The opinion of the court was delivered by: (Chief Judge Kane)
The above-captioned action, in which Plaintiffs Corey and Carrie Sites claim monetary damages in excess of $537,000 from Defendant Nationstar Mortgage LLC, has its origins in a single mortgage loan payment of $814.36. According to Plaintiffs, Defendant untimely credited the payment to their account and falsely reported the loan as delinquent to major credit bureaus with the sole purpose of frustrating the Sites' efforts to refinance the loan. In their amended complaint (Doc. No. 12), Plaintiffs assert claims for defamation, intentional interference with prospective contractual relations, fraud, and a single, unspecified violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. Ann. §§ 201-1 to -9.3 (West 2008).
Before the Court is Defendant's motion to dismiss Plaintiffs' amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 14.) In the instant motion, Defendant argues that all of plaintiffs' claims must be dismissed as entirely preempted by the Fair Credit Reporting Act, 15 U.S.C. §§ 1681--1681x (2006). (Id. at 1.) For the reasons that follow, the Court will grant Defendant's motion to dismiss with respect to Plaintiffs' claim under Pennsylvania's Unfair Trade Practices and Consumer Protection Law and deny Defendant's motion with respect to Plaintiffs' claims of defamation, intentional interference with prospective contractual relations, and fraud.
Plaintiffs Cory and Carrie Sites filed their original complaint against Defendant Nationstar Mortgage LLC, formerly Centrex Home Equity Company LLC, on March 12, 2007, asserting claims of defamation, intentional interference with prospective contractual relations, fraud, and a single, unspecified violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. Ann. §§ 201-1 to -9.3. (Doc. No. 1.) On June 4, 2007, Defendant filed a motion to dismiss the complaint, in which it argued that the Fair Credit Reporting Act, 15 U.S.C. §§ 1681--1681x, preempted Plaintiffs' claims. (Doc. No. 7) Plaintiffs filed an amended complaint soon thereafter, rendering Defendant's then-pending motion moot. (Doc. No. 12.) On July 2, 2007, Defendant filed the instant motion to dismiss Plaintiffs' amended complaint (Doc. No. 14) and brief in support thereof (Doc. No. 15), renewing its preemption argument. Plaintiff timely filed a brief in opposition to the motion (Doc. No. 16), after which Defendant timely filed a brief in reply (Doc. No. 17).
The Plaintiffs are citizens of the Commonwealth of Pennsylvania. (Doc. No. 12, at 1.) Defendant is a Texas corporation with its principal place of business in Dallas, Texas. (Id.) Plaintiffs claim monetary damages in excess of $537,000. (Id. at 7, 12.) Because the parties are citizens of different states and the amount in controversy exceeds $75,000, the Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 (2006).
Accepting as true all well-pleaded allegations of fact and any reasonable inferences that may be drawn therefrom, the factual background of the instant action is as follows. See Kopec v. Tate, 361 F.3d 772, 775 (3d Cir. 2004) (explaining that a court must take a non-movant's allegations as true "when supported by proper proofs" on a motion for summary judgment).
Working with Defendant's branch manager Steve ("Branch Manager"), whose last name is unknown, Plaintiffs secured a mortgage loan from Defendant in September 2004. (Am. Compl. ¶¶ 4, 5.) Plaintiffs' monthly payment on the loan at all times relevant to this action was $814.36. (Id. ¶ 6.) In November 2005, Plaintiffs tendered a check for $814.36 to Defendant in full satisfaction of their monthly loan payment. (Id. ¶ 7.) Defendant, however, erroneously credited Plaintiffs' account for $314.36, rather than the full amount. (Id. ¶ 8.) Upon learning of Defendant's mistake, Plaintiffs tendered an additional payment of $500 to Defendant by way of a wire transfer made November 22, 2005. (Id. ¶¶ 9, 10.) Subsequent monthly loan payments cleared Plaintiffs' bank account on December 15, 2005; January 3, 2006; February 9, 2006; and March 10, 2006. (Id. ¶ 11.)
In early March 2006, Plaintiffs approached CoreStar Financial Group ("CoreStar"), a competing lender, about refinancing their mortgage loan. (Id. ¶ 12.) A few days later, CoreStar requested the "payoff" amount for Plaintiffs' loan from Defendant. (Id. ¶ 13.) Prior to fulfilling that request, however, Defendant reported Plaintiffs' February 2006 loan payment as past due to the three major credit bureaus, Equifax, Experian, and TransUnion. (Id. ¶ 14.) Almost immediately thereafter, the Branch Manager contacted Plaintiffs and proposed that they refinance their loan through Defendant rather than CoreStar. (Id. ¶ 15.) Several days of discussions followed, but Plaintiffs ultimately reached the conclusion that Defendant could not better the terms offered by CoreStar. (Id. ¶ 16.)
Defendant provided CoreStar with the requested payoff amount on March 13, 2006. (Id. ¶ 22.) That same day, Defendant provided Plaintiffs with a good faith estimate and proposed loan agreement for a refinancing loan with a 30-year term and a fixed interest rate of 7.57%. (Id. ¶ 23.) On March 15, 2006, CoreStar received an updated copy of Plaintiffs' credit report indicating that Plaintiffs' mortgage loan had been delinquent for thirty days. (Id. ¶ 24.) CoreStar responded to the report by modifying the terms of the proposed refinancing loan (id. ¶ 25) "from a 30-year note with a fixed interest rate of 7.75% to a 30-year note with a variable interest rate of 8.55% for three years and up to a maximum interest rate of 14.55%" (id. ¶ 26).
