In Mortimer v. Bank of America, N.A., 2013 WL 57856 (N.D.Cal. 2013), Judge Spero rejected a FCRA plaintiff’s complaints about a creditor’s reporting of his account through and after bankruptcy, but allowed leave to amend as to Plaintiff’s CCRAA and UCL claims.
Several courts, including two in this district involving closely analogous factual situations, have held that reports, after discharge, of delinquencies in payment during the bankruptcy proceedings are not “incomplete or inaccurate” information for the purposes of the FCRA. Giovanni v. Bank of America, N.A., 2012 WL 6599681, at *5–*6 (N.D.Cal. Dec.18, 2012); Mortimer, 2012 WL 3155563 at *3–*4; see also Harrold v. Experian Information Solutions, Inc., 2012 WL 4097708, at *4 (N.D.Cal. Sept.17, 2012); Evans, 2011 WL 2936198 at *2–3 (Plaintiff failed to state a claim under the FCRA because the complaint, alleging wrongful reporting of accounts on the basis that they had been discharged through Chapter 7 Bankruptcy, predated the discharge of the debts through bankruptcy); In re O’Connell, 2008 WL 5046496, at *1 (Bankr.D.Ariz. Oct.29, 2008) (discharge of debts through bankruptcy acts only as a bar to a creditor’s right to enforce debt; a creditor’s derogatory remarks to its credit bureaus are not inaccurate if what it is reporting are simply the facts of non-payment and prior delinquencies). This Court agrees that the FCRA does not prohibit the accurate reporting, after discharge, of debts that were delinquent during the pendency of the bankruptcy action. Whether or not the debt was collectible, the debt existed. Reporting this information is neither inaccurate nor misleading.
The Court essentially rejected Plaintiff’s contention that a creditor could not report delinquent obligations incurred post-petition but pre-discharge under a ‘relation-back’ theory.
The debtor is under no legal obligation to pay the discharged debts. Subject to certain exceptions, discharge pursuant to Section 727(a) “discharges the debtor from all debts that arose before the date of the order for relief …” 11 U.S.C. § 727(b). However, this does not change the underlying fact that, during the pendency of the bankruptcy, the account was delinquent. See In re O’Connell, 2008 WL 5046496, *1. Thus, it is accurate to report, after discharge, that a debtor was delinquent during the pendency of bankruptcy because at that time the debt existed. To avoid presenting a misleading picture, the creditor must also report that the account was discharged through the bankruptcy and the outstanding balance on that account is zero. . . .The facts, when construed in the light most favorable to Plaintiff and taking Plaintiff’s allegations as true, are as follows. After discovering inaccuracies in his credit report, Plaintiff sent Experi an the April 21, 2011 letter requesting an investigation. Experi an brought the matter to Defendant’s attention, and Defendant thereafter reported the account in question was “Discharged through Bankruptcy Chapter 7,” had a current account balance of $0, and was “closed” in the months of December 2009 and January 2010, as demonstrated by the Experian Report. At some time thereafter, Defendant adjusted its report to Experian to state that the account in question was “Closed at Consumer’s Request; Bankruptcy Chapter 7,” had a current account balance and a past due balance of $0, and that the account was 30 days past due in December 2009 and 60 days past due in January 2010, as demonstrated by the Service 1st Report.FN4 As discussed above, this information was factually accurate and not misleading. Thus, Plaintiff’s dispute was without merit. Plaintiff’s FCRA claim is dismissed with leave to amend.
The Court allowed Plaintiff leave to amend the CCRAA claim, also finding that it’s possible survival allowed the UCL claim to proceed. Specifically, the Court found that a possible diminished credit score was sufficient economic injury to confer standing.
Plaintiff’s Complaint can be read as alleging that Defendant’s violation of the CCRAA caused him to suffer a diminished credit score and preventing him from obtaining products and services from vendors and additional credit from other agencies. Complaint at ¶ 56.FN5 This is an economic injury sufficient to grant him standing. See King, 2012 WL 4685993 at *8 (citing White v. Trans Union LLC, 462 F.Supp.2d 1079, 1080, 1084 (C.D.Cal.2006)).
Finally, the district court found complete pre-emption of the remaining state law claims, including a statutory claim under the Song-Beverly Credit Card Act.
District courts have struggled to reconcile the two provisions because Section 1681 h(e) appears to permit certain state law tort claims, whereas 1681t(b)(1)(F) appears to preempt both state statutory and common law claims. Subhani, 2012 WL 1980416 at *3. Although the Ninth Circuit has not addressed the issue, both the Second and Seventh Circuits have concluded that Section 1681t(b)(1) (F) sweeps more broadly than Section 1681 h(e), preempting all statutory and common law actions within its purview. See Purcell v. Bank of America, 659 F.3d 622, 624–25 (7th Cir.2011); Macpherson v. JPMorgan Chase Bank, N.A., 665 F.3d 45, 48 (2d Cir.2011); Subhani, 2012 WL 1980416 at *3. This Court joins a number of district courts in this circuit in adopting this approach. See Subhani, 2012 WL 1980416 at *4 (collecting cases).