PALOUIAN v. FIA CARD SERVICES et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE J. CURTIS JOYNER ON 4/29/2013. 5/1/2013 ENTERED AND COPIES E-MAILED. (ems)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
FIA CARD SERVICES D/B/A BANK
OF AMERICA, AND X, Y, Z
MEMORANDUM AND ORDER
Joyner, C. J.
April 29, 2013
Before this Court are Defendant’s Motion to Dismiss the
Plaintiff’s Complaint (Doc. No. 5), Plaintiff’s Response in
opposition thereto (Doc. No. 8), and Defendant’s Reply in further
support thereof (Doc. No. 9).
For the reasons set forth in this
Memorandum, the Court will grant the Defendant’s Motion to
Dismiss, with leave to the Plaintiff to amend the Complaint to
correct the deficiencies therein.
This case arises from a dispute between Plaintiff Michael
Palouian and Defendant FIA Card Services, N.A. (identified by the
Plaintiff as FIA Card Services d/b/a Bank of America) over the
Defendant’s report to unspecified credit reporting agencies about
the Plaintiff’s credit card account information.
the allegations in the Plaintiff’s Complaint, Defendant is an
entity that furnishes information to credit reporting agencies,
and the Defendant furnished derogatory information about the
Plaintiff’s account to one or more credit reporting agencies.
The Plaintiff claims that he disputed the accounts in writing
with the Defendant.
Although the Plaintiff does not dispute the
existence of the debt, he disputes the high balance, interest,
finance charges, fees, and the contract which might justify
The Plaintiff asserts that these disputes “were bona fide
legitimate disputes,” and that the Defendant disregarded the
Plaintiff’s disputes and allowed the information to remain on the
Plaintiff’s credit report.
The Plaintiff asserts that he
disputed the accounts in writing with the relevant credit
bureaus, and one or more of the credit reporting agencies
conducted an investigation and contacted the Defendant.
Defendant allegedly verified the accounts with the agencies
without stating that the account was disputed by the Plaintiff.
Attached to his Complaint, the Plaintiff provides a number
of letters and documents to support his allegations.
include three letters from the Plaintiff to Bank of America
stating that he disputes the information placed on his credit
report and two letters from Bank of America “regarding a notice
of activity reported by you to a consumer reporting agency.”
first of these letters states that Bank of America attempted to
contact him to validate the information, but was unable to reach
him and requests that the Plaintiff get in touch to resolve the
The letter states that if they do not hear from him
within fourteen days, they will consider the matter resolved.
The second letter states that because they had not received a
response from the Plaintiff, they considered the matter resolved.
The Plaintiff also attaches to the Complaint a number of pages
from his credit report regarding the account in question.
The Complaint appears to assert a cause of action under 15
U.S.C. § 1861s-2(b) of the Fair Credit Reporting Act (“FCRA”), 15
U.S.C. § 1681 et seq., although the Plaintiff also discusses
The Complaint asserts that the Defendant is
liable, and makes a demand for $1,225 in attorneys fees spent in
filing the Complaint.
The Defendant removed the Complaint from
the Bucks County Court of Common Pleas on January 17, 2013.
(Doc. No. 1).
The Defendant filed the present Motion to Dismiss
the Complaint on January 24, 2013 (Doc. No. 5), the Plaintiff
responded in opposition on February 19, 2013 (Doc. No. 8), and
the Defendant replied on February 27, 2013 (Doc. No. 9).
STANDARD OF REVIEW
Defendant moves to dismiss the Plaintiff’s claims under Fed.
R. Civ. P. 12(b)(6) for failure to state a claim.
a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), a
district court must “accept as true the factual allegations in
the complaint and all reasonable inferences that can be drawn
Krantz v. Prudential Invs. Fund Mgmt., 305 F.3d 140,
142 (3d Cir. 2002) (quoting Nami v. Fauver, 82 F.3d 63, 65 (3d
“To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’”
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
“A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
“Threadbare” recitations of the elements of a claim supported
only by “conclusory statements” will not suffice.
plaintiff must allege some facts to raise the allegation above
the level of mere speculation.
Great Western Mining & Mineral
Co. v. Fox Rothschild LLP, 615 F.3d 159, 176 (3d Cir. 2010)
(citing Twombly, 550 U.S. at 555).
“Once a claim has been stated
adequately, it may be supported by showing any set of facts
consistent with the allegations in the complaint.”
