Hansen et al v. JP Morgan Chase Bank, N.A. et al

Filing 65

MEMORANDUM DECISION AND ORDER granting 42 Motion to Dismiss Claims as to Parties JP Morgan Chase & Co, JP Morgan Chase Bank, N.A., Chase Bank, and JP Morgan. Signed by Judge David Nuffer on 3/31/17 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
RICK D. HANSEN and CONNIE B.
HANSEN, individual citizens of Utah,

MEMORANDUM DECISION
AND ORDER GRANTING
MOTION TO DISMISS

Plaintiffs,
v.

Case No. 2:16-CV-744-DN

JPMORGAN CHASE BANK, NA, CHASE
BANK, JPMORGAN, JPMORGAN CHASE
& CO., CENLAR, FSB, EQUIFAX, INC.,
EXPERIAN INFORMATION SOLUTIONS,
INC., INNOVIS DATA SOLUTIONS, INC.,
TRANSUNION, LLC, and JOHN DOES
1 - 25,

District Judge David Nuffer

Defendants.

This case involves claims for damages arising from alleged incomplete or inaccurate
reporting of a government taking of real property owned by Plaintiffs Rick D. Hansen and
Connie B. Hansen (the “Hansens”) which had negative effects on the Hansens’ credit rating. 1
The Hansens assert six claims against Defendants JPMorgan Chase Bank, NA, Chase Bank,
JPMorgan, and JPMorgan Chase & Co. (collectively “Chase Bank”): (1) violations of the Fair
Credit Reporting Act (“FCRA”); 2 (2) violations of the FCRA; 3 (3) violation of the Fair and
Accurate Transactions Act of 2003 (“FACTA”); 4 (4) violations of the Consumer Credit

1

Complaint, docket no. 2, filed June 29, 2016.

2

Id. ¶¶ 96-103.

3

Id. ¶¶ 104-112.

4

Id. ¶¶ 113-119.

Reporting Reform Act of 1996 (“CCRRA”); 5 (5) failure to reasonably investigate after multiple
contacts; 6 and (6) defamation of credit. 7 Chase Bank seeks dismissal of the Hansens’ claims
pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim on
which relief may be granted. 8
Because the Hansens’ Complaint 9 fails to allege sufficient facts to support a claim against
Chase Bank, Chase Bank’s Motion to Dismiss 10 is GRANTED.

Contents
BACKGROUND ............................................................................................................................ 2
DISCUSSION ................................................................................................................................. 5
No private right of action exists for alleged violations of Section 1681s-2(a) ......................... 7
The Hansens’ allegations are insufficient to state a claim against Chase Bank for violation of
Section 1681s-2(b) .............................................................................................................. 8
The Hansens’ claim for defamation of credit against Chase Bank fails to state a claim on
which relief may be granted .............................................................................................. 11
ORDER ......................................................................................................................................... 13

BACKGROUND
The Hansens were owners of certain real property in Spanish Fork, Utah (the “Property”)
where they had lived and Mr. Hansen conducted a cement curbing business for more than two
decades. 11 On December 20, 2013, the Hansens transferred ownership of the Property to the
cities of Spanish Fork and Springville as a result of an eminent domain taking for the expansion

5

Id. ¶¶ 120-126.

6

Id. ¶¶ 127-136.

7

Id. ¶¶ 137-147.

8

Motion to Dismiss Plaintiffs’ Complaint and Memorandum in Support (“Motion to Dismiss”), docket no. 42, filed
Sept. 8, 2016.
9

Docket no. 2, filed June 29, 2016.

10

Docket no. 42, filed Sept. 8, 2016.

11

Complaint at 2, 7, docket no. 2, filed June 29, 2016.

