Brown v. LVNV Funding LLC et al
Filing
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MEMORANDUM OPINION. Signed by Judge Paula Xinis on 8/28/2024. (ols, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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RHOZIER T. BROWN,
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Plaintiff,
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v.
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CREDIT ONE BANK, N.A., et al.,
Defendants.
Civil Action No. 23-cv-2512-PX
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MEMORANDUM OPINION
Pending in this consumer credit action are the following motions: Defendant Credit One
Bank, N.A.’s (“Credit One”) Motion to Dismiss (ECF No. 59); Equifax Information Services,
LLC’s (“Equifax”) Motion to Dismiss (ECF No. 22), and Plaintiff Rhozier T. Brown’s
(“Brown”) first and second motions for leave to amend the Complaint. ECF Nos. 29 & 63. The
issues are fully briefed, and no hearing is necessary. See Loc. R. 105.6. For the following
reasons, the Court grants in part and denies in part Credit One’s motion; denies Equifax’s motion
as moot; denies Brown’s motion for leave to file the First Amended Complaint as moot; and
grants in part and denies in part Brown’s motion for leave to file a Second Amended Complaint.
I.
Background
On August 15, 2023, Brown filed suit in Prince George’s County Circuit Court against
Defendants Credit One, Equifax, LVNV Funding, LLC (“LVNV), JPMorgan Chase Bank, N.A.
(“Chase”), Synchrony Bank (“SYNCB”), Experian Information Solutions, Inc. (“Experian”), and
Trans Union, LLC (“Trans Union”), alleging a host of claims under the Fair Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. § 1692; the Maryland Consumer Debt Collection Act
(“MCDCA”), Md. Code Ann., Com. Law §§ 14-201–204; the Maryland Consumer Protection
Act (“MCPA”), Md. Code Ann., Com. Law §§ 13-301–320; the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. § 1681; and common law defamation. See ECF No. 4. The gravamen of
the claims center on the alleged false reporting of credit card debt and other “unpaid debt” and
delinquencies. Id.
On September 15, 2023, Chase removed the case to this Court, asserting federal question
jurisdiction. ECF No. 1. Trans Union and SYNCB answered the Complaint. ECF Nos. 14 &
27. Thereafter, Brown settled with LVNV (ECF Nos. 30 & 31), Chase (ECF Nos. 30 & 31),
Equifax (ECF Nos. 50, 71 & 72) and Experian (ECF Nos. 71 & 72).
Three Defendants SYNCB, Credit One and Trans Union -- remain. As to them, the
parties dueling motions have created a procedural whirlwind. The Court will calm the winds as
follows. Because Brown’s proposed Second Amended Complaint incorporates all proposed
amendments in the First Amended Complaint, the Court denies Brown’s first motion to amend
(ECF No. 29) as moot and will address the propriety of allowing the proposed Second Amended
Complaint to proceed. As to Credit One’s motion to dismiss the MDCPA, MCPA and
defamation claims, ECF No. 59, although Credit One sought dismissal of the claims in the
original Complaint, the counts are identically pleaded in the proposed Second Amended
Complaint. Compare ECF No. 4 with ECF No. 63-1. The Court will treat Credit One’s motion
as directed at the proposed Second Amended Complaint. Last, Trans Union lodges identical
objections to the same facts pleaded in the proposed First and Second Amended Complaints.
ECF Nos. 39 & 64. The court will address Trans Union’s opposition solely as to the Second
Amended Complaint.
To aid resolution of the motions, the Court summarizes Second Amended Complaint’s
factual allegations pertinent as to the remaining Defendants.
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A.
Credit One
Credit One is a sub-prime lender that had erroneously reported to Experian an unpaid
debt attributable to Brown which Credit One had sold to LVNV. ECF No. 63-1 ¶¶ 8-9. Brown
called Credit One regarding the issue, and Credit One admitted that it had no documentation
showing that he had an account, but then Credit One took no action to remedy the false
reporting. Id. Credit One mailed Brown a letter stating that it was not reporting any account
with an unpaid debt to any credit reporting agency (“CRA”). Id. ¶ 13. On September 11, 2023,
Credit One requested and obtained Brown’s credit report from Experian despite being fully
aware that Brown did not have a Credit One account. Id. ¶ 15. From this, Brown alleges that
Credit One violated the MCDCA and MCPA in claiming that Brown had outstanding credit card
debt when he did not (Counts One and Two); the FCRA §1681s-2(b) in failing to conduct a
reasonable investigation (Count Six); FCRA § 1681(b)(f) (Count Eight); and common law
defamation (Count Nine).
