Brown v. Experian Information Solutions, Inc. et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM with Brief In Support

N.D. Ga.April 21, 2017

- 1 - IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION MARK CHRISTOPHER BROWN, Plaintiff, v. EXPERIAN INFORMATION SOLUTIONS, INC. AND GUARANTY BANK, Defendants. ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION FILE NO. 1:17-CV-00800-CC-LTW DEFENDANT EXPERIAN INFORMATION SOLUTIONS, INC.’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT COMES NOW Defendant Experian Information Solutions, Inc. (“Experian”), by and through counsel, and respectfully moves (the “Motion”) this Court to dismiss the Complaint (“Complaint”) [Doc. 1] filed by Plaintiff Mark Christopher Brown (“Plaintiff”), pursuant to Fed. R. Civ. P. 12(b)(6). In support thereof, Experian submits herewith its Memorandum of Law containing arguments and citations of authorities. WHEREFORE, Experian prays for the following relief: (a) That Plaintiff’s action be dismissed in its entirety with prejudice; and (b) For such other relief as this Court deems just and proper. Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 1 of 18 - 2 - Dated: April 21, 2017 Respectfully submitted, /s/ William H. Rooks William H. Rooks Georgia Bar No. 906785 JONES DAY 1420 Peachtree Street, N.E., Suite 800 Atlanta, GA 30309-3053 Telephone: (404) 581-8891 Facsimile: (404) 581-8330 wrooks@jonesday.com An Attorney for Defendant Experian Information Solutions, Inc. Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 2 of 18 - 3 - IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION MARK CHRISTOPHER BROWN, Plaintiff, v. EXPERIAN INFORMATION SOLUTIONS, INC. AND GUARANTY BANK, Defendants. ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION FILE NO. 1:17-CV-00800-CC-LTW MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION TO DISMISS THE COMPLAINT Plaintiff’s Complaint is fatally flawed. Though relying on the Fair Credit Reporting Act (“FCRA”), the Complaint does not actually allege that Experian reported any inaccurate information about Plaintiff. In fact, as the Complaint itself makes plain, Experian accurately reported the discharge of Plaintiff’s debt. This undeniable reality puts an end to any claim based on inaccurate credit reporting and cannot be cured. Accordingly, as explained below, Plaintiff’s claims should be dismissed with prejudice. BACKGROUND Plaintiff’s claims against Experian arise under the Fair Credit Reporting Act (“FCRA”) and involve the accuracy of a reported mortgage debt following Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 3 of 18 - 4 - Plaintiff’s Chapter 13 bankruptcy. For background, this brief begins with an overview of the pertinent law, and then describes Plaintiff’s factual allegations and legal claims. I. THE FAIR CREDIT REPORTING ACT. The FCRA seeks “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). Pertinent here, the statute requires credit bureaus (technically, “consumer reporting agencies” or “CRAs”) to maintain “reasonable procedures to assure maximum possible accuracy” of credit data, 15 U.S.C. § 1681e(b); and to reasonably investigate consumer disputes about the accuracy of credit data, a process called “reinvestigation,” id. § 1681i(a). The FCRA permits a CRA to report a discharged debt for up to seven years after the discharge was entered. See id. § 1681c. II. FACTUAL ALLEGATIONS. A. The Parties. Plaintiff resides in Cobb County, Georgia, and is a consumer as defined by the FCRA. (See Compl. ¶¶ 1–2.) Defendant Experian is a “consumer reporting agency” under the FCRA. (Id. ¶ 4.) Experian collects consumer credit information from various sources, organizes and stores the information, and then makes it Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 4 of 18 - 5 - available to authorized third parties, like lenders. (See id.) Guaranty Bank (“Guaranty”), a co-defendant, but not a party to this motion, is a bank and furnisher of information as defined in the FCRA. (See id. ¶¶ 5–6) B. Plaintiff’s Chapter 13 Bankruptcy. Plaintiff obtained a mortgage loan from Guaranty’s predecessor (GB Home Equity) on February 23, 2006. (See id. ¶¶ 10–11.) This mortgage was collateralized by property in Acworth, Georgia. (See id.) Plaintiff later filed a voluntary petition for bankruptcy on April 23, 2012, listing his loan with