Sandlin v. Citibank, N.A. et al
ORDER adopting DE 45 Report and Recommendations; and granting in part and denying in part DE 41 Motion to Dismiss for Failure to State a Claim signed by Judge John T. Fowlkes, Jr. on 4/14/2017. (Fowlkes, John)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
and CITIMORTGAGE, INC.,
ORDER ADOPTING THE MAGISTRATE JUDGE’S REPORT AND
Before the Court is Defendants’, Citibank, N.A. (Citibank”) and CitiMortgage, Inc.
(“CitiMortgage”) (collectively, the “Defendants”), Partial Motion to Dismiss Plaintiff’s
Amended Complaint filed on January 26, 2017. (ECF No. 41). Plaintiff filed a Response in
Opposition on February 14, 2017. (ECF No. 42). This case was referred to the United States
Magistrate Judge for management and for all pretrial matters for determination and/or report and
recommendation as appropriate. (Admin. Order 2013-05, April 29, 2013). Judge Vescovo
issued her Report and Recommendation on March 16, 2017. (ECF No. 45). To date, no
objections have been filed.
After a de novo review, the Court hereby ADOPTS the Magistrate Judge’s Report and
FINDINGS OF FACT
This Court adopts the Magistrate Judge’s proposed findings of fact in this case. See (ECF
A. Standard for District Court’s Review of a Report and Recommendation
The district court has the authority to refer certain pre-trial matters to a magistrate judge
for resolution. 28 U.S.C. § 636(b); Callier v. Gray, 167 F.3d 977, 980 (6th Cir. 1999). These
referrals may include non-dispositive pretrial matters, such as a motion to compel or a motion for
a protective order concerning discovery. 28 U.S.C. § 636(b)(1)(A). The district court has
appellate jurisdiction over any decisions the magistrate judge issues pursuant to such a referral.
Fed. R. Civ. P. 72. The referrals may also include dispositive matters such as a motion for
summary judgment or a motion for injunctive relief. 28 U.S.C. § 636(b)(1)(B). When a
dispositive matter is referred, the magistrate judge’s duty is to issue proposed findings of fact and
recommendations for disposition, which the district court may adopt or not. “The district judge
may accept, reject, or modify the recommended disposition; receive further evidence; or return
the matter to the magistrate judge with instructions.” Fed. R. Civ. P. 72(b)(3).
The standard of review that is applied by the district court depends on the nature of the
matter considered by the magistrate judge. If the magistrate judge issues a non-dispositive
pretrial order, the district court should defer to that order unless it is “found to be clearly
erroneous or contrary to law.” 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). However, if the
magistrate judge’s order was issued in response to a dispositive motion, the district court should
engage in de novo review of all portions of the order to which specific written objections have
been made. 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a); Baker v. Peterson, 67 Fed. App’x.
308, 310, 2003 WL 21321184 *2 (6th Cir. 2003) (“A district court normally applies a ‘clearly
erroneous or contrary to law’ standard of review for non[-]dispositive preliminary measures. A
district court must review dispositive motions under the de novo standard.”).
B. Standard for Motion To Dismiss
When assessing a plaintiff’s claim at the Fed. R. Civ. P. 12 (b)(6) motion to dismiss
stage, the Sixth Circuit has stated that a complaint must allege sufficient facts to state a plausible
claim for relief, and that a reviewing court must “construe the complaint in the light most
favorable to the plaintiff and accept all allegations as true.” Keys v. Humana, Inc., 684 F.3d 605,
608 (6th Cir. 2012). “Pro se complaints are held to a less stringent standard than pleadings
drafted by lawyers.” Erickson v. Pardus, 551 U.S. 89, 94 (2007). However, pro se litigants “are
not exempt from the requirements of the Federal Rules of Civil Procedure.” Wells v. Brown, 891
F.2d 591, 594 (6th Cir. 1989); see also Brown v. Matauszak, 415 F. App’x 608, 613 (6th Cir.
2011) (“[A] court cannot create a claim which [a plaintiff] has not spelled out in his pleading.”)
(internal quotation marks omitted).
On December 31, 2016, Plaintiff filed an Amended Complaint, in which he set forth the
following additional claims: (1) violation of the Fair Debt Collection Practices Act (“FDCPA”);
violation of the Fair Credit Reporting Act (“FCRA”); (3) breach of the settlement agreement; and
(4) defamation. (ECF No. 36). Defendants’ current Motion to Dismiss seeks dismissal of
Plaintiff’s FDCPA, FCRA, and defamation claims. The Court will address each issue below.
