United States District Court, N.D. California
ORDER ON MOTIONS TO DISMISS
CLAUDIA WILKEN United States District Judge
the Court are multiple motions to dismiss. In
Dahlen, No. 16-cv-5714, Defendant Experian
Information Solutions, Inc. moves to dismiss (Docket No. 19).
Dahlen has filed an opposition and Experian has filed a
reply. In Marino, No. 16-cv-6367, Defendant
RoundPoint Mortgage Servicing Corporation moves to dismiss
(Docket No. 10). Marino has filed an opposition and
RoundPoint has filed a reply. After these cases were
consolidated, Experian also moved to dismiss Marino's
Complaint, simply incorporating by reference the motions to
dismiss that it filed in Fair and Dahlen
(Docket No. 48). Having considered the parties' papers
and oral argument, the Court GRANTS Defendants Experian and
RoundPoint's Motions to Dismiss and grants leave to
Complaints of Plaintiffs Dahlen and Marino are nearly
identical and the Court summarizes their allegations here.
Dahlen filed for Chapter 13 bankruptcy in October 2012 and
Marino did so in June 2014. Chapter 13 of the Bankruptcy Code
allows individuals receiving regular income to obtain relief
from their debts under a repayment plan that, if confirmed
and fully carried out, discharges the individual's debts
according to the plan. Bullard v. Blue Hills Bank,
135 S.Ct. 1686, 1690 (2015). Dahlen's plan was confirmed
in January 2013 and Marino's plan was confirmed in August
2014. Neither Plaintiff alleges that he has successfully paid
off his debts or that his debts have been discharged. Dahlen
alleges that, under his plan, unsecured creditors are allowed
a zero percent disbursement of their filed claims; Marino
alleges 10.22 percent.
Plaintiffs ordered a three-bureau credit report from Experian
in March 2016. Dahlen noticed that six different account
descriptions on his report contained "inaccurate,
misleading, or incomplete information that did not comport
with credit reporting industry standards" and,
specifically, that the documents "continued to report
Plaintiff's accounts with past due balances, "
inaccurate balances, or accounts in collections or charged
off. Dahlen, No. 16-cv-5714, Docket No. 1, Compl.
¶ 93. Marino noticed that three different account
descriptions on his report stated past due or inaccurate
balances. Marino, No. 16-cv-6367, Docket No. 1,
Compl. ¶ 106.
Plaintiffs disputed these alleged inaccuracies by mail with
the three consumer reporting agencies (CRAs) Experian,
Equifax, and TransUnion, LLC. Both Plaintiffs' letters
stated that they had filed for bankruptcy and that their
creditors were "not reporting the bankruptcy accurately
or worse not at all;" "requested each Creditor
investigate the proper way to report Plaintiff's
bankruptcy;" and noted that they believed that after
they filed for bankruptcy their accounts should not be
reported with past due balance or any late payments, or as
charged off, sold or transferred. Dahlen, No.
16-cv-5714, Docket No. 1, Compl. ¶ 95; Marino,
No. 16-cv-6367, Docket No. 1, Compl. ¶ 108. Both
Plaintiffs allege that each CRA received their dispute
letters and forwarded the information to each data furnisher
or, in the alternative, that the CRAs did not forward their
in 2016, both Plaintiffs ordered a second credit report to
ensure that their accounts had been updated. Dahlen did so in
July and Marino did so in September. Dahlen "was pleased
to notice a significant amount of the inaccuracies had been
updated or removed" in his second report.
Dahlen, No. 16-5714, Compl. ¶ 98. His Equifax
score had risen sixty-eight points and his TransUnion score
had risen seventy-six points. Marino does not specify whether
his score changed. However, some of the alleged inaccuracies
in the first reports were still present in the second. Dahlen
alleges his second report included a debt owed to Defendant
Wells Fargo Bank, N.A. as charged off, even though Wells
Fargo failed to file a proof of claim in his bankruptcy
proceeding and the trustee accordingly would not pay Wells
Fargo. He alleges Wells Fargo did not comply with the Metro-2
industry standard by reporting this debt as charged off.
Marino alleges that in his second report RoundPoint
inaccurately reported a "failure to pay" on his
account in the twenty-four month payment history even though
he "has never missed a payment to Defendant."
Marino, No. 16-cv-6367, Docket No. 1, Compl. ¶
111. He also asserts that RoundPoint did not comply with the
Metro-2 industry standard by reporting a failure to pay.
complaint must contain a "short and plain statement of
the claim showing that the pleader is entitled to
relief." Fed.R.Civ.P. 8(a). On a motion under Rule
12(b)(6) for failure to state a claim, dismissal is
appropriate only when the complaint does not give the
defendant fair notice of a legally cognizable claim and the
grounds on which it rests. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) . In considering
whether the complaint is sufficient to state a claim, the
court will take all material allegations as true and construe
them in the light most favorable to the plaintiff. NL
Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.
1986). However, this principle is inapplicable to legal
conclusions; "[t]hreadbare recitals of the elements of a
cause of action, supported by mere conclusory statements,
" are not taken as true. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at
granting a motion to dismiss, the court is generally required
to grant the plaintiff leave to amend, even if no request to
amend the pleading was made, unless amendment would be
futile. Cook, Perkiss & Liehe, Inc. v. N. Cal.
Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir.
