Galea v. Wells Fargo Bank, N.A.

388 F.Supp.3d 1212

Sally GALEA, Plaintiff,

v.WELLS FARGO BANK, N.A., Equifax Information Services LLC, and Experian Information Solutions, Inc., Defendants.

No. 2:19-cv-00386-JAM-AC

United States District Court, E.D. California.

Signed August 1, 2019

Clark Ovruchesky, C.O. Law, APC, San Diego, CA, for Plaintiff.

Thomas Patrick Quinn, Jr., Nokes & Quinn, Laguna Beach, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART EQUIFAX'S MOTION TO DISMISS

In March 2019, Sally Galea filed a complaint against Wells Fargo Bank, N.A., Equifax Information Services, and Experian Information, alleging violations of the Fair Credit Reporting Act ("FCRA") and the California Consumer Reporting Agencies Act ("CCRAA"). Compl., ECF No. 1. She filed an amended complaint seven weeks later. First Am. Compl. ("FAC"), ECF No. 11. Since then, Galea has entered into settlement agreements with Wells Fargo, ECF No. No. 13, and Experian, ECF No. 24. Equifax, the remaining defendant, filed a motion to dismiss under Rule 12(b)(6). Mot. Dismiss ("Mot."), ECF No. 20.¹ For the reasons discussed below, the Court GRANTS in part and DENIES in part Equifax's motion.

I. FACTUAL ALLEGATIONS

Galea filed for Chapter 13 bankruptcy in September 2012. FAC ¶ 39. Over the next five years, she made all the payments required under her bankruptcy plan. FAC ¶¶ 42-49. In November 2017, the Bankruptcy Noticing Center notified her that she had completed her plan. FAC ¶ 49. In January 2018, her bankruptcy was discharged. FAC ¶ 50. Galea contends an Equifax credit report issued eight months later did not reflect this successful discharge of bankruptcy. FAC ¶¶ 110-11.

Galea alleges the Consumer Data Industry Association's Metro 2 format "is the credit industry's standardized, objective reporting format used by furnishers to provide information about consumer accounts to consumer reporting agencies." FAC ¶ 52. The Metro 2 format provides guidance on how furnishers of consumer information should report consumer accounts once the consumer has paid out the account through a successfully-discharged bankruptcy. See FAC ¶ 57. For unsecured accounts, the report should list the CII status as "Discharged/Completed through BK Chapter 13." Id. The Current Balance, Scheduled Monthly Payment Amount, and Amount Past Due should all be listed as "Zero" or "$0". Id. For secured accounts, the Metro 2 likewise requires furnishers to update the account's Status, Payment History, Current Balance, Scheduled Monthly Payment Amount, and Amount Past Due. FAC ¶ 58. Yet, following Galea's successful discharge of bankruptcy, Equifax issued a credit report in September 2018 that listed her Scheduled Payment Amount as $410. FAC ¶ 110.

A month later, Plaintiff sent a letter to Equifax, disputing the September 2018 report. FAC ¶¶ 115-16. In December 2018, Equifax provided Galea with the results of its reinvestigation. FAC ¶ 119. It did not, however, change the Scheduled Payment Amount from $410 to $0. FAC ¶ 120.

II. OPINION

A. Fair Credit Reporting Act Claims

1. 15 U.S.C. §§ 1681e(b) and 1681i(a)

The FCRA "creates a private right of action for willful or negligent noncompliance with its requirements." Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009). See also 15 U.S.C. §§ 1681n and 1681o . Galea claims Equifax violated Sections 1681e(b) and 1681i(a) of this statute. FAC ¶¶ 73, 124-25. Section 1681e(b) requires a consumer reporting agency to "follow reasonable procedures to assure maximum possible accuracy of the information" included in a consumer report. 15 U.S.C. § 1681e(b). If a consumer disputes "the completeness or accuracy of any item of information contained in [her] file," Section 1681i(a) requires the consumer reporting agency to "conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate." 15 U.S.C. § 1681i(a). Stating a prima facie claim under either provision requires a plaintiff to allege information in her credit report was inaccurate. Shaw v. Experian Information Solutions, Inc., 891 F.3d 749, 756 (9th Cir. 2018). Equifax argues the Court must dismiss Galea's Section 1681e(b) and Section 1681i(a) claims because she failed to satisfy this prerequisite. Mot. at 4-9.

The FCRA imposes distinct requirements upon consumer reporting agencies ("CRA's") and those who furnish information to consumer reporting agencies ("furnishers"). Reply at 1-2, ECF No. 33. Even so, courts rely on the same standard for determining whether a credit report included "inaccurate" information regardless of which entity a plaintiff sues. See, e.g., Shaw, 891 F.3d at 756 ; Gorman v. Wolpoff & Ambramson, LLP, 584 F.3d 1147, 1163 (9th Cir. 2009). For the purposes of the FCRA, information is "inaccurate" when "it either is patently incorrect or is misleading in such a way and to such an extent that it can be expected to adversely affect a credit decision." Shaw, 891 F.3d at 756. Plaintiffs who contend information in their consumer report is misleading must claim more than imprecision—"imprecision alone does not render a CRA's conduct actionable." Id. at 757. But information that paints an "inconsistent" or "incomplete" picture of a plaintiff's credit may suffice. Gorman, 584 F.3d at 1162-63 ; cf. Huizar v. Wells Fargo Bank, N.A., 257 F. Supp. 3d 1103, 1108 (E.D. Cal. 2017).

