Vilar v. Equifax Info. Servs., LLC

SONYA LIA VILARf/k/a SONYA LIA SAAVEDRA, Plaintiff, v. EQUIFAX INFORMATION SERVICES,LLC; TRANSUNION, LLC;EXPERIAN INFORMATION SOLUTIONS, INC.;CHASE HOME FINANCE, LLC;LCS FINANCIAL SERVICES CORP.;RCS RECOVERY SERVICES, INC.;and REAL TIME RESOLUTIONS, INC., Defendants.

No. CIV 14-0226 JB/KBM

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

December 17, 2014

MEMORANDUM OPINION AND ORDER

THIS MATTER comes before the Court on JPMorgan Chase Bank, N.A.'s Motion to Dismiss for Failure to State a Claim, filed July 14, 2014 (Doc. 62)("MTD"). The Court held a hearing on November 13, 2014. The primary issues are: (i) whether Defendant JPMorgan Chase Bank, N.A. ("JPMorgan Chase")¹ willfully violated § 1681s-2(a)(2) of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. ("FCRA"); (ii) whether JPMorgan Chase negligently violated § 1681i of the FCRA; (iii) whether JPMorgan Chase engaged in unfair, deceptive, and unconscionable trade practices in violation of § 57-12-2 of the New Mexico Unfair and Deceptive Trade Practices Act, N.M. Stat. Ann. §§ 57-12-1 to 57-12-26 ("UPA"); and (iv) whether JPMorgan Chase violated § 1692e(2)(A) of the Fair Debt Collection Practices Act,15 U.S.C. § 1692-1692p ("FDCPA"). The Court will grant the MTD. First, Vilar cannot plausibly allege that JPMorgan willfully violated § 1681s-2a of the FCRA, because that section does not give rise to a private cause of action. Moreover, even if § 1681s-2a gave rise to a private cause of action, Vilar does not plausibly allege that JPMorgan Chase reported inaccurate information to any credit reporting agencies ("CRAs"). Second, Vilar cannot plausibly allege that JPMorgan Chase negligently violated § 1681i of the FCRA, because JPMorgan Chase is not a CRA and is, therefore, not subject to § 1681i's requirements. Third, Vilar does not plausibly allege that JPMorgan Chase violated § 57-12-2 of the UPA, because the UPA does not require lenders to disclose all helpful information, but instead prohibits them from disseminating misleading, deceitful, or false information; Vilar attempts to turn the UPA into a full-disclosure statute, when it is not. Similarly, Vilar's contention that JPMorgan Chase violated the UPA by misrepresenting that it owned the Second Mortgage when it accepted the short-sale's proceeds is, at this time, implausible. Fourth, Vilar does not plausibly allege that JPMorgan Chase violated either § 1692g(a) or § 1692e(2)(a) of the FDCPA, because it is not a "debt collector," and is, therefore, not subject to the FDCPA.

FACTUAL BACKGROUND

The Court takes its facts from the Amended Complaint, filed June 26, 2014 (Doc. 51)("Amended Complaint"), as it must when considering a motion to dismiss for failure to state a claim. See Fed. R. Civ. P. 12(b)(6). In June, 2007, Vilar purchased the property at 501 14th St. N.W., Albuquerque, New Mexico, 87112 ("the Property"). Amended Complaint ¶ 12, at 3. Vilar executed a promissory note² ("First Note") and mortgage³ ("First Mortgage") on theProperty with First Franklin Financial Corporation for $160,000.00. Amended Complaint ¶ 12, at 3. That same day, Vilar executed a second promissory note ("Second Note") and a second mortgage ("Second Mortgage") on the Property with First Franklin for $40,000.00. Amended Complaint ¶ 12, at 3. Three or four months later, First Franklin transferred Vilar's mortgages to JPMorgan Chase. See Amended Complaint ¶ 13, at 4.

Vilar was and is a self-employed insurance broker who suffered a significant decrease in income because of the 2008 recession. See Amended Complaint ¶ 14, at 4. Although Vilar tried multiple times to work with JPMorgan Chase to modify her loan payments, JPMorgan Chase refused all options but short selling⁴ the Property or foreclosing⁵ on it. See Amended Complaint¶ 14 at 4. By January, 2009, Vilar was delinquent on the Second Mortgage. See Amended Complaint ¶ 14, at 4. To minimize the damage to her credit score, Vilar marketed the Property -- with JPMorgan Chase's consent -- as a short sale. See Amended Complaint ¶ 15, at 4.

In December, 2010, JPMorgan Chase charged off⁶ Vilar's Second Mortgage and wrote off⁷ its total balance of $39,603.00. See Amended Complaint ¶ 16, at 4. JPMorgan Chase alsobegan notifying credit-reporting agencies that the Second Mortgage had been "[t]ransferred to recovery." Amended Complaint ¶ 16, at 4 (internal quotation marks omitted). JPMorgan Chase never informed Vilar, however, that it had charged off the Second Mortgage and transferred it to a collections agency. See Amended Complaint ¶ 16, at 4; id. ¶ 24B, at 6.

On January 18, 2011, Vilar accepted an offer to purchase the Property as a short sale for $104,880.58. See Amended Complaint ¶ 17, at 4. On February 1, 2011, JPMorgan Chase approved the short sale in a letter that stated, in pertinent part:

Dear Mortgagor(s):

Chase Home Finance LLC ("Chase") has agreed to your request for a Short Sale, and will accept a minimum of $104,880.58 to release the lien(s) on the above-referenced Property.

