Opinion
1:22-CV-00325-SPB
05-16-2023
JUSTYN PEREZ-COLON, Plaintiff v. CAPITAL ONE, Defendant
SUSAN PARADISE BAXTER UNITED STATES DISTRICT COURT JUDGE
REPORT AND RECOMMENDATION ON MOTION TO DISMISS
ECF NO. 3
RICHARD A. LANZILLO CHIEF UNITED STATES MAGISTRATE JUDGE
I. Recommendation
It is respectfully recommended that Defendant Capital One's motion to dismiss (ECF No. 3) be GRANTED.
II. Report
A. Introduction and Procedural History
Plaintiff Justyn Perez-Colon commenced this action against Capital One in the Court of Common Pleas of Erie County, Pennsylvania. Capital One removed the action to this Court pursuant to 28 U.S.C. § 1441 based on federal question subject matter jurisdiction conferred by 28 U.S.C. § 1331. ECF No. 1. The Complaint asserts a violation of the Fair Credit Report Act 15 U.S.C. § 1681 (“FCRA”) and the Fair Debt Collection Practices Act 15 U.S.C. § 1692 (“FDCPA”) based on Capital One's allegedly fraudulent reporting of an outstanding balance Perez-Colon owes on a Capital One account. ECF No. 1-1. Perez-Colon seeks declaratory relief, an injunction ordering “Capital One to remove the outstanding balance from the Plaintiffs credit file,” and compensatory and punitive damages. Capital One responded to Perez-Colon's Complaint by moving for dismissal pursuant to Fed.R.Civ.P. 12(b)(6). ECF No. 3. Perez-Colon filed a brief in opposition to the motion, and Capital One filed a reply brief. ECF Nos. 8, 9.
B. Statement of Facts
The factual allegations of Perez-Colon's complaint are sparce and, for purposes of the pending motion, accepted as true. Perez-Colon alleges that Capital One has been falsely reporting to Credit Reporting Agencies (“CRAs”) TransUnion and Experian that he has an outstanding balance of $1,291 on Capital One account A00344845306, which was opened on November 4, 2017. According to Perez-Colon, he could not have incurred this debt because he has been incarcerated for the last six years. He further avers that he has never done business with Capital One or a company affiliated “directly or indirectly,” nor “signed a contract with the Defendant.” ECF No. 1-1, ¶¶ 5, 3. Perez-Colon has “filed complaints with the Consumer Protection Agency and filed an Identity Theft Report” based on this Capital One account. Id., ¶ 4. Additionally, he maintains that he “informed [Capital One] through a letter, disputes, and an Identity Theft Report.” Id., ¶ 6. Perez-Colon claims that “Capital One's false, derogatory, and inaccurate reporting practices led [him] to be denied for the Pell Grant available to federal inmates,” and “the reporting on both TransUnion and Experian” has “caus[ed] [his] credit worthiness to be called into question even in prison.” Id., ¶ 7.
Perez-Colon appended a TransUnion and Experian credit report to the complaint. ECF No. 1-1, pp. 7-10.
C. Standard of Review
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the complaint. See Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In deciding a Rule 12(b)(6) motion to dismiss, the court must accept as true all well-pled factual allegations in the complaint and views them in a light most favorable to the plaintiff. See U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002). The “court[] generally consider[s] only the allegations in the complaint, exhibits attached to the complaint, matters of public record, and documents that form the basis of a claim” when considering the motion to dismiss. Lum v. Bank of Am., 361 F.3d 217, 222 n.3 (3d Cir. 2004) (citing In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).
In making its determination under Rule 12(b)(6), the court is not opining on whether the plaintiff is likely to prevail on the merits; rather, the plaintiff must only present factual allegations sufficient “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004)). See also Iqbal, 556 U.S. 662. Furthermore, a complaint should only be dismissed pursuant to Rule 12(b)(6) if it fails to allege “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570 (rejecting the traditional Rule 12(b)(6) standard established in Conley v. Gibson, 355 U.S. 41, 78 (1957)).
While a complaint does not need detailed factual allegations to survive a motion to dismiss, a complaint must provide more than labels and conclusions. See Twombly, 550 U.S. at 555. A “formulaic recitation of the elements of a cause of action will not do.” Id. (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). Moreover, a court need not accept inferences drawn by a plaintiff if they are unsupported by the facts as explained in the complaint. See California Pub. Emp. Ret. Sys. v. The Chubb Corp., 394 F.3d 126, 143 (3d Cir. 2004) (citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997)). Nor must the court accept legal conclusions disguised as factual allegations. See Twombly, 550 U.S. at 555; McTernan v. City of York, Pennsylvania, 577 F.3d 521, 531 (3d Cir. 2009) (“The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”). Expounding on the Twombly/Iqbal line of cases, the Third Circuit has articulated the following three-step approach:
First, the court must ‘tak[e] note of the elements a plaintiff must plead to state a claim.' Second, the court should identify allegations that, ‘because they are no more than conclusions, are not entitled to the assumption of truth.' Finally, ‘where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief.'Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011) (quoting Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010)). This determination is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
Finally, because Plaintiff is proceeding pro se, the allegations in the complaint must be held to “less stringent standards than formal pleadings drafted by lawyers.” Haines v. Kerner, 404 U.S. 519, 520-521 (1972). If the court can reasonably read a pro se litigant's pleadings to state a valid claim upon which relief could be granted, it should do so despite the litigant's failure to cite proper legal authority, confusion of legal theories, poor syntax and sentence construction, or unfamiliarity with pleading requirements. See Boag v. MacDougall, 454 U.S. 364 (1982); United States ex rel. Montgomery v. Bierley, 141 F.2d 552, 555 (3d Cir. 1969) (petition prepared by a prisoner may be inartfully drawn and should be read “with a measure of tolerance”).
