Wang v. Asset Acceptance LLC, No. 3:2009cv04797 - Document 33 (N.D. Cal. 2010)
Court Description: ORDER granting in part and denying in part 16 Motion to Dismiss; granting leave to file Sur-Reply and treating Section III of 26 Motion to Strike as Sur-Reply (sclc2, COURT STAFF) (Filed on 2/2/2010)
Download PDF
<![CDATA[
Wang v. Asset Acceptance LLC Doc. 33 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 14 JOHNNY WANG, an individual, on his ) own behalf and on behalf of those ) similarly situated, ) ) Plaintiff, ) ) v. ) ) ASSET ACCEPTANCE, LLC, a Delaware ) limited liability company, ) and DOES 1-100, inclusive, ) ) Defendants. ) ) 15 I. 8 9 United States District Court For the Northern District of California 10 11 12 13 Case No. 09-4797 SC ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS INTRODUCTION 16 This matter comes before the Court on the Motion to Dismiss 17 ("MTD") filed by Defendant Asset Acceptance, LLC ("Defendant" or 18 "Asset"). 19 "Wang") filed an Opposition and Defendant submitted a Reply.1 20 Docket Nos. 21, 24. 21 Dismiss is GRANTED IN PART and DENIED IN PART. Docket No. 16. Plaintiff Johnny Wang ("Plaintiff" or For the following reasons, the Motion to 22 23 II. BACKGROUND On August 20, 2009, Wang sued Asset in California Superior 24 25 26 27 28 1 Wang also submitted a motion to strike portions of the Reply, or for leave to file a Sur-Reply. Docket No. 26. Section III of the motion is the Sur-Reply. The Court GRANTS Wang leave to file a Sur-Reply and treats Section III of the motion as the SurReply. Dockets.Justia.com 1 Court, County of Alameda. 2 Ex. A ("Compl."). 3 practices. 4 credit reporting agencies ("CRAs"), but failing to report, if 5 applicable, that such debts are disputed, or that the debts are 6 passed their statute of limitations. 7 putative class action on behalf of two classes: (1) California 8 residents who have disputed debts that have been reported by Asset 9 to CRAs, and (2) California residents whose reported debts are not United States District Court For the Northern District of California 10 See Notice of Removal, Docket No. 1, Wang challenges Asset's debt collection Id. ¶ 1. Wang faults Asset for reporting debts to within the statute of limitations.2 Id. Wang's action is a Id. ¶ 3. 11 Asset received a copy of the state court complaint on 12 September 8, 2009, and removed the case to this Court on October 13 8, 2009. 14 denied Wang's motion to remand this case back to state court. 15 Docket No. 32. 16 the Complaint. Notice of Removal ¶ 2. On January 27, 2009, the Court The Court now addresses Asset's motion to dismiss 17 18 III. LEGAL STANDARD 19 A motion to dismiss under Federal Rule of Civil Procedure 20 12(b)(6) "tests the legal sufficiency of a claim." Navarro v. 21 Block, 250 F.3d 729, 732 (9th Cir. 2001). 22 on the lack of a cognizable legal theory or the absence of 23 sufficient facts alleged under a cognizable legal theory. 24 Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 25 1990). Dismissal can be based Allegations of material fact are taken as true and 26 2 27 28 It is not clear from the Complaint whether the second class is limited to California residents. See Compl. ¶¶ 3, 28. 2 United States District Court For the Northern District of California 1 construed in the light most favorable to the nonmoving party. 2 Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 3 1996). 4 nonmoving party. 5 Ins. Co., 23 F.3d 226, 228 (9th Cir. 1994). 6 not be dismissed if it states a claim under any legal theory, even 7 if the plaintiff erroneously relies on a different legal theory." 8 Haddock v. Bd. of Dental Examiners, 777 F.2d 462, 464 (9th Cir. 9 1985). The Court draws all reasonable inferences in favor of the See Everest & Jennings, Inc. v. Am. Motorists "[A] complaint should When dismissing a claim, the court should grant leave to 10 amend, "unless it determines that the pleading could not possibly 11 be cured by the allegation of other facts." 12 F.3d 1122, 1130 (9th Cir.2000) (citation and internal quotation 13 marks omitted). Lopez v. Smith, 203 14 15 16 17 18 IV. DISCUSSION A. Statutory Framework 1. California's Consumer Credit Reporting Agencies Act Section 1785.25(a) of the Consumer Credit Reporting Agencies 19 Act ("CCRAA") provides: "A person shall not furnish information on 20 a specific transaction or experience to any consumer credit 21 reporting agency if the person knows or should know the 22 information is incomplete or inaccurate." 