Dacumos v. Toyota Motor Credit Corporation
2:17-cv-00964
W.D. Wash.Dec 15, 2017Background
- Plaintiff Caren Rose Dacumos co-signed a vehicle loan with Toyota Motor Credit Corporation (TMCC); the primary borrower defaulted and TMCC sued both in King County Superior Court.
- Plaintiff successfully defended and obtained a dismissal with prejudice of TMCC’s state-court collection action on June 29, 2016.
- Despite the dismissal, TMCC (and CRAs Equifax and Experian) continued to report the account as a $13,593 charged-off balance. Plaintiff repeatedly disputed the reporting with the CRAs and submitted the dismissal order; TransUnion corrected its report but Equifax and Experian continued reporting the debt after TMCC verified it.
- Plaintiff sued under the Fair Credit Reporting Act (15 U.S.C. § 1681s-2(b)), alleging TMCC failed to conduct reasonable investigations and continued to furnish inaccurate information to CRAs after receiving notice of disputes.
- TMCC moved for judgment on the pleadings under Fed. R. Civ. P. 12(c), arguing the state-court dismissal did not extinguish the underlying debt and it did not furnish inaccurate information.
- The district court granted TMCC’s motion, dismissing Plaintiff’s claim against TMCC with leave to amend, but left claims against Equifax and Experian pending.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a state-court dismissal with prejudice extinguishes the underlying debt so TMCC must report $0 balance | Dacumos: dismissal is a judgment on the merits that nullifies the debt, so continued reporting is inaccurate | TMCC: dismissal only bars judicial collection; it does not erase the underlying debt or preclude reporting a charged-off balance | Court: dismissal does not extinguish the debt; claim against TMCC dismissed |
| Whether TMCC violated § 1681s-2(b) by failing to reasonably investigate and correct reporting after CRA disputes | Dacumos: TMCC repeatedly verified false information and failed to correct or reinvestigate despite notices | TMCC: complied with duties; had no obligation to change reporting because debt persisted and reporting was accurate | Court: plaintiff’s theory fails as a matter of law given dismissal’s non-extinguishing effect; claim dismissed |
| Whether the court should convert the Rule 12(c) motion to summary judgment to consider settlement documents | Dacumos: ask conversion and continuation to complete discovery, citing extrinsic records and settlement agreement | TMCC: judicially-noticed public records are properly considered without conversion; settlement document not in complaint | Court: denies conversion; judicial notice of public court filings allowed; declines to consider settlement agreement not in complaint |
| Whether leave to amend should be granted despite dismissal | Dacumos: sought to rely on settlement agreement theory and other documents not in original complaint | TMCC: argued dismissal proper and did not address amendment futility in detail | Court: grants leave to amend limitedly—Plaintiff may file amended complaint within 14 days to try to cure deficiencies |
Key Cases Cited
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (stating FCRA’s purpose to ensure fair and accurate credit reporting)
- Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147 (9th Cir. 2009) (explaining furnisher duties under § 1681s-2(b))
- Hal Roach Studios v. Richard Feiner & Co., 896 F.2d 1542 (9th Cir. 1990) (standard for judgment on the pleadings)
- Dawe v. Capital One Bank, 456 F. Supp. 2d 236 (D. Mass. 2006) (holding state-court dismissal deprives creditor of judicial remedy but does not extinguish underlying debt)
- Noll v. Carlson, 809 F.2d 1446 (9th Cir. 1987) (leave to amend should be freely given unless amendment would be futile)