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Vaughn v. Branch Banking & Trust Co.

United States District Court, W.D. Kentucky, Louisville Division

March 20, 2019

GARNETT VAUGHN PLAINTIFF
v.
BRANCH BANKING & TRUST CO.; TD BANK USA, N.A.; CREDIT FIRST N.A.; and EXPERIAN INFORMATION SOLUTIONS, INC. DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          GREG N. STIVERS, CHIEF JUDGE

         This matter is before the Court on Defendants' Motions to Dismiss (DN 25, 30). The motions are ripe for decision. For the reasons stated below, the motions are GRANTED IN PART AND DENIED IN PART.

         I. BACKGROUND

         This action concerns debt related to two credit card accounts opened by Plaintiff in April and November 2012 with Defendants Branch Banking and Trust Co. (“BBT”) and TD Bank USA, N.A. (“TD”). (Am. Compl. ¶¶ 24, 34, DN 18). Plaintiff alleges BBT charged off credit card debt worth $10, 598.00 in September 2013 and that TD charged off debt worth $2298.00 in September 2014. (Am. Compl. ¶¶ 25, 35).

         In July 2016, [1] BBT issued a Form 1099-C to Plaintiff and presumably filed the form with the Internal Revenue Service (“IRS”). (Pl.'s Resp. Defs.' Mot. Dismiss 4, DN 36 [hereinafter Pl.'s Resp.]). The notice contains the heading, “Cancellation of Debt, ” and is marked with the identifiable event “G.”[2] (Pl.'s Resp. Def's Mot. Dismiss Ex. A, DN 36-1). After receiving the Form 1099-C, Plaintiff alleges BBT did not further attempt to collect the debt and, as a result of this discharge, he owes income tax for the discharged amount. (Am. Compl. ¶¶ 26-27).

         In May 2018, Plaintiff was in the process of securing a home mortgage when he learned BBT and TD were reporting debts as past due to the Credit Reporting Agency (“CRA”) Defendants. (Am. Compl. ¶¶ 24, 34). Plaintiff immediately filed disputes with the CRAs concerning these tradelines. (Am. Compl. ¶¶ 28, 36). Plaintiff alleges that the CRAs informed BBT and TD Bank of Plaintiff's disputes with their respective reports, and both BBT and TD Bank independently verified their reports as accurate. (Am. Compl. ¶¶ 30, 38).

         The Amended Complaint accuses Defendants of negligence, defamation and negligent and willful violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. for their handling of these disputed debts. (Am. Compl. ¶ 1). Plaintiff alleges the Defendants failed to investigate and correct his credit report and falsely reported delinquent debts. (Am. Compl. ¶m 1).

         Defendants BBT and TD move to dismiss Plaintiff's claims under Fed.R.Civ.P. 12(b)(6). (Def.'s Mot. Dismiss, DN 25 [hereinafter BBT's Mot.]; Def.'s Mot. Dismiss, DN 30 [hereinafter TD's Mot.]). In its motion, BBT argues that the Form 1099-C does not indicate that debt has been discharged, and by relying on this form, Plaintiff's pleadings are thus insufficient to state a claim under the FCRA because he still owes the debt. (BBT's Mot. 1). In its motion, TD Bank argues it cannot be liable under the FCRA because its report was accurate. (TD's Mot. 1). Regarding his state law claims for negligence and defamation, both Defendants argue the FCRA preempts these state claims. (BBT's Mot. 2; TD's Mot. 6).

         II. JURISDICTION

         The Court has jurisdiction over this controversy because it arises under the laws of the United States. 28 U.S.C. § 1331.

         III. STANDARD OF REVIEW

         To survive dismissal for failure to state a claim under Fed.R.Civ.P. 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted) (citation omitted). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. When considering Defendants' Motions to Dismiss, the Court will “accept all the Plaintiff's factual allegations as true and construe the complaint in the light most favorable to the Plaintiff[].” Hill v. Blue Cross and Blue Shield of Mich., 409 F.3d 710, 716 (6th Cir. 2005). “A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Iqbal, 556 U.S. at 678 (internal quotation marks omitted) (citation omitted).

         IV. DISCUSSION

         The FCRA was enacted “to promote ‘efficiency in the Nation's banking system and to protect consumer privacy.'” Stafford v. Cross Country Bank,262 F.Supp.2d 776, 781 (W.D. Ky. 2003) (quoting 15 U.S.C. § 1681(a)). The FCRA places distinct obligations on CRAs, users of consumer reports, and furnishers of information to consumer reporting agencies. Id. at 782 (citations omitted). Furnishers of financial information to CRAs, like BBT and TD, have responsibility to refrain from reporting inaccurate information and to correct inaccurate information. See 15 U.S.C. § 1681s-2(a). An affected consumer is permitted to “bring a private cause of action against a furnisher of credit information for either negligent, § 1681o, or willful, § 1681n, violations of the FCRA.” Stafford, ...


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