Lewis v. Beneficial California, Inc. et al

Filing 80

ORDER by Judge Kandis A. Westmore granting 73 Motion to Dismiss with prejudice. (kawlc1, COURT STAFF) (Filed on 2/7/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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ISIAH LEWIS,
Plaintiff,

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United States District Court
Northern District of California

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Case No. 4:17-cv-03575-KAW
ORDER GRANTING DEFENDANTS'
MOTION TO DISMISS FIRST
AMENDED COMPLAINT

v.
BENEFICIAL CALIFORNIA, INC., et al.,

Re: Dkt. No. 73

Defendants.

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On December 21, 2018, Defendants Beneficial California, Inc. and Beneficial Management
Corporation of America filed a motion to dismiss Plaintiff Isiah Lewis’s first amended complaint.
On February 7, 2019, the Court held a hearing, and, after careful consideration of the

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parties’ arguments and the applicable legal authority, for the reasons set forth below, the Court

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GRANTS Defendants’ motion to dismiss with prejudice, because any amendment would be futile.

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I.

BACKGROUND

On June 21, 2017, Plaintiff Isiah Lewis filed a complaint against Defendants Beneficial

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California, Inc. and Beneficial Management Corporation of America, alleging breach of contract,

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accounting, and violation of the Fair Credit Reporting Act.

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On January 31, 1991, Plaintiff entered into a contract with Beneficial to borrow $150,595.

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(First Am. Compl., “FAC,” Dkt. No. 72 ¶ 13.) As a term of the contract, Plaintiff gave Beneficial

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a security interest in the real property located at 2744 Green Island Road, Napa, California. (FAC

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¶ 14.) On or around January 31, 2006, Beneficial granted, assigned and transferred its interest

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under the Deed of Trust, dated January 31, 1991, to Timothy E. Hussey. (FAC ¶ 15.)

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Plaintiff alleges that Defendants did not give him notice of the transfer, so he continued to
make payments to Beneficial according to the terms of the loan. (FAC ¶¶ 16-17.) Since Plaintiff

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was unaware of the transfer, he did not make payments to Hussey, who ultimately foreclosed on

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the property. (FAC ¶¶ 19-20.)

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Plaintiff alleges that after loans was transferred, Beneficial continued to falsely report that

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Plaintiff maintained an open account for approximately $90,000 on the subject property, when in

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fact there was no money owing and the account was closed. (FAC ¶¶ 21-22, 30.)

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On or around July 2008, Plaintiff received a credit report from the three credit reporting
agencies (CRAs)—Transunion, Experian, and Equifax—which all reported that the account was

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open and listed as “Charged Off.” (FAC ¶ 32.) On or around May 10, 2010, Plaintiff applied for a

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mortgage loan, but he was allegedly denied due to the errant reporting. (FAC ¶ 33.) Plaintiff filed

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disputes with the CRAs, but the agencies said that the investigations yielded that the reports were

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United States District Court
Northern District of California

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correct, and that there would be no change to Plaintiff’s credit report. (FAC ¶ 36.)

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On or around June 25, 2016, Beneficial sent Plaintiff a letter stating that the loan was

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settled in 2006 for $50,000. (FAC ¶ 44.) When Plaintiff checked his credit reports on or around

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June 25, 2016, the account was still reported as “Charged Off,” rather than closed. (FAC ¶ 45.)

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On July 13, 2018, Defendants filed a motion for judgment on the pleadings. The Court

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granted the motion with prejudice as to the breach of contract and accounting causes of action, but

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gave Plaintiff leave to amend the Fair Credit Reporting Act (“FCRA”) claim. On December 8,

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2018, Plaintiff filed his first amended complaint consisting only of the FCRA claim.

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On December 21, 2018, Defendants filed a motion to dismiss to first amended complaint.

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(Defs.’ Mot., Dkt. No. 73.) On January 4, 2019, Plaintiff filed an opposition. (Pl.’s Opp’n, Dkt.

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No. 74.) On January 10, 2019, Defendants filed their reply. (Defs.’ Reply, Dkt. No. 75.)

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II.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss based

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on the failure to state a claim upon which relief may be granted. A motion to dismiss under Rule

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12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Navarro v. Block, 250

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F.3d 729, 732 (9th Cir. 2001).

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In considering such a motion, a court must “accept as true all of the factual allegations

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contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (citation
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omitted), and may dismiss the case or a claim “only where there is no cognizable legal theory” or

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there is an absence of “sufficient factual matter to state a facially plausible claim to relief.”

