Crump v. Carrington Mortgage Services, LLC et al
Filing
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MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 1/7/2019.Mailed notice.(jlj, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
BRANDY NICOLE CRUMP,
Plaintiff,
vs.
CARRINGTON MORTGAGE SERVICES, LLC,
EQUIFAX INFORMATION SERVICES, LLC,
TRANSUNION, LLC, and EXPERIAN INFORMATION
SOLUTIONS, LLC,
Defendants.
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18 C 2302
Judge Gary Feinerman
MEMORANDUM OPINION AND ORDER
Brandy Nicole Crump sued credit reporting agencies Equifax Information Services, LLC,
TransUnion, LLC, and Experian Information Solutions, LLC, and mortgage lender and servicer
Carrington Mortgage Services, LLC, alleging that they violated the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. § 1681 et seq., by reporting that she owed tens of thousands of dollars on a
loan that had been discharged in bankruptcy and by refusing to correct that information after she
disputed it. Doc. 1. Crump has resolved her claims against all Defendants save Experian, which
moves under Civil Rule 12(b)(6) to dismiss the claims against it. Doc. 31. The motion is
granted in part and denied in part.
Background
In resolving a Rule 12(b)(6) motion, the court assumes the truth of the operative
complaint’s well-pleaded factual allegations, though not its legal conclusions. See Zahn v. N.
Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). The court must also consider
“documents attached to the complaint, documents that are critical to the complaint and referred
to in it, and information that is subject to proper judicial notice,” along with additional facts set
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forth in Crump’s brief opposing dismissal, so long as those additional facts “are consistent with
the pleadings.” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1019-20 (7th Cir. 2013).
The facts are set forth as favorably to Crump as those materials allow. See Pierce v. Zoetis, Inc.,
818 F.3d 274, 277 (7th Cir. 2016). In setting forth the facts at the pleading stage, the court does
not vouch for their “objective truth.” Goldberg v. United States, 881 F.3d 529, 531 (7th Cir.
2018).
Crump filed for Chapter 13 bankruptcy on July 31, 2014. Doc. 1 at ¶ 9. In Schedule D
of her bankruptcy petition, Crump listed Bank of America as a secured creditor holding an
$83,588 claim on a mortgage loan and represented that the home securing the loan was worth
$75,000. Id. at ¶ 10; Doc. 32-2 at 2. Crump later filed an Amended Chapter 13 Plan (“the Plan”)
providing that she would “surrender[]” the home to Bank of America “in full satisfaction of its
secured claim.” Doc. 1 at ¶ 12.
On November 14, 2016, the bankruptcy court granted Crump a discharge; although
Crump does not specifically allege that the discharge was consistent with the Plan, the parties’
briefs assume as much. Id. at ¶ 14. The bankruptcy court’s discharge order stated in its entirety:
“IT IS ORDERED: A discharge under 11 U.S.C. § 1329(a) is granted to: Brandy Nicole Crump
aka Brandy Crump.” Doc. 32-3 at 2. An “Explanation of Bankruptcy Discharge in a Chapter 13
Case” printed beneath the order, which described in laypersons’ terms the general effect of the
discharge, ended with this disclaimer: “This information is only a general summary of a chapter
13 discharge; some exceptions exist. Because the law is complicated, you should consult an
attorney to determine the exact effect of the discharge in this case.” Id. at 3. Crump believes
that her mortgage loan was fully discharged and therefore that the balance, past due amount, and
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monthly payment amount on the loan were reduced to “zero” as of the date of the discharge
order. Doc. 1 at ¶ 32.
In 2017, Carrington acquired and began reporting on Crump’s loan. Id. at ¶¶ 23-24. That
December, Crump discovered that Experian, a consumer reporting agency (“CRA”), was
reporting information about the loan that she believed to be inaccurate and incomplete. Id. at
¶ 25. Crump sent Experian a dispute letter, expressing her view that the mortgage debt was
discharged and attaching “all relevant and supporting documents.” Id. at ¶¶ 26-28.