B.
SYNCB
SYNCB is a retail credit card lender that erroneously reported Brown had not only
opened a credit card account, but that the account has since been charged off. ECF No. 63-1 ¶¶
43-44. When Brown informed SYNCB of this error, he learned that because SYNCB assigned
the debt another company, SYNCB had no information or documentation to verify whether
Brown is the true account holder. Id. ¶ 47. On August 12, 2023, Brown disputed the debt with
Equifax. Id. ¶ 48. Equifax forwarded the dispute to SYNCB. SYNCB, in turn, notified Brown
that it investigated the matter and determined that the account did not belong to Brown. Id. ¶¶
48-49, 52. Brown brings against SYNCB violations of the MCDCA and MCPA (Counts One
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and Two); the FCRA §1681s-2(b) for failure to conduct a reasonable investigation (Count Six);
FCRA§ 1681b(f) for impermissibly obtaining Brown’s credit report (Count Eight); and common
law defamation (Count Nine).
C.
Trans Union
Trans Union is a credit reporting agency that erroneously reported Brown’s payment on
his Veridian tradeline as delinquent. ECF No. 63-1 ¶ 59. By letter, dated August 12, 2023,
Brown disputed the debt with Trans Union, but Trans Union performed no investigation.
Instead, it “merely forwarded the dispute to Veridian and parroted Veridian’s response.” Id. ¶¶
58-63, 65, 67. Nor did Trans Union inform Brown of any results from its investigation. Trans
Union is alleged to have violated the MCPA (Count Three); the FCRA § 1681i (Count Five).
II.
Standard of Review
Amendment of pleadings should be liberally granted when justice so requires. Ground
Zero Museum Workshop v. Wilson, 813 F. Supp. 2d 678, 706 (D. Md. 2011); see Fed. R. Civ. P.
15(a)(2). “[A] request to amend should only be denied if . . . ‘the amendment would be
prejudicial to the opposing party, there has been bad faith on the part of the moving party, or
amendment would be futile.’” Mayfield v. National Ass’n for Stock Car Auto Racing, Inc., 674
F.3d 369, 379 (4th Cir. 2012) (quoting Matrix Capital Mgmt. Fund, LP v. BearingPoint, Inc., 576
F.3d 172, 193 (4th Cir. 2009)). “Futility is apparent if the proposed amended complaint fails to
state a claim under the applicable rules and accompanying standards.” Katyle v. Penn Nat.
Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011) (internal quotation marks omitted) (quoting
United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir. 2008)).
When a defendant opposes amendment as futile, the Court accepts the averred facts as true and
most favorably to the plaintiff to ascertain whether amendment survives as a matter of law. See
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Kerrigan v. Bd. of Educ. of Carroll Cty., 2016 WL 470827, at *3 (D. Md. Feb. 8, 2016) (citing
Ibarra v. United States, 120 F. 3d 472, 474 (4th Cir. 1997).
With this standard in mind, the Court turns the separate challenges lodged by Credit One
and Trans Union.
III.
Analysis
A. Credit One
Credit One contends that the MCDCA, MCPA, and defamation claims (Counts One,
Two, and Nine) cannot proceed because they are preempted by the FCRA. See ECF No. 59-1 at
3–4. The FCRA is “a comprehensive statutory scheme designed to regulate the consumer
reporting industry.” Ross v. F.D.I.C., 625 F.3d 808, 812 (4th Cir. 2010). It was enacted “to
ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect
consumer privacy.” Safeco, 551 U.S. at 52. The MCDCA and the MCPA fulfill similar
remedial purposes as the FCRA. They are statutes that aim “to protect the public from unfair or
deceptive trade practices by creditors engaged in debt collection activities.” Andrews &
Lawrence Pro. Servs., LLC v. Mills, 467 Md. 126, 131–32 (2020); see also Chavis v. Blibaum &
Assocs., P.A., 476 Md. 534, 553 (2021) (explaining that violation of MCDCA is a per se
violation of MCPA).
The doctrine of preemption derives from the Supremacy Clause, which “provides a clear
rule that federal law ‘shall be the supreme Law of the Land . . . any Thing in the Constitution or
Laws of any state to the Contrary notwithstanding.’” Arizona v. United States, 567 U.S. 387,
399 (2012) (quoting U.S. Const. art. VI, cl. 2). “Under the Supremacy Clause, state law that
conflicts with federal law is ‘without effect.’” AES Sparrows Point LNG, LLC v. Smith, 527
F.3d 120, 125 (4th Cir. 2008) (quoting Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 516
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(1992)). However, the Court assumes “that the historic police powers of the States [are] not to
be superseded by . . . Federal Act unless that [is] the clear and manifest purposes of Congress.”
