Bjornson v. USAA Credit Card

Opinion

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6 7 UNITED STATES DISTRICT COURT 8 WESTERN DISTRICT OF WASHINGTON AT TACOMA 9 10 KEVIN SCOTT BJORNSON, CASE NO. 3:20-cv-05449 RJB 11 Plaintiff, ORDER ON DEFENDANT USAA 12 v. FEDERAL SAVINGS BANK’S MOTION TO DISMISS AND 13 EQUIFAX INC, DISCOVER CARD, PLAINTIFF’S MOTION FOR USAA CREDIT CARD, BANK OF LEAVE TO AMEND THE 14 AMERICA, FIRST NATIONAL BANK COMPLAINT CARD, 15 Defendants. 16

17 This matter comes before the Court on Defendant USAA Federal Savings Bank’s Motion 18 to Dismiss (Dkt. 71) and Plaintiff’s Motion for Leave of Court to Amend the Complaint (Dkt. 19 76). Plaintiff originally filed the motion for leave in response to another motion (Dkt. 76) and 20 refiled that motion in his response the pending motion (Dkt. 94). The Court has considered the 21 pleadings filed in support of and in opposition to the motions and the file herein. Defendant’s 22 motion to dismiss (Dkt. 71) should be granted, in part, and Plaintiff’s motion for leave (Dkts. 76 23 and 94) should be denied without prejudice. 24 1 I. FACTS AND PROCEDURAL HISTORY 2 A. FACTS 3 Plaintiff alleges in his Complaint that, “Equifax Inc. Failed to properly handle the disputes of 4 the Plaintiff and also failed to update the 7 year fraud alert after receiving the Plaintiffs identity 5 theft affidavit.” Dkt. 5 at 4. The Complaint maintains that:

6 Equifax's actions were also in conspiracy of the action(s) taken by Discover Card, First National Bank of Omaha, Bank of America, & USAA Card. Equifax Inc. by 7 failing to imeediately [sic] block each of the codefendants from reporting on the Plaintiffs [sic] Credit report and by delaying the dispute process acted in conspiracy 8 to aid the codefendants [sic] failure to validate the debts challenged by the Plainitff [sic] and violate the billing rights agreement(s) for each of those accounts. And 9 further allow the illegal and discriminatory reporting of such accounts on the Plaintffs [sic] credit report defaming his reputation. 10 Id. The Complaint alleges that on December 4, 2018, the Plaintiff had a process server serve 11 “Discover Card, USAA, [First National], [BOA], Chase, and American Express” with 12 “Validation of Debt Notices,” “a Consumer Affidavit, Identity Theft Affidavit and an Affidavit 13 of Service by Certified Mail with Signature Required.” Dkt. 5-1 at 1 and 3-4. It states that the 14 Plaintiff waited around 37 days, and then “contacted his credit repair coach after receiving no 15 responses to the notices. He advised the Plaintiff to file a police report and a Federal Trade 16 Commission Report.” Id. The Complaint asserts that the Plaintiff’s “credit repair coach” 17 advised him to “notify each of the three credit bureaus and provide them with the copies of the 18 paperwork that he had used in his original disputes, the police report, the FTC report, and the 19 Affidavit of Support was included as well.” Id. at 5-1, at 2. According to the Complaint, the 20 Plaintiff sent a set of each of these documents to Equifax and the other two credit reporting agencies. 21 Id. 22 23 24 1 The Complaint alleges that [e]ach of the creditors violated the Electronic-Code of Federal 2 Regulations (E-CFR) Furnisher Rule 660.4(e)(3); as did Equifax by failing to dispute any of the 3 accounts or consider any of the information that was presented to them.” Id. 4 The Complaint alleges that the Plaintiff checked his credit report in February and March and 5 Equifax had not updated his report to reflect his disputes. Dkt. 5-1, at 2. It maintains that “[t]he Defendants, by failing to update the fraud alert on the consumers’ credit report, biased anyone who 6 may have made a determination based on the Plaintiff’s Equifax consumer credit report.” Id. at 4. It 7 maintains that Equifax failed to update the seven-year fraud alert. Id. at 9. 8 The Complaint asserts violations of Fair Credit Billing Act (“FCBA”), 15 U.S.C. § 1601, et. 9 seq., Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et. seq., Equal Credit Opportunity Act 10 (“ECOA”), 15 U.S.C. § 1691, et. seq., Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 11 1692, et. seq., and the “Electronic Code of Federal Regulations (E-CFR) Furnisher Rule 660.4(e)(3). 12 Dkt. 5. The Plaintiff claims millions of dollars in damages. Id. 13 B. PENDING MOTION 14 In the pending motion, Defendant USAA Federal Savings Bank (“USAA” or 15 “Defendant”) moves to dismiss Plaintiff’s Complaint with prejudice pursuant to Fed. R. Civ. P. 16 12(b)(6). Defendant argues that Plaintiff both fails to demonstrate that there is more than a sheer 17 possibility that he is entitled to relief and that his claims fail as a matter of law. Dkt. 71. 18 Defendant claims dismissal with prejudice without leave to amend is proper because amendment 19 would be futile. Id. 20 Plaintiff responded opposing Defendant’s motion to dismiss and in the same pleading 21 requests the Court grant him leave to amend his complaint. Dkt. 94. Plaintiff’s motion for leave 22 (Dkt. 94), includes a proposed amended complaint, which is identical to the proposed complaint 23 filed within “Cross-Motion re 49 Motion to Dismiss” (Dkt. 76). 24 1 II. DISCUSSION 2 The following analysis first discusses the relevant standards, then considers Plaintiff’s claims 3 under the Fair Credit Billing Act, the Fair Credit Reporting Act, the Equal Opportunity Credit Act, 4 and the Fair Debt Collection Practices Act. 5 A. STANDARD FOR MOTION TO DISMISS

