Mohamed v. Navy Federal Credit Union

• Court: District Court, N.D. California
• Decided: August 12, 2025
• Docket: 3:25-cv-04174
• Status: Unknown

Opinion

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 SAIID MOHAMED, 10 Case No. 25-cv-04174-RS Plaintiff, 11 v. ORDER GRANTING MOTION TO 12 DISMISS NAVY FEDERAL CREDIT UNION, 13 Defendant. 14

15 I. INTRODUCTION 16 Plaintiff Saiid Mohamed, a Department of Defense contractor, sued Defendant Navy 17 Federal Credit Union (“NFCU”) in California state court, averring the unlawful and discriminatory 18 closure of his account as well as publication of false and defamatory credit information and 19 obstruction of his access to financial services. He claims that his credit score dropped 20 precipitously due to false fraud allegations that Defendant levied, ultimately costing him the denial 21 of a $100,000 business loan and reputational harm within his profession. 22 Following removal to federal court, Defendant moves to dismiss all ten causes of action in 23 the complaint for failure to state a claim. For the reasons explained below, the motion to dismiss 24 is granted with leave to amend. 25 II. BACKGROUND 26 The parties’ familiarity with the relevant facts is assumed. In short, Plaintiff avers that he 27 opened an account with Defendant and deposited $250 in January 2025. He applied for a credit 1 than two weeks later, however, his credit card was declined; upon contacting Defendant, he 2 learned that it had frozen his account due to suspected membership fraud. He provided 3 identification and verification documents, but Defendant refused to unfreeze the account and 4 instead closed it. Defendant subsequently reported credit information to credit bureaus, leading to 5 a drop in Plaintiff’s credit score. 6 According to the complaint, Pentagon Federal Credit Union later approved Plaintiff for a 7 full -service account based on the same documents that Defendant rejected. Defendant also 8 allegedly failed to provide any written notice of adverse action or findings regarding its fraud 9 investigation. Plaintiff further avers that SoFi Bank denied him a $100,000 business loan as a 10 result of Defendant’s actions. He claims to have filed a complaint with the Consumer Financial 11 Protection Bureau (“CFPB”), and he also claims that his experience derives from discriminatory 12 bias toward his race and national origin. 13 III. LEGAL STANDARD 14 A complaint must contain “a short and plain statement of the claim showing that the 15 pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While “detailed factual allegations” are not 16 required, a complaint must have sufficient factual allegations to state a claim that is “plausible on 17 its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. v. Twombly, 550 U.S. 544, 18 555, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that 19 allows the court to draw the reasonable inference that the defendant is liable for the misconduct 20 alleged.” Id. (citing Twombly, 550 U.S. at 556). This standard asks for “more than a sheer 21 possibility that a defendant has acted unlawfully.” Id. The determination is a context-specific task 22 requiring the court “to draw on its judicial experience and common sense.” Id. at 679. 23 A motion to dismiss a complaint under Rule 12(b)(6) tests the legal sufficiency of the 24 claims alleged in the complaint. See Conservation Force v. Salazar, 646 F.3d 1240, 1241–42 (9th 25 Cir. 2011). Dismissal may be based on either the “lack of a cognizable legal theory” or on “the 26 absence of sufficient facts alleged under a cognizable legal theory.” Id. at 1242 (internal quotation 27 marks and citation omitted). When evaluating such a motion, the court must accept all material 1 allegations in the complaint as true and construe them in the light most favorable to the non- 2 moving party. In re Quality Sys., Inc. Sec. Litig., 865 F.3d 1130, 1140 (9th Cir. 2017). 3 “[C]onclusory allegations of law and unwarranted inferences,” however, “are insufficient to defeat 4 a motion to dismiss for failure to state a claim.” Caviness v. Horizon Cmty. Learning Ctr., Inc., 5 590 F.3d 806, 812 (9th Cir. 2010) (internal quotation marks and citation omitted). 6 IV. DISCUSSION 7 Defendant moves to dismiss all claims in the complaint, arguing that Plaintiff fails to state 8 a claim in each instance. For the reasons explained below, the motion is granted. 9 A. Breach of Contract 10 Defendant urges the dismissal of Plaintiff’s breach of contract claim, contending that it 11 fails because Plaintiffs does not identify the specific contractual provision allegedly breached. 12 “To properly plead breach of contract, ‘[t]he complaint must identify the specific provision of the 13 contract allegedly breached by the defendant.’” Caraccioli v. Facebook, Inc., 167 F. Supp. 3d 1056, 1064 (N.D. Cal. 2016), aff’d, 700 F. App’x 588 (9th Cir. 2017) (citing Donohue v. Apple, 14 Inc., 871 F. Supp. 2d 913, 930 (N.D. Cal. 2012). 15 The complaint does not provide this necessary identification, as Plaintiff appears to 16 concede by not addressing the matter in his opposition brief. Indeed, the complaint does not even 17 clearly identify which particular contract is at issue. It seems to be the account agreement, but if 18 anything, that contract provides for Defendant’s actions: pursuant to the relevant disclosures, Navy 19 Federal can restrict or limit an account when it “receive[s] conflicting information or instructions 20 regarding account ownership, control, or activity.” See Abbott Decl., Ex. A; Dkt. No. 6-2 at 1 21 (“Account Disclosures”).1 It also did not require any adverse action notices, contrary to Plaintiff’s 22 allegations, and it advised that Navy Federal may report information to credit bureaus. Thus, not 23 only is it unclear what part of the contract was breached by the challenged action, but it appears 24 25

