Sprague v. Salisbury Bank & Tr. Co. ( 2020 )

19-3241
Sprague v. Salisbury Bank & Tr. Co.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
______________
August Term 2019
(Submitted: May 18, 2020 | Decided: August 10, 2020)
Docket No. 19-3241
ROBERT C. SPRAGUE, C. ROBIN ZEIGLER,
Plaintiffs-Appellants,
v.
SALISBURY BANK AND TRUST COMPANY,
Defendant-Appellee. †
______________
Before:
SACK, WESLEY, CHIN, Circuit Judges.
Appellants Robert C. Sprague and C. Robin Zeigler appeal the dismissal of
their amended complaint against Salisbury Bank and Trust Company
(“Salisbury”). Appellants allege that Salisbury violated the Fair Credit Reporting
Act, 15 U.S.C. §§ 1681 et seq., and related state law causes of action by, inter alia,
failing to correct information contained in Sprague’s credit report after being
notified that the information was not correct. The United States District Court for
the District of Connecticut (Bryant, J.) dismissed Appellants’ Amended Complaint
with prejudice because Appellants did not allege that they reported the
discrepancy to a consumer reporting agency or that a consumer reporting agency
† The Clerk of the Court is directed to amend the official caption as set forth above.
notified Salisbury of Sprague’s complaint. Because we agree that Appellants’
allegation that they notified Salisbury directly of their dispute is insufficient to
state a claim under 15 U.S.C. § 1681s–2(b), we AFFIRM the district court’s
decision.
_________________
Clifford Thier, Thier Law Offices, LLC, West Hartford, CT, for
Plaintiffs-Appellants.
Thomas C. Blatchley, Joseph J. Blyskal, Gordon Rees Scully
Mansukhani, LLP, Glastonbury, CT, for Defendant-Appellee.
_________________
PER CURIAM:
Appellants Robert C. Sprague and C. Robin Zeigler appeal from a dismissal
of their amended complaint against Salisbury Bank and Trust Company
(“Salisbury”) alleging that Salisbury violated the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. §§ 1681 et seq., and related state law causes of action.
Specifically, they claim that Salisbury failed to perform a reasonable investigation
and correct inaccurate information contained in Sprague’s credit report. The
United States District Court for the District of Connecticut (Bryant, J.) determined,
inter alia, that, because Appellants did not allege that they reported the error to a
consumer reporting agency (“CRA”) or that a CRA notified Salisbury of the
discrepancy, the Amended Complaint must be dismissed for failure to state a
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claim. Because we agree that the allegation that Appellants notified Salisbury
directly of their dispute is, standing alone, insufficient to state a claim under 15
U.S.C. § 1681s–2(b), we affirm.
BACKGROUND
I. Facts
The relevant facts are straightforward: In 2004, Appellants borrowed
$109,600 from Salisbury to finance the purchase of a house located in North
Canaan, Connecticut. Later that year, Appellants refinanced their mortgage,
borrowing an additional $250,000 from Salisbury.
In August 2011, Salisbury initiated foreclosure proceedings, resulting in a
judgment of strict foreclosure in favor of Salisbury. 1 The parties stipulated to a
$40,000 deficiency judgment, which the Connecticut Superior Court approved on
April 28, 2014.
1In Connecticut, a court may order foreclosure by sale or strict foreclosure. See Conn.
Gen. Stat. § 49–24. Under Connecticut law, a decree of strict foreclosure “finds the
amount due under the mortgage, orders its payment within a designated time and
provides that should such payment not be made, the debtor’s right and equity of
redemption will be forever barred and foreclosed.” Nat’l City Mortg. Co. v. Stoecker, 888
A.2d 95, 100 (Conn. App. Ct. 2006). When a judgment of strict foreclosure “becomes
absolute and all rights of redemption are cut off,” it “constitutes an appropriation of the
mortgaged property to satisfy the mortgage debt.” Id. (citation omitted).
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 On February 15, 2016, Sprague ordered a credit report (the “Report”). The
Report inaccurately indicated “that the mortgage on the foreclosed [h]ouse was
still open and payments had not been made in more than two years.” J.A. 53 ¶ 16.