6 Fed. R. Civ. P. 12(b) motions to dismiss may be based on either the lack of a cognizable 7 legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri 8 v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). “Material allegations [] are taken as 9 admitted and the complaint is construed in favor of the plaintiff.” Keniston v. Roberts, 717 F.2d 10 1295, 1300 (9th Cir. 1983). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss 11 does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his 12 entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the 13 elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-55 14 (2007) (internal citations omitted). “Factual allegations must be enough to raise a right to relief

15 above the speculative level, on the assumption that all the allegations in the complaint are true 16 (even if doubtful in fact).” Id. at 555. The complaint must allege “enough facts to state a claim 17 to relief that is plausible on its face.” Id. at 547. 18 B. STANDARD TO DISMISS WITHOUT LEAVE TO AMEND

19 “Dismissal without leave to amend is improper unless it is clear . . . that the complaint 20 could not be saved by any amendment.” Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 21 368 F.3d 1053, 1061 (9th Cir. 2004). However, a “district court does not err in denying leave to 22 amend where the amendment would be futile.” Id. “An amendment is futile when ‘no set of 23 facts can be proved under the amendment to the pleadings that would constitute a valid and 24 1 sufficient claim or defense.’” Missouri ex rel. Koster v. Harris, 847 F.3d 646, 656 (9th Cir. 2 2017) (quoting Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988). 3 C. PLAINTIFF’S MOTION TO AMEND THE COMPLAINT

4 Plaintiff’s Motion for Leave of Court to Amend the Complaint (Dkt. 76) should be 5 denied, without prejudice. 6 Plaintiff’s Complaint is riddled with labels and conclusions. Dkt. 5. Nowhere in his 7 pleadings does Plaintiff establish a short, plain statement and supportive factual allegations that 8 raise his right to relief above the speculative level. See Fed. R. Civ. P. 8. Plaintiff’s proposed 9 amended complaint (Dkts. 76 and 94) fares no better. It is a repetition of an amalgamation of 10 statutes and references to alleged procedural violations without making clear why he was 11 wronged. See id. 12 The analysis of particular claims follows and applies to both the original complaint and 13 the amended complaint. 14 D. FAIR CREDIT BILLING ACT

15 Plaintiff fails to plausibly allege that he is entitled to relief pursuant to the Fair Credit 16 Billing Act, 15 U.S.C. § 1601, et. seq. 17 “To succeed on a claim under 15 U.S.C. § 1666, plaintiff must show (1) the existence of a 18 billing error, (2) timely notification of the billing error, and (3) failure of the bank to issue the card to 19 comply with the procedural requirements of Section 1666.” Cunningham v. Bank One, 487 F. Supp. 20 1189, 1192 (W.D. Wash. 2007). Billing error disputes pursuant to the FCBA are governed by a one- 21 year statute of limitations. See 15 U.S.C. § 1640(e). While it is unclear from the pleadings whether Plaintiff notified the Bank Defendants of a 22 specific billing error, see e.g., Dkt. 10 at 16–17, Plaintiff’s claims pursuant to the FCBA are time 23 barred. Plaintiff alleges that he notified USAA and co-defendants Bank of America, Discover Card, 24 1 and First National Bank of Omaha of billing errors on December 4, 2018. Dkt. 5-1 at 1. He 2 includes attachments to show his letters were sent on that date. See Dkts. 14 at 3–4, 94-1. He 3 asserts that each defendant received notice by December 11, 2018. Id. The FCBA allows thirty 4 days to respond, which would compel a response by January 12, 2019. See 15 U.S.C. § 5 1666(a)(A). A creditor has ninety days from the date of notice to investigate the claim and take

