Schilling et al v. Jpmorgan Chase & Co. et alMOTION TO DISMISS FOR FAILURE TO STATE A CLAIM W.D. Wash.February 9, 20171 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax The Honorable Ricardo S. Martinez UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE GEORGE L. SCHILLING and SHU Y. SCHILLING, husband and wife,, Plaintiff, v. JPMORGAN CHASE & CO. d/b/a JPMORGAN CHASE BANK, N.A.; TRANSUNUNION, LLC; EXPERIAN INFORMATION SOLUTIONS INC.; and EQUIFAX INC., Defendant. No. 2:17-cv-00060-RSM DEFENDANT JPMORGAN CHASE BANK N.A.’S MOTION TO DISMISS NOTE ON MOTION CALENDAR: March 10, 2017 Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 1 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - i Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax TABLE OF CONTENTS Page I. INTRODUCTION AND SUMMARY OF ARGUMENT ............................................... 1 II. STANDARD AND SCOPE OF REVIEW ....................................................................... 2 III. ALLEGATIONS SET FORTH IN THE COMPLAINT .................................................. 3 IV. AUTHORITY AND ARGUMENT ................................................................................. 3 A. The Schillings’ Two Claims Fail Because There is No Basis for Claiming Accord and Satisfaction ........................................................................................ 3 B. The Schillings Fail to State a FCRA Claim .......................................................... 5 C. The Schillings Fail to State a CPA Claim ............................................................ 7 1. FCRA Preempts the Schillings’ CPA Claim ............................................ 7 2. The Schillings Do Not Substantively Allege a Claim .............................. 8 a. The Schillings Fail to Allege Deceptive or Unfair Acts ............... 8 b. Chase’s Actions Did Not Affect the Public Interest ................... 10 c. Schilling Cannot Establish Causation as to Chase ..................... 10 D. The Court Should Dismiss Without Leave to Amend ........................................ 11 V. CONCLUSION .............................................................................................................. 11 Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 2 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - ii Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax TABLE OF AUTHORITIES Page(s) Federal Cases Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937 (2009) .....................................................................................8 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955 (2007) .....................................................................................8 Biers v. Wash. State Liquor & Cannabis Bd., 2016 WL 3079025 (W.D. Wash. June 1, 2016) ....................................................................14 Carney v. Experian Info. Solutions, Inc., 57 F. Supp. 2d 496 (W.D.Tenn. 1999) ..................................................................................12 Cholla Readimix, Inc. v. Civish, 382 F.3d 969 (9th Cir. 2004) ...................................................................................................8 Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir. 1994) .....................................................................................................8 Gauvin v. Trombatore, 682 F. Supp. 1067 (N.D. Cal. 1988) ........................................................................................8 Gibbs v. SLM Corp., 336 F. Supp. 2d 1 (D. Mass. 2004) ........................................................................................12 Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147 (9th Cir. 2009) ...............................................................................................12 Harris v. Cnty. of Orange, 682 F.3d 1126 (9th Cir. 2012) .................................................................................................8 Ileto v. Glock Inc., 349 F.3d 1191 (9th Cir. 2003) .................................................................................................8 In re Sagent Technology, Inc., Derivative Litigation, 278 F. Supp. 2d 1079 (N.D. Cal. 2003) ...................................................................................8 Knievel v. ESPN, 393 F.3d 1068 (9th Cir. 2005) .................................................................................................8 Lee v. Thornburg Mortg. Home Loans Inc., 2014 WL 4953966 (N.D. Cal. 2014) .......................................................................................8 Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 3 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - iii Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Macpherson v. JPMorgan Chase Bank, N.A., 665 F.3d 45 (2d Cir. 