Wilson v. HSBC Bank, USA et al

Filing 61

OPINION & ORDER re: 59 MOTION to Dismiss RE-FILE of Document 56 filed by HSBC Bank, USA. For the forgoing reasons, Defendant's motion to dismiss Plaintiff's FCRA claims as against HSBC is GRANTED in its entirety. Given the Court's Opinion and Order dated March 22, 2018, which dismissed all claims against Defendants Mortgageit, Inc., Mortgage Electronic Registration System, Inc., Prudential Rand Realty, Inc., and Does 1-100, with prejudice, any claims asser ted in the Amended Complaint against them are similarly dismissed. The Amended Complaint is deemed dismissed in its entirety. The Clerk of the Court is respectfully directed to mail a copy of this Opinion to pro se Plaintiff, show proof of service on the docket, terminate the motion at ECF No. 59, and terminate the action. SO ORDERED. (Signed by Judge Nelson Stephen Roman on 3/1/2019) (anc) Transmission to Docket Assistant Clerk for processing. Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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SHERWIN A. WILSON,
Plaintiff,
-against16-cv-8405 (NSR)
OPINION & ORDER

HSBC BANK, USA, as trustee of Bcap-2008Inl; a securitized trust; MORTGAGEIT,
INC., a corporation; MORTGAGE
ELECTRONIC REGISTRATION SYSTEM
INC., as nominee ofMortgageit, Inc.;
PRUDENTIAL RAND REALTY, INC., a
business; All persons and entities with an
interest in real property located at 4
WILLIAM ST., OSSINING, NEW YORK,
and DOES 1-100, inclusively,
Defendants.
NELSON S. ROMAN, United States District Judge

Plaintiff Sherwin A. Wilson ("Plaintiff'), proceeding prose, commenced this action on or
about October 28, 2016, asserting multiple claims against Defendant HSBC Bank ("Defendant" or
"HSBC") and others, for, inter alia, breach of contract. (ECF No. 1). On May 21, 2018, Plaintiff
filed an amended complaint asserting claims under the Fair Credit Reporting Act ("FCRA). (ECF
No. 49.) Presently before the Court is Defendant's Motion to Dismiss the Amended Complaint
pursuant to Federal Rules of Civil Procedure 12(b)(6) ("Rule 12(b)(6)"). For the following reasons,
Defendant's motion is GRANTED.

BACKGROUND
On October 8, 2010, the Defendant commenced a mortgage foreclosure action in New York
State Supreme Court, County of Westchester, against Plaintiff related to residential premises 4
William Street, Ossining, New York. 1 (Def. Mot. 2) The state court complaint alleged that the

1

Many of the facts concerning the mortgage foreclosure action were derived from Plaintiffs original complaint and is
provided for background information only.

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Plaintiff failed to comply with the terms and conditions of the mortgage by failing to pay the
required charges. (Mem. of Law in Support of Mot. to Dismiss Pl. Compl. 2, ECF No. 26.) On
March 31, 2016, the state court issued a final foreclosure judgment in favor of HSBC. (Def. Mot. 2.)
Plaintiff filed the instant action on October 28, 2016.
In his original complaint, Plaintiff asserted approximately fourteen claims sounding in, inter
alia, fraudulent misrepresentation, breach of duty of good faith and fair dealing, breach of contract,
for an accounting, and seeking to acquire quiet title to realty. By Opinion and Order dated March
23, 2018, this Court dismissed with prejudice all of Plaintiff’s claims, including all claims asserted
against Mortgageit, Inc., Mortgage Electronic Registration System, Inc., Prudential Rand Realty,
Inc., and Does 1-100, except for claims arising under the FCRA as against HSBC. Plaintiff’s FCRA
claims against HSBC were dismissed without prejudice to replead. Thereafter, on May 21, 2018,
Plaintiff filed his Amended Complaint asserting claims under the FCRA. 2 The Amended Complaint
is the operative complaint.
In his Amended Complaint, Plaintiff alleges that on or about May 4, 2006, he executed a
mortgage loan agreement on a single-family home located on 4 William Street, Ossaning, New
York. (Am. Compl. ¶ 13(a), ECF 49.) Shortly after “escrow closed,” a dispute arose concerning the
terms and conditions of the agreement. (Id.) According to the Plaintiff, the mortgage documents
contained different terms than those that were promised by the mortgage lender. (Mem. of Law in
Support of Mot. to Dismiss Am. Compl. (“Def. Mot.”) 3, ECF No. 56 citing Compl. ¶13(a)) 3
Further, the Plaintiff alleged that at the time he signed the mortgage documents the lender made
false statements regarding the loan’s interest rate, monthly payments, and fees. (Id.) Plaintiff further

2

Plaintiff’s Amended Complaint is incorrectly denominated as a Second Amended Complaint.
Generally, pursuant to Rule 12(b)(6), the motion court may not consider evidence or facts proffered by a plaintiff in
opposing the motion. See, Thomas v. Calero, 824 F.Supp.2d 488, 497 (S.D.N.Y.) (internal citations omitted). The
information is provided merely to help clarify pro se Plaintiff’s claim.

