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Franco v. Experian Information Solutions, Inc.

United States District Court, N.D. California, San Jose Division

April 18, 2017

RON FRANCO, Plaintiff,
v.
EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants.

          ORDER GRANTING MOTIONS TO DISMISS FIRST AMENDED COMPLAINT WITH LEAVE TO AMEND [RE: ECF 59, 66]

          BETH LAB SON FREEMAN United States District Judge

         Defendants CIG Financial, LLC (“CIG”) and Wells Fargo Bank, N.A. (“Wells Fargo”) move to dismiss Plaintiff Ron Franco's claims against them for violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., and the California Consumer Credit Reporting Agencies Act (“CCRAA”), California Civil Code § 1785.25(a). For reasons discussed below, the motions are GRANTED WITH LEAVE TO AMEND.

         I. BACKGROUND [1]

         Plaintiff filed for Chapter 13 bankruptcy protection on September 5, 2013 and his plan was confirmed on January 7, 2014. First Am'd Compl. (“FAC”) ¶¶ 93, 97, ECF 55. On August 11, 2015, Plaintiff “ordered a three bureau report from Equifax, Inc. to ensure proper reporting by Plaintiff's Creditors.” Id. ¶ 98. He alleges that this report (“August 2015 Credit Report”) included thirteen different trade lines containing inaccurate, misleading, or incomplete information. Id. ¶ 99. Plaintiff neither attaches a copy of the August 2015 Credit Report nor provides specifics regarding the alleged inaccuracies contained therein. Id. He asserts only that “multiple trade lines continued to report Plaintiff's accounts with past due balances, inaccurate balances, in collections, and/or charged off. Some accounts even failed to register that Plaintiff was making payments on the account through Plaintiff's Chapter 13 plan.” Id.

         Plaintiff disputed the inaccurate trade lines via certified mail sent to three different credit reporting agencies (“CRAs”), Experian, Equifax, Inc., and TransUnion, LLC on February 11, 2016. Id. ¶ 100. Each CRA received Plaintiff's dispute letter and in turn notified the entities that had furnished the disputed information (“furnishers”) by means of automated credit dispute verifications (“ACDVs”). Id. ¶ 102.

         Plaintiff ordered a second three bureau report from Equifax, Inc. on April 11, 2016 (“April 2016 Credit Report”). Id. ¶ 103. Plaintiff alleges that at that time a number of furnishers, including CIG and Wells Fargo, improperly were reporting Plaintiff's accounts as having balances and past due balances, which was inconsistent with Plaintiff's confirmed Chapter 13 plan. FAC ¶¶ 103-13.

         Plaintiff filed this action on June 15, 2016, asserting violations of the FCRA and CCRAA against multiple CRAs and furnishers. Compl., ECF 1. CIG moved to dismiss Plaintiff's complaint and instead of opposing CIG's motion, Plaintiff filed the operative FAC. CIG and Wells Fargo now move to dismiss the FAC under Federal Rule of Civil Procedure 12(b)(6).

         II. LEGAL STANDARD

         “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.'” Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts as true all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the Court need not “accept as true allegations that contradict matters properly subject to judicial notice” or “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks and citations omitted). While a complaint need not contain detailed factual allegations, it “must contain sufficient factual matter, 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 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         III. DISCUSSION

         The FAC contains two claims, one for violation of the FCRA (Claim 1) and the other for violation of the CCRAA (Claim 2). CIG and Wells Fargo seek dismissal of both claims under Rule 12(b)(6).[2]

         A. FCRA (Claim 1)

         The FCRA creates a private right of action against furnishers for noncompliance with duties imposed under 15 U.S.C. § 1681s-2(b). Gorman, 584 F.3d at 1154. Section 1681s-2(b) imposes certain obligations on a furnisher, such as a duty to conduct an investigation, when the furnisher receives notice from a CRA that a consumer disputes information reported by the furnisher. Id. A plaintiff is required to plead and prove four elements to prevail on an FCRA claim against a credit furnisher: “(1) a credit reporting inaccuracy existed on plaintiff's credit report; (2) plaintiff notified the consumer reporting agency that plaintiff disputed the reporting as inaccurate; (3) the consumer reporting agency notified the furnisher of the alleged inaccurate information of the dispute; and (4) the furnisher failed to investigate the inaccuracies or further failed to comply with the requirements in 15 U.S.C. § 1681s-2(b) (1)(A)-(E).” Denison v. Citifinancial Servicing LLC, No. C 16-00432 WHA, 2016 WL 1718220, at *2 (N.D. Cal. Apr. 29, 2016). A furnisher's duties under § 1681s-2(b) of the FCRA arise “only after the furnisher receives notice of dispute from a CRA.” Gorman, 584 F.3d at 1154.

         Plaintiff's FCRA claim against CIG and Wells Fargo is subheaded “Failure to Reinvestigate.” FAC ¶ 115-16. Plaintiff alleges that CIG and Wells Fargo “violated section 1681s-2(b) by failing to conduct a reasonable investigation and re-reporting misleading and inaccurate account information.” Id. ΒΆ 118. Presumably, this claim is based upon the conduct of CIG and Wells Fargo upon receiving notice of Plaintiff's dispute regarding the August 2015 Credit Report. Plaintiff alleges that he sent dispute letters to Experian and other CRAs regarding unidentified inaccuracies ...


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