23 § 1785.25(a). Cal. Civ. Code Section 1785.25(c) provides: 27 So long as the completeness or accuracy of any information on a specific transaction or experience furnished by any person to a consumer credit reporting agency is subject to a continuing dispute between the affected consumer and that person, the person may not furnish the information to any consumer credit reporting 28 3 24 25 26 1 agency without also including a notice that the information is disputed by the consumer. 2 3 4 5 Fair Credit Reporting Act In 1996, in the Fair Credit Reporting Act ("FCRA"), Congress preempted most state laws relating to the duties of persons who 7 furnish information to CRAs, but Congress expressly exempted from 8 preemption claims under section 1785.25(a): 10 United States District Court 2. 6 9 For the Northern District of California Id. § 1785.25(c). 11 12 13 No requirement or prohibition may be imposed under the laws of any State . . . with respect to any subject matter regulated under . . . 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 . . . with respect to section 1785.25(a) of the California Civil Code (as in effect on September 30, 1996). 14 15 16 15 U.S.C. § 1681t(b)(1)(F). Section 1681s-2(a) of the FCRA contains a number of 17 provisions that are similar to provisions of the CCRAA. 18 provides that "[a] person shall not furnish any information 19 relating to a consumer to any consumer reporting agency if the 20 person knows or has reasonable cause to believe that the 21 information is inaccurate." 22 statute also provides that "[i]f the completeness or accuracy of 23 any information furnished by any person to any consumer reporting 24 agency is disputed to such person by a consumer, the person may 25 not furnish the information to any consumer reporting agency 26 without notice that such information is disputed by the consumer." 27 Id. § 1681s-2(a)(3). 28 The FCRA 15 U.S.C. § 1681s-2(a)(1)(A). 4 The Section 1681s-2(b) imposes additional duties on furnishers of United States District Court For the Northern District of California 1 2 information that are triggered only when the furnisher receives 3 notice from a CRA that a consumer disputes the information. 4 § 1681s-2(b). 5 violations of these additional duties. 6 However, duties imposed on furnishers under section 1681s-2(a) -- 7 including the duty not to furnish information to CRAs without also 8 providing notice that the consumer disputes that information -- 9 are enforceable only by federal or state agencies. Id. The FCRA creates a private right of action for 15 U.S.C. § 1681s-2(c). Id. 10 § 1681s-2(d); see also Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 11 1147, 1154 (9th Cir. 2009). 12 B. Wang's First Cause of Action 13 In his first cause of action, Wang seeks a declaratory 14 judgment that he is not liable for the purported debt asserted by 15 Asset. 16 controversy between the parties, and that declaratory relief is 17 not appropriate because the dispute is moot. 18 asserts that it no longer seeks to collect the debt at issue from 19 Wang, and Asset attaches a letter purporting to show that Asset 20 has contacted CRAs to inform them that Asset no longer seeks to 21 collect the disputed debt.3 Compl. ¶ 38. Asset contends that there is no actual MTD at 11-12. Asset "As a general rule, 'a district court may not consider any 22 23 material beyond the pleadings in ruling on a Rule 12(b)(6) 24 motion.'" Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th 25 26 27 28 3 The letter is attached as Exhibit A to Asset's motion as originally filed, Docket No. 8, but the exhibit is missing from Asset's amended motion, Docket No. 16. 5 1 Cir. 2001) (quoting Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 2 1994), overruled on other grounds by Galbraith v. County of Santa 3 Clara, 307 F.3d 1119 (9th Cir. 2002)); see also Arpin v. Santa 4 Clara Valley Transp. Agency, 261 F.3d 912, 925 (9th Cir. 2001) 5 ("[E]xtraneous evidence should not be considered in ruling on a 6 motion to dismiss."). 7 beyond the pleadings, the Court will not dismiss Plaintiff's claim 8 based on an unsworn letter from counsel for Defendant. 9 DENIES Asset's motion to dismiss Wang's claim for declaratory United States District Court For the Northern District of California 10 Even if the Court could consider material The Court relief.4 11 C. Wang's Second Cause of Action 12 In his second cause of action, Wang alleges that "Defendants 13 received notice that Wang and the other members of the Disputed 14 Debt Class disputed the amount and validity of the debts 15 Defendants allege that they were obligated to pay." 16 "Defendants nonetheless reported those alleged debts to the CRAs, 17 but failed to also communicate that the debts had been disputed." 