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Powell v. Pentagon Federal Credit Union

September 17, 2010

DAVID POWELL, PLAINTIFF,
v.
PENTAGON FEDERAL CREDIT UNION, DEFENDANT.



The opinion of the court was delivered by: James B. Zagel United States District Judge

Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

I. BACKGROUND

In 2008, Plaintiff David Powell ("Powell"or "Plaintiff") had a Visa Account with Defendant Pentagon Federal Credit Union ("Pentagon" or "Defendant"). Pursuant to the Cardholder Agreement ("Agreement") that governed the relationship, the account could be terminated under the following circumstances: (1) illegal use of the card; (2) Pentagon's adverse reevaluation of Powell's creditworthiness; (3) false or misleading statements for an advance; (4) withdrawal of consent to Pentagon's statutory lien on protected funds; or (5) default as a result of (a) failure to make timely payments, (b) insolvency or a bankruptcy filing, (c) death or incompetence, (d) judgment or garnishment against Powell's property, or (e) Pentagon's good faith determination that its or Powell's obligations to one another, or Powell's ability to repay Pentagon or otherwise perform his obligations, were unsafe or insecure.

In his second amended complaint Powell alleges that in early November 2008, Pentagon sent him a letter stating that his Visa Account was closed "based on prior delinquency with [Pentagon] and/or information reflected on a report from the following credit reporting agency: Equifax[.]" Pentagon notified Powell of his right under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq., ("FCRA"), to receive a free copy of his credit file and dispute the accuracy of the credit report that was the basis for the decision to close the account.

Another letter from Pentagon followed, apparently in response to a letter from Powell. In the second letter, Pentagon explained that:

Periodically, Pentagon Federal Credit Union reviews line of credit accounts and the member's current credit standing. If, in the judgment of the Pentagon Federal Credit Union's Credit Risk and Policy Department, such a review suggests account activity or trends that could jeopardize the repayment of the balance owed of future use of the account, the line of credit may be closed.

In your case, our decision to close your Visa account was based on information from your credit report. We encourage you to obtain a free copy of your credit report to check its accuracy. If there are errors on the report or if there has been a recent change to this information, you are welcome to apply for a new account with evidence of the corrections or changes.

In his complaint, Powell claims that the credit report referenced in the second letter is not the Equifax report referenced in the first, but rather an "investigative report" compiled by "Pentagon or other third-parties based on interviews of, or other gathering of information from Pentagon employees and other third-parties who have information concerning Powell, his account activity," and the unidentified trends that might jeopardize repayment of the account balance. Powell complains that the termination of his account is unlawful because Powell was not delinquent on the account, and the consumer reports from the relevant time frame reveal no "significant evidence" of any account activity that could jeopardize repayment. Powell also contends that he was not given 15 days notice prior to the account closure, as he maintains is required by the agreement.

Plaintiff alleges the following counts in his second amended complaint: (1) Breach of Contract; (2) Violations of the FCRA; (3) Violations of the Equal Credit Opportunity Act, 15 U.S.C. 1691, et seq. ("ECOA"); and (4) Violations of the Illinois Consumer Fraud Act, 815 Ill. Comp. Stat. 505 ("ICFA"). Defendant now moves to dismiss Plaintiff's complaint in its entirety.

II. STANDARD OF REVIEW

A Motion to Dismiss under Rule 12(b)(6) requires that I analyze the legal sufficiency of the complaint, and not the factual merits of the case. Autry v. Northwest Premium Servs., Inc., 144 F.3d 1037, 1039 (7th Cir.1998). I must take all facts alleged in Plaintiff's complaint as true and draw all reasonable inferences from those facts in favor of Plaintiff. Caldwell v. City of Elwood, 959 F.2d 670, 671 (7th Cir.1992). Plaintiff, for its part, must do more than solely recite the elements for a violation; it must plead with sufficient particularity so that its right to relief is more than a mere conjecture. Bell Atl., Corp. v. Twombly, 550 U.S. 544, 555 (2007). Plaintiff must plead its facts so that, when accepted as true, they show the plausibility of its claim for relief. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Plaintiff must do more than plead facts that are "consistent with Defendant's liability" because that only shows the possibility, not the plausibility, of their entitlement to relief. Id. (internal quotations omitted).

III. DISCUSSION

A. Breach of ...


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