2

of the Spanish Fork/Springville Municipal Airport. 12 The Hansens were paid the Property’s fair
market value for the taking. 13 However, the payment was insufficient to cover the existing debt
owed on the Property. 14
Prior to the taking, by letters dated July 22, 2013, the Hansens notified the Property’s lien
holders, Chase Bank and CENLAR, FSB (“CENLAR”), of the government’s intent to exercise
eminent domain on the Property. 15 This spurred a series of communications over a period of
several months between the Hansens and Chase Bank and CENLAR regarding the debts owed on
the Property. 16 Despite being repeatedly informed that the transaction was a government taking,
Chase Bank and CENLAR treated the Hansens’ notice as a request for a short sale. 17 A “short
sale” is a sale for less than value, which is treated in the industry as a foreclosure. 18
The taking resulted in Chase Bank and CENLAR settling the debts for an amount that
was less than full payment. 19 When the Hansens later attempted to obtain a replacement
property, they discovered that their credit rating had dropped as a result of information Chase
Bank and CENLAR furnished to the major credit reporting agencies concerning the debts. 20
Chase Bank and CENLAR had furnished information that the Hansens were delinquent in their

12

Id. at 2-3, ¶¶ 35-36, 53-54.

13

Id. at 3.

14

Id.

15

Id. ¶ 4.

16

Id. ¶¶ 5-64.

17

Id.

18

Id. at 5-6.

19

Id. at 5, ¶¶ 20, 24, 41, 47, 50-51.

20

Id. at 6.

3

payments on the debts from October 2013 through December 2013, and that the Property was
sold for less than value. 21
Beginning on January 8, 2014, the Hansens sent letters to Chase Bank and CENLAR
demanding that the information furnished to the major credit reporting agencies be corrected to
reflect a government taking. 22 In response, CENLAR issued letters recanting use of the term
“short sale,” and acknowledging that the transaction was a government taking and that the debt
was “paid in full.” 23 CENLAR’s letters were publicly noticed and shared with the major credit
reporting agencies. 24 However, CENLAR later furnished information to the major credit
reporting agencies that the debt was “settled for less than the full amount … due to eminent
domain of the [Property].” 25
Chase Bank initially responded to the Hansens’ demands by indicating that it “sent an
electronic notification to the major credit agencies (Equifax, Experian, Innovis and TransUnion)
requesting that they suppress the delinquent payments reporting on [the Hansens’] account for
October 2013, November 2013, and December 2013.” 26 Chase Bank also notified the Hansens
that it asked the “four major credit agencies (Equifax, Experian, Innovis and TransUnion) to
show that [the Hansens had] paid off (or settled) the account for less than the full balance as of
December 27, 2013.” 27 However, Chase Bank later informed that Hansens that it “requested that
the credit reporting agencies report the loan as paid in full for less than the full balance – settled.

21

Id. at 5-6.

22

Id. at 7, ¶¶ 65, 68, 72.

23

Id. at 7, ¶¶ 70, 76.

24

Id.

25

Id. ¶¶ 79-80.

26

Id. ¶ 67.

27

Id. ¶ 85.

4

The credit bureaus do not report the narrative ‘Short Sale.’” 28 Chase Bank continues to
characterize the debt as settled for “less than the full balance,” without reference to a government
taking or the exercise of eminent domain. 29
Despite the drop in their credit rating, the Hansens purchased a replacement property. 30
However, they received a higher interest rate which increased their monthly mortgage payments
by approximately $400. 31 The authorized limits on the Hansens’ personal and business credit
cards also suffered reductions which impacted the Mr. Hansen’s ability to conduct his cement
curbing business and secure future contracts. 32
DISCUSSION
Chase Bank seeks dismissal of the Hansens’ claims pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure. 33 A defendant is entitled to dismissal under Rule 12(b)(6)
when the complaint, standing alone, is legally insufficient to state a claim for which relief may
be granted. 34 When considering a motion to dismiss for failure to state a claim, the thrust of all
well-pleaded facts in the complaint is presumed, but conclusory allegations need not be
considered. 35 Nor are the complaint’s legal conclusions and opinions accepted, whether or not
they are couched as facts. 36

28

Id. ¶ 88.