Experian responded on January 16, 2018, stating that it had reinvestigated her dispute and
either had changed the report based on the information she provided or had submitted that
information to Carrington with instructions to review, respond to, and, if warranted, update its
systems to reflect that information. Id. at ¶ 64. After concluding its reinvestigation, Experian
reported a $141,426 balance, a $1,008 monthly payment, and $63,837 past due on the loan. Id.
at ¶ 65. As a result, Crump was denied credit, incurred costs in attempting to correct the
information, and suffered mental and emotional distress. Id. at ¶¶ 73-76.
Discussion
Crump filed this suit on March 29, 2018. Doc. 1. She alleges that Experian violated the
FCRA by not establishing or following reasonable procedures to assure maximum possible
accuracy in its reports, 15 U.S.C. § 1681e(b), by not properly reinvestigating her dispute, id.
§ 1681i, and/or by failing to note in her credit report that she disputed the mortgage loan debt, id.
§ 1681c(f). Doc. 1 at ¶¶ 144-167.
I.
Section 1681c(f) Claim
Section 1681c(f) provides: “If a [CRA] is notified pursuant to [15 U.S.C. §] 1681s-
2(a)(3) … that information regarding a consumer [which] was furnished to the [CRA] is disputed
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by the consumer, the [CRA] shall indicate that fact in each consumer report that includes the
disputed information.” 15 U.S.C. § 1681c(f). Section 1681s-2(a)(3), in turn, provides that if a
consumer contacts a creditor to dispute information that the creditor previously furnished to a
CRA, the creditor must notify CRAs of the dispute when furnishing that information in the
future. Id. § 1681s-2(a)(3). Experian contends that Crump’s § 1681c(f) claim should be
dismissed because she does not allege that she contacted any creditor about the disputed
information or that the creditor conveyed that dispute to Experian. Doc. 32 at 11-12. Crump
does not respond to this argument, thus forfeiting the claim. See Goodpaster v. City of
Indianapolis, 736 F.3d 1060, 1075 (7th Cir. 2013) (“Because [the plaintiffs] did not provide the
district court with any basis to decide their claims, and did not respond to the [defendant’s]
arguments, these claims are waived.”); Alioto v. Town of Lisbon, 651 F.3d 715, 721 (7th Cir.
2011) (“We apply [the forfeiture] rule … where a litigant effectively abandons the litigation by
not responding to alleged deficiencies in a motion to dismiss. … Our system of justice is
adversarial, and our judges are busy people. If they are given plausible reasons for dismissing a
complaint, they are not going to do the plaintiff’s research and try to discover whether there
might be something to say against the defendants’ reasoning.”) (internal quotation marks
omitted). Because Crump has not yet amended her complaint, the dismissal is without prejudice.
See Pension Trust Fund for Operating Eng’rs v. Kohl’s Corp., 895 F.3d 933, 941 (7th Cir. 2018)
(“We repeatedly have said that a plaintiff whose original complaint has been dismissed under
Rule 12(b)(6) should be given at least one opportunity to try to amend her complaint before the
entire action is dismissed.”).
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II.
Sections 1681e(b) and 1681i(a) Claims
Section 1681e(b) states: “Whenever a consumer reporting agency prepares a consumer
report it shall follow reasonable procedures to assure maximum possible accuracy of the
information concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b).
Section 1681i(a) states in pertinent part:
[I]f the completeness or accuracy of any item of information contained in a
consumer’s file at a consumer reporting agency is disputed by the consumer
and the consumer notifies the agency directly, or indirectly through a reseller,
of such dispute, the agency shall, free of charge, conduct a reasonable
reinvestigation to determine whether the disputed information is inaccurate
and record the current status of the disputed information, or delete the item
from the file in accordance with paragraph (5), before the end of the 30–day
period beginning on the date on which the agency receives the notice of the
dispute from the consumer or reseller.
Id. § 1681i(a)(1)(A). In seeking dismissal of Crump’s § 1681e(b) and § 1681i(a) claims,
Experian argues that the complaint does not allege that it reported inaccurate information or that
it acted unreasonably in connection with her credit report.
A.
