In Blakeney v. Experian Information Solutions, 2016 WL 1535085, at *1-2 (N.D.Cal., 2016), Judge Koh grants a Motion to Dismiss filed by a FCRA furnisher who was alleged to have failed to properly re-investigate a dispute regarding an account that passed through Chapter 13.
On November 7, 2014, Plaintiff filed for Chapter 13 bankruptcy. ECF No. 1 (“Compl.”) ¶ 5. “Chapter 13 of the Bankruptcy Code affords individuals receiving regular income an opportunity to obtain some relief from their debts while retaining their property. To proceed under Chapter 13, a debtor must propose a plan to use future income to repay a portion (or in the rare case all) of his debts over the next three to five years.” Bullard v. Blue Hills Bank, 135 S. Ct. 1686, 1690 (2015). “If the bankruptcy court confirms the plan and the debtor successfully carries it out, he receives a discharge of his debts according to the plan.” Id. at 1690. In the instant case, Plaintiff’s bankruptcy plan was confirmed on May 30, 2015. Compl. ¶ 5. The complaint provides no details on Plaintiff’s bankruptcy plan. See generally Compl. Plaintiff does not allege that Plaintiff has successfully paid her debt according to the plan, or that Plaintiff’s debt has been discharged. On September 3, 2015, Plaintiff ordered a three-bureau credit report from Equifax, Inc. (“Equifax”). Id. ¶ 6. In the report, Plaintiff allegedly “noticed several tradelines all reporting a misleading and or inaccurate balance, past due balance, and or monthly payment owed on the account and or listing of the account as in collections and or charged off rather than included in [b]ankruptcy.” Id. ¶ 7. In response to the report, Plaintiff disputed the allegedly inaccurate tradelines with the three credit reporting bureaus: Equifax, Experian Information Solutions, Inc. (“Experian”), and TransUnion, LLC (“TransUnion”).2Id. ¶ 8. According to Plaintiff, each credit reporting bureau sent Credit Recovery Associates a notification that Plaintiff was disputing the accuracy of the credit report. Id. ¶ 9. On November 24, 2015, Plaintiff ordered a three-bureau credit report from Equifax. Id. ¶ 14. Plaintiff allegedly learned that the credit report still reported “the misleading and or inaccurate statements.” Id. ¶ 15. Plaintiff alleges that Credit Recovery Associates failed to conduct a “reasonable investigation” into Plaintiff’s dispute and again “reported falsely” to Experian, Equifax, and TransUnion a “misleading and or inaccurate balance or past due balance.” Id. ¶ 10. Specifically, Plaintiff alleges that Credit Recovery Associates “supplied inaccurate and misleading information to the Credit Reporting Agencies by reporting, after Plaintiff’s [C]hapter 13 filing and confirmation of the repayment plan, that the account was in collections, charged off, and that both a balance and past due balance were owed to Defendant Credit Recovery Associates, despite the treatment of its claims under the terms of Plaintiff’s confirmed [C]hapter 13 repayment plan.” Id. ¶
Judge Koh found no inaccuracy or issues with regard to the furnisher’s reinvestigation of the Account, as pleaded.