Guaranty Bank (as then serviced by Fifth Third Bank) on Schedule D to his petition. (See id. ¶ 14; In re Brown, 1:12-bk-60307, Doc. 1 at 14 (Bankr. N.D. Ga. Apr. 23, 2012).) Plaintiff alleges that his Chapter 13 Plan provided for the cure of any deficiency and maintenance of payments to Guaranty pursuant to 11 U.S.C. § 1322(b)(5). (See Compl. ¶ 15.) Plaintiff’s confirmed Chapter 13 plan, however, indicated— under an asterisk—that he would not pay anything on the mortgage owed to Guaranty Bank pending his motion to determine secured status. (See Brown, 1:12- bk-60307, Doc. 30 at 4 (Bankr. N.D. Ga. Aug. 6, 2012).) Oddly, Plaintiff’s confirmed plan listed “None” under the section designated for claims that Plaintiff would seek a valuation under 11 U.S.C. § 506, which allows a debtor to seek a determination that a secured claim is unsecured. (See id. at 3; 11 U.S.C. § 506.) Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 5 of 18 - 6 - On December 3, 2012, the Bankruptcy Court entered an Order Granting Debtor’s Motion to Value Collateral and Modify Rights of Guaranty Bank, which stripped the lien from the mortgage. (See id., Doc. 41 at 2 (Bankr. N.D. Ga. Dec. 3, 2012).) Plaintiff’s plan was confirmed on December 6, 2012. (See id., Doc. 44 (Bankr. N.D. Ga. Dec. 6, 2012).) A discharge order was later entered November 19, 2015. (See id., Doc. 89 (Bankr. N.D. Ga. Nov. 19, 2015).) The discharge order does not state which debts are discharged, instead stating that “the debtor(s) is discharged from all debts provided for by the plan . . .” and listing several categories of exceptions, including debts provided for under 11 U.S.C. § 1322(b)(5). (See id.) C. Experian’s Credit Reporting and Plaintiff’s Disputes. On March 28, 2016, following the discharge of his bankruptcy, Plaintiff obtained his Experian credit report, which showed the Guaranty Bank account status as “Discharged through Chapter 13/Never late,” and with a $0 recent balance. (See Compl. ¶¶ 43–46.) The Guaranty account also was reporting a Balloon payment of $20,910.00 due in February 2026. (Id. ¶ 45.) This was allegedly inaccurate because “the mortgage was discharged in Plaintiff’s Bankruptcy Case, and the payment terms permanently modified.” (Id. ¶ 47.) Six weeks later, on May 9, 2016, Plaintiff sent Experian a dispute letter. (Id. ¶ 49.) Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 6 of 18 - 7 - Experian then contacted Guaranty Bank through e-Oscar to reinvestigate. (Id. ¶ 51.) Following the dispute, Plaintiff’s Guaranty Bank account with Experian continued to report the same $0 recent balance and account history, a discharged status, and a balloon payment of $20,910 due February 2026. (Id. ¶ 54.) III. PROCEDURAL HISTORY AND LEGAL CLAIMS. Plaintiff filed his Complaint on March 5, 2017. (See Doc. 1.) The Complaint alleges that Experian violated 15 U.S.C. § 1681e(b) (reasonable procedures) and 15 U.S.C. § 1681i (reasonable reinvestigation). (See Compl. ¶¶ 67–86.) Plaintiff specifically bases his claims against Experian on its inclusion of the $20,910 balloon payment due in 2026 in the status of Plaintiff’s Guaranty Bank account. (See id. ¶¶ 44–45, 49.) Plaintiff alleges that these violations were both negligent and willful. (See id. ¶¶ 81–83.) LEGAL STANDARD Federal Rule of Civil Procedure 12(b)(6) requires the Court to dismiss a complaint if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). As the United States Supreme Court has made clear, “[t]hreadbare recitals of the elements of the cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“[A] plaintiff’s obligation to Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 7 of 18 - 8 - provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]”). While courts must accept the well-pleaded facts in the complaint as true, “[w]here a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility of “entitlement to relief.”’