Mohnkern v. Equifax Info. Servs.

DECISION AND ORDER

DAVID G. LARIMER, UNITED STATES DISTRICT JUDGE

INTRODUCTION

Plaintiffs Steven L. Mohnkern and Sarah Mohnkern filed this lawsuit against Breckenridge Group Statesboro Georgia, LLC (“Breckenridge”) and National Credit Systems, Inc. (“NCS”), alleging claims pursuant to the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and New York state law, specifically, New York General Business Law section 349(a) and common law fraud. (See generally Dkt. # 1).^[1]

Two motions are pending before the Court. First, plaintiffs request a default judgment pursuant to Rule 55(b) of the Federal Rules of Civil Procedure against Breckenridge regarding

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their New York state law claims, which are the only claims alleged against Breckenridge. (Dkt. # 27). Second, NCS moves for judgment on the pleadings pursuant to Rule 12(c), seeking dismissal of plaintiffs' FCRA and FDCPA claims, which are the only claims asserted against NCS. (Dkt. # 38).

For the following reasons, NCS's motion is granted, which resolves all federal claims alleged by plaintiffs in this case. As a result, I decline to exercise supplemental jurisdiction over plaintiffs' state law claims alleged against Breckenridge and dismiss those claims on that basis, and thus deny plaintiffs' motion for default judgment. Accordingly, plaintiffs' complaint is dismissed in its entirety.

BACKGROUND^[2]

On December 15, 2017, Sarah Mohnkern entered into a lease agreement with Breckenridge for a college apartment in Statesboro, Georgia, which Steven Mohnkern (Sarah's father) co-signed (the “Lease”). (Dkt. # 1 at ¶¶ 18-19). The Lease, which the parties have not produced as part of the record, called for monthly payments of $584.00 for twelve months. (Id. at ¶ 20). It also provided that “a tenant could terminate [it] upon a ‘Completed Reassignment,' i.e.[, ] locating a tenant to take the[] [original tenant's] place in the apartment building, ” a provision Breckenridge told plaintiffs they could satisfy “simply [by] find[ing] someone to ‘take over [the Lease].'” (Id. at ¶¶ 21-22).

Sarah Mohnkern did not move into the apartment as planned, and plaintiffs thus sought to get out of the Lease in accordance with the “completed reassignment” provision. (Id. at ¶¶ 23, 24, 32). When Sarah Mohnkern identified two potential replacement tenants to assume the Lease,

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however, Breckenridge “thwarted [plaintiffs'] efforts to have someone take over [the] [L]ease” and signed each of these replacement tenants to separate leases. (Id. at ¶¶ 24-31, 36). Plaintiffs allege that Breckenridge's conduct amounted to a material breach of the Lease under Georgia law, thereby relieving plaintiffs' obligations under the Lease; plaintiffs therefore did not make any Lease payments to Breckenridge. (See generally Dkt. # 1).

Based on this nonpayment, on September 1, 2018 - a month following Sarah Mohnkern's original move-in date - Breckenridge “accelerated the rent for the twelve-month period” of the Lease, an action which plaintiffs allege also violated Georgia law, and attempted to collect the $7, 008.00 plaintiffs owed (the “Debt”). (Id. at ¶¶ 33, 37, 94-97). At some point “[s]oon thereafter, ” Breckenridge placed plaintiffs' Debt with NCS for collection, and NCS “began contacting plaintiffs in an attempt to collect the [D]ebt.” (Id. at ¶¶ 34-35). NCS's collection efforts included sending plaintiffs' attorney a letter on November 14, 2018 with “a copy of the [L]ease and an invoice from Breckenridge, ” to which plaintiffs responded by letter on December 13, 2018 explaining their view that Breckenridge breached the Lease, that plaintiffs did not owe the Debt, and “demand[ing] that NCS cease collection efforts.” (Id. at ¶¶ 37-39). There is no allegation that NCS continued collection efforts following plaintiffs' December 2018 letter.

NCS ultimately reported the Debt as a “delinquent account” to three of the major credit reporting agencies, Equifax, Experian, and Trans Union. (Id. at ¶ 40). Plaintiffs disputed the accuracy of the Debt in an April 15, 2019 letter to Equifax, Experian, Trans Union, and NCS, and requested that those entities delete information relating to the Debt from plaintiffs' credit reports, again expressing their view that Breckenridge breached the Lease and pointing to legal authority showing that the Debt was “unenforceable under Georgia law.” (Id. at ¶¶ 47-49). After receiving notice of this dispute from Equifax, Experian, and Trans Union, NCS nonetheless confirmed that

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the information was accurate, and the Debt continued to be reported on plaintiffs' credit reports. (Id. at ¶¶ 16, 50-52, 151).^[3] Plaintiffs allege that this inaccurate credit information has negatively impacted their credit scores, their ability to obtain a car loan, and Sarah Mohnkern's efforts to apply for an apartment. (Id. at ¶¶ 44-46, 158).

