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)
1
IN THE UNITED STATES DISTRICT COURT
2
FOR THE NORTHERN DISTRICT OF CALIFORNIA
3
4
MARK MORTIMER,
5
6
7
8
9
United States District Court
For the Northern District of California
10
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.
________________________________/
11
12
Plaintiff Mark Mortimer has sued Chase Bank USA, N.A., for
13
allegedly furnishing inaccurate information concerning his credit
14
card account to Experian, a credit reporting agency (CRA), and
15
failing to investigate and correct the disputed information.
16
also seems to complain that Chase failed to report to Experian
17
that he continued to dispute information about his Chase account.
18
Mortimer originally alleged nine causes of action under (1) the
19
Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681s-2(b); (2) the
20
California Song-Beverly Credit Card Act of 1971, Civil Code
21
section 1747; (3) the California Consumer Credit Reporting
22
Agencies Act (CCRAA), Civil Code section 1785.25(a);
23
(4) California’s Unfair Competition Law (UCL), Business and
24
Professions Code section 17200; (5) libel, California Civil Code
25
section 45; (6) intentional infliction of emotional distress;
26
(7) negligent infliction of emotional distress; (8) deceit,
27
California Civil Code section 1710; and (9) constructive fraud,
28
California Civil Code section 1573.
He
Chase moves to dismiss the
1
action.
2
hearing, Mortimer filed a First Amended Complaint (1AC), alleging
3
only FCRA, CCRAA and UCL causes of action.
4
Docket No. 5.
Mortimer opposes the motion.
After the
Having considered all of the parties’ submissions and oral
5
argument, Mortimer’s FCRA, CCRAA and UCL claims are dismissed with
6
leave to amend.
7
to amend.
The remaining claims are dismissed without leave
8
9
BACKGROUND
Mortimer alleges the following.
As of November 2009, he held
United States District Court
For the Northern District of California
10
a Chase credit card account.
11
voluntary petition for Chapter 7 bankruptcy in the Northern
12
District of California.
13
discharge of debts pursuant to 11 U.S.C. § 727.
14
B, Discharge of Debtor and Final Decree.
15
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
16
that, among other items allegedly in error, the Chase account
17
ending in the numbers 0032 “was included in [his] bankruptcy and
18
should not be showing any lates.
19
Compl., ¶ 16 and Ex. A, Dispute Letter.
20
Remove these lates now.”
After receiving notice of Mortimer’s allegations from
21
Experian, he complains, Chase failed to report that Mortimer
22
disputed the account information.
23
complains of this fact, given that it was Experian that told Chase
24
that he disputed the reports of delinquencies.
25
It is not clear why Mortimer
On May 10, 2011, Mortimer requested his Experian credit
26
report to verify that the inaccuracies were corrected.
27
Ex. C, Experian Report.
28
the previously reported delinquencies and reported to Experian
Compl.
According to Mortimer, Chase had removed
2
1
that his account was closed before he filed for bankruptcy.
2
Compl., ¶ 17.
3
inaccurately reported his account as closed.
4
It is not clear whether he complains that Chase
On March 15, 2012, Mortimer received his Service 1st Credit
5
Report, a compilation of credit reports from all three credit
6
reporting agencies.
7
alleges that Chase “re-reported the disputed information to
8
Experian, that Plaintiff’s account was open and delinquent in
9
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
10
bankruptcy.”
11
to report that Mortimer continued to dispute this account
12
information.
Mortimer
13
Compl., ¶ 18.
Mortimer complains that Chase failed
Compl., ¶ 18.
It seems that the gravamen of Mortimer’s complaint is that
14
Chase reported overdue payments on his account for two months
15
after he filed for bankruptcy but before his debts had been
16
discharged.
17
matter of fact.
He does not allege that this was inaccurate as a
18
19
LEGAL STANDARD
A complaint must contain a “short and plain statement of the
20
claim showing that the pleader is entitled to relief.”
21
Civ. P. 8(a).
22
state a claim, dismissal is appropriate only when the complaint
23
does not give the defendant fair notice of a legally cognizable
24
claim and the grounds on which it rests.
25
Twombly, 550 U.S. 544, 555 (2007).