29

Id. ¶¶ 92, 94.

30

Id. at 6.

31

Id. at 6-7.

32

Id. at 7.

33

Motion to Dismiss, docket no. 42, filed Sept. 8, 2016.

34

Sutton v. Utah State Sch. for the Deaf and Blind, 173 F.3d 1226, 1236 (10th Cir. 1999).

35

Cory v. Allstate Ins., 583 F.3d 1240, 1244 (10th Cir. 2009).

36

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Brown v.
Zavaras, 63 F.3d 967, 972 (10th Cir. 1995).

5

The United States Supreme Court has held that satisfying the basic pleading requirements
of the federal rules “demands more than an unadorned, the defendant-unlawfully-harmed-me
accusation.” 37 “A pleading that offers labels and conclusions or a formulaic recitation of the
elements of a cause of action will not do.” 38 “Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice.” 39 Moreover, “naked assertions
devoid of further factual enhancement” are insufficient to state a claim that will survive a motion
to dismiss. 40
“The allegations must be enough that, if assumed to be true, the plaintiff plausibly (not
just speculatively) has a claim for relief.” 41 “This requirement of plausibility serves not only to
weed out claims that do not (in the absence of additional allegations) have a reasonable prospect
of success, but also to inform the defendants of the actual grounds of the claim against them.” 42
The Hansens’ Complaint asserts six claims against Chase Bank. 43 The predicate for
Chase Bank’s liability on the six claims is alleged violations of 15 U.S.C. §§ 1681s-2(a)
and 1681s-2(b). The Hansens generally allege that Chase Bank willfully or negligently furnished
incomplete or inaccurate information to the major credit reporting agencies concerning the
Hansens’ debt on the Property. 44 The Hansens also allege that Chase Bank willfully or
negligently failed to investigate and correct the information it furnished after being repeatedly

37

Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 862 (2009).

38

Id. (internal quotations omitted).

39

Id.

40

Id. (internal quotations omitted).

41

Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008).

42

Id. at 1248.

43

Complaint ¶¶ 96-147, docket no. 2, filed June 29, 2016.

44

Id.

6

notified by the Hansens of their dispute. 45 The Hansens seek damages for Chase Bank’s alleged
willful or negligent noncompliance under 15 U.S.C. §§ 1681n and 1681o. 46
As a matter of law, the Hansens fail to allege sufficient facts to state a claim against
Chase Bank on which relief may be granted.
No private right of action exists for alleged violations of Section 1681s-2(a)
In asserting their claims against Chase Bank, the Hansens make repeated reference to and
allegations concerning the obligations the FCRA imposes on furnishers of information to credit
reporting agencies under 15 U.S.C. § 1681s-2(a). 47 Section 1681s-2(a) pertains to the duty of
furnishers to provide accurate information to credit reporting agencies. 48 Among the obligations
imposed by Section 1681s-2(a) are:
•

a furnisher may not furnish information to a credit reporting agency that it
knows or has reasonable cause to believe is inaccurate; 49

•

a furnisher must promptly correct and update the information it furnishes to
credit reporting agencies; 50

•

a furnisher may not furnish information to a credit reporting agency without
notice that the information is disputed by the consumer; 51

•

a furnisher must provide timely written notice to the consumer when it
furnishes negative information to a credit reporting agency; 52 and

45

Id.

46

Id. ¶¶ 101-102, 110-111, 135-136, 145-146.

47

Id. ¶¶ 96-147.

48

15 U.S.C. § 1681s-2(a).

49

Id. § 1681s-2(a)(1).

50

Id. § 1681s-2(a)(2).

51

Id. § 1681s-2(a)(3).

52

Id. § 1681s-2(a)(7).

