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Falcy v. Citimortgage, Inc.

United States District Court, D. Oregon, Medford Division

June 13, 2014

BARBARA FALCY, an individual, Plaintiff,
CITIMORTGAGE, INC., a New York corporation, Defendant.


MARK D. CLARKE, Magistrate Judge.

Plaintiff Barbara Falcy brings this action against Defendant CitiMortgage alleging breach of contract, intentional infliction of emotional distress (IIED), violation of the Fair Credit Reporting Act (FCRA), and violation of Oregon's Unlawful Debt Collection Practices Act (OUDCPA). Currently before the court is CitiMortgage's motion to partially dismiss Faley's claims (#23). The parties executed written consent to entry of judgment by a United States Magistrate Judge (#32). For the reasons set forth below, CitiMortgage's motion is DENIED in part and GRANTED in part.


For the purpose of considering CitiMortgage's motion, the court accepts as true the allegations outlined in Faley's Amended Complaint. In August 2005, Faley and her late husband signed a promissory note in the amount of $141, 700 and executed a mortgage to CitiMortgage's predecessor-in-interest on real property located in Ames, Iowa. In 2009, Faley fell behind on her payments and CitiMortgage initiated a foreclosure action on the property. On January 22, 2010, Faley signed a Warranty Deed in lieu of foreclosure, deeding the property to the CitiMortgage, and an Estoppel Affidavit, releasing Faley from liability for the promissory note and mortgage. On March 24, 2010, CitiMortgage dismissed its foreclosure action.

Despite the Warranty Deed, Estoppel Affidavit, and case dismissal, CitiMortgage continued its efforts to collect approximately $64, 000 from Faley. Faley, Faley's counsel, and CitiMortgage's counsel in the foreclosure action instructed CitiMortgage that Faley had been released from liability and instructed CitiMortgage to cease collection efforts. However, CitiMortgage continued to call and send collection letters to Faley.

On August 7, 2013, Faley's counsel submitted a dispute to the three credit bureaus regarding information on Faley's credit report relating to her transaction with CitiMortgage. Faley and the credit bureaus notified CitiMortgage of the dispute. On August 15, 2013, CitiMortgage mailed Faley's counsel a letter stating it would investigate the issue and inform Faley of the results. As of February 2014, CitiMortgage was persisting in its collection efforts against Faley and had not altered the information it furnished to the credit bureaus. _


Under Fed.R.Civ.P. 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. The question presented by a motion to dismiss is not whether the plaintiff will prevail in the action, but whether the plaintiff is entitled to offer evidence in support of the claim. Scheuer v. Rhodes , 416 U.S. 232, 236 (1974), overruled on other grounds, Davis v. Scherer , 468 U.S. 183 (1984). In answering this question, the court must assume that the plaintiffs' allegations are true and must draw all reasonable inferences in the plaintiffs' favor. Usher v. Citv of Los Angeles , 828 F.2d 556, 561 (9th Cir. 1987). A complaint need not make "detailed factual allegations, " however, "a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007). To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), plaintiffs must allege sufficient facts to "raise a right to relief above the speculative level." Id . That is, plaintiffs must show that their claims are not merely conceivable, but plausible. Id . at 570; Ashcroft v. Iqbal , 556 U.S. 662, 679 (2009).

If the court dismisses the complaint, it must then decide whether to grant leave to amend. Leave to amend should be granted unless it is clear that the complaint cannot possibly be cured by the allegation of additional facts. Lucas v. Dep't of Corrs. , 66 F.3d 245, 248 (9th Cir. 1995); Fed.R.Civ.P. 15(a)(2) ("The court should freely give leave [to amend] when justice so requires"). The court must also consider whether granting leave to amend will result in undue prejudice to the opposing party, is sought in bad faith or for a dilatory motive, is futile, or creates undue delay. U.S. ex. rel. Lee v. SmithKline Beecham. Inc. , 245 F.3d 1048, 1052 (9th Cir. 2001).


CitiMortgage moves to dismiss four of Faley's five claims. Faley's First Claim for Relief, breach of contract, is not at issue in this motion. For the reasons set forth below, the court denies CitiMortgage's motion as to Faley's Second, Third, and Fourth Claims for relief; respectively alleging willful violation of the FCRA, negligent violation of the FCRA, and IIED.

The court grants CitiMortgage's motion as to.Faley's Fifth Claim for Relief, alleging violation of the OUDCP A, with leave to amend.

I. Fair Credit Reporting Act

The FCRA imposes a duty on a furnisher of credit information to investigate and, if necessary, correct credit information it submits to a credit reporting agency (CRA) upon notice from the CRA that a consumer has disputed the information's completeness or accuracy. 15 U.S.C. § 1681s-2(b). The FCRA confers on consumers a private right of action to enforce this duty. Id . Faley asserts two claims under the FCRA. First, Faley alleges that CitiMortgage is civilly-liable under 15 U.S.C. § 1681n for willfully failing to properly investigate and correct Faley's credit report dispute. Second, Faley alleges CitiMortgage is liable under 15 U.S.C. § 1681o for negligently failing to research and remedy the information it provided to the CRA.

