Hall v. Bay Area Credit Service et al

Filing 24

Memorandum Opinion and Order...BACS's motion to dismiss is granted in part, and that plaintiff's FDCPA claims against BACS are dismissed. (Ordered by Judge John McBryde on 9/15/2017) (wrb)

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Plaintiff,

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KRISTEE HALL,

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NO. 4:17-CV-502-A

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BAY AREA CREDIT SERVICE,
ET AL.,

§
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Defendants.

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MEMORANDUM OPINION
and
ORDER
Came on for consideration the motion of defendant Bay Area
Credit Service ("BACS") to dismiss plaintiff's claims against it
in the above-captioned action.

The court, having considered the

motion, the response, the record, and applicable legal
authorities, concludes that it should be granted in part.
I.

Plaintiff's Claims
Kristee Hall initiated this action on June 26, 2017 by
filing her original complaint.

Plaintiff's live pleading is her

first amended complaint filed August 16, 2017.

In it, plaintiff

alleges that BACS violated the Fair Credit Reporting Act, 15
U.S.C.

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vs.

1

1681-1681x ("FCRA"), as well as various provisions of

the Fair Debt Collection Practices Act, 15 U.S.C

§

1692-

1962p("FDCPA"), by reporting inaccurate information to a credit
reporting agency and by failing to correct the information upon

becoming aware of its inaccuracy. Plaintiff makes the following
factual allegations:
In January 2017, plaintiff became aware from her TransUnion
credit report that BACS was reporting her to be delinquent on a
debt.

Plaintiff inquired as to the nature of this debt, and

learned that it was for an ambulance ride in California that she
in fact had not taken.

Plaintiff filed an online dispute with

Transunion regarding the inaccurate debt, which then conveyed the
information to BACS.

BACS apparently responded by placing

plaintiff's account in disputed status and notifying the credit
reporting agencies of the disputed status.

In February 2017

plaintiff again called BACS to dispute the debt she saw reflected
on her credit report.

Plaintiff contacted BACS in April 2017 to

dispute the debt yet again, prompting BACS to finally investigate
the legitimacy of the debt.
II.
Grounds of Bay Area Credit Service's Motion
Movant seeks dismissal of plaintiff's claims against it for
failure to state a claim upon which relief may be granted.
Specifically, BACS claims that plaintiff has failed to state a
claim under 15 U.S.C.

§

1681s-2(b) because BACS complied with the

requirements of the FCRA by placing plaintiff's claim "in
dispute" after their first communication and then later deleting

2

the item from plaintiff's credit history.

Second, BACS claims

that plaintiff has failed to state a claim under the FDCPA
because her pleadings fail to allege that BACS made any attempt
to collect a debt from plaintiff.
III.

Applicable Pleading Standards
Rule 8 (a) (2) of the Federal Rules of Civil Procedure
provides,

in a general way, the applicable standard of pleading.

It requires that a complaint contain "a short and plain statement
of the claim showing that the pleader is entitled to relief[,]"
Fed. R. Civ. P. 8(a) (2), "in order to give the defendant fair
notice of what the claim[s are]
rest[]."

and the grounds upon which [they]

Twombly, 550 U.S. at 555 (internal quotation marks and

ellipsis omitted) .

Although a complaint need not contain

detailed factual allegations, the "showing" contemplated by Rule
8 requires the plaintiff to do more than simply allege legal
conclusions or recite the elements of a cause of action.
555 & n.3.

Id. at

Thus, while a court must accept all of the factual

allegations in the complaint as true, it need not credit bare
legal conclusions that are unsupported by any factual
underpinnings.

See Iqbal, 556 U.S. at 679 ("While legal

conclusions can provide the framework of a complaint, they must
be supported by factual allegations.'')

3

Moreover, to survive a motion to dismiss for failure to
state a claim under Rule 12 (b) (6), the facts pleaded must allow
the court to infer that the plaintiff's right to relief is
plausible.

Id. at 678.

To allege a plausible right to relief,

the facts pleaded must suggest liability; allegations that are
merely consistent with unlawful conduct are insufficient.
Twombly, 550 U.S. at 566-69.

"Determining whether a complaint

states a plausible claim for relief .

[is] a context-specific

task that requires the reviewing court to draw on its judicial
experience and common sense."

Iqbal, 556 U.S. at 679.

The court generally is not to look beyond the pleadings in
deciding a motion to dismiss.
774

(5th Cir. 1999).

Spivey v. Robertson, 197 F.3d 772,

"Pleadings" for purposes of a Rule 12 (b) (6)

motion include the complaint, its attachments, and documents that
are referred to in the complaint and central to the plaintiff's
claims.

Collins v. Morgan Stanley Dean Witter, 224 F.3d 496,

498-99 (5th Cir. 2000).
IV.

Analysis
1.

FCRA Claim Under§ 1681s-2(b)

Plaintiff's first cause of action against BACS alleges that
BACS violated§ 1681s-2(b) by "failing to fully and properly
investigate Plaintiff's disputes; by failing to review all

4

relevant information regarding same; by failing to accurately
respond to Trans Union [sic] ; and by failing to permanently and
lawfully correct its own internal records to prevent the rereporting of the false information to Trans Union [sic]."

