Perez v. Portfolio Recovery Associates, LCC et al

Filing 10

OPINION & ORDER granting 8 Motion to Dismiss. Judgment shall be entered accordingly. Certified translation due by 11/30/2012. See Opinion at n. 1. Signed by Judge Jay A Garcia-Gregory on 10/30/2012. (RJC)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
MAXIMILIANO PEREZ,
Plaintiff,
CIVIL NO.

v.

12-1603 (JAG)

PORTFOLIO RECOVERY ASSOCIATES,
LLC, et al.,
Defendants.

OPINION & ORDER
GARCIA-GREGORY, D.J.
Pending before the Court is Portfolio Recovery Associates,
LLC’s

(“Defendant”)

Motion

to

Dismiss

under

FED. R. CIV. P.

12(b)(6). (Docket No. 8). For the reasons that follow, the Court
GRANTS this motion and dismisses this case with prejudice.
BACKGROUND
Plaintiff Maximiliano Perez (“Plaintiff”) filed this suit,
pro se, alleging that Defendant had willfully violated the Fair
Credit

Reporting

Act

(“FCRA”)

in

making

sixteen

unauthorized

inquiries into Plaintiff’s credit report. (Docket No. 1, ¶ 29).
Plaintiff contends that these inquiries harmed his ability to
obtain

credit

and,

among

other

things,

resulted

in

higher

insurance premiums.1 (See Docket No. 1, ¶ 33). Defendant does not

1

Plaintiff appears to paint these inquiries as the sole reason
his loan application was denied. (See Docket No. 1, ¶ 32).

Civil No. 12-1603 (JAG)

2

deny that it made the inquiries. However, Defendant argues that
the FCRA requires Plaintiff to allege that “defendant used or
obtained

the

plaintiff’s

purpose”

and

“that

the

credit

report

for

an

violation

was

willful

impermissible
or

negligent.”

(Docket No. 8, p. 6; citing 15 U.S.C. § 1681(b)f and
v.

Rosenthal,

2001

WL

910771

(S.D.N.Y.

Aug.

13,

Stonehart
2001)).2

However, Scotiabank’s letter reveals that “excessive inquiries”
were but one of four reasons that justified rejecting his
application. (See Docket No. 1-1). Scotiabank also found
Plaintiff’s regular and revolving account balances to be
“excessive,” as well as problems with the length of his credit
history. (Id.). The Court notes that this attachment forms part
of the pleadings and may be considered at the motion to dismiss
stage. However, the same is in Spanish and circuit precedent
requires it be translated to English. See Gonzalez-de-Blasini v.
Family Dept., 377 F.3d 81, 89 (1st Cir. 2004) (holding that the
“district court should not have considered any documents before
it that were in the Spanish language”). Thus, and in the
interest of efficiency, the Court conditions this Opinion and
Order on Defendant’s submission of a certified translation of
the aforementioned exhibit within 30 days of the entry of this
Order. See Local Rule 5(g).
2
The Court notes that there is little caselaw in our Circuit
dealing with the FCRA, especially regarding the provisions under
which Plaintiff brings this case. However, the Court finds that
the test outlined by Stonehart is consistent with both the
statute and other courts which have addressed claims under §
1681(b). See e.g. Dobson v. Holloway, 828 F.Supp. 975, 977
(M.D.Ga. 1993) (“The fact that a consumer report is furnished
for an impermissible purpose ... does not result in automatic
liability. Liability is imposed only when the consumer reporting
agency either willfully or negligently fails to maintain
reasonable procedures to avoid violations of, i.e., § 1681 b.”);
see also Phillips v. Grendahl, 312 F.3d 357, 364 (8th Cir. 2002)
abrogated on other grounds by Safeco Ins. Co. of Am. v. Burr,

Civil No. 12-1603 (JAG)

3

Defendant’s position is that the complaint does not charge them
with

either

inquiries.

willful

Thus,

it

or

negligent

fails

to

conduct

state

a

in

claim

making
and

those

must

be

dismissed.
STANDARD OF LAW
Under Rule 12(b)(6), a defendant may move to dismiss an
action for failure to state a claim upon which relief can be
granted.
plead

To overcome a Rule 12(b)(6) motion, the complaint must

sufficient

facts

plausible on its face.”
544,

570

(2007);

see

“to

state

a

claim

to

relief

that

is

Bell Atl. Corp. v. Twombly, 550 U.S.
also

Ashcroft

v.