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). For a claim to be plausible, Plaintiff must put forth “enough facts to raise a reasonable expectation that discovery will reveal evidence” of Experian’s liability. Twombly, 550 U.S. at 556. The Court must reject mere legal conclusions. Mamani v. Berzain, 654 F.3d 1148, 1153–54 (11th Cir. 2011) (citing Randall v. Scott, 610 F.3d 701, 709–10 (11th Cir. 2010)). A district court may dismiss a complaint with prejudice where the plaintiff fails to allege any additional facts to support a cause of action, and leave to amend would be futile. See, e.g., Locke v. SunTrust Bank, 484 F.3d 1343, 1346 (11th Cir. 2007) (affirming district court’s dismissal with prejudice where plaintiff “did not allege ‘any additional facts to support a cause of action,’” and the district court concluded that “leave to amend . . . would be futile”). Finally, “A district court may take judicial notice of certain facts without converting a motion to dismiss into a motion for summary judgment . . . . Public records are among the Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 8 of 18 - 9 - permissible facts that a district court may consider.” Universal Express, Inc. v. U.S. S.E.C., 177 F. App’x 52, 53 (11th Cir. 2006) (citations omitted). ARGUMENT Plaintiff’s claims reflect a fundamental misunderstanding of the relief Chapter 13 bankruptcies provide. Discharge does not extinguish the debt itself, but rather extinguishes one mode of enforcing a claim. Reporting that a debt still exists after it has been discharged, along with a $0 balance and status of discharged, is accurate. These basic facts of bankruptcy law foreclose any possible claim that Plaintiff could have against Experian under the FCRA. I. THE COMPLAINT SHOULD BE DISMISSED FOR FAILURE TO ALLEGE A FACTUAL INACCURACY. A. The Element of Inaccuracy. The existence of inaccurate information is a part of the prima facie case a plaintiff must allege to plausibly state a claim under § 1681e(b) and § 1681i(a). See, e.g., Ray v. Equifax Info. Servs., LLC, 327 F. App’x 819, 826 (11th Cir. 2009) (“To establish a prima facie violation of § 1681e(b), a consumer must present evidence that [] a credit reporting agency’s report was inaccurate”); Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156–60 (11th Cir. 1991) (“In order to make out a prima facie violation of [§ 1681e(b)] the Act implicitly requires that a consumer must present evidence tending to show that a credit reporting agency Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 9 of 18 - 10 - prepared a report containing ‘inaccurate’ information . . . under [§ 1681i] of FCRA to make reasonable efforts to investigate and correct inaccurate or incomplete information brought to its attention by the consumer.”). B. Plaintiff Does Not Plead Any Factual Inaccuracies. As an initial matter, the muddle of Plaintiff’s complaint and bankruptcy proceeding makes it difficult to determine what theory Plaintiff is proceeding under. He alleges that he provided for his debt to Guaranty under 11 U.S.C. § 1322(b)(5). (See Compl. ¶ 15.) If that were the case, then the debt may not have been discharged at all, as debts treated under §1322(b)(5) are generally excepted from a Chapter 13 discharge. See 11 U.S.C. § 1328. On the other hand, Plaintiff’s confirmed plan does not provide for any payments directly to Guaranty, and the bankruptcy court’s order stripping Guaranty’s lien provided that the debt would be treated as a general unsecured claim. This sort of confusion is why courts generally refuse to hold CRAs like Experian liable for adjudicating issues of law like those presented here. See, e.g., Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1160 (11th Cir. 1991); (holding that “a [§ 1681i] claim is properly raised when a particular credit report contains a factual deficiency or error that could have been remedied by uncovering additional facts that provide a more accurate representation about a particular entry”) (emphasis in original); Carvalho Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 10 of 18 - 11 - v. Equifax Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010) (“reinvestigation claims are not the proper vehicle for collaterally attacking the legal validity of consumer debts”); Wright v. Experian Info. Sols., Inc., 805 F.3d 1232, 1242 (10th Cir. 2015) (holding that the FCRA did not require the CRAs to determine the validity of tax liens because “[a] reasonable reinvestigation, however, does not require CRAs to resolve legal disputes about the validity of the underlying debts they report”); Hupfauer v. Citibank, N.A., No. 16 C 475, 2016 WL 4506798, at *7 (N.D. Ill. Aug. 19, 2016) (dismissing claims following a Chapter 13 discharge in part because “requiring a third party such as a