Cipollone, 505 U.S. at 516. Where “Congress has clearly expressed an intention to [preempt
state law],” then the state claim cannot proceed alongside the federal statutory claim. H & R
Block E. Enters., Inc. v. Raskin, 591 F.3d 718, 723 n.9 (4th Cir. 2010) (quoting Coll. Loan Corp.
v. SLM Corp., a Del. Corp., 396 F.3d 588, 595–96 (4th Cir. 2005)).
The FCRA expressly states that “[n]o requirement or prohibition may be imposed under
the laws of any State . . . with respect to any subject matter regulated under . . . section 1681s–2
of this title, relating to the responsibilities of persons who furnish information to consumer
reporting agencies.” § 1681t(b)(1)(F). Plainly, the FCRA preempts all state statutory claims
“arising from reporting inaccurate information to credit reporting agencies.” Magruder v. Educ.
Sys. Fed. Credit Union, 194 F. Supp. 3d 386, 388-389 (D. Md. 2019); see White v. Green Tree
Servicing, LLC, 118 F. Supp. 3d 867, 872 (D. Md. 2015). Because the MDCPA and MCPA
claims “run into the teeth of the FCRA preemption provision,” id (quoting Ross, 625 F.3d at
813), and no amendment could cure this preemptive effect, the claims as pleaded are futile.
Brown will not be permitted to proceed on Counts One and Two.
As to the defamation claim (Count Nine), the proposed Second Amended Complaint
avers that Credit One defamed Brown by reporting inaccurate credit information about him to the
CRAs, knowing that “the CRAs would furnish credit reports containing their inaccurate
information to third parties.” ECF No. 4 ¶¶ 50–51. For common law claims, the FCRA
prohibits “any action or proceeding in the nature of defamation . . . except as to false information
furnished with malice or willful intent to injure such consumer.” § 1681h(e) (emphasis added).
The FCRA thus preempts defamation unless the complaint makes plausible that the defendant
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defamed plaintiff with a willful intent to injure or with malice. See Richards v. New Rez, LLC,
No. ELH-20-1282, 2022 WL 657568, at *22–23 (D. Md. Mar. 4, 2022).
Credit One singularly argues that no facts make plausible its having acted with malice or
willful intent. See ECF No. 65 at 4. Willfulness is a “‘knowingly and intentionally committed
an act in conscious disregard for the rights of others.’” Beuster v. Equifax Info. Servs., 435 F.
Supp. 2d 471, 479 (D. Md. 2006) (quoting Wiggins v. Equifax Servs., Inc., 848 F. Supp. 213, 219
(D.D.C.1993)). Malice requires reporting the inaccurate credit information with “serious doubts
as to the truth of the publication,” “with a high degree of awareness of [its] probable falsity,” or
with actual knowledge that the statement was false. Id.
Although the Second Amended Complaint’s factual predicate is thin, it is sufficient such
that the claim is not preempted. The proposed Second Amended Complaint alleges that Credit
One reported false credit information to the CRAs “each and every month” even though Credit
One “knew the CRAs would furnish credit reports containing [its] inaccurate information to third
parties.” ECF No. 63-1 ¶¶ 147–48. The proposed Second Amended Complaint further avers
that Credit One reported the inaccurate credit information “with the actual knowledge that the
material was false.” Id. Thus, the claim survives challenge. See Beuster, 435 F. Supp. 2d 471 at
480 (“[T]he Federal Rules require only a general pleading of malice.”) (internal quotation marks
omitted). Count Nine shall proceed.
Credit One also opposes amendment as to Count Eight, which alleges a willful or
negligent violation of 15 U.S.C. § 1681b(f). Credit One first argues that Brown lacks standing to
bring the claim. Standing is conferred where the plaintiff demonstrates that it has “(1) suffered
an injury in fact, (2) that is fairly traceable to the challenged conduct . . . and (3) that is likely to
be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016),
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as revised (May 24, 2016). Credit One presses that the proposed claim fails to aver any injuryin-fact because no damages are pleaded. See ECF No. 65 at 5–6. But a willful violation of the
FCRA triggers statutory and punitive damages in addition to actual damages. See Safeco Ins.
Co. of Am. v. Burr, 551 U.S. 47, 53 (2007); 15 U.S.C. §§ 1681o, 1681n(a). Because the
proposed Second Amended Complaint avers mental and emotional distress from Credit One’s
invasion of Brown’s privacy by seeking unauthorized credit reports, ECF No. 63-2 ¶ 143, an
array of related damages are available. Thus, Brown has averred sufficient injury in fact to
confer standing. See Alston v. AT&T Servs., Inc., No. GJH-18-2529, 2019 WL 670241, at *3 (D.
