- Nevada Court Finds Plaintiff’s FCRA Allegations against Furnisher are Adequately Pled, but Finds Plaintiff’s Defamation Claim to be Preempted
- February 14, 2011 | Author: Paul W. Sheldon
- Law Firm: Strasburger Price LLP - Dallas Office
Karony v. Dollar Loan Center, LLC, et al., 2010 U.S. Dist. LEXIS 132884 (D. Nev. Dec. 13, 2010)
Facts: Plaintiff filed suit against Defendants Dollar Loan Center (“Dollar Loan”) and its collection agency, Clark County Collection Service, LLC (“Clark County”) alleging FCRA violations among other statutory and common law claims. Plaintiff alleges he never entered into a promissory note with Defendant Dollar Loan and therefore was never responsible for the debt owed to the defendants and therefore, he should not be the subject of collection efforts nor adverse credit reporting. Additionally, Defendant Clark County previously filed suit in state court against Plaintiff for the debt which was eventually dismissed with prejudice based on Plaintiff’s challenge that he was not personally responsible for the debt. Plaintiff claims that Defendant Clark County continued to verify the debt to Equifax after the state court’s dismissal, resulting in a drop in Plaintiff’s credit score. Defendants filed their motion to dismiss under 12(b)(6) or alternatively, for summary judgment. The Court granted the Motion in part.
•Failure to State a Claim. Under § 1681s-2(a)(1)(A), a furnisher must not provide any information to a credit reporting agency (“CRA”) if the furnisher knows or has a reasonable cause to believe that the information is inaccurate. A furnisher has reasonable cause to believe that the information is inaccurate if the furnisher has specific knowledge, other than mere allegations by the consumer, that would cause a reasonable person to have substantial doubts about the inaccuracy of the information. Plaintiff alleged that Defendants reported the debt to the CRAs despite knowing that Plaintiff was dismissed from the underlying lawsuit and that Plaintiff did not personally sign the promissory note or agree to be responsible for the debt in any way (it was his wife who signed the note). Accordingly, these facts were sufficient to state a claim under § 1681s-2(a)(1)(A).
•Failure to State a Claim. Under § 1681s-2(a)(3), a furnisher must inform a CRA that a consumer is disputing a reported debt. Plaintiff alleges that despite having knowledge that he disputed the debt, Defendants continued to verify the debt to the CRAs. Accepting these allegations as true, the Court found that it may reasonably infer that Defendants are liable for violating this duty. Accordingly, the Court found that Plaintiff stated a claim under 1681s-2(a)(3).
•Preemption. Under the FCRA, no requirement or prohibition may be imposed under the laws of any state with respect to matters regulated by § 1681s-2. To the extent that Plaintiff’s common law claims relate to Defendants’ responsibilities under § 1681s-2, they are preempted, including Plaintiff’s defamation claim.