Kehren v. JP Morgan Chase Bank
ORDER granting in part and denying in part 16 Defendant's Motion to Dismiss for Failure to State a Claim; denying as moot 20 Plaintiff's Motion for Leave to File Supplemental Memorandum. Signed by Judge George C. Smith on 1/26/17. (sem)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
Case No. 2:16-cv-133
Magistrate Judge Deavers
JPMORGAN CHASE BANK,
OPINION AND ORDER
This matter is before the Court upon Defendant JPMorgan Chase Bank’s Motion to
Dismiss (Doc. 16). Plaintiff Jason Kehren filed a Response in Opposition (Doc. 18) to which
Chase replied (Doc. 19).
Additionally pending are Plaintiff’s Motion for Leave to file a
Supplemental Memorandum (Doc. 20) which Defendant opposed (Doc. 23). The issues before
the Court are fully briefed and ripe for review. For the reasons that follow, Defendant’s Motion
to Dismiss is GRANTED in part and DENIED in part. Plaintiff’s Motion for Leave to file is
DENIED as moot.
Plaintiff Jason Kehren (“Plaintiff”) brings this Fair Credit Reporting Act (“FCRA”) case
against Defendant JPMorgan Chase Bank (“Chase”) for Chase’s alleged violations of the FCRA.
Plaintiff alleges that Chase incorrectly reported a debt as owing even though Plaintiff had filed
for bankruptcy and received a discharge under Chapter 13 of the Bankruptcy Code. (Doc. 13,
Am. Compl. at ¶ 5). Plaintiff notified Chase of his bankruptcy filing, but the error was not
corrected. (Id. at ¶ 6). After several years of attempting to remedy the error, Plaintiff was
rejected for a home loan because of credit issues. Chase fixed the error in December 2015. (Id.).
Plaintiff filed suit in this case in February 2016, alleging that Chase violated the FCRA in
its reporting of his debt. Specifically, Plaintiff asserts: (1) Chase violated Plaintiff’s consumer
rights by “making false representations about the amount and status of Plaintiff’s debt to credit
reporting agencies;” (2) Chase “failed to accurately conduct a reasonable investigation” into the
errors on Plaintiff’s credit report; and (3) Chase “violated the discharge injunction by repeatedly
reporting a debt owed” even though Chase was aware of Plaintiff’s past bankruptcy filing. (See
Doc. 13, Am. Compl. at ¶¶ 5, 13, 18). Plaintiff seeks actual damages, statutory damages,
punitive damages, and costs of this action together with reasonable attorney’s fees for Chase’s
alleged willful noncompliance and alleged negligent noncompliance in violation of the FCRA.
(Id. at ¶ 20). Plaintiff also seeks to hold Chase in contempt for alleged violation of the discharge
injunction, together with attorney’s fees and punitive damages. (Id. at ¶ 21). Chase filed the
instant Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure,
arguing that dismissal is warranted on several grounds which will be discussed below.
STANDARD OF REVIEW
Defendant brings this motion pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure, alleging that Plaintiff failed to state a claim upon which relief can be granted.
Under the Federal Rules, any pleading that states a claim for relief must contain a “short
and plain statement of the claim” showing that the pleader is entitled to such relief. Fed. R. Civ.
P. 8(a)(2). To meet this standard, a party must allege sufficient facts to state a claim that is
“plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A claim will be
considered “plausible on its face” when a plaintiff sets forth “factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Rule 12(b)(6) allows parties to challenge the sufficiency of a complaint under the
foregoing standards. In considering whether a complaint fails to state a claim upon which relief
can be granted, the Court must “construe the complaint in the light most favorable to the
plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the
plaintiff.” Ohio Police & Fire Pension Fund v. Standard & Poor’s Fin. Servs. LLC, 700 F.3d
829, 835 (6th Cir. 2012) (quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007)).
However, “the tenet that a court must accept a complaint’s allegations as true is inapplicable to
threadbare recitals of a cause of action’s elements, supported by mere conclusory statements.”
