Leapai v. Collection Bureau of America, Ltd.

Filing 14

ORDER by U.S. District Judge John C Coughenour granting Defendant's 9 Motion to Dismiss for Failure to State a Claim. (AD)

THE HONORABLE JOHN C. COUGHENOUR

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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RITA LEAPAI,

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CASE NO. C16-0766-JCC
Plaintiff,

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ORDER GRANTING MOTION TO
DISMISS

v.
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COLLECTION BUREAU OF
AMERICA, LTD.,

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Defendant.

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This matter comes before the Court on Defendant Collection Bureau of America’s (CBA)
motion to dismiss for failure to state a claim. (Dkt. No. 9.) Having thoroughly considered the
parties’ briefing and the relevant record, the Court finds oral argument unnecessary and hereby
GRANTS the motion for the reasons explained herein.

I.

BACKGROUND
This action arises out of an alleged violation of the Fair Debt Collections Practices Act

(“FDCPA”), specifically 15 U.S.C. § 1692e(8). (Dkt. No. 1 at 2–3.) 15 U.S.C. § 1692e provides
that “[a] debt collector may not use any false, deceptive, or misleading representation or means
in connection with the collection of any debt” and that “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” violates the FDCPA.
15 U.S.C. § 1692e(8). Plaintiff Rita Leapai alleges in her complaint that CBA reported an

ORDER GRANTING MOTION TO DISMISS
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1 alleged debt to a credit reporting agency, however Leapai does not provide the date on which
2 CBA made the reporting. (Dkt. No. 1 at 3, ¶ 11.) Leapai further alleges that on November 19,
3 2015 she disputed the debt directly with CBA, but that CBA did not remove the credit account
4 from her credit report or mark it as “disputed by consumer,” thus violating the FDCPA. (Id. at 3,
5 ¶ 12–13.) When she checked her credit report on January 4, 2016, the credit account was still
6 there and was not marked as “disputed.” (Id. at 3, ¶ 13.) Leapai contends that under these facts as
7 alleged, CBA violated 15 U.S.C. § 1692e(8). (Id. at 3, ¶¶ 13, 16; Dkt. No. 11 at 5.)
8 II.

DISCUSSION

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A.

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Fed. R. Civ. P. 12(b)(6) Standard

A defendant may move for dismissal when a plaintiff “fails to state a claim upon which

11 relief can be granted.” Fed. R. Civ. P. 12(b)(6). To grant a motion to dismiss, the court must be
12 able to conclude that the moving party is entitled to judgment as a matter of law, even after
13 accepting all factual allegations in the complaint as true and construing them in the light most
14 favorable to the non-moving party. Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009).
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B.

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CBA argues that Leapai did not plead sufficient facts to show liability under 15 U.S.C.

Analysis

17 § 1692e(8) because she did not allege when CBA reported the debt to a credit reporting agency.
18 (Dkt. No. 9 at 1, 6.) Leapai also has not alleged that CBA made any report to a credit reporting
19 agency after she disputed the debt. (Id. at 6.) CBA contends that a violation of 1692e(8) occurs
20 only when the dispute is already known by the debt collector when the initial, or subsequent,
21 report is made. (Id. at 3.) CBA cites to Hylkema v. Associated Credit Serv. Inc., 2012 WL 13681
22 (W.D. Wash. Jan. 4, 2012) for support.
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In Hylkema, Magistrate Judge Theiler found that if a debt is disputed after a debt

24 collector reports the debt to a credit reporting agency, the debt collector does not have an
25 affirmative obligation to notify the agency of the dispute. Id. at *6. Absent authority from the
26 Ninth Circuit, Magistrate Judge Theiler cited approvingly to Wilhelm v. Credico, Inc., 519 F.3d

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1 416, 418 (8th Cir. 2008):
In [Wilhelm] the Eighth Circuit found no affirmative duty to report
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the fact that a consumer disputed a debt absent a communication in
which that fact should have been reported. Instead, “if a debt
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collector elects to communicate ‘credit information’ about a
consumer, it must not omit a piece of information that is always
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material, namely, that the consumer has disputed a particular debt.”
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Id. The Court noted Federal Trade Commission (FTC) Staff
Commentary to the FDCPA confirming its conclusion:
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1. Disputed debt. If a debt collector knows that a debt is disputed by
the consumer . . . and reports it to a credit bureau, he must report it
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as disputed.
2. Post-report dispute. When a debt collector learns of a dispute after
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reporting the debt to a credit bureau, the dispute need not also be
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reported.
Id. (citing FTC Staff Commentary, 53 Fed. Reg. 50097-02, 50106
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(Dec. 13, 1988).
11 Hylkema, 2012 WL 13681, at *7. Other courts have held similarly. See Llewellyn v. Allstate
12 Home Loans, Inc., 711 F.3d 1173, 1189 (10th Cir. 2013)(“[A] debt collector does not have an
13 affirmative duty to notify CRAs that a consumer disputes the debt unless the debt collector
14 knows of the dispute and elects to report to a CRA”); In re Benson, 445 B.R. 445 (Bankr. E.D.
15 Pa. 2010)(holding no subsequent reporting requirement arose if debt was disputed after it was
16 reported to agency); Phillips v. NCO Fin. Sys., Inc., 2014 WL 1405217, at *7 (E.D. Mich. Apr.
17 11, 2014)(same).
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Leapai counters by citing to Semper v. JBC Legal Group, 2005 WL 2172377 (W.D.

19 Wash. Sept. 6, 2005). (Dkt. No. 11 at 4–5.) In Semper, the debt collector violated § 1692e(8)
20 because it failed to inform a credit reporting agency that the plaintiff’s debt was disputed. 2005
21 WL 2172377, at *3. However, Semper is not helpful, because the issue was whether the FDCPA
22 gives “debt collectors the authority to determine unilaterally whether a dispute has merit or
23 whether to comply with the requirements of the FDCPA in a given case.” Id.
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This Court finds Hylkema and the other relevant authorities persuasive. Under that case

25 law, Leapai would have to allege that she disputed the debt prior to CBA reporting it to an
26 agency, or that after she disputed the debt, CBA made an additional report to the agency and

ORDER GRANTING MOTION TO DISMISS
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1 failed to inform it of the dispute. The only dates provided by Leapai are the date she filed a
2 dispute with CBA, November 19, 2015, and the date she checked her credit report, January 4,
3 2016. (Dkt. No. 1 at 3.) Absent these dates, Leapai has failed to plead sufficient facts to support
4 her claim.
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CONCLUSION

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For the foregoing reasons, Defendant CBA’s motion to dismiss (Dkt. No. 9) is

7 GRANTED. The Court ORDERS that Plaintiff’s claims are dismissed without prejudice.
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DATED this 22nd day of September 2016.

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A

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John C. Coughenour
UNITED STATES DISTRICT JUDGE

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ORDER GRANTING MOTION TO DISMISS
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