18 Id. ¶ 43. 19 Cal. Civ. Code § 1785.25(a). 20 Compl. ¶ 42. According to Wang, this conduct violated the CCRAA, Id. ¶ 41 Asset contends that Wang's claim concerning the failure of 21 Asset to notify the CRAs that his debt was disputed arises under 22 section 1785.25(c) of the CCRAA, not section 1785.25(a). 23 5. 24 subsection (a) is not. MTD at As noted above, subsection (c) is preempted by the FCRA, but See Part IV(A), supra. Hence, if Wang's 25 26 27 28 4 This denial is made without prejudice to Defendant moving for summary judgment on Wang's claim for declaratory relief at a later stage of this litigation. 6 1 allegations really give rise to a claim under subsection (c), then 2 his cause of action should be dismissed as preempted. United States District Court For the Northern District of California 3 A federal court interpreting a California statute applies 4 California's rules of statutory interpretation. See In re Reaves, 5 285 F.3d 1152, 1156 (9th Cir. 2002). 6 to determine the lawmakers' intent so as to effectuate the purpose 7 of the statute. 8 4th 804, 811 (2004); MacIsaac v. Waste Mgmt. Collection and 9 Recycling, Inc., 134 Cal. App. 4th 1076, 1082 (Ct. App. 2005). The Court's primary task is Olmstead v. Arthur J. Gallagher & Co., 32 Cal. 10 The Court looks first to the words of the statute, and the 11 language of a specific section must be construed in the context of 12 the larger statutory scheme of which it is a part. 13 Cal. 4th at 811. 14 in a manner that would render them superfluous. 15 Servs., Inc. v. Hunt, 47 Cal. 4th 381, 390 (2009) (quoting 16 Shoemaker v. Myers, 52 Cal. 3d 1, 22 (1990)). Olmstead, 32 Statutory provisions should not be interpreted Imperial Merchant 17 Here, in his second cause of action, Wang alleges that 18 despite being notified by consumers that the debts were disputed, 19 Asset reported those debts to CRAs, without also notifying the 20 CRAs that the debts were disputed. 21 obligation to notify CRAs of disputed debts is clearly and 22 unambiguously addressed by the California legislature in section 23 1785.25(c) of the CCRAA. 24 1785.25(a) not to furnish CRAs with incomplete or inaccurate 25 information cannot have been intended to include the obligation to 26 notify CRAs of disputed debts. 27 would be superfluous and unnecessary. 28 Compl. ¶¶ 42-43. This Hence, the general obligation in section Otherwise, section 1785.25(c) 7 The Court rejects Wang's 1 contention that section 1785.25(a) includes a duty to notify CRAs 2 when consumers dispute debts. 3 322, 333 (2008) (rejecting broad reading of statute that would 4 render other statutes unnecessary surplusage). 5 Since subsection (a) does not include an obligation to notify 6 CRAs of disputed debts, Wang cannot rely on that subsection in his 7 second cause of action. 8 Asset's misconduct clearly give rise to a cause of action under 9 subsection (c). United States District Court 10 For the Northern District of California See Van Horn v. Watson, 45 Cal. 4th 11 Instead, Wang's allegations concerning However, as Wang concedes in his Opposition, the FCRA preempts section 1765.25(c) of the CCRAA. See Opp'n at 7. In his Opposition, Wang argues that it is unreasonable to 12 interpret section 1785.25(a) of the CCRAA in a manner that would 13 shield the very misconduct the legislature intended to prohibit. 14 Opp'n at 7. 15 legislature intended to require furnishers of information to CRAs 16 to notify the CRAs if the consumer disputes the debt. 17 Civ. Code § 1785.25(c). 18 not the California legislature, to preempt section 1785.25(c). 19 Furthermore, and as noted above, the FCRA contains a provision 20 almost identical to section 1765.25(c) of the CCRAA, see 15 U.S.C. 21 § 1681s-2(a)(3), but no private right of action is available under 22 that section, see 15 U.S.C. § 1681s-2(d). 23 preempting similar state laws, Congress intended for this duty to 24 provide notice when consumers disputed their debts to be enforced 25 by federal and state authorities, not private citizens. 26 Wang's claim, when properly construed, arises under section 27 1785.25(c) of the CCRAA, and since this provision is preempted by 28 The Court does not doubt that the California See Cal. However, it was the decision of Congress, 8 Therefore, by Since United States District Court For the Northern District of California 1 the FCRA, the Court must dismiss Wang's second cause of action. 