D. Analysis
Capital One argues that Perez-Colon's FCRA and FDCPA claims must be dismissed because Perez-Colon has not alleged facts to support the essential elements of either claim. Capital One is correct and its motion should be granted.
1. Perez-Colon has not alleged facts to support a plausible claim under the FCRA.
Perez-Colon argues that Capital One's actions violate the FCRA, 15 U.S.C. § 1681. Congress passed the FCRA “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007). See 15 U.S. Code § 1681(b). “[T]o satisfy the ‘consumer oriented objectives'” of the FCRA, the Third Circuit construes the Act liberally. Lewis v. Cap. One Bank, 2022 WL 17364641, at *4 (E.D. Pa. Dec. 1, 2022) (quoting Harris v. Pa. Higher Educ. Assistance Agency/Am. Educ. Servs., 2016 WL 3473347, at *4 (E.D. Pa. June 24, 2016), aff'd by Harris v. Pa. Higher Educ. Assistance Agency/Am. Educ. Servs., 696 Fed.Appx. 87, 90 (3d Cir. 2017) (citing S.Rep. No. 91-517, at 3 (1969))). The FCRA places varying obligations on three types of entities: “(1) consumer reporting agencies, (2) users of consumer reports, and (3) furnishers of information to consumer reporting agencies.” Id. (citing 15 U.S.C. § 1681, et seq.). Perez-Colon's claims against Capital One concern its alleged inaccurate or fraudulent reporting of information to CRAs. He therefore alleges that Capitol One acted as a “furnisher.” See id. (citing Donohue v. C. Blosenski Disposal Co., 2006 WL 3423888, at *3 (E.D. Pa. Nov. 28, 2006)) (“A ‘furnisher' is an entity which transmits information about a particular debt owed by a particular consumer to a consumer reporting agency.”).
“Among other things, the FCRA requires consumer reporting agencies to 'follow reasonable procedures to assure maximum possible accuracy of consumer reports, § 1681 e(b); to notify providers and users of consumer information of their responsibilities under the FCRA, § 1681 e(d); and to limit the circumstances in which such agencies provide consumer reports ‘for employment purposes, § 168 lb(b)(1).”' Ebrahimzadeh v. Sharestates Invs., LLC, No. CV 181659, 2018 WL 6065419, at *8 (E.D. Pa. Nov. 20, 2018).
Section 1681 s-2(b) of the FCRA “imposes certain duties on a furnisher/creditor who has been notified by a consumer credit reporting agency that a consumer has disputed information furnished by that furnisher/creditor.” See Harris v. Pa. Higher Educ. Assistance Agency/Am. Educ. Servs., 696 Fed.Appx. 87, 90 (3d Cir. 2017).
Section 1681 s-2 of the FCRA imposes two categories of legal obligations on furnishers: (1) liability under § 1681s-2(a) arises following a consumer's notice directly to the furnisher of inaccurate information, and (2) liability under § 1681 s-2(b) arising upon a consumer's notice to the CRA of inaccurate information, and the CRA's subsequent notice to the furnisher of the inaccurate information. See 15 U.S.C. §§ 168 ls-2(a)(1),(b)(1). But a private individual cannot “assert a claim for a violation of § 1681s-2(a), as such claims are available only to the Government.” SimmsParris v. Countrywide Fin. Corp., 652 F.3d 355, 358 (3d Cir. 2011) (citing 15 U.S.C. § 1681s-2(c) (“[S]ections 168 In and 1681 o of this title do not apply to any violation of-(1) subsection (a) of this section....”); id. § 1681 s-2(d) (“The provisions of law described in paragraphs (1) through (3) of subsection (c) of this section ... shall be enforced exclusively ... by the Federal agencies and officials and the State officials identified in section 1681s of this title.”)). Accordingly, 15 U.S.C. § 1681 s-2(b) is “the only section that can be enforced by a private citizen seeking to recover damages caused by a furnisher of information.” Id. (citing Chiang v. Verizon New England Inc., 595 F.3d 26, 35 (1st Cir. 2010); Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009); Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 149 (4th Cir. 2008)).