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Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (citing

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Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009); Navarro, 250 F.3d at 732) (internal quotation

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marks omitted).

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A claim is plausible on its face when a plaintiff “pleads factual content that allows the

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court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

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Iqbal, 556 U.S. at 678 (citation omitted). In other words, the facts alleged must demonstrate

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“more than labels and conclusions, and a formulaic recitation of the elements of a cause of action

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United States District Court
Northern District of California

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will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
“Threadbare recitals of the elements of a cause of action” and “conclusory statements” are

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inadequate. Iqbal, 556 U.S. at 678; see also Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th

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Cir. 1996) (“[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat

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a motion to dismiss for failure to state a claim.”). “The plausibility standard is not akin to a

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probability requirement, but it asks for more than a sheer possibility that a defendant has acted

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unlawfully . . . When a complaint pleads facts that are merely consistent with a defendant's

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liability, it stops short of the line between possibility and plausibility of entitlement to relief.”

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Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557) (internal citations omitted).

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Generally, if the court grants a motion to dismiss, it should grant leave to amend even if no

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request to amend is made “unless it determines that the pleading could not possibly be cured by

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the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (citations

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omitted).

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III.

DISCUSSION

Defendants move to dismiss the first amended complaint on the grounds that it is both
time-barred and fails to plead sufficient facts to state a claim under Rule 12(b)(6).

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A.

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Defendants contend that Plaintiff’s claim is barred by the statute of limitations. (Defs.’

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Claim is time-barred.

Mot. at 6.) Under the FCRA, a plaintiff must file his lawsuit not later than the earlier of (1) two
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years after the plaintiff discovers a violation that is the basis for liability or (2) five years after the

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date of the violation that is the basis for liability. 15 U.S.C. § 1681p. Thus, Defendants argue that

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Plaintiff’s claim accrued in 2010 when he began submitting disputes to the CRAs, triggering the

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two-year statutory period. (Defs.’ Mot. at 6-7.) Defendants argue that even if Plaintiff had not

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discovered the violation at that time, the five-year period expired in 2015. Id. at 7.
In opposition, Plaintiff contends that he did not discover the violation until June 25, 2016,

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after he received the letter detailing that the loan was sold to Hussey for $50,000. (Pl.’s Opp’n at

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4) (citing FAC ¶ 44.) Thus, Plaintiff argues that the statute of limitations did not start to run until

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2016, rendering his claim is timely. (Pl.’s Opp’n at 4.)
While the Court understands Plaintiff’s predicament, it is undisputed that he first became

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United States District Court
Northern District of California

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aware of the allegedly inaccurate reporting in 2010, when he first filed the disputes with the CRAs

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pertaining to his account with Beneficial. (FAC ¶¶ 33-34.) That he was unaware of the exact

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balance on the errantly reported account—$90,000 versus $50,000—is insignificant, because he

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knew that there as a mistake.
Notwithstanding, Plaintiff alleges that Defendants informed him that the error had been

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corrected in June 2016. Thereafter, Plaintiff discovered that, despite Defendants’ representation,

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the account was still being inaccurately reported as “Charged Off” on his credit report. (FAC ¶ 44-

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45.) At the hearing, Plaintiff conceded that this was the same error that he first discovered as late

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as 2010. Therefore, there as no new violation. That Defendants allegedly informed Plaintiff that

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the credit report had been corrected is irrelevant, because Plaintiff’s two-year statute of limitations

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began to run when he discovered the error. Since seven years passed between the discovery and

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the filing of the initial complaint, the case is barred by the statute of limitations. Accordingly, the

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motion to dismiss is granted without leave to amend, because any amendment would be futile.

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B.

Plaintiff fails to state a claim pursuant to Rule 12(b)(6).

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Since the lawsuit is time-barred, the undersigned need not address Defendant’s argument

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that Plaintiff fails to state a cognizable FCRA claim under Rule 12(b)(6). (Defs.’ Mot. at 5.)

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IV.

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CONCLUSION

In light of the foregoing, Defendants’ motion to dismiss the first amended complaint is
GRANTED with prejudice. The Clerk shall close the case.
IT IS SO ORDERED.
Dated: February 7, 2019
__________________________________
KANDIS A. WESTMORE
United States Magistrate Judge

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United States District Court
Northern District of California

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