OPINION AND ORDER
BARBARA B. CRABB, District Judge.
In this proposed class action suit for statutory and punitive damages under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., plaintiffs Jon Germain and Amber Rhy allege that defendant Bank of America, N.A. obtained their credit reports and those of the proposed class members without a lawful purpose. Before the court is defendant's motion to dismiss the complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6). Defendant contends that it was authorized to obtain plaintiffs' credit reports under § 1681b(a)(3)(F) because it held the mortgage on plaintiffs' residential properties. In the alternative, it argues that plaintiffs have failed to allege enough facts to establish that it acted willfully, which is a prerequisite to a claim for statutory damages. 15 U.S.C. § 1681n(a). Because I conclude that plaintiffs' allegations are sufficient to state a claim and that questions of fact exist that cannot be resolved by the pleadings, defendant's motion will be denied.
Before setting forth the facts, I note that defendant relies on facts drawn from the court records in plaintiffs' bankruptcy proceedings. Because these filings are matters of judicial and public record and plaintiffs have not disputed their authenticity, I may take judicial notice of them without converting defendant's motion to dismiss into a motion for summary judgment.
From plaintiffs' complaint and the court documents submitted by defendants, I find the following facts for the purpose of deciding this motion.
Plaintiffs Jon Germain and Amber Rhy are residents and citizens of Wisconsin. Defendant Bank of America is a national bank organized under federal law with headquarters in Charlotte, North Carolina.
On October 27, 2008, Germain filed a Chapter 7 bankruptcy petition in the United States District Court for the Western District of Wisconsin, case no. 09-15674. He scheduled defendant's predecessor, Countrywide Home Loans, as a creditor. On February 19, 2009, Germain received a Chapter 7 discharge of his debts, including his debt to defendant. In late 2012, Germain received a copy of his consumer report from Trans Union, a national credit reporting agency. Germain's consumer report reflects that defendant obtained access to his consumer report on eight separate occasions: January 1, 2012; February 8, 2012; March 7, 2012; March 9, 2012; March 26, 2012; November 29, 2012; December 26, 2012; and February 19, 2013.
Germain did not remain in the house financed by defendant after February 1, 2008, when defendant changed the locks. On March 16, 19 and 29, 2012; April 16, 2012; and September 19, 2012, he contacted defendant regarding a deed in lieu of foreclosure. On July 2, 2012 and October 10, 2012, Germain posted two short sale requests on defendant's website.
Between 2007 and 2013, Germain filed numerous documents in defense of two foreclosure proceedings. In one action, he asserted the affirmative defense that the foreclosure should be dismissed for defendant's failure to offer him loss mitigation prior to the foreclosure proceedings.
On October 3, 2009, Rhy filed a Chapter 7 bankruptcy petition in the United States District Court for the Western District of Wisconsin, case no. 09-17434. She scheduled defendant's predecessor, Countrywide Home Loans, as a creditor. On February 18, 2010, Rhy received a Chapter 7 discharge of her debts, including her debt to defendant. In late 2012, Rhy received a copy of her consumer report from Trans Union. The report shows that defendant obtained access to Rhy's credit report once on January 1, 2012. After filing her bankruptcy petition, Rhy never contacted defendant regarding any sort of loan modification or workout program.
In her statement of intent filed in her bankruptcy action, Rhy elected to retain her property and continue to make ongoing payments to defendant. However, when she remained in default, defendant instituted foreclosure proceedings, which Rhy contested.
Under the Fair Credit Reporting Act, 15 U.S.C. § 1681b(f), it is unlawful to "use or obtain" a credit report for any purpose that is not authorized by the Act.
Section 1681o allows consumers to bring a civil action to enforce violations of § 1681b(f).
In this case, plaintiffs allege that defendant did not have a lawful purpose for obtaining their credit reports because plaintiffs had discharged their mortgage debts to defendant in Chapter 7 bankruptcy proceedings, thereby terminating their "account" and any business relationship with defendant. Although the mortgages that defendant held on plaintiffs' properties constitute "interest[s] in real property that secure [defendant's] right to repayment,"
Defendant contends that unlike the creditors in
In support of its argument, defendant claims that courts have interpreted the Fair Credit Reporting Act as allowing a creditor to pull a credit report to review an account even where the account has been closed or the debt is no longer enforceable.
At this stage, it is unnecessary to decide whether a credit relationship can remain after the debt is discharged or whether former creditors may pull credit reports on closed accounts. It is also unnecessary to determine whether plaintiffs had open accounts or an ongoing business relationship with defendants, because even if this were true, defendant may still have violated the Fair Credit Reporting Act.
Under the Act, a credit report may be furnished only when the requester "intends to use the information" for a proper purpose (such as an account review) or when it "has a legitimate business need for the information." 15 U.S.C. § 1681b(a). Neither the complaint nor the bankruptcy court records identify the reason why defendant pulled plaintiffs' credit reports. However, plaintiffs have alleged that defendant did not have a legitimate reason for doing so once they had discharged their debts with defendant. These allegations are sufficient to state a claim under the Fair Credit Reporting Act. In the absence of discovery and a more fully developed record, I cannot determine whether defendant pulled plaintiffs' reports for an improper purpose or for a legitimate business reason. As a result, I must deny defendant's motion to dismiss on this issue.
Plaintiffs may recover statutory damages up to $1,000 as well as punitive damages if they can show that defendant willfully failed to comply with the Fair Credit Reporting Act. 15 U.S.C. § 1681n(a). The standard is the same as in other cases involving punitive damages: whether the defendant knowingly or recklessly violated plaintiffs' rights, or, in other words, whether the defendant knew of an "unjustifiably high" risk that a violation would occur or should have known of such a risk because it was obvious.
As with the alleged underlying violation, the question whether defendant acted knowingly or relied on an unreasonable reading of the Act is a fact intensive one that cannot be resolved by the pleadings.
IT IS ORDERED that defendant Bank of America, N.A.'s motion to dismiss, dkt. #30, is DENIED.