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Palouian v. Fia Card Services

United States District Court, Third Circuit

April 29, 2013

MICHAEL PALOUIAN, Plaintiff,
v.
FIA CARD SERVICES D/B/A BANK OF AMERICA, AND X, Y, Z CORPORATIONS, Defendants.

MEMORANDUM AND ORDER

THOMAS N. O'NEILL, Jr., District Judge.

Before this Court are Defendant's Motion to Dismiss the Plaintiff's Complaint (Doc. No. 5), Plaintiff's Response in opposition thereto (Doc. No. 8), and Defendant's Reply in further support thereof (Doc. No. 9). For the reasons set forth in this Memorandum, the Court will grant the Defendant's Motion to Dismiss, with leave to the Plaintiff to amend the Complaint to correct the deficiencies therein.

I. BACKGROUND

This case arises from a dispute between Plaintiff Michael Palouian and Defendant FIA Card Services, N.A. (identified by the Plaintiff as FIA Card Services d/b/a Bank of America) over the Defendant's report to unspecified credit reporting agencies about the Plaintiff's credit card account information. According to the allegations in the Plaintiff's Complaint, Defendant is an entity that furnishes information to credit reporting agencies, and the Defendant furnished derogatory information about the Plaintiff's account to one or more credit reporting agencies. The Plaintiff claims that he disputed the accounts in writing with the Defendant. Although the Plaintiff does not dispute the existence of the debt, he disputes the high balance, interest, finance charges, fees, and the contract which might justify these. The Plaintiff asserts that these disputes "were bona fide legitimate disputes, " and that the Defendant disregarded the Plaintiff's disputes and allowed the information to remain on the Plaintiff's credit report. The Plaintiff asserts that he disputed the accounts in writing with the relevant credit bureaus, and one or more of the credit reporting agencies conducted an investigation and contacted the Defendant. The Defendant allegedly verified the accounts with the agencies without stating that the account was disputed by the Plaintiff.

Attached to his Complaint, the Plaintiff provides a number of letters and documents to support his allegations. These include three letters from the Plaintiff to Bank of America stating that he disputes the information placed on his credit report and two letters from Bank of America "regarding a notice of activity reported by you to a consumer reporting agency." The first of these letters states that Bank of America attempted to contact him to validate the information, but was unable to reach him and requests that the Plaintiff get in touch to resolve the matter. The letter states that if they do not hear from him within fourteen days, they will consider the matter resolved. The second letter states that because they had not received a response from the Plaintiff, they considered the matter resolved. The Plaintiff also attaches to the Complaint a number of pages from his credit report regarding the account in question.

The Complaint appears to assert a cause of action under 15 U.S.C. § 1861s-2(b) of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., although the Plaintiff also discusses section 1861s-2(a). The Complaint asserts that the Defendant is liable, and makes a demand for $1, 225 in attorneys fees spent in filing the Complaint. The Defendant removed the Complaint from the Bucks County Court of Common Pleas on January 17, 2013. (Doc. No. 1). The Defendant filed the present Motion to Dismiss the Complaint on January 24, 2013 (Doc. No. 5), the Plaintiff responded in opposition on February 19, 2013 (Doc. No. 8), and the Defendant replied on February 27, 2013 (Doc. No. 9).

II. STANDARD OF REVIEW

Defendant moves to dismiss the Plaintiff's claims under Fed.R.Civ.P. 12(b)(6) for failure to state a claim. In considering a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), a district court must "accept as true the factual allegations in the complaint and all reasonable inferences that can be drawn therefrom." Krantz v. Prudential Invs. Fund Mgmt. , 305 F.3d 140, 142 (3d Cir. 2002) (quoting Nami v. Fauver , 82 F.3d 63, 65 (3d Cir. 1996). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id . "Threadbare" recitations of the elements of a claim supported only by "conclusory statements" will not suffice. Id . Rather, a plaintiff must allege some facts to raise the allegation above the level of mere speculation. Great Western Mining & Mineral Co. v. Fox Rothschild LLP , 615 F.3d 159, 176 (3d Cir. 2010) (citing Twombly , 550 U.S. at 555). "Once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly , 550 U.S. at 563.

