District Court (Cal.) Finds Creditor’s Bankruptcy Reporting Was Not Inaccurate Under the FCRA

In Keller v. Experian Information Solutions, Inc., 2017 WL 130285, at *6–8 (N.D.Cal., 2017), Judge Koh dismissed a FCRA plaintiff’s argument that her creditor’s reporting of an account during bankruptcy was inaccurate.

Experian and Wells Fargo argue Plaintiff’s FAC must be dismissed because Plaintiff fails to identify any inaccurate or misleading statements in Plaintiff’s credit report. In response, Plaintiff argues that “[t]he information that was being reported on Plaintiff’s credit report after the confirmation of [Plaintiff’s] chapter 13 plan of financial reorganization was both inaccurate and misleading and does not comport with the industry standards that cover credit reporting and bankruptcy.” Pl. Opp. to Experian Mot. at 2. Specifically, Plaintiff asserts that “Plaintiff’s confirmed chapter 13 plan modifies [Plaintiff’s] secured and unsecured debts and the confirmation order is a final and binding judgment on the status of those debts” and that “[r]eporting a debt differently than its treatment runs afoul of the confirmation order and res judicata effect of the confirmation order.” Id. at 3.  The Court has repeatedly rejected Plaintiff’s argument. In Blakeney v. Experian Info. Sols., Inc., 2016 WL 4270244 (N.D. Cal. Aug. 15, 2016), this Court held that although reporting delinquent payments may be misleading if the debts have been discharged in bankruptcy, “it is not misleading or inaccurate to report delinquent debts that have not been discharged.” Id. at *5. In Jaras v. Experian Info. Sols., Inc., 2016 WL 7337540, at *3 (N.D. Cal. Dec. 19, 2016), this Court held that “as a matter of law, it is not misleading or inaccurate to report delinquent debts during the pendency of a bankruptcy proceeding prior to the discharge of the debts.” Other courts in this district have consistently reached the same conclusion. See Mortimer v. JP Morgan Chase Bank, N.A., 2012 WL 315563, at *3 (N.D. Cal. Aug. 2, 2012) (“Mortimer I”) (“While it might be good policy in light of the goals of bankruptcy protection to bar reporting of late payments while a bankruptcy petition is pending, neither the bankruptcy code nor the FCRA does so.”); Mortimer v. Bank of Am., N.A., 2013 WL 1501452, at *4 (N.D. Cal. Apr. 10, 2013) (“Mortimer II”) (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); Giovani v. Bank of Am., N.A., 2012 WL 6599681, at *6 (N.D. Cal. Dec. 18, 2012) (“Giovani I”) (holding that it was not misleading or inaccurate for a furnisher to report overdue payments on debtor’s account during pendency of Chapter 7 bankruptcy petition but prior to discharge); Giovanni v. Bank of Am., N.A., 2013 WL 1663335, at *6 (N.D. Cal. Apr. 17, 2013) (“Giovanni II ”) (same); Harrold v. Experian Info. Sols., Inc., 2012 WL 4097708, at *4 (N.D. Cal. Sept. 17, 2012) (“[R]eports of delinquencies in payment while bankruptcy proceedings are still ongoing is not ‘incomplete or inaccurate’ information.”).  As discussed at length in Jaras, Blakeney, and other cases, the legal status of a debt does not change until the debtor is discharged from bankruptcy. 11 U.S.C. § 1328; Blakeney, 2016 WL 4270244, at *6 (“Plaintiff is not entitled to receive a discharge of debts covered under Plaintiff’s Chapter 13 bankruptcy plan until Plaintiff has completed all payments provided for under the Chapter 13 bankruptcy plan.”). Confirmation of a payment plan is not sufficient to alter the legal status of a debt because if a debtor fails to comply with the Chapter 13 plan, the debtor’s bankruptcy petition can be dismissed, in which case the debt will be owed as if no petition for bankruptcy was filed. See In re Blendheim, 803 F.3d 477, 487 (9th Cir. 2015) (“[D]ismissal returns to the creditor all the property rights he held at the commencement of the Chapter 13 proceeding.”); see also Elliott, 150 B.R. at 