DISCUSSION

I. NCS's Motion for Judgment on the Pleadings

I turn first to NCS's motion for judgment on the pleadings because it deals with the federal claims over which this Court has original jurisdiction.

A. Legal Standard

Rule 12(c) of the Federal Rules of Civil Procedure permits a party to move for judgment on the pleadings “[a]fter the pleadings are closed[, ] but early enough not to delay trial.” FED. R. CIV. P. 12(c).^[4] The standard applicable to Rule 12(c) motions mirrors that for motions brought under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Hayden v. Paterson, 594 F.3d 150, 160 (2d Cir. 2010). To survive a Rule 12(c) motion, then, “the complaint must contain sufficient factual matter to ‘state a claim to relief that is plausible on its face.'” Graziano v. Pataki, 689 F.3d 110, 114 (2d Cir. 2012) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). This “plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.”

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Id. (quotations omitted). Moreover, while at this stage the court must accept as true all factual allegations in the complaint and draw all reasonable inferences in favor of the plaintiff, see Johnson v. Rowley, 569 F.3d 40, 43 (2d Cir. 2009), at the same time, “legal conclusions, deductions or opinions couched as factual allegations [need not be accorded] a presumption of truthfulness, ” In re NYSE Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007) (Sotomayor, J.) (alterations, brackets, and citation omitted), cert. denied sub nom., California Public Employees' Ret. Sys. v. New York Stock Exch., Inc., 552 U.S. 1291 (2008).

B. Plaintiffs' FCRA Section 1681s-2(b) Claim

Plaintiffs' FCRA claim arises under section 1681s-2(b) of the statute and challenges NCS's investigation of plaintiffs' dispute of the reported Debt, as well as NCS's refusal to request that Equifax, Experian, and Trans Union delete the Debt from plaintiffs' credit reports. (See Dkt. # 1 at ¶¶ 112-60). For the following reasons, this claim fails.

“The FCRA seeks to ensure ‘fair and accurate credit reporting.'” Spokeo, Inc. v. Robins, 578 U.S. 330, 334 (2016) (quoting 15 U.S.C. § 1681(a)(1)). The statute thus “regulates credit reporting procedures to ensure the confidentiality, accuracy, relevancy, and proper utilization of consumers' information, ” Longman v. Wachovia Bank, N.A., 702 F.3d 148, 150 (2d Cir. 2012) (citing 15 U.S.C. § 1681(b)), and “places distinct obligations on three types of entities: consumer reporting agencies, users of consumer reports, and furnishers of information to consumer reporting agencies, ” Ostreicher v. Chase Bank USA, N.A., 2020 WL 6809059, *3 (S.D.N.Y. 2020) (citation omitted).

Relevant here, furnishers of information (“furnishers”), such as NCS (see Dkt. ## 1 at ¶ 13; 18 at ¶ 13), are “entities that transmit, to credit reporting agencies, information relating to debts owed by consumers, ” Kane v. Guar. Residential Lending, Inc., 2005 WL 1153623, *3 (E.D.N.Y. 2005),

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whereas consumer (or credit) reporting agencies (“CRAs”), such as Equifax, Experian, and Trans Union, (see Dkt. ## 1 at ¶ 12; 6 at ¶ 12; 8 at ¶ 12; 20 at ¶ 12), are entities that “regularly engage[] in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, ” 15 U.S.C. § 1681a(f).

For our purposes here, section 1681s-2(b) of the FCRA “outlines a furnisher's duties following a dispute regarding the completeness or accuracy of a consumer's credit report, ” Sprague v. Salisbury Bank & Trust Co., 969 F.3d 95, 99 (2d Cir. 2020), and among these is the obligation “to investigate and verify the accuracy of the information that they report [to CRAs] following notice of a dispute from a [CRA], ” Yuli v. Trans Union, LLC, 2020 WL 5604748, *3 (E.D.N.Y.), report and recommendation adopted by, 2020 WL 5594638 (E.D.N.Y. 2020). Specifically, after a furnisher receives notice from a CRA that a consumer disputes the “completeness or accuracy” of furnished information, the furnisher must (1) investigate the disputed information, (2) review all relevant information provided by the CRA, and (3) report the results of the investigation to the CRA. 15 U.S.C. §§ 1681s-2(b)(1)(A)-(C); see also Sprague, 969 F.3d at 99. If the furnisher's...