United States District Court, S.D. New York
EDWARD B. MENDY, Plaintiff,
JP MORGAN CHASE & CO., CHASE AUTO FINANCE CORP., JANE DOE, JOHN DOE, DOES 1 THROUGH DOES 10, ABC INSURANCE COMPANY, and XYZ INSURANCE COMPANY Defendants.
MEMORANDUM OPINION & ORDER
PAUL G. GARDEPHE, District Judge.
Pro se Plaintiff Edward Mendy brings this action, pursuant to the Fair Credit Reporting Act (the "FCRA"), 15 U.S.C. § 1681 et seq., alleging that Defendants JP Morgan Chase & Co. and Chase Auto Finance Corp. provided inaccurate information to credit reporting agencies and failed to properly investigate the inaccuracies after Plaintiff disputed them. (Cmplt. (Dkt. No. 1) ¶¶ 51-76) Plaintiff also asserts state law claims for consumer fraud, defamation, intentional infliction of emotional distress, invasion of privacy, breach of contract, and breach of the implied covenant of good faith and fair dealing. (Id. ¶¶ 77-151)
Defendants have moved to dismiss the Complaint under Fed.R.Civ.P. 12(b)(6). (Dkt. No. 12) For the reasons stated below, Defendants' motion to dismiss will be granted in part and denied in part.
On April 11, 2008, Plaintiff entered into two related contracts with Defendants: a Promissory Note and Security Agreement (the "PNSA"), and a Disbursement Request and Authorization (the "DRA"). (Cmplt. (Dkt. No. 1) at ¶¶ 17-19; Wilk Decl. (Dkt. No. 16), Exs. 1, 2) Plaintiff entered into these agreements with Defendants in order to obtain financing to purchase a 2003 Toyota Sequoia. (Cmplt. (Dkt. No. 1) at ¶¶ 17-19) In the PNSA, Defendants agree to provide Plaintiff with $17, 642.67 to purchase the truck, to pay $1, 665.34 in "fees and taxes... to governmental agencies, " and to register the vehicle. (Wilk Decl. (Dkt. No. 16), Ex. 1; Pltf. Br. (Dkt. No. 23) at 4) The DRA states that the $1, 665.34 in "fees and taxes" includes $1, 587.84 for "estimated sales tax." (Wilk Decl. (Dkt. No. 16), Ex. 2) Defendants charged Plaintiff $75.00 as a loan origination fee. ( Id., Ex. 1) Accordingly, the balance on Plaintiff's account totaled $19, 308.01. The PNSA provides for an annual interest rate of 9.392%. (Id.)
The PNSA provides that it is
governed by the laws (including, but not limited to, any and all statutes, regulations, interpretations, and opinions) of the United States and the State of Ohio for all matters related to interest and the exportation of interest. For all other matters, this Agreement will be governed by the laws of the United States, and the state of residence of the borrower (to the extent that such laws are not preempted by the laws of the United States).
(Id.) Plaintiff alleges that he was a New Jersey resident at all relevant times. (Pltf. Br. (Dkt. No. 23) at 16)
The PNSA requires Plaintiff to make monthly payments of $484.08 until the principal and interest associated with the loan are paid in full. (Id.) Plaintiff made this payment each month between April 2008 and July 2012, at which point his debt was repaid and his account was closed. (Cmplt. (Dkt. No. 1) ¶¶ 17, 24, 33)
On August 24, 2011, Defendants increased Plaintiff's principal balance by $1, 050.18. (Id. ¶¶ 30, 33, 53) Between September 2011 and July 2012, Defendants repeatedly sent Plaintiff notices and statements reflecting this increase and demanding repayment in full. (Id. ¶¶ 32-33) The increase reflected penalties that Defendants had been charged for late payment of Louisiana sales tax on Plaintiff's vehicle. (Id. ¶¶ 54-55; Pltf. Br. (Dkt. No. 23) at 4) Defendants contend that the taxes were paid late because Plaintiff had not provided information and documents necessary to register the vehicle - information and documents that Defendants had repeatedly requested. (Def. Reply Br. (Dkt. No. 25) at 5) Plaintiff maintains that Defendants bear sole responsibility for the late registration. (Pltf. Br. (Dkt. No. 23) at 4)
Plaintiff objected to the increase in principal and the corresponding interest, arguing that he should not be penalized for Defendants' failure to pay the taxes on time. (Cmplt. (Dkt. No. 1) ¶¶ 29-31, 55) Beginning in September 2011, Plaintiff sent at least three letters to Defendants disputing the increase in his loan balance. (Id. ¶ 35) Defendants responded that the balance on the account was correct and refused to make any changes. (Id. ¶¶ 32-33, 36) Plaintiff continued to dispute the increase and refused to make payments toward that amount, which he believed he did not owe. (Id. ¶ 38)