Inaccurate Information
To state a claim under § 1681e(b) or § 1681i(a), Crump must allege that her consumer
report included inaccurate information. See Childress v. Experian Info. Sols., Inc., 790 F.3d 745,
747 (7th Cir. 2015) (affirming summary judgment on a § 1681e(b) claim, in part, because there
was “no inaccuracy in the statement in the plaintiff’s credit report”); Johnson v. Trans Union,
LLC, 524 F. App’x 268, 270 (7th Cir. 2013) (“Johnson must prove that something in his credit
report was inaccurate, or at least misleading, to show that the defendants’ procedures were
unreasonable under 15 U.S.C. § 1681e(b), or that the defendants failed to reasonably
reinvestigate under 15 U.S.C. § 1681i.”) (citations omitted); Wantz v. Experian Info. Sols., 386
F.3d 829, 834 (7th Cir. 2004) (“In the absence of evidence that Experian disclosed incorrect
information about the Virginia judgment to a third party, Wantz cannot even show that it violated
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the Act’s reinvestigation requirement … .”), abrogated on other grounds by Safeco Ins. Co. of
Am. v. Burr, 551 U.S. 47 (2007); Sarver v. Experian Info. Sols., 390 F.3d 969, 971 (7th Cir.
2004) (“[T]o state a claim under [§ 1681e(b)], a consumer must sufficiently allege ‘that a credit
reporting agency prepared a report containing inaccurate information.’”) (quoting Henson v. CSC
Credit Servs., 29 F.3d 280, 284 (7th Cir. 1994)) (internal quotation marks omitted). Experian
makes two arguments as to why Crump has not plausibly alleged an inaccuracy in her credit
report. Doc. 32 at 7-11.
Experian’s first argument starts from the premise (which Crump does not challenge) that
the home securing her mortgage loan was her “principal residence” within the meaning of
§ 1322(b)(2) of the Bankruptcy Code. Section 1322(b)(2) provides that a Chapter 13 plan may
not “modify” a debt secured by a debtor’s principal residence. 11 U.S.C. § 1322(b)(2) (“[T]he
plan may … modify the rights of holders of secured claims, other than a claim secured only by a
security interest in real property that is the debtor’s principal residence … .”); see Rake v. Wade,
508 U.S. 464, 473 n.9 (1993) (“[Section] 1322(b)(2) generally prohibits the modification of the
rights of home mortgage holders.”); Nobelman v. Am. Sav. Bank, 508 U.S. 324, 327 (1993)
(“[T]he ‘other than’ exception in § 1322(b)(2) proscribes modification of the rights of a
homestead mortgagee.”). Some courts hold that § 1322(b)(2)—when read in conjunction with
11 U.S.C. § 1328(a), which states that a Chapter 13 discharge order discharges only those debts
“provided for by the [Chapter 13] plan”—effectively prohibits discharge of a debt secured by a
debtor’s principal residence. See, e.g., In re Dukes, 2016 WL 5390948, at *5 (M.D. Fla. Sept.
27, 2016), aff’d, __ F.3d __, 2018 WL 6367176 (11th Cir. Dec. 6, 2018); In re Park, 532 B.R.
392, 398 (Bankr. M.D. Fla. 2015). The more persuasive of those decisions reason that if a
Chapter 13 plan cannot “modify” a debt secured by the debtor’s principal residence, then the
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debt cannot be “provided for” in the Chapter 13 plan, which means that the debt cannot be
discharged. See, e.g., Dukes, 2016 WL 5390948, at *5 (“[A] Chapter 13 plan that does not
modify the rights of a secured creditor under the plan leaves unaffected the rights of that creditor
under § 1322(b)(2). If the rights of the holder of the claim are left unaffected, the claim is not
discharged.”) (citations omitted); Park, 532 B.R. at 398 (same). According to Experian, because
Crump could not lawfully have received what her complaint alleges that she received—a full
discharge of her mortgage loan—the complaint cannot plausibly allege that Experian was
inaccurate in reporting that there was a $141,426 balance, a $1,008 monthly payment, and
$63,837 past due on the loan. Doc. 32 at 7-8.
Experian’s argument would have force in an appeal challenging the bankruptcy court’s
confirmation of a Chapter 13 plan that modifies a mortgage loan on a principal residence. As a
defense to an FCRA claim, however, it misses the mark, for it ignores a fundamental feature of
our legal system: A court order is binding until vacated or reversed, whether or not the order was
correctly decided. See Kathrein v. City of Evanston, 752 F.3d 680, 688 (7th Cir. 2014) (“It is
important both for litigants and the judicial system that claims already decided remain that way,
barring an appropriate motion for reconsideration or to set aside the judgment.”); Shemaitis v.