Apart from the private right of action, the Court identifies additional reasons to dismiss Plaintiff’s FCRA claim. As to Plaintiff’s first theory of liability, the FCRA requires a furnisher to “conduct an investigation with respect to the disputed information” after the furnisher receives notice of a dispute from a consumer reporting agency. 15 U.S.C. § 1681s-2(b)(1). The Ninth Circuit has held that such an investigation must be “reasonable.” Gorman, 584 F.3d at 1157. “[W]hether a reinvestigation conducted by a furnisher in response to a consumer’s notice of dispute is reasonable depends in large part on the allegations provided to the furnisher by the credit reporting agency.” Id. at 1160 (ellipses omitted). Plaintiff’s only allegation related to this theory of liability is that Credit Recovery Associates “failed to conduct a reasonable investigation.” Compl. ¶ 10; see also id. ¶ 24. Plaintiff does not allege any facts in support of this assertion. Nor is this theory explained in Plaintiff’s opposition to the instant motion, even though the opposition notes that Plaintiff “received a reinvestigation report indicating what attempts had been made to correct the perceived inaccuracies.” Opp. at 2-3. Instead, Plaintiff seems to assume that Credit Recovery Associates’ investigation must have been unreasonable if Credit Recovery Associates reported inaccurate information after the investigation. However, the Ninth Circuit has explicitly rejected this argument. In Gorman, the Ninth Circuit explained that “the requirement that furnishers investigate consumer disputes is procedural. An investigation is not necessarily unreasonable because it results in a substantive conclusion unfavorable to the consumer, even if that conclusion turns out to be inaccurate.” Gorman, 584 F.3d at 1161. Accordingly, Plaintiff’s conclusory allegation that Credit Recovery Associates “failed to conduct a reasonable investigation” is insufficient to plausibly allege that Credit Recovery Associates conducted an unreasonable investigation in violation of the FCRA. See Iqbal, 556 U.S. at 678; see also Abbot, 2016 WL 1365950, at *4 (dismissing virtually identical FCRA claim for failure to conduct a reasonable investigation). As to Plaintiff’s second theory of liability, the FCRA requires a furnisher, upon receiving notice of a dispute, to report the results of the investigation and “if the investigation finds that the information is incomplete or inaccurate, report” and correct those results. 15 U.S.C. § 1681s-2(b)(1)(C)–(E); see also Drew v. Equifax Info. Servs., LLC, 690 F.3d 1100, 1106 (9th Cir. 2012) (“Upon being notified of a dispute by a [credit reporting agency], a furnisher must investigate and, if necessary, correct the information it reports.”). Information can be “incomplete or inaccurate” within the meaning of the FCRA “because it is patently incorrect, or because it is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.” Gorman, 584 F.3d at 1163. Accordingly, omitting the disputed nature of a debt, if the dispute could materially alter how the reported debt is understood, may be “incomplete or inaccurate” reporting. See id. at 1163–64. In the instant case, Plaintiff alleges that Credit Recovery Associates reported “that the account was in collections, charged off, and that both a balance and past due balance were owed to Defendant Credit Recovery Associates, despite the treatment of its claims under the terms of Plaintiff’s confirmed [C]hapter 13 repayment plan.” Compl. ¶ 26. Plaintiff does not assert that the account was not in collection or charged off, that the balance on the account was not past due, or that no balance was owed. Rather, Plaintiff explains that “Plaintiff is specifically alleging that despite the treatment under the terms of the confirmed [C]hapter 13 plan, [Credit Recovery Associates] continued to report Plaintiff’s account as owing a current and past due balance, that the account was in collection, and charged off without making any mention or reference to a bankruptcy filing.” Opp. at 5. Thus, according to Plaintiff, Credit Recovery Associates’ reporting inaccurately indicates that Plaintiff’s account is subject to collection even though Plaintiff is absolved “from any legal requirement to pay on the debts separate from the treatment under the terms of the [C]hapter 13 plan.” Id. at 3. Credit Recovery Associates argues that, as a matter of law, reporting historically accurate balances during the pendency of a bankruptcy can not be inaccurate or incomplete under the FCRA. Mot. at 6–8. However, courts in this district have found that reporting delinquent