Tusen v. M&T Bank
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that: 1. Defendant M&T's Motion to Dismiss 29 is GRANTED in part and DENIED in part; and 2. Counts II and III of Tusen's Fourth Amended Complaint 54 are DISMISSED with prejudice as to Defendant M&T. (Written Opinion) Signed by The Hon. Paul A. Magnuson on 10/31/2017. (LLM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Gregg A. Tusen,
Civ. No. 16-4339 (PAM/KMM)
MEMORANDUM AND ORDER
M&T Bank, Trans Union, LLC, and
FD Holdings, LLC
This matter is before the Court on Defendant M&T Bank’s (“M&T”) Motion to
Dismiss. For the following reasons, the Motion is granted in part and denied in part.
In November 2012, Plaintiff Gregg A. Tusen filed for Chapter 13 bankruptcy.
(4th Am. Compl. (Docket No. 54) ¶ 11.) 1 His bankruptcy petition included real property
with an estimated value of $65,000, secured by a $103,225 mortgage with Bank of
America. (Id. ¶ 12.) His bankruptcy plan also included a $1,560 delinquency owed to
Bank of America. (Id. ¶ 13.) During the bankruptcy proceedings, Bank of America filed
a Notice of Postpetition Mortgage Fees, Expenses, and Charges, seeking $150. (Id. ¶ 14.)
On July 25, 2013, M&T notified Tusen by letter that it was now servicing his mortgage
on behalf of Bank of America. (Id. ¶ 15.) There is no dispute that Tusen voluntarily
made his mortgage payments during the bankruptcy proceedings. (Id. ¶ 18.) However,
M&T reported “no data” on these payments to credit reporting agencies because of the
This pleading is labeled the Fifth Amended Complaint, but no fourth amended
complaint was ever filed. Thus, the Court refers to it as the Fourth Amended Complaint.
bankruptcy stay. (Id. ¶ 26.) Tusen received his Chapter 13 discharge on December 22,
2015. (Id. ¶¶ 17-18.)
On January 4, 2016, M&T sent Tusen a mortgage statement that sought $650 as a
“recoverable corporate advance,” in addition to his regular $688.85 mortgage payment.
(Id. ¶ 19.) Tusen disputed the extra charge and requested additional information. (Id.
¶¶ 20, 22.) M&T clarified that $500 of the $650 “recoverable corporate advance” was for
attorney’s fees, and the remaining $150 was for a bankruptcy filing in connection with
the Notice of Postpetition Mortgage Fees, Expenses, and Charges originally filed by
Bank of America. (Id. ¶ 21, Ex. 2.) M&T then withdrew its $500 demand for attorney’s
fees because it concluded that the amount was not recoverable from Tusen. (Id. ¶ 24.)
M&T continues to seek $150 related to Bank of America’s notice, and although he
disputes that he owes this amount, Tusen conceded at oral argument that his claims relate
only to the $500 demand for attorney’s fees. (Id. ¶¶ 21, 24.)
After receiving the bankruptcy discharge, Tusen attempted to refinance his
mortgage to lower his monthly mortgage payments. (Id. ¶ 25.) He requested a credit
report from Defendant FD Holdings, LLC, which reported that he was delinquent on
mortgage payments between August 2014 and February 2015. (Id. ¶ 28.) The next day,
he requested a credit report from Defendant Trans Union, LLC, which reported “no data”
during the same time period. (Id. ¶ 30.) It appears that both credit reporting agencies
interpreted M&T report of “no data” as delinquent payments. (Id. ¶¶ 30-31.)
Tusen then mailed disputes to FD Holdings and Trans Union, challenging the “no
data” reporting. (Id. ¶ 32.) M&T responded to Tusen’s disputes twice; the second time
M&T stated that, after careful review, it had determined that Tusen’s “account is
reporting accurately in accordance with the bankruptcy laws and guidelines.” (Id. ¶¶ 33,
35.) About three months later, Tusen again mailed disputes to FD Holdings and Trans
Union, which included bank statements showing on-time mortgage payments. (Id. ¶ 36.)
