Montgomery v. PNC Bank National Association
Filing
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Order by Hon. Samuel Conti re 19 Motion for Leave to File Motion for Reconsideration, Vacating 18 August 6, 2012 Order, and GRANTING in part and DENYING in part 12 Motion to Dismiss.(sclc1, COURT STAFF) (Filed on 8/24/2012)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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LARRY MONTGOMERY,
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Plaintiff,
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v.
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PNC BANK, N.A., and DOES 1 through )
100, inclusive,
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Defendants.
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)
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United States District Court
For the Northern District of California
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Case No. C-12-2453 SC
ORDER RE: MOTION FOR LEAVE
TO FILE MOTION FOR
RECONSIDERATION
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I.
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INTRODUCTION
Plaintiff Larry Montgomery ("Montgomery") brings this action
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against Defendant PNC Bank, N.A. ("PNC") for improper credit
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reporting.
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reported his account as delinquent even though the bank was aware
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that Montgomery's debts had been discharged through bankruptcy.
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ECF No. 1 ("Not. of Removal") Ex. A ("Compl.") ¶¶ 15-17.
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6, 2012, the Court granted PNC's motion to dismiss the action on
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the ground that Montgomery's claims were contradicted by a credit
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report attached to his Complaint.
Specifically, Montgomery alleges that PNC improperly
On August
ECF No. 18 ("Aug. 6 Order").1
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Montgomery v. PNC Bank, Nat. Ass'n, No. C-12-2453 SC, 2012 WL
3236299, 2012 U.S. Dist. LEXIS 109932 (N.D. Cal. Aug. 6, 2012).
Montgomery now moves the Court for leave to file a motion for
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reconsideration.
ECF No. 20 ("Mot. for Reconsideration").
In
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support of his motion, Montgomery has filed a clearer copy of the
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credit report which was central to the Court's August 6 Order.
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clearer copy reveals text which previously was not visible.
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the Court been able to read this text in the first instance, it
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would have reached a different decision on PNC's motion to dismiss.
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Thus, the Court's prior order was in error.
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Plaintiff leave to file a motion for reconsideration, the Court
Had
Rather than grant
United States District Court
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For the Northern District of California
The
VACATES its August 6 Order sua sponte.
The Court also revisits
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PNC's motion to dismiss, which is GRANTED in part and DENIED in
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part.
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II.
BACKGROUND
Montgomery filed a voluntary Chapter 7 bankruptcy petition on
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March 8, 2010.
Compl. ¶ 12.
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proceedings that followed, Montgomery was granted a discharge of
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all dischargeable debts pursuant to 11 U.S.C. § 727 on June 2,
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2010.
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included his $993,750 debt to PNC.
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Montgomery in another action indicate that this $993,750 was a
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mortgage debt.
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Montgomery sent a letter to the credit reporting agency Experian,
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contesting the inclusion of certain information in his credit
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profile.
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Montgomery's PNC account ending 8530, the letter stated: "This
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account was included in my bankruptcy.
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reporting a high balance, lates, charge-offs, and should be
Id. ¶¶ 13, 15.
As a result of the bankruptcy
Montgomery alleges that this discharge
Id.
Pleadings filed by
See ECF No. 6-1 ("RJN") Ex. A.
Id. ¶ 16, Ex. A ("Experian Ltr.").
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On April 7, 2011,
Referring to
This account should not be
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reflecting a 0 balance.
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Remove these delinquent items now."
Experian Ltr.
Montgomery alleges that, despite his letter to Experian, PNC
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continued to improperly report his credit and also failed to report
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to Experian that his account information was disputed.
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17.
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credit report, which was attached to the Complaint as Exhibit C and
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was later re-filed with the Court as an exhibit to a declaration in
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support of Montgomery's motion for reconsideration.
Compl. ¶
Montgomery specifically points to a May 28, 2011 Experian
Compl. ¶ 17,
United States District Court
For the Northern District of California
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Ex. C; ECF No. 20 ("Decl. ISO Mot. for Reconsideration") Ex. A.
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With respect to the PNC account identified in the Complaint, the
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credit report describes the "Recent balance" and "Monthly Payment"
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as "Not reported."
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another lender," and "Status: Transferred, closed."
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credit report does not report a "high balance" or "charge-offs" for
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the account.
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delinquent.
It further states: "Account transferred to
Id.
The
Nor does it indicate that the account is currently
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At the bottom of the credit report there is a multi-colored
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table showing the "payment history" for the account from October
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2007 through October 2010.