7

•

a furnisher must comply with certain investigative procedures concerning the
accuracy of the information it furnishes when a consumer raises a dispute
directly with the furnisher. 53

The Tenth Circuit has held that “while [the] FCRA allows federal agencies and state
officials to enforce the[] obligations [of Section 1681s-2(a)], it does not allow consumers … a
private right of action to do so.” 54 Therefore, even assuming the Hansens’ allegations
demonstrate that the obligations of Section 1681s-2(a) apply to Chase Bank, and that Chase
Bank failed to comply with them, any claim that Chase Bank violated Section 1681s-2(a) fails as
a matter of law.
Therefore, insofar as the Hansens’ claims against Chase Bank are predicated on
violations of Section 1681s-2(a), the Hansens’ Complaint 55 fails to state a claim against Chase
Bank on which relief may be granted.
The Hansens’ allegations are insufficient to state a claim against Chase Bank
for violation of Section 1681s-2(b)
In asserting their claims against Chase Bank, the Hansens also make repeated reference to
and allegations concerning the duties the FCRA imposes on furnishers of information to credit
reporting agencies under 15 U.S.C. § 1681s-2(b). 56 Section 1681s-2(b) pertains the duties of
furnishers to comply with certain investigative procedures after receiving notice from a credit
reporting agency that a consumer disputes the completeness or accuracy of furnished
information. 57 Among the duties imposed by Section 1681s-2(b) are:

53

Id. § 1681s-2(a)(8).

54
Brunson v. Provident Funding Associates, 608 Fed. App’x 602, 611 (10th Cir. 2015) (citing Sanders v. Mountain
Am. Fed. Credit Union, 689 F.3d 1138, 1147 (10th Cir. 2012)); see also Pinson v. Equifax Credit Info. Servs.,
Inc., 316 Fed. App’x 744, 751 (10th Cir. 2009); 15 U.S.C. § 1681s-2(c), (d).
55

Complaint, docket no. 2, filed June 29, 2016.

56

Id. ¶¶ 96-147.

57

15 U.S.C. § 1681s-2(b).

8

•

a furnisher must timely conduct an investigation with respect to the disputed
information; 58

•

a furnisher must review all relevant information provided by a consumer
reporting agency; 59

•

a furnisher must report the results of its investigation to the consumer
reporting agency that provided the furnisher notice of the consumer’s
dispute; 60

•

if the investigation reveals that the furnished information was incomplete or
inaccurate, a furnisher must report the results to all credit reporting agencies
to which the information was furnished; 61 and

•

if the information disputed by the consumer is incomplete, inaccurate, or
cannot be verified, a furnisher must promptly modify, delete, or permanently
block the reporting of the information. 62

“The investigation an information furnisher undertakes must be a reasonable one.” 63
Unlike Section 1681s-2(a), a private right of action exists against furnishers of
information to credit reporting agencies for violations of Section 1681s-2(b). 64 However, the
Tenth Circuit has held that “[t]he furnisher’s duty to investigate [under Section 1681-2(b)] arises
only after a [credit reporting agency] notifies the furnisher of a dispute and, conversely, does not
arise when notice is provided directly from a consumer.” 65 “Thus, a consumer cannot recover

58

Id. § 1681s-2(b)(1)(A), (b)(2).

59

Id. § 1681s-2(b)(1)(B).

60

Id. § 1681s-2(b)(1)(C).

61

Id. § 1681s-2(b)(1)(D).

62

Id. § 1681s-2(b)(1)(E).

63

Maiteki v. Marten Transp. Ltd., 828 F.3d 1272, 1275 (10th Cir. 2016) (internal quotations omitted).

64

Sanders, 689 F.3d at 1147.

65
Willis v. Capital One Corp., 611 Fed. App’x 500, 502 (10th Cir. 2015) (internal quotations omitted); see also
Sanders, 689 F.3d at 1147; Pinson, 316 Fed. App’x at 751.