payments during bankruptcy may be misleading depending on the circumstances, including whether the report fails to indicate that a charge is disputed or part of a bankruptcy. See Mortimer v. Bank of Am., N.A., 2013 WL 1501452, at *4 (N.D. Cal. Apr. 10, 2013) (finding that reporting delinquencies during the pendency of bankruptcy is not misleading so long as the creditor reports that the account was discharged through bankruptcy and the outstanding balance is zero); Venugopal v. Digital Fed. Credit Union, 2013 WL 1283436, at *3 (N.D. Cal. Mar. 27, 2013) (holding that reporting of historically accurate debt may violate the FCRA when the reporting did not include that the debt was discharged in bankruptcy or that the debt was in dispute). Accordingly, the Court turns to Plaintiff’s particular allegations. In the instant case, Plaintiff asserts that Credit Recovery Associates’ reporting is inaccurate because it is inconsistent with Plaintiff’s Chapter 13 bankruptcy plan. However, Plaintiff does not allege the terms of the Chapter 13 bankruptcy plan; that the balance owed to Credit Recovery Associates was included in the bankruptcy plan; or that the debt has either been paid or discharged. Nor does Plaintiff indicate whether Credit Recovery Associates’ reporting included a notation about the pending bankruptcy or any disputes. Plaintiff seems to recognize these failures, as Plaintiff’s opposition asserts that Credit Recovery Associates failed to include a notation about the pending bankruptcy and disputes, and Plaintiff’s opposition attempts to explain—in general terms—Plaintiff’s bankruptcy plan. See Opp. at 2–3, 6. However, Plaintiff cannot avoid dismissal by alleging new facts in an opposition to a motion to dismiss. See Schneider v. Cal. Dep’t of Corr., 151 F.3d 1194, 1197 n.1 (9th Cir. 1998) (“In determining the propriety of a Rule 12(b)(6) dismissal, a court may not look beyond the complaint to a plaintiff’s moving papers, such as a memorandum in opposition to a defendant’s motion to dismiss.”). Accordingly, Plaintiff fails to allege that Credit Recovery Associates’ reporting was inaccurate or incomplete because it was inconsistent with Plaintiff’s Chapter 13 bankruptcy plan. See Abbot, 2016 WL 1365950, at *4 (holding that virtually identical allegations failed to allege that the defendant’s reporting was inaccurate or incomplete). Plaintiff additionally asserts that Credit Recovery Associates’ reporting is inaccurate or incomplete because it violates the automatic stay put in place by the bankruptcy court. Alternatively, Plaintiff argues that Credit Recovery Associates’ reporting inaccurately indicates that Plaintiff’s debt involves a child support obligation, which, according to Plaintiff, is the only type of debt that Credit Recovery Associates could report without violating the automatic stay. Opp. at 8–9. The Court finds that these allegations are insufficient to show that Credit Recovery Associates’ reporting was incomplete or inaccurate. The complaint does not allege that Credit Recovery Associates violated the automatic stay. Further, Plaintiff provides no authority that any violation of an automatic stay is also a violation of the FCRA. Indeed, courts in this district have held that whether a defendant reports accurate information as required by the FCRA is separate from whether a defendant violates the bankruptcy code. See, e.g., Mortimer, 2013 WL 1501452, at *10 & n.3 (noting that “the question before the Court is whether [d]efendant reported accurate information, not whether [d]efendant violated the bankruptcy code”); see also Abbot, 2016 WL 1365950, at *5 (holding that virtually identical claims failed to allege an FCRA violation based on violation of the automatic stay). Lastly, Plaintiff fails to allege the nature of the debt she owes to Credit Recovery Associates, and fails to allege that this debt is not a child support obligation. Because Plaintiff does not plausibly allege that any of the reported information was inaccurate or incomplete, Plaintiff does not state a FCRA claim for failing to correct reported information. See Drew, 690 F.3d at 1106; see also Abbot, 2016 WL 1365950, at *5 (dismissing virtually identical FCRA claim). Accordingly, the Court GRANTS Credit Recovery Associates’ motion to dismiss Plaintiff’s FCRA cause of action. The Court does so with leave to amend because the Court concludes that amendment would not necessarily be futile. See Lopez, 203 F.3d at 1127 (holding that “a district court should grant leave to amend…unless it determines that the pleading could not possibly be cured by the allegation of other facts”).