Appellants “notified [Salisbury] of the error,” id. at ¶ 21, and on March 7, 2016,
Salisbury acknowledged that the loan had been erroneously reported as “open”
but that “[a] correction ha[d] been made to report this loan as closed,” id. at 57.
Salisbury also indicated that the “information [would] be supplied to the credit
reporting agencies.” Id. Appellants subsequently learned, however, that the bank
did not correct the erroneous information until November 30, 2016. See id. at 53
¶ 19.
II. Procedural History
Appellants filed their initial complaint on August 17, 2018. 2 On September
25, 2018, Salisbury moved to dismiss the complaint under Federal Rule of Civil
Procedure 12(b)(6). Appellants successfully cross-moved to amend their
complaint and filed their Amended Complaint on October 22, 2018. As relevant
here, the Amended Complaint alleges that Salisbury violated the FCRA by
2In September 2018, Salisbury removed this action from the Connecticut Superior Court
to the United States District Court for the District of Connecticut.
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“negligently and willfully fail[ing] to perform a reasonable reinvestigation and
correction of inaccurate information,” J.A. 53 ¶ 21, and “engag[ing] in behavior
prohibited by [the] FCRA by failing to correct errors in the information that it
provided to credit reporting agencies,” id. at 54 ¶ 23, “after [Appellants] notified
[Salisbury] of the error,” id. at 53 ¶ 21. The Amended Complaint does not
reference a specific provision of the FCRA.3
On November 19, 2018, Salisbury moved to dismiss the Amended
Complaint, arguing, inter alia, that its “duty of investigation is only triggered after
a furnisher of information receives notice of a dispute from a consumer reporting
agency” and that Appellants “fail[ed] to allege that [Salisbury] ever received notice
of a dispute from a consumer reporting agency.” Id. at 58–59.
On March 11, 2019, following three extensions of time to respond to
Salisbury’s motion to dismiss, Appellants cross-moved to amend their complaint
for a second time. The district court denied Appellants’ motion but allowed
Appellants to refile within seven days with a proposed second amended
complaint. Appellants complied on April 1, 2019. Ultimately, the district court
3The Amended Complaint also contained three additional claims under state law.
Appellants do not contend that the district court erred in dismissing these claims.
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rejected the proposed complaint because “[it] provide[d] no substantive additions,
adding only background information about the Fair Credit Reporting Act,
dormant facts which could have been included with either of [Appellants’] first
two complaints, and irrelevant information.” Id. at 7. On July 18, 2019—eight
months after Salisbury moved to dismiss—Appellants filed their opposition to
Salisbury’s motion to dismiss.
The district court dismissed the Amended Complaint. Because the
Amended Complaint failed to allege a statutory basis for Appellants’ FCRA claim,
the district court considered two potential available bases for relief. To the extent
Appellants sought relief for a violation of 15 U.S.C. § 1681s–2(a), the district court
concluded that they failed to state a claim because there is no private right of action
under that subsection of the FCRA. See id. at 209–10 (citing Longman v. Wachovia
Bank, N.A., 702 F.3d 148, 151 (2d Cir. 2012) (per curiam)). If Appellants’ claim was
premised on a violation of Section 1681s–2(b), the district court likewise concluded
that they again failed to state a claim because they (1) did not plead that they
notified a CRA of the disputed accuracy of Salisbury’s reports, and (2) did not
allege that a CRA notified Salisbury of the dispute. See id. at 211–16.
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 Leave to amend was not warranted in the court’s view because Appellants
“failed to cure deficiencies by amendments previously allowed.” Id. at 223
(internal quotation marks and citation omitted). Further, Appellants presented no
basis for the district court to believe they could allege facts withstanding a 12(b)(6)
motion, and therefore, “further leave to amend would be futile.” Id. (citation
omitted).
The district court entered judgment; Appellants timely appealed.