40 (“[E]ven if a confirmed Chapter 13 plan did bar challenges to the underlying claims, res judicata would not apply where the confirmed plan had been dismissed.”). Thus, a confirmation order does not constitute a final determination of the amount of the debt, and it is not misleading or inaccurate to report delinquent debt during the pendency of a bankruptcy proceeding but before discharge. In short, even if Plaintiff is correct that Plaintiff’s credit report did not reflect the terms of Plaintiff’s Chapter 13 bankruptcy plan, this would not be an inaccurate or misleading statement that could sustain a FCRA claim against either Experian or Wells Fargo.  Plaintiff’s invocation of “industry standards” does not undermine this conclusion. FAC ¶ 80 (“Post confirmation the accepted accurate credit reporting standard for reporting balances is to report the balance owed under the Chapter 13 plan terms.”). Indeed, this Court recently rejected an identical “industry standards” argument in Devincenzi v. Experian Information Solutions, 2017 WL 86131, at *6 (N.D. Cal. Jan. 10, 2017). As this Court explained in Devincenzi, courts in this district have repeatedly held that accurately reporting a delinquent debt during the pendency of a bankruptcy is not rendered unlawful simply because a Plaintiff alleges that the reporting, though accurate, was inconsistent with industry standards. Id. For example, in Mortimer II, the court held that “[t]o the extent that the account was delinquent during the pendency of the bankruptcy, failure to comply with the CDIA guidelines does not render the report incorrect.” 2013 WL 1501452, at *12. Similarly, in Sheridan v. FIA Card Services, N.A., 2014 WL 587739 (N.D. Cal. Feb. 14, 2014), the court followed Mortimer in “reject[ing] the argument that failure to comply with industry standards violates the FCRA where the information itself is nonetheless true.” Id. at *5. Additionally, in Mestayer v. Experian Information Solutions, Inc., 2016 WL 7188015 (N.D. Cal. Dec. 12, 2016) (“Mestayer III”), the court held that at least when a credit report acknowledges the existence of a pending bankruptcy, reporting a delinquent debt during the pendency of a bankruptcy is not inaccurate or misleading “even if [the report] otherwise did not fully comply with” industry standards. Id. at *3; see also Mestayer v. Experian Info. Solus., Inc., 2016 WL 3383961 (N.D. Cal. June 20, 2016) (same); Hupfauer v. Citibank, N.A., 2016 WL 4506798 (N.D. Ill. Aug. 19, 2016) (citing Mortimer for the proposition that “Plaintiff’s argument that Experian’s reporting deviated from guidelines set by the Consumer Data Industry Association is beside the point, as these guidelines do not establish the standards for accuracy under the FCRA”). The same is true here. See Devincenzi, 2017 WL 86131, at *6.  Plaintiff cites Nissou-Raban v. Capital One Bank (USA), N.A., 2016 WL 4508241 (S.D. Cal. June 6, 2016), for the proposition that alleging a violation of reporting standards can in some circumstances be sufficient to state a claim under the FCRA. However, Nissou-Raban held only that if a furnisher reports a debt that is the subject of a pending bankruptcy, it could be misleading for the furnisher to describe that debt as “charged off”—that is, seriously delinquent and likely uncollectable—rather than to specify that the debt is the subject of a pending bankruptcy. Id. at *4. Thus, at most, Nissou-Raban stands for the proposition that a furnisher that reports delinquent debts during the pendency of a bankruptcy should also report the fact that a bankruptcy is pending so that creditors know that those delinquent debts may be discharged in the future. However, Nissou-Raban does not endorse Plaintiff’s argument that reporting a delinquent debt itself violates industry standards and is misleading or inaccurate. Devincenzi, 2017 WL 86131, at *6 (distinguishing Nissou-Raban from a situation where, as here, the plaintiff alleged only that the defendants’ reporting of plaintiff’s delinquent debt during plaintiff’s Chapter 13 bankruptcy violated industry standards and was thus incorrect under the FCRA). On the contrary, Nissou-Raban explicitly recognized that “pleading facts that show a furnisher reported information that was accurate while bankruptcy was pending but before the debt was discharged does not, as a matter of law, provide the predicate inaccuracy necessary to state a FCRA or a CCRAA claim.” Nissou-Raban, 2016 WL 4508241, at *3.  