Prianto v. Experian Info. Solutions, Inc.
| Decision Date | 10 July 2014 |
| Docket Number | Case No. 13-cv-03461-TEH |
| Court | U.S. District Court — Northern District of California |
| Parties | RECO PRIANTO, Plaintiff, v. EXPERIAN INFORMATION SOLUTIONS, INC., Defendant. |
This matter came before the Court on April 28, 2014, on the motion of Defendant Experian Information Solutions, Inc. ("Experian") for judgment on the pleadings. Having carefully considered the written and oral arguments of the parties, and the relevant law, the Court GRANTS Experian's motion for the reasons discussed below.
On or about April 11, 2007, Plaintiff Reco Prianto ("Plaintiff") purchased a single family residence for his personal use in Sacramento, California, and lived in it for some time thereafter. First Amended Complaint ("FAC") ¶ 6, Docket No. 14. Plaintiff financed the purchase of the home with loans from Aurora Bank FSB, secured by a first and second deed of trust. Id. ¶ 7. The loan in second place, which was for $97,800, was later transferred or sold to Defendant Heritage Pacific Financial LLC ("Heritage"). Id. ¶ 8. Plaintiff stopped making the monthly payments on the loans in or about September 2008; thereafter, the holder of the first deed of trust initiated foreclosure proceedings that resulted in a trustee's sale that took place on January 20, 2009. Id. ¶ 9. The effect of theforeclosure was to extinguish the loan secured by the second deed of trust, rendering its holder, Heritage, a "sold out junior lienholder." Id. ¶ 10.
Plaintiff alleges that the loan held by Heritage is subject to one of California's anti-deficiency statutes, set forth at section 580b of the California Code of Civil Procedure ("section 580b"). Id. ¶¶13-14. Because section 580b provides that no deficiency judgment lies after a foreclosure for a deed of trust or mortgage given to the vendor to secure payment of the balance of the purchase price of that real property, Plaintiff argues that Heritage cannot legally collect on the loan even if it were to sue him. Id. ¶ 14.
Heritage furnishes credit information on its customers to the three national credit reporting agencies ("CRAs") - Equifax LLC, Trans Union LLC, and Experian. Id. ¶ 11. As a "furnisher" of credit information, beginning in June 2011, Heritage reported to the CRAs that Plaintiff's loan account was "past due in the amount of $96,601" (the "Heritage loan"). Id. ¶ 12. Plaintiff asserts that because the Heritage loan "cannot be enforced," Heritage's reports to the CRAs were misleading and incomplete. Id. ¶ 16. Potential creditors who access Plaintiff's credit reports, in the process of making decisions whether to extend credit to Plaintiff, will erroneously believe that Plaintiff may be forced to pay $96,601 "through legal process" should Heritage seek a judgment against him, when in fact, Plaintiff "is in no danger of ever having to pay anything on the account." Id. Additionally, banks and other financial institutions - which typically use computer algorithms that rely heavily, if not exclusively, on the applicant's credit scores, and data in the applicant's credit application and credit reports prepared by CRAs, including Experian - will inform potential creditors that Plaintiff may be forced to pay $96,601 to Heritage. Id. ¶¶ 17-18. This reporting, Plaintiff asserts, misleads potential creditors who will either offer credit only on unfavorable terms or will reject Plaintiff's application altogether, and is incomplete because the reporting fails to note that he cannot be made to pay the $96,601 or any lesser amount to Heritage. Id. ¶ 19.
In January 2012, and on May 5 and 20, 2013, Plaintiff sent dispute letters to the CRAs, including Experian, in which he stated that Heritage's credit reporting violated theFair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et. seq., because it was misleading and caused creditors to believe he could be held liable for $96,601 when, in fact, that was not legally possible. Id. ¶ 20. After receiving the dispute letters, the CRAs sent automatic customer dispute verification requests ("ACDVs") to Heritage, informing it that Plaintiff disputed Heritage's reporting on the account. Id. ¶ 21. Upon receipt of the ACDVs, Heritage was obligated to conduct a reasonable investigation of the dispute and to report the results of its investigation to the CRAs, but Plaintiff alleges that Heritage failed to do so, and instead merely reported the same information it had previously reported to the CRAs. Id. ¶¶ 22-23. After receiving Heritage's responses to the ACDVs, the CRAs were obligated to conduct a reasonable investigation of the dispute. Id. ¶ 24. Trans Union and Equifax corrected their reports to reflect that no money was past due on the account; Experian failed to correct its report on the account. Id. Plaintiff asserts that Experian's reporting of the Heritage loan has significantly reduced his credit scores, such that he has been unable to obtain financing to purchase a home, and has suffered emotional distress. Id. ¶¶ 15, 25-26.
Based on the foregoing conduct, Plaintiff asserts against Experian in his Third Claim for Relief violations of the FCRA's accurate reporting requirement, 15 U.S.C. § 1681e(b), and reinvestigation provision, 15 U.S.C. § 1681i. Id. ¶¶ 43-52. Plaintiff also asserted claims against Heritage under the FCRA and the California Consumer Credit Reporting Act, California Code of Civil Procedure § 1785.25(a), but stipulated to dismiss Heritage from this suit on January 23, 2013. See Docket No. 34. Thus, Plaintiff's only remaining claim is that Experian's reports on the Heritage loan were incomplete and misleading to potential creditors because the reports did not remove or otherwise explain the true, non-collectible nature of the Heritage debt.
"After the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings." Fed. R. Civ.P. 12(c). Motions filed pursuant toRule 12(b) and Rule 12(c) differ in the time of filing but are "functionally identical." Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). In ruling on either motion, a court must "accept all material allegations of fact as true and construe the complaint in a light most favorable to the non-moving party." Vasquez v. Los Angeles Cnty., 487 F.3d 1246, 1249 (9th Cir. 2007). A dismissal under either rule "can be based on the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).
To survive a motion for judgment on the pleadings, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). This "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. Plausibility does not equate to probability, but it requires "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Dismissal of claims that fail to meet this standard should be with leave to amend unless it is clear that amendment could not possibly cure the deficiencies in the complaint. Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1296 (9th Cir. 1998).
Experian's motion for judgment on the pleadings asks whether, as a matter of law, a CRA may have any liability under certain provisions of the FCRA for reporting the existence of a consumer's section 580(b) debt. The Court concludes, that under the facts alleged, Plaintiff's claims fail as a matter of law. The Court, therefore, GRANTS Experian's motion for the reasons discussed below.1
Congress passed 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). Because CRAs "have assumed a vital role in assembling and evaluating consumer credit" information, the FCRA sought to insure that "consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy." 15 U.S.C. § 1681(a)(3)-(4).
Under section 1681e(b), CRAs have a duty to ensure the accuracy of the report. Section 1681e(b) provides:
Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.
15 U.S.C. § 1681e(b). "Liability under § 1681e(b) is predicated on the reasonableness of the [CRA]'s procedures in obtaining credit information," but to "make out a prima facie violation under § 1681e(b), a consumer must present evidence tending to show that a credit reporting agency prepared a report containing inaccurate information." Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995) (emphasis added). "If he fails to satisfy this initial burden, the consumer, as a matter of law, has not established a violation of [§ 1681e(b)], and a court need not inquire further as to the reasonableness of the procedures adopted by the credit reporting agency." Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991).
Section 1681i(1)(A) obligates CRAs to reinvestigate disputes when the completeness or accuracy of an item of information has been challenged. Section 1681i(1)(A) provides:
if the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the [CRA] shall, free of charge, conduct a reasonablereinvestigation to determine whether the disputed information is...
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