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Frierson v. States Recovery Systems

United States District Court, E.D. California

June 12, 2017

HEATHER FRIERSON, Plaintiff,
v.
STATES RECOVERY SYSTEMS, Defendant.

          MEMORANDUM AND ORDER RE: MOTION TO DISMISS

          WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE

         Plaintiff Heather Frierson brought this action against defendant States Recovery Systems, alleging that defendant violated federal and California law when it reported her unpaid utility bills to a credit reporting agency as two separate debts, instead of one. (Compl. (Docket No. 1).) Before the court is defendant's Motion to dismiss plaintiff's Complaint. (Def.'s Mot. (Docket No. 4).)

         I. Factual and Procedural Background

         From June through August 2015, plaintiff incurred $127.92 in charges to the Sacramento Municipal Utility District (“SMUD”). (See Compl. ¶¶ 6, 17; Pl.'s Opp'n Ex. A, SMUD Bill (Docket No. 5-1).) After plaintiff failed to pay such charges, SMUD referred the charges to defendant for collection.[1] (See Compl. ¶ 9.)

         In or around August 2016, plaintiff attempted to open a new account with SMUD at a new address. (See Id. ¶¶ 11-12.) At that time, SMUD informed her that she had an unpaid balance of $127.92 remaining on her previous account. (See id.) Plaintiff then obtained a copy of her credit report and saw that defendant had reported her SMUD debt to a credit reporting agency. (Id. ¶ 13.) The debt was listed on the credit report as two separate tradelines[2]--one for $58.06 and one for $69.86, corresponding to charges plaintiff incurred for the June through July and July through August 2015 billing cycles, respectively. (See id.; SMUD Bill.[3]) Reporting her SMUD debt as two tradelines instead of one, plaintiff alleges, lowered her credit score. (Compl. ¶ 19.)

         Plaintiff thereafter filed this action, alleging that defendant made a “false, deceptive, or misleading representation” under the federal Fair Debt Collection Practices Act (“federal FDCPA”), 15 U.S.C. § 1692e, and California Fair Debt Collection Practices Act (“California FDCPA”), Cal. Civ. Code § 1788.17, when it reported her SMUD debt to a credit reporting agency as two tradelines instead of one. (See Compl. at 4-5.) She brings causes of action against defendant for unlawful debt collection practice under the federal FDCPA and California FDCPA.[4] (See id.) Defendant now moves to dismiss plaintiff's Complaint under Federal Rule of Civil Procedure 12(b)(6). (Def.'s Mot.)

         II. Legal Standard

         On a Rule 12(b)(6) motion, the inquiry before the court is whether, accepting the allegations in the complaint as true and drawing all reasonable inferences in the plaintiff's favor, the plaintiff has stated a claim to relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 67. An “absence of sufficient facts alleged under a cognizable legal theory” is grounds for dismissal under Rule 12(b)(6). Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988).

         III. Discussion

         15 U.S.C. § 1692e (“section 1692e”) prohibits debt collectors from making “false, deceptive, or misleading representation[s] . . . in connection with the collection of any debt.” Courts in this circuit and others have interpreted “collection of any debt” to encompass reporting debts to credit reporting agencies. See Gustafson v. Experian Info. Sols. Inc., No. 2:14-CV-1453 ODW EX, 2014 WL 2115210, at *4 (C.D. Cal. May 21, 2014); Akalwadi v. Risk Mgmt. Alternatives, Inc., 336 F.Supp.2d 492, 503 n.4 (D. Md. 2004). Thus, the dispositive question with respect to plaintiff's federal FDCPA claim, and, by extension, plaintiff's California FDCPA claim, [5] is whether defendant made a “false, deceptive, or misleading representation” under section 1692e when it reported plaintiff's SMUD debt to a credit reporting agency as two tradelines instead of one. (See Def.'s Mot., Mem. at 6-7 (Docket No. 4-1); Pl.'s Opp'n at 6-7 (Docket No. 5).)

         Plaintiff does not cite, and the court is not aware of, a case that has held that reporting multiple tradelines for debt incurred from a single billing account is, without more, “false, deceptive, or misleading.” The court is only aware of three cases that have ruled on section 1692e claims involving multiple tradelines being reported for a single billing account.[6] Each of those cases supports, or is consistent with, the proposition that where multiple tradelines are reported for a single billing account, but the information reported in such tradelines is accurate, no section 1692e claim is established.

         In Kohut v. Trans Union LLC, No. 04 C 2854, 2004 WL 1882239 (N.D. Ill. Aug. 11, 2004), a debtor sued a debt collector for reporting a second tradeline on a loan he defaulted on after his loan holder had already reported a tradeline on that loan. Id. at *1. The second tradeline was a duplicate of the first, stating the same balance the first had stated. Id.

         Acknowledging that the practice of reporting multiple tradelines on loans “is detrimental to consumers [because] credit scoring systems assess the total number of tradelines when calculating credit scores, ” the Kohut court nevertheless dismissed the debtor's section 1692e claim because the debtor did “not claim that the information [in the second tradeline] was itself inaccurate . . . instead [claiming only] that the effect of that report--the double entry--was inaccurate.” Id. at *1-3.

         In Gustafson v. Experian Info. Sols. Inc., No. 2:14-CV-01453 ODW EX, 2015 WL 3477071 (C.D. Cal. June 2, 2015), a debtor sued a debt servicer for reporting two tradelines on a credit card account she defaulted on--one on behalf of the debtor's original creditor, and another on behalf of another creditor who purchased the debtor's account from the original creditor. Id. at *1. The first tradeline stated a balance of $0 and noted that the debtor's account had been sold to the second creditor, and the second tradeline stated that the debtor owed a balance of $705. Id. at *1, 6. The Gustafson court granted judgment to the debt servicer on the debtor's ...


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