United States District Court, N.D. California
ORDER GRANTING MOTION TO DISMISS WITH PREJUDICE RE:
DKT. NO. 25
PHYLLIS J. HAMILTON United States District Judge
motion to dismiss plaintiff's first amended complaint
came on for hearing before this court on June 28, 2017.
Plaintiff Osias Torion appeared through his counsel, Elliot
Gale. Defendant Chase Bank USA, N.A. (“Chase”),
erroneously sued as JPMorgan Chase Bank, National
Association, appeared through its counsel, Megan Rodgers and
Emily Henn. Having read the papers filed by the parties and
carefully considered their arguments and the relevant legal
authority, the court hereby GRANTS the motion to dismiss WITH
PREJUDICE, for the following reasons.
Chapter 13 Bankruptcy
13 bankruptcy allows debtors with regular income to
“repay creditors in part, or in whole, over the course
of a three-to-five-year period.” In re
Blendheim, 803 F.3d 477, 485 (9th Cir. 2015). Under
Chapter 13, the debtor proposes a debt repayment plan that
must comply with a number of statutory requirements.
Id. at 485-86. “A Chapter 13 debtor seeking a
discharge typically proposes a plan in which the discharge is
granted at the end of the proceeding, after the debtor
completes all required payments under the plan.”
Id. at 486. If the Chapter 13 plan satisfies all of
the statutory requirements, the bankruptcy court approves or
“confirms” the plan. 11 U.S.C. § 1325(a);
In re Flores, 735 F.3d 855, 857 (9th Cir. 2013).
debtor makes the payments under the confirmed plan, the
bankruptcy court will grant a discharge of the debts, which
“releases debtors from personal liability on claims and
enjoins creditors from taking any action against the
debtor.” Blendheim, 803 F.3d at 486-87.
“Many debtors, however, fail to complete a Chapter 13
plan successfully.” Harris v. Viegelahn, 135
S.Ct. 1829, 1835 (2015). If the debtor fails to make the
required payments, he may either “convert [the] Chapter
13 case to a [bankruptcy] case under a different chapter,
” or dismiss the action. Blendheim, 803 F.3d
at 487. The effect of dismissal is to restore the legal
status quo prior to the Chapter 13 filing: “dismissal
returns to the creditor all the property rights he held at
the commencement of the Chapter 13 proceeding and renders him
free to exercise any nonbankruptcy collection
remedies.” Id. at 487.
case is one of over 200 similar actions in this district
filed by the Sagaria Law firm against consumer credit
reporting agencies and credit furnishers in 2016 and 2017. On
March 20, 2017, this court dismissed a substantially similar
complaint in Burrows v. Experian Info. Sols., Inc.,
No. 16-CV-06356-PJH, 2017 WL 1046973 (N.D. Cal. Mar. 20,
2017) (“Burrows”). Burrows
described the factual context as follows:
Plaintiffs are individuals who filed for Chapter 13
bankruptcy and allege that their debts were reported
inaccurately in light of their confirmed Chapter 13 plan.
Experian Information Solutions, Inc.
(“Experian”), Equifax, Inc.
(“Equifax”), or both credit reporting agencies
(“CRAs”) are named as defendants. Also named as
defendants in most of the cases are “furnishers”
of credit information, such as [Chase] . . . .
The complaint accuses CRAs and furnishers of
“ignor[ing] credit reporting industry standards for
accurately reporting bankruptcies.” Allegedly, this
inaccurate reporting is an effort to perpetuate the
“myth” that filing for bankruptcy ruins
consumers' credit scores for years.
The complaint explains in some detail how a consumer's
FICO credit score is calculated, and how the score derives
from information that furnishers report to CRAs. Plaintiffs
then describe the Metro 2 credit reporting standards
promulgated by the Consumer Data Industry Association (the
“Metro 2 standards” or “CDIA
guidelines”), which plaintiffs allege is the
“industry standard for accurate credit
reporting.” The Metro 2 standards have different
“CII indicator” codes that are used to note the
filing and discharge of Chapter 7 and 13 petitions.
Plaintiffs allege that the CII indictor “D” is
used when a Chapter 13 petition has been filed, but no
discharge yet entered.
The complaint alleges that, prior to the confirmation of a
Chapter 13 plan, the “accepted credit reporting
standard” is to “report the outstanding balance
amount as of the date of filing” of the bankruptcy
petition, and to note the bankruptcy filing with CII
indicator code D. Post-confirmation, however, plaintiffs
allege that the balances should be updated to reflect the
confirmed Chapter 13 plan. Reporting ongoing past due amounts
and late payments, instead of only indicator D, is “not
generally accepted as accurate by the credit reporting
Burrows, 2017 WL 1046973 at *1-*2 (citations
original complaint in this case was filed by Torion against
Chase and Equifax, Inc. on January 26, 2017. Dkt. 1.
Following this court's order in Burrows, Torion
filed his first amended complaint (the “FAC”) on
April 28, 2017. Dkt. 23. The parties subsequently stipulated
to the dismissal of Equifax. Dkt. 34. Chase now moves to
dismiss the FAC for failure to state a claim. Dkt. 25.
The FAC's Allegations
largely follows the template pleading used in these cases.
However, the allegations regarding the reported debt balances
(i.e., whether the amounts owed must be updated to reflect
the lower amounts per the confirmed Chapter 13 plan) have
been removed. Instead, the FAC focuses on two interrelated
alleged inaccuracies: (1) that Chase “is reporting two
accounts of Plaintiff's as being in collections and
charged off despite the inclusion of the account in
Plaintiff's chapter 13 bankruptcy filing, ” FAC
¶ 2; and (2) that Chase is “not following industry