Defendants reported the increase in Plaintiff's loan balance to credit reporting agencies, without notifying the agencies that Plaintiff disputed the increase. (Id. ¶¶ 38-40, 57) Defendants also reported that Plaintiff was delinquent on his payments. (Id. ¶ 38) As a result, at least three credit reporting agencies - Equifax, Experian, and TransUnion - placed this information on Plaintiff's credit report. (Id. ¶¶ 39-42, 57) Plaintiff "filed several disputes with the credit reporting agencies, " prompting each company to conduct a "reinvestigation" of Defendants' reporting. (Id. ¶¶ 42, 60) "[I]n response to the notices of reinvestigation from the [c]redit [r]eporting [a]gencies, [Defendants] verified that the disputed information was accurate and complete on at least three different occasions, even though they were in possession of information which showed that the [information was] inaccurate." (Id. ¶ 68) As a result, Plaintiff's Experian score dropped from 720 to 584 in the first half of 2012. (Id. ¶ 69, Ex. A) Plaintiff eventually paid the full amount of the increased principal and interest "[t]o protect his credit score and to militate against further erosion of his credit scores." (Id. ¶ 61-62)
While Plaintiff was disputing the increase in his loan balance, he was also engaged in an ongoing dispute with Defendants regarding alleged late payments reflected on his credit file. (Id. ¶¶ 25-28, 43-47) Plaintiff claims that only one of his loan payments was ever late, and that was the result of a "reversal of auto-debit by Chase... which Chase failed to notify Plaintiff of." (Id. ¶ 25) When Plaintiff notified Defendants of the error, "they acknowledged fault and agreed to not only remove the late reporting but also to reverse the applicable fee(s)." (Id. ¶ 26) Defendants reversed the fees, but Plaintiff's credit file continued to reflect late payments. (Id. ¶ 27) When Plaintiff again sought to have the error corrected, Defendants refused to do so. (Id. ¶¶ 23, 43-45, 47) As a result, Plaintiff's credit scores plummeted and his credit lines with third-parties, including eBay, were reduced. (Id. ¶ 28)
At some point prior to full repayment of the loan, Defendants increased the interest rate to 9.44%, even though the PNSA specified that the rate would be 9.392%. (Cmplt. (Dkt. No. 1) ¶ 80)
The Complaint was received by this District's Pro Se Office on November 13, 2012. (Cmplt. (Dkt. No. 1)) On May 31, 2013, Defendant moved to dismiss or, in the alternative, for judgment on the pleadings or for summary judgment. (Dkt. No. 12)
I. LEGAL STANDARD
A. Motion to Dismiss
Defendants have moved to dismiss the Complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6). "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 Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)). "In considering a motion to dismiss... the court is to accept as true all facts alleged in the complaint, " Kassner, 496 F.3d at 237 (citing Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals , 282 F.3d 83, 87 (2d Cir. 2002)), and must "draw all reasonable inferences in favor of the plaintiff." Id . (citing Fernandez v. Chertoff , 471 F.3d 45, 51 (2d Cir. 2006)).
A complaint is inadequately pled "if it tenders naked assertion[s]' devoid of further factual enhancement, '" Iqbal , 556 U.S. at 678 (quoting Twombly , 550 U.S. at 557), and does not provide factual allegations sufficient "to give the defendant fair notice of what the claim is and the grounds upon which it rests." Port Dock & Stone Corp. v. Oldcastle Ne., Inc. , 507 F.3d 117, 121 (2d Cir. 2007) (citing Twombly , 550 U.S. at 555).
Because Plaintiff is proceeding pro se, this Court is required to read his complaint liberally. See Erickson v. Pardus , 551 U.S. 89, 94 (2007) ("A document filed pro se is to be liberally construed.'") (quoting Estelle v. Gamble , 429 U.S. 97, 106 (1976)). Accordingly, this Court will construe Plaintiff's pleadings "to raise the strongest arguments that they suggest.'" Fulton v. Goord , 591 F.3d 37, 43 (2d Cir. 2009) (quoting Green v. United States , 260 F.3d 78, 83 (2d Cir. 2001)). "Moreover, [factual] allegations made in a pro se plaintiff's memorandum of law, where they are consistent with those in the complaint, may also be considered on a motion to dismiss." Braxton v. Nichols, No. 08 Civ. 08568 (PGG) , 2010 WL 1010001, at *1 (S.D.N.Y. Mar. 18, 2010). However, "the court need not accept as true conclusions of law or unwarranted deductions of fact.'" Whitfield v. O'Connell, No. 09 Civ. 1925 (WHP) , 2010 WL 1010060, at *4 (S.D.N.Y. Mar. 18, 2010) (quoting First Nationwide Bank v. Gelt Funding Corp. , 27 F.3d 763, 771 (2d Cir. 1994)).
B. The Fair Credit Reporting Act
"The Fair Credit Reporting Act [(FCRA')], 15 U.S.C. § 1681 et seq., regulates credit reporting procedures to ensure the confidentiality, accuracy, relevancy, and proper utilization of consumers' information." Longman v. Wachovia Bank, N.A. , 702 F.3d 148, 150 (2d Cir. 2012); see 15 U.S.C. § 1681(b). "As part of this regulatory scheme, the Act imposes several duties on those who furnish information to consumer reporting agencies." Longman , 702 F.3d at 150; see 15 U.S.C. § 1681s-2. "Among these are duties to refrain from knowingly reporting inaccurate ...