Please note this amount is for the release of the lien(s) only and that you are responsible for all deficiency balances per the terms of the original loan documents.

. . . .

Once certified funds have been received, Chase will release the lien(s). Any excess funds at closing will be paid to Chase. As the Seller, you will not receive any proceeds from this transaction.

Letter at 1-2 from JPMorgan Chase to Tracy Von Blon⁸ (Feb. 1, 2011), filed June 26, 2014 (Doc. 51-1)("Letter")(bold in original).⁹

The loan numbers for both the First Mortgage and the Second Mortgage were "clearly typed on top of each page" of the short-sale purchase agreement. Amended Complaint ¶ 20, at 4 (citing Realtor's® Association of New Mexico Purchase Agreement - Residential Resale - 2011 at 1, filed June 26, 2014 (Doc. 51-1)("Purchase Agreement")). When the short sale closed on February 28, 2011, $105,355.58 was wired to JPMorgan Chase to "[p]ayoff first mortgage . . . short sale payoff loan 24723025 . . . ." Amended Complaint ¶ 21, at 5 (quoting Outgoing Wire Form at 1, filed June 26, 2014 (Doc. 51-1)("Wire Transfer")). Loan # 24723025 was the Second Mortgage. See Amended Complaint ¶ 21, at 5.

JPMorgan Chase has never released¹⁰ either the First Mortgage or the Second Mortgage. See Amended Complaint ¶ 22, at 5. Mortgage Electronic Registration Systems, Inc. ("MERS")recorded, however, two Releases of Mortgage with the Clerk of the County of Bernalillo, New Mexico, for those mortgages. See Amended Complaint ¶ 23, at 5 (citing Release of Mortgage for Loan # 0024723025 (Apr. 3, 2011), filed June 26, 2014 (Doc. 51-1)("First Release"); Release of Mortgage for Loan # 0024722837 (Mar. 30, 2011), filed June 26, 2014 (Doc. 51-1)("Second Release")).

In August, 2012, Vilar began receiving letters from Defendants LCS Financial Services Corporation and Real Time Resolutions, Inc., which said that the Second Mortgage was an active debt in collections. See Amended Complaint ¶ 24, at 5. Vilar subsequently obtained copies of her credit reports and discovered that JPMorgan Chase and First Franklin were reporting that she still owed the full amount on the Second Mortgage. See Amended Complaint ¶ 24, at 5. After the short sale, JPMorgan Chase did not inform her: (i) that the short sale did not apply to both the First Mortgage and the Second Mortgage; (ii) that she was still liable for the amount owed on the Second Mortgage; (iii) what the remaining balance on the Second Mortgage was after the short sale; (iv) that she should continue making the same monthly payments; or (v) that she had a right to dispute the debt. See Amended Complaint ¶ 24A, at 5. Moreover, JPMorgan Chase did not send Vilar a bill for the Second Mortgage's monthly payments after the short sale. See Amended Complaint ¶ 24A, at 5.

Vilar began disputing her negative entries with CRAs, JPMorgan Chase, LCS Financial, and Real Time, but was unsuccessful in removing the entries from her credit report. See Amended Complaint ¶ 25, at 6. Although JPMorgan Chase had stopped reporting Vilar'sdelinquency on the Second Mortgage to the credit-reporting agencies in December, 2010, it began to do so again in February, 2012, and continued to do so until April, 2013. See Amended Complaint ¶ 28, at 6.

From November, 2012, through fall 2013, Vilar disputed the negative entries on her credit reports with Defendants Experian Information Solutions, Inc., Equifax Information Solutions, Inc., and TransUnion, LLC -- all of which refused to remove the entries from her reports. See Amended Complaint ¶ 25, at 6. In the summer of 2013, Vilar began receiving letters from a new collection agency -- RCS Recovery Services, Inc. -- regarding the Second Mortgage. See Amended Complaint ¶ 26, at 6. RCS Recovery Services, LCS Financial, and Real Time all claim that Vilar owes a balance of $39,603.00 on the Second Mortgage. See Amended Complaint ¶ 26, at 6. Experian Information, Equifax Information, and TransUnion "have not verified these entries as accurate, and thus have not corrected [them]." Amended Complaint ¶ 29, at 7.

In September, 2013, Vilar attempted to refinance her personal residence, but was denied because of the negative entries in her credit reports. See Amended Complaint ¶ 27, at 6. Unless Vilar pays off the Second Mortgage, the negative entries will remain on her credit reports until at least February, 2017, and potentially until August, 2019.¹¹ See Amended Complaint ¶¶ 30, 32,at 7.

PROCEDURAL BACKGROUND

Vilar commenced this lawsuit on March 8, 2014. See Complaint, filed March 8, 2014 (Doc. 1)("Complaint"). She filed the Amended Complaint on June 26, 2014. See Amended Complaint at 1. The Amended Complaint alleges, among other things, that JPMorgan Chase: (i) willfully violated §§ 1681s-2(a)(1) and 1681s-2(a)(2) of the FCRA, see Amended Complaint ¶¶ 38-42, at 8-9 ("Count II"); (ii) negligently violated § 1681i of the FCRA, see Amended Complaint ¶¶ 50-55, at 10-11 ("Count IV"); (iii) engaged in...