DISCUSSION 4
I. The Amended Complaint Fails to State a Claim Under 15 U.S.C.
§ 1681s–2(b)
“The [FCRA] regulates credit reporting procedures to ensure the
confidentiality, accuracy, relevancy, and proper utilization of consumers’
information.” Longman, 702 F.3d at 150 (citing 15 U.S.C. § 1681(b)). Accordingly,
to ensure credit reports are accurate, the FCRA imposes certain duties on CRAs,
4The standard of review is not in doubt. We review a district court’s dismissal of a
complaint pursuant to Rule 12(b)(6) de novo, “construing the complaint liberally,
accepting all factual allegations in the complaint as true, and drawing all reasonable
inferences in the plaintiff’s favor.” Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d
Cir. 2002). We review the district court’s denial of leave to amend for abuse of discretion,
Longman, 702 F.3d at 150, but we review de novo its legal determination that amendment
would be futile, Hutchison v. Deutsche Bank Sec., Inc., 647 F.3d 479, 490 (2d Cir. 2011).
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users of consumer reports, and furnishers of information to CRAs, such as
Salisbury.
Section 1681s–2 sets forth an information furnisher’s responsibilities under
the FCRA, delineating two separate categories of duties. See 15 U.S.C. § 1681s–2.
Section 1681s–2(a) details a furnisher’s responsibility to provide accurate
information, including a duty to refrain from knowingly reporting inaccurate
information, see 15 U.S.C. § 1681s–2(a)(1), and to correct information discovered to
be inaccurate, see id. § 1681s–2(a)(2). As the district court correctly concluded, the
FCRA does not provide a private cause of action for violations of Section 1681s–
2(a). See 15 U.S.C. § 1682s–2(d); Longman, 702 F.3d at 151 (“[T]he statute plainly
restricts enforcement of [15 U.S.C. § 1681s–2(a)] to federal and state authorities.”). 5
Section 1681s–2(b) outlines a furnisher’s duties following a dispute
regarding the completeness or accuracy of a consumer’s credit report. Under
Section 1681s–2(b), once a furnisher “receiv[es] notice” of a dispute, the furnisher
must:
(A) conduct an investigation with respect to the disputed
information;
5Appellants agree and do not appeal the dismissal of their complaint based on a Section
1681s–2(a) theory of liability.
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(B) review all relevant information provided by the consumer
reporting agency pursuant to section 1681i(a)(2) . . .;
(C) report the results of the investigation to the consumer
reporting agency;
(D) if the investigation finds that the information is incomplete
or inaccurate, report those results to all other consumer
reporting agencies to which the person furnished the
information . . .; and
(E) if an item of information disputed by a consumer is found
to be inaccurate or incomplete or cannot be verified after
any reinvestigation under paragraph (1) . . ., (i) modify that
item of information; (ii) delete that item of information; or
(iii) permanently block the reporting of that item of
information.
15 U.S.C. § 1681s–2(b)(1). The statute is clear that the notice triggering these duties
must come from a CRA, not the consumer. See 15 U.S.C. § 1681i(a)(2) (providing
that once a “consumer reporting agency receives notice of a dispute from any
consumer . . . the agency shall provide notification of the dispute to any person
who provided any item of information in dispute”); id. § 1681s–2(b); see also
SimmsParris v. Countrywide Fin. Corp., 652 F.3d 355, 358 (3d Cir. 2011) (“Notice
under § 1681i(a)(2) must be given by a credit reporting agency, and cannot come
directly from the consumer.”); Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147,
1154 (9th Cir. 2009) (“[Section 1681s–2(b)] obligations are triggered upon notice of
dispute—that is, when a person who furnished information to a CRA receives
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notice from the CRA that the consumer disputes the information.” (internal
quotation marks omitted)). Accordingly, Section 1681s–2(b) is not implicated
simply because a consumer contacts a furnisher such as Salisbury regarding
inaccuracies in her credit report.
Appellants do not allege that a CRA notified Salisbury of their dispute
concerning the information in the Report. Appellants do not even allege that they
notified a CRA of the discrepancy. The Amended Complaint alleges only that,
after receiving the Report, Sprague directly notified Salisbury of the Report’s
inaccuracy. See J.A. 53. This alone is insufficient to state a claim under Section
1681s–2(b). See Chiang v. Verizon New England Inc., 595 F.3d 26, 35 & n.8 (1st Cir.
