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Bilderback v. Ocwen Loan Servicing, LLC

United States District Court, D. Nevada

September 14, 2017

Dianne Bilderback, Plaintiff
Ocwen Loan Servicing, LLC, Defendant



         Plaintiff Dianne Bilderback sues Ocwen Loan Servicing, LLC for inaccurately reporting to credit-reporting agencies a mortgage account that Bilderback had allegedly settled. Bilderback claims that Ocwen's report has two inaccuracies that violate the Fair Credit Reporting Act (FCRA): (1) the account is reported as charged off with a remaining balance due even though she settled the account; and (2) Ocwen does not report that Bilderback disputed the account's status as a charge-off rather than paid-in-full. Ocwen moves to dismiss, arguing that: (1) the attempted accord and satisfaction was ineffective, so the account was not settled and was indeed charged off; and (2) any disputes regarding Ocwen's characterization of the account are meritless, so they don't need to be reported.[1] Because the attempted settlement of Bilderback's mortgage is an ineffective accord and satisfaction under Nevada common law, Ocwen's reporting is accurate and Bilderback fails to state a claim upon which relief can be granted. I therefore grant the motion and dismiss Bilderback's claims with prejudice.


         Like many Nevadans, Bilderback found herself “underwater” after the real-estate bubble burst.[2] She sent a check to Ocwen for 10% of the principal balance on a mortgage account as an offer to settle it.[3] The check was accompanied by a letter explicitly stating that Ocwen was “authorized to deposit the check, provided that [Ocwen] do so with the understanding that it constitutes payment in full. Your negotiation and depositing of the check, even if ‘under protest, ' would constitute your acceptance of our offer.”[4]

         Ocwen deposited the check, subtracted its amount from the balance, reported that the account had been charged off, and continued to report that the remaining balance was due and owing on the account.[5] Bilderback disputed Ocwen's reporting with the credit-reporting agencies (TransUnion, Equifax, and Experian) because Ocwen was not reporting that the account was paid in full as conditioned by the letter.[6] Eventually, after Ocwen investigated the disputes, it deleted the account from its report to TransUnion but continued to report the account-without any mention of a settlement or subsequent disputes-to the other reporting agencies.[7]


         A. Motion-to-dismiss standard

         Federal Rule of Civil Procedure 8 requires every complaint to contain “[a] short and plain statement of the claim showing that the pleader is entitled to relief.”[8] While Rule 8 does not require detailed factual allegations, the properly pled claim must contain enough facts to “state a claim to relief that is plausible on its face.”[9] This “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation”; the facts alleged must raise the claim “above the speculative level.”[10] In other words, a complaint must make direct or inferential allegations about “all the material elements necessary to sustain recovery under some viable legal theory.”[11]

District courts employ a two-step approach when evaluating a complaint's sufficiency on a Rule 12(b)(6) motion to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint, recognizing that legal conclusions are “not entitled to the assumption of truth.”[12] Mere recitals of a claim's elements, supported only by conclusory statements, are insufficient.[13] Second, the court must consider whether the well-pled factual allegations state a plausible claim for relief.[14] A claim is facially plausible when the complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct.[15] A complaint that does not permit the court to infer more than the mere possibility of misconduct has “alleged-but not shown-that the pleader is entitled to relief, ” and it must be dismissed.[16]

         B. Ocwen's report is not inaccurate under the FCRA.

         To state a claim under the FCRA, Bilderback must show that: “(1) [s]he found an inaccuracy in [her] credit report; (2) [s]he notified a credit reporting agency; (3) the credit reporting agency notified the furnisher of the information about the dispute; and (4) the furnisher failed to investigate the inaccuracies or otherwise failed to comply with the requirements of 15 U.S.C. § 1681s-2(b)(1)(A)-(E).”[17] The parties primarily disagree on whether the first and fourth elements are satisfied, but because the fourth element is dependent on the first, I only thoroughly discuss the first.