2011) ....................................................................................................13 Moseley v. CitiMortgage Inc., 2011 WL 5175598 (W.D. Wash. Oct. 31, 2011), aff'd, 564 Fed. Appx. 300 (9th Cir. 2014) .................................................................................................................10, 15 Nat’l Ass’n for Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043 (9th Cir. 2000) .................................................................................................8 Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057 (9th Cir. 2002) ...............................................................................................12 Obeng-Amponsah v. Chase Home Fin., LLC, 624 Fed. Appx. 459 (9th Cir. 2015), cert. denied, 137 S. Ct. 163, 196 L. Ed. 2d 138 (2016) ........................................................................................................................12 Ornelas v. Fid. Nat. Title Co. of Wash., Inc., 2005 WL 3359112 (W.D. Wash. Dec. 9, 2005), aff’d sub nom. Ornelas v. Fid. Nat. Title Co. of Washington Inc., 245 Fed. Appx. 708 (9th Cir. 2007) ........................13 Peasley v. Verizon Wireless (VAW) LLC, 364 F. Supp. 2d 1198 (S.D. Cal. 2005) .................................................................................12 Purcell v. Bank of Am., 659 F.3d 622 (7th Cir. 2011) .................................................................................................13 Riegel v. Medtronic, Inc., 552 U.S. 312, 128 S. Ct. 999, 169 L. Ed. 2d 892 (2008) ......................................................14 Roybal v. Equifax, 405 F. Supp. 2d 1177 (E.D. Cal. 2005) .................................................................................13 Steckman v. Hart Brewing, Inc., 143 F.3d 1293 (9th Cir. 1998) .................................................................................................8 Thinket Ink Information Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053 (9th Cir. 2004) ...............................................................................................17 Timmerman v. HSBC Bank USA, Nat’l Ass’n, 2016 WL 4061813 (W.D. Wash. July 29, 2016) ...................................................................14 Tuttle v. Bank of New York Mellon, 2012 WL 726969 (W.D. Wash. Mar. 6, 2012) ......................................................................12 Watters v. Wachovia Bank, N.A., 550 U.S. 1 (2007) ....................................................................................................................9 Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 4 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - iv Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Whisenant v. First Nat’l Bank & Trust Co., 258 F. Supp. 2d 1312 (N.D. Okla. 2003) ....................................................................7, 10, 12 State Cases Bain v. Metro Mortg. Grp., Inc., 175 Wn.2d 83 (2012) .............................................................................................................14 Boardman v. Dorsett, 38 Wn. App. 338 (1984) ..................................................................................................10, 15 Burlington N. R. Co. v. Grabber Const. Supply, Inc., 55 Wn. App. 772 (1989) ..................................................................................................10, 15 Field Lumber Co. v. Petty, 9 Wn. App. 378 (1973) ....................................................................................................10, 15 Guijose v. Wal-Mart Stores, Inc., 144 Wn.2d 907 (2001) ...........................................................................................................14 Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778 (1986) .....................................................................................................15, 16 Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59 (2007) .............................................................................................................16 Leingang v. Pierce Cty. Med. Bureau, Inc., 131 Wn.2d 133 (1997) ...........................................................................................................14 Magney v. Lincoln Mut. Sav. Bank, 34 Wn. App. 45 (1983) ..........................................................................................................15 Nguyen v. Doak Homes, Inc., 140 Wn. App. 726 (2007) ......................................................................................................14 Federal Statutes 15 U.S.C. § 1681s-2 ..............................................................................................................11, 13 15 U.S.C. §1681s-2(a) ...........................................................................................................11, 12 15 U.S.C. § 