Iqbal,

556

U.S.

662

(2009).
In Ocasio-Hernández v. Fortuño Burset, 640 F.3d 1 (1st Cir.
2011), the First Circuit distilled from Twombly and Iqbal a twopronged test designed to measure the sufficiency of a complaint.
First,

the

reviewing

court

must

identify

and

disregard

“statements in the complaint that merely offer legal conclusions
couched as fact, or threadbare recitals of the elements of a
cause of action.”
punctuation

Ocasio-Hernández, 640 F.3d at 12 (internal

omitted).

In

this

analysis,

the

remaining

non-

conclusory factual allegations must be taken as true, even if

551 U.S. 47 (2007). Accordingly, the Court finds it proper to
employ this test here.

Civil No. 12-1603 (JAG)

4

they are “seemingly incredible,” or that “actual proof of those
facts is improbable.”

Id.

Finally, the court assesses whether

the facts taken as a whole “state a plausible, not merely a
conceivable, case for relief.”

Id.

ANALYSIS
In 1970, 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). The FCRA aims to ensure “that
consumer

reporting

agencies

adopt

reasonable

procedures

for

meeting the needs of commerce for consumer credit, personnel,
insurance, and other information in a manner which is fair and
equitable to the consumer, with regard to the confidentiality,
accuracy,

relevancy,

and

proper

utilization

of

such

information.” 15 U.S.C. § 1681(b). The FCRA enforces this goal
by

imposing

civil

liability

upon

a

person

or

entity

that

willfully or negligently obtains a credit report for a purpose
that is not authorized by the statute. 15 U.S.C. §§ 1681b(f),
1681n(a). A plaintiff may recover actual damages for negligent
violations, 15 U.S.C. § 1681 o(a)(1), and actual or statutory
and punitive damages for willful ones, id. § 1681n(a)(1)-(2);
Safeco, 551 U.S. at 53.

Civil No. 12-1603 (JAG)
Plaintiff
Defendant

5

contends

that

on

sixteen

impermissibly

used

or

different

obtained

occasions,

Plaintiff’s

credit

report. But the mere fact that Defendant accessed Plaintiff’s
report

without

his

consent

is

not

sufficient

to

engage

the

liability provisions of the FCRA. See 15 U.S.C. § 1681(a); see
e.g.

Stergiopoulos

v.

First

Midwest

Bancorp,

Inc.,

427

F.3d

1043, 1046 (7th Cir. 2005) (observing that § 1681b “does not
require

that

report”).

It

consumers
is

the

expressly
purpose

approve

behind

each

the

request

inquiry

for

that

a
is

determinative. For example, an entity may procure a person’s
credit report without permission if it:
1. “intends to use the information in connection with a credit
transaction involving the consumer on whom the information
is to be furnished and involving the extension of credit
to, or review or collection of an account of, the
consumer;” Id. at § 1681b(a)(3)(A).
2. “intends to use the information, as a potential investor or
servicer, or current insurer, in connection with a
valuation of, or an assessment of the credit or prepayment
risks associated with, an existing credit obligation;” Id.
at § 1681b(a)(3)(A).
3. or if it “otherwise has a legitimate business need for the
information.” Id. at § 1681b(a)(3)(F), such as when a
review of a consumer account is necessary “to determine
whether the consumer continues to meet the terms of the
account.” Id. at § 1681b(a)(3)(F)(ii).

To

survive

Defendant’s

Motion

to

Dismiss,

the

complaint

must aver sufficient facts to establish to a plausible degree
that Defendant obtained the credit reports for an impermissible

Civil No. 12-1603 (JAG)