Instead of updating his payment history to “ok” as requested, Trans Union updated
Tusen’s payment history to show “x,” meaning no data, from September 2013 to
December 2015. (Id. ¶ 38.) On September 13, 2016, Tusen received his credit report
from a different credit reporting agency reporting that he was current on all mortgage
payments, and he successfully refinanced his mortgage. (Id. ¶¶ 40-41.)
Tusen’s three-count Fourth Amended Complaint includes the following
allegations against M&T. The first count alleges that M&T violated the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692e, 1692f, by attempting to collect
a fee to which M&T was not entitled and communicating that he was delinquent on
mortgage payments to credit reporting agencies. (Id. ¶¶ 42-47.) The second count claims
that M&T violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681n, 1681o,
1681s-2(b), by reporting misleading and inaccurate information to credit reporting
agencies. (Id. ¶¶ 48-53.) The third count alleges that M&T’s actions also violate the
Minnesota Deceptive Trade Practices Act (“MDTPA”), Minn. Stat. § 325D.44. (Id.
¶¶ 62-65.) M&T moves for dismissal of the Fourth Amended Complaint pursuant to Fed.
R. Civ. P. 12(b)(6).
When evaluating a motion to dismiss under Rule 12(b)(6), the Court assumes the
allegations in the Fourth Amended Complaint to be true and construes all reasonable
inferences from those facts in the light most favorable to the non-moving party. Morton
v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). The Court need not accept as true wholly
conclusory allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805
(8th Cir. 1999), or legal conclusions that the plaintiff draws from the facts pled. Westcott
v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990).
A complaint must contain “enough facts to state a claim to relief that is plausible
on its face” to survive a motion to dismiss. Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). Although a complaint need not contain “detailed factual allegations,” it must
contain facts with enough specificity “to raise a right to relief above the speculative
level.” Id. at 555. “Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements,” will not pass muster under Twombly. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555). This standard “calls for
enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of
[the claim].” Twombly, 550 U.S. at 556.
The FDCPA prohibits debt collectors from using a “false, deceptive, or misleading
representation” or “unfair or unconscionable means” in the collection of any debt. 15
U.S.C. §§ 1692e, 1692f. Tusen claims that M&T violated the FDCPA “by attempting to
collect a fee from [him] that it was not entitled and by communicating with credit
reporting agencies that [he] was delinquent paying his mortgage.” (4th Am. Compl.
¶ 47.) M&T moves to dismiss this claim, arguing that it is not a debt collector.
A debt collector is any person (1) “who uses any instrumentality of interstate
commerce or the mails in any business the principal purpose of which is the collection of
any debts” or (2) “who regularly collects or attempts to collect, directly or indirectly,
debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). A
person who satisfies either definition triggers the statutory definition under the FDCPA.
The Fourth Amended Complaint alleges only that M&T is a debt collector because “[a]t
the time Bank of America transferred its mortgage servicing rights to M&T, [Tusen] was
in default.” (4th Am. Compl. ¶ 44.) In response to M&T’s Motion, Tusen argues that
M&T qualifies as a debt collector under either definition.
The first definition requires proof that M&T’s principal business activity is debt
collection. See A.W. v. Preferred Platinum Plan, Inc., 923 F. Supp. 2d 1168, 1171 (D.
Minn. 2013) (Kyle, J.). Because Tusen never alleges that the principal purpose of M&T
is debt collection, the Court concludes that this definition cannot apply. 2
M&T contends that a business collecting debts on its own account is not a debt
collector under the second statutory definition. In Henson v. Santander Consumer USA
In his responsive memorandum, Tusen refers to an M&T webpage that mentions its
collection services business, but the Court may not consider materials outside the
pleadings. Greenman v. Jessen, 787 F.3d 882, 887 (8th Cir. 2015) (citation omitted).
And even if the Court considered it, this website is insufficient because it only
demonstrates that one of M&T’s business activities is debt collection. Rockridge Tr. v.
Wells Fargo, N.A., 985 F. Supp. 2d 1110, 1137 (N.D. Cal. 2013) (stating that plaintiffs
must allege that the principal purpose is debt collection, not that debt collection is “some
part” of the business).
