District Court (Wis.) Holds Credit-Card Company Properly Reported Post-Discharge Account

In Ewert v. FD Holdings, LLC, No. 20-cv-354-wmc, 2021 U.S. Dist. LEXIS 9402 (W.D. Wis. Jan. 19, 2021), Judge Conley dismissed an FCRA claim premised on an account that passed through bankruptcy being improperly reported.

Plaintiff Lance M. Ewert alleges that defendant FD Holdings, LLC, d/b/a “Factual Data,” violated his rights under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., by reporting his Chase credit card debt as “due and owing” after it had been discharged in bankruptcy. Before the court is defendant Factual Data’s motion to dismiss, which argues that plaintiff’s FCRA claim fails as a matter of law because: (1) the information in the report was not inaccurate; (2) even if inaccurate, defendant did not have prior notice of an inaccuracy; and (3) plaintiff failed to allege that he was harmed by any inaccuracy. (Dkt. #4.) For the reasons that follow, the court will grant the motion to dismiss, finding that plaintiff has failed to allege that the information in the report was inaccurate. . . In October 2017, plaintiff filed a voluntary petition for individual bankruptcy under Chapter 7 in the United States Bankruptcy Court for the Western District of Wisconsin. In re Ewert, No. 1-17-13471-cjf (W.D. Wis. Bankr.). Among other things, the petition listed plaintiff’s two, unsecured credit card accounts with Chase as disputed debts. (Def.’s Mot., Ex. A (dkt. #4-1).) On January 10, 2018, the United States Bankruptcy Court for the Western District of Wisconsin granted plaintiff a discharge. (Def.’s Mot., Ex. 2 (dkt. #4-2).) Despite this discharge, defendant Factual Data is “reporting an account as due and owing on Plaintiff’s credit report, specifically JP Morgan Chase Bank Card.” (Compl. (dkt. #1-2) ¶ 8.) Plaintiff alleges that the “reporting of the accounts as due and owing is false.” (Id. ¶ 9.) Defendant attaches to its motion the credit report Factual Data produced on June 4, 2018, for Ladysmith Federal Savings and Loan Association (“Ladysmith S&L”). (Def.’s Mot., Ex. 3 (dkt. #4-3).) Material to plaintiff’s complaint, the report contained the following information about Ewert’s Chase account: (Id. at 3-4.)2 The report also provides information about Ewert’s bankruptcy proceeding, including that he received a discharge. (Id. at 4.) Plaintiff further alleges that his “creditors and/or potential creditors have accessed Plaintiff’s reports while the misreporting was on the credit report and were misinformed by Defendant[] about Plaintiff’s credit worthiness — including, but not necessarily limited to Ladysmith Federal Savings and Loan Association.” (Id. ¶ 14.) As a result, plaintiff alleges “[t]he inaccurate information negatively reflects upon the Plaintiff, Plaintiff’s credit repayment history, and Plaintiff’s financial responsibility as a debtor and Plaintiff’s credit worthiness.” (Id. ¶ 15.)

The District Court found that reporting to be accurate.

In his complaint, plaintiff alleges that defendant reported that his Chase credit card debt was still “due and owing” despite its discharge in bankruptcy. As defendant points out in its motion, the credit report itself does not state that the account was still “due and owing.” Instead, the report indicates that this account was part of plaintiff’s Chapter 7 bankruptcy proceeding and further describes that plaintiff received a discharge as part of his bankruptcy. For “payment,” the report further lists “Bankruptcy,” while for “balance,” the report identifies $ 2,066. Thus, plaintiff’s claim hinges on whether the inclusion of the $ 2,066 figure under balance, viewed in the context of the other information, was inaccurate. Specifically, plaintiff argues that “[p]utting the balance on a consumer report when the debtor does not have a personal obligation to pay it misrepresents the consumer’s obligations and therefore inaccurately states the risk that a creditor may have be lending money to that consumer.” (Pl.’s Opp’n (dkt. #5) 5.) Unfortunately for plaintiff, however, this argument has been rejected by a number of courts, all of whom have essentially concluded that the inclusion of a discharge “balance” on a credit report is not by itself inaccurate. For example, defendant directs the court to Vogt v. Dynamic Recovery Services, 257 B.R. 65 (D. Colo. Bankr. 2000), in which that bankruptcy court dismissed a debtor’s FCRA clam based on the same material claim as here, that listing a “balance” for a discharged debt was inaccurate. As that court explained, the bankruptcy discharge did not “wipe away the debt”; rather, “[i]t only serves to eliminate the debtor’s personal responsibility to pay the debt.” Id. at 70. Similarly, in In re O’Connell, No. 4:05BK07616-JMM, 2008 Bankr. LEXIS 4317, 2008 WL 5046496 (Bankr. D. Ariz. Oct. 29, 2008), the bankruptcy court rejected a debtor’s request to “require[e] certain of his creditors, as well as various credit reporting agencies, to report that there is ‘no balance due’ on certain debts discharged in his chapter 7 proceeding.” 2008 Bankr. LEXIS 4317, [WL] at *1. In rejecting this request, the bankruptcy court explained that reporting a balance is not “inaccurate,” because it is reporting “simply the facts of non-payment and prior delinquencies,” and also noted, as here, that the report accurately describes “the bankruptcy proceedings and discharge.” Id. Likewise, in Abeyta v. Bank of Am., N.A., No. 215CV02320RCJNJK, 2016 U.S. Dist. LEXIS 8918, 2016 WL 304308 (D. Nev. Jan. 25, 2016), the district court dismissed an FCRA claim premised on a similar theory as that at issue. In Abeyta, the plaintiff alleged that a notation that she was “120-149 days behind on her debt to” defendant was inaccurate in light of her bankruptcy discharge. 2016 U.S. Dist. LEXIS 8918, [WL] at *2. In rejecting the argument, the Abeyta court explained that it was unaware of any statute or case providing that discharge in bankruptcy makes a debt unreportable (as opposed to uncollectable) so long as only the fact of the previous delinquency is reported. The fact that Congress explicitly permits bankruptcies themselves to be reported for ten years from the date of discharge, see 15 U.S.C. § 1681c(a)(1), undermines any argument that Congress intended specific debts discharged in bankruptcy to be categorically unreportable. Id. . . .In the end, the court is left with the persuasive reasoning of those courts dealing with the same material facts and basic legal issue presented here. As a result, the court holds that defendant’s reporting the balance on plaintiff Ewert’s Chase credit account is not by itself inaccurate as a matter of law in light of other information on the report explaining that this account was part of his Chapter 7 bankruptcy proceeding and that he received a discharge of that debt as a result of those proceedings. Accordingly, the court agrees that plaintiff has failed to state a claim for a violation of the FCRA and will grant defendant’s motion to dismiss.