Md. Feb. 19, 2019) (finding plaintiff’s allegations of “mental distress and emotional anguish
from the ongoing invasion of [his] privacy” sufficient); Alston v. Freedom Plus/Cross River, No.
TDC-17-0033, 2018 WL 770384, at *6 (D. Md. Feb. 7, 2018) (same).
Alternatively, Credit One argues that the proposed amendment avers no facts to make
plausible that Credit One sought the report for no legitimate purpose. ECF No. 65 at 6-8.
Section 1681b(f) prohibits a person from “us[ing] or obtain[ing] a consumer report for any
purpose” not expressly authorized by the FCRA. To survive challenge, the claim must aver that
defendant used or obtained a consumer report without any permissible statutory purpose and
with a specified culpable mental state. See Bolden v. McCabe, Weisberg & Conway, LLC, No.
DKC 13-1265, 2013 WL 6909156, at *3 (D. Md. Dec. 31, 2013). Notably, the statute
enumerates the permissible purposes associated with requesting a consumer report. FCRA §
1681b(a). The proposed amended claim, however, merely alleges that Credit One obtained the
report “with no intention of using [the] credit report for a permissible purpose” and then used the
report for “marketing and/or other impermissible purposes.” ECF No. 63-1 at ¶¶ 141-142. This
naked legal averment devoid of any facts is insufficient. See Cole v. Cap. One, No. GJH-15-
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1121, 2016 WL 2621950, at *4 (D. Md. May 5, 2016) (dismissing § 1681(b)(f) claim when
plaintiff merely asserted that the defendant “willfully obtained her credit report through false
pretenses and without a permissible purpose”); see also King v. Equable Ascent Fin., LLC, No.
1:12-443, 2013 WL 2474377, at *3 (M.D.N.C. June 10, 2013) (dismissing claim when plaintiff
alleged no facts ruling out a permissible purpose for the defendant’s request); cf. Alston, 2019
WL 670241, at *2 (denying dismissal when plaintiff “allege[d] that he did not receive an offer of
credit and that he spoke to [Defendant’s] representative who advised him that the Defendant had
not obtained his credit report for a permissible purpose”). Because the claim fails as a matter of
law, amendment to add Count Eight is futile. The motion to amend as to Count Eight is denied.
B.
Trans Union
Trans Union opposes amendment to the complaint because the proposed pleading “add[s]
incorrect facts” regarding its reporting of two credit accounts. ECF No. 64 at 1. Specifically,
Trans Union protests that contrary to the facts averred in the Second Amended Complaint, Trans
Union did investigate the Veridian account in response to Brown’s August 2023 dispute letter.
ECF No. 64. Trans Union also maintains that it took corrective action on the LVNV account in
response to Brown’s dispute. Id. Although in the end Trans Union may have the better
evidence, the Court cannot go beyond the four corners of the proposed amended complaint to
determine if the claims are legally sufficient. Surely Trans Union knows this, and so the
argument is perplexing -- especially considering that Trans Union had answered the original
Complaint, and the Second Amended Complaint adds no new causes of action.
Notwithstanding this, Trans Union highlights that Brown’s seriatim motions to amend
have added unnecessary confusion to the matter, which may very well be by design. ECF No. 64
at 3. Although the Court will not award Trans Union’s requested attorneys’ fees to compensate
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for responding to both motions to amend, Brown is forewarned that no further amendments of
the pleading will be permitted absent extraordinary good cause.
IV.
Conclusion
For the foregoing reasons, Equifax’s Motion to Dismiss (ECF No. 22) is denied as moot;
Brown’s motion for leave to file a First Amended Complaint (ECF No. 29) is denied as moot;
Credit One’s Motion to Dismiss at ECF No. 59 and as applied to the proposed Second Amended
Complaint is granted in part and denied in part; and Brown’s Motion for Leave to File a Second
Amended Complaint (ECF No. 63) is granted in part and denied in part. Within 14 days from
the date of this Opinion and Order, Brown shall file a clean copy of the Second Amended
Complaint removing Counts One, Two and Seven, 1 and Eight as to Credit One, and renumbering
the causes of action. Thereafter, the Defendants shall have 21 days to Answer the Second
Amended Complaint. A separate Order follows.
August 28, 2024
Date
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/S/
Paula Xinis
United States District Judge
Count Seven appears to proceed only against Experian which has since settled with Brown.
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