Reid, 193 F.2d 119, 120-21 (7th Cir. 1951) (“[W]hether [the judge] may have been mistaken in
the facts or may have misconceived the law, did not affect the validity of the judgment, and the
judgment, whether right or wrong, was valid and binding until set aside by proper
proceedings.”); United States v. Rothstein, 187 F. 268, 269 (7th Cir. 1911) (“Having jurisdiction
of the parties and of the subject-matter, the court had lawful power to render a judgment which
would be equally binding whether questions of fact or of law were rightly or wrongly decided.”);
McWilliams v. Blackard, 96 F.2d 43, 45 (8th Cir. 1938) (“Whenever the right and the duty of a
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court to exercise its jurisdiction depends upon the decision of a question it has power to hear and
determine, its judgment, right or wrong, is binding upon the parties and those in privity with
them. The power to decide includes the power to decide erroneously.”) (internal citations
omitted).
Thus, to report “accurately” on Crump’s mortgage loan, Experian’s credit report had to
reflect what the discharge order actually accomplished based on what the Plan actually provided
for—not what the discharge order should have accomplished based on what the Plan should have
provided for. It follows that if Crump has plausibly alleged that Experian’s report was
inconsistent with the discharge order, then Crump has sufficiently alleged an inaccuracy. Crump
has done just that. She plausibly alleges that the Plan provided for surrender of her home in full
satisfaction of what was then Bank of America’s secured claim. Doc. 1 at ¶ 12. Because
§ 1328(a) states that all debts provided for in a confirmed plan and not excepted in § 1328(a)(1)(4) are discharged, and because mortgage loans secured by a debtor’s primary residence are not
among the exceptions, Crump plausibly alleges that the secured claim had been discharged by
the time Experian issued its report.
Experian’s second argument is that even if the secured claim had been discharged, the
remaining, unsecured portion of Crump’s mortgage debt had not been, rendering implausible the
complaint’s allegation that her liability on the debt was “zero.” Doc. 1 at ¶ 32; Doc. 32 at 8.
Experian’s argument seems to be that because Crump has not plausibly alleged the correct
amount of her remaining mortgage debt as of January 2018, the date of Experian’s report, it
cannot be inferred from the complaint that the amount Experian reported was incorrect.
Experian’s argument fails at the pleading stage.
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Section 506(a) of the Bankruptcy Code provides that a “claim of a creditor secured by a
lien on property in which the [bankruptcy] estate has an interest” is “secured” only “to the extent
of the value of such creditor’s interest in the estate’s interest in such property,” leaving it
“unsecured … to the extent that the value of such creditor’s interest … is less than the amount of
such allowed claim.” 11 U.S.C. § 506(a). The effect of § 506(a) is to “divide[] loans into
secured and unsecured portions; the unsecured portion is the amount by which the debt exceeds
the current value of the collateral.” In re Wright, 492 F.3d 829, 830 (7th Cir. 2007); see also In
re Ryan, 725 F.3d 623, 624 (7th Cir. 2013) (“Section 506(a) of the Bankruptcy Code separates
loans into secured and unsecured portions. … If the value [of the collateral] is less than the
unpaid balance of the secured loan, the difference is considered an unsecured claim of the
creditor.”); cf. U.S. Bankr. Ct., Instructions: Bankruptcy Forms for Individuals 18 (2015),
http://www.uscourts.gov/sites/default/files/instructions_individuals_0.pdf (“To determine the
amount of a secured claim [for purposes of Schedule D], compare the amount of the claim to the
value of your portion of the property that supports the claim. … [I]f that value is less than the
amount of the claim, the difference is an unsecured portion. For example, if the outstanding
balance of a car loan is $10,000 and the car is worth $8,000, the car loan has a $2,000 unsecured
portion.”). Schedule D of Crump’s bankruptcy petition values Bank of America’s claim at
$83,588 and values the surrendered house at $75,000, leaving an unsecured claim of $8,588.