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the report initially filed with the Court, this table is
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indecipherable and appears to be nothing more than a bar code.
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table is more legible in the later-filed color copy of the report.
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The table appears to reflect that Montgomery was at least 180 days
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overdue on his PNC loan from June 2009 through September 2010.
In the blurry, black-and-white copy of
The
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On April 12, 2012, Montgomery filed the instant action in the
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Superior Court of the State of California in and for the County of
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Alameda.
The case was subsequently removed to federal court.
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Montgomery asserts nine causes of action: (1) violation of the Fair
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Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681s-2(b); (2)
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violation of the California Song-Beverly Credit Card Act, Cal. Civ.
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Code § 1747, et seq.; (3) violation of the Consumer Credit
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Reporting Agencies Act, Cal. Civ. Code § 1785.25(a); (4) violation
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of the California Unfair Competition Law ("UCL"), Cal. Bus. & Prof.
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Code § 17200, et seq.; (5) libel; (6) intentional infliction of
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emotional distress; (7) negligent infliction of emotional distress;
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(8) deceit; and (9) constructive fraud.
All of these claims are
United States District Court
For the Northern District of California
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predicated on the allegation that PNC falsely reported that
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Montgomery was delinquent on his loan payments.
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31, 40, 48, 63, 68, 77, 81, 86, 91.
See Compl. ¶¶ 30-
On June 4, 2012, PNC filed a motion to dismiss the Complaint.2
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The Court granted the motion on August 6, 2012, reasoning that the
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credit report attached to Montgomery's Complaint directly
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contradicted his allegations.
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the Court found that the report did not reflect any delinquencies
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on Montgomery's PNC account.
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filed the instant motion, requesting leave to file a motion for
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reconsideration in connection with the Court's August 6 Order.
Aug. 6 Order at 4.
Id.
Specifically,
On August 13, 2012, Montgomery
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III. DISCUSSION
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A.
Motion for Leave to File a Motion for Reconsideration
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The local rules allow a party to file a motion for
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reconsideration where there has been "[a] manifest failure by the
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Court to consider material facts or dispositive legal arguments
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The motion was fully briefed.
("Reply").
ECF Nos. 11 ("Opp'n"), 16
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which were presented to the Court . . . ."
Civ. L.R. 7-9(b)(3).
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"Unless otherwise ordered by the assigned Judge, no response need
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be filed and no hearing will be held concerning a motion for leave
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to file a motion to reconsider."
Civ. L.R. 7-9(d).
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In deciding PNC's motion to dismiss, the Court failed to
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consider material facts contained in the credit report attached to
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the Complaint because the copy filed with the Court was illegible.
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Specifically, the Court failed to consider the "Payment history"
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table in the credit report.
This table is material because,
United States District Court
For the Northern District of California
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without it, the credit report is inconsistent with Montgomery's
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allegation that PNC falsely reported that he was delinquent on his
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loan payments.
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was delinquent on his loan payments after he filed for bankruptcy
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in March 2010.3
The Payment history table indicates that Montgomery
Thus, the Court's August 6 Order was in error since it turned
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on an inaccurate copy of the credit report.
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from Montgomery's motion for leave to file a motion for
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reconsideration, further briefing is unnecessary.
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Court VACATES its August 6 Order and reconsiders the other
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arguments advanced in PNC's motion to dismiss.
B.
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Accordingly, the
Motion to Dismiss
1.
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As this error is clear
Accuracy of Montgomery's Credit Report
PNC's lead argument in favor of dismissal is that Montgomery
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cannot state a claim for false credit reporting because his credit
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report is accurate.
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Montgomery's credit report reflects that he was delinquent on the
MTD at 3.
This argument is unavailing.
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It is not clear that Montgomery is responsible for the poor
quality of the credit report. PNC filed a copy of the document
with the Court when it removed this action from state court.
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payments for his PNC loan from June 2009 through October 2010.
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Compl. Ex. C.
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been reported on the account after June 2010, when his PNC debt was
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discharged through bankruptcy.
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no authority which would suggest that this position is incorrect as
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a matter of law.
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the Court must accept all well-pleaded allegations as true and
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construe them in the light most favorable to the plaintiff.
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Erickson v. Pardus, 551 U.S. 89, 93-94 (2007).
Montgomery alleges that no delinquencies should have
Compl. ¶¶ 15-16.