U.S. at 563.
The Defendant’s Motion to Dismiss raises three issues with
the Plaintiff’s Complaint.
First, the Defendant argues that the
Plaintiff cannot sue for a violation of 15 U.S.C. § 1681s-2(a),
as claims under this section are available only to the
(Def.’s Br. in Supp. of Mot. to Dismiss, at 7, Doc.
Second, the Defendant argues that the Plaintiff fails to
state a claim for a violation of 15 U.S.C. § 1681s-2(b).
Finally, the Defendant argues that the Plaintiff’s Complaint
is deficient because he fails to allege any damages apart from
expenditure of attorney’s fees in pursuit of the Complaint.
The Plaintiff, in his response to the Defendant’s Motion,
concedes that there is no private right of action under
subsection 1681s-2(a) of the FCRA, but asserts that sufficient
facts have been pled to sustain a claim under subsection 1681s2(b).
(Br. in Supp. of Pl.’s Answer to Def.’s Mot. to Dismiss,
at 1, Doc. No. 8-1).
The Plaintiff’s response does not address
the Defendant’s argument about damages.
The Court must decide whether the Plaintiff has sufficiently
alleged a claim under subsection 1681s-2(b) of the FCRA.
Subsection 1681s-2(b) does not explicitly require a furnisher of
information, like the Defendant, to notify a credit reporting
agency that an account is disputed.
This subsection merely
requires a furnisher to investigate “the completeness or
accuracy” of any information furnished upon notice of an
15 U.S.C. § 1681s-2(b)(1).
The Third Circuit has
determined that consumers wishing to avail themselves of this
private action “must first file a dispute with the consumer
reporting agency, which then must notify the furnisher of
information that a dispute exists.”
SimmsParris v. Countrywide
Financial Corp., 652 F.3d 355, 359 (3d Cir. 2011).
the consumer notifies the consumer reporting agency, who then
notifies the furnisher, can the furnisher be liable to the
consumer for failing to investigate the completeness or accuracy
Although the Third Circuit has not addressed this precise
issue, other Courts of Appeals, along with District Courts within
this Circuit, have determined that a furnisher’s failure to
report a debt as disputed can create liability under subsection
See Gorman v. Wolpoff & Abramson, LLP, 584 F.3d
1147, 1163 (9th Cir. 2009) (holding that failure to report a
dispute that is bona fide could give rise to liability under
subsection (b)); Saunders v. Branch Banking & Trust Co. of Va.,
526 F.3d 142, 150 (4th Cir. 2008) (holding that a bank’s failure
to report a debt as disputed gave rise to liability under the
FCRA); see also Seamans v. Temple Univ., 11-6774, 2012 WL
5287900, at *14 (E.D. Pa. Oct. 25, 2012) (Dalzell, J.); Shap v.
Capital One Financial Corp., 11-4461, 2012 WL 1080127, at *3-4
(E.D. Pa. March 30, 2012) (Rufe, J.); Van Veen v. Equifax
Information, 844 F. Supp. 2d 599, 606 (E.D. Pa. 2012) (Diamond,
These courts have all relied upon the principle that the
debt must be bona fide in order for the furnisher to be liable.
The Court finds this conclusion persuasive.
A majority of
Circuits has held that technically accurate but misleading
information in a credit report can be “inaccurate” under the
See Gorman, 584 F.3d at 1163; Saunders, 526 F.3d at 148;
Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 895 (5th Cir.
1998); Koropoulos v. Credit Bureau, Inc., 734 F.2d 37, 40 (D.C.
The Third Circuit articulated this position in an
unpublished opinion, stating “a consumer report that contains
technically accurate information may be deemed inaccurate if the
statement is presented in such a way that it creates a misleading
Schweitzer v. Equifax Information Solutions, LLC,
441 F. App’x 896, 902 (3d Cir. 2011) (quoting Saunders, 526 F.3d
If a debt is bona fide, a failure to report the dispute
of that debt on a consumer report can be misleading.
This conclusion is consistent with other provisions of the
For example, subsection 1681s-2(a)(8)(F) states that a
furnisher is not under a duty to report disputes where the
consumer’s dispute is “frivolous or irrelevant.”
We agree with our colleague, Judge Rufe,
who concluded that this provision “evidences the intent of
Congress to include information that an account is disputed
within the category of information that a furnisher must report
to ensure completeness and accuracy in a consumer’s credit report
where the dispute submitted is bona fide.”