III. DISCUSSION

The Defendant's Motion to Dismiss raises three issues with the Plaintiff's Complaint. First, the Defendant argues that the Plaintiff cannot sue for a violation of 15 U.S.C. § 1681s-2(a), as claims under this section are available only to the government. (Def.'s Br. in Supp. of Mot. to Dismiss, at 7, Doc. No. 5). Second, the Defendant argues that the Plaintiff fails to state a claim for a violation of 15 U.S.C. § 1681s-2(b). (Id. at 8). Finally, the Defendant argues that the Plaintiff's Complaint is deficient because he fails to allege any damages apart from expenditure of attorney's fees in pursuit of the Complaint. (Id. at 10).

The Plaintiff, in his response to the Defendant's Motion, concedes that there is no private right of action under subsection 1681s-2(a) of the FCRA, but asserts that sufficient facts have been pled to sustain a claim under subsection 1681s-2(b). (Br. in Supp. of Pl.'s Answer to Def.'s Mot. to Dismiss, at 1, Doc. No. 8-1). The Plaintiff's response does not address the Defendant's argument about damages.

The Court must decide whether the Plaintiff has sufficiently alleged a claim under subsection 1681s-2(b) of the FCRA. Subsection 1681s-2(b) does not explicitly require a furnisher of information, like the Defendant, to notify a credit reporting agency that an account is disputed. This subsection merely requires a furnisher to investigate "the completeness or accuracy" of any information furnished upon notice of an inaccuracy. 15 U.S.C. § 1681s-2(b)(1). The Third Circuit has determined that consumers wishing to avail themselves of this private action "must first file a dispute with the consumer reporting agency, which then must notify the furnisher of information that a dispute exists." SimmsParris v. Countrywide Financial Corp. , 652 F.3d 355, 359 (3d Cir. 2011). Only after the consumer notifies the consumer reporting agency, who then notifies the furnisher, can the furnisher be liable to the consumer for failing to investigate the completeness or accuracy of information.

Although the Third Circuit has not addressed this precise issue, other Courts of Appeals, along with District Courts within this Circuit, have determined that a furnisher's failure to report a debt as disputed can create liability under subsection 1681s-2(b). See Gorman v. Wolpoff & Abramson, LLP , 584 F.3d 1147, 1163 (9th Cir. 2009) (holding that failure to report a dispute that is bona fide could give rise to liability under subsection (b)); Saunders v. Branch Banking & Trust Co. of Va. , 526 F.3d 142, 150 (4th Cir. 2008) (holding that a bank's failure to report a debt as disputed gave rise to liability under the FCRA); see also Seamans v. Temple Univ., 11-6774, 2012 WL 5287900, at *14 (E.D. Pa. Oct. 25, 2012) (Dalzell, J.); Shap v. Capital One Financial Corp., 11-4461, 2012 WL 1080127, at *3-4 (E.D. Pa. March 30, 2012) (Rufe, J.); Van Veen v. Equifax Information , 844 F.Supp.2d 599, 606 (E.D. Pa. 2012) (Diamond, J.). These courts have all relied upon the principle that the debt must be bona fide in order for the furnisher to be liable.

The Court finds this conclusion persuasive. A majority of Circuits has held that technically accurate but misleading information in a credit report can be "inaccurate" under the FCRA. See Gorman , 584 F.3d at 1163; Saunders , 526 F.3d at 148; Sepulvado v. CSC Credit Servs., Inc. , 158 F.3d 890, 895 (5th Cir. 1998); Koropoulos v. Credit Bureau, Inc. , 734 F.2d 37, 40 (D.C. Cir. 1984). The Third Circuit articulated this position in an unpublished opinion, stating "a consumer report that contains technically accurate information may be deemed inaccurate if the statement is presented in such a way that it creates a misleading impression." Schweitzer v. Equifax Information Solutions, LLC , 441 ...


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