Handrock v. Ocwen Loan Servicing, LLC. et al

Filing 43

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 11/1/2016:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHER DISTRICT OF ILLINOIS
EASTERN DIVISION

ALAN HANDROCK and CAROLYN
MARY HANDROCK,
Plaintiffs,

Case No. 16 C 5732
Case No. 16 C 5733

v.
Judge Harry D. Leinenweber
OCWEN LOAN SERVICING, LLC
And EXPERIAN INFORMATION
SERVICES, INC.,
Defendants.

MEMORANDUM OPINION AND ORDER
Before

the

Court

is

Defendant

Experian

Information

Solutions, Inc.’s Motion to Dismiss the Complaint pursuant to
FED. R. CIV. P. 12(b)(6). [ECF No. 27].

For the reasons stated

herein, the Motion is denied.
I.
The

following

facts

BACKGROUND
are

contained

Complaints and attached exhibits.

in

the

Plaintiffs’

They are presumed true for

purposes of deciding the motion to dismiss.

See, Forrest v.

Universal Sav. Bank, F.A., 507 F.3d 540, 542 (7th Cir. 2007).
Husband and wife Alan and Carolyn Mary Handrock, Plaintiffs
in

this

consolidated

case

(hereinafter,

“Plaintiffs”

“Handrocks”), filed for bankruptcy on April 20, 2013.
the

debts

involved

in

their

bankruptcy

was

a

or

One of

mortgage

loan

secured

by

Servicing,
Experian

the
LLC

couples’
(“Ocwen”)

Information

reporting

agency,

residence.
serviced

Solutions,

maintained

and

Defendant

the

Inc.

loan,

Ocwen

while

(“Experian”),

reported

Defendant
a

information

loan as part of Plaintiffs’ credit history.

Loan

credit
on

the

In their bankruptcy

plan, Plaintiffs proposed to surrender the residence and thereby
extinguish Ocwen’s claim against them.

The Bankruptcy Court

confirmed the Plaintiffs’ plan on June 28, 2013.
Eleven months later, on May 28, 2014, the court entered an
Order of Discharge in Plaintiffs’ case.

Plaintiffs thereafter

sent credit dispute letters to Experian.

They requested that

Experian update their credit files to reflect that their debts
had

been

discharged

through

bankruptcy

and

to

report

a

zero

current balance on those debts.
In responding to the letters, Experian generated and mailed
to Plaintiffs a report that is one of three reports underlying
Plaintiffs’ claim in this case.

The report showed that the

Ocwen account has a balance of $0.00 as of June 2014, that the
status

of

the

account

was

“Discharged

through

Bankruptcy

Chapter 7,” and that the Account History stated “Debt included
in Chapter 7 Bankruptcy on May 28, 2014.”

See, Alan Handrock v.

Ocwen, 16 C 5732, ECF No. 1 (“Compl.”), Ex. I (“First Report”).
However, the month-by-month Account History showed a scheduled
payment amount of $1,525.00 for each of the months from April
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2013 to April 2014, or the period from when Plaintiffs first
filed for bankruptcy to the month before the Discharge Order was
entered.

The Payment History section also showed the number 180

under each month from September 2013 to April 2014, presumably
reflecting

that

the

account

was

more

than

180

days

overdue

during this time.
Plaintiffs claim that the report was inaccurate.
to

Plaintiffs,

the

Ocwen

account

should

have

According

reported

“the

status of the subject loan without a negative payment history
for the months following Plaintiff’s bankruptcy filing.”
¶ 33.

Compl.

This is because “Ocwen could no[t] collect payments for

the subject loan after Plaintiff’s bankruptcy filing in April
2013.”

Id.

Furthermore, “Plaintiff no longer had any personal

liability for the balance of the subject loan” after his and his
wife’s bankruptcy plan was confirmed on June 28, 2013.

Id.

Some six months later, the Plaintiffs sent Experian yet
another

pair

of

dispute

letters,

this

time

disputing the accuracy of the Ocwen account.
them back an updated report.

specifically

Experian mailed

This report contained the same

scheduled payment and 180 days past due information on the Ocwen
account as did the First Report.

See, ECF No. 1, Ex. K (“Second

Report”).
Alan
credit

Handrock

report

on

(“Alan”)

obtained

February

15,
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2016.

a

copy
See,

of

his

Ex.

