ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
On November 14, 2011, Defendant Bank of America, N.A., as successor by merger to BAC Home Loans Servicing, L.P., (“BAC” or “Defendant”) filed a motion to dismiss Plaintiff Ronnie Miller’s first amended complaint (“FAC”) for failure to state a claim upon which relief can be granted. [Doc. No. 12-1.]
Background
This action arises from events related to Plaintiffs short sale of real property located at 2436 Adirondack Row # 2, San Diego, California 92139 (the “Property”), which resulted in Defendant BAC reporting inaccurate information on Plaintiffs credit report. [FAC, Doc. No. 1, Exh. A. ¶ 11.]
In or around February 2010, Plaintiff checked his credit report in anticipation of refinancing his primary residence later that year and learned for the first time that Defendant incorrectly reported the short sale of the Property as a foreclosure. [Id. ¶ 18.] Plaintiff contacted Defendant regarding the inaccuracy and received two letters in response, dated April 19, 2010 [Doc. No. 1, Exh. 1] and April 26, 2010 [ Id. Exh. 2], each stating his request for credit correction was approved and formal requests were sent to the credit reporting agencies, Equifax Credit Information Services, Experian Services Corporation, TransUnion Corporation, and Innovis Data Solutions. [FAC ¶ 19.] Thereafter, Plaintiff called Defendant on June 7, July 2,
On October 26, 2010, Plaintiff and his loan officer ran a credit report to determine Plaintiff’s eligibility to refinance the loan on his primary residence. [Id. ¶ 32.] The report showed two 30-day late payments and a foreclosure on the Property. [Id. ¶ 33.] Plaintiff alleges these negative marks on his credit report made him ineligible to refinance his primary residence loan. [Id. ¶ 36.] Accordingly, Plaintiff notified Equifax, TransUnion, and Experian on November 9, 2010 about Defendant BAC’s negative and inaccurate reporting. [Id. ¶ 40.] All three agencies replied that the credit report on the Property did not show any late payments. [Id. ¶¶ 41^13.] Plaintiff therefore alleges the credit reporting agencies are “fraudulently giving out misinformation to the lenders so as to allow the lenders to deny credit and/or to allow the lenders to offer higher interest rates for consumers.” [Id. ¶ 45.] Plaintiff also asserts Defendant BAC continues to willfully and inaccurately report Plaintiffs credit history with respect to the Property. [Id. ¶ 44.]
Plaintiff filed this action in the Superior Court of California, San Diego Judicial District, Central Division on September 23, 2011. [Doc. No. 1 ¶ 1.] Plaintiffs FAC alleges seven causes of action for: (1) Violation of the Consumer Credit Reporting Agencies Act, Cal. Civ.Code § 1785.25(a); (2) Violation of the Consumer Credit Reporting Agencies Act, Cal. Civ.Code § 1785.14(b); (3) Violation of Consumer Credit Reporting Agencies Act, Cal. Civ. Code § 1785.16; (4) Negligence; (5) Intentional infliction of emotional distress; (6) Negligent infliction of emotional distress; and (7) Violation of California’s Unfair Competition Law, Cal. Bus. & Prof.Code §§ 17200 et seq. On November 7, 2011, Defendant Equifax Inc. removed the complaint to this Court based on federal question jurisdiction because Plaintiffs Unfair Competition Law claim is premised on violations of federal law. [Id.] On November 14, 2011, Defendant BAC filed a motion to dismiss Plaintiffs entire FAC under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
Legal Standard
A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint. Navarro v. Block,
In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must construe them in the light most favorable to the nonmoving party. Cahill v. Liberty Mut. Ins. Co.,
Discussion
I. California’s Unfair Competition Law
Plaintiffs seventh cause of action asserts Defendant BAC violated California’s Unfair Competition Law (“UCL”) by using unfair, unlawful, and fraudulent business practices with respect to the credit reporting of the Property. [FAC ¶¶ 84-85.] While Plaintiffs complaint contains minimal detail, his allegations are based on two primary theories. First, Plaintiff asserts Defendant violated the UCL’s unlawful prong by providing Plaintiff and his representatives with false, deceptive and misleading information in violation of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. 1692 et seq. [Id. ¶ 87.] Next, Plaintiff alleges Defendant failed to comply with provisions in the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. 1681 et seq., by failing to investigate and correctly report credit information, which violates the unlawful, fraudulent, and unfair prongs of the UCL. [Id. ¶¶ 84-85.] In response, Defendant moves to dismiss Plaintiffs entire UCL claim on the ground that it is preempted by section 1681t(b)(1)(F)(ii) of the FCRA. [Doc. 12-1, p. 4.]