26 1 The agreement referred to in the complaint is incorporated by reference, and its truth is assumed for the purposes of evaluating the instant motion. See Khoja v. Orexigen Therapeutics, Inc., 899 27 F.3d 988, 1003 (9th Cir. 2018). 1 from the face of the only contract plausibly at issue that Defendant’s actions were not a breach at 2 all. At any rate, the failure to identify the specific contractual provisions breached is fatal to 3 Plaintiff’s breach of contract claim, and that claim is therefore dismissed, with leave to amend. 4 B. Fair Credit Reporting Act 5 Defendant next contends that Plaintiff’s FCRA claim fails because he never filed a dispute with a credit reporting agency (“CRA”), the threshold requirement for the private right of action 6 under 15 U.S.C. § 1681s-2(b). To state a claim under § 1681s-2(b), Plaintiff must allege that: 7 “Defendant is a ‘furnisher’; (2) Plaintiff notified the CRA that Plaintiff disputed the reporting as 8 inaccurate; (3) the CRA notified the furnisher of the alleged inaccurate information of the dispute; 9 (4) the reporting was in fact inaccurate; and (5) Defendant failed to conduct the investigation 10 required by [15 U.S.C.] § 1681s-2(b)(1).” Aranda v. Nissan Motor Acceptance Corp., No. 2:21- 11 cv-03451-CBM-PDx, 2023 WL 3564931 at *2 (C.D. Cal. March 21, 2023). 12 The complaint contains no allegations about submitting a dispute to any CRA, so it fails to 13 meet the second element of the FCRA claim.2 Although Plaintiff alleges submitting disputes or 14 complaints to the CFPB and Defendant, such submissions are insufficient under the statute. See 15 Smith v. Cap. One Bank (USA), No. C21-5867RSL, 2022 WL 2952410, at *2 (W.D. Wash. July 16 26, 2022) (notice to CFPB and Washington State Attorney General insufficient); Higley v. 17 Newrez, LLC, No. 3:22-cv-01474-IM, 2023 WL 2968240, at *4 (D. Or. Apr. 17, 2023) (notice to 18 CFPB not sufficient to state a claim under § 1681s-2(b)); Obeng-Amponsah v. Fin. Am., LLC, No. 19 EDCV 09-96-GHK (JCX), 2009 WL 10646147, at *6 (C.D. Cal. Dec. 21, 2009) (under the FCRA, 20 “a consumer’s direct notification to the furnisher does not trigger any obligation for the 21 furnisher”). “The duties imposed upon a furnisher of information are triggered upon notice of a 22 dispute from a consumer reporting agency, not from the consumer himself.” Smith, 2022 WL 23 2952410, at *2 (citing 15 U.S.C. § 1681(a)(2)(A) and 1681s-2(b)). The claim is therefore 24 25

