Mark Donald Hunt v. JPMorgan Chase Bank, National Association

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-11306
Non-Argument Calendar
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D.C. Docket No. 0:17-cv-62094-BB
MARK DONALD HUNT,
Plaintiff - Appellant,
versus
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(April 25, 2019)
Before MARCUS, ROSENBAUM and JILL PRYOR, Circuit Judges.
PER CURIAM:
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In this putative class action, Mark Donald Hunt alleged that JP Morgan
Chase (“JPMC”) violated the Fair Credit Reporting Act (the “FCRA” or the
“Act”), 15 U.S.C. § 1681 et seq. Specifically, Hunt alleged that JPMC violated
§ 1681s-2(b) of the Act by failing to adequately investigate consumers’ disputes as
to the accuracy of the information JPMC furnished to credit reporting agencies
(“CRAs”).
The district court granted JPMC’s motion to dismiss. We agree with the
district court’s decision and therefore affirm.
I. BACKGROUND
A. The Fair Credit Reporting Act
Congress enacted the FCRA “to ensure fair and accurate credit reporting,
promote efficiency in the banking system, and protect consumer privacy.” Safeco
Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007). To that end, the FCRA requires
CRAs to adopt procedures balancing commercial needs for consumer credit
information with consumers’ rights to “confidentiality, accuracy, relevancy, and
proper utilization” of their credit information. 15 U.S.C. § 1681(b). In later
amendments to the FCRA, Congress extended the Act to cover not only CRAs, but
also entities that supply consumer information to them—so-called “furnishers.”
S. Rep. No. 103-209, at 6 (1993). Those amendments closed a “gap in the FCRA’s
coverage”: namely, what happens when a consumer disputes information provided
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to the CRAs, and the CRAs attempt to verify the information, but a careless
furnisher acts irresponsibly and leaves inaccurate information, without
consequence or recourse, on a consumer’s credit report. Id; see also Chiang v.
Verizon New Eng. Inc., 595 F.3d 26, 35 (1st Cir. 2010) (setting forth a history of
the amendments to the FCRA).
As amended, the FCRA imposes two obligations on furnishers. First, under
§ 1681s-2(a), furnishers are prohibited from “furnish[ing] any information relating
to a consumer to any [CRA] if the person knows or has reasonable cause to believe
that the information is inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(A). Second, under
§ 1681s-2(b), furnishers are required to take certain actions once notified by a
CRA that a consumer disputes the accuracy or completeness of her furnished
information. Id. § 1681s-2(b); see also id. § 1681i(a)(2) (requiring CRAs to notify
furnishers of consumer disputes). A furnisher must “(A) conduct an investigation
with respect to the disputed information;” “(B) review all relevant information
provided by the [CRA];” and “(C) report the results of the investigation to the
[CRA].” Id. § 1681s-2(b)(1). If the investigation reveals that the information is
incomplete, inaccurate, or unverifiable, the furnisher must “modify” the furnished
information, “delete” it, or “permanently block the reporting of that item of
information” to CRAs. Id. § 1681s-2(b)(1)(E). Hunt’s claim is based on § 1681s-
2(b), at issue in this appeal.
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B. Factual Background
To purchase property in Coconut Creek, Florida, Hunt executed a note and a
mortgage in exchange for a $162,000 loan from JPMC’s predecessor in interest. 1
In December 2012, Hunt missed a payment on the loan. In response, JPMC sent
Hunt an “Acceleration Warning,” advising that he was in default. 2
Hunt continued to fail to make his past-due payments. In the spring of 2013,
JPMC began reporting to CRAs—Experian, Equifax, and TransUnion—that
Hunt’s account was 120 days past due. In May 2013, JPMC filed a verified
complaint to foreclose the mortgage in the circuit court of Broward County,
Florida (the “Foreclosure Action”), declaring the full amount payable under the
note to be due and seeking acceleration of the outstanding balance.
The circuit court entered a $123,836.94 Final Judgment of Foreclosure (the
“Foreclosure Judgment”) in JPMC’s favor in May 2014. In March 2015, JPMC
closed Hunt’s account after transferring it to another lender. Three months after
JPMC closed the account, in June 2015, Hunt paid the Foreclosure Judgment.