1990). In determining whether amendment would be futile, the
court examines whether the complaint could be amended to cure
the defect requiring dismissal "without contradicting
any of the allegations of [the] original complaint."
Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th
Cir. 1990) .
Plaintiffs bring two causes of action, one under the Fair
Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et
seq.,  and one under the California Consumer
Credit Reporting Agencies Act (CCRAA), California Civil Code
section 1785.1 et seq. Dahlen and Marino bring the
FCRA claim against their respective creditors, Wells Fargo
and RoundPoint (Creditor Defendants). Dahlen also brings a
FCRA claim against Experian and Equifax, and Marino brings it
against Experian (CRA Defendants). Both Plaintiffs bring
their CCRAA claim against only their respective Creditor
Defendants. Wells Fargo answered Dahlen's Complaint.
Equifax has neither moved to dismiss Dahlen's Complaint
nor answered it.
Plaintiffs' claims as described in their Complaints
depend primarily on the legal theory that it is inaccurate
under the FCRA and the CCRAA to report a consumer's
delinquent debts after the consumer's bankruptcy plan has
been confirmed. However, "courts in this district have
consistently held that it is not misleading or inaccurate to
report delinquent debts that have not been
discharged." Blakeney v. Experian Info. Sols.,
Inc., 2016 WL 4270244, at *5 (N.D. Cal.) (collecting
cases); see also Jaras v. Experian Info. Sols.,
Inc., 2016 WL 7337540, at *3 (N.D. Cal.); Mortimer
v. Bank of Am., Nat'l Ass'n, 2013 WL 1501452, at
*4 (N.D. Cal.). "[E]ven if a confirmation order
constitutes a final judgment, it constitutes a final judgment
only as to 'the manner in which the debtor will discharge
his financial obligations, ' not the legal validity of
the debt." Jaras, 2016 WL 7337540, at *4
(citation omitted); see also Mestayer v. Experian Info.
Sols., Inc., 2016 WL 631980, at *3 (N.D. Cal.);
Biggs v. Experian Info. Sols., Inc., 2016 WL
5235043, at *2 (N.D. Cal.); Adkins v. Experian Info.
Sols., Inc., 2016 WL 6841700, at *2 (N.D. Cal.).
Furthermore, "[i]f a debtor fails to comply with the
Chapter 13 plan, the debtor's bankruptcy petition may be
dismissed and the debtor will then owe the entirety of the
debt." Jaras, 2016 WL 7337540 at *4 (citing 11
U.S.C. § 1307(c)(6)). "While it might be good
policy in light of the goals of bankruptcy protection to bar
reporting of late payments while a bankruptcy petition is
pending, neither the bankruptcy code nor the FCRA does
so." Mortimer v. JP Morgan Chase Bank, Nat'l
Ass'n, 2012 WL 3155563, at *3 (N.D. Cal.).
Plaintiffs also point out that reporting a delinquency during
the pendency of a bankruptcy proceeding violates certain
credit industry reporting standards. However, neither
Plaintiff alleges that this is inherently inaccurate under
the FCRA or provides any authority to that effect, and case
law indicates the contrary. See Mestayer, 2016 WL
631980, at *4 (finding CCCRA inaccurate reporting claim
failed in part because plaintiff "failed to point to any
authority indicating that a failure to comply with an
industry standard is a failure to comply with the law");
Mortimer v. Bank of Am., Nat'l Ass'n, 2013
WL 1501452, at *12; Giovanni v. Bank of Am., Nat'l
Ass'n, 2013 WL 1663335, at *6 (N.D. Cal.).
the CCRAA is substantially based on the FCRA, judicial
interpretation of the latter is persuasive as to the former,
and the rule that it is not inaccurate to report delinquent
debts prior to discharge applies in the CCRAA context.
Blakeney, 2016 WL 4270244, at *6. Accordingly, to
the extent Plaintiffs' claims rely on this theory they
fail as a matter of law.
hearing, Plaintiffs' counsel explained that the only
inaccuracy Dahlen now wishes to allege is a failure to report
the fact of his bankruptcy. Courts in this district have
indicated that this may constitute an inaccuracy under the
FCRA. See Poster v. Experian Info. Sols.,
Inc., 2017 WL 264401 at *6 (N.P. Cal.); Connors v.
Experian Info. Sols., Inc., 2017 WL 168493, at *5 (N.P.
Cal.); Keller v. Experian Info. Sols., Inc., 2017 WL
130285, at *8 (N.P. Cal.); Pevincenzi v. Experian Info.
Sols., Inc., 2017 WL 86131 (N.P. Cal.). Counsel conceded
that Marino does not allege that RoundPoint failed to report
the fact of his bankruptcy; his theory is an inaccuracy
unrelated to his bankruptcy. It is not clear whether Marino
wishes to allege that Experian failed to report the fact of
Credit Reporting Act
Pefendants' State of Mind
FCRA creates a private right of action only for willful or
negligent noncompliance with its requirements. §§
1681n (willful), o (negligent); Gorman v. Wolpoff &
Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009). A
plaintiff may recover actual or statutory damages, as well as
punitive damages and attorneys' fees, for willful
noncompliance, § 1681n, but only actual damages for
negligent noncompliance, § 1681o.
plaintiff may demonstrate "willfulness" by showing
a "reckless disregard" of statutory duty.
Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 56-60
(2007) . Willfulness "may be alleged generally."
Fed.R.Civ.P. 9(b). As noted above, both Plaintiffs plead
generally that ...