26 2 Plaintiff’s opposition brief alleges that he filed a written dispute with Experian in March 2025, but because this averment is not in the complaint, and absent any evidence of which the court 27 could take judicial notice, this note in the brief is insufficient to state a claim. 1 dismissed with leave to amend.3 2 C. Equal Credit Opportunity Act (“ECOA”) 3 Defendant next moves to dismiss Plaintiff’s third claim, which alleges that Defendant failed to 4 provide a written statement of the reasons for its actions in violation of 15 U.S.C. § 1691(d)(2). 5 Moreover, according to Plaintiff, he was subjected to this denial in a way that similarly situated 6 non-Black or non-U.S.-born applicants would not be subjected. In his opposition to dismissal, 7 Plaintiff further explains that he makes this argument via inference and circumstantial evidence, 8 relying on the juxtaposition between his success opening accounts at other institutions and the 9 failure of his efforts with Defendant. 10 Plaintiff’s opposition fails to show that his ECOA claim satisfies the relevant standard, which 11 requires alleged facts showing that: (1) he was a member of a protected class; (2) he applied for 12 credit from the defendant; (3) he qualified for the credit; and (4) defendant denied him credit 13 despite his qualification. Anderson v. Wachovia Mortg. Corp., 621 F.3d 261, 268 n.5 (3d Cir. 14 2010); Carter v. Bentley Motors Inc., 489 F.Supp.3d 316, 324 (D.N.J. 2020); Jones v. Vargas, No. 15 LA CV19-0440 JAK (SKx), 2019 WL 13253487, at *5 (C.D. Cal. Nov. 6, 2019) (highlighting 16 several California district courts that use this standard notwithstanding the lack of clear Ninth 17 Circuit guidance). Although Plaintiff alleges that he is a member of a protected class, he fails to 18 allege any facts that suggest he qualified for credit. The fact that a different institution treated him 19 differently does not, standing alone, suffice to demonstrate prejudicial treatment. The claim is 20 therefore dismissed with leave to amend. 21 22