2010); Gorman, 584 F.3d at 1154; Elmore v. North Fork Bancorporation, Inc., 325 F.
Supp. 2d 336, 340 (S.D.N.Y. 2004).
Appellants contend that Salisbury based its motion to dismiss solely on the
failure of a CRA to notify the bank of an inaccuracy in Sprague’s credit report.
They seem to imply that by limiting its objection to the failure to allege notice from
a CRA to Salisbury, the bank could not be heard to complain about the absence of
a factual allegation regarding notice by Sprague to the consumer reporting agency.
See Appellants’ Br. 19–20. We disagree. The complaint gave no guidance as to
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what section of the FCRA Appellants sought to employ in the litigation. Salisbury
argued that Appellants “only allege that they disputed the debt with [Salisbury,]” and
therefore, the Amended Complaint “is devoid of any allegations that a [CRA]
informed [Salisbury] of their alleged dispute,” which is a “prerequisite for liability
under § 1681s–2(b)(1).” J.A. 70–71 (emphasis added). This put the sufficiency of
Appellants’ Section 1681s–2(b) claim before the district court. The district court
agreed that Section 1681s–2(b) was the only available statutory basis for liability
under the FCRA and measured the complaint by the standard therein. See id. at
211–17.
Under the statute, a CRA need only notify a furnisher about any disputes
concerning the accuracy of credit information after the CRA receives such notice
from the consumer—either directly or indirectly through a reseller. 6 See 15 U.S.C.
6Though not at issue here, the term “reseller” is defined as a consumer reporting agency
that:
(1) assembles and merges information contained in the database of another
consumer reporting agency or multiple consumer reporting agencies
concerning any consumer for purposes of furnishing such information to
any third party, to the extent of such activities; and
(2) does not maintain a database of the assembled or merged information
from which new consumer reports are produced.
15 U.S.C. § 1681a(u).
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§ 1681i(a)(2) (requiring consumer reporting agencies to report a dispute to the
furnisher within five business days “beginning on the date on which a consumer
reporting agency receives notice of a dispute from any consumer or a reseller” (emphasis
added)). Indeed, the CRA is required to include “all relevant information
regarding the dispute that the [CRA] has received from the consumer” in its notice
to the furnisher. Id. § 1681i(a)(2)(A). And, in turn, a furnisher is only required to
investigate a dispute upon receiving the CRA’s notice. Thus, the chain of events
leading up to the furnisher’s duty to investigate under Section 1681s–2(b) begins
with the consumer’s notice to a CRA. The district court did not err when it
considered whether Appellants alleged that they notified a CRA of their dispute—
even if Salisbury did not specifically articulate this point.
In alleging that Salisbury violated the FCRA by continuing to furnish
inaccurate information after receiving notice of an error directly from the
consumer, Appellants effectively seek to employ the private right of action
permitted under Section 1681s–2(b) as a means of enforcing Salisbury’s general
obligation under Section 1681s–2(a) not to knowingly furnish inaccurate
information. Section 1681s–2(b) imposes on Salisbury a more specific duty,
triggered only by a proper chain of notice. Here, Appellants have alleged no facts
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indicating that Salisbury received notice from a CRA regarding the inaccuracies in
the Report. The Amended Complaint alleges only that Appellants notified
Salisbury about the erroneous information. This alone does not state a valid claim
under Section 1681s–2(b). 7
II. The District Court Did Not Err in Denying Leave to Amend
Appellants also contend that the district court erred in dismissing the
complaint with prejudice. See Appellants’ Br. 27. We disagree. The district court
found that, notwithstanding the several extensions of time to respond to
Salisbury’s motion to dismiss and a previous chance to amend, Appellants failed
to cure the alleged deficiency. See J.A. 223. Additionally, the district court noted
that discovery would not aid Appellants in alleging that they notified a CRA of
their dispute. See id. at 216 & n.2. Indeed, Sprague certainly knew whether he
lodged a complaint with a CRA. Appellants therefore presented no basis for the
7 Because the Amended Complaint failed to allege not only that a CRA notified Salisbury
about the contested information in the Report, but also that Appellants notified a CRA of
their dispute, we need not address the narrower question of whether an allegation that a
plaintiff notified a CRA of disputed credit information is, standing alone, sufficient to
survive a 12(b)(6) motion with respect to holding a furnisher of information like Salisbury
liable under Section 1681s–2(b).