PNC has offered
Further, on a Rule 12(b)(6) motion to dismiss,
Thus, at this stage
United States District Court
For the Northern District of California
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of the litigation, the Court cannot conclude that Montgomery's
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credit was accurately reported.
2.
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Transfer of Montgomery's Loan
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PNC also argues that it could not have improperly reported
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Montgomery's credit in 2011 because it transferred Montgomery's
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account to another loan servicer in December 2010.
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4-6.
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which states that Montgomery's PNC account had been "transferred to
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another lender."
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Montgomery in another matter which alleges that "Litton" became the
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servicer of one of Montgomery's PNC loans in December 2010.
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(citing RJN Ex. A).
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PNC is not currently servicing his loan since the bank continues to
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report inaccuracies on the account.
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boils down to a question of who reported the delinquencies on
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Montgomery's PNC account in 2011, PNC or some other entity.4
See MTD at 1,
PNC points to the credit report attached to the Complaint,
Id.
PNC also points to a pleading filed by
Id.
Montgomery responds that it is irrelevant that
Opp'n at 11.
This dispute
Such
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PNC does not dispute that it could be held liable if it was
responsible for reporting false information after Montgomery's
account was transferred. Rather, its position appears to be that,
after the account was transferred, it did not convey any
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factual disputes are inappropriate for resolution on a Rule
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12(b)(6) motion to dismiss.
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dismiss Montgomery's action or any of his individual claims on the
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ground that Montgomery's PNC account was transferred.
3.
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Accordingly, the Court declines to
Violation of the FCRA
PNC argues that Montgomery has failed to state an actionable
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violation of the FCRA because "[Montgomery] has no private right of
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action under the FCRA for the alleged inaccurate reporting of
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information."
MTD at 4.
It is true that there is no private right
United States District Court
For the Northern District of California
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of action under 15 U.S.C. § 1681s-2(a), which relates to the "duty
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of furnishers of information to provide accurate information."
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U.S.C. § 1681s–2(d); see also Nelson v. Equifax Info. Servs., LLC,
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522 F. Supp. 2d 1222, 1230 (C.D. Cal. 2007).
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FCRA claim is predicated on § 1681s-2(b), not § 1681s-2(a).
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¶¶ 28-37.
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under § 1681s-2(b).
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Wolpoff & Abramson, LLP, 584 F.3d 1147, 1155 (9th Cir. 2009).
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However, Montgomery's
Compl.
The FCRA does not preclude private lawsuits brought
15 U.S.C. § 1681s–2(d); see also Gorman v.
Section 1681s-2(b) requires that, after receiving a notice of
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dispute concerning the accuracy of any information provided to a
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consumer reporting agency, a furnisher of information shall, among
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other things, "conduct an investigation," "review the relevant
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information," and "report the results."
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PNC argues that Montgomery's allegation that an investigation
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occurred indicates that there was no violation of the statute.
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at 4.
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investigation, and does not mandate that the investigation be
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"reasonable."
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information pertaining to Montgomery's account to the credit
reporting agencies.
15 U.S.C. § 1681s-2(b)(1).
MTD
PNC reasons that the statute merely requires an
This exact argument has been addressed and rejected
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by the Ninth Circuit.
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any investigation under § 1681s–2(b)(1)(A) must be reasonable.").
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Accordingly, PNC's motion to dismiss is denied with respect to
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Montgomery's claim for violation of the FCRA.
4.
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Gorman, 584 F.3d at 1165 ("[W]e hold that
Violation of the Song-Beverly Credit Card Act
Montgomery's claim for violation of the Song-Beverly Credit
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Card Act does not identify which provision of the Act PNC allegedly
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violated.
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violation of California Civil Code section 1747.70, which provides
However, it appears that Montgomery intends to allege a
United States District Court
For the Northern District of California
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that "[n]o card issuer shall knowingly give any untrue credit
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information to any other person concerning a cardholder."
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Compl. ¶ 39 ("Creditor published . . . credit reports which
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contained statements about Plaintiff that were untrue . . . .").
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As PNC points out, Montgomery cannot possibly state a claim under
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this provision -- or any other provision of the Song-Beverly Credit
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Card Act for that matter -- because it applies to credit card
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debts, not mortgage debts like the one that is the subject of this
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action.5
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Accordingly, Montgomery's claim for violation of the Song-Beverly
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Credit Card Act is DISMISSED WITH PREJUDICE.
Montgomery does not offer any response to this argument.
5.