26
complaint is sufficient to state a claim, the court will take all
27
material allegations as true and construe them in the light most
28
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
3
1
896, 898 (9th Cir. 1986).
2
to legal conclusions; “threadbare recitals of the elements of a
3
cause of action, supported by mere conclusory statements,” are not
4
taken as true.
5
(citing Twombly, 550 U.S. at 555).
However, this principle is inapplicable
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
6
When granting a motion to dismiss, the court is generally
7
required to grant the plaintiff leave to amend, even if no request
8
to amend the pleading was made, unless amendment would be futile.
9
Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911
United States District Court
For the Northern District of California
10
F.2d 242, 246-47 (9th Cir. 1990).
11
amendment would be futile, the court examines whether the
12
complaint could be amended to cure the defect requiring dismissal
13
"without contradicting any of the allegations of [the] original
14
complaint."
15
Cir. 1990).
16
In determining whether
Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th
Although the court is generally confined to consideration of
17
the allegations in the pleadings, when the complaint is
18
accompanied by attached documents, such documents are deemed part
19
of the complaint and may be considered in evaluating the merits of
20
a Rule 12(b)(6) motion.
21
1265, 1267 (9th Cir. 1987).
Durning v. First Boston Corp., 815 F.2d
22
23
DISCUSSION
I. Fair Credit Reporting Act
24
Chase argues that Mortimer’s FCRA claim must be dismissed
25
because he has failed to allege that Chase gave any inaccurate
26
information to Experian.
27
two separate violations of the statute, one claim concerning
28
Chase’s failure to investigate the reported inaccuracy and another
Mortimer responds that he has alleged
4
1
claim based on Chase’s alleged failure to report Mortimer’s
2
continuing dispute of the claimed inaccuracy to Experian.
3
Congress enacted the FCRA, 15 U.S.C. §§ 1681 et seq., in 1970
4
“to ensure fair and accurate credit reporting, promote efficiency
5
in the banking system, and protect consumer privacy.”
6
Co. of Am. v. Burr, 551 U.S. 47 (2007).
7
reports are accurate, the FCRA imposes certain duties on the
8
furnishers that provide credit information to CRAs.
9
Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009).
United States District Court
For the Northern District of California
10
Safeco Ins.
To ensure that credit
Gorman v.
Section 1681s-2(a) describes the “[d]uty of furnishers to
11
provide accurate information,” and subsection (b) establishes the
12
duties of furnishers after receiving notice of a dispute.
13
U.S.C. § 1681s-2.
14
prohibits furnishers from reporting information with actual
15
knowledge of errors and requires furnishers to correct and update
16
information, and provide notice of disputes and closed accounts.
17
15 U.S.C. § 1681s-2(a)(1)(A), (2), (3).
18
that the furnisher shall, after receiving notice of a dispute from
19
the CRA, conduct an investigation of the disputed information;
20
review all relevant information provided by the CRA; report the
21
results of the investigation to the CRA; and, if the investigation
22
reveals that the information is incomplete or inaccurate, report
23
those results to all other CRAs to which the person furnished the
24
information.
25
at 1154.
26
15
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
27
subsection (a) are enforceable only by federal or state agencies,”
28
§§ 1681n and 1681o provide a limited private right of action that
5
1
applies to § 1681s-2(b)’s requirement to investigate disputes and
2
report inaccuracies.
3
§§ 1681s-2(c) and (d)).
Gorman, 584 F.3d at 1154 (citing 15 U.S.C.
4
As noted earlier, Mortimer asserts a claim based on Chase’s
5
alleged failure to report to Experian that Mortimer continued to
6
dispute his payment delinquencies.
7
that, after he sent Experian a written notice that he disputed
8
Chase’s reporting, Experian notified Chase of his dispute, but
9
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
10
investigation, that is, that Mortimer still disputed the credit
11
information.
12
This claim is insufficiently alleged because Mortimer has not
13
asserted that Chase reported incomplete or inaccurate information
14
in the first place.
15
action under § 1681s–2(b) does not mean that a furnisher could be
16
held liable on the merits simply for a failure to report that a
17
debt is disputed.
18
fact that the omission of the dispute was ‘misleading in such a
19
way and to such an extent that [it] can be expected to have an
20
adverse effect.’”