Inc., the Supreme Court recently concluded that a debt purchaser may “collect debts for
its own account without triggering th[is] statutory definition.” 137 S. Ct. 1718, 1721-22
(2017). It reasoned that the statute’s plain terms focus “on third party collection agents
working for a debt owner—not on a debt owner seeking to collect debts for itself.” Id. at
1721. M&T argues that, because it is attempting to collect a debt on its own account, it is
not a debt collector.
The Court does not interpret Henson so broadly. The Supreme Court held that
only “individuals and entities who regularly purchase debts originated by someone else
and then seek to collect those debts for their own account” are not debt collectors. Id.
Indeed, Henson repeatedly refers only to debts purchased. See, e.g., id. at 1721-22 (“[A]
debt purchaser like Santander may indeed collect debts for its own account without
triggering the statutory definition in dispute . . . .”); id. at 1724 (classifying Santander as
“a company collecting purchased defaulted debt for its own account”); see also Bank of
N.Y. Mellon Tr. Co. N.A. v. Henderson, 862 F.3d 29, 34 (D.C. Cir. 2017) (stating that a
bank that purchases debt is not a debt collector, even if the debt was already in default).
Here, the Fourth Amended Complaint alleges that the mortgage servicing rights were
transferred to M&T, but the record contains no allegation that M&T purchased the debt.
(4th Am. Compl. ¶¶ 15, 44.)
M&T claims that Henson only requires possession—not ownership—of a debt to
fall outside the statutory definition of a debt collector. (Def.’s Reply Mem. (Docket No.
50) at 3.) But this assertion takes the Supreme Court’s reasoning out of context, and it is
In summation, the Court concludes that Henson does not apply here, and M&T is a
debt collector under 15 U.S.C. 1692a(6). The Motion on the FDCPA claim is denied.
Tusen argues that M&T violated the FCRA by willfully and negligently failing to
investigate, review, and correct allegedly inaccurate mortgage payment data. (4th Am.
Compl. ¶¶ 52-53.)
Under the FCRA, a creditor has an “obligation to conduct a
reasonable investigation . . . when it receives a notice of dispute from a [Credit Reporting
Agency (“CRA”)].” Anderson v. EMC Mortg. Corp., 631 F.3d 905, 908 (8th Cir. 2011);
see 15 U.S.C. § 1681s-2(b). Because Tusen did not allege that FD Holdings notified
M&T of his dispute in credit reporting, the Court first notes that M&T was not subjected
to the credit-furnishing requirements of 15 U.S.C. § 1681s-2(b) as it relates to FD
Holdings. See id. at 907 (stating that the duties of a furnisher of credit information “are
triggered by notice that its information is being disputed from a CRA, not from the
consumer”). However, M&T was notified and responded to Tusen’s credit-reporting
dispute with Trans Union. (4th Am. Compl. ¶¶ 34-35.)
If a furnisher of credit information is notified of a consumer dispute, it must
conduct a reasonable investigation “‘with respect to the disputed information,’ ‘review all
relevant information provided by the . . . reporting agency,’ and, where an inaccuracy has
been found, either modify the information, delete it, or permanently block its reporting.”
Johnson v. Collector, Inc., 127 F. Supp. 3d 1012, 1017 (D. Minn. 2015) (Kyle, J.)
(quoting 15 U.S.C. § 1681s-2(b)). Any creditor who willfully or negligently fails to
comply violates the FCRA. 15 U.S.C. §§ 1681n, 1681o.
Tusen contends that M&T failed to correct what he believes are inaccuracies in
M&T’s reporting. Consequently, Tusen’s FCRA claim turns on whether M&T’s “no
data” reporting is inaccurate, and if so, whether M&T violated 15 U.S.C. § 1681s-2(b) by
failing to modify its reporting.
The Court concludes that M&T’s “no data” reporting here is not inaccurate
because the relevant time period of the “no data” reporting was during Tusen’s
bankruptcy proceedings. Other federal courts have reached the same conclusion on
similar facts. See Groff v. Wells Fargo Home Mortg., Inc., 108 F. Supp. 3d 537, 542
(E.D. Mich. 2015) (concluding that a bank could not report payments voluntarily made
during Chapter 7 bankruptcy proceedings because it would suggest “the bank was
engaged in exactly the conduct prohibited by the bankruptcy”); Horsch v. Wells Fargo
Home Mortg., 94 F. Supp. 3d 665, 674-75 (E.D. Pa. 2015) (dismissing claims that alleged
that reporting a zero balance on post-bankruptcy accounts violated the FCRA).