1681s-2(b) ..........................................................................................................12, 13 15 U.S.C. § 1681s-2(d) ................................................................................................................12 15 U.S.C. §1681t(b)(1)(F) ...........................................................................................................13 Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 5 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - v Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax State Statutes RCW 19.36.110 .....................................................................................................................11, 15 RCW 19.86.093 ...........................................................................................................................16 Rules Fed. R. Civ. P. 12(b)(6) .................................................................................................................8 Rule 8 .............................................................................................................................................8 Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 6 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 1 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax I. INTRODUCTION AND SUMMARY OF ARGUMENT Plaintiffs George and Shu Schilling (the “Schillings”) are engaging in a game of “gotcha” against Defendant JPMorgan Chase Bank, N.A. (“Chase”); they claim that sending a letter to Chase saying “if you cash the enclosed check, you agree our loan is paid in full” relieved them of paying on their loan. Since their check was only a partial payment (and did not cure their default), Chase negotiated the check, as the Deed of Trust securing their loan expressly permits. When, predictably, Chase sent further payment requests, and reported the loan as delinquent, the Schillings doubled down on their ploy. They now sue Chase for violating the Federal Credit Reporting Act (“FCRA”) and the Washington Consumer Protection Act (“CPA”). The Schillings have not found a magic loophole allowing them to both avoid their debt and then sue Chase on it. Their satisfaction and accord scheme does not work—there was no dispute about their debt so there was no consideration. They also failed to show a written modification, and their Deed of Trust indicated that a partial payment would not relieve them of further payments. Even if their scheme had worked, FCRA has a very limited private cause of action—and they do not allege facts allowing them to state the claim. FCRA also preempts their CPA claim. But even if it did not, they fail to state a CPA claim. The Schillings claims fail because: First, their two claims fail because their check did not act as a satisfaction and accord— there was no consideration, the Deed of Trust allows collection of the debt (even upon a partial payment), and there was no written modification. Second, FCRA contains a limited private right of action and the Schillings do not meet the requirements to state a claim. Third, FCRA preempts the Schillings’ CPA claim, and in any event, they cannot establish essential CPA elements. The Court should grant Chase’s motion to dismiss with prejudice. Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 7 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 2 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax II. STANDARD AND SCOPE OF REVIEW A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint. Ileto v. Glock Inc., 349 F.3d 1191, 1199-1200 (9th Cir. 2003). A Complaint that lumps together seemingly unrelated defendants fails to give them fair notice of the claims against them under Rule 8. In re Sagent Technology, Inc., Derivative Litigation, 278 F. Supp. 2d 1079, 1094-1095 (N.D. Cal. 2003); Gauvin v. Trombatore, 682 F. Supp. 1067, 1071 (N.D. Cal. 1988). A Complaint must allege enough facts to state a claim against a particular defendant that is plausible, not merely conceivable. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S. Ct. 1955, 1974 (2007). Moreover, “the court is not required to accept legal conclusions cast in the form of factual allegations if those allegations cannot reasonably be drawn from the facts alleged.” Clegg v. Cult Awareness Network, 18 F.3d 752, 754-755 (9th Cir. 1994); Cholla Readimix, Inc. v. Civish, 382 F.3d 969, 973 (9th Cir. 2004); see also Twombly, 550 U.S. at 555, 570. A plaintiff must allege more than “an unadorned, the- defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937 (2009). “‘[L]abels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). The Court may consider on a motion to dismiss evidentiary facts contained in exhibits attached to a Complaint. Nat’l Ass’n for Advancement of Psychoanalysis v. Cal. Bd. of Psychology, 228 F.3d 1043, 1049 (9th Cir. 2000). And where allegations are contradicted by documents relied on in the Complaint, the documents control. Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295 (9th Cir. 1998). Moreover, the Court may consider documents “whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the [plaintiff’s] pleading.” Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005). The Court may also take judicial notice of undisputed matters of public record, such as documents on file in federal or state courts. See Harris v. Cnty. of Orange, 682 F.3d 1126, 1131–32 (9th Cir. 2012) (taking judicial notice of state court proceedings in res judicata analysis); Lee v. Thornburg Mortg. Home Loans Inc., 2014 WL 4953966 (N.D. Cal. 2014) Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 8 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 3 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax (taking judicial notice of court filings and public records in evaluating whether res judicata barred pro se plaintiff’s third attempt to litigate home foreclosure). III. ALLEGATIONS SET FORTH IN THE COMPLAINT Chase summarizes the allegations in the Complaint without conceding their truth. The Schillings allege three claims: 1) FCRA violations; 2) Washington Fair Credit Reporting Act violations (not against Chase); and 3) CPA violations. The Schillings obtained a $230,000 second mortgage loan (secured by a Deed of Trust) from Washington Mutual Bank, and the loan was later acquired by Chase. Compl. ¶ 10, Ex. A. In 2015, the Schillings were unable to make payments on the loan. Compl. ¶ 11. Chase sent the Schillings an offer to compromise the debt for $28,000 in September 2015, but the Schillings rejected it and made a counteroffer of $10,000 on October 15.1 Compl. ¶ 12, Ex. B. On October 26, 2015, the Schillings’ counsel sent a letter stating that the enclosed $10,000 check (with the statement “Paid in Full”) was in consideration of Chase releasing the Deed of Trust and corresponding Note (there was no indication that Chase accepted any counteroffer). Compl. ¶ 12, Exs. C and D. Chase deposited the funds but continued to request the remaining payments on the loan. Compl. ¶¶ 13-16, Exs. E-H. Ultimately, Chase reported the loan as being “charged off” instead of paid by compromise. Compl. ¶ 17. The Schillings complained to credit reporting agencies, but they performed no further investigation beyond reviewing an automated dispute system. Compl. ¶¶18-25. According to the Schillings, Chase did not credit the $10,000 to the balance of the loan. Compl. ¶ 23. IV. AUTHORITY AND ARGUMENT A. The Schillings’ Two Claims Fail Because There is No Basis for Claiming Accord and Satisfaction The Schillings’ two claims are premised on the idea that Chase cannot report the loan as charged off (or request payments) since it cashed their $10,000 check. But the $10,000 check 1 The Schillings also allege that Chase may not be licensed to service loans in Washington. Such a “license” is not required. Watters v. Wachovia Bank, N.A., 550 U.S. 1 (2007) (state licensing requirements preempted by National Bank Act). Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 9 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 4 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax does not operate as an accord and satisfaction. As a consequence, there is no legal or factual basis for their claims. First, there was no consideration for the accord. The Schillings owed $190,000 in principal ($217,000 total) as of April 2015 and September 23, 2015 and $180,000 in principal as of January 14, 2016, March 4, 2016, June 22, 2016, October 18, 2016 and December 23, 2016. Compl. Ex H, Dkt 1-2 p. 65, 70, 74, 76, 78-79, 85-86. The Schillings never disputed the amount due, or that they were obligated to make the payments. Chase offered to deem the debt satisfied for a payment of $27,000, but the Schillings rejected that offer and sent $10,000, claiming that accepting their check settled the debt. Compl. Exs. C, D, H. The $10,000 payment does not settle the debt. It is axiomatic that “an agreement to do that which one is already obliged to do does not constitute consideration to support a contract.” Boardman v. Dorsett, 38 Wn. App. 338, 341 (1984). “[A] subsequent agreement modifying an existing contract must be supported by new consideration independent of the consideration involved in the original agreement.” Boardman, 38 Wn. App. at 341. The Schillings’ counteroffer and payment is nothing more than an agreement to (partially) pay what they are already obligated to pay under the original loan documents. Thus, their counteroffer lacked consideration. Furthermore, there was no dispute they owed $180,000—and Chase did not agree that only $10,000 was due and owing—so payment of that sum is not a full settlement. If there is no dispute, “a debtor cannot unilaterally tender a lesser sum than that which it is agreed is due and owing and rely upon the retention of that sum as full settlement