RICHARD D. BENNETT, District Judge.
This action arises out of alleged violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., and other state law claims relating to Plaintiff Marceline White's ("Plaintiff" or "White") residential mortgage. Currently pending before this Court are Defendant Green Tree Servicing, LLC's ("Defendant" or "Green Tree") Motion to Dismiss White's original Complaint (ECF No. 4); Defendant's Motion to Dismiss Counts I, II, IV and VI, in part, of Plaintiff's Second Amended Complaint (ECF No. 16); and Plaintiff's Motion for Leave to Present the Court with Supplemental Authorities (ECF No. 22). The parties' submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D.Md.2014). For the reasons that follow, Green Tree's Motion to Dismiss (ECF No. 4) is DENIED AS MOOT. Defendant's Motion to Dismiss Counts I, II, IV and VI of the Second Amended Complaint (ECF No. 16) is GRANTED IN PART and DENIED IN PART; specifically, it is granted with respect to Counts I, II, and VI, in part, due to preemption under the Fair Credit Reporting Act, but is denied with respect to White's specific claim under the Act set forth in Count IV. Plaintiff's Motion for Leave to Present the Court with Supplemental Authorities (ECF No. 22) is considered WITHDRAWN.
In a ruling on a motion to dismiss, this Court accepts the facts alleged in the plaintiff's complaint as true. See Aziz v. Alcolac, Inc., 658 F.3d 388, 390 (4th Cir. 2011). On November 14, 2001, White acquired the residence at 1531 Park Avenue in Baltimore City, Maryland ("the Property") with her former husband. Second Am. Compl. ¶ 17. White became the sole owner of the Property when the couple divorced in 2007. Id. On June 1, 2013, the servicing rights for White's loan were transferred from Bank of America, North America, to Green Tree.
In October 2013, White attempted to refinance her mortgage through PNC so
Days before the proposed settlement date of January 29, 2014, PNC informed White that it could no longer approve her refinance because Green Tree, her mortgage servicer, reported to PNC that she was no longer current on her mortgage payments. Id. ¶ 28. White proceeded to request a payoff statement from Green Tree so that she could settle with PNC for her refinanced mortgage. Id. ¶ 30. The statement that Green Tree provided White indicated that White owed $6,751.11 in interest on her loan, as well as $154.78 in late fees. Id. Shortly thereafter, PNC informed White that according to her TransUnion credit report, she had recent derogatory collections events, which White attributes to the reporting from Green Tree that she was behind on her payments. Id. ¶ 32. Around this time, Green Tree passed on the same information to the three major credit reporting agencies (Experian, Equifax, and Transunion). Id. ¶¶ 33-34.
On January 27, 2014, White wrote to the three reporting agencies regarding the disputed information, copying Green Tree on each letter. Id. ¶ 35. Pursuant to the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., White notified the reporting agencies and Green Tree that she disputed the negative credit reporting by Green Tree reflecting her as late on her mortgage.
In a February 20, 2014 letter Green Tree responded to White's RESPA claims, maintaining that White was behind on her payments. Id. In a February 24, 2014 letter Green Tree acknowledged receipt of White's FCRA claims, indicating it would investigate the disputed payment information. Id. ¶ 42. In a February 27, 2014 letter Green Tree acknowledged receipt of White's MCPA inquiry, promising an investigation
White contends that Green Tree failed to investigate or correct the payment information, and that she suffered economic damages as a result. On June 17, 2014, White filed a three-count complaint in the Circuit Court for Baltimore City, alleging violations of the Maryland Consumer Protection Act ("MCPA"), Md.Code Ann., Com. Law § 13-101 et seq., the Maryland Consumer Debt Collection Act ("MCDCA"), Md.Code Ann., Com. Law § 14-201, and the Maryland Mortgage Fraud Protection Act ("MMFPA"), Md. Code Ann., Real Prop. §§ 7-401 et seq. See Notice of Removal, ECF No. 1. In response, Green Tree moved to dismiss on September 19, 2014, arguing that White's Complaint was preempted by the FCRA. Id. Plaintiff then filed an amended complaint on October 1, 2014 in the Circuit Court for Baltimore City, alleging identical state law claims but adding the RESPA and FCRA claims. Id. Defendant filed a Notice of Removal in this Court pursuant to 28 U.S.C. § 1331 for federal question jurisdiction on October 21, 2014. Id.
On October 22, 2014, White filed a six-count Second Amended Complaint mirroring the amended complaint she filed in Baltimore City Circuit Court.
Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a claim upon
The Supreme Court's recent opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), "require that complaints in civil actions be alleged with greater specificity than previously was required." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir.2012) (citation omitted). In Twombly, the Supreme Court articulated "[t]wo working principles" that courts must employ when ruling on Rule 12(b)(6) motions to dismiss. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. First, while a court must accept as true all the factual allegations contained in the complaint, legal conclusions drawn from those facts are not afforded such deference. Id. (stating that "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice" to plead a claim); see also Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir.2012). Second, a complaint must be dismissed if it does not allege "a plausible claim for relief." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. Although a "plaintiff need not plead the evidentiary standard for proving" her claim, she may no longer rely on the mere possibility that she could later establish her claim. McCleary-Evans v. Maryland Department of Transportation, State Highway Administration, 780 F.3d 582, 586 (4th Cir.2015) (emphasis omitted) (discussing Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) in light of Twombly and Iqbal).
The Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., is "a comprehensive statutory scheme designed to regulate the consumer reporting industry." Ross v. F.D.I.C., 625 F.3d 808, 812 (4th Cir.2010). The FCRA creates a duty for furnishers of credit information to provide accurate information, including a duty to correct inaccuracies and to investigate disputed information upon notice from a credit reporting agency. 15 U.S.C.A. § 1681s-2.
Congress amended the FCRA in 1996 to address the disparity in reporting laws emerging among states that had, until then, been permitted to pass their own regulations to supplement the FCRA. Ross, 625 F.3d at 812. To avoid this patchwork result, the amended FCRA included a preemption provision which states in part:
15 U.S.C. § 1681t(b)(1)(F) (emphasis added).
Section 1681h(e)—a preemption provision in the original FCRA—allows for certain state common law claims under the FCRA. Section 1681h(e) states:
15 U.S.C. § 1681h(e)(emphasis added).
On its face, the broad preemption of Section 1681t appears to conflict with the malice-exception in Section 1681h(e). To reconcile these provisions, district courts, including this Court, have adopted the "statutory approach," which applies Section 1681t for state statutory claims, and applies Section 1681h for state common law claims. See, e.g., Jacobs v. Seterus, Inc., Civ. A. No. ELH-13-02578, 2013 WL 4852243, at *4 (D.Md. Sept. 9, 2013) (adopting the "statutory approach," holding that section 1681t(b) pre-empts state statutory claims, but not state common law claims); see also Davenport v. Sallie Mae, Inc., Civ. A. No. PJM-12-1475, 2013 WL 4010983, at *5 (D.Md. Aug. 2, 2013) (also adopting the state statutory approach). Under the statutory approach, as consistently applied by this Court in the recent opinions of Judge Hollander and Judge Messitte, state statutory claims arising from reporting inaccurate information to credit reporting agencies are "squarely preempted by the plain language of the FCRA." Ross, 625 F.3d at 813.
In Count I of the Second Amended Complaint, White alleges violations of Maryland's Consumer Protection Act ("MCPA"), Md.Code Ann., Com. Law § 13-101 et seq., and Maryland's Consumer Debt Collection Act ("MCDCA"), Md. Code Ann., Com. Law § 14-201, as a result of Green Tree making "materially false, misleading oral or written statements, omissions, or other representations related to the status of White's mortgage loan . . ." Second Am. Compl. ¶¶ 49-73. In Count II, White alleges violations of the Maryland Mortgage Fraud Protection Act ("MMFPA"), Md.Code Ann., Real Prop. §§ 7-401 et seq., as a result of Green Tree "knowingly making . . . deliberate misstatements, misrepresentations and omissions. . . during the mortgage lending process . . ." Id. ¶ 72. Because Counts I and II constitute claims arising under Maryland statutes and relate to Green Tree's furnishing of credit information to credit reporting agencies, they run "into the teeth of the FCRA preemption provision," as noted by the Fourth Circuit in Ross, 625 F.3d at 813. Accordingly, Counts I and II of the Second Amended Complaint are preempted by the FCRA, and will be dismissed.
In Count VI, for defamation, White alleges that Green Tree is liable for making "a series of false and misleading statements" by claiming that White was late on her mortgage payments. See Compl. ¶ 101. White argues that Count VI survives the preemption provision through the exception in Section 1681h(e) permitting state common law causes of action for "false information furnished with malice or willful intent to injure such consumer." 15 U.S.C.A. § 1681h(e).
