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Hernandez v. Wells Fargo Financial National Bank

United States District Court, D. Nevada

April 15, 2014

CARLOS HERNANDEZ, Plaintiff,
v.
WELLS FARGO FINANCIAL NATIONAL BANK, Defendant.

ORDER

ROBERT C. JONES, District Judge.

This Fair Credit Reporting Act case concerns the accuracy of a "charge-off" designation on Plaintiff's credit report. Defendant Wells Fargo has moved to dismiss the first amended complaint ("FAC") (ECF No. 17). For the reasons stated herein, the motion to dismiss is granted.

I. FACTS AND PROCEDURAL HISTORY

Hernandez failed to pay on his Wells Fargo credit card account for over 120 days. (FAC, Ex. 1, ECF No. 13, at 8). As a result, in 2009, Defendant Wells Fargo "transferred [the account] to Security Credit Services, LLC" ("SCS") for collection. (FAC ¶ 6, ECF No. 13, at 2). Hernandez alleges that he "fully satisfied" the underlying account with SCS during 2010. ( Id. ¶ 7). On June 6, 2013, he sent a notice of dispute to Experian Information Services, LLC ("Experian") and to Wells Fargo contesting Wells Fargo's reporting of his account as a chargeoff. ( See id. ¶ 8). In the notice, he requested that Wells Fargo delete the charge-off designation or revise it to "full satisfaction after charge-off." (FAC, Ex. 1, ECF No. 13, at 6). Hernandez alleges that Experian notified Wells Fargo of the dispute. (FAC ¶ 11, ECF No. 13, at 2).

An Experian credit report dated May 17, 2013, described the account's payment status as a "[c]harge off" but noted that the "[a]ccount [is] in dispute - reported by subscriber." (FAC, Ex. 1, ECF No. 13, at 8). On September 3, 2013, Hernandez procured a second Experian report. (FAC, ¶ 15; FAC Ex. 4, ECF No. 13, at 12). In this report, Wells Fargo again described the account's payment status as a "charge off" but revised the note: "[s]ubscriber reports dispute resolved - consumer disagrees." (FAC Ex. 4, ECF No. 13, at 12).

On December 13, 2013, Hernandez initiated this action, asserting a single cause of action under § 1681s-2(b) of the Fair Credit Reporting Act. (FAC, ¶ 29, ECF No. 13, at 5). Specifically, Hernandez complains that Wells Fargo has "willfully and/or negligently, " ( id. ), erroneously reported the status of his account by "fail[ing] to report the account as either transferred or fully paid. " ( id. ¶¶ 8-9 (emphasis in the original)). Wells Fargo has moved to dismiss the FAC, arguing that, as a matter of law, it accurately reported the status of the account such that a claim under § 1681s-2(b) cannot be maintained. The Court now considers the pending motion.

II. LEGAL STANDARD

When considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, the court must accept as true all factual allegations in the complaint as well as all reasonable inferences that may be drawn from such allegations. LSO, Ltd. v. Stroh, 205 F.3d 1146, 1150 n.2 (9th Cir. 2000). Such allegations must be construed in the light most favorable to the nonmoving party. Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). In general, the court should look only to the contents of the complaint during its review of a Rule 12(b)(6) motion to dismiss. However, the court may consider documents attached to the complaint or referred to in the complaint whose authenticity no party questions. Id .; see Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987).

The analysis and purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim is to test the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997) (quotations omitted). To avoid a Rule 12(b)(6) dismissal, a complaint does not need detailed factual allegations; rather, it must plead "enough facts to state a claim to relief that is plausible on its face." Clemens v. Daimler Chrysler Corp., 534 F.3d 1017, 1022 (9th Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964, 167 L.Ed.2d 929 (2007)); Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (stating that 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"). Even though a complaint does not need "detailed factual allegations" to pass Rule 12(b)(6) muster, the factual allegations "must be enough 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)." Twombly, 550 U.S. at 555, 127 S.Ct. at 1965. "A pleading that offers labels and conclusions' or a formulaic recitation of the elements of a cause of action will not do." Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949. "Nor does a complaint suffice if it tenders naked assertion[s]' devoid of further factual enhancements.'" Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. at 1966).

III. ANALYSIS

Wells Fargo contends that the complaint must be dismissed because, as a matter of law, it accurately reported Hernandez's failure to pay his account as a charge-off. The Court agrees.

Congress enacted the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681 et seq., in 1970 "to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007). To ensure that credit reports are accurate, the FCRA imposes certain duties on parties who furnish information to credit reporting agencies ("CRAs"). Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009).

Section 1681s-2(a) describes the "[d]uty of furnishers to provide accurate information, " and subsection (b) establishes the duties of furnishers after receiving notice of a dispute. 15 U.S.C. § 1681s-2. Among other responsibilities, subsection (a) prohibits furnishers from reporting information with actual knowledge of errors and requires furnishers to correct and update information, and provide notice of disputes and closed accounts. 15 U.S.C. § 1681s-2(a)(1)(A), (2), (3). Subsection (b) provides that the furnisher shall, after receiving notice of a dispute from the CRA, conduct an investigation of the disputed information; review all relevant information provided by the CRA; report the results of the investigation to the CRA; and, if the investigation reveals that the information is incomplete or inaccurate, report those results to all other CRAs to which the furnisher has provided credit information. 15 U.S.C. § 1681s-2(b)(1)(A)-(D); Gorman, 584 F.3d at 1154.

While the "[d]uties imposed on furnishers under subsection (a) are enforceable only by federal or state agencies, " §§ 1681n and 1681o provide a limited private right of action that applies to § 1681s-2(b)'s requirement to investigate disputes and report inaccuracies. Id. (citing 15 U.S.C. §§ 1681s-2(c) and (d)). If, however, a plaintiff fails to allege an initial inaccuracy in reporting, no claim under § 1681s-2(b) exists. Chiang v. Verizon New England Inc., 595 F.3d 26, 38 (1st Cir. 2010) (holding that, due to their similar construction, a § 1681s-2(b) claim includes the same "factual inaccuracy" requirement as a § 1681i claim); Carvalho v. Equifax Info. Servs., LLC, 615 F.3d 1217, 1230 (9th Cir. 2010) ("Although the FCRA's reinvestigation provision, 15 U.S.C. § 1681i, does not on its face require that an actual inaccuracy exist for a plaintiff to state a claim, many courts, including our own, have imposed such a requirement."); see also DeAndrade v. Trans Union LLC, 523 F.3d 61, 67 (1st Cir. 2008) (collecting cases). The inaccuracy requirement comports with the purpose of the FCRA, which is "to protect consumers from the transmission of inaccurate information about them." Gorman, 584 F.3d at 1157. Nonetheless, a consumer report that is "technically accurate" may still be deemed "incomplete or ...


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