of the debt unless there is some additional consideration given therefor.” Field Lumber Co. v. Petty, 9 Wn. App. 378, 380 (1973); Burlington N. R. Co. v. Grabber Const. Supply, Inc., 55 Wn. App. 772, 778–79 (1989); Moseley v. CitiMortgage Inc., 2011 WL 5175598, *7 (W.D. Wash. Oct. 31, 2011), aff'd, 564 Fed. Appx. 300 (9th Cir. 2014). Again, the Schillings failed to offer any new consideration. Second, the Deed of Trust expressly contemplates that a short-payment does not satisfy the debt; it provides that “[b]y accepting payment of any sum secured by this Deed of Trust Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 10 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 5 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax after its due date, Beneficiary does not waive its right to require prompt payment when due of all other sums so secured.” Compl. Ex. A, § 7(d). Thus, by accepting the $10,000, Chase did not waive its rights to collect any remaining amount due. The Schillings point to no Deed of Trust provision, Note term, or other law allowing them to unilaterally make a partial payment, declare the debt settled, and escape their debt obligations. Third, the Schillings’ attempt to satisfy the loan cannot validly modify their obligation to pay the full amount of the loan. Under Washington’s Credit Agreement Statute of Frauds, any modification of a credit agreement must be in writing and signed their creditor: A credit agreement is not enforceable against the creditor unless the agreement is in writing and signed by the creditor. The rights and obligations of the parties to a credit agreement shall be determined solely from the written agreement, and any prior or contemporaneous oral agreements between the parties are superseded by, merged into, and may not vary the credit agreement. Partial performance of a credit agreement does not remove the agreement from the operation of this section. RCW 19.36.110. The Schillings’ counteroffer is thus not a modification of their obligation (reinforced by the Deed of Trust), as it was not in writing and was not signed by Chase or even Plaintiffs—their attorney made the offer and signed the letter, not them. (And their counsel was only authorized to contact Chase about their loan in April 2016—well after the October 2015 invalid offer was made. Compl. Ex. G, Dkt 1-2 p. 34.) There is thus no legal or factual basis to find that the Schillings’ debt was satisfied through an accord. As a result, the Schillings still owe the debt, so Chase is still authorized to request payment and report it as charged off (i.e., report that the loan is unlikely to be collected, not that the loan no longer exists). B. The Schillings Fail to State a FCRA Claim FCRA primarily regulates “consumer reporting agencies” and the credit reports and scores they generate. “Furnishers” of credit such as Chase are only liable as set forth in 15 U.S.C. §1681s-2. Under 15 U.S.C. §1681s-2, a furnisher of credit is only potentially liable for violating “the duty to provide accurate information [§1681s-2(a)] and the duty to undertake an Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 11 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 6 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax investigation upon receipt of notice of dispute from a consumer reporting agency [§1681s- 2(b)].” Gibbs v. SLM Corp., 336 F. Supp. 2d 1, 11 (D. Mass. 2004) (quoting Carney v. Experian Info. Solutions, Inc., 57 F. Supp. 2d 496, 501 (W.D.Tenn. 1999)); Obeng-Amponsah v. Chase Home Fin., LLC, 624 Fed. Appx. 459, 462 (9th Cir. 2015), cert. denied, 137 S. Ct. 163, 196 L. Ed. 2d 138 (2016). Moreover, a consumer only has a limited right to bring a private action for a violation—generally, only federal agencies and specified state officials can sue. 15 U.S.C. §1681s-2(d); see also Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1059 (9th Cir. 2002). Under the facts alleged, the Schillings do not have a private right of action under §1681s-2(a), even if Chase provided inaccurate information. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009). The private right of action under §1681s-2(b) is only triggered when a furnisher of information receives a notice of a consumer dispute from a credit reporting agency. See Whisenant v. First Nat’l Bank & Trust Co., 258 F. Supp. 2d 1312, 1316 (N.D. Okla. 2003)2; Obeng-Amponsah, 624 Fed. Appx. at 462; Tuttle v. Bank of New York Mellon, 2012 WL 726969, *3 (W.D. Wash. Mar. 6, 2012). When a furnisher receives such a notice, it must conduct an investigation, review information from the credit reporting agency, report the results of the investigation to the credit reporting agency, and, if the investigation uncovers that information was incorrectly furnished, report the inaccuracies to all consumer reporting agencies possessing the incorrect information. Whisenant, 258 F. Supp. 2d