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court to “believe [they] could allege facts that could withstand a 12(b)(6) motion.”
Id. at 223 (alteration in original).
The district court did not err in dismissing with prejudice here. Although
Appellants suggested that their “pleading [could] be amended with ease,” id. at
174, nothing in Appellants’ proposed second amended complaint corrected the
deficiency. 8 This is true despite the fact that Salisbury, in its motion to dismiss the
8 Moreover, outside of a general assertion that Appellants could “allege that they notified
a [CRA] and that a [CRA] notified [Salisbury] of the error in question,” Appellants’ Br.
17–18, Appellants provide no information or argument on whether such notice was in
fact provided. Were this the case, it is somewhat suspect that Appellants did not simply
add this allegation in their proposed amended complaint. Indeed, some of the cases cited
by Appellants in their opposition to Salisbury’s motion to dismiss were cases in which
the plaintiffs did allege that they notified either a CRA of their dispute or that a CRA had
notified the furnisher. See, e.g., J.A. 171–72 (citing Pleznac v. Equity Residential Mgmt.,
L.L.C., 320 F. Supp. 3d 99, 106 (D.D.C. 2018), DiMezza v. First USA Bank, Inc., 103 F. Supp.
2d 1296, 1301 (D.N.M. 2000)); see also Pleznac, 320 F. Supp. 3d at 106 (“To prevail on a
claim against a furnisher under § 1681s–2(b), a plaintiff must show both that (1) she
notified the reporting agency . . . of the disputed credit information and that (2) the
agency in turn provided notice . . . of the dispute to the furnisher . . . . Equity agrees that
Pleznac adequately pled the first of these requirements. She claims to have contacted Transunion
[i.e., the CRA] in March 2017 to dispute the accuracy of her credit information.” (emphasis
added)); DiMezza, 103 F. Supp. 2d at 1301 (“The amended complaint sufficiently alleges
that [the furnisher] actually did, or should have, received notice from a consumer
reporting agency and cures any defect that may have been in the original complaint.”).
Moreover, district courts in this circuit have required a plaintiff to allege the furnisher
received notice from a CRA to survive a motion to dismiss. See, e.g., Burns v. Bank of
America, No. 03 Civ. 1685, 2003 WL 22990065 at *2 (S.D.N.Y. Dec. 18, 2003), vacated on other
grounds, 115 F. App’x 105 (2d Cir. 2004) (summary order) (granting defendants’ motion
to dismiss a complaint alleging claims under the FCRA because “Plaintiffs d[id] not allege
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Amended Complaint (to which Appellants’ proposed second amended complaint
responded), argued that Appellants failed to plead the proper chain of notice
triggering any duty by Salisbury under 1681s–2(b)(1). See id. at 70–71. “[R]epeated
failure to cure deficiencies by amendments previously allowed” is a valid reason
to deny leave to amend. Forman v. Davis, 371 U.S. 178, 182 (1962). Accordingly,
we affirm the district court’s decision to dismiss the Amended Complaint with
prejudice.
CONCLUSION
For the reasons stated above, we AFFIRM the judgment of the district court.
that Defendants ever received notice from a consumer reporting agency that imposed a
duty to investigate”); Korzeniowski v. NCO Fin. Sys., No. 3:09-cv-1399 (WWE), 2010 WL
466162, at *4, 2010 (D. Conn. Feb. 8, 2010) (“[15 U.S.C. § 1681s-2(b)] takes effect once the
consumer reporting agency receives notice as required by 15 U.S.C. § 1681i(a)(2) of a
dispute with regard to the completeness or accuracy of any information provided. The
notice requirement is to be strictly construed; failure to abide by it means that there
cannot be a claim for relief.”).
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