6 appropriate action, which would require action by March 12, 2019. 15 U.S.C. § 1666(a)(B); see 7 Burnstein v. Saks Fifth Ave. & Co., 208 F. Supp. 2d 765, 776 (E.D. Mich. 2002). Plaintiff filed suit 8 on May 11, 2020. Dkt. 1. According to Plaintiff’s timeline, he did not commence action until two 9 months after the statute of limitations expired. See Dkts. 1 and 5. Amendment would, therefore, be 10 futile, and Plaintiff’s claims pursuant to the FCBA should be dismissed with prejudice. E. FAIR CREDIT REPORTING ACT 11

Plaintiff’s fails to plausibly allege that he is entitled to relief pursuant to the Fair Credit 12 Reporting Act. 13 1. Claim Pursuant to 15 U.S.C. § 1681s-2(a) Should be Dismissed With Prejudice 14 Plaintiff cannot bring a claim pursuant to 15 U.S.C. § 1681s-2(a) because there is no 15 private right of action. Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1060 (9th Cir. 16 2002) (“Congress limited the enforcement of the duties imposed by § 1681s-2(a) to 17 governmental bodies.”). Because there is no private right of action, amendment would be futile. 18 Plaintiff’s claim pursuant to § 1681s-2(a) should, therefore, be dismissed with prejudice. 19 2. Claim Pursuant to 15 U.S.C. § 1681s-2(b) Should be Dismissed Without Prejudice 20 Unlike § 1681s-2(a), there is a private right of action under 15 U.S.C. § 1681s-2(b). See 21 Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1165 (9th Cir. 2009). 15 U.S.C. § 1681s- 22 2(b) imposes duties on a furnisher of information “[a]fter receiving notice pursuant to section 23 1681i(a)(2) of this title[.]” Accordingly, the duties of a furnisher “arise only after the furnisher 24 1 receives notice of dispute from a [consumer reporting agency]; notice of a dispute received 2 directly from the consumer does not trigger furnishers’ duties under subsection (b).” Id. at 1154 3 (citing 15 U.S.C. § 1681s-2(b)(1); Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 4 1059–60 (9th Cir. 2002)). 5 While Plaintiff appears to allege that USAA, as well as co-defendants Bank of America,

6 Discover Card, and First National Bank of Omaha, are furnishers of information under the 7 FCRA, he claims that, “[b]y the 11th of December 2018, each . . . had received the Validation of 8 Debt dispute from the Plaintiff.” See Dkt. 5-1 at 3 (emphasis added). Because notice directly 9 from the consumer is insufficient to trigger a furnisher’s duty under § 1681s-2(b), Plaintiff’s 10 claim should be dismissed. It is not, however, clear that amendment would be futile, so 11 dismissal should be without prejudice. 12 C. Any Remaining Fair Credit Reporting Act Claims Should be Dismissed Without Prejudice 13 The FCRA requires showing that the defendant negligently or willfully failed to comply 14 with its terms. See Gorman, 584 F.3d at 1332. Although Plaintiff has failed to make that 15 showing, it is unclear whether amendment would be futile and any additional claims pursuant to 16 the FCRA should be dismissed without prejudice. 17 D. The “Furnisher Rule” does not have an Independent Private Right of Action 18 The “Furnisher Rule,” 16 C.F.R. § 660.4, is an implementing regulation of the FCRA, 19 and does not create an independent private right of action. See Kianpour v. Wells Fargo Bank, 20 N.A., 17-cv-01757-GJSx, 2017 WL 8292776, at *5 n.2 (C.D. Cal. 2017); Sprague v. Salisbury 21 Bank & Tr, Co., 2019 WL 4246601, at *4 (D. Conn. 2019), citing Corcia v. Asset Acceptance, 22 2014 WL 3656049, at *5 (E.D.N.Y 2014). While it may be relevant to Plaintiff’s claims, to the 23 24 1 extent that he is attempting to use it as a private right of action, that claim should be dismissed 2 with prejudice. 3 F. EQUAL OPPORTUNITY CREDIT ACT 4 Plaintiff fails to plausibly allege that he is entitled to relief pursuant to the Equal 5 Opportunity Credit Act.

6 Plaintiff claims that Defendants violated the EOCA, 15 U.S.C. § 1691 et. seq., (Dkt. 5), 7 which provides that it is “unlawful for any creditor to discriminate against any applicant . . . on 8 the basis of race, color, religion, national origin, sex or marital status, or age.” United States v. 9 Union Auto Sales, Inc., 490 F. App’x 847, 848 (9th Cir. 2012) (citing 15 U.S.C. § 1691(a)). “The 10 purpose of the ECOA is to eradicate credit discrimination[.]” Anderson v. United Fin., 666 F.2d 11 1274, 1277 (9th Cir. 1982). 12 Nowhere in the hundreds of pages of filings does Plaintiff claim that USAA, or any of the 13 Defendants, discriminated against him. See Dkt. 5. Plaintiff’s claim pursuant to the EOCA 14 should be dismissed without prejudice because it is not clear that amendment would be futile.