Doc. 32-2 at 2. According to Experian, because the Plan did not “provide for” this unsecured
claim, 11 U.S.C. § 1328(a), that portion of Crump’s debt was not discharged, rendering
implausible the complaint’s allegation that her debt was fully discharged. Doc. 32 at 8.
Crump does not contest Experian’s interpretation of Schedule D or the Plan, thereby
forfeiting any argument for a different interpretation. See Firestone Fin. Corp. v. Meyer, 796
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F.3d 822, 825 (7th Cir. 2015) (“[A] party generally forfeits an argument or issue not raised in
response to a motion to dismiss … .”); G & S Holdings LLC v. Cont’l Cas. Co., 697 F.3d 534,
538 (7th Cir. 2012) (“We have repeatedly held that a party waives an argument by failing to
make it before the district court.”). The court therefore accepts Experian’s submission that the
Plan, and therefore the discharge order, did not reach the $8,588 unsecured portion of Bank of
America’s claim.
Crump nevertheless plausibly alleges the inaccurate information component of her
§§ 1681e(b) and 1681i(a) claims because, even though a small portion of her mortgage debt
survived her bankruptcy, it still reasonably can be inferred that Experian inaccurately reported
her liability on the debt. Crump alleges that, in January 2018, Experian reported a $141,426
balance and a $63,837 past due amount on her mortgage loan, Doc. 1 at ¶ 65—amounts many
times greater than the $8,588 unsecured claim left untouched by the discharge order, Doc. 32-2
at 2. Drawing reasonable inferences in Crump’s favor, it is plausible that the amounts reported
by Experian included portions of Crump’s debt that had been discharged. Crump has therefore
plausibly alleged an inaccuracy for purposes of her §§ 1681e(b) and 1681i(a) claims.
B.
Reasonable Procedures and Reasonable Reinvestigation
Experian next argues that Crump has insufficiently alleged that it acted unreasonably in
connection with her credit report. “[T]he FCRA is not a strict liability statute.” Sarver, 390 F.3d
at 971. Rather, CRAs are liable under §§ 1681e(b) and 1681i(a)(1) for inaccurate reporting only
if they fail to act reasonably. See Shaw v. Experian Info. Sols., Inc., 891 F.3d 749, 755 (9th Cir.
2018) (“Liability under this reasonable procedures provision is predicated on the reasonableness
of the [CRA’s] procedures in obtaining credit information.”) (internal quotation marks omitted).
To state a § 1681e(b) claim, a plaintiff must allege that the CRA did not “follow reasonable
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procedures to assure maximum possible accuracy of the information” in her consumer report. 15
U.S.C. § 1681e(b). To state a § 1681i(a)(1) claim, a plaintiff must allege that the CRA did not
“conduct a reasonable reinvestigation” into the information that she disputed. Id. § 1681i(a)(1).
“The reasonableness of a CRA’s procedures is normally a question for trial unless the
reasonableness or unreasonableness of the procedures is beyond question.” Sarver, 390 F.3d at
971 (brackets and internal quotation marks omitted). The plaintiff bears the burden to establish
that the CRA could have prevented or corrected an error by acting reasonably. See Childress,
790 F.3d at 747.
The complaint alleges that Experian violated § 1681e(b) prior to receiving Crump’s
dispute letter by not employing reasonable procedures to prevent the inaccurate report of her
mortgage debt. Doc. 1 at ¶ 153. The complaint also alleges that Experian violated §§ 1681e(b)
and 1681i(a)(1) after receiving Crump’s dispute letter by continuing to report the inaccurate
information without reasonably reinvestigating her dispute. Id. at ¶¶ 153-154. Experian
contends that the complaint’s allegations do not support an inference that it failed to take
reasonable steps, either before or after receiving Crump’s letter, because preventing or correcting
the errors she identified would have unreasonably required it to gather and interpret bankruptcy
court orders and adjudicate disputes concerning their application. Doc. 32 at 9-11. Crump
responds that Experian did not need to make any legal determinations to prevent or correct the
errors in her consumer report. Doc. 48 at 7.
1.