6

purpose, and that their conduct was either willful or negligent.
See Footnote 2, supra; see also Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009).
The Court finds the complaint fails to meet either requirement.
Were the inquiries made for a permissible purpose?
Beyond stating that Defendant made sixteen inquiries into
Plaintiff’s credit report, the complaint offers no factual basis
to infer what purpose –permissible or impermissible- Defendant
had in making those inquiries. The complaint starts by stating
that Defendant has been “obtaining and furnishing information
from the Plaintiff’s Transunion consumer credit report with no
permissible purpose in violation of the FRCA.” (Docket No. 1, ¶
2). But this is nothing more than a “threadbare recital of the
elements of a cause of action,” and thus may safely be discarded
in this analysis. Ocasio-Hernández, 640 F.3d at 12 (internal
punctuation omitted).
The complaint alleges that Plaintiff has no accounts or
business with the Defendant “that could grant the Defendant any
right

to

collect,

or

to

have

permissible

purpose

to

obtain

Plaintiff’s consumer report, or make any inquiries…” (Docket No.
1, ¶ 39). But no part of the FCRA prevents third-parties from
searching a person’s credit report, even ones with no previous
relationship to the person, provided that the inquiry is done

Civil No. 12-1603 (JAG)

7

for permissible purposes. The fact that Plaintiff had credit
problems,

as

evidenced

by

the

loan

rejection

letter,

(see

Footnote 1, supra), militates against finding that the credit
inquiries were unwarranted. See e.g. 15 U.S.C. § 1681b(a)(3)(A)
(providing that credit inquiry is permissible for “review or
collection

of

an

account

of[]

the

consumer”);

see

generally

Huertas v. Galaxy Asset Management, 641 F.3d 28, 34 n.7 (3rd
Cir. 2011); see also 15 U.S.C. § 1681b(a)(3)(F)(ii). Thus, this
argument is also unavailing.
The complaint also states that the consumer report “places
outside

the

Defendant.

‘permissible

(Docket

No.

1,

purpose’
¶

27,

all

inquiries”

copied

verbatim).

made

by

Plaintiff

points to what appears to be a printed page of a section of
Plaintiff’s

website

account

with

Transunion,

attached

to

the

complaint as “Evidence A1.” (See Docket No. 1-1). That document
shows the “account review inquiries” made on Plaintiff’s report.3

3

The Court is not exactly sure what this document represents.
For instance, the page explicitly states that the “inquiries are
not displayed to anyone but you and will not affect any
creditor’s decision or any credit score…,” (Docket No. 1-1, p.
1)(emphasis added), which belies Plaintiff’s contention that his
credit eligibility was affected by Defendant’s inquiries. This
also flies in the face of the statute’s definition of what a
“consumer report” is. Cf. 15 U.S.C. § 1681a(d)(1)(term “consumer
report” means any […] communication of any information by a
consumer reporting agency bearing on a consumer’s credit
worthiness […] which is used […] for the purpose of establishing
the
consumer’s
eligibility
for
credit…”)(emphasis
added).
Second, it is not clear whether this page represents all, or

Civil No. 12-1603 (JAG)
These

are

include

listed

that

requests

by

8

the

company’s

were

made.

company
address

that

Some

of

and

the

made

the

the

date

inquiries

inquiry,
on

which

listed

and
the

include

a

section titled “Permissible Purpose.” For example, the printout
shows that two inquiries were made either by Plaintiff or on his
behalf.

(See

e.g.

Id.

(for

“credit

monitoring”

and

due

to

“consumer request”)). Another request was made for the purpose
of “collection.” (Id.). However, the requests made by Defendants
are more numerous than those made by any other entity on the
report, and do not have the “permissible purpose” qualifier.
Taken in isolation and in the light most favorable to Plaintiff,
this

might

indicate

that

Defendant

did

not

have

a

statute-

sanctioned purpose in obtaining his credit report. However, it
is a stretch (and an implausible one at that) to state that the
mere

omission

of

the

“permissible

purpose”

qualifier

for

Defendant’s inquiries automatically means that those inquiries
were
Inc.,

impermissible.
618

F.2d

693,

See
696

Heath
(10th

v.

Credit

Cir.

Bureau

1980)(noting

of

Sheridan,

that

“if

a

credit bureau supplies information on a consumer that bears on
personal financial status, but does not know the purpose for
which the information is to be used, it may be reasonable to
assume the agency expected the information to be used for a

only a portion of, the inquiries made on Plaintiff’s credit
report.