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2

alleges that the mortgage loan was misleading because the interest rate changed over time. (Compl.
¶13(b))
Interpreting the allegations in the Amended Complaint liberally, Plaintiff suggest that HSBC
failed to provide “accurate and timely consumer debt information to CRAs 4 upon request.” That
HSBC failed to report payments made by Plaintiff presumably on his mortgage loan. As a result of
HSBC’s failure to provide accurate information to the CRAs, Plaintiff suffered “actual damages.”
Lastly, Plaintiff alleges that he notified the CRAs in writing of the misinformation and HSBC failed
to correct the information. 5
STANDARD OF REVIEW
To withstand a motion to dismiss under Rule 12(b)(6), a complaint must contain “sufficient
factual matter, accepted as true, ‘to state a claim that is plausible on its face.’” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw a reasonable inference that the defendant is liable for the misconduct
alleged.” Id. While the court must accept all of the allegations in the complaint as true, the court is
not “bound to accept as true legal conclusions couched as factual allegations.” Id. A plaintiff
“armed with nothing more than conclusions” does not unlock the doors to discovery. Id.
Determining whether a complaint states a plausible claim for relief is a context-specific task for the
court “that requires the reviewing court to draw on its judicial experience and common sense.” Id. at
679. However, the “submissions of a pro se litigant must be construed liberally and interpreted ‘to

4

CRA is an abbreviation for credit reporting agency.
Plaintiff references Exhibit H, attached to his Amended Complaint as proof that he notified the respective CRAs,
presumably Experian, Equifax and TransUnion. The document, however, is letter from the Federal Trade Commission
concerning his complaint of financial fraud. The Federal Trade Commission is not a CRA.

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raise the strongest arguments that they suggest.’” Triestman v. Fed. Bureau of Prisons, 470 F.3d
471, 474 (2d Cir. 2006).
DISCUSSION
The Defendant moves to dismiss the Amended Complaint pursuant to Rules 12(b)(6). The
Defendant asserts that the Plaintiff has failed to assert plausible claims under the FCRA. Plaintiff’s
claim under 15 U.S.C. § 1681s-2(b) (“Section 1681s-2(b)”) lack sufficient factual allegations to
support the claim. (Def. Mot. 6.) Further, Plaintiff’s claim under 15 U.S.C. § 1681s-2(a) (“Section
1681s-2(a)”) lacks merit because the statute does not create a private cause of action (Def. Mot. 5).
This Court agrees.
I.

FCRA
Congress enacted the FCRA “to ensure fair and accurate credit reporting, promote efficiency

in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47,
52 (2007); 15 U.S.C. § 1681. As such, the FCRA “imposes several duties on those who furnish
information to consumer reporting agencies.” Longman v. Wachovia Bank, N.A., 702 F.3d 148, 150
(2d Cir. 2012). Specifically, “the FCRA places distinct obligations on three types of entities:
consumer reporting agencies, users of consumer reports, and furnishers of information 6 to consumer
reporting agencies.” Redhead v. Winston & Winston, P.C., No. 01-CV-11475, 2002 U.S. Dist.
LEXIS 17780, at *8 (S.D.N.Y. Sept. 20, 2002); 15 U.S.C. §§ 1681s-2(a)(1) − (2). These duties
include refraining from knowingly reporting inaccurate information and correcting any information
they later discover to be inaccurate. Longman, 702 F.3d at 150.

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While the FCRA does not define “furnisher of information,” courts in the Second Circuit have “interpreted the phrase
to mean entities that transmit, to credit reporting agencies, information relating to debts owed by consumers.” Jenkins v.
Capital One, N.A., No. 14-CV-5683, 2017 U.S. Dist. LEXIS 57512, at *13 (E.D.N.Y. Feb. 28, 2017) (citing Barberan
v. Nationpoint, 706 F. Supp. 2d 408, 426 n.11 (S.D.N.Y. 2010); see also Gorman v. Experian Info. Solutions, Inc., No.
07-CV-1846, 2008 LEXIS 94083, at *11, n.4 (S.D.N.Y. Nov. 18, 2008) (citing 15 U.S.C. § 1681s-2) (“HSBC is a
‘furnisher of information’ within the meaning of the FCRA”).