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See
FCRA Preemption
PNC argues that all of Montgomery's state law causes of
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action, with the exception of his claim for violation of California
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Civil Code § 1785.25a(a), are preempted by the FCRA.
MTD at 5.
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Even if Montgomery means to refer to the apparent credit card
debt referenced in the exhibits to his complaint, he still cannot
plead a plausible violation of the Song-Beverly Credit Card Act.
The credit report attached to the Complaint shows that this debt
was "Discharged through Bankruptcy Chapter 7." Compl. Ex. C. The
report also does not reflect any delinquencies on the account.
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Even though this argument implicates seven of Montgomery's claims,
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PNC summarily outlines its position in two short paragraphs and
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does not mention the issue in its reply brief.
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PNC, as the moving party, bears the burden of persuasion, its
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briefing leaves much to be desired.
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position has some merit.
Considering that
Nevertheless, PNC's legal
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With respect to preemption, the FCRA provides:
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(a) Except as provided in subsections (b) and (c) of this
section, this subchapter does not annul, alter, affect,
or exempt any person subject to the provisions of this
subchapter from complying with the laws of any State with
respect to the collection, distribution, or use of any
information on consumers, or for the prevention or
mitigation of identity theft, except to the extent that
those laws are inconsistent with any provision of this
subchapter, and then only to the extent of the
inconsistency.
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United States District Court
For the Northern District of California
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(b) General exceptions
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No requirement or prohibition may be imposed under the
laws of any State-(1) with respect to any subject matter regulated under-. . .
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(F) section 1681s–2 of this title, relating to the
responsibilities of persons who furnish information to
consumer reporting agencies, except that this paragraph
shall not apply-. . .
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(ii) with respect to section 1785.25(a) of the California
Civil Code (as in effect on September 30, 1996) . . . .
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15 U.S.C. § 1681t.
In sum, the FCRA does not preempt state law
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collection, distribution, and reporting requirements, except those
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relating to the furnishing of accurate information to credit
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reporting agencies.
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Civil Code section 1785.25(a).
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Court turns to Montgomery's fourth through ninth causes of action.
The FCRA also does not preempt California
With this framework in mind, the
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Montgomery's fourth cause of action for violation of the
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California UCL is not preempted because it is predicated on PNC's
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alleged violation of California Civil Code section 1785.25(a).
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See Compl. ¶ 62.
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section 1785.25(a) from preemption.
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"does impose any additional substantive duties on [PNC]" beyond
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those set forth in the FCRA and "is merely an additional
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procedural vehicle for enforcing section 1725.25(a)."
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v. Citibank, N.A., C-11-5359 EMC, 2012 WL 506473, at *6 (N.D. Cal.
As discussed above, the FCRA expressly exempts
Thus, Montgomery' UCL claim
El-Aheidab
United States District Court
For the Northern District of California
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Feb. 15, 2012); see also Bottoni v. Sallie Mae, Inc., C 10-03602
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LB, 2011 WL 635272, at *15 (N.D. Cal. Feb. 11, 2011).
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Accordingly, Montgomery's claim for violation of the UCL
remains undisturbed.
The Court reaches a different conclusion with respect to the
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preemption of Montgomery's remaining state law claims for libel,
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intentional infliction of emotional distress, negligent infliction
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of emotional distress, deceit, and constructive fraud.
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split of authority in this area that arises from the tension
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between two provisions of the FCRA.
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1968, the FCRA contained only one section dealing with the
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preemption of state law claims.
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1681h(e), currently provides:
There is a
When it was first enacted in
This section, 15 U.S.C. §
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Except as provided in section 1681n and 1681o of this
title, no consumer may bring any action or proceeding in
the nature of defamation, invasion of privacy, or
negligence with respect to the reporting of information
against any consumer reporting agency, any user of
information, or any person who furnishes information to a
consumer reporting agency, based on information disclosed
pursuant to section 1681g, 1681h, or 1681m of this title,
or based on information disclosed by a user of a consumer
report to or for a consumer against whom the user has
taken adverse action based in whole or part on the report
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1
except as to false information furnished with malice or
willful intent to injure such consumer.
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In sum, under § 1681h(e), state law claims for defamation and
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certain other torts are preempted only to the extent that such
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claims are based on the disclosure of certain information and are
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not based on " malice or willful intent to injure such consumer."
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Congress later amended the FCRA to add a broader preemption
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provision, currently codified at 15 U.S.C. § 1681t(b)(1)(F).
8
discussed above, this provision preempts all state law
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requirements relating to the furnishing of accurate information to
United States District Court
For the Northern District of California
10
credit reporting agencies.