Green Tree's Motion makes clear, however, that it only seeks to dismiss Count VI to the extent that the defamation claim is premised upon a theory of negligence. Indeed, Green Tree's Motion explicitly states that it does not challenge the sufficiency of White's allegations regarding
In Count IV, White alleges that Green Tree violated Section 1681s-2(b) of the FCRA by failing to investigate allegedly false information on White's credit history for several months after Green Tree was informed of the disputed information. Id. ¶¶ 87-88. Section 1681s-2(b) imposes a duty on furnishers of credit information to investigate disputed information "after receiving notice pursuant to section 1681i(a)(2)." In turn, Section 1681i(a)(2) requires a credit reporting agency to report disputed information to a furnisher. 15 U.S.C.A. § 1681i.
Through a narrow interpretation of these two provisions, Green Tree argues that the duty to conduct an investigation into disputed information pursuant to Section 1681s-2(b) is therefore only triggered after receiving a report from a "credit reporting agency." Green Tree asserts that "[b]ecause Plaintiff does not allege Green Tree ever received such a report, Plaintiff's claim under the FCRA fails as a matter of law." See Pl.'s Mot. to Dismiss, 19. White contends, however, that because the FCRA imposes a duty on a credit reporting agency to notify a furnisher once the consumer disputes credit information, White can satisfy her pleading requirements by merely alleging that she raised her dispute with the reporting agencies. She concludes that she should not have to allege that the reporting agency actually notified the furnisher to state a claim on which relief can be granted.
In arguing that a plaintiff must explicitly allege that a furnisher received a report from a credit reporting agency before they can state a claim on which relief may be granted, Green Tree relies heavily on Mavilla v. Absolute Collection Serv., Inc., 539 Fed.Appx. 202, 208 (4th Cir.2013).
Green Tree's reliance on Mavilla, however, is misplaced. In Mavilla, two plaintiffs filed suit against a collection agency for reporting unpaid debts relating to health services which the plaintiffs never actually received. 539 Fed.Appx. at 204. One week before filing their suit against the collection agency, the plaintiffs notified their credit reporting agency that they disputed the negative reporting from the defendant. Id. The credit reporting agency immediately notified the collection agency of the dispute, triggering the duty to investigate within thirty days under the FCRA. Id. Because the plaintiffs filed their lawsuit only five days after notifying the reporting agency, the Fourth Circuit
At the same time, the U.S. Courts of Appeal for the Seventh and Ninth Circuits as well as a number of federal district courts have spoken directly on this issue. Those decisions illustrate that, for purposes of an FCRA lawsuit, a plaintiff triggers the defendant-furnisher's duty to investigate under 1681s-2(b) by merely notifying their credit reporting agency of a dispute. This is for two reasons: 1) the reporting agency has an obligation to notify the furnisher of the dispute, and 2) the reporting agency has no duty to inform the consumer once they have notified the furnisher. Instead, a plaintiff satisfies the 12(b)(6) standard by merely alleging that she notified her reporting agency of disputed credit information. See, e.g., Lang v. TCF Nat. Bank, 249 Fed.Appx. 464, 466 (7th Cir.2007) (unpublished) (because the FCRA does not require a credit reporting agency to inform a consumer once it notifies a furnisher of the dispute, the consumer may not be in a position to allege notification at the time they file a complaint); see also Pace v. Bank of Am. Corp., 537 Fed.Appx. 735, 736 (9th Cir.2013) (unpublished) (at the 12(b)(6) stage, it is reasonable to infer that the credit reporting agencies obeyed the law, and that the furnisher received notice of Pace's dispute from the credit reporting agencies); Sheffer v. Experian Info. Solutions, Inc., 249 F.Supp.2d 560, 563 (E.D.Pa.2003) (the issue of whether the CRA notified the furnisher after receiving notice from a consumer is an issue appropriately resolved after discovery).
Thus, the general trend in the caselaw is that a 1681s-2(b) claim survives a motion to dismiss despite the absence of an express allegation that a credit reporting agency provided notice to a furnisher of credit information of a dispute. This conclusion is not inconsistent with the Fourth Circuit's decision in Mavilla. Moreover, Green Tree's other cited caselaw is also unavailing.
For the reasons stated above, Green Tree's Motion to Dismiss (ECF No. 4) is DENIED AS MOOT. Defendant's Motion to Dismiss Counts I, II, IV and VI of the Second Amended Complaint (ECF No. 16) is GRANTED IN PART and DENIED IN PART; specifically, it is granted with respect to Counts I, II, and VI, in part, due to preemption under the Fair Credit Reporting Act, and denied with respect to White's specific claim under the Act as set forth in Count IV.
A separate Order follows.