15 Plaintiff, however, should be reminded he is bound by the Rules of Civil Procedure and must not 16 file frivolous claims. See Fed. R. Civ. P. 11. 17 G. FAIR DEBT COLLECTION PRACTICES ACT 18 Plaintiff fails to plausibly allege that he is entitled to relief pursuant to the Fair Debt 19 Collection Practices Act. 20 The FDCPA, 15 U.S.C. § 1692 et. seq., “imposes civil liability on ‘debt collectors’ for 21 certain prohibited debt collection practices.” “The Act's definition of the term ‘debt collector’ 22 includes a person ‘who regularly collects or attempts to collect, directly or indirectly, debts owed 23 to ... another.’” Heintz v. Jankins, 514 U.S. 291, 293 (1995) (quoting 15 U.S.C. § 1692(a)(5)). 24 1 Like Plaintiff’s claims pursuant to the EOCA, Plaintiff vaguely claims he is entitled to relief 2 pursuant to the FDCPA. However, nowhere in hundreds of pages of documents does he even allude 3 to the possibility that any of the Defendants acted as debt collectors. The failure to include such a 4 basic fact anywhere in the extensive record indicates that amendment would be futile, and Plaintiff’s 5 claims pursuant to the FDCPA should be dismissed with prejudice. H. PLAINTIFF, PROCEEDING PRO SE, IS BOUND BY THE RULES OF CIVIL 6 PROCEDURE 7 Plaintiff is proceeding pro se, but he is still bound by the Rules of Civil Procedure. See King 8 v. Atiyeh, 814 F.2d 565, 567 (9th Cir. 1987), overruled on other grounds, Lacey v. Maricopa 9 Cty., 693 F.3d 896 (9th Cir. 2012). An amended complaint supersedes an original complaint, 10 and a court may not consider facts or allegations from the original complaint that are not 11 included in the amended complaint. Id. An amended complaint should be one pleading. 12 Plaintiff should not attempt to file multiple documents in different places in the record and 13 expect the parties and the Court to sort out which pleading he intends to include with his 14 complaint. A complaint must include “a short and plain statement of the claim showing that the 15 pleader is entitled to relief.” Fed. R. Civ. P. 8. Plaintiff is further notified that failure to 16 plausibly allege a cognizable legal theory could result in dismissal of the case. See Balistreri, 17 901 F.2d at 699. 18 I. CONCLUSION 19 There are serious deficiencies in Plaintiff’s claims that, contrary to Plaintiff, are not the 20 result of limitations in space. See Dkt. 94. In the hundreds of pages of documents filed by 21 Plaintiff, he fails to cohesively articulate what the Defendants did wrong, how that caused his 22 harm, and why he is intitled to relief. Due to Plaintiff’s pro se status, he should be entitled to one 23 more opportunity to file a motion for leave to amend the complaint. A motion for leave to 24 1 amend the complaint must be in accordance with the Local Rules, which require the motion 2 include the proposed amended complaint. LCR 15. 3 If the Plaintiff chooses to file a motion for leave to amend the complaint, he must do so 4 on or before October 23, 2020. Failure to address the fundamental flaws in the pleadings will 5 result in dismissal of the remaining claims.

6 III. ORDER 7 Therefore, it is hereby ORDERED that: 8  Defendant USAA’s Motion to Dismiss (Dkt. 71) is GRANTED, IN PART; 9  Plaintiff’s claims pursuant to The Fair Credit Billing Act, 15 U.S.C. § 1681s-2(a) 10 of The Fair Credit Reporting Act, 16 C.F.R. § 660.4, and The Fair Debt 11 Collections Practices Act are DISMISSED, WITH PREJUDICE; 12  Plaintiff’s remaining claims pursuant to The Fair Credit Reporting Act and claim 13 pursuant The Equal Opportunity Credit Act are DISMISSED, WITHOUT 14 PREJUDICE;

15  Plaintiff’s Motion for Leave of Court to Amend the Complaint (Dkts. 76 and 94) 16 is DENIED, WITHOUT PREJUDICE, and; 17  Plaintiff must file a motion for leave to amend his complaint, should he so choose, 18 by October 23, 2020. 19 The Clerk is directed to send uncertified copies of this Order to all counsel of record and 20 to any party appearing pro se at said party’s last known address. 21 Dated this 30th day of September, 2020. A 22

23 ROBERT J. BRYAN 24 United States District Judge