House v. Credit One Bank et al
Filing
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ORDER granting 12 Motion to Dismiss, as more fully set out. Signed by Honorable David L. Russell on 3/22/18. (jw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
EMMIT HOUSE,
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) Case No. CIV-17-957-R
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Plaintiff,
v.
CREDIT ONE BANK,
TINKER FEDERAL CREDIT UNION,
and FED LOAN SERVICING,
Defendants.
ORDER
Before the Court is Defendant Fed Loan Servicing’s Motion to Dismiss the
complaint, Doc. 12. Plaintiff brings this suit for violations of the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. § 1681s-2(b)(1), against three credit furnishers. Doc. 1. After
Plaintiff filed a notice of dispute to credit reporting agencies (“CRAs”) concerning two of
Defendant’s trade lines, Defendant allegedly failed to mark them as disputed in subsequent
reports to the CRAs. The question is whether such omissions were “incomplete or
inaccurate” as to trigger FCRA liability. 15 U.S.C. § 1681s-2(b)(1)(D). The Court hereby
grants the Motion because Plaintiff’s complaint lacks “enough facts to state a claim to relief
that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
I.
Motion to Dismiss Standard
A complaint may be dismissed upon a motion for “failure to state a claim upon
which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Federal Rule of Civil Procedure
8(a)(2) requires a “short and plain statement of the claim showing that the pleader is entitled
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to relief.” The standard “does not require ‘detailed factual allegations,’ but it demands more
than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). Dismissal is proper “if,
viewing the well-pleaded factual allegations in the complaint as true and in the light most
favorable to the non-moving party, the complaint does not contain ‘enough facts to state a
claim to relief that is plausible on its face.’” MacArthur v. San Juan County, 497 F.3d 1057,
1064 (10th Cir. 2007) (quoting Twombly, 550 U.S. at 547); see Iqbal, 556 U.S. at 676–80.
The plaintiff cannot merely give “labels and conclusions, and a formulaic recitation of the
elements of a cause of action.” Twombly, 550 U.S. at 555. Such conclusory allegations are
not entitled to the court’s presumption for the plaintiff. Instead, the plaintiff must plead
facts that at least make the claims plausible and raise the “right of relief above the
speculative level.” Id. at 558.
II.
Background
Some background on the FCRA is necessary:
[T]he FCRA obligates furnishers of information like [Defendant] to provide
accurate information to consumer reporting agencies, 15 U.S.C. § 1681s–
2(a), and, upon receiving notice of a dispute from a CRA, to (1) investigate
the disputed information; (2) review all relevant information provided by the
CRA; (3) report the results of the investigation to the CRA; (4) report the
results of the investigation to all other CRAs if the investigation reveals that
the information is incomplete or inaccurate; and (5) modify, delete, or
permanently block the reporting of the disputed information if it is
determined to be inaccurate, incomplete, or unverifiable
Pinson v. Equifax Credit Info. Servs., Inc., 316 F. App’x 744, 750 (10th Cir. 2009) (citing
15 U.S.C. § 1681s-2(a)–(b)). Only Section 1681s-2(b) is privately enforceable—it imposes
on furnishers a duty to investigate and correct misleading information following a
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dispute—whereas federal or state agencies enforce Section 1681s-2(a)’s duties to provide
accurate information in the first place. Id.; 15 U.S.C. §§ 1681s-2(c), 1681n, 1681o.
Plaintiff’s case under the FCRA is rather straightforward. On or about October 7,
2016, he applied for a residential mortgage loan and noticed what he believed to be “false,
inaccurate and unverifiable” information on his consumer report. Doc. 1, at 3. He disputed
two of Defendant Fed Loan Servicing’s trade lines for $2,904 and $1,750 to the CRAs—
TransUnion, Equifax, and Experian. Id. The CRAs communicated this dispute to
Defendant and Defendant investigated the matter, but subsequent credit reports failed to
notate that Defendant’s trade lines were disputed. Id. at 3–4. So Plaintiff brought five
claims under Section 1681s-2(b)(1)(A)–(E) of the FCRA against Defendant. According to
the complaint, Defendant’s negligent and/or willful conduct caused Plaintiff mental and
emotion distress, denial of credit, and higher interest rates. Id. at 4.
III.
Discussion
Each of Plaintiff’s claims is conclusory and fails to state sufficient facts to “nudge[]
[it] across the line from conceivable to plausible.” Twombly, 550 U.S. at 570. First, his
claim under Section 1681s-2(b)(1)(A) alleges that Defendant “failed to notate the
information as disputed after being contacted by the Consumer Reporting Agencies.” Doc.
1, at 4–5. Section 1681s-2(b)(1)(A) requires furnishers to “conduct an investigation with
respect to the disputed information.” It says nothing about notating information as disputed
or correcting misleading information. To the contrary, Plaintiff concedes at various points
in his complaint that Defendant did conduct a post-dispute investigation. See Doc. 1, at 3
(“Plaintiff received re-investigation results where Defendants failed to notate that the
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information was being disputed . . . . Defendants verified to TransUnion, Equifax and
Experian . . . .”); 4 (“On or about December 9, 2016, Plaintiff received re-investigation
results . . . . On or about February 8, 2017 Plaintiff received re-investigation results . . . .”).
Thus, Plaintiff is not entitled to relief on his Section 1681s-2(b)(1)(A) claim.
Second, Plaintiff’s claim under Section 1681s-2(b)(1)(B) alleges that Defendant
“fail[ed] to consider all relevant information forwarded to [it] by the consumer reporting
agencies . . . and to notate the disputed information as disputed to [the CRAs].” Id. at 5.