         Bilderback claims that the credit report is inaccurate because she settled the account with a valid accord and satisfaction. Ocwen disagrees and argues that the report is accurate because the accord and satisfaction was ineffective, and the account truly was charged off as a loss. Bilderback responds that Ocwen needs to report that she is disputing the charge-off label (because, to her, it should say “paid in full for less than the full balance”); Ocwen counters that the charge-off label is accurate, Bilderback's dispute is therefore without merit, and the law does not require it to report a meritless dispute.

         Deciding this motion and the viability of Bilderback's claims depends on the legal significance of the check and accompanying letter. If Bilderback plausibly alleges that it constituted an accord and satisfaction under Nevada contract law, then she also plausibly alleges the “inaccuracy” element of her FRCA claim; otherwise her claim fails and must be dismissed.[18]

         1. Bilderback has not pled a plausible accord and satisfaction.

         In Nevada, an accord is “an agreement whereby one of the parties undertakes to give or perform, and the others to accept, in satisfaction of a claim, liquidated or in dispute, and arising either from contract or from tort, something other than or different from what he is, or considers himself, entitled to.”[19] The party claiming that an accord and satisfaction was reached “must bear the burden of proof and must establish clearly that there was a meeting of the minds of the parties, accompanied by a sufficient consideration.”[20]

         a. Insufficient consideration

         Ocwen argues that the check was insufficient consideration to support a valid accord and satisfaction, and I agree. “Consideration is not adequate when it is a mere promise to perform that which the promissor is already legally bound to do.”[21] It is undisputed that Bilderback legally owed the balance on the mortgage; the check and accompanying letter were an offer to satisfy 10% of her legal obligation as if it were 100%. Ocwen received nothing out of the “deal” that it was not already entitled to, so the accord and satisfaction fails for insufficient consideration.

         b. No meeting of the minds

         The accord and satisfaction also fails for the additional reason that Bilderback has not pled a meeting of the minds between Ocwen and herself. Even at this motion-to-dismiss stage-where I accept all of the non-moving party's allegations as true-it is clear that Ocwen did not accept the accord and satisfaction despite the language in the letter.

         The Nevada Supreme Court's decision in Pierce Lathing Co. v. ISEC, Inc. illustrates the point.[22] Pierce was hired to paint and install moldings at Caesar's Palace.[23] Because of unforseen circumstances, Pierce had to perform additional work that was not initially contemplated by the parties.[24] Pierce submitted invoices for the extra work, and ISEC declined to pay.[25] A couple weeks later, ISEC sent Pierce two checks totaling $12, 028.70 along with a letter that stated, in relevant part: “Execution of this check will constitute full satisfaction of all obligations owed by ISEC, Incorporated to Pierce Enterprises.”[26] Pierce deposited the checks along with a disclaimer that said: “The above terms are not accepted by payee, payee claims extra work in the amount of $71, 031.00.”[27] Pierce eventually filed suit against ISEC for the remainder and raised essentially the same argument that Ocwen raises here: the accord and satisfaction was ineffective-despite the language in ISEC's letter-so ISEC was still liable.

         The Pierce court then considered whether there was a meeting of the minds to support an accord and satisfaction and analyzed two approaches. “In some jurisdictions, conduct revealing a subjective intent not to accept the lower payment as full discharge of their claims is deemed immaterial. The common law in these jurisdictions is that negotiation ‘under protest' of a conditionally tendered check constitutes an accord and satisfaction as a matter of law.”[28] Under this approach, the creditor “can either accept the check on the debtor's terms, or refrain from negotiating the check and seek the entire disputed amount through the judicial process.”[29] The Pierce court declined to follow this approach because it “would often result in unnecessary punishment [to] the creditor. Specifically, it would disallow any creditor access to funds which the debtor already concedes is owed because . . . even a disclaimer would not assist in preserving the creditor's right to litigate.”[30]

         The facts in this case, as alleged by Bilderback, clearly indicate that there was no meeting of the minds between her and Ocwen. Although Ocwen did not include a disclaimer like Pierce did when it deposited the check, Ocwen continued to report the account as charged off with a balance still due and owing. Then, when Bilderback disputed the report, Ocwen verified that the report was accurate. Based on these allegations, and applying Nevada's ...

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