District Court (Cal.) Says Furnisher Subject to CCRAA Claim When It Failed to Report an Account as Discharged by the Customer’s Bankruptcy

This standard is met when a complaint plausibly alleges that a furnisher failed to report a debt as discharged. Venugopal v. Dig. Federal Credit Union, 2013 WL 1283436, at 3 (N.D. Cal. 2013). In addition, this standard is met where a furnisher reported inconsistent information, some of which was negative to the debtor. Grantham v. Bank of America, N.A., No. CV12-1960 MEJ, 2012 WL 5904729, at *4 (N. D. Cal. Nov. 26, 2012).  Here, the complaint sufficiently alleges that Defendant made reports that were “incomplete or inaccurate” and “materially misleading.” Kuns, 611 Fed. App’x at 400. As in Venugopal, Plaintiff asserts that Defendant “continued reporting information based on [Defendant’s] pre-bankruptcy contract terms with the Plaintiff, which were no longer enforceable upon the bankruptcy filing and confirmation of the Bankruptcy Plan, thereby rendering the disputed information inaccurate and materially misleading.” Compl. ¶ 115. Plaintiff asserts, and Defendant concedes, that her bankruptcy was discharged in October 28, 2014. Id. ¶ 110; Doc. 32 at 3. Plaintiff alleges that three separate reports issued after her bankruptcy discharge show Defendant reported an inaccurate “charged off” status with outstanding balance amounts. Compl. ¶¶ 185-87. These reports should have reported the debt as “discharged” with no outstanding amount owed, reflecting the completion of the Plan. Id. ¶ 221.  Further, as in Grantham, Plaintiff alleges Defendant furnished inaccurate information, which was negative to herself. Plaintiff asserts “[Defendant] inaccurately and misleadingly suggested that Plaintiff still has a personal legal liability to pay the alleged Debt to [Defendant]” as opposed the true outstanding amount of $0. Id. ¶ 199. Therefore, Plaintiff has sufficiently alleged that Defendant violated § 1785.25(a) because this information is “incomplete or inaccurate” and “materially misleading.” Kuns, 611 Fed. App’x at 400.  Moreover, Plaintiff sufficiently alleges that Defendant knew, or should have known, its reporting was inaccurate. “The statutory term ‘should have known imparts a test of reasonableness.’ ” Holmes v. NCO Fin. Services, Inc., 538 Fed. App’x 765, 766 (9th Cir. 2013) (citing Shultz v. Dep’t of Army, 886 F.2d 1157, 1160 (9th Cir. 1989)). The Holmes court concluded that a reasonable debt collector in the defendant’s position, who was the last of four debt collectors to have handled the plaintiff’s account, should have known that the plaintiff’s account was disputed because the defendant was not able to access essential information through their web portal. Id. Unlike in Holmes, where the debt collector was passed the information from previous collectors, Plaintiff alleges that the Bankruptcy Court directly sent Defendant multiple notices of her bankruptcy completion through first class mail. Compl. ¶¶ 109-10. These notices are sufficient to inform Defendant that a “charge off” status with an outstanding balance amount would be “incomplete or inaccurate” and “materially misleading.” Kuns, 611 Fed. App’x at 400.  Thus, taking all material allegations as true and construing them in the light most favorable to Plaintiff, the Court finds that she has stated a cognizable claim for relief under § 1785.25(a). The Court therefore DENIES Defendant’s motion.