credit bureau to determine whether a specific account was discharged in a particular consumer’s Chapter 13 bankruptcy would impose an unfairly heavy burden on that party . . . This is precisely the kind of legal question that credit reporting agencies are neither qualified nor obligated to answer.”). Additionally, the premise that appears to underlie Plaintiff’s claims of inaccuracy, that bankruptcy discharge extinguishes the debt itself, is incorrect. When a debt is discharged in bankruptcy, the debt itself continues to exist, even if the debtor’s creditors are enjoined from collecting on the obligation against the debtor personally. See Johnson v. Home State Bank, 501 U.S. 78, 84 (1991) (“a bankruptcy discharge extinguishes only one mode of enforcing a claim—namely, Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 11 of 18 - 12 - an action against the debtor in personam—while leaving intact another—namely, an action against the debtor in rem.”); In re Irby, 337 B.R. 293, 295 (Bankr. N.D. Ohio 2005) (explaining that it is “a common misconception . . . that the bankruptcy discharge eliminates the very existence of a debt. But this is not the case.”). Accordingly, the Federal Trade Commission has indicated that discharged debts should report with a $0 balance to indicate that the consumer is no longer personally liable on the debt, while allowing that the debt itself can be reported. See Federal Trade Commission, 40 Years of Experience with the Fair Credit Reporting Act, an FTC Report with Summary of Interpretations (July 2011), at 55– 56, 68.1 Here, Experian is accurately reporting the facts of Plaintiff’s discharge. The discharged status of the Guaranty debt is plainly denoted, along with a $0 recent balance. Likewise, there is no monthly payment amount listed or any other past- due reporting to suggest that Plaintiff is somehow delinquent on the loan, and Plaintiff does not allege any facts to suggest that reporting “a balloon payment of $20,910 due in February of 2026” is factually incorrect (e.g., that a different balloon payment was due on the original contract terms). 1 The Report is available at https://www.ftc.gov/sites/default/files/ documents/reports/40-years-experience-fair-credit-reporting-act-ftc-staff-report- summary-interpretations/110720fcrareport.pdf. Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 12 of 18 - 13 - Instead, Plaintiff alleges that the discharge in his bankruptcy case “permanently modified” the payment terms in a way that made reporting the debt inaccurate, (Compl. ¶ 47), but Plaintiff is mistaken. Despite the fact that Guaranty Bank can no long pursue claims against Plaintiff for that debt, the debt itself remains in existence. Likewise, the fact that Guaranty’s lien was stripped means only that they can no longer foreclose on the underlying property; it has no effect on the existence of the debt itself. Moreover, in light of other details in the report, the idea that the report of the balloon payment would somehow indicate Plaintiff’s liability for the payment remains is absurd. Both excerpts of Experian reports that Plaintiff supplies in his Complaint provide that the debt was “[d]ischarged through Bankruptcy Chapter 13” and report a recent balance of $0. (Compl. ¶¶ 46, 54.) In addition, the account history notes that the “[d]ebt [was] included in Chapter 13 Bankruptcy.” (Id.) These details make it impossible to read the report and conclude that Plaintiff remained liable for the Guaranty Bank debt.2 In the end, there is no inaccurate information on which Plaintiff can plausibly base his claim; this is fatal to his complaint. 2 The additional indication that the account is only scheduled to report until May 2019, nearly seven years before the payment is due further highlights the absurdity of Plaintiff’s claims (and suggests looming questions of ripeness of the dispute). Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 13 of 18 - 14 - II. PLAINTIFF’S INVOCATION OF INDUSTRY STANDARDS CANNOT SAVE HIS COMPLAINT. Plaintiff’s Complaint is littered with accusations that Experian’s reporting is inaccurate because it does not comport with industry standards embodied in the Consumer Data Industry’s Credit Resource Reporting Guide (the “CRRG”). (See Compl. ¶¶ 22–42, 48, 56.) Yet, despite repeatedly invoking supposed violations of industry standards, at no point does Plaintiff explain which specific provisions of the CRRG or other industry standard was supposedly violated here. Notably, Plaintiff states that the guidelines embodied in the CRRG are published “to assist furnishers with their compliance requirements under the FCRA.” (See id. ¶ 28 (emphasis added).) As with Plaintiff’s attempts to hold Experian liable for adjudicating legal claims, courts around the country routinely dismiss claims like these founded on vague invocations of the purported industry standards embodied in the CRRG. See, e.g., Mortimer v. Bank of Am., N.A., No. C-12-01959 JCS, 2013 WL 1501452, at *12 (N.D. Cal. Apr. 10, 2013) (“Defendant’s alleged noncompliance with the Metro 2 Format is an insufficient basis to state a claim under the FCRA.”); Mestayer v. Experian Info. Sols., Inc, No. 15-CV-03645-EMC, 2016 WL 631980, at *4 (N.D. Cal. Feb. 17, 2016) (same); Devincenzi v. Experian Info. Sols., Inc., No. 16-CV-04628-LHK, 2017 WL 86131, at *6 (N.D. Cal. Jan. 10, 2017) (holding that otherwise accurate reporting “is not rendered unlawful Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 14 of 18 - 15 - simply because a Plaintiff alleges that the reporting, though accurate, was inconsistent with industry standards”). And in those rare instances where courts have held that a violation of the CDIA’s guidelines can state a claim, it is usually where a furnisher’s alleged violation of industry standards is directly and explicitly tethered to the alleged inaccuracy. See, e.g., Nissou-Rabban v. Capital One Bank (USA), N.A., No. 15CV1675 JLS (DHB), 2016 WL 4508241, at *5 (S.D. Cal. June 6, 2016) (denying data furnisher’s motion to dismiss where plaintiff specifically alleged that Metro-2 standards required reporting “no data” instead of the charge- off that was reported). Moreover, courts have repeatedly declined to follow Nissou-Rabban, reaffirming that “allegations that a credit report deviated from the Metro 2 format [are] insufficient, without more, to state a claim under the FCRA.” Rodriguez v. Experian Info. Sols., Inc., No. 16-CV-04668-BLF, 2017 WL 1354764, at *7 (N.D. Cal. Apr. 13, 2017); Mensah v. Experian Info. Sols., Inc., No. 16-CV-05689-WHO, 2017 WL 1246892, at *8 (N.D. Cal. Apr. 5, 2017) (disagreeing with Nissou-Rabban and holding that “deviation from industry standards by itself is insufficient to allege inaccurate or misleading reporting”). Here, Plaintiff does not specifically allege how Experian violated Metro-2 or the CDIA’s guidelines. He does not offer any factual support to tie the allegedly inaccurate balloon payment information to any violation of Metro-2 or the CDIA’s Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 15 of 18 - 16 - guidelines. Accordingly, Plaintiff’s attempts to bolster his Complaint by peppering it with allusions to industry standards cannot save their claims against Experian, which should be dismissed. CONCLUSION For all of these reasons, Experian respectfully requests that this Court grant its Motion to Dismiss, and dismiss all claims in Plaintiff’s Complaint against Experian, and do so with prejudice. Dated: April 21, 2017 Respectfully submitted, /s/ William H. Rooks William H. Rooks Georgia Bar No. 906785 JONES DAY 1420 Peachtree Street, N.E., Suite 800 Atlanta, GA 30309-3053 Telephone: (404) 581-8891 Facsimile: (404) 581-8330 wrooks@jonesday.com An Attorney for Defendant Experian Information Solutions, Inc. Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 16 of 18 - 17 - The undersigned hereby certifies that the foregoing document has been prepared in accordance with the font type and margin requirements of Local Rule 5.1 of the Northern District of Georgia, using a font type of Times New Roman and a point size of 14. /s/ William H. Rooks William H. Rooks An Attorney for Experian Information Solutions, Inc. Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 17 of 18 - 18 - CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 21st day of April, 2017, I caused the foregoing to be electronically filed with the Clerk of the Court by using the CM/ECF system, which will send a notice of electronic filing to all counsel of record. /s/ William H. Rooks William H. Rooks An Attorney for Defendant Experian Information Solutions, Inc. Case 1:17-cv-00800-CC-LTW Document 5 Filed 04/21/17 Page 18 of 18