at 1316; 15 U.S.C. §1681s-2(b). The Schillings’ claim fails because they do not allege the prerequisites to bring a claim under §1681s-2(b)—they do not allege the credit reporting agencies contacted Chase. See Carney, 57 F. Supp. 2d at 502 (“plaintiff has not alleged that a consumer reporting agency notified [defendants] of a dispute so as to trigger any duty under §1681s-2(b). Thus, plaintiff fails to state a claim under 15 U.S.C. §1681s-2(b).”); Gibbs, 336 F. Supp. 2d at 12 (“[plaintiff] 2 See also Peasley v. Verizon Wireless (VAW) LLC, 364 F. Supp. 2d 1198, 1200 (S.D. Cal. 2005) (“Courts have consistently held that for the duty imposed by §1681s-2(b) to be triggered, the furnisher of information must have received notice of the dispute from a consumer reporting agency, not from the consumer.”) Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 12 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 7 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax has not alleged that he contacted any credit reporting agency or that the agency, in turn, got in touch with any of the defendants. Under such circumstances, a complaint brought under §2(b) should be dismissed”). In fact, they allege facts showing the exact opposite—that no credit reporting agency contacted Chase: “Defendant Experian did not acknowledge or respond to the Schillings credit dispute at all”; “the refusal to investigate by the CRA [credit reporting agency]-defendants”; “Trans Union acted unreasonably when it simply ‘verified’ the creditor via the ACDV process without additional investigation”; and “Equifax acted unreasonably when it simply ‘verified’ the creditor via the ACDV process without additional investigation.” Compl. ¶¶ 25, 40, 43, 45. Without such contact, Plaintiffs’ FCRA claim fails. C. The Schillings Fail to State a CPA Claim The Schillings claim Chase violated the CPA by not crediting their $10,000 payment and not accepting it as a settlement of their loan obligation. 1. FCRA Preempts the Schillings’ CPA Claim To the extent that the Schillings’ CPA claim relies on their FCRA claim (i.e., inaccurate credit reporting), it fails. State-law based claims are explicitly preempted under the FCRA. 15 U.S.C. §1681t(b)(1)(F)3 (“No requirement or prohibition may be imposed under the laws of any State--(1) with respect to any subject matter regulated under-- . . .(F) section 1681s-2 of this title.”); Ornelas v. Fid. Nat. Title Co. of Wash., Inc., 2005 WL 3359112, *4 (W.D. Wash. Dec. 9, 2005), aff’d sub nom. Ornelas v. Fid. Nat. Title Co. of Washington Inc., 245 Fed. Appx. 708 (9th Cir. 2007)(FCRA preempts CPA claim); Macpherson v. JPMorgan Chase Bank, N.A., 665 F.3d 45, 48 (2d Cir. 2011) (“Macpherson’s state law claims are preempted by the plain language of §1681t(b)(1)(F).”); Purcell v. Bank of Am., 659 F.3d 622, 625–26 (7th Cir. 2011); Roybal v. Equifax, 405 F. Supp. 2d 1177, 1181 (E.D. Cal. 2005) (“Because Plaintiffs’ State 3 Specific California and Massachusetts statutes are exempt from this broad preemption. Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 13 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 8 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax Claims are based on alleged injury arising purely from the reporting of credit information by a furnisher of credit, they are completely preempted”); see also Riegel v. Medtronic, Inc., 552 U.S. 312, 324, 128 S. Ct. 999, 1008, 169 L. Ed. 2d 892 (2008) (“Absent other indication, reference to a State’s ‘requirements’ includes its common-law duties”). 2. The Schillings Do Not Substantively Allege a Claim The CPA requires: (1) an unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) that impacts the public interest; (4) which causes injury to a plaintiff’s business or property; and (5) that injury is causally linked to the unfair or deceptive act. Guijose v. Wal- Mart Stores, Inc., 144 Wn.2d 907, 917 (2001). The Schillings may state a CPA claim only if they “produce[s] evidence on each element required to prove a CPA claim.” Bain v. Metro Mortg. Grp., Inc., 175 Wn.2d 83, 119 (2012). Courts decide whether an action is unfair or deceptive as a matter of law. Leingang v. Pierce Cty. Med. Bureau, Inc., 131 Wn.2d 133, 150 (1997). The Schillings only provide the barest outline of their claim, merely parroting the elements of a CPA claim, which “is not enough to state a claim.” Timmerman v. HSBC Bank USA, Nat’l Ass’n, 2016 WL 4061813, *5 (W.D. Wash. July 29, 2016); Biers v. Wash. State Liquor & Cannabis Bd., 2016 WL 3079025, *12 (W.D. Wash. June 1, 2016). a. The Schillings Fail to Allege Deceptive or Unfair Acts To be “deceptive,” the CPA requires that the act or practice at issue is one that “misleads or misrepresents something of material importance.” Nguyen v. Doak Homes, Inc., 140 Wn. App. 726, 734 (2007). Chase did not act deceptively. The Schillings’ allegation that Chase “deceived” them by not crediting their $10,000 payment is simply wrong and contrary to their Deed of Trust. The April 2015 statement and the September 23, 2015 indicate that the unpaid principal balance was $190,950.89. Compl. Ex. H. The $10,000 payment was made in October 2015. Not coincidentally, the January 14, 2016 letter indicates that the outstanding principal balance is $180,950.89—exactly $10,000 lower. Compl. Ex. H. There was no deception since the payment was credited. Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 14 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 9 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax The Schillings also cannot base their claim on their deceptive counteroffer to settle their loan obligation for $10,000. It was not deceptive for Chase to cash their check while failing to release the obligation. As discussed, the Schillings gave no consideration, and sending a check stating the obligation was paid in full does not act as an accord and satisfaction. Boardman, 38 Wn. App. at 341; Petty, 9 Wn. App. at 380; Grabber Const., 55 Wn. App. at 778–79; Moseley, 2011 WL 5175598, at *7. Under the Deed of Trust, Chase did not waive any right to collect on the loan by accepting the $10,000. And the Schillings’ attempt to modify the loan was not in writing or signed by Chase (or them), as is required under Washington’s Credit Agreement Statute of Frauds. RCW 19.36.110. Chase also did not act unfairly. As a matter of law, Chase did not commit any per se unfair trade practice. Only the Washington Legislature has the authority to declare a trade practice as being per se “unfair.” Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 787 (1986). The Schillings cite no statutory violation that is a legislatively declared per se CPA violation and, thus, there is no basis for a per se “unfair” claim. Further, to show Chase acted “unfairly”—aside from a per se unfair trade practice—the Schillings must show Chase took some action that offends public policy as established by law, is “immoral, unethical, oppressive, or unscrupulous” or causes substantial injury to consumers. Magney v. Lincoln Mut. Sav. Bank, 34 Wn. App. 45, 57–58 (1983). The Schillings offer no facts showing Chase’s actions affected anyone other than them. And it violates public policy to allow the Schillings to state a claim by deceptively tendering a payment check and claiming it resolved the debt. If that were the law, everyone would retire their debts easily by engaging in the exact shenanigans the Schillings tried to pull off here. It is not unfair to take a required payment that is less than the amount due, and less than the amount offered to settle the loan, and not release the obligation. Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 15 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 10 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax b. Chase’s Actions Did Not Affect the Public Interest The Schillings must offer evidence showing the alleged act impacts the public interest. Hangman Ridge, 105 Wn.2d at 780. “[I]t is the likelihood that additional plaintiffs have been or will be injured in exactly the same fashion that changes a factual pattern from a private dispute to one that affects the public interest.” Hangman Ridge, 105 Wn.2d at 790. Notably, the Legislature amended the CPA in 2009 to create a new test for establishing the public interest element of the CPA for actions occurring after that date. Now, the Schillings must show Chase’s act or practice “(a) injured other persons, (b) had the capacity to injure other persons, or (c) have the capacity to injure other persons.” RCW 19.86.093. Chase’s alleged actions do not affect the public interest. The Schillings do not allege any facts showing that the alleged factual situation commonly occurs. Indeed, their allegations are unique to them as it was their own actions—not Chase’s actions—that led to the dispute. This is essentially a contract dispute between the parties which is not actionable under the CPA. Hangman Ridge, 105 Wn.2d at 790. c. Schilling Cannot Establish Causation as to Chase The Schillings cannot show the essential CPA element of causation—that but for Chase’s actions, they would not have received further billing statements or negative credit reporting. Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 82 (2007). They admit they were unable to make payments and their billing statements show they have not made a payment since November 2010. Compl. ¶ 11; Dkt. 1-1, Ex. H. p.86. Thus, any negative credit reporting was not due to the supposed settlement, it was due to their own actions. Furthermore, Chase never agreed to the counteroffer or to settle the loan obligation for $10,000. Thus, there is no causal link between the payment and the failure to change the collection status of the loan. The unchanged collection status was caused by the Schillings’ failure to make the correct payment, not by any action or inaction on Chase’s part. Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 16 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 11 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax D. The Court Should Dismiss Without Leave to Amend Dismissal without leave to amend is proper if amendment could not save the Complaint. The Schillings cannot amend their complaint to state any claims as to Chase—they are barred as a matter of law. The Court should dismiss their claims against Chase with prejudice. See Thinket Ink Information Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004). V. CONCLUSION The Schillings’ gamesmanship in tendering a short payment to settle their loan obligation does not relieve them of their debt. And it certainly does not give them the basis to sue for a FCRA and CPA claim. Likewise, the Schillings’ claims are otherwise meritless due to the failure to allege facts showing essential elements of their claims. For the foregoing reasons, the Court should grant Chase’s motion to dismiss with prejudice. DATED this 9th day of February, 2017. Davis Wright Tremaine LLP Attorneys for JPMorgan Chase Bank, N.A. By s/ Frederick A. Haist Frederick Haist, WSBA #48937 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 Tel.: (206) 622-3150 Fax: (206) 757-7000 Email: fredburnside@dwt.com frederickhaist@dwt.com Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 17 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 CHASE’S MOTION TO DISMISS - 12 Case No. 2:17-cv-00060-RSM 4812-8152-7874v.3 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax CERTIFICATE OF SERVICE I hereby certify that on this day, I electronically filed the foregoing document with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the attorneys of record registered on the CM/ECF system. All other parties (if any) shall be served in accordance with the Federal Rules of Civil Procedure. Dated this 9th day of February, 2017. /s/Frederick A. Haist Frederick A. Haist Case 2:17-cv-00060-RSM Document 16 Filed 02/09/17 Page 18 of 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 [PROPOSED] ORDER GRANTING MOTION TO DISMISS - 1 Case No. 2:17-cv-00060-RSM 4812-5632-1602v.2 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax The Honorable Ricardo S. Martinez UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE GEORGE L. SCHILLING and SHU Y. SCHILLING, husband and wife, Plaintiff, v. JPMORGAN CHASE & CO. d/b/a JPMORGAN CHASE BANK, N.A.; TRANSUNUNION, LLC; EXPERIAN INFORMATION SOLUTIONS INC.; and EQUIFAX INC., Defendants. No. 2:17-cv-00060-RSM [Proposed] ORDER GRANTING DEFENDANT JPMORGAN CHASE BANK N.A.’S MOTION TO DISMISS Note on Motion Calendar: March 10, 2017 THIS MATTER came before the Court on Defendant JPMorgan Chase, Bank, N.A. (“Chase”)’s Motion to Dismiss. The Court, having considered the papers submitted in support of and in opposition to this motion, finds that the motion should be GRANTED. The Court further finds that amendment to the Complaint would be futile as to Chase. Now therefore, it is hereby ORDERED that Chase’s Motion to Dismiss is GRANTED, and the Complaint is dismissed in its entirety with prejudice. Case 2:17-cv-00060-RSM Document 16-1 Filed 02/09/17 Page 1 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 [PROPOSED] ORDER GRANTING MOTION TO DISMISS - 2 Case No. 2:17-cv-00060-RSM 4812-5632-1602v.2 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax The Clerk of Court shall enter judgment against Plaintiffs George L. Schilling and Shu Y. Schilling and for Defendant JPMorgan Chase, Bank, N.A. DATED this _____ day of March, 2017. ___________________________________ Honorable Ricardo S. Martinez United States District Judge Presented by: Davis Wright Tremaine LLP Attorneys for Defendant JPMorgan Chase, Bank, N.A. By /s/Frederick A. Haist Fred B. Burnside, WSBA #32491 Frederick A. Haist, WSBA #48937 1201 Third Avenue, Suite 2200 Seattle, WA 98101 Telephone: 206-622-3150 Fax: 206-757-7700 E-mail: frederickhaist@dwt.com Case 2:17-cv-00060-RSM Document 16-1 Filed 02/09/17 Page 2 of 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 [PROPOSED] ORDER GRANTING MOTION TO DISMISS Case No. 2:17-cv-00060-RSM 4812-5632-1602v.2 0036234-000608 Davis Wright Tremaine LLP LAW OFFICES 1201 Third Avenue, Suite 2200 Seattle, WA 98101-3045 206.622.3150 main · 206.757.7700 fax CERTIFICATE OF ELECTRONIC SERVICE I hereby certify that on February 9, 2017, I electronically filed the foregoing document with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the attorneys of record registered on the CM/ECF system. All other parties (if any) shall be served in accordance with the Federal Rules of Civil Procedure. Dated this 9th day of February, 2017. /s/Frederick A. Haist Frederick A. Haist Case 2:17-cv-00060-RSM Document 16-1 Filed 02/09/17 Page 3 of 3