1
Because we are reviewing the district court’s grant of a motion to dismiss, we recite the
facts as Hunt alleged them. See Adinolfe v. United Techs. Corp., 768 F.3d 1161, 1169 (11th Cir.
2014). We may also consider attachments to the complaint when they are central to the
plaintiff’s claim and their authenticity is not challenged. See SFM Holdings, Ltd. v. Banc of Am.
Sec., LLC, 600 F.3d 1334, 1337 (11th Cir. 2010).
2
Although the record indicates that Washington Mutual was the original mortgagee,
nothing in the record clarifies how JPMC lawfully acquired the mortgage. We note, however,
that neither party disputes that JPMC had lawfully acquired the mortgage by the time Hunt
defaulted on his payment obligations.
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Two years after he paid the Foreclosure Judgment, Hunt retrieved his credit
reports and saw that, between May 2013 and February 2015, JPMC had reported
his account as 120 days past due. Hunt sent letters to the three CRAs: (1)
notifying them that he disputed the accuracy of information contained in the
reports indicating that he was “120 days or more delinquent and/or missed a
monthly payment pursuant to a ‘Primary or secondary mortgage’ for (22) twenty-
two months beginning in May 2013”; (2) requesting that they “provide prompt
notice of this dispute to the furnisher . . . , [JPMC]”; and (3) requesting that they
“promptly delete such inaccurate and incomplete information” from his credit
reports. Doc. 1-4 at 3, 6, and 9.3 The CRAs, in turn, sent notice to JPMC, as a
“furnisher” of consumer credit information under the FCRA, that Hunt disputed
the information regarding the May 2013 – February 2015 period that it had
provided to the CRAs.
Equifax and TransUnion conducted investigations and returned their results
to Hunt in the summer of 2017.4 Equifax’s investigation confirmed that JPMC had
furnished accurate information regarding Hunt’s delinquency between May 2013
and February 2015. TransUnion stated only that it had reviewed Hunt’s
allegations; made changes to Hunt’s credit score based on that information, where
3
“Doc. #” refers to the numbered entries on the district court’s docket.
4
Experian, meanwhile, asked Hunt for more information, which Hunt supplied.
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possible; and asked JPMC to review the case, verify its furnished information, and
respond to Hunt’s claims. The updated credit reports attached to the investigation
results included descriptions of Hunt’s now-closed account with JPMC. Although
JPMC stopped furnishing monthly updates of Hunt’s payment status to CRAs
when it closed Hunt’s account in March 2015, the CRAs nonetheless described the
account as past due as of July 2017, more than two years after Hunt paid the
Foreclosure Judgment.
Hunt continued to press his dispute. After receiving the investigation
results, he informed JPMC and the CRAs that he intended to sue JPMC. In
response, JPMC told Hunt that it had provided to the CRAs only accurate
information about his account. Again, Hunt pulled his credit reports from the
CRAs, and the reports contained the same information as they had before.
C. Procedural Background
Hunt filed a putative class action suit against JPMC, asserting that JPMC
had failed to comply with its duty to conduct an adequate investigation under
FCRA § 1681s-2(b), in willful and negligent violation of §§ 1681n and 1681o,
respectively. His allegations concerned two pieces of information contained in his
credit reports.
First, Hunt alleged that JPMC “inaccurately” reported to CRAs that he was
“120 days or more delinquent and/or missed a monthly payment” for 22 months
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beginning in May 2013, when JPMC filed the Foreclosure Action, and continuing
through February 2015. Doc. 1 ¶ 46. Notably, however, Hunt did not dispute that
he failed to make payments between December 2012 and February 2015. Rather,
he contended that the filing of the Foreclosure Action in May 2013 relieved him of
any obligation to make monthly mortgage payments. On this theory, Hunt asserted
that if JPMC had “conducted a reasonable investigation and/or reinvestigation, [it]
would have verified that the mortgage and loan account had been accelerated and
Plaintiff no longer had t[he] option [from May 2013 to February 2015] of making
monthly installment payments pursuant to the terms of the original Note and
Mortgage, thereby rendering the consumer information being furnished by [JPMC]
. . . incomplete and/or inaccurate.” Id. ¶ 86.