Experian’s Conduct Before Receiving Crump’s Letter
Experian has the better of the argument as to Crump’s § 1681e(b) claim for the period
before she sent her dispute letter. In Sarver, the Seventh Circuit held that § 1681e(b) did not
prohibit the CRA from reporting a debt based solely on information obtained from the creditor
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before receiving notice that the plaintiff disputed the debt. 390 F.3d at 973. In so holding, the
Seventh Circuit explained that the CRA reasonably relied on the creditor’s information given
that there was no indication that the creditor frequently reported debts inaccurately, that the
CRA’s information gathering procedures were systematically unreliable, or that the CRA could
verify the creditor’s information through reasonable means. Id. at 972. In Childress, the
plaintiff alleged that the CRA violated § 1681e(b) by reporting that her bankruptcy petition had
been “dismissed” rather than “voluntarily withdrawn.” 790 F.3d at 746-47. It appeared from the
record, however, that the only feasible way to distinguish a “dismissed” petition from a
“voluntarily withdrawn” petition, at least before the consumer complained, was to employ “a live
human being, with at least a little legal training, to review every bankruptcy dismissal and
classify it as either voluntary or involuntary.” Id. at 747. The court held that requiring that
procedure was not reasonable because it “would put an enormous burden” upon the CRA. Ibid.;
see also Wright v. Experian Info. Sols., Inc., 805 F.3d 1232, 1241 (10th Cir. 2015) (“[The
plaintiff argues that the FCRA] require[es] CRAs to employ individuals trained in American tax
law to examine every [notice of federal tax lien] filed in a county recorder’s office. No court has
required a CRA to go this far to meet the reasonable procedures requirement of § 1681e(b).”).
Given these precedents, Crump has no viable § 1681e(b) claim for the period before
Crump sent her dispute letter. Experian reported the allegedly inaccurate information regarding
Crump’s mortgage loan in reliance on information that Carrington provided. Doc. 1 at ¶¶ 23-25.
And Crump does not allege, for example, that Carrington frequently reported debts inaccurately,
that Experian’s information gathering procedures were systematically unreliable, or that
Experian could verify Carrington’s information through reasonable means. See Sarver, 390 F.3d
at 972. To the contrary, the Rule 12(b)(6) record reflects that Experian would have had to
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review at least three court documents to discover the alleged inaccuracy: (1) the discharge order,
which did not itemize the debts discharged and which warned laypersons to consult a lawyer
about its scope, Doc. 32-3 at 2-3; (2) the Plan, which provided that Crump would surrender her
home “to Bank of America, N.A., in full satisfaction of its secured claim,” Doc. 1 at ¶ 12; and (3)
Schedule D of her bankruptcy petition, which revealed that the “secured claim” referenced in the
Plan arose out of the same debt that Carrington reported to Experian, Doc. 32-2 at 2. Verifying
Carrington’s information based on documents in the bankruptcy docket would have required
Experian to employ “a live human being, with at least a little legal training, to review” the
documents “and classify” the debt that Carrington reported as discharged or not. Childress, 790
F.3d at 747. And because there is no indication that Experian could have distinguished Crump’s
mortgage loan from any other debt that had been through bankruptcy, the only way to prevent
errors like the one complained of here would have been to carry out this classification process for
every such debt—a procedure that § 1681e(b) does not demand. See ibid.
Accordingly, prior to receiving Crump’s dispute letter, Experian did not violate
§ 1681e(b) by relying on the information that Carrington reported instead of manually crosschecking that information against several documents on Crump’s bankruptcy docket. See ibid.;
Sarver, 390 F.3d at 972. Crump’s § 1681e(b) claim is therefore dismissed to the extent it rests
on Experian’s conduct before receiving her letter. Although the court doubts that repleading
could save that portion of the claim, the dismissal is without prejudice. See Pension Trust Fund,
895 F.3d at 941.
2.
Experian’s Conduct After Receiving Crump’s Letter
A different result obtains as to Crump’s § 1681i(a) claim and the portion of her
§ 1681e(b) claim pertaining to Experian’s conduct after receiving her dispute letter. “A [CRA]
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that has been notified of potentially inaccurate information in a consumer’s credit report is in a
very different position than one who has no such notice,” because the former can “target its
resources in a more efficient manner and conduct a more thorough investigation.” Henson, 29
F.3d at 286. Once a CRA receives notice that information in a consumer report may be
inaccurate, “the statutory duty [to reinvestigate under § 1681i(a)(1)] click[s] in, and at that point
the continued sending of [the contested information] to creditors might be viewed as a failure to
maintain reasonable procedures for assuring accuracy” under § 1681e(b). Crabill v. Trans
Union, L.L.C., 259 F.3d 662, 664 (7th Cir. 2001) (internal citations omitted).