L

personal
(“Third

Report”).

This report contained two tradelines for the same

Ocwen loan, one of which Plaintiffs say is correct.

The second

tradeline, however, reported a recent balance of $192,392.00 and
a monthly payment of $1,526.00.
Ex. L.

See, Compl. ¶¶ 43, 44 and

It also reported a past due amount of $66,120.00 as of

December 2015, more than a year after Plaintiffs’ bankruptcy
discharge, and a notation of “180 days past due as of Dec. 2015,
Nov.

2015.”

Id.

Alan

alleges

that

this

credit

report

is

inaccurate and that around March 10, 2016, he was “denied credit
as a result of the inaccurate credit reporting.”
Carolyn

Handrock

(“Carolyn”)

makes

a

similar

complaint.

Like Alan, Carolyn alleges that she was denied credit, although
in her case this was a denial of a Capital One credit card
around October 26, 2014.
Plaintiffs
Ocwen,

bring

claiming

that

this
the

lawsuit

against

Defendants

Credit Reporting Act (“FCRA”).

have

both

Experian

violated

the

and
Fair

Plaintiffs seek actual damages

to compensate them for “loss of credit, increase in the price of
credit, out-of-pocket expenses associated with writing dispute
letters,

sending

certified

mail,

time

meeting

with

[their]

attorneys and monitoring [their] credit file, as well as mental
and emotional pain and suffering.”
also

pray

for

injunctive

monetary compensation.

relief

Compl. ¶ 49.
alongside

Compl. ¶¶ 74, 97.
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other

Plaintiffs
forms

of

II. ANALYSIS
Plaintiffs

allege

sections of the FCRA.

that

Experian

violated

two

separate

The first, 15 U.S.C. § 1681e(b), requires

a consumer reporting agency like Experian to “follow reasonable
procedures

to

assure

maximum

information it reports.

possible

accuracy”

of

the

This provision is operative whenever a

reporting agency “prepares a consumer report.”

In contrast, the

second provision, 15 U.S.C. § 1681i, is relevant only during
“reinvestigations”; it provides steps that a reporting agency
must

take

disputing

after
“the

a

consumer

notifies

completeness

or

the

accuracy

agency
of

that

is

item

an[]

he

of

information” contained in the consumer’s credit file.

See, 15

U.S.C. § 1681i(a)(1)(A) and 15 U.S.C. § 1681i generally.
Experian
Plaintiffs

argues

have

not

that

Plaintiffs’

pled

the

Complaint

existence

of

(1)

fails
an

because

actionable

inaccuracy on a consumer credit report; (2) a consumer credit
report; or (3) actual damages.

The Court considers each of

these arguments in turn.
A.
To

state

Plaintiffs

a

must

Inaccurate Information

claim

under

allege

that

inaccurate information.

either
their

§

1681e(b)

credit

or

reports

§

1681i,

contained

See, Henson v. CSC Credit Servs., 29

F.3d 280, 284 (7th Cir. 1994) (“In order to state a claim under
15 U.S.C § 1681e(b), a consumer must sufficiently allege that a
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credit

reporting

agency

prepared

a

report

containing

‘inaccurate’ information.”) (internal quotation marks omitted);
DeAndrade v. Trans Union LLC, 523 F.3d 61, 67 (1st Cir. 2008)
(“[W]ithout a showing that the reported information was in fact
inaccurate,

a

claim

brought

under

§

1681i

must

fail.”);

and

Hanson v. Experian Info. Sols., Inc., No. 10 C 2022, 2012 U.S.
Dist. LEXIS 11450, at *7 (N.D. Ill. Jan. 27, 2012) (following
DeAndrade).

See also, Bagby v. Experian Info. Sols., Inc., 162

F. App’x. 600, 603 (7th Cir. 2006) (“The FCRA was enacted to
protect

consumers

from

the

transmission

of

inaccurate

information.”).
Experian

contends

that

its

reports

of

Plaintiffs’

nonpayments to the Ocwen account are not actionable inaccuracies
under the FCRA.
the

information

In making this argument, Experian distinguishes
shown

on

the

first

two

reports

from

that

displayed on the last report.
1.