(A) Unlawful Business Practices Predicated on FDCPA Violations
The FDCPA aims to eliminate abusive debt collection practices by prohibiting debt collectors from using false, deceptive, or misleading practices in connection with the collection of debts. 15 U.S.C. §§ 1692(e), 1692e; Winter v. I.C. Sys.,
Narog is instructive. In Narog, the plaintiff alleged the defendant inaccurately reported a debt to credit reporting agencies in violation of the FDCPA. Id. The court granted the defendant’s motion to dismiss without leave to amend because the conduct alleged occurred after the debt
As in Narog, Defendant BAC’s misconduct is not actionable under the FDCPA because it occurred after Plaintiffs debt with Defendant was settled. Plaintiff alleges Defendant made false statements regarding the status of his request to correct the inaccuracies in his credit report beginning in April 2010. [FAC ¶¶ 20, 22, 25-26, 28-31.] However, when Plaintiff sold the Property via short sale in November 2008, Plaintiff satisfied its debt to BAC. [Id. ¶¶ 12-13.] Thus, BAC’s allegedly wrongful conduct occurred more than a year after the debt was settled. The credit reports from October and December 2010 attached to Plaintiffs complaint confirm that the BAC account is closed and has a current balance of $0. [Id. Exhs. 3-4.] Therefore, Plaintiff cannot state a claim under the FDCPA because BAC’s allegedly false statements cannot be deemed to be “in connection” with a present debt collection proceeding. Because Plaintiff cannot seek recovery under the FDCPA for misconduct that occurred after the pertinent debt was settled, the Court concludes leave to amend would be futile and Plaintiffs claim is subject to dismissal with prejudice. In addition, the alleged FDCPA violation cannot serve as a predicate act for a UCL claim.
(B) Unlawful Business Practices Predicated on FCRA Violations
The FCRA requires credit reporting agencies to adopt reasonable procedures related to the collection, communication, and use of consumer credit information to ensure fair and accurate credit reporting. 15 U.S.C. § 1681e; Roybal v. Equifax,
Section 1681s-2 sets forth two categories of duties for furnishers of credit information. Wang v. Asset Acceptance LLC,
Second, under subsection (b), when a furnisher is notified by a credit reporting agency that a consumer disputes the reported information, the furnisher is required to review, investigate, and compile a report regarding the disputed information. 15 U.S.C. § 1681s-2(b); Wang,
In this case, Plaintiff predicates a UCL claim on allegations that Defendant violated subsections (a) and (b), because BAC reported inaccurate information to the credit reporting agencies and failed to conduct a reasonable investigation after being notified that Plaintiff disputed the report. [FAC ¶¶ 84-86.] Plaintiff cannot bring a private cause of action under subsection (a), but may be able to bring a successful private action under subsection (b). Plaintiff notified the credit reporting agencies in April, June, and November 2010 that he disputed the information reported by Defendant BAC, but Defendant failed to investigate and remedy the inaccurate report. [Id. ¶¶ 21, 23-24, 40.] However, Plaintiff has not pled an independent cause of action under the FCRA. Instead, Plaintiff alleges Defendant’s conduct in violation of the FCRA constitutes a UCL claim. Accordingly, the Court must examine whether the FCRA preempts Plaintiffs theory under the UCL.
In an effort to maintain a uniform set of duties across all furnishers of credit information, Congress included an express preemption clause in the FCRA. Gorman,
Here, Plaintiffs allegations against Defendant BAC relate exclusively to the responsibilities of furnishers of credit information as set forth under sections 1681— 2(a) and (b). Plaintiff asserts BAC’s failure to conduct a reasonable investigation after he notified BAC of the discrepancy, in violation of section 1681s-2(b), constitutes an unlawful business practice prohibited by the UCL. [FAC ¶¶ 84, 86.] However, because the FCRA expressly preempts all state common law and statutory claims regulating the duties of furnishers of credit information, Plaintiffs theory under the UCL is completely preempted. Accordingly, Plaintiffs UCL claim is dismissed with prejudice because amendment would be futile.
In his first cause of action, Plaintiff alleges Defendant BAC violated section 1785.25(a) of the California Consumer Credit Reporting Act (“CCRA”) by knowingly furnishing inaccurate information to the national consumer credit reporting agencies. [FAC ¶¶ 50, 52.]
Generally, section 1782.31 of the CCRA allows private plaintiffs to bring an action for damages suffered as a result of violations of the Act. Cal. Civ.Code § 1785.31. However, section 1785.31 only extends to private plaintiffs bringing CCRA claims against credit reporting agencies and users of information. Pulver v. Avco Fin. Serv.,
III. Common Law Tort Claims
(A) Negligence
In his fourth cause of action for negligence, Plaintiff asserts Defendant BAC breached its duty of care by not finalizing an investigation into Plaintiffs request for credit correction and reporting inaccurate information to the national credit reporting agencies. [FAC ¶¶ 44, 70.] Like the UCL claim, Defendant argues the FCRA preempts Plaintiffs negligence claim and that it should be dismissed because it relates exclusively to the duties set forth under section 1681s-2. [Doc. 12-1, p. 3.] In response, Plaintiff asserts the FCRA does not preempt his claim because he adequately pled “willful intent to injure” as required under section 1681h(e) of the FCRA. [Doc. 17, pp. 5-6.]