2 Because alleging other facts will not cure this deficiency, the 3 Court dismisses Wang's second cause of action without leave to 4 amend. 5 D. Fourth Cause of Action 6 As his fourth cause of action, Wang alleges that Asset 7 violated section 1785.25(a) of the CCRAA by failing to report to 8 CRAs that his debt, and those of putative class members, were no 9 longer within the applicable statute of limitations. Compl. 10 ¶¶ 52-56. 11 duty to report applicable statutes of limitations to CRAs, but 12 that Wang has still stated a claim for violation of section 13 1785.25(a). 14 The Court finds, as a matter of law, that Asset had no 1. 15 No Duty to Report Statute of Limitations Section 1785.25(a) prohibits the furnishing of incomplete and 16 inaccurate information. 17 from the plain language of section 1785.25(a) that it contains no 18 duty to report to CRAs that debts are within the applicable 19 statute of limitations, and Wang has cited no authority indicating 20 that section 1785.25(a) has been interpreted to require such a 21 duty. Cal. Civ. Code § 1785.25(a). It is clear 22 Consideration of the nature of a statute-of-limitations 23 defense convinces the Court that section 1785.25(a) does not 24 include this duty. 25 defense. 26 statute of limitations does not operate to extinguish a debt, but 27 merely bars recovery on a debt when properly asserted. 28 The statute of limitations is an affirmative Norgart v. Upjohn Co., 21 Cal. 4th 383, 396 (1999). 9 A Dep't of United States District Court For the Northern District of California 1 Indus. Relations v. Seaboard Surety Co., 50 Cal. App. 4th 1501, 2 1511 (Ct. App. 1996). 3 limitations is waived if not raised by the defendant. 4 v. Cavaney, 56 Cal. 2d 576, 581 (1961); see also County of Los 5 Angeles v. Comm'n on State Mandates, 150 Cal. App. 4th 898, 912 6 (Ct. App. 1997) ("Forfeiture of a time-bar defense transpires by 7 the failure to raise the applicable statute of limitations in the 8 answer"); Gailing v. Rose, Klein & Marias, 43 Cal. App. 4th 1570, 9 1577 (Ct. App. 1996) ("The defendant must raise . . . [the As an affirmative defense, the statute of See Minton 10 statute-of-limitations defense] or the plaintiff has every right 11 to collect a full judgment."). 12 may waive this defense by failing to raise it if sued in 13 California, and since the statutory provision contains no mention 14 of an affirmative duty to report that a statute of limitations has 15 expired, the Court finds that section 1785.25(a) of the CCRAA does 16 not impose upon Asset a duty to report information related to any 17 applicable statute of limitations to CRAs. 18 2. Since it is possible that a debtor Wang States a Claim for Violation of Section 1785.25(a) 19 20 Nevertheless, accepting the allegations in the Complaint as 21 true, and drawing all reasonable inferences in Wang's favor, 22 Wang's Complaint still states a claim for violation of section 23 1785.25(a). 24 court, but Asset dismissed the suit on August 9, 2007, after Wang 25 answered the complaint asserting affirmative defenses, including 26 that the applicable statute of limitations had expired. 27 ¶¶ 14-16. 28 Wang alleges that Asset sued him in California state Compl. Despite dismissing the state court action in August 10 1 2007, Asset reported the debt to TransUnion in August 2008, and 2 June 2009. 3 Report"), Ex. 4 ("2009 TransUnion Credit Report"). United States District Court For the Northern District of California 4 Id. ¶¶ 15, 18, 22; Ex. 2 ("2008 TransUnion Credit The August 2008 tradeline categorized the debt as "seriously 5 past due." Id. ¶ 19. Asset's 2009 tradeline contains the 6 notations "Date placed for collection: [04/2005]," "Account Type: 7 Open Account," and "Pay Status: >Collection Account<." 8 Earlier, TransUnion had added a remark to Wang's Credit Report 9 indicated that "ACCT INFO DISPUTED BY CONSUMR." 10 ("TransUnion Letter"). 11 remark with ">Placed for collection<." 12 Credit Report. Id. ¶ 23. Id. ¶¶ 21; Ex. 3 Asset's 2009 tradeline replaced this Id. ¶ 24; 2009 TransUnion Having dismissed the state court action, it is reasonable to 13 14 infer that Asset could no longer collect on the debt. 15 when addressing Wang's claim for declaratory relief, Asset states 16 that it is no longer seeking to collect a debt from Wang. 17 12. 