Smith v. Tenant Tracker Inc.

• Decision Date: 31 August 2022
• Docket Number: 3:21-cv-05380-BHS-SKV
• Parties: JOSEPH SMITH, et al., Plaintiffs, v. TENANT TRACKER, INC., et al., Defendants, v. DALE PEROZZO, Cross Defendant
• Court: U.S. District Court — Western District of Washington

JOSEPH SMITH, et al., Plaintiffs,
v.
TENANT TRACKER, INC., et al., Defendants,
v.
DALE PEROZZO, Cross Defendant

No. 3:21-cv-05380-BHS-SKV

United States District Court, W.D. Washington, Tacoma

August 31, 2022

ORDER

BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on Magistrate Judge S. Kate Vaughan's Report and Recommendation (“R&R”), Dkt. 34, recommending the Court grant in part and deny in part Defendant/Cross Defendant Dale Perozzo's Motion for Judgment on the Pleadings, Dkt. 28.

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The facts are detailed in the R&R and need not be repeated here. In short, Plaintiffs Joseph and Adam Smith^[1] sought to rent property from Dale Perozzo. Perozzo accessed Defendant/Cross Claim Plaintiff Tenant Tracker's^[2] credit reporting system to run a credit and background check on Smith. Perozzo did not have an account with Tenant Tracker, and instead used the access credentials of a non-party, Lewis and Clark Properties. Tenant Tracker's report on Smith erroneously included information about a different, non-party Smith, who was a registered sex offender. See Dkt. 1 at 4. Smith alleges that Perozzo denied his rental application without explanation, and that he then disseminated the false claim that Smith was a sex offender to law enforcement, his current landlord, and the references Smith listed on his application. Id. at 4-5.

Smith sued, alleging violations of the Fair Credit Reporting Act (“FCRA”) and the Washington Consumer Protection Act, and defamation. Id. at 7-9. Smith ultimately settled with Perozzo. Dkt. 18. Tenant Tracker asserted a cross claim against Perozzo, both alleging that he had wrongly accessed and used its system and seeking indemnity for the cost and damages it incurred in defending and resolving Smith's lawsuit. It alleges that Perozzo accessed its system and obtained the results under false pretenses or for an improper purpose, and, despite clear warnings, failed to properly “filter” the results. It

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seeks indemnification or damages under the FCRA, specifically 15 U.S.C. § 1681n(b)). Dkt. 26.

Perozzo seeks dismissal under Federal Rule of Civil Procedure 12(b)(6), arguing that the FCRA does not include a contribution or indemnity provision. Dkt. 28 at 2. He argues there is no federal common law right to equitable indemnity, and that Tenant Tracker's 15 U.S.C. § 1681n(b) claim should be dismissed because he obtained Smith's consumer report for a “permissible purpose”-to determine whether he would be good rental candidate. Id. at 6-8 (quoting Veno v. AT&T Corp., 297 F.Supp.2d 379, 385 (D. Mass. 2003) (“A court is to determine whether a request for a consumer report has been made under ‘false pretenses' by looking at the permissible purposes for which consumer reports may be obtained under 15 U.S.C. § 1681b of the FCRA.”)). Perozzo's motion did not address Smith's state law equitable indemnity claim.

The R&R properly considered Perozzo's motion under Rule 12(c), rather than Rule 12(b)(6), because he had already filed an answer. The standard is the same under Rule 12(b)(6) and Rule 12(c).

Dismissal under Federal Rule of Civil Procedure 12(b)(6) may be based on either 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. 1988). A plaintiff's complaint must allege facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A claim has “facial plausibility” when the party seeking relief “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

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Although the Court must accept as true the complaint's well-pled facts, conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper Rule 12(b)(6) motion to dismiss. Vazquez v. Los Angeles Cnty., 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and footnotes omitted). This requires a plaintiff to plead “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555.).

“Although Iqbal establishes the standard for deciding a Rule 12(b)(6) motion, . . . Rule 12(c) is functionally identical to Rule 12(b)(6) and the same standard of review applies to motions brought under either rule.” Cafasso, U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011) (internal quotation marks omitted) (quoting Dworkin v. Hustler Mag. Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)); see also Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010) (applying Iqbal standard to a Rule 12(c) motion).

On a 12(b)(6) motion, “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990). However, where the facts are not in

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dispute, and the sole issue is whether there is liability as a matter of substantive law, the court may deny leave to amend. Albrecht v. Lund, 845 F.2d 193, 195-96 (9th Cir. 1988).

As an initial matter, the R&R concluded that any federal common law equitable indemnity claim was not plausible, and recommends granting Perozzo's motion on that claim. Tenant Tracker does not object. The R&R on that point is ADOPTED, Perozzo's Motion for Judgment on the Pleadings on Tenant Tracker's federal common law equitable indemnity claim is GRANTED, and the claim is DISMISSED with prejudice.

The R&R also correctly concluded that, because Perozzo's motion did not address Tenant Tracker's state law equitable indemnity claim, and because he addressed that claim only in his reply, he waived his arguments on that claim. It recommends the Court deny Perozzo's motion on that claim. Perozzo objects, arguing that he did not have fair notice of the assertion of a state law equitable indemnity claim until Tenant Tracker clarified its claim in response to his motion. He claims the pleading was ambiguous and that he read it to mean federal common law equitable indemnity (which he successfully argues is not a viable claim). Dkt. 37 at 5-8.

The Court disagrees. The claim at issue is entitled “Negligence-Equitable Indemnity.” Dkt. 26 at 3. Negligence is a state law tort, and equitable indemnity is a viable claim under Washington law. Accordingly, the Court agrees with the R&R that Perozzo's motion to dismiss this claim, raised for the first time in reply, came too late. It also concludes that the facts alleged (and largely admitted) fit squarely within Washington's common law equitable indemnity rule, also known as the “ABC rule.” The elements of...