Experian argues that Crump cannot plausibly allege that it acted unreasonably after
receiving her dispute letter because it could not reasonably have been expected to resolve a legal
dispute between Carrington and Crump concerning the scope of the bankruptcy court’s discharge
order. True enough, §§ 1681e(b) and 1681i(a)(1) do not require a CRA “to do more than a
reasonable reinvestigation requires.” Wright, 805 F.3d at 1245. And certain parts of Crump’s
complaint appear to allege that Experian informed Carrington of her dispute regarding the scope
of the discharge order and that Carrington verified the debt. Doc. 1 at ¶ 85 (“Had Carrington
reviewed the information provided by … Experian … , it would have corrected the inaccurate
designation of the subject loan and transmitted the correct information to … Experian. Instead,
Carrington wrongfully and erroneously verified its inaccurate reporting without conducting a
reasonable investigation.”). On those facts, Experian reasonably could have concluded that it
could not further reinvestigate Carrington’s information regarding Crump’s mortgage debt
without adjudicating a legal dispute about the scope and effect of the discharge order, a step that
the FCRA likely does not require. See Brill v. TransUnion LLC, 838 F.3d 919, 921-22 (7th Cir.
2016) (holding that the FCRA did not obligate a CRA to resolve a creditor-debtor dispute
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concerning the authenticity of a signature); Wright, 805 F.3d at 1245 (“[The plaintiff] insists the
CRAs must … determine the validity of the tax lien. … [T]hat question is a matter he should
take up with the IRS.”); Phillips v. Archstone Simi Valley LLC, 740 F. App’x 603, 604 (9th Cir.
2018) (“[C]redit reporting agencies are not tribunals required to adjudicate disputes regarding the
legal validity of a debt.”) (internal quotation marks omitted); Carvalho v. Equifax Info. Servs.,
LLC, 629 F.3d 876, 892 (9th Cir. 2010) (“[R]einvestigation claims are not the proper vehicle for
collaterally attacking the legal validity of consumer debts.”).
Elsewhere in her complaint, however, Crump alleges that Experian did not notify
Carrington about her dispute letter, much less ask Carrington whether it contested her
understanding of the amount (if any) owed on her mortgage loan. Id. at ¶ 156 (“Upon
information and belief, Experian violated 15 U.S.C. § 1681i(a)(2) by failing to provide
notification of Plaintiff’s dispute to Carrington.”). The Civil Rules permit this type of alternative
pleading—here, the complaint’s dueling allegations that Experian did and did not notify
Carrington about Crump’s dispute letter—and instruct that “the pleading is sufficient if any one
of [the alternatives] is sufficient.” Fed. R. Civ. P. 8(d)(2). In seeking dismissal, Experian neither
acknowledges Crump’s allegation that Experian failed to notify Carrington about her dispute
letter nor argues that it would have been reasonable for Experian to disregard Crump’s dispute
letter without so much as asking Carrington about her contentions. Any such argument is
therefore forfeited for purposes of this motion. See Firestone, 796 F.3d at 825; G & S Holdings,
697 F.3d at 538; Alioto, 651 F.3d at 721. It follows that Crump’s §§ 1681e(b) and 1681i(a)(1)
claims regarding Experian’s conduct after receiving her dispute letter survive dismissal.
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Conclusion
For the foregoing reasons, Experian’s motion to dismiss is granted in part and denied in
part. The motion is denied as to Crump’s § 1681e(b) claim as it pertains to Experian’s conduct
after receiving her dispute letter and as to her § 1681i claim. Crump’s § 1681e(b) claim as it
pertains to Experian’s conduct before receiving her dispute letter, as well as her § 1681c(f)
claim, are dismissed without prejudice. Crump has until January 22, 2019 to file an amended
complaint. If she does not do so, the dismissals will convert automatically to dismissals with
prejudice. If Crump repleads, Experian will have until February 12, 2019 to file its response to
the amended complaint.
January 7, 2019
United States District Judge
16
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