Opinion
Case No. 02-16796, Adversary Case No. 06-1279.
April 3, 2007
MEMORANDUM OF DECISION ON ORDER GRANTING MOTIONS TO DISMISS
Presently before the Court are two motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted, filed by FFCC-Columbus, Inc. ("FFCC") and Qualified Emergency Specialists, Inc. ("QESI"). See Docs. 4 and 6. Torrence Smith's (aka Saint Torrence) ("Plaintiff") complaint seeks relief for alleged violations of the discharge injunction set forth in 11 U.S.C. § 524.
I. STANDARD OF REVIEW
Fed.R.Bankr.P. 7012(b) incorporates Fed.R.Civ.P. 12(b)(6). A Rule 12(b)(6) motion to dismiss should be denied "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The Court must take all well plead facts as true and construe those facts liberally in favor of the plaintiff when any ambiguity arises. Pik-Coal Co. v. Big Rivers Elec. Corp., 200 F.3d 884, 886 fn. 2 (6th Cir. 2005). However, conclusory allegations cloaked as factual conclusions will not defeat a motion to dismiss. Meziboy v. Allen, 411 F.3d 712, 716 (6th Cir. 2005). This Court must only look to the complaint and the facts alleged therein. Hammond v. Baldwin, 866 F.2d 172, 175 (6th Cir. 1989).
II. ANALYSIS
On October 17, 2006, Plaintiff, a pro se litigant, commenced this adversary proceeding seeking injunctive relief, compensatory damages and punitive damages for violation of the discharge injunction. Plaintiff states the following in support of this action.
Defendant (QESI) Qualified Emergency Specialist, Inc. had hire FFCC-Columbus, In which is a collection agency and is still trying to collect on this debt of $115.00 from Mr. Smith ever since made aware on my credit report this debt is still trying to be obtain and still being report as a current debt which is effecting me purchasing a house and a vehicle in my name causing my credit to be not worthy after bankruptcy discharge.
(Doc. 1 at 2.) Plaintiff further states the following:
Plaintiff had notified this Collection Agency as well as (QESI) to remove this bill from my credit report still that have not remove this bill which should have never been on my report ever since my discharge on January 8, 2003.
Id. The Plaintiff does not allege any other act or action by the Defendants in support of his complaint. The Plaintiff therefore alleges that the Defendants violated the discharge injunction by reporting a discharged debt and refusing to remove the debt from the Plaintiff's credit history.
There are two issues to be determined in this case. First, what is the effect of a discharge on a debt? Second, is the report of a discharged debt and the failure to remove the debt from a debtor's credit history a violation of the discharge injunction? These very issues were presented in In re Irby, 337 B.R. 293 (Bankr. N.D. Ohio. 2005). The Court finds Irby to be well reasoned and concludes that the mere reporting of and failure to remove a debt from a debtor's credit report is not a violation of the discharge injunction.
a. What is the effect of discharge?
The Plaintiff mistakenly believes the effect of discharge on his debt is to completely extinguish it. That, however, is simply not the case. This is a common misconception of the effect of a discharge. Id. at 295. Section 524 does not extinguish the debt. Discharge is simply an injunction on any further collection efforts by the creditor.
The facts and allegations of Irby are indistinguishable from those alleged in the present case. In Irby, the debtors alleged a violation of the discharge injunction based on the continued reporting of debt and refusal to remove reported debt from their credit report. Id. at 294. The debtors did not allege any other act by the creditor to collect on the debt. Id. The court held that "it is only a debtor's personal obligation to pay the debt that is effectively extinguished; the debt itself remains." Id at 295. Therefore, despite the discharge, the debt still exists and the discharge simply stays the creditor from further collection proceedings. See also In re Vogt, 257 B.R. 65 (Bankr. D. Colo. 2000) (discharge serves to eliminate the debtor's personal responsibility to pay the debt, and reporting of the debt is not a violation of the discharge unless done to extract payment).
The Irby case can be distinguished from the present case in that it dealt with a motion for default judgment. However, much like Mr. Torrence, the plaintiff in Irby filed other adversary proceedings similar to the one cited above. In a subsequent decision the same court that decided Irby ruled on a 12(b)(6) motion to dismiss. Irby v. Preferred Credit (In re Irby), Adv. No. 06-3536 2007 Bankr. LEXIS 297 (Bankr. N.D. Ohio. Jan. 30, 2007). The plaintiff and the allegations were identical to that of the first Irby case. Id. at 3-4. The court concluded that the facts were indistinguishable from those of the first Irby case and that in light of the ruling in the first Irby case the motion to dismiss should be granted. Id. at 9.
b. Does the report of a discharged debt and failure to remove the debt from the debtor's credit report constitute a violation of the discharge injunction?
Understandably, the Plaintiff wishes to remove the debt from his credit report and desires a clean start without any reference to his prior debts, including those reported by the Defendants. He argues:
Defendants, Knowingly disregarded the law and the order of my discharge and still attempting to collet this debt which causing a lot of blockage to a house, car and freedom to be just like another citizen after bankruptcy to have a fresh start for my future and not be reminded of my debt which has been forgiven.
(Doc. 1 at 3.) The fresh start afforded by bankruptcy relief does not necessarily equate with giving a debtor a head start. See Caldwell v. Continental American Ins. Co. (In re Caldwell), 350 B.R. 182, 200 (Bankr. E.D. Pa. 2006). Much like the debtors in Irby, Mr. Torrence simply alleges that the Defendants reported the debt and failed to remove the debt after discharge. However, the court in Irby concluded that the mere act of reporting the debt by itself does not constitute an affirmative act to collect on the debt. Irby, 337 B.R. 293 at 297. Moreover, because the debt was reported on Plaintiff's credit history well before the bankruptcy petition was even filed, Plaintiff's allegation that this constituted an improper collection activity attenuates. See In re Bruno, 356 B.R. 89 (Bankr. W.D. New York 2006). Accordingly, no violation of the discharge injunction occurred in this case. See Vogt, 257 B.R. 65 at 70 (If a creditor continues to report a debt, this action alone is not an act to effect collection of a debt.); Bruno, 356 B.R. 89 (same).
In an exhibit attached to the complaint the Plaintiff has provided an Experian credit report indicating that the debt in question was first reported prior to the bankruptcy filing. See Doc. 1 at Ex. 4.
III. CONCLUSION
Based on the foregoing, the complaint filed in this case fails to state a claim upon which relief can be granted. The motions to dismiss will be granted by separate order filed in this case.