Brian & Karen Handlin v. On-site Manager, Inc.

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
BRIAN and KAREN HANDLIN,
No. 71954-8-1
Appellants,
DIVISION ONE
v.
ON-SITE MANAGER, INC.,
PUBLISHED OPINION
Respondent.
FILED: May 26, 2015
Becker, J. — The element of injury to business or property in a consumer
protection action is sufficiently pleaded when a consumer reporting agency
unlawfully withholds information from a person who is entitled to receive it. The
plaintiffs' complaint in this matter was improperly dismissed and must be
reinstated.
The plaintiffs, appellants in this matter, are Brian and Karen Handlin. Their
complaint alleges that respondent On-Site Manager Inc., a consumer reporting
agency, violated the Washington Fair Credit Reporting Act, chapter 19.182 RCW,
and that On-Site's violations are actionable under the Consumer Protection Act,
chapter 19.86 RCW. On-Site successfully moved to dismiss under CR 12(b)(6).
The Handlins appeal.
Whether a complaint was properly dismissed under CR 12(b)(6) is a
question of law this court reviews de novo. Tenore v. AT&T Wireless Servs., 136
No. 71954-8-1/2
Wn.2d 322, 329-30, 962 P.2d 104 (1998), cert denied, 525 U.S. 1171 (1999).
On-Site incorrectly presents its argument under the standard set for Federal Rule
of Civil Procedure 12(b)(6), which requires dismissal of a complaint when
plaintiffs "have not nudged their claims across the line from conceivable to
plausible." BellAtl. Corp. v. Twomblv. 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L.
Ed. 2d 929 (2007): see also Ashcroft v. Iqbal. 556 U.S. 662, 677-79, 129 S. Ct.
1937, 173 L. Ed. 2d 868 (2009). Our Supreme Court does not follow Twomblv
and Iqbal. McCurrv v. Chew Chase Bank. FSB. 169 Wash. 2d 96, 101-02, 233 P3d
861 (2010). Under CR 12(b)(6), dismissal is appropriate only if it appears
beyond doubt that the plaintiffs cannot prove any set of facts which would justify
recovery. Tenore. 136 Wash. 2d at 329-30; McCurrv. 169 Wash. 2d at 101. The
Handlins' allegations must be accepted as true, and a court may consider
hypothetical facts not included in the record. Tenore. 136 Wash. 2d at 330. CR
12(b)(6) motions should be granted sparingly and with care. Bravo v. Dolsen
Cos., 125 Wash. 2d 745, 750, 888 P.2d 147 (1995).
According to the complaint, the Handlins applied for tenancy at the
Forestview apartment complex in Renton on August 5, 2013. Forestview
collected a tenant screening fee from the Handlins and purchased consumer
reports about them from On-Site. The On-Site reports gave the Handlins a low
rental score (4.5 out of 10) and recommended that their application be denied.
Forestview told the Handlins their application was being denied based on On-
Site's recommendation.
No. 71954-8-1/3
Karen Handlin telephoned On-Site and was told that a 2008 eviction
lawsuit was the main reason for the low rental score. She informed On-Site that
the 2008 lawsuit had been resolved in favor of the Handlins. On-Site told her the
litigation appeared to still be pending.
On August 9, 2013, Karen Handlin provided Forestview with documents
showing that the 2008 eviction lawsuit had been resolved in the Handlins' favor.
Forestview faxed these documents to On-Site. On-Site corrected its report to
reflect that the lawsuit had been dismissed and advised Forestview of this
change. However, Forestview continued to tell the Handlins that their application
would not be approved, citing negative information from On-Site.
On August 13, 2013, the Handlins requested copies of their screening
reports through On-Site's web site. They hoped to find out what additional
negative information was responsible for Forestview's continued rejection of their
application. On-Site did not respond. Three days later, the Handlins sent the
request through counsel by e-mail, fax, and certified mail, accompanied by
signed release-of-information forms.
Meanwhile, the Handlins began to search for another apartment. They
found one on August 21, 2013, that was not as suitable for them as Forestview
would have been. But with less than two weeks remaining on their then-current
lease, time was of the essence. They signed a lease, paid a $250 deposit, and
began moving that same day. The next day, the Handlins learned that
Forestview would accept their application if they agreed to pay an increased
security deposit.
No. 71954-8-1/4
On August 24, 2013, the Handlins' attorney received a letter from On-Site
stating that the requested reports would not be produced until the Handlins
submitted identification. Although the Handlins were no longer in a position to
pursue housing at Forestview, they were still interested in seeing their tenant
screening reports. On August 26, 2013, they faxed copies of their driver's
licenses to On-Site. The next day, On-Site sent copies of the screening reports
to the Handlins by mail, which they received on August 30, 2013. The material
sent to the Handlins did not include their rental scores or On-Site's tenancy
recommendation. Certain mandatory disclosures about the Handlins' Fair Credit
Reporting Act rights and remedies were also omitted.
