United States District Court, S.D. California
ORDER DENYING DEFENDANT'S MOTION TO DISMISS (DOC.
Anthony J. Battaglia United States District Judge.
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.
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.)
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.)
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.
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
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
(A) conduct an investigation with respect to the disputed
(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 . . .;
(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 ...