At some point during the first few weeks of March-exactly when is not clear from the face of Plaintiffs' amended complaint-the Branch Manager contacted a debt collection agent ("Agent") at Paragon Way, a collection agency seeking repayment of a debt, unrelated to Plaintiffs' mortgage loan, owed by Plaintiff Carrie Sites. (Id. ¶ 17.) Impersonating Plaintiff Cory Sites, the Branch Manager attempted to settle the debt for less than fifty cents on the dollar with the promise that she would discharge any outstanding obligations by means of a cash payout from the proposed refinancing loan. (Id. ¶ 18.) All of this was done without Plaintiffs' knowledge or consent (id. ¶ 19), and the Agent has since identified the Branch Manager's voice in a message left on Plaintiffs' answering machine as that of the individual who had negotiated the settlement of Plaintiff Carrie Sites's debt (id. ¶ 21).
Plaintiffs closed on the refinancing loan with CoreStar under the modified terms on March 26, 2006. (Id. ¶ 28.) Two days later, a representative of Defendant's Customer Relations Office wrote Plaintiffs to inform them that it had "adjusted Plaintiffs['] account and reported the correct information to the three major credit bureaus." (Id. ¶ 29.)
A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) is properly granted when, accepting all factual allegations and inferences as true, the moving party is entitled to judgment as a matter of law. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990). Although the moving party bears the burden of showing that no claim has been stated, Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2007), the complaint must allege facts sufficient to "raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)," Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007) (citations omitted). Moreover, in order to satisfy federal pleading requirements, a plaintiff's obligation "to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008) (brackets and quotation marks omitted) (quoting Twombly, 127 S.Ct. at 1964--65).
In its motion to dismiss, Defendant argues that the Fair Credit Reporting Act ("FCRA") preempts Plaintiffs' claims of defamation and intentional interference with prospective contractual relations and, to the extent that Plaintiffs predicate their claim of fraud upon an allegation that Defendant furnished the credit bureaus with inaccurate information, Plaintiffs' claim of fraud as well. (Doc. No. 14, at 5.) Defendant vigorously objects to Plaintiffs' "outlandish" allegation-new to the amended complaint-that its Branch Manager assumed the guise of Plaintiff Cory Sites in order to negotiate "a 50% reduction of the debt owed." (Id. at 21.) Defendant argues that, "even accepting the new allegation as true . . . , the Court must dismiss the claims that rely on this allegation because Plaintiffs have not, and cannot, allege actual damages." (Id. at 21.) As to why "Plaintiffs have not, and cannot, allege actual damages," Defendant contends that, "[s]ince Plaintiffs admit that they paid only the full amount for which they were legally obligated to Paragon Way and not one cent more, their allegations, even if accepted as true, fail to allege any actual damages." (Doc. No. 17, at 13.)
The purpose of the FCRA is 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)(4) (2006). To that end, the FCRA imposes numerous duties upon "furnishers of information," that is, financial institutions and persons who supply consumer-related information to credit reporting agencies. These duties are laid out in subsections (a) and (b) of § 1681s-2. Subsection (a) establishes an overarching duty "to provide accurate information," id. § 1681s-2(a), which includes a prohibition on reporting information with actual knowledge of errors, id. § 1681s-2(a)(1)(a); a duty to correct and update information, id. § 1681s-2(a)(2); a duty to provide notice of a dispute, id. § 1681s-2(a)(3); a duty to provide notice of voluntarily closed accounts, id. § 1681s-2(a)(4); a duty to provide consumers with notice of the furnishing of negative information, id. § 1681s-2(a)(7)(A); and a conditional duty to reinvestigate a dispute concerning the accuracy of information contained in a consumer report based on a consumer's direct request, id. § 1681s-2(a)(8)(A). Subsection (b) sets forth the duties of furnishers "after receiving notice . . . of a dispute with regard to the completeness or accuracy of any information," including the duty to conduct an investigation and report its results to the consumer reporting agency. Id. § 1681s-2(b)(A), (C).
Notwithstanding the depth and breadth of these duties, the FCRA limits the enforcement of § 1681s-2(a) to government agencies and officials, id. § 1681s-2(d), and, relatedly, curtails private rights of action for violations of the act, id. § 1681h(e), 1681t. See Gordon v. Greenpoint Credit, 266 F. Supp. 2d 1007, 1011 (S.D. Iowa 2003) ("To prevent the glut of cases in the federal courts that would result if every consumer could sue anytime he or she disputed the accuracy of furnished information, Congress wisely limited enforcement of this section to government agencies."). Two provisions in particular serve to shield furnishers of information from the threat of private suits: § 1681h(e), which provides qualified immunity from "proceeding[s] in the nature of defamation, invasion of privacy, or negligence," id. § 1681h(e), and § 1681t(b), which provides qualified immunity from proceedings "under the laws of any State," id. § 1681t(b). Section 1681h(e), quoted in its entirety, provides that:
Except as provided in sections 1681n and 1681o of this title, [which provide private causes of action for willful noncompliance and negligent noncompliance, respectively,] no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 1681g, 1681h, or 1681m of this title, or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report except as to false information furnished with malice or willful intent to injure such consumer.
Id. § 1681h(e) (emphasis added). The product of an omnibus appropriations bill enacted in 1996, § 1681t(b) ...