Plaintiff quotes the correct statutory language, but he fails to plead facts that make such a
violation plausible. See 15 U.S.C. §§ 1681s-2(b)(1)(B) (the furnisher shall “review all
relevant information provided by the consumer reporting agency . . .”). A “formulaic
recitation of the elements of a cause of action” is insufficient to withstand 12(b)(6)
dismissal. Twombly, 550 U.S. at 555. Nor does failing to notate a trade line “disputed”
qualify for relief under Section 1681s-2(b)(1)(B), which merely imposes an obligation to
“review all relevant information.” Plaintiff’s second claim also fails to state a claim upon
which relief can be granted.
Third, Defendant allegedly violated Section 1681s-2(b)(1)(C) “by failing to report
the notation of the disputed information to the consumer reporting agencies.” Doc. 1, at 6.
Section 1681s-2(b)(1)(C) requires furnishers to “report the results of the investigation” to
the CRAs. Plaintiff’s conclusory assertion that the underlying trade line was “disputed”
does not present “enough facts to state a claim to relief that is plausible on its face.”
Twombly, 550 U.S. at 555.
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Fourth, Plaintiff claims that Defendant “violated 15 U.S.C. § 1681s-2(b)(1)(D) by
failing to report to the consumer reporting agencies that the information was being
disputed.” Doc. 1, at 6–7. Defendant argues that “since the duty of a furnisher to notate that
a trade line is disputed to consumer reporting agencies falls squarely within the realm of
the duty to provide accurate information per 15 U.S.C. § 1681s-2(a), no private right of
action exists for such a claim.” Doc. 12, at 5. The Tenth Circuit and sister circuits have
squarely rejected this argument. See Sartori v. Susan C. Little & Assocs., P.A., 571 F. App’x
677, 682 (10th Cir. 2014) (unpublished); Seamans v. Temple Univ., 744 F.3d 853, 867 (3d
Cir. 2014); Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1163 (9th Cir. 2009);
Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 148 (4th Cir. 2008). Section
1681s-2(a)(3), which is not privately enforceable, requires that furnishers notify CRAs
whether a consumer disputes the information furnished to the CRA; yet, “a furnisher’s
continuing failure to flag an account as disputed” can also constitute a violation of Section
1681s-2(b) for failure to report or correct “incomplete or inaccurate information.”
Seamans, 744 F.3d at 866; 15 U.S.C. § 1681s-2(b)(1)(D).
This is because “the FCRA’s requirement that furnishers of information correct
‘incomplete or inaccurate’ information . . . extends not only to false information, which ‘is
clearly inaccurate,’ but to information provided ‘in such a manner as to create a materially
misleading impression’ as well.” Llewellyn v. Allstate Home Loans, Inc., 711 F.3d 1173,
1186 (10th Cir. 2013) (quoting Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611, 617 (6th
Cir. 2012)). Failure to report a bona fide dispute can create a “materially misleading
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impression” and subject furnishers to private FCRA suits. Id.; see also Seamans, 744 F.3d
at 867; Gorman 584 F.3d at 1163; Saunders, 526 F.3d at 148.
This does not mean that Plaintiff is necessarily entitled to relief—he simply fails to
offer more than conclusory allegations. To survive dismissal, Plaintiff must plead facts that
plausibly establish the bona fide nature of the dispute that Defendant failed to report.
[A] furnisher does not report “incomplete or inaccurate” information within
the meaning of § 1681s–2(b) simply by failing to report a meritless dispute,
because reporting an actual debt without noting that it is disputed is unlikely
to be materially misleading. It is the failure to report a bona fide dispute, a
dispute that could materially alter how the reported debt is understood, that
gives rise to a furnisher’s liability under § 1681s–2(b).
Gorman, 584 F.3d at 1163 (emphasis added). All Plaintiff pleads about the disputed
information is that the $2,904 and $1,750 trade lines were “false, inaccurate and
unverifiable.” Doc. 1, at 3. Merely quoting the statutory language does not suffice.
Plaintiff’s fourth claim for relief therefore fails to pass Rule 12(b)(6) muster.
Lastly, Plaintiff confronts similar obstacles with his fifth claim under 15 U.S.C.
§ 1681s-2(b)(1)(E). Defendant allegedly “fail[ed] to have a procedure to modify the
information in [its] system and report the disputed information with consumer reporting
agencies.” Doc. 1, at 7–8. Failure to maintain modification and reporting procedures does
not subject Defendant to liability under Section 1681s-2(b)(1)(E).
After receiving notice . . . of a dispute with regard to the completeness or
accuracy of any information provided by a [furnisher] to a consumer
reporting agency, the [furnisher] shall—
....
(E) if an item of information disputed by a consumer is found to be inaccurate
or incomplete or cannot be verified after any reinvestigation under paragraph
(1), for purposes of reporting to a consumer reporting agency only, as
appropriate, based on the results of the reinvestigation promptly—
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(i) modify that item of information;
(ii) delete that item of information; or
(iii) permanently block the reporting of that item of information.
15 U.S.C. § 1681s-2(b)(1). Looking to the statutory text, the relevant FCRA violation is
the particular failure to modify, delete, or permanently block the reporting of “that item of
information.” Id. § 1681s-2(b)(1)(E). There is no precedent for Plaintiff’s alleged policiesand-procedures private right of action. To the extent Plaintiff relies on Seamans to bolster
his claim, that case merely stands for the proposition that systemic reporting deficiencies
can support punitive damages for willful conduct—not a free standing Section 1681s2(b)(1)(E) claim. 744 F.3d at 867–69. Moreover, even if such a claim were available under
Section 1681s-2(b)(1)(E), Plaintiff has not pleaded sufficient facts for relief.
Accordingly, Plaintiff is not entitled to relief against Defendant Fed Loan Servicing
and the Motion (Doc. 12) is GRANTED.
IT IS SO ORDERED this 22nd day of March, 2018.
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