A. FDCPA Claim
Congress enacted the FDCPA “to eliminate abusive debt collection practices by debt
collectors.” 15 U.S.C. § 1692(e). A debt collector must follow the guidelines provided by
Congress when attempting to collect a debt, and must give the consumer a chance to dispute the
validity of a disputed debt. No action taken by the debt collector should “overshadow or be
inconsistent” with the right of the consumer to dispute a debt. 15 U.S.C. § 1692g. However, to
be held liable under the FDCPA, a defendant must be a debt collector within its meaning. Debt
collector is defined as “any person who uses any instrumentality of interstate commerce or the
mails in any business the principal purpose of which is the collection of any debts, or who
regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be
owed or due another.” 15 U.S.C. § 1692a (6).
Conversely, the term creditor is defined as “any person who offers or extends credit
creating a debt or to whom a debt is owed, but such term does not include any person to the
extent that he receives an assignment or transfer of a debt in default solely for the purpose of
facilitating collection of such debt for another.” 15 U.S.C. § 1692a (4); see also Bridge v. Ocwen
Fed. Bank, 681 F.3d 355, 359 (6th Cir. 2012) (“[O]ne cannot be both a ‘creditor’ and a ‘debt
collector,’ as defined in the FDCPA, because those terms are mutually exclusive.”).
Judge Vescovo recommends that Plaintiff’s FDCPA claim be dismissed because Plaintiff
failed to plausibly allege that the Defendants were “debt collectors” subject to the FDCPA. In
the Amended Complaint, Plaintiff alleges that his debt was assigned to CitiMortgage on May 1,
2006. (ECF No. 36 ¶¶ 9-10). However, Plaintiff was not in default until November 2014. (Id. at
¶ 26). Plaintiff has not alleged that CitiMortgage received the debt for the purpose of collection
for another or that the loan was in default at the time of acquisition. As such, Defendants are not
debt collectors under the FDCPA. Defendants’ Motion to Dismiss Plaintiff’s FDCPA claim is
B. FCRA Claim
“The FCRA, 15 U.S.C. § 1681, et seq., originally enacted in 1968, is designed to protect
consumers from inaccurate information in consumer reports by establishing credit reporting
procedures which ‘utilize correct, relevant and up-to-date information in a confidential and
responsible manner.’” Nelski v. Trans Union, LLC, 86 F. App’x 840, 843-44 (6th Cir. 2004)
(quoting Jones v. Federated Fin. Reserve Corp., 144 F.3d 961, 965 (6th Cir. 1988)). “The
FCRA imposes distinct obligation on three types of entities: (1) consumer reporting agencies: (2)
users of consumer reports; and (3) furnishers of information to consumer reporting agencies.”
Id. at 844 (citing Carney v. Experian Info. Solutions, Inc., 57 F. Supp. 2d 496, 500 (W.D. Tenn.
Judge Vescovo found that the FCRA claim should not be dismissed at this time.
Defendants did not object to Judge Vescovo’s finding on this issue. Therefore, Defendants’
Motion to Dismiss Plaintiff’s FCRA claim is DENIED.
C. Defamation Claims
Defendants argue that Plaintiff’s state law defamation claim is preempted by the FCRA.
In response, Plaintiff asserts that his defamation clam is not preempted by the FCRA since
Defendants acted with malice or willful intent to injure. The FCRA contains two preemption
provisions. The first provision, 15 U.S.C. § 1681h(e) states:
Except as provided in sections 1681n and 1681o of this title, no consumer may
bring any action or proceeding in the nature of defamation, invasion of privacy, or
negligence with respect to the reporting of information against any consumer
reporting agency, any user of information, or any person who furnishes
information to a consumer reporting agency, based on information disclosed
pursuant to section 1681g, 1681h, or 1681m of this title, or based on information
disclosed by a user of a consumer report to or for a consumer against whom the
user has taken adverse action, based in whole or in part on the report except as to
false information furnished with malice or willful intent to injure such consumer.
The second preemption provision, 15 U.S.C. § 1681t (b)(1)(F) states that “no requirement or
prohibition may be imposed under the laws of any state … with respect to the subject matter
regulated under § 1681s-2 of this title, relating to the reporting agencies.”
