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Short v. Experian Information Systems, Inc.

United States District Court, S.D. West Virginia, Charleston Division

May 25, 2017

KARA SHORT, Plaintiff,



         Before the Court are Motions to Dismiss the First Amended Complaint filed by Defendants Citibank, N.A., (ECF No. 35), and Discover Bank, (ECF No. 44). Also pending is Plaintiff Kara Short's Motion for Leave to File a Second Amended Complaint. (ECF No. 47.) For the reasons that follow, the Motion for Leave to Amend is GRANTED IN PART and DENIED IN PART. Due to the filing of the Second Amended Complaint, the Motions to Dismiss are DENIED AS MOOT.

         I. BACKGROUND

         Plaintiff brings this action challenging the accuracy of certain negative entries on her credit reports. Originally named as Defendants were three credit reporting agencies (“CRAs”)- TransUnion LLC (“TransUnion”), Experian Information Solutions, Inc. (“Experian”), and Equifax Information Services, LLC (“Equifax”)-and three lending institutions-Discover Bank (“Discover”), Chase Bank USA, N.A. (“Chase”), and Citibank, N.A (“Citibank”) (collectively “the Banks”).[1] In the First Amended Complaint filed in this action on December 19, 2016, Plaintiff brought a claim for violations of the Fair Credit Reporting Act (“FCRA”) against the CRAs as well as claims for defamation and violations of the West Virginia Consumer Credit and Protection Act (“WVCCPA”) against the Banks.

         Citibank and Discover moved to dismiss the First Amended Complaint under Federal Rule of Civil Procedure 12(b)(6). Plaintiff responded by moving for leave to file a Second Amended Complaint. The motion was timely pursuant to the Court's Scheduling Order, (ECF No. 33), which set a deadline for amended pleadings of January 23, 2017. Only Citibank opposes the amendment. Accordingly, the Court confines its discussion of Plaintiff's factual allegations to those relevant to Citibank.

         Plaintiff accessed her TransUnion, Experian, and Equifax credit reports on November 3, 2015. (Second Am. Compl. ¶¶ 17, 49, 81.) Each credit report contained alleged inaccuracies relating to Plaintiff's Citibank account. In each case, Citibank reported the account as a charged-off debt for $1016. Plaintiff claims that she previously paid the debt on the account in full under the terms of a settlement agreement between her and Citibank. (See Id. ¶ 40.) Plaintiff contends that since Citibank had agreed to treat the debt as fully paid, the account should not have appeared on her credit reports. With the assistance of counsel, Plaintiff sent letters to TransUnion, Equifax, and Experian disputing Citibank's reporting. (See id.)

         Notice of the dispute eventually reached Citibank. Citibank responded to the dispute by altering its reporting, though not to Plaintiff's satisfaction. Each credit report still lists the disputed account. On the Experian credit report, the account is now listed with this description: “Paid for Less than Full Balance; Paid Charge Off.” (Id. ¶ 43.) The TransUnion report lists the account as disputed by the consumer with the descriptor “current, paid, or paying as agreed.” (Id. ¶ 73.) The Equifax report also identifies the account as disputed, indicates that it was paid for less than the full balance, and describes the account as a “paid charge off.” (Id. ¶ 105.)

         As stated above, Plaintiff's First Amended Complaint alleged that Citibank defamed her and violated the WVCCPA by continuing to report the disputed account. In her latest proposed amendment, Plaintiff expands on her allegations that Citibank's defamatory conduct was malicious and carried out with willful intent to injure her. (Second Am. Compl. Count IV.) Her WVCCPA claim has undergone minor alterations but remains substantively unchanged. (Id. Count V.) The most significant change between the two pleadings is the inclusion of an FCRA claim against Citibank for failure to conduct a reasonable investigation into its reporting as mandated by 15 U.S.C. § 1681s-2(b). (Id. Count II.) Citibank challenges the amendment as futile.


         Federal Rule of Civil Procedure 15 permits amendment of a complaint more than twenty-one days after service “only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2). “The court should freely give leave when justice so requires.” Id. Under Rule 15(a), “leave to amend should be denied only when the amendment would be prejudicial to the opposing party, there has been bad faith on the part of the moving party, or amendment would be futile.” Matrix Capital Mgmt. Fund, LP v. BearingPoint, Inc., 576 F.3d 172, 193 (4th Cir. 2009) (citing Laber v. Harvey, 438 F.3d 404, 426 (4th Cir. 2006)). This liberal approach to amendment “gives effect to the federal policy in favor of resolving cases on their merits instead of disposing of them on technicalities.” Id. (internal quotation marks and citation omitted).

         “Leave to amend should be denied on the ground of futility when the proposed amendment is clearly insufficient or frivolous on its face. A proposed amendment is futile ‘if . . . [it] fails to satisfy the requirements of the federal rules, ' such as Rule 12(b)(6).” Friend v. Remac Am., Inc., 924 F.Supp.2d 692, 696 (N.D. W.Va. 2013) (citations omitted).

         A motion to dismiss for failure to state a claim upon which relief can be granted tests the legal sufficiency of a civil complaint. Fed.R.Civ.P. 12(b)(6); Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). “[I]t does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir.1992) (Citing 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court decides whether this standard is met by separating the legal conclusions from the factual allegations, assuming the truth of only the factual allegations, and then determining whether those allegations allow the court to reasonably infer that “the defendant is liable for the misconduct alleged.” Id. A motion to dismiss will be granted if, “after accepting all well pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of [her] claim entitling [her] to relief.” Edwards, 178 F.3d at 244.


         Citibank opposes the amendment of Plaintiff's pleading on grounds of futility. It argues that the recently added FCRA claim fails to state a claim because Plaintiff cannot demonstrate that her credit report was inaccurate or incomplete. Citibank reasons that without this foundational showing, Plaintiff cannot proceed on a claim that it fell short of its duty to investigate and correct her credit report. As for the defamation and WVCCPA claims, Citibank renews the arguments put forward in its Motion to Dismiss. Citibank continues to maintain that the FCRA preempts these claims.

         A. Section ...

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