Iqbal, 556 U.S. at 663. Thus, while a court is to afford plaintiff every inference, the pleading
must still contain facts sufficient to “provide a plausible basis for the claims in the complaint”; a
recitation of facts intimating the “mere possibility of misconduct” will not suffice. Flex Homes,
Inc. v. Ritz-Craft Corp of Mich., Inc., 491 F. App’x 628, 632 (6th Cir. 2012); Iqbal, 556 U.S. at
Chase seeks to dismiss each of Plaintiff’s claims on various grounds. With respect to
Count One, Chase argues that Plaintiff cannot allege either a negligent or willful FCRA violation
by Chase. Chase argues that Plaintiff fails to allege actual damages and thus, does not set forth a
sufficient negligent FCRA violation claim. Chase also argues Plaintiff’s Amended Complaint
does not contain allegations to support a claim of a willful FCRA violation. Chase last argues
for dismissal of Count Two, asserting that damages are not available in private actions to enforce
a discharge injunction because 11 U.S.C. § 524 does not include an enforcement mechanism.
The Court will address each of these arguments in turn.
Negligent Violation of the FCRA
Chase first contends that Plaintiff fails to allege actual damages arising from the claim
sufficient to state a claim for negligent violation of the FCRA.
It is well-settled that a claim of a negligent FCRA violation requires the plaintiff to
sustain actual damages as a result of the violation. The FCRA states, in pertinent part:
Any person who is negligent in failing to comply with any requirement imposed
under this subchapter with respect to any consumer is liable to that consumer in
an amount equal to the sum of—
(1) any actual damages sustained by the consumer as a result of the failure; and
(2) in the case of any successful action to enforce any liability under this section,
the costs of the action together with reasonably attorney’s fees as determined by
15 U.S.C. § 1681o. Actual damages can take many forms including both concrete damages in
the forms of costs and “humiliation and mental distress.” Bach v. First Union Nat. Bank, 149 F.
App'x 354, 361 (6th Cir. 2005); see also Robinson v. Equifax Info. Servs., LLC, 560 F.3d 235,
240 (4th Cir. 2009) (damages included “(1) loss of opportunity in the home mortgage market,
(2) emotional distress, and (3) loss of income from missing approximately 300 hours of work
addressing [the defendant’s] mistakes.”).
Chase argues Plaintiff’s only actual damage allegedly caused by Chase’s failure to
provide accurate information is Plaintiff was rejected for a home loan and lost any potential
equity to be gained from a home purchase. Chase argues that the loss of a home loan is not an
economic damage, “as the borrower would similarly be free from the obligation to repay the
loan.” (Doc. 16, Mot. at 5). In response, Plaintiff argues that denial of a home loan application
is a sufficient allegation of actual damages to constitute a claim for negligent violation of the
FCRA. (Doc. 18, Mem. Opp. at 4). Plaintiff further asserts that the Amended Complaint also
alleges the number of inquiries into Plaintiff’s credit history also had an adverse impact on his
credit score. (Id. at 5).
The Court finds Plaintiff has sufficiently alleged actual damages resulting from Chase’s
alleged violation of the FCRA to survive Chase’s Motion to Dismiss.
In his Amended
Complaint, Plaintiff asserts that Chase’s alleged credit reporting errors caused Plaintiff to be
rejected for a home loan and that damages were approximately $40,000. Chase argues that
damages arising out of a loss of potential equity are not plausible but provides no basis for this
claim. As the Fourth Circuit Court of Appeals has recognized, the “loss of opportunity in the
home mortgage market” is a viable basis for actual damages. Robinson, 560 F.3d at 240.
Although Chase argues that lost opportunity damages are “far too speculative to be recoverable,”
Chase will have the chance to advance that argument at later stages in this litigation. (Doc. 19,
Reply at 3–4 (citing Casella v. Equifax Credit Info. Servs., 56 F.3d 469, 475–76). Whether
Plaintiff can prove his damages—as the plaintiff failed to do in Casella—is a question for a later
Casella, 56 F.3d at 471 (noting case was decided at summary judgment stage).