9

under [Section] 1681s-2(b) if they do not initiate the process for recovery by notifying a [credit
reporting agency] of the dispute.” 66
The Hansens fail to allege that they ever initiated the investigative procedures of
Section 1681s-2(b) by providing notice to a credit reporting agency of their dispute regarding the
completeness or accuracy of the information Chase Bank furnished. 67 Rather, the Hansens allege
only that they raised their dispute directly with Chase Bank and CENLAR, and through the
office of Senator Orrin Hatch. 68
The closest the Hansens come to alleging that they initiated the investigative procedures
of Section 1681s-2(b) is found in following allegation:
Either the [credit reporting agency] was not provided, with a [consumer dispute
verification form], containing sufficient detail to explain that this was a “taking”
and not a foreclosure type action, in which case the furnisher of information is to
blame for causing the negative credit report, or the furnisher did provide direct
information clearly classifying the transaction as a government taking based on
eminent domain and the [credit reporting agency] mischaracterized the transaction
as carrying a negative impact. The results were the same as neither the [credit
reporting agency] nor the furnisher satisfy the reasonable obligation test. 69
However, this allegation is generalized, conclusory, and argumentative. The allegation is found
in the Hansens’ claim against Chase Bank and CENLAR for failure to reasonably investigate
after multiple contacts. 70 But the allegation does not refer to Chase Bank as the relevant furnisher
of information. 71 Nor does the allegation identify the relevant credit reporting agency. 72 The

66

Willis, 611 Fed. App’x at 502 (internal quotations omitted); see also Sanders, 689 F.3d at 1147; Pinson, 316 Fed.
App’x at 751.
67

15 U.S.C. § 1681i; see also Wright, 805 F.3d at 1241-42.

68

Complaint at 7, ¶¶ 65, 68, 72, 75, 82-83, 86, 89-90, 93, 98-99, 107, 118, 140, docket no. 2, filed June 29, 2016.

69

Id. at 130.

70

Id. at ¶¶ 127-136.

71

Id. at ¶ 130.

72

Id.

10

allegation also acknowledges that the credit reporting agency may not have been provided with a
consumer dispute verification form. 73
Moreover, the Hansens do not allege, even on information and belief, that Chase Bank
ever received relevant information from a credit reporting agency concerning the Hansens’
dispute. 74 “A ‘reasonable’ investigation [by a furnisher] is one that a reasonably prudent person
would undertake under the circumstances.” 75 And “[h]ow thorough an investigation must be to
be ‘reasonable’ turns on what relevant information was provided to a furnisher by the [credit
reporting agency] giving notice of a dispute.” 76
In the absence of allegations that the Hansens initiated the investigative procedures of
Section 1681s-2(b), and that Chase Bank received relevant information concerning the Hansens’
dispute from a credit reporting agency to guide its investigation, any claim that Chase Bank
violated Section 1681s-2(b) fails as a matter of law. Therefore, the Hansens’ Complaint 77 fails to
state a claim against Chase Bank on which relief may be granted.
The Hansens’ claim for defamation of credit against Chase Bank
fails to state a claim on which relief may be granted
Chase Bank argues for the dismissal of the Hansens’ claim for defamation of credit on
the ground that the claim is preempted by the FCRA. 78 This argument is based on the mistaken
assumption that the claim is predicated on state common law, and not the provisions of the

73

Id. at ¶ 130.

74

15 U.S.C. § 1681s-2(b).

75

Maiteki, 828 F.3d at 1275 (internal quotations omitted).

76

Id. (internal quotations omitted).

77

Complaint, docket no. 2, filed June 29, 2016.

78

Motion to Dismiss at 4, 15-16, docket no. 42, filed Sept. 8, 2016; Reply Memorandum in Support of motion to
Dismiss Plaintiffs’ Complaint (“Reply”) at 3, 7, docket no. 60, filed Nov. 8, 2016.