Equifax argues that listing the Scheduled Payment Amount as $410 is neither patently incorrect nor materially misleading. Mot. at 4-5. The Equifax consumer report lists Galea's Travis Credit Union Account as "Paid and Closed," "Closed or Paid Account/Zero Balance." Exh. 3, ECF No. 20-4. The "Date of Last Activity" and "Date Closed" are both listed as "04/2012." Id. The "Balance Amount" and "Amount Past Due" are listed as "$0." Id. Within this context, Equifax argues the Scheduled Payment Amount merely reflects a "historical payment term" or "historical scheduled payment amount." Mot. at 1, 4-5. Galea does not dispute that, at one point, she made monthly payments of $410 on her Travis Credit Union account. Mot. at 4.

Neither the Ninth Circuit nor this Court have ruled on the question of whether it is inaccurate to include a "scheduled monthly payment amount" on an account that is otherwise paid off and closed. Defendants argue other courts have "readily and consistently" found consumer reporting agencies may include accurate, historical information on consumer reports—even if that information is derogatory. Reply at 3; see also Mot. at 6-9 (citing Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151, 1158-59 (11th Cir. 1991) ; Meeks v. Equifax Information, Serv's, LLC, No. 1:18-cv-03666-TWT-WEJ, 2019 WL 1856411, at *5 (N.D. Ga. Mar. 4, 2019) ; Harris v. Nissan-Infiniti LT, No. 2:17-cv-00191-JCM-VCF, 2018 WL 2741040, at *1 (D. Nev. June 7, 2018) ; Blanch v. Trans Union, LLC, 333 F. Supp. 3d 789, 793 (M.D. Tenn. 2018) ). The Court finds Equifax's collection of authority is both overinclusive and incomplete, including some cases that are clearly distinct from the one at hand, and excluding others that undermine its claims of a judicial consensus.

For example, in Cahlin, 936 F.2d at 1154, a plaintiff defaulted on a lease with General Motors. Following the default, the plaintiff's credit report included an "I9" rating on his General Motors account, indicating the account had been "charged off" or was a bad debt. Id. at 1154-55. The plaintiff eventually settled the account. Id. at 1155. The account retained its I9 rating but showed a balance of zero. Id. at 1159. Plaintiff sued, arguing it was incorrect for the credit reporting agency to continue reporting his charge off after he settled the account. Id. at 1155. The Eleventh Circuit disagreed, finding there was nothing incorrect about including derogatory references on a credit report to reflect an account had been charged and settled for less than the original amount. Id. at 1158.

Cahlin, however, is not persuasive authority for this case. Unlike the plaintiff in Cahlin, Galea does not contend her credit report should be without any derogatory references that may accurately reflect her credit history. Indeed, Galea's challenge is not with the inclusion of historical information, but rather, the absence of any clear indication that her "scheduled monthly payment amount" is, in fact, historical. See Opp'n at 6-7. Furthermore, the plaintiff in Cahlin, 936 F.2d at 1158 only argued that his report was patently incorrect. Because he did not argue the report was misleading, the court never addressed that issue. Id.

Meeks, 2019 WL 1856411, at *5 is Equifax's closest analog. There, the disputed credit report listed the "Terms" of the plaintiff's debt ("$613 per month, paid Monthly for 76 months") even though plaintiff had charged off the debt and closed the account. Id. Upon viewing the tradeline as a whole, the Northern District of Georgia found the report "undeniabl[y]" showed "that there exist[ed] no ongoing obligation for payment." Id. at *6. Because the account was "clearly reported as closed, charged off, ... and with a $0 balance", the "mere presence of historical monthly payment terms neither cause[d] confusion nor create[d] an inaccuracy." Id. Similarly, in Harris v. Nissan-Infiniti LT, No. 2:17-cv-00191-JCM-VCF, 2018 WL 2741040, at *4 (D. Nev. 2018), the District of Nevada found that including a balloon payment term on an account discharged through bankruptcy was not materially misleading where the phrase "[d]ischarged through bankruptcy chapter 7" preceded the disputed payment amount. Harris v. Nissan-Infiniti LT, 2018 WL 2741040, at *1, 4.

But Galea cites an equally comparable case arising out of the Northern District of Illinois. Opp'n at 7 (citing Freedom v. Citifinancial, LLC, No. 15-cv-10135, 2016 WL 4060510 (N.D. Ill. July 25, 2016) ). In Freedom, 2016 WL 4060510, at *6, the plaintiff's credit report listed a "scheduled payment" of $143 even though he'd successfully discharged his debt through bankruptcy. The Court found that...