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Gugger v. USAA Federal Savings Bank

United States District Court, S.D. California

November 17, 2017

Paul Gugger, Plaintiff,
v.
USAA Federal Savings Bank, Defendant.

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS (DOC. NO. 4)

          Hon. Anthony J. Battaglia United States District Judge.

         Before the Court is Defendant USAA's motion to dismiss Plaintiff Paul Gugger's complaint. (Doc. No. 4.) The Court heard oral arguments on November 2, 2017, and took the matter under submission. Upon consideration of the motion and the parties' arguments in support and opposition, the Court DENIES USAA's motion to dismiss, and sua sponte DISMISSES Gugger's Consumer Credit Reporting Agencies Act claim.

         I. BACKGROUND

         Gugger filed his complaint, alleging USAA violated the Fair Credit Reporting Act, (“FCRA”), 15 U.S.C. § 1681, and the California Consumer Credit Reporting Agencies Act, (“CCRAA”), Cal. Civ. Code § 1785.25(f). The basis of Gugger's complaint arises from USAA's issuance of a form to Gugger regarding his account's debt. Specifically, USAA issued Gugger a Form 1099-C with code “G” marked. (Doc. No. 1-3 at 4.) According to Gugger, because USAA issued this form with code “G” marked, he believed it legally released him from any further obligation to pay the debt. (Id.) USAA then filed the Form 1099-C with the IRS, obligating Gugger to pay taxes on the debt-which he thought was discharged. But, when Gugger received his consumer credit report, he discovered the debt was still being reported. (Id. at 2.)

         Gugger sent a written dispute to Trans Union regarding the inaccurate debt. (Id. at 4.) Trans Union forwarded the dispute to USAA, but the debt was not removed. (Id.) Gugger then sent a second written dispute to Trans Union. (Id.) Again, Trans Union forwarded the dispute to USAA, but the debt remained. (Id.) Instead, both Trans Union and USAA verified the disputed information as accurate. (Id. at 5.)

         Gugger now asserts the following claims: (1) USAA failed to conduct a reasonable investigation after receiving written disputes about Gugger's debt, as required under the FCRA, and (2) USAA failed to report accurate information breaching the CCRAA. (Doc. No. 1-3 at 6.) After reaching a settlement, (Doc. No. 13), the Court dismissed Trans Union with prejudice. (Doc. No. 24.) For the reasons set forth below, the Court DENIES USAA's motion to dismiss, and sua sponte DISMISSES the CCRAA claim.

         II. LEGAL STANDARDS

         A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In reviewing a motion to dismiss under Rule 12(b)(6), the Court must assume the truth of all factual allegations and must construe them in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). However, legal conclusions cast in the form of factual allegations will not be taken as true. Roberts v. Corrothers, 812 F.2d 1173, 1177 (9th Cir. 1987). Similarly, “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto v. Fed. Deposit Ins. Corp., 139 F.3d 696, 699 (9th Cir. 1998). A “motion to dismiss is not the appropriate procedural vehicle to test the merits of Plaintiff's complaint.” Walker v. City of Fresno, No. 1:09cv1667, 2010 WL 3341861, at *4 (E.D. Cal. Aug. 23, 2010) (citing Navarro, 250 F.3d at 732).

         Congress enacted the FCRA “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). To ensure credit reports are accurate, the FCRA imposes certain duties on “furnishers, ” which are entities that provide credit information to consumer reporting agencies. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009). One such duty imposed on a furnisher is triggered when a furnisher receives notice of a dispute from a credit reporting agency, (“CRA”), stating the consumer disputes the information. Id. at 154; see also 15 U.S.C. § 1681s-2(b). Section 1681s-2(b) provides that, after receiving a notice of disputes, the furnisher shall:

(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the [CRA] . . .;
(C) report the result of the investigation to the [CRA];
(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other [CRAs] to which the person furnished the information . . .; and
(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation . . . (i) modify that item of information; (ii) delete that item of information; or ...

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