11

FRCA. 79 Chase Bank’s mistaken assumption is understandable because the claim is titled
“Defamation of Credit” 80 without reference to the FCRA and its allegations do not expressly
refer to the FCRA section Chase Bank is alleged to have violated. 81 The claim’s allegations 82
also track the elements of a Utah common law claim for defamation:
A prima facie case for defamation must demonstrate that (1) the defendant
published the statements in print or orally; (2) the statements were false; (3) the
statements were not subject to privilege; (4) the statements were published with
the requisite degree of fault; and (5) the statements resulted in damages. 83
Specifically, the claim alleges that Chase Bank communicated and made public statements that
were inaccurate and false concerning the Hansens’ debt on the Property. 84 And that these
communications and public statements are not subject to privilege, are malicious in nature, and
have harmed the Hansens’ reputation and caused lost profits to Mr. Hansen’s business. 85
However, the claim’s allegations 86 also track the obligations and duties of furnishers of
information to credit reporting agencies under the FCRA, specifically Section 1681s-2(a) and
Section 1681s-2(b). 87 And the claim asserts the Hansens are entitled to damages for Chase
Bank’s alleged willful or negligent noncompliance with the FCRA under Section 1681n and
Section 1681o. 88 Moreover, the Hansens’ Response to Chase Bank’s Motion to Dismiss makes

79

Motion to Dismiss at 4, 15-16, docket no. 42, filed Sept. 8, 2016; Reply at 3, 7, docket no. 60, filed Nov. 8, 2016.

80

Complaint at 38, docket no. 2, filed June 29, 2016.

81

Id. ¶¶ 137-147.

82

Id. ¶¶ 138-144.

83

Jacob v. Bezzant, 2009 UT 37, ¶ 21, 212 P.3d 535 (internal quotations and punctuation omitted).

84

Complaint ¶¶ 138-141, docket no. 2, filed June 29, 2016.

85

Id. ¶¶ 142-144.

86

Id. ¶¶ 138-144.

87

Supra at 7-10.

88

Complaint ¶¶ 145-146, docket no. 2, filed June 29, 2016.

12

clear that the claim is predicated on the existence of a private right of action against furnishers of
information to credit reporting agencies under Section 1681s-2(b), not Utah common law. 89
Therefore, because the Hansens’ defamation of credit claim 90 is an FCRA claim
predicated on Section 1681s-2(b), Chase Bank’s preemption argument 91 lacks merit.
Nevertheless, because the Hansens fail to allege that they ever initiated the investigative
procedures of Section 1681s-2(b), and fail to allege that Chase Bank received relevant
information concerning the Hansens’ dispute from a credit reporting agency to guide its
investigation, any claim that Chase Bank violated Section 1681s-2(b) fails as a matter of law. 92
Therefore, the Hansens’ defamation of credit claim 93 fails as a matter of law.
ORDER
IT IS HEREBY ORDERED that Chase Bank’s Motion to Dismiss 94 is GRANTED.
Consequently, the Hansens’ claims against Chase Bank 95 are DISMISSED.
Signed March 31, 2017.
BY THE COURT

________________________________________
District Judge David Nuffer

89

Response to Defendants JPMorgan Chase Bank, N.A.; Chase Bank; JPMorgan; and JPMorgan Chase & Co.
Motion to Dismiss at 3, docket no. 56, filed Oct. 18, 2016. The Hansens similarly argue that their claim for
defamation of credit is predicated on a private right of action under Section 1681s-2(b), and not Utah common law,
in their Response to Defendant CENLAR, FSB’s Motion for Judgment on the Pleadings at 3-4, 18-19, docket
no. 57, filed Oct. 18, 2016.
90

Complaint ¶¶ 137-147, docket no. 2, filed June 29, 2016.

91

Motion to Dismiss at 4, 15-16, docket no 42, filed Sept. 8, 2016; Reply at 3, 7, docket no. 60, filed Nov. 8, 2016.

92

Supra at 8-11.

93

Complaint ¶¶ 137-147, docket no. 2, filed June 29, 2016.

94

Docket no. 42, filed Sept. 8, 2016.

95

Complaint ¶¶ 96-147, docket no. 2, filed June 29, 2016.

13