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Cable v. Midland Funding, LLC

United States District Court, E.D. Kentucky, Central Division

July 11, 2019

DONALD CABLE, Plaintiff,
MIDLAND FUNDING, LLC, et al., Defendants.



         Plaintiff Donald Cable discovered that his delinquency with Defendant Commonwealth Credit Union (CCU) was disclosed by several credit reporting agencies. In his Complaint, Mr. Cable asserts that CCU and the credit reporters failed to investigate and correct the allegedly false credit reports, notwithstanding his notice to them that such reports were mistaken. Mr. Cable initiated this suit to recover against the defendants for their alleged violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, as well as the two-state law tort claims of defamation and negligence. Defendant CCU has moved to dismiss all claims against it, and for the following reasons, the motion to dismiss is GRANTED.


         Around October 2018, Mr. Donald Cable became aware that Commonwealth Credit Union (CCU) recorded with three credit reporting agencies (also defendants in this suit) that Mr. Cable was delinquent to the tune of $4, 724.00. [R. 1 at ¶ 27.] The credit reports apparently indicated that CCU had “charged off” the same amount, prompting Mr. Cable to dispute the debt's validity with all three credit reporters. Id. at ¶ 28. CCU was notified of the dispute, and in January 2019, it verified the accuracy of the credit reports that Mr. Cable was in fact delinquent. [R. 18-1 at 2.] On March 7, 2019, Plaintiff brought this action for negligence, defamation, and violation of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, for Defendants' alleged false credit reporting and failure to investigate Mr. Cable's dispute thereof. [R. 1 at ¶ 1.] Defendant CCU seeks to have all claims against it dismissed for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Mr. Cable failed to file a response, and the time to do so has now expired. [R. 28.]


         CCU argues, pursuant to Federal Rule of Civil Procedure 12(b)(6), that each of the theories for relief contained in the Complaint fails to state a claim upon which relief may be granted and must be dismissed. [R. 18-1 at 1.] A motion to dismiss pursuant to Rule 12(b)(6) tests the sufficiency of a plaintiff's complaint. In reviewing a Rule 12(b)(6) motion, the Court “construe[s] the complaint in the light most favorable to the plaintiff, accept[s] its allegations as true, and draw[s] all inferences in favor of the plaintiff.” DirecTV, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citation omitted). The Court, however, “need not accept as true legal conclusions or unwarranted factual inferences.” Id. (quoting Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir. 2000)). The Supreme Court has explained that in order “[t]o survive a motion to dismiss, 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, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). See also Courier v. Alcoa Wheel & Forged Products, 577 F.3d 625, 629 (6th Cir. 2009).

         Stated otherwise, it is not enough for a claim to be merely possible; it must also be “plausible.” See Courier, 577 F.3d at 630. According to the Court, “A claim has facial plausibility 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. (citing Twombly, 550 U.S. at 556). “Plausibility” then, is the benchmark the factual allegations contained in Plaintiffs' Complaint must meet in order to defeat CCU's Motion to Dismiss.

         Mr. Cable's Complaint asserts four causes of action against CCU: (1) willful violation of the FCRA § 1681s-2b; (2) negligent violation of the FCRA § 1681s-2b; (3) negligence; and (4) defamation. [R. 1 at ¶ 1.]


         Congress enacted the FCRA in 1968 in order to promote “efficiency in the Nation's banking system and to protect consumer privacy.” 15 U.S.C. § 1681. More specifically, the Sixth Circuit has noted that “the FCRA is aimed at protecting consumers from inaccurate information in consumer reports and [aimed] at the establishment of credit reporting procedures that utilize correct, relevant, and up-to-date information in a confidential and responsible manner.” Jones v. Federated Financial Reserve Corp., 144 F.3d 961, 965 (6th Cir. 1998).

         Mr. Cable claims that CCU willfully and negligently violated § 1681s-2(b) of the FCRA. [R. 1 at ¶¶ 94, 115]; 15 U.S.C.S. § 1681n (“Civil liability for willful noncompliance”); 15 U.S.C.S. § 1681o (“Civil liability for negligent noncompliance”). Specifically, Mr. Cable alleges “Commonwealth's failure to investigate Plaintiff's dispute and its initial and continued false reporting” amount to violations of the FCRA. [R. 1 at ¶¶ 93, 114.]

         Section 1681s-2b of the FCRA lays out the “[d]uties of furnishers of information upon notice of dispute.” “Upon receiving notice from a credit reporting agency that a consumer disputes the information a furnisher has provided, the furnisher is required to (1) investigate the veracity of the disputed information; (2) review the information provided by the credit reporting agency; (3) report the results of the investigation; and (4) correct any inaccuracies uncovered by the investigation.” Bach v. First Union Nat'l Bank, 149 Fed.Appx. 354, 358 (6th Cir. 2005) (citing § 1681s-2(b)(1)(A)-(E)).

         The Complaint acknowledges that CCU was notified of Mr. Cable's dispute and CCU subsequently verified the debt with the credit reporting agencies, [R. 1 at ¶¶ 30-31], but leaves the Court left to guess as to CCU's precise investigative failure-either willful or negligent. Mr. Cable presumably believes that, given the “charged off” status of his debt, [R. 1 at ¶ 28], CCU should have arranged for the credit reporters to cease the reporting of Mr. Cable's delinquency. However, the Court agrees with CCU that a “charge off” does not mean what Mr. Cable understands it to.

         The “charge off” of a debt does not equate to its “discharge, ” which is the subject matter of Mr. Cable's quoted regulation-26 C.F.R. § 6050P-1(b)(2)(i)(G). [R. 1 at ¶ 28.] When a lender determines a debt is “uncollectable and at least partially worthless, ” the company can “charge off” the debt, permitting the original lender to sell the debt to another party and recoup a portion of the lost investment. Stratton v. Portfolio Recovery Associates, LLC, 770 F.3d 443, 445-46 (6th Cir. 2014). Indeed, a “charge off” is an accounting method utilized by companies to reduce their tax liability; it is not the ...

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