• Plaintiffs' Conclusory Allegations of Unreasonable Procedures Regarding § 1681s-2(b) Claim Sufficient to Survive Furnisher's 12(b)(6) Dismissal Motion
  • May 4, 2009 | Author: Erik Grohmann
  • Law Firm: Strasburger & Price, LLP - Frisco Office
  • Calloway v. Green Tree Servicing, LLC, 2009 U.S. Dist. LEXIS 31467 (D. Del.Apr. 13, 2009)

    Facts: Plaintiffs alleged § 1681s-2(b) and defamation claims against defendant Green Tree Financial Services for the erroneous double-reporting of their mortgage account. Plaintiffs twice disputed the accuracy of the duplicate account with Trans Union, with Green Tree verifying the information as accurate in both instances. Green Tree filed a 12(b)(6) Motion to Dismiss, arguing that no private right of action existed on Plaintiffs’ § 1681s-2(b) claim and that the FCRA preempted Plaintiffs’ defamation claim because they failed to allege acts demonstrating malice or willfulness. The Court denied Defendant’s 12(b)(6)motion on both counts.   

    • Furnisher Duties. While there is no private right of action for a violation of § 1681s-2(a), a private right of action does exist for alleged violations of § 1681s-2(b).
    • Furnisher Investigation. Liability pursuant to § 1681s-2(b) occurs as a result of an unreasonable investigation, not simply the reporting of inaccurate information. Where a furnisher conducts an investigation and concludes that the disputed information is accurate, it will not be liable pursuant to § 1681s-2(b) if the investigation was reasonable.  Plaintiffs’ complaint included many allegations of Defendant providing inaccurate information, “but no allegations (besides conclusory ones) describing the unreasonableness of Defendant’s investigation . . .. Nevertheless, the court can reasonably infer from Plaintiffs’ allegations . . . that the alleged inaccuracies in Plaintiffs’ credit reports . . . resulted from Defendant’s unreasonable investigations, and thus, are sufficient to cast Plaintiffs’ claim as more than merely speculative.” 
    • Defamation. Where alleged defamation arises out of a defendant’s act pursuant to the FCRA, the defamation claim is preempted unless the plaintiff also pleads malice or willful intent to injure. Under Fed. R. Civ. P. 9(b), a plaintiff may allege malice or intent generally. Because Plaintiffs’ complaint generally alleges that Defendant engaged in defamatory conduct with malice or intent to injure, Plaintiffs’ defamation claim will not be preempted.