Second, Hunt alleged that, even after he paid the Foreclosure Judgment in
June 2015, JPMC “fail[ed] to accurately and/or completely report to the CRAs that
[he] fully satisfied his obligations under the loan and mortgage account held by
[JPMC].” Doc. 1 ¶¶ 104.vii, 111.vi. He pointed to the updated credit reports
Equifax and TransUnion attached to their investigation results, which indicated
that the account was past due as of July 2017. Hunt did not allege, however, that
he ever notified the CRAs that he disputed his account’s 2017 past-due status—
whether in his original dispute letters or in his intent-to-sue letters—or that the
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CRAs had ever notified JPMC that he disagreed that his account was still past due
as of 2017.
As a result of JPMC’s alleged FCRA violations, Hunt contended, he and
other similarly situated individuals suffered “damage to their creditworthiness,
impairment of their ability to rebuild and/or build their creditworthiness,
impairment of their ability to obtain credit on favorable terms and/or obtain credit
whatsoever,” and other injuries, including “severe financial and emotional harm.”
Id. ¶ 88.
JPMC filed a motion to dismiss Hunt’s complaint. JPMC pointed out that
Hunt did not dispute that he had failed to pay his mortgage for a period of two
years. JPMC also noted that all the documents attached to Hunt’s complaint
accurately reported Hunt’s failure to pay. Because it accurately furnished the
information that Hunt had failed to make payments, JPMC contended that the
complaint should be dismissed. In addition, JPMC argued that Hunt’s contention
that he was no longer obliged to make monthly payments once the loan was
accelerated was “a legal argument, not a factual inaccuracy,” and it therefore could
not “form the basis of his FCRA claim.” Doc. 14 at 8. Lastly, JPMC denied that it
had any FCRA obligation to inform the CRAs of Hunt’s satisfaction of the
Foreclosure Judgment, which occurred after JPMC had transferred the account.
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The district court granted JPMC’s motion to dismiss the complaint. The
district court reasoned that based on the “undisputed fact that [Hunt] was in default
from May 2013 to February 2015,” JPMC “correctly reported the status of [Hunt’s]
account from May 2013 to February 2015.” Doc. 29 at 9, 11. Because JPMC
reported accurate information, it had satisfied its obligations under the FCRA. The
district court agreed with JPMC that Hunt’s allegation that he had no obligation to
make monthly payments on the “mortgage following acceleration [wa]s a legal
conclusion devoid of factual support”—and therefore an insufficient basis on
which to bring a claim under § 1681s-2(b). Id. at 8. In addition, the district court
held that Hunt failed to provide any “authority to support his claim that [JPMC]
had any obligation to report the payoff [of the Foreclosure Judgment] after it
transferred the account.” Id. at 10 n.4. Finally, the district court dismissed the
complaint with prejudice because no amendment could change the result, given
that “[n]o valid cause of action exists.” Id. at 11.
This is Hunt’s appeal.
II. STANDARDS OF REVIEW
“We review de novo the district court’s grant of a motion to dismiss for
failure to state a claim under Fed. R. Civ. P. 12(b)(6), accepting the allegations in
the complaint as true and construing them in the light most favorable to the
plaintiff.” Timson v. Sampson, 518 F.3d 870, 872 (11th Cir. 2008) (per curiam).
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The court need not “accept as true a legal conclusion couched as a factual
allegation.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotation marks omitted).
“To 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, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570).
A complaint is plausible on its face 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.
We review for abuse of discretion orders dismissing actions with prejudice
rather than allowing the plaintiff an opportunity to amend her complaint, Garfield
v. NDC Health Corp., 466 F.3d 1255, 1270 (11th Cir. 2006), though we review de
novo the “underlying legal conclusion of whether a particular amendment to the
complaint would be futile,” Harris v. Ivax Corp., 182 F.3d 799, 802 (11th Cir.