Shap, 2012 WL
1080127, at *4.
Having concluded that the failure to report a bona fide
dispute can give rise to liability under subsection 1681s-2(b) of
the FCRA, the Court must now consider what constitutes a bona
fide dispute and whether the Plaintiff has sufficiently alleged
one with the Defendant.
Again, the provisions of the FCRA are
Subsection 1681s-2(a)(8)(F) tells us that the duty to
investigate and report disputes does not apply if a dispute is
frivolous or irrelevant, including “by reason of the failure of a
consumer to provide sufficient information to investigate the
15 U.S.C. § 1681s-2(a)(8)(F)(i)(I).
another subsection, the Act specifies the information that a
consumer who disputes the accuracy of information must provide to
the furnisher, including “(i) identif[ying] the specific
information that is being disputed; (ii) explain[ing] the basis
for the dispute; and (iii) includ[ing] all supporting
documentation required by the furnisher to substantiate the basis
of the dispute.”
15 U.S.C. § 1681s-2(a)(8)(D).
In light of
these provisions, the Court determines that a dispute is
frivolous if the consumer has failed to provide sufficient
information to the furnisher to aid in the furnisher’s
investigation of the dispute.
If the dispute is frivolous, the
furnisher cannot be liable to the consumer for the failure to
investigate the completeness or accuracy of information under
In the Plaintiff’s Complaint, he declares “Plaintiff’s
disputes with Defendant were bona fide legitimate disputes.”
(Compl., at ¶ 16, Doc. No. 1).
This allegation alone does not
properly plead a bona fide dispute; rather, this is the sort of
conclusory statement insufficient to establish the plausibility
of a claim under Ashcroft v. Iqbal.
556 U.S. at 678.
Plaintiff has not shown that he provided sufficient information
to the Defendant to enable the Defendant to investigate his
Instead, the exhibits attached to the Complaint,
purportedly in support of his claim, show that the Defendant made
at least one attempt to contact the Plaintiff to investigate the
dispute, to which the Plaintiff failed to reply.
The Court may
consider this exhibit attached to the Complaint in ruling on the
Motion to Dismiss.
See Pension Ben. Guar. Corp. v. White Consol.
Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993) (“To decide a
motion to dismiss, courts generally consider only the allegations
contained in the complaint, exhibits attached to the complaint
and matters of public record.”).
As the allegations in the
Complaint and the exhibits attached thereto demonstrate that the
Plaintiff’s dispute was not bona fide, he fails to state a claim
under subsection 1681s-2(b) of the FCRA.
The Court therefore
grants the Defendant’s Motion to Dismiss the Plaintiff’s
“[I]f a complaint is subject to a Rule 12(b)(6) dismissal, a
district court must permit a curative amendment unless such an
amendment would be inequitable or futile.”
Phillips v. Cnty. Of
Allegheny, 515 F.3d 225, 445 (3d Cir. 2008).
Leave to amend must
be given even if the Plaintiff does not seek it.
there are facts that could be pled that would support a claim
under subsection 1681s-2(b), leave to amend would not be futile.
The Court therefore grants the Plaintiff leave to amend his
Complaint to properly state a claim under subsection 1681s-2(b)
of the FCRA, if he can do so.
Because the Court concludes that the Plaintiff’s Complaint
fails to state a claim and dismisses it under Fed. R. Civ. P.
12(b)(6), we need not delve far into the Defendants’ third
argument - the Complaint’s failure to specify damages.
as we are granting the Plaintiff leave to amend his Complaint,
the Court will note that the Plaintiff must include an assertion
of damages in his Complaint, if he chooses to amend.
assertion of damages must be specific and cannot merely amount to
Finally, we will take the opportunity to advise
Plaintiff’s counsel that a largely generic and non-specific
amended Complaint like the first Complaint, which simply
references attached exhibits that do not in fact support its
broad conclusory statements, will not succeed.
standard established in Ashcroft v. Iqbal, the Plaintiff must
allege factual content; threadbare recitations of the elements of
a claim supported by conclusory statements will not suffice.
U.S. at 678.
For the foregoing reasons, the Court grants the Defendant’s
Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6).
Plaintiff has leave to amend the Complaint within twenty days of
entry of the accompanying Order to properly assert a bona fide
debt as required to state a claim under 15 U.S.C. § 1681s-2(b).
An order to this effect follows.
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