Block v. Real Time ReSols., Inc.
| Decision Date | 08 June 2021 |
| Docket Number | CIVIL ACTION NO. 3:20-CV-01592 |
| Parties | ALBERT W. BLOCK, JR., ET AL. v. REAL TIME RESOLUTIONS, INC., ET AL. |
| Court | U.S. District Court — Western District of Louisiana |
Before the undersigned magistrate judge, on reference from the District Court, are two Rule 12(b)(6) motions to dismiss for failure to state a claim upon which relief can be granted, one filed by each Defendant: Capital One. N.A. [doc. # 18] and Real Time Resolutions, Inc. [doc. # 27]. The motions are opposed. For reasons assigned below, it is recommended that the motions to dismiss be GRANTED.
On December 8, 2020, Plaintiffs Albert W. Block, Jr. ("Block") and Claudia Ann Marlette Block filed the instant complaint against Defendants, Capital One. N.A. ("Capital One") and Real Time Resolutions, Inc. ("RTR") to recover compensatory and punitive damages, plus attorney's fees, that they sustained as a result of Defendants' alleged violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681, et seq. (the "FCRA"), and the Fair Debt Collection Practices Act, 15, U.S.C. §§ 1692, et seq. (the "FDCPA"). (Compl.).1 Plaintiffs filed an amended complaint on January 29, 2021, which did not adopt or incorporate by reference the initialcomplaint. [doc. # 6]. Therefore, the operative pleading in the case is the First Amended Complaint,2 which for simplicity's sake the court will refer to as the "Complaint," or otherwise cite to as the "Compl."
Plaintiffs alleged that they formerly were domiciled in Ouachita Parish, Louisiana, at the time that they took out a home equity line of credit which was secured by their home. (Compl., ¶¶ 4-6).3 The home equity loan constituted a "consumer loan for personal, family, or household purposes," and represents a debt that Defendant, RTR, purportedly has sought to collect. Id.
On July 8, 2020, Plaintiff, Claudia Block, received notice from LifeLock that a derogatory comment referencing a "judgment in the amount of $100,000 had been reported on a credit reporting service." Id., ¶ 9. Similarly, a credit report from Equifax revealed a "derogatory report" from RTR showing a remaining balance of $121,598.00 on a mortgage. Id.
Plaintiffs contend that the derogatory report was based on a February 8, 2016 petition to enforce security interest filed by Capital One against Plaintiffs, i.e., Capital One, N.A., v. Block, No. 16-0932 (4th JDC for Ouachita Parish). . Plaintiffs alleged that a curator ad hoc was appointed for the absent defendants (i.e., them); the action purportedly was in rem only; the security interest was enforced by a judicial sale and satisfied from the proceeds of the sale; and, ultimately, an order of dismissal, without prejudice, was executed on July 20, 2016. Id., 10-15; Exh. B, pg. 17 [doc. # 6-2]).
On July 10, 2020, Block sent a letter to RTR confirming a telephone conversation that he had had earlier that day with an RTR account representative. (Compl., Exh. B, pg. 5 [doc. # 6-2]). The representative advised Block that RTR was acting as a third-party collector on behalf of the creditor, Capital One. Id. RTR had received the account from Capital One on September 21, 2018, for the original amount of $100,525. Id. However, the account had been marked as "charged off" on June 13, 2020. Id.
On August 6, 2020, Block sent a certified letter to RTR advising the company that it had violated the FDCPA and that he was offering the firm an opportunity to redress the violation. . Block asserted that the purported "debt" did not exist because he and his wife were not personally liable for the debt. Id. He further explained that Capital One held a second mortgage on the Blocks' home pursuant to a home equity line of credit, but Capital One had initiated an in rem action against them which could result only in a judgment against the real estate without any personal liability against the Blocks. Id. Block added that no money judgment had been entered against them, and, therefore, there was no personal liability to be referred for collection. Id. Block demanded a full retraction of the "erroneous derogatory report" because there was no debt due. Id. He emphasized that this was not a disputed debt and that full retraction and removal of the report was the minimum, acceptable response. Id. Block threatened legal action against RTR if it attempted to redress this issue by marking the debt as "disputed." Id. "Anything short of a complete retraction and correction is not acceptable." Id.