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As
1682h(e) when it enacted § 1681t(b)(1)(F).
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Congress did not repeal or alter §
Courts have taken three approaches to address this tension:
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the "total preemption" approach, the "temporal" approach, and the
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"statutory" approach.
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As one court aptly summarized:
Under the "total preemption" approach, [1681]t(b)(1)(F)
does indeed preempt all state law claims against
furnishers of credit information arising from conduct
regulated by 1681s-2, thus effectively repealing the
earlier preemption provision, 1681h(e).
Under the
"temporal" approach, preemption depends on whether the
cause of action arises before or after a credit
information furnisher has notice of a consumer dispute.
Finally, under the "statutory" approach, [1681]t(b)(1)(F)
preempts only state law claims against credit information
furnishers brought under state statutes, just as 1681h(e)
preempts only state tort claims.
22
Manno v. Am. Gen. Fin. Co., 439 F. Supp. 2d 418, 424-25 (E.D. Pa.
23
2006) (footnotes omitted).
24
among these different approaches.
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("In the end, we need not decide this issue.").
26
majority of district courts in this circuit appear to have adopted
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the total preemption approach.
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506473, at *6-8 (applying the total preemption approach and
The Ninth Circuit has yet to choose
See Gorman, 584 F.3d at 1167
However, the
See, e.g., El-Aheidab, 2012 WL
11
02588-MMA, 2012 WL 871321 (S.D. Cal. Mar. 14, 2012) (applying the
3
total preemption approach); but see Gorman v. Wolpoff & Abramson,
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LLP, 370 F. Supp. 2d 1005, 1009 (N.D. Cal. 2005) (adopting the
5
statutory approach).
6
have also adopted the total preemption approach.
7
v. JPMorgan Chase Bank, N.A., 665 F.3d 45, 47-48 (2d Cir. 2011);
8
Purcell v. Bank of America, 659 F.3d 622, 624–25 (7th Cir. 2011).
9
In light of the weight of authority favoring the total
10
United States District Court
collecting cases), Miller v. Bank of Am., Nat. Ass'n, 3:11-CV-
2
For the Northern District of California
1
preemption approach, the Court finds that Montgomery's claims for
11
libel, intentional infliction of emotional distress, negligent
12
infliction of emotional distress, deceit, and constructive fraud
13
are preempted by the FCRA.
14
regulated by § 1681s-2 and, thus, are preempted by
15
§ 1681t(b)(1)(F).6
Circuit courts that have addressed the issue
See Macpherson
These claims arise from conduct
Accordingly, they are DISMISSED WITH PREJUDICE.
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IV.
CONCLUSION
For the foregoing reasons, the Court VACATES its August 6,
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2012 Order and directs the clerk of the court to reopen this case.
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The Court also GRANTS in part and DENIES in part Defendant PNC Bank
21
N.A.'s motion to dismiss.
The Court DISMISSES WITH PREJUDICE
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6
Even if they were not preempted, many of these claims would still
fail. Montgomery cannot state a claim for intentional infliction
of emotional distress based on purely economic activity. See
Potter v. Firestone & Rubber Co., 6 Cal. 4th 965, 985 (Cal. 1993).
Nor can he state a claim for fraud or deceit since he has not
alleged that PNC induced any detrimental reliance by Montgomery.
The fraud and deceit claims also fail to the extent that they are
predicated on an "attempt[] to collect" a non-existent debt against
Montgomery, see Compl. ¶¶ 86, 90, since Montgomery has not alleged
that PNC engaged in any debt collection activities after he filed
for bankruptcy. Montgomery does not attempt to save either of
these claims in his opposition papers.
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Plaintiff Larry Montgomery's claims for violation of the California
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Song-Beverly Credit Card Act, libel, intentional infliction of
3
emotional distress, negligent infliction of emotional distress,
4
deceit, and constructive fraud.
5
violation of the FCRA, violation of California Civil Code section
6
1785.25(a), and violation of the California UCL remain undisturbed.
Montgomery's remaining claims for
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The Court hereby sets a case management conference for
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September 21, 2012 at 10:00 a.m. in Courtroom 1, 450 Golden Gate
9
Avenue, San Francisco, California.
United States District Court
For the Northern District of California
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The parties are to file a joint
case management statement no fewer than seven days prior.
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IT IS SO ORDERED.
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Dated: August 24, 2012
UNITED STATES DISTRICT JUDGE
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