18 continued to report the debt to TransUnion, and Asset continued to 19 report the debt in a manner that suggests it could still collect 20 on it. 21 TransUnion despite having dismissed the state court action, the 22 Court finds that the Complaint contains sufficient allegations to 23 state a claim for relief under section 1785.25(a) of the CCRAA, 24 which prohibits Asset from furnishing incomplete or inaccurate 25 information to CRAs. 26 Wang's fourth cause of action for violation of section 1785.25(a) MTD at Yet, after the state court action was dismissed, Asset Based on Asset's continued reporting of the debt to The Court DENIES Asset's motion to dismiss 27 28 Indeed, 11 United States District Court For the Northern District of California 1 of the CCRAA.5 2 E. Third and Fifth Cause of Action 3 Wang's third and fifth causes of action allege a violation of 4 the California Unfair Competition Law ("UCL"), Business and 5 Professions Code, section 17200 et seq. 6 Asset contends that these causes of action must be dismissed 7 because they are preempted by the FCRA. Compl. ¶¶ 46-51, 59-64. MTD at 10-11. 8 The Court agrees that Wang's UCL claims are preempted. While 9 the FCRA exempts section 1785.25(a) of the CCRAA from preemption, 10 it also provides that "[n]o requirement or prohibition may be 11 imposed under the laws of any State . . . with respect to any 12 subject matter regulated under . . . section 1681s-2 of this 13 title, relating to the responsibilities of persons who furnish 14 information to consumer reporting agencies . . . ." 15 § 1681t(b)(1)(F). 16 FCRA does not preempt section 1785.25(g) and section 1785.31 of 17 the CCRAA because those sections do not impose a requirement or 18 prohibition. 19 sections provide a vehicle for private parties to enforce section 15 U.S.C. Recently, the Ninth Circuit clarified that the Gorman, 584 F.3d at 1170-71. Instead, those 20 5 21 22 23 24 25 26 27 28 Whether Wang's lawsuit can be maintained as a class action is a question for another day. What makes the information furnished by Asset to TransUnion potentially inaccurate or incomplete is the fact that Asset had previously dismissed a lawsuit against Wang. In response to Wang's motion to remand, Asset filed a declaration indicating that, as of October 2009, Asset was furnishing information to CRAs concerning no less that 177,023 California accounts where the limitations period relating to those accounts has expired. See Docket No. 23 ("Parker Decl."). The Court has no information concerning how many lawsuits Asset has filed, and dismissed, against California residents or holders of California accounts. Such issues are beyond the scope of this Order, which merely seeks to determine whether Wang's Complaint states a claim upon which relief can be granted. 12 1 1785.25(a) of the CCRAA. United States District Court For the Northern District of California 2 Id. Here, however, California's UCL does impose a requirement or 3 prohibition. This statutory scheme prohibits "any unlawful, 4 unfair or fraudulent business act or practice." 5 Code § 17200. 6 cause of action. 7 Cellular Telephone Co., 20 Cal. 4th 163, 179-80 (1999)(describing 8 UCL as independent of other laws, and noting that UCL makes 9 violations of other laws "independently actionable"). Cal. Bus. & Prof. The UCL provides plaintiffs with an independent See Cel-Tech Communications, Inc. v. Los Angeles Since the 10 UCL would impose an independent requirement or prohibition on 11 furnishers of information to CRAs, it is preempted by the FCRA. 12 See Howard v. Blue Ridge Bank, 371 F. Supp. 2d 1139, 1143-44 (N.D. 13 Cal. 2005) (granting motion to dismiss section 17200 claim because 14 preempted by FCRA); Roybal v. Equifax, 405 F. Supp. 2d 1177, 1181 15 (E.D. Cal. 2005) (finding state claims, including UCL claim, 16 preempted); Riley v. General Motors Acceptance Corp., 226 F. Supp. 17 2d 1316, 1322 (S.D. Ala. 2002) ("there is no question that the 18 statutory prohibition precludes suits under state consumer 19 protection laws"). 20 claims. 21 deficiency, the Court dismisses Wang's third and fifth causes of 22 action without leave to amend. 23 /// 24 /// 25 /// 26 /// 27 /// 28 According, the Court dismisses Wang's UCL Because alleging other facts will not cure the 13 1 2 V. CONCLUSION For the reasons stated above, the Motion to Dismiss filed by 3 Asset Acceptance, LLC, is GRANTED IN PART and DENIED IN PART. 4 Court dismisses Johnny Wang's second, third, and fifth causes of 5 action WITH PREJUDICE. 6 first and fourth causes of action. The The Court does not dismiss Johnny Wang's 7 8 IT IS SO ORDERED. 9 United States District Court For the Northern District of California 10 Dated: February 2, 2010 11 UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
