Corns v. Residential Credit Solutions, Inc.

Filing 28

ORDER Denying Defendant's 7 Motion to Dismiss. Signed by Chief Judge Gloria M. Navarro on 3/3/16. (Copies have been distributed pursuant to the NEF - PS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ROBERT S. CORNS,
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Plaintiff,
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vs.
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RESIDENTIAL CREDIT SOLUTIONS, INC., )
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Defendant.
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Case No.: 2:15-cv-1233-GMN-VCF
ORDER

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Pending before the Court is the Motion to Dismiss, (ECF No. 7), filed by Defendant

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Residential Credit Solutions, Inc. (“RCS”). Plaintiff Robert Corns (“Plaintiff”) filed a

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Response in opposition, (ECF No. 24), and RCS replied, (ECF No. 27). For the reasons set

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forth herein, the Motion to Dismiss will be DENIED.

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I.

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BACKGROUND
This case centers upon allegations that RCS reported false and misleading information

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regarding the status of Plaintiff’s mortgage, in violation of the Fair Credit Reporting Act

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(“FCRA”). (Compl., ECF No. 1). Specifically, the Complaint alleges that Plaintiff filed for

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Chapter 13 bankruptcy protection in 2009. (Id. ¶ 7). On October 22, 2010, Plaintiff agreed to a

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modification of a mortgage loan, which was outside of the bankruptcy plan. (Id. ¶ 11). In April

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2014, Plaintiff received a bankruptcy discharge. (Id. ¶ 8). Two months later, in June 2014,

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RCS began servicing Plaintiff’s mortgage loan. (Id. ¶ 9).

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Plaintiff alleges that RCS subsequently misreported Plaintiff’s account as “discharged in

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bankruptcy” to Experian, Equifax, and TransUnion. (Id. ¶ 10). Plaintiff claims to have disputed

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this reporting with each of the three credit reporting agencies on or around May 8, 2015. (Id. ¶¶

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15-16). On May 25, 2015, RCS corrected the report with Experian by deleting references to
Plaintiff’s bankruptcy. (Id. ¶ 18). However, Plaintiff claims that RCS failed to correct its
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reporting with Equifax and TransUnion. In regard to Equifax, Plaintiff alleges that RCS

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“verified” Plaintiff’s account as being included within the bankruptcy. (Id. ¶ 20). In regard to

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TransUnion, Plaintiff claims that RCS deleted the entire line item from the report, rather than

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correcting it. (Id. ¶ 19).

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Based on these allegations, the Complaint sets forth a cause of action against RCS for

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violating § 1681s-2(b) of the FCRA. In the instant Motion, RCS argues that this cause of

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action should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).

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II.

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LEGAL STANDARD
Dismissal is appropriate under Rule 12(b)(6) where a pleader fails to state a claim upon

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which relief can be granted. Fed. R. Civ. P. 12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,

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555 (2007). A pleading must give fair notice of a legally cognizable claim and the grounds on

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which it rests, and although a court must take all factual allegations as true, legal conclusions

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couched as a factual allegations are insufficient. Twombly, 550 U.S. at 555. Accordingly, Rule

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12(b)(6) requires “more than labels and conclusions, and a formulaic recitation of the elements

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of a cause of action will not do.” Id. “To survive a motion to dismiss, a complaint must contain

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sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its

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face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A

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claim has facial plausibility when the plaintiff pleads factual content that allows the court to

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draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. This

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standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.

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If the court grants a motion to dismiss for failure to state a claim, leave to amend should

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be granted unless it is clear that the deficiencies of the complaint cannot be cured by

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amendment. DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992). Pursuant

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to Rule 15(a), the court should “freely” give leave to amend “when justice so requires,” and in

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the absence of a reason such as “undue delay, bad faith or dilatory motive on the part of the

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movant, repeated failure to cure deficiencies by amendments previously allowed, undue

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prejudice to the opposing party by virtue of allowance of the amendment, futility of the

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amendment, etc.” Foman v. Davis, 371 U.S. 178, 182 (1962).

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III.

DISCUSSION

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The Fair Credit Reporting Act (“FCRA”) requires that entities which furnish information

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to credit reporting agencies report accurate information and take action to investigate notices of

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dispute by consumers. See 15 U.S.C. § 1681s-2. Specifically, 15 U.S.C. § 1681s-2(b)(1)

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governs the responsibilities of furnishers of information and sets forth the necessary elements to

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state a claim under the FCRA. See, e.g., Klaizner v. Countrywide Fin., No. 2:14-cv-1543-JCM-

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PAL, 2015 WL 627927, at *5 (D. Nev. Feb. 12, 2015).
To state a claim under the FCRA, a plaintiff must show that: (1) he found an inaccuracy

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in his credit report; (2) he notified a credit reporting agency; (3) the credit reporting agency

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notified the furnisher of the information about the dispute; and (4) the furnisher failed to

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investigate the inaccuracies or otherwise failed to comply with the requirements of 15 U.S.C. §

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1681s-2(b)(1)(A)-(E). Id.; see also Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154

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(9th Cir. 2009).

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In this case, Plaintiff’s claim satisfies all of these elements. Plaintiff alleges that upon

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discovering his account with RCS had been reported as “discharged in bankruptcy,” he

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promptly filed disputes with Equifax, Experian, and TransUnion. (Compl. ¶¶ 10, 15, 16).

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Furthermore, Plaintiff alleges that RCS received notice of his disputes on May 14, 2015, and

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though RCS appropriately corrected the information in regard to Experian, it failed to do the

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same in regard to Equifax and TransUnion. (Compl. ¶¶ 17-20).

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Pursuant to the FCRA, a furnisher, upon discovering that it provided incomplete or

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inaccurate information, must report corrections to all credit reporting agencies to which it

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originally furnished the information. 15 U.S.C § 1681s-2(b)(1)(D). Here, Plaintiff has

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sufficiently alleged that RCS discovered it had provided incomplete or inaccurate information

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regarding his mortgage account, yet failed to appropriately report corrections to two of the three

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credit reporting agencies. Accordingly, the Court finds that Plaintiff has stated a claim under §

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1681s-2(b), and RCS’ Motion will be denied.

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IV.

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CONCLUSION
IT IS HEREBY ORDERED that Defendant Residential Credit Solutions Inc.’s Motion

to Dismiss, (ECF No. 7), is DENIED.
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DATED this _____ day of March, 2016.

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___________________________________
Gloria M. Navarro, Chief Judge
United States District Court

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