Accordingly, Chase’s request for dismissal of Plaintiff’s claim for negligent violation of the
FCRA is denied.
Willful Violation of the FCRA
Chase next contends that Plaintiff’s Amended Complaint does not contain sufficient
allegations to suggest Chase committed a willful violation of the FCRA because Plaintiff has not
alleged any facts which, if proven, would show Chase knowingly and intentionally committed an
act in conscious disregard for the rights of others. In his response, Plaintiff does not address
Section 1681n(a) establishes that “[a]ny person who willfully fails to comply with any
requirement imposed under this subchapter with respect to any consumer is liable to that
consumer . . . .” The Supreme Court has definitively determined that the term “willfully” in
§ 1681n encompasses knowing and reckless violations of the FCRA. Safeco Ins. Co. of Am. v.
Burr, 551 U.S. 47, 56 (2007).
After construing all factual allegations in Plaintiff’s Amended Complaint as true—as it is
required to do—the Court finds Plaintiff has met this relatively low standard.
Amended Complaint expressly states that Plaintiff notified Chase and a credit reporting agency,
which in turn also notified Chase, but the information on Plaintiff’s report was still not corrected
over a period of several years. Plaintiff alleges that despite these notifications, Chase continued
to report that Plaintiff owed Chase $10.
Plaintiff also alleges Chase “only conducted a
reasonable investigation” after Plaintiff had obtained counsel. (Doc. 13, Am. Compl. at ¶ 13).
These factual allegations throughout Plaintiff’s Amended Complaint allow the Court to draw a
reasonable inference that Chase knowingly failed to conduct a reasonable investigation into the
matter in violation of the FCRA. D’Ambrosio v. Marino, 747 F.3d 378, 383 (6th Cir. 2014)
(“For a complaint to survive [a 12(b)(6) motion], it must . . . contain either ‘direct or inferential
allegations respecting all material elements necessary for recovery under a viable legal theory.’”
(quoting Philadelphia Indem. Ins. Co. v. Youth Alive, Inc., 732 F.3d 645, 649 (6th Cir. 2013))).
In construing all well-pleaded factual allegations in favor of Plaintiff, the Court finds that
Plaintiff has stated a plausible claim upon which relief can be granted, i.e., that Chase knowingly
and/or recklessly committed a violation of the FCRA.
Chase argues that Plaintiff’s second cause of action—violation of the discharge
injunction—has no reasonable ground under the law because the Sixth Circuit has held that
damages are not available in private actions to enforce a discharge injunction. Plaintiff, responds
by relying on In re Perviz, 302 B.R. 357, 369–370 (Bankr. N.D. Ohio 2003), a bankruptcy court
decision, as support that Plaintiff may bring an action to hold Chase in contempt. Plaintiff
further asks this Court to “remove the claim to the correct forum or to decide in what other way
this claim should proceed.” (Doc. 18, Mem. Opp. at 7).
As Chase correctly points out, the Sixth Circuit has determined that there is no private
right of action under 11 U.S.C. § 524. Pertuso v. Ford Motor Co., 233 F.3d 417, 422–23 (6th
Cir. 2000). Further, it is not the job of the Court to instruct Plaintiff where to file a complaint or
decide how a claim should proceed. It is up to the parties to determine litigation strategy.
Accordingly, Chase’s motion to dismiss Count Two is granted.
For the foregoing reasons, JPMorgan Chase Bank’s Motion to Dismiss is GRANTED as
to Count Two. As for Count One, JPMorgan Chase Bank’s Motion is DENIED. Plaintiff’s
Motion for Leave to file is DENIED as moot. The Clerk shall remove Document 16 from the
Court’s pending motion list.
IT IS SO ORDERED.
/s/ George C. Smith
GEORGE C. SMITH, JUDGE
UNITED STATES DISTRICT COURT
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