Faley's Amended Complaint sets forth allegations sufficient to state both FCRA claims. The pleading establishes that CitiMortgage had a duty under 15 U.S.C. § 1681s-2(b) and raises reasonable doubt regarding CitiMortgage's satisfaction of that obligation. Faley pled facts to demonstrate that she was harmed by CitiMortgage's alleged misconduct and to support the plausible inference that CitiMortgage acted willfully. Accordingly, Faley is entitled to move forward with her claims under the FCRA.

II. Intentional Infliction of Emotional Distress

To state a claim of intentional infliction of emotional distress (liED) under Oregon law, a plaintiff must pled that (1) the defendant intended to inflict severe emotional distress on the plaintiff or knew such distress was substantially certain to result from its conduct, (2) the defendant's acts were the cause of the plaintiffs severe emotional distress, and (3) the defendant acts constituted an extraordinary transgression of the bounds of socially tolerable conduct. McGanty v. Staudemaus , 321 Or. 532, 543, 550-51 (1995). The Amended Complaint advances sufficient allegations as to all three elements. Faley alleges that CitiMortgage acted outrageously with the intent to inflict, and knowledge of the likelihood of inflicting, severe emotional distress on her. Furthermore, Faley alleges that CitiMortgage's persistent collection efforts did, in fact, cause her to suffer extreme distress.

Typically, an liED claim's viability turns on the tort's third element: whether the defendant's actions were "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency." House v. Hicks , 218 Or.App. 348, 358 (2008). This is a question of law. Harris v. Pameco Corp. , 170 Or.App. 164, 171 (2000). To answer it, the court must engage in a case-by-case "fact-specific inquiry... considering the totality of the circumstances." Rosenthal v. Erven , 172 Or.App. 20, 23 (2001). At this early stage in the proceeding and without the facts fully developed, it is premature for the court to find that Faley's liED claim must fail as a matter of law. As the case progresses, it may be difficult for Faley to prove that CitiMortgage's actions amounted to an extreme departure from societal norms. However, to survive a motion to dismiss, Faley need only set forth a legally cognizable claim, which she has done.

III. Oregon's Unlawful Debt Collection Practices Act

In her Fifth Claim for Relief, Faley states "[b]ased upon the facts asserted herein, defendant CitiMortgage's practices violate Oregon's Unlawful Debt Collection Practices Act, ORS 646.639-643." The OUDCPA prohibits debt collectors from using specific "unlawful collection practice[s]... while collecting or attempting to collect" actual or alleged debts. Or. Rev. Stat.§ 646.639(2); Porter v. Hill , 314 Or. 86, 92 (1992) ("The statute proceeds from the assumption that a debt does (or might) exist and prohibits the debt collector from using unfair practices to collect it. Nothing in the statute evidences a legislative concern with the existence or amount of the underlying debt, as distinct from the use of abusive methods to pressure debtors to pay their debts."). For instance, it is unlawful for a debt collector to threaten the use of physical force, Or. Rev. Stat. § 646.639(2)(a); communicate with a debtor's employer regarding the debt, Or. Rev. Stat. § 646.639(2)(t); or attempt to collect fees in excess of the debt unless expressly authorized by contract or law, Or. Rev. Stat. § 646.639(2)(n).

The employment of a listed abusive practice is an essential element of an OUDCPA claim. See Lyon v. Chase Bank USA. N.A. , 656 F.3d 877, 883 (9th Cir. 2011) (reversing dismissal of plaintiffs claim that Chase Bank "violated Oregon Revised Statutes [§]. 646.639(2)(k) by attempting to collect a debt when it knew or had reason to know that its right to do so did not exist"); see also Rowe v. Bank of Cascades , 68 Or.App. 490, 492-93 (1984) (analyzing plaintiffs claim that defendant "in an attempt to collect one or both of said debts immediately attached the funds in the account referred to in Paragraph III without cause, not pursuant to Court order, without notifying the Plaintiffs, and with knowledge or reason to know that such a right or remedy did not exist, in violation of ORS 646.639."). The Amended Complaint does not identify which prohibited collection methods CitiMortgage allegedly engaged in and the court declines to speculate as to which theories of liability the alleged facts may support. Accordingly, CitiMortgage's motion to dismiss Faley's Fifth Claim for Relief is granted and Faley is given leave to amend her complaint.


CitiMortgage's motion (#23) for partial dismissal of Faley's claims is DENIED as to Faley's Second, Third, and Fourth Claims for Relief and GRANTED as to Faley's Fifth Claim for Relief. Faley shall file any amended complaint on or before July 1, 2014.

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