A viable § 1681s-2(b)(1) claim requires a consumer to allege facts to plausibly support that they: “[1] filed a notice of dispute with a consumer reporting agency; [2] the consumer reporting agency notified the furnisher of information of the dispute; and [3] the furnisher of information failed to investigate and modify the inaccurate information.” Lewis, 2022 WL 17364641, at *5 (alteration in original) (quoting Harris, 2016 WL 3473347, at *6) (citing 15 U.S.C. §§ 1681s-2(b), 1681n& § 1681o).
Perez-Colon's Complaint does not allege facts to support the elements of § 1681s-2(b)(1). Perez-Colon pleads that Capital One reported inaccurate and fraudulent information against him to CRAs TransUnion and Experian and that he notified Capital One that he disputed this account. But he does not allege that he notified the CRAs that he disputed this information or that a CRA notified Capital One of his dispute. Accordingly, the complaint fails to state a FCRA claim against Capital One.
2. Perez-Colon's allegations fail to state a claim under the FDCPA.
Perez-Colon also claims that Capital One's actions violate the FDCPA. The FDCPA was established to target abusive practices used by debt collectors and, consistent with that purpose, imposes liability on “any debt collector who fails to comply with” the FDCPA. 15 U.S.C. §§ 1692(e),(k). Capital One argues that Perez-Colon's FDCPA claim against it fails as a matter of law because it is a “creditor” under the FDCPA, not a “debt collector.” ECF No. 4. The statute defines a “debt collector” as, inter alia, “any person ... in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.” 15 U.S.C. § 1692a(6). A “creditor” means “any person who offers or extends credit creating a debt or to whom a debt is owed,” but not “any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.” 15 U.S.C. § 1692a(4). “Through this distinction between creditors and debt collectors, the FDCPA ‘exempts entities engaged in no more than the enforcement of security interests from the lion's share of its prohibitions.'” Belfi v. USAA Fed. Sav. Bank, 2022 WL 4097325, at *4 (E.D. Pa. Sept. 7, 2022) (quoting Obduskey v. McCarthy & Holthus LLP, 139 S.Ct. 1029, 1040 (2019)) (internal quotation marks omitted).
Plaintiff asserts a cause of action under the “Fair Debt Collection Act,” but no such act exists. Despite this misnomer, he correctly cites to the FDCPA. Given Perez-Colon's pro se status, the Court will construe his Complaint as asserting a claim under the FDCPA, 15 U.S.C. § 1692, et seq.
Here, the Complaint alleges no facts to support that Capital One is a debt collector within the meaning of the FDCPA. To the contrary, Perez-Colon's allegations make it clear that Capital One is a creditor. Perez-Colon contends that Capital One falsely reported to two CRAs that he owes a balance on a Capital One account, which, if true, would establish Capital One as a company “to whom a debt is owed.” Perez-Colon does not allege that Capital One acquired this debt from an assignment or transfer, or that Capital One has attempted to collect this debt from him. Thus, the Complaint does not support a plausible inference that Capital One is a “business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect. . . debts owed or due . .. another.” 15 U.S.C. § 1692a(6). See also Henson v. Santander Consumer USA Inc., 582 U.S. 79, 81-82 (2017). The Complaint therefore fails to state a FDCPA claim against Capital One.
E. Leave to Amend
The Court of Appeals for the Third Circuit has instructed that if a civil or consumer rights complaint is vulnerable to dismissal for failure to state a claim, the Court should permit a curative amendment unless an amendment would be inequitable or futile. Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002). This instruction is equally applicable to pro se litigants and those represented by counsel. Alston v. Parker, 363 F.3d 229, 235 (3d Cir. 2004). In this case, Perez-Colon may be able to amend his Complaint to allege facts sufficient to cure the deficiencies of his FCRA claim. Given the nature of the deficiencies of his FDCPA, any amendment regarding this claim would be futile. Accordingly, it is recommended that the Court grant Capital One's motion to dismiss Perez-Colon's Complaint and dismiss his FCRA claim without prejudice and with leave to file an amended complaint within twenty (20) days. It is further recommended that the Court dismiss his FDCPA claim with prejudice. If Perez-Colon fails to file an amended complaint within the time provided, the Court should enter an order dismissing his FCRA claim with prejudice.
III. Conclusion
For the foregoing reasons, it is respectfully recommended that Capital One's motion to dismiss (ECF No. 3) be GRANTED.
IV. Notice
In accordance with 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72, the parties may seek review by the district court by filing Objections to the Report and Recommendation within fourteen (14) days of the filing of this Report and Recommendation. Any party opposing the objections shall have fourteen (14) days from the date of service of objections to respond thereto. See Fed.R.Civ.P. 72(b)(2). Failure to file timely objections may waive appellate rights. See Brightwell v. Lehman, 637 F.3d 187, 194 n.7 (3d Cir. 2011); Nara v. Frank, 488 F.3d 187 (3d Cir. 2007).