The issue in Nissou-Raban is therefore not presented in the instant case. Plaintiff alleges generally that, on Plaintiff’s three-bureau credit report, “[s]ome accounts … [were] not reporting the bankruptcy … at all,” FAC ¶ 99, but Plaintiff never specifies which accounts failed to mention the pending bankruptcy. More specifically, Plaintiff alleges that Wells Fargo “was reporting Plaintiff’s account … with a balance in the amount of $19,650.00, a past due balance in the amount of $19,650.00, and monthly payments owed in the amount of $495.00, despite the Court ordered treatment of its claim under the terms of Plaintiff’s Chapter 13 plan of reorganization.” FAC ¶ 107. Plaintiff never alleges, however, that Wells Fargo failed to report Plaintiff’s pending bankruptcy. See id. Further, Plaintiff never alleges that Experian failed to report Plaintiff’s pending bankruptcy. See generally FAC ¶¶ 104–07; Experian Mot. at 8 (“While Plaintiff alleges that she ordered a ‘three bureau’ report from Experian, she does not allege that Experian reported the purportedly inaccurate information in that document,” as opposed to the other bureaus). To the contrary, Plaintiff’s FAC makes only general and unspecified allegations that her three-bureau report contained inaccuracies, and that the CRAs reported misleading and inaccurate information, but the FAC does not allege any conduct that is specific to Experian. See, e.g., FAC ¶¶ 123–34.³ Accordingly, because Plaintiff’s FAC does not allege that either Wells Fargo or Experian failed to report the fact of Plaintiff’s pending bankruptcy, the Court need not consider whether such a failure would be misleading or inaccurate under the FCRA. Devincenzi, 2017 WL 86131, at *7 (dismissing identical FCRA claims because the Plaintiff “never allege[d] that [the furnisher] or Experian failed to mention the pending bankruptcy”).  In sum, Plaintiff’s vague assertion that “reporting a past due balance post confirmation does not comport with industry standards,” FAC ¶ 133, is not enough to overcome this Court’s consistent holding that as a matter of law it is not misleading or inaccurate to report a delinquent debt during the pendency of a bankruptcy. Thus, the Court rejects Plaintiff’s argument that his credit report was misleading or inaccurate for reporting delinquent debt during the pendency of his Chapter 13 bankruptcy. See Devincenzi, 2017 WL 86131, at *7.  The Court therefore GRANTS Experian’s and Wells Fargo’s motions to dismiss Plaintiff’s FCRA claims based on the reporting of delinquent debt during the pendency of a bankruptcy. The Court finds as a matter of law that reporting a delinquent debt during the pendency of a bankruptcy is not inaccurate or misleading, and thus these claims are dismissed with prejudice. See Jaras v. Experian Info. Solus., Inc., 2016 WL 7337540, at *3 (N.D. Cal. Dec. 19, 2016) (“[A]s a matter of law, it is not misleading or inaccurate to report delinquent debts during the pendency of a bankruptcy proceeding prior to the discharge of the debts.”). Therefore, because Plaintiff “cannot make a prima facie case of inaccurate reporting” with respect to these claims, the Court finds that “amendment … would be futile.” Carvalho, 629 F.3d at 892

See also Connors v. Experian Information Solutions, Inc., 2017 WL 168493, at *3 (N.D.Cal., 2017) (Koh, J.)