McGarvey v. USAA Sav. Bank (In re McGarvey)
| Decision Date | 21 February 2020 |
| Docket Number | DKM-3,Docket Control No. DKM-3,Adv. Proc. No. 18-2053,Case No. 15-28908-E-13 |
| Citation | 613 B.R. 285 |
| Court | U.S. Bankruptcy Court — Eastern District of California |
| Parties | IN RE William Norbert MCGARVEY and Sarah Marie McGarvey, Debtors. Sarah McGarvey, Plaintiff, v. USAA Savings Bank, Defendant. |
Joseph Angelo, Elliot Gale, Roseville, CA, Kyle W. Schumacher, San Antonio, TX, for Plaintiffs.
Joshua N. Kastan, Jaime Y. Ritton, San Francisco, CA, for Defendant.
Sarah McGarvey ("Plaintiff-Debtor") filed this Adversary Proceeding on April 27, 2018, seeking relief against USAA Savings Bank ("Defendant"). On July 6, 2018, Plaintiff-Debtor filed an Amended Complaint. Dckt. 18. Defendant filed a Motion to Dismiss, which resulted in the court granting relief and dismissing all claims in the Amended Complaint except the claim based on the alleged failure to include in, update, or amend the information provided by Defendant about the Plaintiff-Debtor to consumer reporting agencies to disclose that the debt was included in the pending bankruptcy case of Plaintiff-Debtor. Civil Minutes, Dckt. 29; Order, Dckt. 30. Defendant filed its Answer (Dckt. 33) on September 6, 2018. The court has issued its pre-trial conference Scheduling Order which provides that Discovery closes on May 31, 2019. Order, Dckt. 36.
Defendant filed a Motion for Judgment on the Pleadings. Dckt. 41. Defendant asserts that the Amended Complaint fails to state a claim, when applying the pleading standards enunciated by the United States Supreme Court in Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868, 884 (2009) ; and Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and judgment should be entered for Defendant. Id.
The determination of this Motion lies in two Congressionally enacted statutory schemes - the Bankruptcy Code and the Federal Fair Credit Reporting Act ("FCRA"). As the United States Supreme Court and law professors have taught generations of law students and lawyers, when determining issues arising under a statutory scheme, one's analysis begins with the statutes as enacted and the plain language thereof.1
Upon review of the Motion for Judgment on the Pleadings and supporting documents, Opposition pleadings, and the arguments of the respective counsel, the Motion is granted and judgment shall be entered for Defendant USAA Savings Bank on all claims, except for the allegation that failure to report the obligations as being included in Plaintiff-Debtor's bankruptcy case (it being alleged that the "Metro 2 Code D" is necessary to make the information accurate) is a violation of the automatic stay.
Congress has created specific defined terms for the persons and conduct subject to the limitations, rights, powers, and authorizations imposed under the Federal Fair Credit Reporting Act ( 15 U.S.C. § 1681 et. seq ). As in the present Adversary Proceeding, these specifically defined terms get used in a general way, leading to confusion in the application of the law. In this Decision, the following terms are used by the court:
"FCRA" Federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et. seq
"Furnisher" A person who provides information about a consumer to a consumer
reporting agency
15 U.S.C. § 1681s-2
"Consumer "[A]ny person which, for monetary fees, dues, or on a cooperative
Reporting Agency" nonprofit basis, regularly engages in whole or in part in the practice of
("CRA") assembling or evaluating consumer credit information or other
information on consumers for the purpose of furnishing consumer
reports to third parties, and which uses any means or facility of
interstate commerce for the purpose of preparing or furnishing
consumer reports." 15 U.S.C. § 1681a(f)
The three main, easily recognizable consumer reporting agencies are
Experian, Equifax, and TransUnion. Consumer Financial Protection
Bureau List of Consumer Reporting Agencies, 2019
https://files.consumerfinance.gov/f/documents/cfpb_consumer-reporting-companies-list.pdf
"Consumer" An individual for whom the information in the credit report relates.
15 U.S.C. § 1681a(c), (d).
"Consumer Report" Consumer Report is any written, oral, or other communication of
(also referred to as any information by a consumer reporting agency bearing on a
a "Credit Report") consumer's credit worthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or mode of
living which is used or expected to be used or collected in whole or in
part for the purpose of serving as a factor in establishing the
consumer's eligibility for credit or insurance (primarily for family or
household purposes), employment purposes; or as authorized under the
FCRA. 15 U.S.C. § 1681a(d).
Motion for Judgment on the Pleadings
Defendant asserts that it is entitled to a Judgment on the Pleadings as provided in Federal Rule of Civil Procedure 12(c), asserting in its Motion (Dckt. 41) the following:
Defendant filed a Reply to Plaintiff's Opposition, providing specific responses to the Opposition and expanding the discussion of the law. Reply, Dckt. 48. Key points addressed in the Reply include: (1) The case law cited by Plaintiff-Debtor does not address whether Defendant has a legal obligation to report a bankruptcy filing; (2) Plaintiff-Debtor ignores the distinction between a bankruptcy filing and discharge; (3) The FCRA does not require a creditor to furnish information that a bankruptcy case has been filed by a consumer; and (4) A credit report is not inaccurate because the creditor does not furnish information to the CRA that a bankruptcy case has been filed by a consumer.
In asserting that the FCRA does not impose an affirmative burden on a furnisher of information to report bankruptcy filings, "but only prohibits a creditor from reporting bankruptcy filings for more than ten (10) years if the creditor chooses to report the bankruptcy filing," Defendant cites the court to 15 U.S.C. 1681c(a)(1) and 16 C.F.R. § Part 600, Appendix, pp. 558-59 (2011). Points and Authorities, p. 11:21-25, Dckt. 43. While accurately stating a portion of the FCRA, this ignores the requirement that accurate information must be provided.3
Plaintiff-Debtor filed an Opposition on February 14, 2019. Dckt. 47. Plaintiff-Debtor first argues that the merely "reporting" (not stating who has such obligation to "report") is not sufficient to give a "reader" accurate information about a "specific trade line." Id. , p. 4:9-12. The alleged inaccuracy of the information furnished by Defendant arises under 15 U.S.C. § 1681s-2 ().
The information that a obligation for which the Furnisher has provided information to a CRA must include disclosure that the obligation is part of a pending Chapter 13 plan so that a future lender considering making a loan to a debtor in a pending Chapter 13 case would know what obligations are included in a Chapter 13 plan and which debts are not.
Federal Rule of Civil Procedure 12(c) providing for a party moving for judgment on the pleadings is incorporated into the bankruptcy adversary proceeding process by Federal Rule of Bankruptcy Procedure 7012. A motion for judgment on the pleadings does not include matters outside the pleadings at issue (here the Complaint), and if outside matters are included, then the motion is one for a summary judgment. Fed. R. Civ. P. 12(d), Fed. R. Bankr. P. 7012. The court has not allowed such matters outside the pleadings to be presented and has before it a motion based on the Amended Complaint filed by Plaintiff-Debtor.
On a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), the allegations of the non-moving party must be accepted as true, while the allegations of the moving party, which have been denied, are assumed to be false. Hal Roach...
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