“The majority of courts have found that § 1681t (b)(1)(F) applies to preempt both
statutory and common law claims under state law that are based on allegations involving a
subject matter regulated under the FCRA.” Birdsall v. Peoples Bank of the S., 2014 WL 640704,
at *4 (E.D. Tenn. Feb. 19, 2014). However, the Sixth Circuit has not “decided whether section
1681h(e)’s exception for claims alleging malice or willful intent has been overridden by section
1681t (b)(1)(F).” Brown v. Wal-Mart Stores, Inc., 507 F. App’x 543, 548 (6th Cir. 2012). “The
resulting tension between these two provisions, as well as the various district court attempts to
harmonize them have, resulted in four distinct and conflicting interpretive approaches.” Wolfe v.
MBNA Am. Bank, 485 F. Supp. 2d 874, 883 (W.D. Tenn. 2007). These approaches were
summarized in Skidmore v. Access Grp., Inc., No. CV 14-13031, 2015 WL 6736533, at *5 (E.D.
Mich. Nov. 4, 2015) (citations and internal quotation marks omitted). The Skidmore Court, in
pertinent part, stated:
In a nutshell, the “temporal approach” views § 1681t (b)(1)(F) as preempting only
state claims related to conduct by the furnisher after it receives notice of a dispute;
and § 1681h(e) as applying only to claims arising from the conduct of the
furnisher before that notice. Under the “statutory approach,” § 1681t (b)(1)(F)
bars all state law claims based on statutory schemes, only, while § 1681h(e) is
viewed as applying to common law claims. The “total approach” views the 1996
amendments as repealing § 1681h(e) and thus concludes that § 1681t (b)(1)(F)
preempts all state causes of action relating to the furnishing of credit information.
Under the approach adopted by the magistrate judge in Westbrooks, [a]ll state law
claims that do not allege willfulness are preempted by § 1681h(e), and any
surviving claims alleging willfulness are preempted under § 1681t (b)(1)(F) if
they involve a subject-matter regulated under § 1681s-2.
Judge Vescovo found that the Westbrooks approach best reconciled the two preemption
provisions. In reaching this conclusion, Judge Vescovo found the following Seventh Circuit’s
analysis citied in Skidmore to be persuasive:
See also Westbrooks v. Fifth Third Bank, No. 3:05-0664, 2005 WL 3240614 (M.D. Tenn. Nov. 30, 2005).
Section 1681h(e) preempts some state claims that could arise out of reports to
credit agencies; § 1681t(b)(1)(F) preempts more of these claims. Section
1681h(e) does not create a right to recover for willfully false reports; it just says
that a particular paragraph does not preempt claims of that stripe. Section
1681h(e) was enacted in 1970. Twenty-six years later, in 1996, Congress added §
1681t(b)(1)(F) to the United States Code. The same legislation also added §
1681s-2. The extra federal remedy in § 1681s-2 was accompanied by extra
preemption in § 1681t(b)(1)(F), in order to implement the new plan under which
reporting to credit agencies would be supervised by state and federal
administrative agencies rather than judges. Reading the earlier statute, §
1681h(e), to defeat the later enacted system in § 1681s-2 and § 1681t(b)(1)(F),
would contradict fundamental norms of statutory interpretation.
Id. at *6 (citing Purcell v. Bank of Am., 659 F.3d 622, 625 (7th Cir. 2011)).
After reviewing the relevant case law, this Court also finds that the Westbrooks approach
best reconciles the two preemption provisions.
Plaintiff’s defamation claim based on the
Defendants’ conduct as a furnisher is preempted by the FCRA.
Therefore, this claim is
Plaintiff also alleges that:
In publishing the  foreclosure notice, Defendants published false and defamatory
information concerning Plaintiff. Specifically, Defendants published statements
indicating the Plaintiff was in default of his mortgage and that Defendants were
rightfully entitled to foreclose. Those statements were made with knowledge that
they were false or with reckless disregard of whether they were false.
(ECF No. 36 ¶ 108). Judge Vescovo found that this claim was not preempted by the FCRA.
Furthermore, Defendants did not argue dismissal with respect to this defamation claim and have
not objected to Judge Vescovo’s finding. Therefore, this claim remains.
For the reasons set forth above, the Court ADOPTS the Magistrate Judge’s Report and
IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss Plaintiff’s
FDCPA claim is GRANTED; Defendants’ Motion to Dismiss Plaintiff’s FCRA claim is
DENIED; and Defendants’ Motion to Dismiss Plaintiff’s Defamation claim that is preempted by
the FCRA is GRANTED.
IT IS SO ORDERED on this 14th day of April, 2017.
s/John T. Fowlkes, Jr.
John T. Fowlkes, Jr.
United States District Judge
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