1999). “Discretion means the district court has a range of choice, and that its
decision will not be disturbed as long as it stays within that range and is not
influenced by any mistake of law.” Betty K. Agencies, Ltd. v. M/V Monada,
432 F.3d 1333, 1337 (11th Cir. 2005) (internal quotation marks omitted). Leave to
amend need not be granted where amendment would be futile. Cockrell v. Sparks,
510 F.3d 1307, 1310 (11th Cir. 2007).
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III. LEGAL ANALYSIS
A. The District Court Did Not Err in Determining that Hunt Failed to
State a Claim that JPMC Violated the FCRA.
On appeal, Hunt argues that the district court erred in granting JPMC’s
motion to dismiss his claims for JPMC’s allegedly willful and/or negligent
violations of the FCRA. Hunt alleges JPMC violated the FCRA with respect to
two aspects of his credit reports: (1) the 22 months between May 2013 and
February 2015, in which the reports show he was 120 days delinquent on making
his monthly mortgage payments and (2) his past-due status as of July 2017.
Neither states a claim for relief. We conclude that his allegations regarding the
May 2013 – February 2015 period fail to state an FCRA claim because he cannot
show that a reasonable investigation would have revealed that JPMC furnished
inaccurate information to the CRAs. We also conclude that his allegations
regarding his past-due status as of July 2017 fail to state an FCRA claim because
he never alleged that he disputed that part of his credit reports or that JPMC
received notification from the CRAs of such a dispute.
As relevant here, § 1681i(a)(2)(A) of the FCRA provides that once in receipt
of a dispute from a consumer, a CRA must notify the furnisher of the consumer’s
dispute. 15 U.S.C. § 1681(a)(2)(A). Under § 1681s-2(b), after a furnisher receives
notification from a CRA that a customer disputes the information it furnished, the
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furnisher must conduct an investigation, review all relevant information provided
by the CRA, and report its results to the CRA. Id. § 1681s-2(b)(1).
We previously have explained that § 1681s-2(b) contemplates three possible
outcomes of a satisfactory investigation: (1) the information is accurate and
complete, (2) the information is inaccurate or incomplete, or (3) the information
cannot be verified. See Felts v. Wells Fargo Bank, N.A., 893 F.3d 1305, 1312
(11th Cir. 2018). We evaluate under a reasonableness standard whether the
furnisher has satisfied its obligation to conduct an investigation under § 1681s-
2(b). Id. “When a furnisher ends its investigation by reporting that the disputed
information has been verified as accurate, the question of whether the furnisher
behaved reasonably will turn on whether the furnisher acquired sufficient evidence
to support the conclusion that the information was true.” Id. (internal quotation
marks omitted).
1. The 22-Month Delinquency Between May 2013 and February
2015
Hunt’s complaint alleged that JPMC inaccurately reported that Hunt’s
payments were 120 days past due for the 22 months between May 2013, when
JPMC filed the Foreclosure Action, and February 2015. However, his complaint
did not allege that he in fact made payments between December 2012 and February
2015, nor does he make an argument to this effect on appeal. Thus, it is
undisputed that JPMC accurately reported that Hunt was 120 days delinquent
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during those 22 months. “[A] plaintiff asserting a claim against a furnisher for
failure to conduct a reasonable investigation cannot prevail on the claim without
demonstrating that had the furnisher conducted a reasonable investigation, . . . the
furnisher would have discovered that the information it reported was inaccurate or
incomplete . . . .” Id. at 1313 (emphasis omitted). Because JPMC provided
accurate information to CRAs, Hunt cannot demonstrate that a reasonable
investigation would have uncovered an inaccuracy in that information. Id.
Hunt argues nonetheless that JPMC furnished inaccurate information
regarding the 22-month delinquency because the filing of the Foreclosure Action
and acceleration of the loan relieved him of any obligation to make monthly
payments. As an initial matter, we are unconvinced by Hunt’s argument that
JPMC’s filing of the Foreclosure Action relieved him of any obligation to make
monthly payments on the mortgage. See Deutsche Bank Tr. Co. Americas v.
Beauvais, 188 So. 3d 938, 946-47 (Fla. Dist. Ct. App. 2016) (interpreting a
mortgage provision identical to the one at issue here and determining that “despite
acceleration of the balance due and the filing of an action to foreclose, the
installment nature of a loan secured by such a mortgage continues until a final
judgment of foreclosure is entered”).