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A.

Section 1681s-2(b)
Under the FCRA, consumers have the right to dispute information reported to a credit

reporting agency (“CRA”). 7 Longman, 702 F.3d at 150-51; 15 U.S.C. § 1681g(c)(1)(B)(iii). Section
1681s-2(b) provides a private right of action for consumers that “imposes a duty upon those who
furnish information to credit reporting agencies to conduct an investigation upon notice that a
consumer has disputed the accuracy or completeness of reported information.” Longman v.
Wachovia Bank, N.A., No. 09-CV-01669, 2011 U.S. Dist. LEXIS 105450, at *10-11 (Dist. CT.
Sept. 16, 2011). If a dispute is filed with the reporting agency, both the agency and the furnisher of
the information have a duty to reasonably investigate and verify that the information is accurate.
Longman, 702 F.3d at 151 (citing 15 U.S.C. § 1681s-2(b)); Nguyen v. Ridgewood Sav. Bank, 66 F.
Supp. 3d. 299, 304 (E.D.N.Y. 2014) (same).
In order to trigger the duty to investigate, the furnisher must receive “notice pursuant to §
1681i(a)(2).” Longman, 2011 U.S. Dist. LEXIS 105450 at *11. Section 1681i(a)(2) requires that the
CRA, upon notice of a dispute, report the dispute to the “person who furnished the information and
to provide all relevant information received from the consumer disputing the information.” Id. The
furnisher’s notice must be received from a CRA and not the consumer directly. Id.; Markovskaya v.
Am. Home. Mortg. Servicing, Inc., 867 F. Supp. 2d 340, 344 (E.D.N.Y. 2012) (“Where a consumer
shows only that the furnisher received notice of the dispute from the consumer, but not from a credit
reporting agency, no claim is stated.); Prakash v. Homecomings Fin., No. 05-CV-2895, 2006
LEXIS 62911, at *3 (E.D.N.Y. Sept. 6, 2006) (“Under § 1681s-2(b) a defendant has no duty to
investigate a credit dispute unless defendant received notice of the dispute from a consumer
reporting agency.”); Kane v. Guar. Residential Lending, Inc., No. 04-CV-4847, at *11 (E.D.N.Y.
May 16, 2005) (“The duty to investigate in Subsection (b) is triggered only after a furnisher of

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Throughout the case law “Credit Reporting Agency” and “Consumer Reporting Agency” are used interchangeably.

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information receives notice from a credit reporting agency of a consumer’s dispute). In order for a
plaintiff to prevail on a claim arising under Section 1681s-2(b), the Plaintiff must establish (1) the
furnisher received notice of a credit dispute from a credit reporting agency and, (2) the furnisher
thereafter acted in ‘willful or negligent noncompliance with the statute.” Markovskaya, 867 F.
Supp. at 344. Accordingly, in order to state a plausible claim against the Defendant for a violation
of Section 1681s-2(b), Plaintiff must allege that the Defendant received notice from a CRA stating
that the Plaintiff is disputing the accuracy of the reported information.
Plaintiff alleges that the Defendant failed to provide accurate and timely reporting to CRAs
and that as a result of these actions his credit score was damaged. 8 (Am. Compl. at 13.) However,
the Defendant’s duty to investigate was never triggered. The Plaintiff states that he gave notice to
all CRAs, but relies on written correspondence with the Federal Trade Commission (“FTC”). (Id. at
14; Exh. H.) However, the FTC is not a recognized CRA as defined by 15 U.S.C. § 1681a(f). See
Nguyen, 66 F. Supp. 3d. at 306 (“A consumer reporting agency is an entity which, in exchange for a
monetary fee, ‘regularly engages in whole or in part in the practice of assembling or evaluating
consumer credit information or other information on consumers for the purpose of furnishing
consumer reports to third parties.’”) (citing 15 U.S.C. § 1681a(f)). Further, this letter informed the
Plaintiff that the FTC does not intervene in individual disputes but referred him to the Consumer
Financial Protection Bureau (“CFPB”) so that he may “possibly participate in their mediation
process.” 9 (Exh. H.) Further, because the CFPB is also not a CRA, 10 they had no duty to report the
dispute to the Defendant. The Plaintiff asserts that “the CRA’s had a duty to contact HSBC and

8

The Plaintiff points to numerous credit applications that were denied, as well as two government contracts. See Am.
Compl. at 13-4; Exh. D-G.
9
The letter emphasized that the CFPB is required to mediate some (emphasis added) individual complaints through its
dispute resolution process and that the service is only provided if the companies have agreed to participate in the
mediation. See Am. Compl. Exh. H.
10
See Nguyen v. Ridgewood Sav. Bank, 66 F. Supp. 3d. 299, 306 (E.D.N.Y. 2014) (finding that the FDIC Consumer
Response Center is not a consumer reporting agency).