First Two Reports

The first two reports showed that Plaintiffs did not make
payments during the interim of their filing for bankruptcy and
the entry of the Discharge Order.

Experian calls these “pre-

discharge delinquencies” and claims that they cannot sustain an
FCRA claim.

Plaintiffs, on the other hand, argue that these

reports were generated after their bankruptcy discharge, and as
such, any information on them that suggests Plaintiffs still owe
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the debt post-discharge is false or misleading and renders the
report inaccurate under the FCRA.
The issue before the Court is thus whether post-discharge
reporting

of

pre-discharge

“inaccurate”

information

under

delinquencies
the

FCRA.

constitutes

While

there

is

no

controlling authority on this point, the Court finds Hupfauer v.
CitiBank, N.A., No. 16 C 475, 2016 U.S. Dist. LEXIS 112227 (N.D.
Ill.

Aug.

received

19,
a

2016)

persuasive.

bankruptcy

discharge,

In

Hupfauer,

sent

a

the

dispute

plaintiff
letter

to

Experian, and received back an “investigation report” showing
that one of her accounts was past due during the months after
her bankruptcy filing but before her discharge.
She

then

sued

Experian,

Plaintiffs

bring

counsel

that

in

Handrocks here).
Chief

Judge

against Experian.
*23.

here
case

alleging
(perhaps

is

the

same

all

of

the

same

unsurprising
law

firm

Id. at *1-5.

as

claims

as

Hupfauer’s

representing

the

Id. at *5.
Rubén

Castillo

dismissed

Hupfauer’s

case

Hupfauer, 2016 U.S. Dist. LEXIS 112227 at

The judge concluded that Experian’s investigation report

was “factually accurate.”

Id. at *11-12.

Hupfauer, just as the

report showed, “did not make any payments on the Citi account
within 150 or 180 days of February or March 2014.”

Id.

The

fact that Hupfauer filed for bankruptcy and had her bankruptcy
plan confirmed before February 2014 did not change her account
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conditions as they existed prior to her discharge.

Id. at *12-

14.
This case is identical to Hupfauer’s as far as the first
two reports are concerned.

Plaintiffs, like Hupfauer, do not

allege that they made payments to Ocwen during the time between
their

bankruptcy

filing

and

discharge.

Instead,

they,

like

Hupfauer, make the legal argument that Experian should not have
reported a balance due, monthly payment, or delinquency for the
months following the filing or confirmation of their bankruptcy
plan.

Judge Castillo rejected the argument in Hupfauer, and his

is not the only court to have done so.

See, Mortimer v. Bank of

Am., N.A., No. C-12-01959 JCS, 2013 U.S. Dist. LEXIS 51877, at
*10,

25-32

(N.D.

Cal.

Apr.

10,

2013)

(collecting

cases

to

reaffirm the position that “the FCRA does not prohibit accurate
reporting, after discharge, of debts that were delinquent during
the pendency of a bankruptcy action.

Whether or not the debt

was collectible, the debt existed.”) (internal quotation marks
omitted).
Plaintiffs

have

cited

no

persuasive

authority

to

distinguish Hupfauer.

None of the cases from Plaintiffs’ string

citation

the

dealt

alleged here.

with

kind

of

pre-discharge

inaccuracies

The Court therefore finds that Plaintiffs have

not stated a cognizable FCRA claim insofar as they rely on the
first

two

Experian

reports.

To
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the

extent

that

Plaintiffs’

claims against Ocwen rest on the same alleged inaccuracies in
the two reports, they, too, must fail.
2.
The

Third

from dismissal.
stated

that

as

Report,

Third Report

however,

rescues

Plaintiffs’

Complaint

Unlike the first two reports, the Third Report
of

December

2015

–

a

time

after

Plaintiffs’

discharge – the Ocwen account had a positive balance and was
past due.

While the report also contained another tradeline on

the same Ocwen account and this tradeline was accurate, at least
one court in this district has found the duplicate tradeline to
be

irrelevant

complaint

in

determining

the

dismissal.

survives

whether

plaintiff’s

See,

Twomey

v.

FCRA

Ocwen

Loan

Servicing, LLC, No. 16-cv-0918, 2016 U.S. Dist. LEXIS 111307, at
*3-4, 10-13 (N.D. Ill. Aug. 22, 2016).
Experian contends that the Third Report does not contain an
actionable inaccuracy because “determining whether or not the
Ocwen

account

was

in

fact

discharged,

is

itself,

a

legal

question, and not one Experian is required to determine under
the FCRA.”

