

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15 U.S.C. § 1681s-2(a)(1)(A), (2), (3).

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that the furnisher shall, after receiving notice of a dispute from

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the CRA, conduct an investigation of the disputed information;

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review all relevant information provided by the CRA; report the

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results of the investigation to the CRA; and, if the investigation

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reveals that the information is incomplete or inaccurate, report

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those results to all other CRAs to which the person furnished the

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information.

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at 1154.

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Among other responsibilities, subsection (a)

Subsection (b) provides

15 U.S.C. § 1681s-2(b)(1)(A)-(D); Gorman, 584 F.3d

While the “[d]uties imposed on furnishers under

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subsection (a) are enforceable only by federal or state agencies,”

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§§ 1681n and 1681o provide a limited private right of action that
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applies to § 1681s-2(b)’s requirement to investigate disputes and

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report inaccuracies.

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§§ 1681s-2(c) and (d)).

Gorman, 584 F.3d at 1154 (citing 15 U.S.C.

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As noted earlier, Mortimer asserts a claim based on Chase’s

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alleged failure to report to Experian that Mortimer continued to

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dispute his payment delinquencies.

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that, after he sent Experian a written notice that he disputed

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Chase’s reporting, Experian notified Chase of his dispute, but

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Chase later failed to inform Experian of the results of its

Here, Mortimer has alleged

United States District Court
For the Northern District of California

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investigation, that is, that Mortimer still disputed the credit

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information.

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This claim is insufficiently alleged because Mortimer has not

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asserted that Chase reported incomplete or inaccurate information

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in the first place.

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action under § 1681s–2(b) does not mean that a furnisher could be

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held liable on the merits simply for a failure to report that a

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debt is disputed.

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fact that the omission of the dispute was ‘misleading in such a

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way and to such an extent that [it] can be expected to have an

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adverse effect.’”

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& Trust Co. of Va., 526 F.3d 142, 150 (4th Cir. 2008)).

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words, a furnisher does not report ‘incomplete or inaccurate’

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information within the meaning of § 1681s–2(b) simply by failing

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to report a meritless dispute, because reporting an actual debt

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without noting that it is disputed is unlikely to be materially

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misleading.”

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“Holding that there is a private cause of

The consumer must still convince the finder of

Id. at 1163 (citing Saunders v. Branch Banking
“In other

Id.

Mortimer argues that he has alleged a claim under § 1681s2(b) of the FCRA because Chase unlawfully reported delinquencies
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after he filed his bankruptcy petition.

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he made timely payments, but that Chase’s reporting violated the

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letter and the spirit of 11 U.S.C. § 362.

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this provision of the Bankruptcy Code, which in general imposes a

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stay on creditors’ collection activities, prohibits Chase from

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reporting any derogatory information arising while the bankruptcy

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petition was pending.

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proposition that an individual is not obliged to make timely

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payments on his accounts while his petition for bankruptcy is

Mortimer claims, not that

Mortimer argues that

Section 362 does not stand for the

United States District Court
For the Northern District of California

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pending.

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claims that arose before the bankruptcy petition.

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be good policy in light of the goals of bankruptcy protection to

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bar reporting of late payments while a bankruptcy petition is

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pending, neither the bankruptcy code nor the FCRA does so.

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Mortimer has not alleged that he was timely in making payments on

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his Chase account in November 2009, December 2009 or January 2010.

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Thus, Mortimer has not alleged an inaccuracy or misleading

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statement for the purposes of his FCRA claim, and the failure to

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report his meritless dispute is not actionable.

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Rather, § 362 limits collection activities in pursuit of
While it might

In footnote seven of his opposition, Mortimer argues that the

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court’s decision in In re Burgess, 2007 WL 130818 (Bankr. E.D.

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Va.), demonstrates that a plaintiff may state a claim for

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violation of the automatic stay where the defendant reported post-

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petition delinquencies even though the credit report indicated

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that the plaintiff received a Chapter 7 discharge and carried a

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zero balance.

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claim under the FCRA, but instead concerned a motion to reopen a

The case is inapposite because it did not involve a

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bankruptcy case and a claim for violation of the bankruptcy

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discharge injunction.

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Mortimer also contends in his opposition brief that he has

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alleged that Chase provided inaccurate and incomplete information

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because the Service 1st Report shows that his Chase account was

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open and collectable while he was in bankruptcy, when the account

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was closed.

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original complaint.

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Chase continued to report that he had an account that was open and

Such facts, however, are not alleged in Mortimer’s
Mortimer’s 1AC likewise does not allege that

United States District Court
For the Northern District of California

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delinquent at a time when his account was closed with a zero

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balance.

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Thus, because Mortimer has not alleged that Chase furnished

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inaccurate credit information in the first instance or after

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investigation, he has insufficiently plead a FCRA violation for

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failure to investigate or failure to report its investigation of

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the dispute to Experian.

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the payments were delinquent, there was no inaccuracy for Chase to

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investigate and no bona fide dispute or corrected information for

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Chase to report to back to Experian.

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claim is dismissed with leave to amend his complaint to allege

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that Chase furnished material false information, and then failed

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to investigate and report Mortimer’s dispute and the corrected

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information.

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II. State Claims

Because Mortimer does not dispute that

However, Mortimer’s FCRA

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Chase argues that Mortimer’s state claims should be dismissed

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because they are preempted by the FCRA and insufficiently alleged.

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Mortimer’s original complaint alleged several causes of action

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under California statutory and common law which are subject to two
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preemption provisions of the FCRA, 15 U.S.C. § 1681h(e) and

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§ 1681t(b)(1)(F).

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submitted his 1AC, omitting his Song-Beverly Credit Card Act

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claim, as well as his claims for libel, negligent and intentional

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infliction of emotional distress, deceit and constructive fraud.