The Fair Credit Reporting Act requires a consumer reporting agency to
make certain disclosures upon request from a consumer. Ifa reporting agency
receives a request from a consumer, it must disclose all information in its files on
that consumer, identify the sources of that information, and identify all persons
who sought or obtained a consumer report about that consumer within the
preceding six months. See RCW 19.182.070. If the consumer reporting agency
calculates a credit score, then it must also provide an explanation of the meaning
of the credit score. RCW 19.182.080(5). The disclosures must be provided "on
reasonable notice," and by any "reasonable means that are available to the
consumer reporting agency ifthat means is authorized by the consumer." RCW
19.182.080(1), (2)(c). With each written disclosure, the consumer reporting
agency must provide the consumer with "a written summary of all rights and
remedies the consumer has under this chapter." RCW 19.182.080(7)(a).
No. 71954-8-1/5
The complaint alleges that On-Site violated the provisions cited above by
unreasonably delaying the disclosure of the requested information and omitting
some of the materials the Handlins were entitled to receive. These acts are
alleged to be actionable as per se violations of the Consumer Protection Act.
RCW 19.86.020, .090: see also RCW 19.182.150. The complaint states the
Handlins are entitled to damages and injunctive relief due to the "economic and
non-economic injuries" they suffered "as a direct and proximate result" of On-
Site's violations of the Consumer Protection Act.
The Consumer Protection Act provides a private right of action for litigants
to redress unfair or deceptive acts or practices that occur in trade or commerce.
RCW 19.86.020. To prevail, consumer protection plaintiffs must establish five
distinct elements: (1) an unfair or deceptive act or practice, (2) occurring in trade
or commerce, (3) that impacts the public interest, (4) causes injury to the plaintiff
in his or her business or property, and (5) causation. Hangman Ridge Training
Stables. Inc. v. Safeco Title Ins. Co.. 105 Wash. 2d 778, 780, 719 P.2d 531 (1986).
The first two elements may be established by showing that the alleged act
constitutes a per se unfair trade practice. A per se unfair trade practice exists
when the defendant has violated a statute which has been declared by the
legislature to constitute an unfair or deceptive act in trade or commerce.
Hangman Ridge. 105 Wash. 2d at 785-87. The public interest element may also be
satisfied per se by "showing that a statute has been violated which contains a
specific legislative declaration of public interest impact." Hangman Ridge. 105
Wn.2dat791. Washington's Fair Credit Reporting Act is such a statute. It
No. 71954-8-1/6
contains a legislative finding "that the practices covered by this chapter are
matters vitally affecting the public interest for the purpose of applying the
consumer protection act, chapter 19.86 RCW," and it declares that a violation is
an unfair and deceptive act or practice in trade or commerce:
Violations of this chapter are not reasonable in relation to the
development and preservation of business. A violation of this
chapter is an unfair or deceptive act in trade or commerce and an
unfair method of competition for the purpose of applying the
consumer protection act, chapter 19.86 RCW. The burden of proof
in an action alleging a violation of this chapter shall be by a
preponderance of the evidence, and the applicable statute of
limitation shall be as set forth in RCW 19.182.120. For purposes of
a judgment awarded pursuant to an action by a consumer under
chapter 19.86 RCW, the consumer shall be awarded actual
damages and costs of the action together with reasonable
attorney's fees as determined by the court. However, where there
has been willful failure to comply with any requirement imposed
under this chapter, the consumer shall be awarded actual
damages, a monetary penalty of one thousand dollars, and the
costs of the action together with reasonable attorneys' fees as
determined by the court.
RCW 19.182.150.
On-Site does not dispute that the Handlins' complaint sufficiently pleads
the first three elements of a consumer protection cause of action. On-Site's
argument is directed at the last two elements, injury and causation.
At the outset, we reject On-Site's argument that the complaint was
insufficient because it did not specifically allege "actual damages," a term used in
RCW 19.182.150, the section quoted above. The Fair Credit Reporting Act is
designed so that violations can be enforced as a consumer protection violation.
There are five elements to a consumer protection act claim. Actual damages is
not one of them. Under the Consumer Protection Act, "injury" is broader than
No. 71954-8-1/7
"damages." Panag v. Farmers Ins. Co. of Wash., 166 Wash. 2d 27, 58, 204 P.3d
885 (2009). "Monetary damages need not be proved; unquantifiable damages
may suffice." Panag, 166 Wash. 2d at 58; accord Mason v. Mortg. Am.. Inc., 114
Wash. 2d 842, 854, 792 P.2d 142 (1990). "The failure to show actual monetary
damages only precludes the recovery of treble damages. It does not act as a
complete bar to a recovery." St. Paul Fire & Marine Ins. Co. v. Updeqrave, 33
Wash. App. 653, 660, 656 P2d 1130 (1983).