Experian’s argument thus seems to be that had it

known that the Ocwen account was discharged through bankruptcy,
it

would

Handrocks’

not

have

credit

included

reports,

the

but

information

it

required to know under the law.

did

not

it

know

did
and

on

the

was

not

Experian’s argument is belied

by the fact that the credit reporting agency had a duplicate
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tradeline on the same Ocwen account showing that the account was
discharged

through

bankruptcy.

So

Experian

did

know

the

discharged status of the account, and its argument here to the
contrary is unavailing.
Furthermore,

courts

in

this

district

consistently

have

found that the type of post-discharge information included on
the Experian report gives rise to a FCRA claim.

See, e.g.,

Twomey, 2016 U.S. Dist. LEXIS 111307 at *3-4, 10-13 (finding
that

reporting

a

post-discharge

positive

balance,

past

due

amount, and a monthly payment obligation states a claim under
the

FCRA);

Jackson

v.

Experian

Info.

Sols.,

Inc.,

No.

15

C

11140, 2016 U.S. Dist. LEXIS 65846, at *6, 15 (N.D. Ill. May 19,
2016) (denying a motion to dismiss when a report showed a postdischarge scheduled payment amount and payment received); and
Asufrin v. RoundPoint Mortg. Servicing Corp., No. 15 C 9077,
2016 U.S. Dist. LEXIS 34420, at *11-12 (N.D. Ill. Mar. 17, 2016)
(rejecting

the

defendant’s

argument

that

there

were

no

inaccuracies when the credit reports reflected that “the subject
debt had an account balance and a scheduled payment amount for
March

2015

and

discharged”).
Experience

with

April
See
the

2015,

after

also,

Fed.

Fair

Credit

Trade

the

subject

Comm’n,

Reporting

Act

40

debt

was

Years

(July

2011),

available at https://www.ftc.gov/sites/default/files/documents/

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of

reports/40-years-experience-fair-credit-reporting-act-ftc-staffreport-summary-interpretations/110720fcrareport.pdf

(stating

that for a debt discharged in bankruptcy, a consumer report must
“report[] a zero balance to reflect the fact that the consumer
is no longer liable for the discharged debt”).

Judge Castillo

is no exception in this case, having found that a post-discharge
scheduled payment is plausibly inaccurate under the FCRA.

See,

Freedom v. CitiFinancial, LLC, No. 15 C 10135, 2016 U.S. Dist.
LEXIS 97533, at *4-5, 19-20 n.5 (N.D. Ill. July 25, 2016).
Experian raises one more argument with regards to the Third
Report.
this
that

Relying on the fact that Plaintiffs have not disputed

report

before

Plaintiffs

commencing

therefore

their

have

lawsuit,

not

Experian

triggered

argues

Experian’s

reinvestigation duties as laid out in § 1681i.
It is true that Plaintiffs did not write Experian another
dispute letter after obtaining their own copies of their credit
reports.
bankruptcy

However, Plaintiffs had notified Experian of their
discharge

twice

and

specifically

disputed

accuracy of the Ocwen account prior to filing suit.

the

Experian

informed the Handrocks both times that “the Ocwen account was
updated to show it was included in bankruptcy.”
32, 39-40.

Compl. ¶¶ 31-

Yet the Ocwen tradeline complained of from the Third

Report, among other inaccuracies, did not mention the bankruptcy
discharge

at

all.

Under

such

circumstances,

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the

Handrocks

should not be required to write to Experian yet again before
being allowed to bring suit.
The sole case cited by Experian in support of its argument
does not suggest otherwise.

In Ruffin-Thompkins v. Experian

Info. Sols., Inc., 422 F.3d 603, 606, 608 (7th Cir. 2005), the
Seventh Circuit found that a purported dispute letter did not
trigger

§ 1681i’s

obligations

when

the

letter

included

an

incomplete form with requested information lines left blank.