Doc. 1

19 at 6-7.
Section 1681s-2(b) (1)

involves the duties of furnishers of

information upon a notice of dispute from a credit reporting
agency, and provides:
After receiving notice pursuant to section 1681i (a) (2) of
this title of a dispute with regard to the completeness or
accuracy of any information provided by a person to a
consumer reporting agency, the person shall-(A) conduct an investigation with respect to the
disputed information;
(B) review all relevant information provided by the
consumer reporting agency pursuant to section
1681i (a) (2) of this title;
(C) report the results of the investigation to the
consumer reporting agency;
(D) if the investigation finds that the information is
incomplete or inaccurate, report those results to all
other consumer reporting agencies to which the person
furnished the information and that compile and maintain
files on consumers on a nationwide basis; and
(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

1

The "Doc._" reference is to the numbers assigned to the referenced documents on the
docked of this case, No. 4-17-CV-502-A.
5

agency only, as appropriate, based on the results of
the reinvestigation promptly-(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.A. § 1681s-2 (b) (1).

This section applies when

furnishers of information, in this case defendant BACS, have been
notified by a credit reporting agency that a consumer is
disputing a debt.

2

For a consumer to state a claim under §1681s-

2(b), she must allege that a consumer reporting agency such as
TransUnion actually notified the furnisher of information that
the debt was disputed.
(5th Cir. 2002)

See Young v. Eguifax, 294 F.3d 631, 639

(notice from the credit reporting agency "is

necessary to trigger the furnisher's duties under § 1681s2(b) .").

Plaintiff alleges in her amended complaint that the

credit reporting agency (here, TransUnion) notified BACS about a
disputed debt on plaintiff's credit report •on or around January
7, 2017," thus triggering BACS's duty to investigate plaintiff's
claims.

BACS admits that it responded to this information by

placing the account in disputed status and notifying the credit
reporting agencies of the disputed status.

2

Section 1681 i(a)(2), cited in § 1681 s-2(b )( 1), provides that a credit reporting agency, within
five days of receiving notice of a dispute from a consumer, must notifY the furnisher of the information
of the dispute.
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However,

§ 1681s-2(b) requires a debt collector take more

action than just placing the account in disputed status.

It

requires that the debt collector, among other things, conduct an
investigation into the merits of the dispute, and if the
information in question is found to be false, undertake prompt
removal, deletion, or other measures to correct the mistake.
U.S.C.

§ 1681s-2(b) (1).

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The debt collector has a 30-day window

in which to conduct such an investigation and follow up with
appropriate action.

Id. at 1681i.

Plaintiff's amended

complaint alleges that despite being put on notice in January
that the information listed on her credit report was false, BACS
continued to report the debt to credit reporting agencies for
several more months.

Plaintiff has pleaded facts sufficient to

make her§ 1681s-2(b) claim plausible.
2.

FDCPA Claims

The purposes of the FDCPA are "to eliminate abusive debt
collection practices by debt collectors, to insure that those
debt collectors who refrain from using abusive debt collection
practices are not competitively disadvantaged, and to promote
consistent State action to protect consumers against debt
collection abuses."

15 U.S.C.

§ 1692(e).

Section 1692e of FDCPA provides in pertinent part:
A debt collector may not use any false, deceptive, or
misleading representation or means in connection with the
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collection of any debt. Without limiting the general
application of the foregoing, the following conduct is a
violation of this section:

(2) The false representation of-(A) the character, amount, or legal status of
any debt;

(8) Communicating or threatening to communicate to
any person credit information which is known or
which should be known to be false, including the
failure to communicate that a disputed debt is
disputed.

(10) The use of any false representation or
deceptive means to collect or attempt to collect
any debt or to obtain information concerning a
consumer.

15 U.S.C.

§§

1692e(2),

(8),

(10).

Section 1692f prohibits use of

"unfair or unconscionable means to collect or attempt to collect
any debt," and lists specific actions that are considered
violations,

including "[t]he collection of any amount ... unless

such amount is expressly authorized by the agreement creating the
debt or permitted by law."

15 U.S.C.

8

§

1692f(1).

Although plaintiff cites the above sections of the FDCPA in
her amended complaint, and continues on to allege that BACS made
certain false or misleading representations when it reported the
debt to TransUnion, the amended complaint alleges nothing to
plausibly support a theory that the complained of communications
were to induce her to pay her debt. Thus, plaintiff has not
plausibly alleged that BACS made its credit reporting in
connection with collecting a debt, or that BACS used unfair or
unconscionable means to collect a debt.
There is another reason why plaintiff has failed to
sufficiently plead her

§

1692e(8) claim.

Plaintiff alleges that

upon learning of the alleged mistake on her credit report, BACS
"did not investigate the debt, and instead simply reported the
debt as 'disputed by consumer'."

Doc. 19 at 5.

However, by its

own terms, the applicable statute "merely requires a debt
collector who knows or should know that a given debt is disputed
to disclose its disputed status to persons inquiring about a
consumer's credit history."

Sayles v. Advanced Recovery Systems,

Inc., 865 F.3d 246, 249 (5th Cir. 2017).
did this.

Plaintiff admits BACS

Thus, plaintiff has failed to plausibly allege a

violation of FDCPA

§

1692e(8).

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v.
Order
The court ORDERS that BACS's motion to dismiss be, and is
hereby, granted in part, and that plaintiff's FDCPA claims
against BACS be, and are hereby, dismissed.
SIGNED September 15, 2017.

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