But even assuming Hunt ultimately turned out to be correct about his legal
obligation to pay, his FCRA argument fails nonetheless. A plaintiff must show a
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factual inaccuracy rather than the existence of disputed legal questions to bring suit
against a furnisher under § 1681s-2(b). See Chiang, 595 F.3d at 38 (determining
that a “plaintiff’s required showing is factual inaccuracy, rather than the existence
of disputed legal questions” for a claim under § 1681s-2(b) (emphasis in original)).
Whether Hunt was obligated to make payments on the mortgage after the
Foreclosure Action was filed is a currently unresolved legal, not a factual,
question. Thus, even assuming JPMC furnished information that turned out to be
legally incorrect under some future ruling, JPMC’s purported legal error was an
insufficient basis for a claim under the FCRA.
2. The Account’s Past-Due Status as of July 2017
Hunt’s complaint also alleged that JPMC failed to update the CRAs that
Hunt paid the Foreclosure Judgment against him in June 2015. As a result, his
credit reports continued to show that he was past due on the account as of July
2017. We need not decide whether JPMC had a duty under the FCRA to update
the CRAs regarding Hunt’s satisfaction of the Foreclosure Judgment after JPMC
transferred the account to another lender in March 2015 because, even if JPMC
had a duty to refresh the information it had previously furnished to CRAs, Hunt’s
complaint alleges a violation of § 1681s-2(b), which governs JPMC’s investigation
duties. That subsection requires furnishers to conduct investigations into consumer
disputes only upon receiving notification of a dispute from a CRA. See 15 U.S.C.
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§ 1681s-2(b)(1); see also id. § 1681i(a)(2)(A). Hunt never alleged that JPMC
received notification from the CRAs that he disputed his account’s past-due status
as of July 2017, see id. § 1681s-2(b)(1); that the CRAs provided notification of any
such dispute to JPMC, see id. § 1681i-(a)(2)(A); or even that he contacted the
CRAs to dispute that aspect of his credit reports. Without receiving notification
from the CRAs that Hunt disputed the information in his credit reports showing his
account as past due as of July 2017, JPMC had no obligation to conduct a § 1681s-
2(b) investigation. Thus this allegation also fails to state a claim under the FCRA.
B. The District Court Did Not Abuse Its Discretion in Dismissing
Hunt’s Complaint with Prejudice.
Lastly, we affirm the district court’s decision to dismiss the complaint with
prejudice rather than give Hunt an opportunity to amend. Hunt undisputedly failed
to make monthly mortgage payments between December 2012 and February 2015,
which means that JPMC accurately reported to the CRAs that his account was 120
days past due between May 2013 and February 2015. JPMC’s accurate report in
turn means that no amendment would change our conclusion that JPMC’s
investigation was adequate. Similarly, his dispute letters and his intent-to-sue
letters attached to his complaint do not indicate that he ever notified the CRAs that
he disputed the accuracy of his credit reports’ statement that his account was past
due as of 2017, nor did he allege in his complaint or argue on appeal either that he
sent other communications to the CRAs disputing the 2017 past-due status or that
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JPMC ever received notification from the CRAs that he disputed that information
in his credit reports. Hunt argues that “if given the opportunity to amend, [he]
would be capable of sufficiently stating a plausible claim for relief beyond the
speculative level.” Appellant’s Br. at 54. But he nowhere explains how he would
overcome these factual deficiencies. Because any amendment would be futile, the
district court did not abuse its discretion in dismissing his claims with prejudice.
Cockrell, 510 F.3d at 1310.
IV. CONCLUSION
The district court properly dismissed Hunt’s claims for willful and negligent
violations of FCRA § 1681s-2(b). Hunt’s complaint failed to show that (1) a
reasonable investigation would have revealed that JPMC inaccurately furnished
information that Hunt’s account was 120 days past due between May 2013 and
February 2015; and (2) JPMC received notice from the CRAs that Hunt disputed
his July 2017 past-due status, without which JPMC had no obligation to
investigate. Likewise, the district court did not abuse its discretion in dismissing
his complaint with prejudice because any amendment would be futile.
AFFIRMED.
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