In

such a situation, the credit reporting agency may determine that
the complaint is frivolous and so not begin a reinvestigation.
Id. 608.
any

That is not the situation here.

point

imply

that

the

Handrocks’

Experian did not at

dispute

letters

were

incomplete or that their dispute was frivolous.
In sum, the Court finds that the First and Second Report do
not

contain

inaccurate

information

but

the

Third

Report

plausibly does and so states a claim under 15 U.S.C. § 1681e(b)
and 15 U.S.C. § 1681i.
B.

Disclosure of Information to a Third-Party

In addition to pleading inaccurate information, plaintiffs
looking

to

recovery

allegations

that

communicated

to

under

the
a

third

the

inaccurate
party.

FCRA

must

credit
This

is

make

plausible

information
because

was

without

disclosure to a third party “there cannot be a consumer report”
and “[w]ithout such a report, there could be no duty to follow
- 12 -

reasonable procedures regarding the report, nor could damages
flow from a breach of that duty.”

Wantz v. Experian Info.

Sols., 386 F.3d 829, 833-34 (7th Cir. 2004), abrogated on other
grounds by Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 56
(2007).
Experian argues that Plaintiffs have not plausibly alleged
that the reports they complained of were disclosed to any third
parties besides themselves.
alleged

that

threadbare

they

were

allegation

.

In particular, although Plaintiffs

denied
.

.

credit,

[and]

no

they

offered

reason

to

“only

think

a

that

Experian actually provided a credit report bearing inaccurate
information to any third parties.”

However, it is reasonable to

infer that companies that denied Plaintiffs credit viewed their
credit

reports

before

making

the

decision.

This

is

common

business practice and indeed, the reason for the existence of
credit

reporting

Experian,

agencies

Experian

(Oct.

such

as

31,

Experian.
2016),

See,
available

About
at

http://www.experian.com/corporate/about-experian.html. See also,
Geinosky v. City of Chi., 675 F.3d 743, 745 n.1 (7th Cir. 2012)
(allowing for consideration of information subject to judicial
notice

in

deciding

a

Rule

12(b)(6)

motion).

Further,

even

though the Third Report may have been “prepared exclusively for,
and sent exclusively to, Plaintiff[s],” as Experian asserts, the
information on it was presumably available to any party that
- 13 -

obtained Plaintiffs’ credit reports.

All Plaintiffs need is to

gather evidence to show that a company that denied them credit
obtained such an Experian credit report before doing so.

This,

the Court reasonably expects that Plaintiffs will be able to do
in the course of discovery.

The Court therefore declines to

dismiss their Complaint at this point.

See, Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 556 (2007) (holding that a complaint only
needs to allege “enough fact to raise a reasonable expectation
that discovery will reveal evidence” supporting the plaintiff’s
claim).
C.
Experian

contends

Damages

that

Plaintiffs

have

alleged that they suffered actual damages.

not

plausibly

However, because

Plaintiffs here are seeking other remedies, including injunctive
relief, the case may proceed even if they did not adequately
plead actual damages.
F.3d

662,

664

(7th

See, Crabill v. Trans Union, L.L.C., 259
Cir.

2001)

(stating

that

even

where

a

plaintiff cannot obtain an award of actual damage, he may still
“obtain any other remedy, such as an injunction”).
Moreover,
actual

Plaintiffs

damages.

have

Experian

plausibly

calls

stated

Plaintiffs’

a

claim

for

allegations

of

actual damages “boilerplate,” but merely because something is
not creatively pled does not mean that it fails.
set

of

facts

exists

under

which
- 14 -

Plaintiffs

can

A plausible
show

that

a

company that denied them credit viewed an Experian credit report
containing inaccurate information on the Ocwen loan before doing
so.

This

would

establish

a

“causal

relation

between

the

violation of the statute and the loss of credit” and entitle
Plaintiffs to recover actual damages.
422 F.3d at 609 n.2.

See, Ruffin-Thompkins,

Similarly, Plaintiffs may be able to meet

the “strict standard” for proving emotional damage by either
providing

proof

of

medical

costs

incurred

or

explaining

circumstances of their distress in reasonable detail.

the

Id.

In sum, dismissal of Plaintiffs’ Complaint is improper at
this point.
III.
For

the

reasons

CONCLUSION

stated

herein,

Defendant

Experian

Information Solutions, Inc.’s Motion to Dismiss [ECF No. 27] is
denied.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
Dated: November 1, 2016

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