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Thorp v. Educap, Inc.

United States District Court, Ninth Circuit

November 6, 2013

KRISTYANN THORP, et al., Plaintiffs,
EDUCAP, INC., et al., Defendants.


MAXINE M. CHESNEY, District Judge.

Before the Court is defendant EduCap Inc.'s ("EduCap") Motion to Dismiss, filed September 24, 2013.[1] Plaintiffs Kristyann Thorp, Michael L. Suechting, and Barbara Suechting have filed opposition, to which EduCap has replied. Having read and considered the papers filed in support of and in opposition to the motion, the Court rules as follows.[2]


The following facts are either taken from the complaint and assumed true for purposes of the instant motion, or are taken from documents referenced in the complaint and filed by EduCap in connection with its motion to dismiss.[3]

In 2006, plaintiffs jointly applied for a student loan from EduCap, and EduCap loaned plaintiffs the amount of $15, 000. (See Compl. ¶ 10; Martin Decl. Ex. 1.) Plaintiffs made payments for "an extended period, " but after they "fell behind" on their payments, EduCap, in August 2010, "filed a collection action" in state court. (See Compl. ¶ 11.) In October 2011, the parties to the state court action reached a settlement, the terms of which they placed on the record (see Compl. ¶ 12), and they thereafter signed two documents to memorialize the settlement agreement (see id.; Martin Decl. Ex. 2).

The material terms of the settlement agreement, as placed on the record in state court on October 28, 2011, are as follows: payment by plaintiffs to EduCap in the amount of $100 each month beginning in November 2011 and continuing for a period of eighteen months, and thereafter in the amount of $250 each month until payment of the outstanding principal, $14, 868.22, is made in full (see Compl. Ex. A at 9:12-15, 9:28-10:8); as long as plaintiffs make the requisite payments, no interest is due (see id. Ex. A at 9:17-18); and, in the event plaintiffs fail to make timely payments, EduCap is entitled to obtain, on an ex parte basis, judgment on its claim for the principal, plus interest at the rate of 10%, less credit for any payments made under the settlement agreement (see id. Ex. A. at 10:11-14).

On October 28, 2011, plaintiffs and counsel for EduCap signed a handwritten one-page document summarizing the terms they had placed on the record. (See id. Ex. B.) Thereafter, plaintiff signed a "Stipulation for Compromise Settlement, "[4] which document includes two additional terms: after plaintiffs make the final payment due under the settlement agreement, EduCap will dismiss with prejudice its state court complaint (see Miller Decl. Ex. 2 at ¶ 3); and counsel for EduCap "will notify [EduCap] to correct [illegible] reporting on credit report regarding all defendants [illegible]" (see id. Ex. 2 at ¶ 6).[5]

Plaintiffs have made each payment due under the settlement agreement on a timely basis. (See Compl. ¶ 13.) EduCap, however, has reported to credit reporting agencies Experian, Equifax, and Trans Union that plaintiffs' account is "past due in the approximate amount of $20, 026, " that plaintiffs' monthly payment is "$6, 126, " and that plaintiffs are "180 days late making payments over the period October 2001 to date." (See Compl. ¶ 14.) Experian, Equifax, and Trans Union have published in their respective credit reports the information submitted to them by EduCap "since October 2011." (See Compl. ¶ 15.)

Plaintiffs have sent "dispute letters" to Experian, Equifax, and Trans Union" (see Compl. ¶ 17), each of which credit reporting agencies, in turn, notified EduCap that plaintiffs "were disputing the account" (see Compl. ¶ 19). EduCap thereafter sent Experian, Equifax, and Trans Union "verifications that its credit reporting was accurate" (see id.), and Experian, Equifax, and Trans Union then sent plaintiffs "notices that they would not change their reporting on the account" (see Compl. ¶ 18). Plaintiffs applied for and were denied loans and extensions of credit "based on" the information reported in the credit reports. (See Compl. ¶¶ 23, 24.)


Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. See Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990). Rule 8(a)(2), however, "requires only a short and plain statement of the claim showing that the pleader is entitled to relief.'" See Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)(2)). Consequently, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations." See id. Nonetheless, "a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." See id. (internal quotation, citation, and alteration omitted).

In analyzing a motion to dismiss, a district court must accept as true all material allegations in the complaint, and construe them in the light most favorable to the nonmoving party. See NL Indus., Inc. v. Kaplan , 792 F.2d 896, 898 (9th Cir. 1986). "To survive a motion to dismiss, a complaint must contain sufficient factual material, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Twombly , 550 U.S. at 570). "Factual allegations must be enough to raise a right to relief above the speculative level[.]" Twombly , 550 U.S. at 555. Courts "are not bound to accept as true a legal conclusion couched as a factual allegation." See Iqbal , 556 U.S. at 678 (internal quotation and citation omitted).

Generally, a district court, in ruling on a Rule 12(b)(6) motion, may not consider any material beyond the complaint. See Hal Roach Studios, Inc. v. Richard Feiner & Co. , 896 F.2d 1542, 1555 n. 19 (9th Cir. 1990). Documents whose contents are alleged in the complaint, and whose authenticity no party questions, but which are not physically attached to the pleading, however, may be considered. See Branch v. Tunnell , 14 F.3d 449, 454 (9th Cir. 1994). In addition, a district court may consider any document "the authenticity of which is not contested, and upon which the plaintiff's complaint necessarily relies, " regardless of whether the document is referenced in the complaint. See Parrino v. FHP, Inc. , 146 F.3d 699, 706 (9th Cir. 1998).


In their complaint, plaintiffs allege that EduCap has violated the Consumer Credit Reporting Agencies Act ("CCRAA"), California Civil Code §§ 1785.1-1785.35; the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681-1681x; and the Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), California Civil Code §§ 1788-1788.33. EduCap argues each claim alleged against it is subject to dismissal.

At the outset, the Court notes that plaintiffs do not oppose dismissal of their RFDCPA claim. (See Pls.' Opp'n at 8:17-20.) Accordingly, to the extent the motion seeks dismissal of ...

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