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failed, after due inquiry to advise the Plaintiff in writing of the existence of the inquiry and last, the
CRA failed to confirm the dispute or resolve it…” (Am. Compl. ¶ 170(b)) However, because the
Plaintiff did not contact the appropriate authority, the Defendant’s duty to investigate was never
triggered under § 1681s-2(b). Thus, the Court finds that the Plaintiff has failed to state a claim
pursuant to § 1681s-2(b). Accordingly, the Plaintiff’s claim is dismissed.
B.

Section 1681s-2(a)
The Plaintiff also alleges that the Defendant deliberately reported inaccurate missed

payments and non-payments to credit bureaus on 49 occasions. (Am. Compl. at 13.) However, to
the extent Plaintiff alleges the Defendant is liable to him for the inaccuracy of these reports, he fails
to state a claim because there is no private cause of action for violations of § 1681s-2(a). Longman,
792 F.3d at 151; Barberan v. Nationpoint, 706 F. Supp. 2d 408, 427 (S.D.N.Y. 2010) “The statute
expressly provides that Section 1681s-2(a) ‘shall be enforced exclusively…by the Federal agencies
and officials and the state officials identified in Section 1681 of this title’” Nguyen, 66 F. Supp. 3d.
at 304 (citing 15 U.S.C. § 1681s-2(a)); see also Redhead, 2002 U.S. Dist. LEXIS 17052, at *12
(“There is no private cause of action under Section 1681s-2(a), for the FCRA limits the enforcement
of this subsection to government agencies and officials”) (citing collected cases). 11 Accordingly, the
Amended Complaint fails to state a claim and is dismissed.
C.

Section 15 U.S.C § 1681e(b)
Section 1681e(b) provides, in relevant part, that “[w]henever 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.

11

See also Nguyen v. Ridgewood Sav. Bank, 66 F. Supp. 3d. 299, 304 (E.D.N.Y. 2014) (dismissing a claim where the
Plaintiff alleged the Defendants were liable to him for inaccurately reporting missed payments and non-payments to
credit bureaus on 22 occasions).

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1681 e(b ). In order to assert a negligence claim under Section 1681 e(b ), a Plaintiff must allege that
the CRA provided patently incorrect or misleading information which can be expected to have an
adverse effect, failed to follow reasonable procedures, and the incorrect or misinformation causally
resulted in actual damages. See Wenning v. On-Site Manager, Inc., No. 14 CIV. 9693, 2016 WL
3538379, at *9 (S.D.N.Y. June 22, 2016). As previously discussed, Defendant's duty to investigate
was never triggered. Nor does Plaintiff allege that procedures were not reasonably followed. 12

CONCLUSION
For the forgoing reasons, Defendant's motion to dismiss Plaintiffs FCRA claims as against
HSBC is GRANTED in its entirety. 13 Given the Comi' s Opinion and Order dated March 22, 2018,
which dismissed all claims against Defendants Mmigageit, Inc., Mortgage Electronic Registration
System, Inc., Prudential Rand Realty, Inc., and Does 1-100, with prejudice, any claims asserted in
the Amended Complaint against them are similarly dismissed. The Amended Complaint is deemed
dismissed in its entirety. The Clerk of the Court is respectfully directed to mail a copy of this
Opinion to prose Plaintiff, show proof of service on the docket, terminate the motion at ECF No.
59, and terminate the action.
Dated: March 1, 2019
White Plains, New York

SO ORDERED:

cNEtSGffs.1["6~United States District Judge

12
The Court notes that Defendant HSBC is not alleged to be a CRA but is alleged to be the lender of the refinanced
mortgage.
13
The Comi notes that Plaintiff failed to asse1i any measure of damages. In supp mi of his claims, Plaintiff attached
documents to his Amended Complaint from New York City agencies, Exhibit E, which indicate that his request for
proposals to provide residential services were denied for reasons unrelated to his claims.

8