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Accordingly, the Court considers whether Plaintiff’s remaining

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CCRAA and UCL claims are preempted.

After the hearing on this motion, Plaintiff

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Section 1681t states,

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(a)

Except as provided in subsections (b) and (c) of
this section, this subchapter does not annul,
alter, affect, or exempt any person subject to
the provisions of this subchapter from complying
with the laws of any State with respect to the
collection, distribution, or use of any
information on consumers, or for the prevention
or mitigation of identity theft, except to the
extent that those laws are inconsistent with any
provision of this subchapter, and then only to
the extent of the inconsistency.

(b)

General exceptions

United States District Court
For the Northern District of California

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No requirement or prohibition may be imposed
under the laws of any State-(1)

with respect to any subject matter regulated
under--

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. . .

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(F)

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section 1681s-2 of this title, relating
to the responsibilities of persons who
furnish information to consumer
reporting agencies, except that this
paragraph shall not apply--

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. . .

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(ii) with respect to section 1785.25(a)
of the California Civil Code (as
in effect on September 30, 1996);

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15 U.S.C. § 1681t.
In sum, § 1681t generally provides that the FCRA does not
preempt state law requirements, except those relating to the
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furnishing of accurate information to CRAs.

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exception is California Civil Code section 1785.25(a), a provision

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of the CCRAA, which is specifically not preempted.

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An exception to the

Mortimer alleges a CCRAA claim under section 1785.25(a),
which states, “A person shall not furnish information on a

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specific transaction or experience to any consumer credit

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reporting agency if the person knows or should know the

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information is incomplete or inaccurate.”

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Chase “intentionally and knowingly reported inaccurate and false

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United States District Court
For the Northern District of California

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information regarding delinquency in payment to credit reporting

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agencies and date of discharge in violation of California Civil

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Code § 1785.25.”

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includes a private right of action to enforce the prohibition

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against supplying incomplete or inaccurate consumer credit

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information.

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information to a consumer credit reporting agency is liable for

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failure to comply with this section, unless the furnisher

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establishes by a preponderance of the evidence that, at the time

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of the failure to comply with this section, the furnisher

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maintained reasonable procedures to comply with those

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provisions.”).

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FCRA.

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Information Services, LLC, 629 F.3d 876, 888-89 (9th Cir. 2010).

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As explained above, however, Mortimer has failed to allege a

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falsity.

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1785.25(a) is dismissed with leave to amend to allege one.

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Compl. at ¶ 50.

Mortimer alleges that

Unlike the FCRA, the CCRAA

Cal. Civ. Code § 1785.25(g) (“A person who furnishes

Mortimer’s CCRAA claim is not preempted by the

Gorman, 584 F.3d at 1169; see also Carvalho v. Equifax

Therefore, Mortimer’s CCRAA claim under section

Mortimer also asserts a UCL claim.

In El-Aheidab v. Citibank

(South Dakota), N.A., 2012 WL 506473 (N.D. Cal.), relying on
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Gorman, another judge in this district ruled that, to the extent

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the plaintiff based his UCL claim solely on violations of

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section 1785.25(a), such a claim is not preempted because it does

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not impose any additional substantive duties on the defendant and

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is merely an additional procedural vehicle for enforcing section

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1725.25(a).

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preempted a claim under the UCL, it considered a defendant’s

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argument that the plaintiff’s claim under section 1785.25(a) was

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preempted, despite the language of the § 1681t(b)(1)(F) exception,

Although Gorman did not address whether FCRA

United States District Court
For the Northern District of California

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because the two provisions that established a private right of

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action to enforce section 1785.25(a) were found elsewhere in the

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state Civil Code and were not expressly excepted from FCRA

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preemption.

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because the two provisions referred to do not impose a

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“requirement or prohibition” but instead “merely provide a vehicle

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for private parties to enforce other sections, which do impose

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requirements and prohibitions.”

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The Ninth Circuit, however, rejected this argument,

584 F.3d at 1171.

As alleged in Mortimer’s claim, the UCL does not impose any

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additional duties, but is merely another vehicle for enforcing

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section 1725.25(a).

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violations of other laws and treats them as unlawful practices

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independently actionable under section 17200.”

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Superior Court, 27 Cal. App. 4th 832, 838-39 (1994).

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A UCL claim under section 17200 “‘borrows'

Saunders v.

Wang v. Asset Acceptance, LLC, 681 F. Supp. 2d 1143, 1150

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(N.D. Cal. 2010), also relied on Gorman, but concluded that the

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plaintiff’s UCL claims were preempted without regard to whether

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they were predicated on a violation of section 1725.25(a).

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determined that the UCL “does impose a requirement or prohibition.
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Wang

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This statutory scheme prohibits ‘any unlawful, unfair or

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fraudulent business act or practice . . . [and] provides

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plaintiffs with an independent cause of action.”

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at 1150.

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fact that the UCL provides for a cause of action does not

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demonstrate that the law itself imposes an additional requirement.

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681 F. Supp. 2d

This Court finds El-Aheidab more persuasive because the

Thus, Mortimer’s UCL claim is not preempted, but it is

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dismissed because, as explained above, he has not alleged an

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inaccuracy in the first instance.

United States District Court
For the Northern District of California

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CONCLUSION
Chase’s motion to dismiss is granted.

Mortimer’s FCRA, CCRAA

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and UCL claims are dismissed with leave to amend to allege an

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actual factual inaccuracy.

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complaint, within seven days, solely to address the defects

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addressed in this order.

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parties shall appear for a case management conference on October

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4, 2012 at 2:00 pm.

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Mortimer may submit an amended

No new claims may be alleged.

The

IT IS SO ORDERED.

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Dated:

8/2/2012

CLAUDIA WILKEN
United States District Judge

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