Tusen argues that, unlike a Chapter 7 bankruptcy, his mortgage was not
discharged in his Chapter 13 bankruptcy proceedings. But this distinction is irrelevant
because the filing of any bankruptcy petition generally stays a collection action. 11
U.S.C. § 362. Thus, the Court concludes on the circumstances of case that reporting “no
data” was not inaccurate or misleading because it reflected the very nature of bankruptcy
proceedings. M&T’s Motion on the FCRA claim is granted.
The MDTPA provides injunctive relief to “[a] person likely to be damaged by a
deceptive trade practice.” Minn. Stat. § 325D.45, subd. 1. A person engages in a
deceptive trade practice if, in the course of business, the person’s conduct “creates a
likelihood of confusion or of misunderstanding.” Minn. Stat. § 325D.44, subd. 1(13).
Tusen alleges that two separate communications by M&T violated the MDTPA: “(1)
collect[ing] from [him] a fee that it was not entitled and (2) repeatedly confirming to
credit reporting agencies that [he] was late paying his mortgage.” (4th Am. Compl.
¶¶ 62-65.) The MDTPA only “provides relief from future damage, not past damage.”
Gardner v. First Am. Title Ins. Co., 296 F. Supp. 2d 1011, 1020 (D. Minn. 2003) (Kyle,
J.) (quoting Lofquist v. Whitaker Buick-Jeep-Eagle, Inc., No. C5-01-767, 2001 WL
1530907, at *2 (Minn. Ct. App. Dec. 4, 2001)).
Tusen contends that future harm is likely because M&T is still reporting “no data”
for his mortgage payments during relevant time period. But as discussed above, M&T’s
reporting is not inaccurate, and the Fourth Amended Complaint contains no allegation
that M&T continues to report inaccurately. Indeed, Tusen alleges that he ultimately
received “an accurate credit report” from a different credit reporting agency. (4th Am.
Compl. ¶¶ 40-41.) Tusen also contends that “it is possible that [M&T], absent an
injunction, could refuse to report the on-time payments” in the future. (Pl.’s Opp’n Mem.
(Docket No. 42) at 15.) But “[m]erely demonstrating ‘the possibility of harm’ is not
enough.” Chlorine Inst., Inc. v. Soo Line R.R., 792 F.3d 903, 915 (8th Cir. 2015)
(quoting Roudachevski v. All-Am. Care Ctrs., Inc., 648 F.3d 701, 706 (8th Cir. 2011)).
Tusen’s MDTPA claim fails as a matter of law. 3
Injunctive relief is also inappropriate related to M&T’s demand of $500 in attorney’s
fees because Tusen concedes that M&T withdrew that demand. (4th Am. Compl. ¶ 24.)
Even if Tusen’s claim alleged a likelihood of future harm, an MDTPA claim must
also allege statements that are “provably false.” McClure v. Am. Family Mut. Ins. Co.,
223 F.3d 845, 855 (8th Cir. 2000). Here, the statements must create “a likelihood of
confusion or of misunderstanding” to be provably false. Minn. Stat. § 325D.44, subd.
1(13). The Court concludes that M&T’s reporting is not provably false because it is not
inaccurate or misleading. M&T’s Motion on Tusen’s MDTPA claim is granted.
The Court concludes that Tusen’s FCRA and MDTPA claims are without merit as
to M&T and grants the Motion with respect to these claims. Because M&T is a debt
collector, the Court denies the Motion on Tusen’s FDCPA claim. Accordingly, IT IS
HEREBY ORDERED that:
Defendant M&T’s Motion to Dismiss (Docket No. 29) is GRANTED in
part and DENIED in part; and
Counts II and III of Tusen’s Fourth Amended Complaint (Docket No. 54)
are DISMISSED with prejudice as to Defendant M&T.
Dated: October 31, 2017
s/ Paul A. Magnuson
Paul A. Magnuson
United States District Court Judge
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