21
& Trust Co. of Va., 526 F.3d 142, 150 (4th Cir. 2008)).
22
words, a furnisher does not report ‘incomplete or inaccurate’
23
information within the meaning of § 1681s–2(b) simply by failing
24
to report a meritless dispute, because reporting an actual debt
25
without noting that it is disputed is unlikely to be materially
26
misleading.”
27
28
“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
6
1
after he filed his bankruptcy petition.
2
he made timely payments, but that Chase’s reporting violated the
3
letter and the spirit of 11 U.S.C. § 362.
4
this provision of the Bankruptcy Code, which in general imposes a
5
stay on creditors’ collection activities, prohibits Chase from
6
reporting any derogatory information arising while the bankruptcy
7
petition was pending.
8
proposition that an individual is not obliged to make timely
9
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
10
pending.
11
claims that arose before the bankruptcy petition.
12
be good policy in light of the goals of bankruptcy protection to
13
bar reporting of late payments while a bankruptcy petition is
14
pending, neither the bankruptcy code nor the FCRA does so.
15
Mortimer has not alleged that he was timely in making payments on
16
his Chase account in November 2009, December 2009 or January 2010.
17
Thus, Mortimer has not alleged an inaccuracy or misleading
18
statement for the purposes of his FCRA claim, and the failure to
19
report his meritless dispute is not actionable.
20
Rather, § 362 limits collection activities in pursuit of
While it might
In footnote seven of his opposition, Mortimer argues that the
21
court’s decision in In re Burgess, 2007 WL 130818 (Bankr. E.D.
22
Va.), demonstrates that a plaintiff may state a claim for
23
violation of the automatic stay where the defendant reported post-
24
petition delinquencies even though the credit report indicated
25
that the plaintiff received a Chapter 7 discharge and carried a
26
zero balance.
27
claim under the FCRA, but instead concerned a motion to reopen a
The case is inapposite because it did not involve a
28
7
1
bankruptcy case and a claim for violation of the bankruptcy
2
discharge injunction.
3
Mortimer also contends in his opposition brief that he has
4
alleged that Chase provided inaccurate and incomplete information
5
because the Service 1st Report shows that his Chase account was
6
open and collectable while he was in bankruptcy, when the account
7
was closed.
8
original complaint.
9
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
10
delinquent at a time when his account was closed with a zero
11
balance.
12
Thus, because Mortimer has not alleged that Chase furnished
13
inaccurate credit information in the first instance or after
14
investigation, he has insufficiently plead a FCRA violation for
15
failure to investigate or failure to report its investigation of
16
the dispute to Experian.
17
the payments were delinquent, there was no inaccuracy for Chase to
18
investigate and no bona fide dispute or corrected information for
19
Chase to report to back to Experian.
20
claim is dismissed with leave to amend his complaint to allege
21
that Chase furnished material false information, and then failed
22
to investigate and report Mortimer’s dispute and the corrected
23
information.
24
II. State Claims
Because Mortimer does not dispute that
However, Mortimer’s FCRA
25
Chase argues that Mortimer’s state claims should be dismissed
26
because they are preempted by the FCRA and insufficiently alleged.
27
Mortimer’s original complaint alleged several causes of action
28
under California statutory and common law which are subject to two
8
1
preemption provisions of the FCRA, 15 U.S.C. § 1681h(e) and
2
§ 1681t(b)(1)(F).
3
submitted his 1AC, omitting his Song-Beverly Credit Card Act
4
claim, as well as his claims for libel, negligent and intentional
5
infliction of emotional distress, deceit and constructive fraud.
6
Accordingly, the Court considers whether Plaintiff’s remaining
7
CCRAA and UCL claims are preempted.
After the hearing on this motion, Plaintiff
8
Section 1681t states,
9
(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
10
11
12
13
14
15
16
17
18
No requirement or prohibition may be imposed
under the laws of any State-(1)
with respect to any subject matter regulated
under--
19
. . .
20
(F)
22
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--
23
. . .
24
(ii) with respect to section 1785.25(a)
of the California Civil Code (as
in effect on September 30, 1996);
21
25
26
27
28
15 U.S.C. § 1681t.
In sum, § 1681t generally provides that the FCRA does not
preempt state law requirements, except those relating to the
9
1
furnishing of accurate information to CRAs.