Section 1681h(e) exempts certain state tort claims from preemption, if the plaintiff pleads the defendant acted with malice or willful intent to injure. See 15 U.S.C. § 1681h(e) (exempting negligence, defamation, and invasion of privacy common law claims). District courts have grappled with defining a workable relationship between sections 1681h(e) and 1681t(b)(1)(F). See El-Aheidab v. Citibank (South Dakota), N.A.,
In El-Aheidab, the District Court for the Northern District of California considered how to reconcile sections 1681h(e) and 1681t(b)(1)(F). The Court finds the rationale in El-Aheidab persuasive. The district court concluded section 1681t(b)(1)(F) completely preempts all state law causes of action, despite the exceptions noted in section 1681h(e), for three primary reasons. El-Aheidab,
Second, the district court concluded section 1681t(b)(1)(F) applies to common law negligence claims because under the plain language of the statute — “laws of any state” — literally encompasses state statutory and common law claims. Id. at *7-8,
Applying the rationale in El-Aheidab, Plaintiffs negligence claim is preempted by section 1681t(b)(1)(F). BAC negligently reported inaccurate information to the credit reporting agencies and failed to investigate and remedy Plaintiffs request for a credit correction. [FAC ¶¶ 44, 70.] Plaintiffs allegations put his negligence claim within the purview of section 1681s-2, because they clearly involve duties and responsibilities required of furnishers of credit information. 15 U.S.C. § 1681s-2(a) (furnishers must accurately report credit information); Id. at § s-2(b) (furnishers must undergo an investigation after receiving notice of inaccurate reporting). Because the wrongful conduct is regulated under section 1681s-2, section 1681t(b)(1)(F) applies to preempt Plaintiffs negligence claim despite his allegations that Defendant acted with the willful
(B) Intentional and Negligent Infliction of Emotional Distress
Plaintiff alleges claims for intentional and negligent infliction of emotional distress based on BAC’s conduct during the course of Plaintiffs contractual relationship with Defendant. [FAC ¶ 76.] As discussed above in section 111(A), Plaintiffs state-based emotional distress claims are preempted by the FCRA and subject to dismissal with prejudice, to the extent they are based on BAC’s inaccurate reporting and failure to investigate. [FAC ¶ 73.] Moreover, to the extent these claims are based on conduct that would otherwise be actionable, Defendant correctly argues Plaintiffs emotional distress claims are barred by the statute of limitations. [Doc. No. 12-1, p. 5.]
In California, intentional and negligent infliction of emotional distress claims have a two-year statute of limitations. Cal. Civ. Proc. § 335.1; Walker v. Boeing Corp.,
Conclusion
For the reasons set forth above, the Court GRANTS Defendant’s motion to dismiss [Doc. No. 12-1], and ORDERS as follows:
(i) Plaintiffs first cause of action is DISMISSED WITHOUT PREJUDICE and with leave to amend.
(ii) Plaintiffs fourth, fifth, sixth, and seventh causes of action are DISMISSED WITH PREJUDICE and without leave to amend.
(iii) If Plaintiff wishes to proceed with this action, he must file a second amended complaint that remedies the deficiencies noted above, no later than April 2, 2012.
IT IS SO ORDERED.
Notes
. Defendants Experian Services Corporation, TransUnion Corporation, and Equifax Inc. answered in November 2011. [See Doc. Nos. 9-10, 15.]
. Because this matter is before the Court on a motion to dismiss, the Court must accept as true the allegations of the complaint in question. Hosp. Bldg. Co. v. Rex Hosp. Tr.,
. While it is unclear whether Plaintiff purchased the Property as an investment, it appears not to be his primary residence.
. Defendant erroneously cites 15 U.S.C. § 1681t(b)(1)(F)(ii) as 15 U.S.C. § 181t(b)(1)(F)(ii).
. Section 16811(b)(1)(F) of the FCRA provides an exception for claims brought under section 1785.25(a) of the California Consumer Credit Reporting Act. 15 U.S.C. § 1681t(b)(1)(F)(I). However, as explained below in section II, Plaintiff cannot adequately state a claim under this statute.
. Plaintiff’s second and third causes of action for violations of the CCRA are brought against Defendants Experian, TransUnion, and Equifax. [FAC ¶¶ 54, 62.]
. In his Opposition to Defendant’s Motion to Dismiss, Plaintiff provides no indication that he could not have discovered Defendant's conduct earlier, except with respect to the inaccurate credit reporting, which is preempted by the FCRA.