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Handrock v. Ocwen Loan Servicing, LLC

United States District Court, N.D. Illinois, Eastern Division

November 1, 2016

ALAN HANDROCK and CAROLYN MARY HANDROCK, Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC And EXPERIAN INFORMATION SERVICES, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          Harry D. Leinenweber, Judge

         Before the Court is Defendant Experian Information Solutions, Inc.'s Motion to Dismiss the Complaint pursuant to Fed.R.Civ.P. 12(b)(6). [ECF No. 27]. For the reasons stated herein, the Motion is denied.

         I. BACKGROUND

         The following facts are contained in the Plaintiffs' Complaints and attached exhibits. They are presumed true for purposes of deciding the motion to dismiss. See, Forrest v. Universal Sav. Bank, F.A., 507 F.3d 540, 542 (7th Cir. 2007).

         Husband and wife Alan and Carolyn Mary Handrock, Plaintiffs in this consolidated case (hereinafter, “Plaintiffs” or “Handrocks”), filed for bankruptcy on April 20, 2013. One of the debts involved in their bankruptcy was a mortgage loan secured by the couples' residence. Defendant Ocwen Loan Servicing, LLC (“Ocwen”) serviced the loan, while Defendant Experian Information Solutions, Inc. (“Experian”), a credit reporting agency, maintained and reported information on the loan as part of Plaintiffs' credit history. In their bankruptcy plan, Plaintiffs proposed to surrender the residence and thereby extinguish Ocwen's claim against them. The Bankruptcy Court confirmed the Plaintiffs' plan on June 28, 2013.

         Eleven months later, on May 28, 2014, the court entered an Order of Discharge in Plaintiffs' case. Plaintiffs thereafter sent credit dispute letters to Experian. They requested that Experian update their credit files to reflect that their debts had been discharged through bankruptcy and to report a zero current balance on those debts.

         In responding to the letters, Experian generated and mailed to Plaintiffs a report that is one of three reports underlying Plaintiffs' claim in this case. The report showed that the Ocwen account has a balance of $0.00 as of June 2014, that the status of the account was “Discharged through Bankruptcy Chapter 7, ” and that the Account History stated “Debt included in Chapter 7 Bankruptcy on May 28, 2014.” See, Alan Handrock v. Ocwen, 16 C 5732, ECF No. 1 (“Compl.”), Ex. I (“First Report”). However, the month-by-month Account History showed a scheduled payment amount of $1, 525.00 for each of the months from April 2013 to April 2014, or the period from when Plaintiffs first filed for bankruptcy to the month before the Discharge Order was entered. The Payment History section also showed the number 180 under each month from September 2013 to April 2014, presumably reflecting that the account was more than 180 days overdue during this time.

         Plaintiffs claim that the report was inaccurate. According to Plaintiffs, the Ocwen account should have reported “the status of the subject loan without a negative payment history for the months following Plaintiff's bankruptcy filing.” Compl. ¶ 33. This is because “Ocwen could no[t] collect payments for the subject loan after Plaintiff's bankruptcy filing in April 2013.” Id. Furthermore, “Plaintiff no longer had any personal liability for the balance of the subject loan” after his and his wife's bankruptcy plan was confirmed on June 28, 2013. Id.

         Some six months later, the Plaintiffs sent Experian yet another pair of dispute letters, this time specifically disputing the accuracy of the Ocwen account. Experian mailed them back an updated report. This report contained the same scheduled payment and 180 days past due information on the Ocwen account as did the First Report. See, ECF No. 1, Ex. K (“Second Report”).

         Alan Handrock (“Alan”) obtained a copy of his personal credit report on February 15, 2016. See, Ex. L (“Third Report”). This report contained two tradelines for the same Ocwen loan, one of which Plaintiffs say is correct. The second tradeline, however, reported a recent balance of $192, 392.00 and a monthly payment of $1, 526.00. See, Compl. ¶¶ 43, 44 and Ex. L. It also reported a past due amount of $66, 120.00 as of December 2015, more than a year after Plaintiffs' bankruptcy discharge, and a notation of “180 days past due as of Dec. 2015, Nov. 2015.” Id. Alan alleges that this credit report is inaccurate and that around March 10, 2016, he was “denied credit as a result of the inaccurate credit reporting.” Carolyn Handrock (“Carolyn”) makes a similar complaint. Like Alan, Carolyn alleges that she was denied credit, although in her case this was a denial of a Capital One credit card around October 26, 2014.

         Plaintiffs bring this lawsuit against both Experian and Ocwen, claiming that the Defendants have violated the Fair Credit Reporting Act (“FCRA”). Plaintiffs seek actual damages to compensate them for “loss of credit, increase in the price of credit, out-of-pocket expenses associated with writing dispute letters, sending certified mail, time meeting with [their] attorneys and monitoring [their] credit file, as well as mental and emotional pain and suffering.” Compl. ¶ 49. Plaintiffs also pray for injunctive relief alongside other forms of monetary compensation. Compl. ¶¶ 74, 97.

         II. ANALYSIS

         Plaintiffs allege that Experian violated two separate sections of the FCRA. The first, 15 U.S.C. § 1681e(b), requires a consumer reporting agency like Experian to “follow reasonable procedures to assure maximum possible accuracy” of the information it reports. This provision is operative whenever a reporting agency “prepares a consumer report.” In contrast, the second provision, 15 U.S.C. § 1681i, is relevant only during “reinvestigations”; it provides steps that a reporting agency must take after a consumer notifies the agency that he is disputing “the completeness or accuracy of an[] item of information” contained in the consumer's credit file. See, 15 U.S.C. § 1681i(a)(1)(A) and 15 U.S.C. § 1681i generally.

         Experian argues that Plaintiffs' Complaint fails because Plaintiffs have not pled the existence of (1) an actionable inaccuracy on a consumer credit report; (2) a consumer credit report; or (3) actual ...


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