2
exception is California Civil Code section 1785.25(a), a provision
3
of the CCRAA, which is specifically not preempted.
4
An exception to the
Mortimer alleges a CCRAA claim under section 1785.25(a),
which states, “A person shall not furnish information on a
6
specific transaction or experience to any consumer credit
7
reporting agency if the person knows or should know the
8
information is incomplete or inaccurate.”
9
Chase “intentionally and knowingly reported inaccurate and false
10
United States District Court
For the Northern District of California
5
information regarding delinquency in payment to credit reporting
11
agencies and date of discharge in violation of California Civil
12
Code § 1785.25.”
13
includes a private right of action to enforce the prohibition
14
against supplying incomplete or inaccurate consumer credit
15
information.
16
information to a consumer credit reporting agency is liable for
17
failure to comply with this section, unless the furnisher
18
establishes by a preponderance of the evidence that, at the time
19
of the failure to comply with this section, the furnisher
20
maintained reasonable procedures to comply with those
21
provisions.”).
22
FCRA.
23
Information Services, LLC, 629 F.3d 876, 888-89 (9th Cir. 2010).
24
As explained above, however, Mortimer has failed to allege a
25
falsity.
26
1785.25(a) is dismissed with leave to amend to allege one.
27
28
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
10
1
Gorman, another judge in this district ruled that, to the extent
2
the plaintiff based his UCL claim solely on violations of
3
section 1785.25(a), such a claim is not preempted because it does
4
not impose any additional substantive duties on the defendant and
5
is merely an additional procedural vehicle for enforcing section
6
1725.25(a).
7
preempted a claim under the UCL, it considered a defendant’s
8
argument that the plaintiff’s claim under section 1785.25(a) was
9
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
10
because the two provisions that established a private right of
11
action to enforce section 1785.25(a) were found elsewhere in the
12
state Civil Code and were not expressly excepted from FCRA
13
preemption.
14
because the two provisions referred to do not impose a
15
“requirement or prohibition” but instead “merely provide a vehicle
16
for private parties to enforce other sections, which do impose
17
requirements and prohibitions.”
18
The Ninth Circuit, however, rejected this argument,
584 F.3d at 1171.
As alleged in Mortimer’s claim, the UCL does not impose any
19
additional duties, but is merely another vehicle for enforcing
20
section 1725.25(a).
21
violations of other laws and treats them as unlawful practices
22
independently actionable under section 17200.”
23
Superior Court, 27 Cal. App. 4th 832, 838-39 (1994).
24
A UCL claim under section 17200 “‘borrows'
Saunders v.
Wang v. Asset Acceptance, LLC, 681 F. Supp. 2d 1143, 1150
25
(N.D. Cal. 2010), also relied on Gorman, but concluded that the
26
plaintiff’s UCL claims were preempted without regard to whether
27
they were predicated on a violation of section 1725.25(a).
28
determined that the UCL “does impose a requirement or prohibition.
11
Wang
1
This statutory scheme prohibits ‘any unlawful, unfair or
2
fraudulent business act or practice . . . [and] provides
3
plaintiffs with an independent cause of action.”
4
at 1150.
5
fact that the UCL provides for a cause of action does not
6
demonstrate that the law itself imposes an additional requirement.
7
681 F. Supp. 2d
This Court finds El-Aheidab more persuasive because the
Thus, Mortimer’s UCL claim is not preempted, but it is
8
dismissed because, as explained above, he has not alleged an
9
inaccuracy in the first instance.
United States District Court
For the Northern District of California
10
11
CONCLUSION
Chase’s motion to dismiss is granted.
Mortimer’s FCRA, CCRAA
12
and UCL claims are dismissed with leave to amend to allege an
13
actual factual inaccuracy.
14
complaint, within seven days, solely to address the defects
15
addressed in this order.
16
parties shall appear for a case management conference on October
17
4, 2012 at 2:00 pm.
18
Mortimer may submit an amended
No new claims may be alleged.
The
IT IS SO ORDERED.
19
20
21
Dated:
8/2/2012
CLAUDIA WILKEN
United States District Judge
22
23
24
25
26
27
28
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?