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Demay v. Wells Fargo Home Mortgage, Inc.

United States District Court, N.D. California

July 11, 2017

JACK A. DEMAY, et al., Plaintiffs,



         Pending before the Court is the motion to dismiss filed by Defendant Wells Fargo Home Mortgage, Inc. Dkt. No. 27. For the reasons articulated below, the Court GRANTS the motion.

         I. BACKGROUND

         A. Factual Background [1]

         In 2006, Plaintiffs Jack and Nancy Demay obtained a mortgage loan for their home located at 8985 W. Verde Way, in Las Vegas, Nevada. Dkt. No. 28 (“RJN”), Ex A.[2] Plaintiffs then filed for Chapter 13 bankruptcy in November 2009. Dkt. No. 24 (“FAC”) ¶ 17. They included the mortgage loan for their home on the bankruptcy schedule. Id. ¶ 18. In lieu of postpetition payments, Plaintiffs' final modified bankruptcy plan provided for the “surrender [of] the Property to [Wells Fargo] in full satisfaction of the debt . . . .” Id. ¶ 21 (quotation omitted). Plaintiffs also reserved the right to participate in the Nevada Foreclosure Mediation Program. Id. ¶ 22. Plaintiffs allege that they then “performed all obligations required to carry out the effect of their intent to surrender” the property to Wells Fargo. Id. ¶ 23. The bankruptcy court confirmed Plaintiffs' final Chapter 13 plan and entered a discharge order in August 2015 that discharged Plaintiffs' debts that were not otherwise subject to statutory exemption. Id.; RJN, Ex. H. The following month, in September 2015, Wells Fargo obtained Plaintiffs' consumer credit reports from Equifax. FAC ¶ 29. According to Equifax, Wells Fargo requested the reports for “Account Review” purposes. Id.

         B. Procedural History

         On August 17, 2016, Plaintiffs filed this putative class action against Wells Fargo, alleging that it violated the Fair Credit Reporting Act (“FCRA” or the “Act”) by impermissibly obtaining their consumer credit reports. Dkt. No. 1. Plaintiffs allege that Wells Fargo impermissibly pulled their credit reports because Plaintiffs' bankruptcy discharge terminated any relationship with the bank. FAC ¶¶ 24, 31. On October 17, 2016, Wells Fargo moved to dismiss the complaint and strike the class allegations. Dkt. Nos. 17, 18. Rather than oppose the motion, Plaintiffs amended the complaint. Dkt. No. 24. Wells Fargo now moves to dismiss the amended complaint. Dkt. No. 27.


         Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss a complaint for failing to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A plaintiff must provide more than conclusory statements or “a formulaic recitation of the elements of a cause of action” for the court to find a facially plausible claim. Id. at 555. Rather, the complaint must present facts which allow “the reasonable inference” of a defendant's liability for the alleged misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In reviewing the plausibility of a complaint, courts “accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

         III. ANALYSIS

         The FCRA aims to “ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007). In service of these goals, the Act imposes limitations on the use of consumer credit reports. See generally 15 U.S.C. §§ 1681b et seq. Specifically, the FCRA prohibits third parties from accessing consumer credit reports without a statutorily authorized (i.e., a “permissible”) purpose. Id. § 1681b(f)(1). The FCRA provides a private right of action for both willful and negligent violations. Id. §§ 1681n, 1681o.

         To assert a claim against a party for requesting a consumer credit report without a permissible purpose, a plaintiff must establish: (1) the defendant obtained a consumer credit report from a Consumer Reporting Agency, (2) without a permissible purpose, and (3) the defendant acted willfully or negligently in requesting the report. See VanDyke v. N Leasing Sys., Inc., No. CIV.S. 07-1877 FCD GGH PS, 2009 WL 3320464, at *3 (E.D. Cal. 2009).

         Because Wells Fargo does not dispute that it obtained Plaintiffs' consumer credit report after their bankruptcy discharge, the Court need only analyze whether Plaintiffs adequately allege (1) that Wells Fargo acted without a permissible purpose, and (2) that such action was willful or negligent. The Court addresses each in turn.

         A. ...

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