The central question here is whether the complaint sufficiently alleges an
injury to business or property caused by On-Site's violations. The trial court
recognized that On-Site's report to Forestview caused Forestview to delay
offering the Handlins tenancy until it was too late for them to accept it. As a
result of Forestview's initial decision to deny their application, the Handlins did
not get the apartment they wanted and they incurred expense and inconvenience
finding another apartment before their lease ran out. But as the trial courtsaw it,
their complaint did not allege that the situation with Forestview would have been
resolved differently if On-Site had responded more promptly and completely to
the request for tenant screening information. The court dismissed "on the basis
that the plaintiffs have not alleged an actual injury."
An injury to property occurs when one's right to possess, use, or enjoy a
determinate thing has been affected in the slightest degree. Ambach v. French.
167 Wash. 2d 167, 172, 216 P.3d 405 (2009). A sufficient injury is therefore pleaded
if a plaintiff alleges that she was deprived of the use of her property for even a
short amount of time. Sorrel v. Eagle Healthcare. Inc.. 110 Wash. App. 290, 298-
No. 71954-8-1/8
99, 38 P.3d 1024. review denied. 147 Wash. 2d 1016 (2002). The Handlins argue
that the consumer disclosures mandated by the act are a form of property.
On-Site points out that the Washington Fair Credit Reporting Act does not
say that the consumer reporting agency must disclose copies of actual reports; it
commands disclosure of all "items of information" in the agency's files on that
consumer. RCW 19.182.070(2) ("Disclosures to consumer"). According to On-
Site, the complaint is fatally defective because the violation alleged by the
Handlins was a failure to send them copies of their tenant screening reports, their
tenant scores, and On-Site's recommendation to Forestview. On-Site claims
these reports are not property because they are not physically stored in the
Handlins' file. This hypertechnical argument cannot sustain dismissal given
Washington's liberal standard under CR 12(b)(6) and the mandate for liberal
construction of the Consumer Protection Act. When a consumer reporting
agency assembles information about a consumer's creditworthiness to sell to
landlords like Forestview, the information has commercial utility for the consumer
as well as for landlords. See RCW 19.182.005 (legislature declares "that
consumers have a vital interest in establishing and maintaining
creditworthiness.") The Fair Credit Reporting Act is designed to benefit
consumers by giving them the same right of access to their credit information as
is available to landlords, employers, or others who are evaluating their
creditworthiness. The format in which the information is stored and disclosed is
not material to the plaintiffs' pleading obligations under CR 12(b)(6).
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No. 71954-8-1/9
The Handlins had a right to use and possess information in On-Site's files.
On-Site's alleged violations of the Fair Credit Reporting Act deprived the
Handlins of their right to obtain information that has commercial utility for them.
Their complaint sufficiently alleges that On-Site's unfair trade practice caused
them an actionable "injury" to "property" in the sense that those terms are used in
the Consumer Protection Act. See Ambach. 167 Wash. 2d at 172-77.
In addition to damages and an award of attorney fees and costs, the
complaint requested several forms of injunctive relief against On-Site under RCW
19.182.150 and RCW 19.86.090:
a. An order commanding On-Site to produce complete
copies of the Handlins' screening reports, including all rental
scores, recommendations, and all other disclosures required by
law;
b. An order commanding On-Site to cease and desist from
violating RCW 19.182.070 and .080 by failing to provide full and
complete consumer disclosures when requested by a consumer;
c. An order commanding On-Site to cease and desist from
violating RCW 19.182.080 by failing to provide consumer
disclosures by e-mail or fax when requested by e-mail or fax;
d. An order commanding On-Site to cease and desist from
violating RCW 19.182.080 by failing to make consumer disclosures
promptly upon receiving a consumer's request for disclosures;
e. An order commanding On-Site to cease and desist from
violating RCW 19.182.090 by failing to make all required
disclosures promptly upon completing a reinvestigation of disputed
information.
On-Site contends that the requests for injunctive relief must be dismissed
because the Washington Fair Credit Reporting Act does not expressly list
injunctive relief as a remedy. This argument lacks merit. The statute states that
violations of the Fair Credit Reporting Act are to be pleaded under the Consumer
Protection Act. RCW 19.182.150. And the Consumer Protection Act does
No. 71954-8-1/10
authorize injunctive relief. Scott v. Cinqular Wireless. 160 Wash. 2d 843, 853, 161
P.3d 1000 (2007) ("Consumers bringing actions under the CPAdo not merely
vindicate their own rights; they represent the public interest and may seek
injunctive relief even when the injunction would not directly affect their own
private interests.")
On-Site also argues that the authority to grant injunctive relief against a
credit reporting agency belongs exclusively to the Federal Trade Commission. If
the Handlins prevail, their request for an order commanding On-Site to produce
information concerning them could not possibly interfere with federal law. It is
also difficult to see how the simple cease and desist orders requested by the
Handlins would subvert federal regulatory interests either as a matter of federal
preemption or under RCW 19.86.170. More likely, such orders would
complement federal regulation. We decline to hold that the injunctive relief
r-o
requested should be dismissed as a matter of law. The trial court can decide o
issues related to injunctive relief in due course.
cr.
On-Site's request for an award of attorney fees is denied.
Reversed and remanded for reinstatement of the complaint.
CO Cr —
^ See*,
WE CONCUR:
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