23 3 Plaintiff also seems to raise a claim under 15 U.S.C. § 1681(m)(a), which states that any person who takes an adverse action “based in whole or in part on any information contained in a 24 consumer report” is required to provide notice of adverse action. That statute, however, does not provide a private right of action. White v. E-Loan, Inc., 409 F. Supp. 2d 1183, 1187 (N.D. Cal. 25 2006) (holding that “the language of the statute is clear” in eliminating private enforcement of the rights created by § 1681m. In his opposition, Plaintiff claims that he does not actually assert a 26 stand-alone claim under this statute and only cited it to bolster his unfair competition claim discussed infra. At any rate, to the extent there is any claim alleged under this statute, it fails for 27 the reasons stated. 1 D. Defamation 2 Plaintiff also claims that Defendant reported alleged membership fraud to the CRAs in a 3 way that amounts to defamation per se as an unprivileged false statement of fact. Defendant 4 moves to dismiss this claim, contending that Plaintiff’s conclusory discussion of malice and bad 5 faith is insufficient at the pleadings stage, particularly in light of the preemption that Defendant 6 claims to govern state law claims against furnishers as defined by the FCRA. 7 The motion is granted. “The FCRA contains two preemption sections restricting state law 8 claims that apply to persons who furnish information under the FCRA.” Buraye v. Equifax, 625 F. 9 Supp. 2d 894, 897 (C.D. Cal. 2008). Under 15 U.S.C. § 1681h(e), “no consumer may bring any 10 action or proceeding in the nature of defamation ... against ... any person who furnishes 11 information to a consumer reporting agency...” This preemption reflects the fact that “Congress 12 intended the FCRA to be the sole remedy against these furnishers.” Howard v. Blue Ridge Bank, 13 371 F. Supp. 2d 1139, 1143 (N.D. Cal. 2005). The only exception is for false information 14 furnished with malice, but the complaint fails to aver facts that could plausibly support a finding 15 of malice. 16 The second preemption provision under the FCRA is contained in 15 U.S.C. § 1681t(b), 17 which preempts any requirements or prohibitions under state law with respect to matters regulated 18 by the FCRA. Considering that “[t]he majority of district courts in the Ninth Circuit favor the total 19 preemption approach,” Khankin v. JLR San Jose, LLC, 720 F. Supp. 3d 816, 824 (N.D. Cal. 2024), 20 the defamation claim asserted here is dismissed. 21 E. Fraudulent Misrepresentation 22 Stating a claim for fraudulent misrepresentation requires alleging facts plausibly sufficient 23 to show five elements: (1) misrepresentation, (2) knowledge of the statement’s falsity, (3) intent to 24 induce reliance, (4) justifiable reliance, and (5) resulting damage. See Hunter v. Up-Right, Inc., 6 25 Cal. 4th 1174, 1184 (1993); see also Lazar v. Superior Court, 12 Cal. 4th 631, 638 (1996). 26 Moreover, because such a claim sounds in fraud, it must comply with Rule 9(b)’s particularity 27 requirement, which mandates that fraud allegations be “specific enough to give defendants notice 1 of the particular misconduct which is alleged to constitute the fraud charged so that they can 2 defend against the charge and just deny that they have done anything wrong.” Bly-Magee v. Cal., 3 236 F.3d 1014, 1019 (9th Cir. 2001) (quotation marks and citation omitted). Defendant contends 4 that Plaintiff fails to allege any plausible misrepresentation. 5 The motion is granted. Plaintiff’s complaint asserts that Defendant represented he had 6 good standing when it first allowed him to open an account, only to later allege fraud. This fails to 7 state a claim because predictions as to future events are not actionable on a fraudulent 8 misrepresentation theory; they are expressions of opinion. See Bayview Hunters Point Cmty. 9 Advocs. v. Metro. Transp. Comm’n, 366 F.3d 692, 698 (9th Cir. 2004), as amended on denial of 10 reh’g and reh’g en banc (June 2, 2004). Crucially, Defendant was relying on Plaintiff’s own 11 submissions when it stated that he was a member in good standing, and nothing in the complaint 12 suggests that Defendant knew it would change its opinion other than Plaintiff’s conclusory 13 allegations to that effect. At any rate, the complaint fails to meet rule 9(b)’s particularity 14 requirements. The claim is therefore dismissed with leave to amend. 15 F. Consumer Financial Protection Act (“CFPA”) 16 Plaintiff next cites the CFPA, 12 U.S.C. § 5531, and attempts to make a claim over the 17 reporting of false credit data, refusing to provide certain documents, and retaliation after a CFPB 18 complaint. As Defendant rightly highlights, however, there is no private right of action under this 19 statute. See Williams v. Lobel Fin. Corp., 673 F. Supp. 3d 1101, 1106 (C.D. Cal. 2023). This 20 claim is therefore dismissed without leave to amend. 21 G. Unfair Competition Law 22 To state a claim under the UCL, a plaintiff must allege, inter alia, having “suffered injury 23 in fact” and “lost money or property as a result of the unfair competition.” Cal. Bus. & Prof. Code 24 § 17204. Defendant moves to dismiss this claim because Plaintiff has not alleged losing money or 25 property, and on the alternative grounds that Plaintiff has not alleged conduct that would satisfy 26 any of the UCL’s three prongs prohibiting unlawful, unfair, or fraudulent conduct. 27 The motion is granted without leave to amend. A UCL claim cannot proceed absent 1 allegations of lost money or property. See Ghazarian v. Magellan Health, Inc., 53 Cal. App. 5th 2 171, 193 (2020). Plaintiff waives this point by failing to address it in opposition. 3 H. Intentional and/or Negligent Infliction of Emotional Distress 4 Defendant next moves to dismiss Plaintiffs claims for intentional and/or negligent 5 infliction of emotional distress, asserting that each is preempted under the FCRA. Defendant 6 || explains that each claim arises from allegations that it reported certain information about Plaintiff 7 || that negatively affected his credit score. 8 The motion is granted without leave to amend, as such claims for emotional distress are 9 || preempted under the FCRA. See Buraye, 625 F. Supp. 2d at 897; see also Miller v. Bank of Am., 10 || Nat. Ass’n, 858 F. Supp. 2d 1118, 1127 (S.D. Cal. 2012) (dismissing intentional and negligent 11 infliction of emotional distress claims as preempted by FCRA). 12 I. Injunctive Relief 5 13 Finally, to the extent Plaintiff aims to assert an independent claim for injunctive relief, the 14 || motion to dismiss is granted. All the claims upon which relief might be granted are dismissed, as 3 15 explained supra. Injunctive relief is a remedy, not an independent cause of action, and it is not 16 || warranted based on the averments in the operative complaint. V. CONCLUSION 18 Defendant’s motion to dismiss is granted for the reasons explained. Leave to amend is 19 granted only as to those claims noted above. 20 21 IT IS SO ORDERED. 22 23 Dated: August 12, 2025 24 / RICHARD SEEBORG 25 Chief United States District Judge 26 27 98 ORDER GRANTING MOT. TO DISMISS CASE No. 25-cv-04174-RS