Civil No. 12-1603 (JAG)

9

proper purpose”). This is so because Transunion bears the same
obligation as Defendant, and as any other person intending to
inquire upon Plaintiff’s credit history, of ensuring that those
inquiries are made for permissible purposes.
In any event, Iqbal requires that the claims asserted be
plausible, not merely possible. Ashcroft v. Iqbal, 129 S.Ct. at
1951 (internal punctuation omitted). To nudge a complaint across
the line from the possible to the plausible, plaintiffs must do
more than deliver “naked assertions devoid of further factual
enhancement.” Id. at 1949 (citing Twombly, 550 U.S. at 557); see
also Ocasio-Hernández v. Fortuño Burset, 640 F.3d at 14-15 (to
survive

a

Rule

12(b)(6)

motion

to

dismiss,

plaintiffs

must

bolster their allegations with “discrete factual events”). Here,
while there may be sufficient ground to find that Defendant
possibly

obtained

permissible
short

of

required

Plaintiff’s

purpose,
showing

to

the

complaint

plausibility.

“conjure

credit

up

report

–taken

Further,

unpled

as
the

without

a

wholeCourt

allegations”

to

is

any
stops
not

support

Plaintiff’s deficient complaint. Gooley v. Mobil Oil Corp., 851
F.2d 513, 514 (1st Cir. 1988).
Other

courts

have

faced

this

type

of

complaint

before,

based on similar allegations, and have also found them lacking.
See e.g., Hinton v. Trans Union, LLC, 654 F.Supp.2d 440 (E.D.Va.
2009), aff’d 382 Fed. Appx. 256, 2010 WL 2294589 (dismissing

Civil No. 12-1603 (JAG)

10

FCRA claims that rested on the allegation that the plaintiff
never

gave

his

consent

to

several

inquiries

in

the

credit

report).

Were Defendant’s actions willful or negligent?
The complaint fares worse on this prong of the test. To
start with, this factor feeds off of the previous one, for the
Court cannot find negligence or willfulness where Defendant’s
conduct was not contrary to the FCRA. But even assuming arguendo
that Defendant impermissibly obtained Plaintiff’s credit report,
the complaint fails to follow through and plausibly plead that
Defendant’s conduct was either willful or negligent.
At

every

turn,

the

complaint

claims

that

Defendant’s

actions were negligent or willful, but gives no factual basis
for these allegations. (See e.g., Docket No. 1, ¶ 29, 30, 35-37,
etc.). For instance, the complaint contends Defendant willfully
violated

the

FCRA

“by

obtaining

Plaintiff’s

consumer

report

without permissible purpose…” (Docket No. 1, ¶ 29). But that
threadbare

statement

motion

dismiss,

to

plausibly

establish

is

not

Plaintiff
that

enough.
must

Defendant,

To

aver

survive

Defendant’s

sufficient

either

knowingly

facts
or

to

with

reckless disregard, ignored its obligations under the FCRA. See
Safeco Ins. Co. v. Burr, 551 U.S. 47, 56–60 (2007)(holding that

Civil No. 12-1603 (JAG)

11

willfulness as used in § 1681n of the FCRA means knowledge or
recklessness).
Plaintiff’s

There

complaint.

is

no

such

Neither

is

allegation
there

enough

present
to

in

glean

negligence from the pleadings. Simply put, the reasons for which
Defendant made the inquiries are unknown and, more importantly,
remain unpled.
In Farkash v. RJM Acquisitions Funding, Inc., Slip Copy,
2012

WL

2619710

(S.D.N.Y.

2012),

the

plaintiff

alleged

he

“contacted Defendants to notify them of their violations in an
attempt” to amicably settle his dispute. Id. at *2. Like in
Farkash, the Plaintiff here sent that communication after the
alleged violations had occurred. (Cf. Farkash, 2012 WL 2619710
at 2 with Docket No. 1, ¶ 27). Accordingly, Plaintiff cannot
claim that his communication put Defendant on notice that their
actions were illegal. The opposite seems to be the case, as
there appear no inquiries made by Defendant after the date in
which Plaintiff allegedly notified Defendant of his impending
lawsuit.
CONCLUSION
For the reasons set forth above, the Court hereby GRANTS
Defendant’s

Motion

to

accordingly.
IT IS SO ORDERED.

Dismiss.

Judgment

shall

be

entered

Civil No. 12-1603 (JAG)

12

In San Juan, Puerto Rico, this 30th day of October, 2012.
s/ Jay A. Garcia-Gregory
JAY A. GARCIA-GREGORY
United States District Judge