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Marino v. Ocwen Loan Servicing LLC

United States District Court, D. Nevada

March 3, 2017


         Member Cases: 3:16-cv-00483-MMD-WGC 3:16-cv-00498-MMD-WGC 3:16-cv-00603-MMD-WGC



         I. SUMMARY

         The four consolidated cases before the Court assert similar claims under the Fair Credit Reporting Act (“FCRA”) to challenge a loan servicer's alleged practice of obtaining consumer credit information without authorization after the loans had been discharged in bankruptcy.[1] (ECF No. 47.) In each case, the loan servicer, Defendant Ocwen Loan Servicing, LLC's (“Ocwen”), has moved to dismiss (“Motions”) based on lack of subject matter jurisdiction (Marino, ECF No. 23; Horton, ECF No. 18; Farrin, ECF No. 25; Hardin, ECF No. 27.) The Motions all raise the same issue - whether impermissibly obtaining a consumer's credit information under the FCRA results in a concrete harm for purposes of Article III standing. Plaintiffs each filed responses to the Motions (Marino, ECF No. 25; Horton, ECF No. 26; Farrin, ECF No. 37; Hardin, ECF No. 31) and Ocwen filed replies in three of the cases (Marino, ECF No. 32; Horton, ECF No. 28; Hardin, ECF No. 34).

         The Court issued a minute order on February 10, 2017, (Marino, ECF No. 61) requesting supplemental briefing in light of a recently decided Ninth Circuit opinion, Syed v. M-I, LLC, 846 F.3d 1024(9th Cir. 2017), that addressed procedural standing and statutory damages under the FCRA. The Court has reviewed the parties' supplemental briefs (Marino, ECF Nos. 62, 65).

         In addition, the parties have filed several motions to supplement. (Marino, ECF Nos. 54, 60, 63.) The Court has reviewed these motions as well as responses thereto (Marino, ECF Nos. 56, 64, 67). All three motions are granted pursuant to Local Rule LR 7-2(g).

         For the reasons discussed below, the Motion in Horton is granted only with regards to the claim for negligent noncompliance with the FCRA. The Court will give Horton leave to amend to allege facts demonstrating a concrete injury and/or actual damages. The Motions in Marino, Hardin, and Farrin are denied.


         Plaintiffs each bring a class action lawsuit against Ocwen based on almost identical factual allegations: each Plaintiff discharged in bankruptcy a prior loan that had been serviced by Ocwen, yet Ocwen continued, and possibly still continues, to obtain Plaintiffs' credit information from credit reporting agencies (“CRAs”) without a legally permissible purpose and without Plaintiffs' authorization as required under the FCRA. See 15 U.S.C § 1681b. All Plaintiffs allege that Ocwen obtained their credit reports under false pretenses or knowingly without a permissible purpose, each willful violations under the statute. See §§ 1681n & 1681q.

         Marino alleges that he discharged a mortgage loan that had been serviced by Defendant in Chapter 7 bankruptcy. (Marino, ECF No. 1 at 3.) After his relationship with Defendant ended, Marino did not seek credit of any type from Defendant, Defendant knew of the discharge of the loan, and Defendant obtained information from a CRA twice about Marino without his authorization. (Id.) Farrin's allegations are practically the same: Defendant knowingly accessed Farrin's credit report after his loan had been discharged and did so without Farrin's authorization or a permissible reason as required under the FCRA. (Farrin, ECF No. 1 at 3.)

         Similarly, Horton asserts that his relationship with Ocwen was terminated after his mortgage loan was discharged in bankruptcy. Horton also includes allegations that Ocwen makes “batch” pulls of credit reports on a quarterly basis for “account review” purposes, regardless of whether the consumer still maintains a relationship with them. (Horton, ECF No. 13 at 4, 5.) Unique to Horton's complaint is a claim for negligent noncompliance with the FCRA.

         The complaint in Hardin presents similar but distinguishable factual circumstances. While they similarly discharged a loan to secure a mortgage that Defendant had serviced, the Hardins also allege that Defendant harassed them, invaded their privacy, falsely reported their credit status, and violated their consumer protection rights. (Hardin, ECF No. 2 at 2.) Defendant, however, is moving only to dismiss Count I of their complaint -willful violation of the FCRA - which relates to the alleged impermissible credit pulls conducted after discharge of the loan and after termination of the Hardins' relationship with Ocwen. (Hardin, ECF No. 27-1 at 1.)

         Ocwen's Motions assert that the Court lacks subject matter jurisdiction because a legally impermissible pull of an individual's credit report does not give rise to a concrete injury or actual damages that would give rise to Article III standing.


         A. 12(b)(1) Standard

         Rule 12(b)(1) of the Federal Rules of Civil Procedure allows defendants to seek dismissal of a claim or action for a lack of subject matter jurisdiction. Dismissal under Rule 12(b)(1) is appropriate if the complaint, considered in its entirety, fails to allege facts on its face that are sufficient to establish subject matter jurisdiction. In re Dynamic Random Access Memory (DRAM) Antitrust Litigation, 546 F.3d 981, 984-85 (9th Cir. 2008). Because Plaintiffs are invoking the court's jurisdiction, they bear the burden of proving that the case is properly in federal court. See In re Ford Motor Co./Citibank (South Dakota), N.A.,264 F.3d 952, 957 (9th Cir. 2001) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. ...

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