On November 23, 2020, Block sent a certified letter to Equifax Information Services, L.L.C. ("Equifax") wherein he notified Equifax that RTR had reported an erroneous debt, whichwas appearing on the Blocks' credit report as an unpaid balance of $121,598. . He stressed that his letter was a not a "dispute" letter because there was no dispute. Id. Block stated that the debt was being reported allegedly as a result of litigation: Capital One v. Block (4th JDC 2015). Id. He explained that the litigation had been dismissed, no judgment had been entered against him or his wife, and there was no debt. Id. Block advised Equifax to consult with legal counsel if it doubted the validity of his own legal assessment. Id. He further notified Equifax of the total invalidity of the debt and called upon Equifax to delete the debt entirely. Id.
On December 23, 2020, Block received a reply from Equifax indicating that 1) the account was not marked as disputed, and 2) "[w]e have verified that this item has been reported correctly." (Compl., ¶ 20). However, according to December 10, 2020 correspondence that Equifax had sent to Claudia Block, the firm stated that information Ms. Block had disputed had been verified as accurate, but that information unrelated to the dispute had been updated. (Compl., Exh. E [doc. # 6-5]). Equifax indicated that the type of loan from Capital One was a "Home Equity Line of Credit," and that the type of account was a "Line of Credit." Id. Equifax noted that the account had been transferred/sold, but that the status of the loan was characterized as a "Charge Off." Id. The date of the first delinquency was July 2015, but the date of the last payment was November 2016. Id. Equifax added that if Ms. Block had any more questions about this account, she should contact Capital One. Id.
Plaintiffs contend that RTR violated the FCRA and the FDCPA as a result of RTR's willful refusal to remove the false derogatory report after having received clear proof that there was no lawful or enforceable debt. (Compl. ¶ 21). Plaintiffs further assert that Capital Oneviolated the FCRA when it willfully referred a non-existent debt for collection with the full knowledge that the collection action would include the posting of a false derogatory report "as to the underlying state court action." Id.
Plaintiffs divided their FCRA claim into four counts. First, Plaintiffs asserted that Defendants violated 15 U.S.C. § 1681s-2(a)(2) by furnishing incomplete or inaccurate information to a consumer reporting agency information and by failing to promptly notify the consumer reporting agency of corrections or additions to make the information complete and accurate. (Compl., ¶¶ 25-35).
Second, RTR violated § 623(a)(3) of the FCRA (codified as 15 U.S.C. § 1681s-2(a)(3)) when, despite notice that the debt was nonexistent, it failed to notify the consumer reporting agency that the debt was disputed. (Compl., ¶¶ 36-37).
Third, RTR violated § 611(a)(2)(A) of the FCRA (codified as 15 U.S.C. § 1681(i) when it had a second opportunity to remove erroneous and inaccurate information that it had furnished to Equifax, but still failed to do so. (Compl., ¶¶ 38-40).
Fourth, Defendants violated § 623(a)(7) of the FCRA (codified as 15 U.S.C. §§ 1681s-2(a)(1)(A) and 1681s-2(a)(7)) when they failed to timely disclose (within 30 days) to Plaintiffs (as consumers) that they had disclosed negative information about them to a credit reporting agency.
Plaintiffs further alleged that RTR violated the FDCPA when it failed to correct the derogatory credit report after notice by the consumer and proof that the debt sought to be collected was not debt. (Compl., ¶¶ 45-51). Plaintiffs also contend that Defendant, Capital One, is a furnisher of information under the FCRA and is responsible for the referral of the allegeddebt to RTR with full knowledge as a step in the collection process that a derogatory report as to a "dismissed judgment" would be reported. Consequently, Capital One, too, is answerable for damages. Id., ¶ 51.
On March 9, 2021, Defendant, Capital One, file the instant motion to dismiss for failure to state a claim upon which relief can be granted. [doc. # 18]. Capital One attached to its motion non-certified copies of various state court records, which flesh out more of the details of Plaintiffs' loans and the state court litigation referenced in Plaintiffs' complaint:4
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