(PS) Ortiz v. Diversified Consultants, Inc.
2:17-cv-00713
E.D. Cal.May 1, 2018Background
- Plaintiff Rene Ortiz alleges DCI reported a disputed $68 AT&T debt on his credit reports (first reported Jan 2016, removed Sept 2016, re-reported Jan 2017 with a “Consumer disputes this account information” notation).
- Ortiz disputes verification: DCI sent a June 8, 2016 verification letter with an AT&T billing statement, but Ortiz contends the account numbers and addresses did not match.
- Ortiz claims the re-reporting caused mortgage denials on Jan 31 and Mar 7, 2017 and seeks $139,136.90 under the FDCPA for violations of 15 U.S.C. §§ 1692g and 1692e(8).
- Defendants moved to dismiss Ortiz’s second amended complaint under Rule 12(b)(6); Ortiz moved for default judgment against two individual defendants who had appeared and joined the motion to dismiss.
- The magistrate judge concluded DCI’s verification complied with Ninth Circuit standards, the re-report included the disputed notation required by §1692e(8), and Ortiz failed to plead individual liability for the Zehnders; the court recommended dismissal with prejudice and denial of default judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did DCI fail to verify debt under §1692g? | DCI’s verification was deficient because account numbers and addresses did not match the AT&T statement. | DCI verified the amount with AT&T and provided supporting billing information; minor discrepancies do not defeat verification. | Dismissed — verification satisfied §1692g under Ninth Circuit standard. |
| Did DCI violate §1692e(8) by reporting false credit info? | Re-reporting was false because verification was inadequate; re-report harmed creditworthiness. | DCI’s re-report included the notation that the debt was disputed; verification was adequate. | Dismissed — no §1692e(8) violation; disputed notation was included. |
| Are Charlotte and Christopher Zehnder individually liable under the FDCPA? | They are DCI executives and thus personally liable. | Mere officer status is insufficient; Ortiz failed to plead facts showing they are "debt collectors." | Dismissed — insufficient allegations of individual FDCPA liability. |
| Should leave to amend be permitted? | Ortiz sought to add a claim that DCI failed to give 1692g(a) notice initially. | Defendants submitted a Jan 25, 2016 notice showing compliance; plaintiff already had prior chances to amend. | Denied — further amendment would be futile; dismissal with prejudice recommended. |
Key Cases Cited
- Clark v. Capital Credit & Collection Servs., 460 F.3d 1162 (9th Cir. 2006) (verification requires confirming in writing the amount the creditor claims is owed)
- Mahon v. Credit Bureau of Placer County Inc., 171 F.3d 1197 (9th Cir. 1999) (example of adequate verification conveyed to debtor)
- Chaudhry v. Gallerizzo, 174 F.3d 394 (4th Cir. 1999) (baseline: verification is confirmation in writing that the amount demanded is what the creditor claims)
- Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (factors governing default judgment)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim for relief)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)