Opinion
Case No.: 20-cv-2449-MMA (MDD)
2022-09-06
Alfredo LARA, Jr., Plaintiff, v. EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants.
Cory Michael Teed, Jeremy Golden, Golden & Cardona-Loya, LLP, Chula Vista, CA, for Plaintiff. Justin Michael Penn, Hinshaw & Culbertson LLP, Chicago, IL, Shalini Bhasker, Hinshaw & Culbertson, Los Angeles, CA, for Defendant Merchants Credit Guide Company. Parisa Jassim, Akerman, LLP, Los Angeles, CA, Natalie Lynn Winslow, Akerman LLP, Las Vegas, NV, for Defendant PennyMac Loan Services, LLC.
Cory Michael Teed, Jeremy Golden, Golden & Cardona-Loya, LLP, Chula Vista, CA, for Plaintiff. Justin Michael Penn, Hinshaw & Culbertson LLP, Chicago, IL, Shalini Bhasker, Hinshaw & Culbertson, Los Angeles, CA, for Defendant Merchants Credit Guide Company. Parisa Jassim, Akerman, LLP, Los Angeles, CA, Natalie Lynn Winslow, Akerman LLP, Las Vegas, NV, for Defendant PennyMac Loan Services, LLC.
ORDER DENYING DEFENDANT PENNYMAC'S MOTION FOR SUMMARY JUDGMENT
MICHAEL M. ANELLO, United States District Judge
Plaintiff Alfredo Lara, Jr. ("Plaintiff") brings this action against Defendants Experian Information Solutions, Inc., Merchants Credit Guide Company, PennyMac Loan Services, LLC, and Bank of America, N.A., asserting various violations of federal and California consumer protection laws. See Doc. No. 18 ("FAC"). Defendant PennyMac Loan Services, LLC ("Defendant PennyMac") now moves for summary judgment in its entirety, or partially, in the alternative. See Doc. No. 62. Plaintiff filed an opposition, to which Defendant PennyMac replied. See Doc. Nos. 64, 65. The Court found the matter suitable for determination on the papers and without oral argument pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7.1.d.1. Doc. No. 66. For the reasons set forth below, the Court DENIES Defendant PennyMac's motion for summary judgment in its entirety.
On July 29, 2022, the Court directed Defendant PennyMac to file exhibits that were referenced in, but appeared to have been inadvertently omitted from, a declaration submitted in support of its summary judgment motion and granted Plaintiff the opportunity to respond to the late filing. See Doc. Nos. 63, 69. Defendant PennyMac filed the missing exhibits that same day. Doc. No. 70. Plaintiff objected to Defendant PennyMac's late filing, stating that Defendant PennyMac "failed to show its late filing of exhibits was the result of 'excusable neglect.' " Doc. No. 71. However, the Court had already permitted Defendant PennyMac leave to file the documents. Doc. No. 69. And in any event, Plaintiff has not demonstrated that he would be prejudiced by the late filing. Importantly, Plaintiff did not mention or raise an issue relating to the missing exhibits in his opposition to the summary judgment motion, presumably because he had access to the missing documents from discovery and was able to sufficiently oppose without their being attached to the motion. See Doc. No. 64. In particular, Plaintiff responded to Defendant PennyMac's statement of undisputed facts, which rely upon the missing exhibits. See Doc. No. 64-1 ("SUF").
"The district court is given broad discretion in supervising the pretrial phase of litigation." Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1087 (9th Cir. 2002) (quoting Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607 (9th Cir. 1992)); Green v. Baca, 306 F. Supp. 2d 903, 913 n.40 (C.D. Cal. 2004) ("The court, however, has broad discretion in the application of the local rules."). While Defendant PennyMac's filing of the exhibits fell after the dispositive motions' deadline, see Doc. No. 58 at 2, the Court finds there is no prejudice to Plaintiff and Defendant PennyMac has sufficiently provided good cause for the delay and a good faith effort to remedy the situation, see Doc. No. 72. Accordingly, the Court considers the late-filed exhibits.
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I. BACKGROUND
These material facts are taken from Defendant PennyMac's separate statement of material facts and Plaintiff's responses thereto, as well as the parties' supporting declarations and exhibits. Disputed material facts are discussed in further detail where relevant to the Court's analysis. Facts that are immaterial for purposes of resolving the current motion are not included in this recitation.
A. Factual Background
Plaintiff was born in 1978 and moved to San Diego County in 1982. Doc. No. 64-2 ("Lara Decl.") ¶¶ 3-4. He has lived in San Diego County since then. Id. ¶ 4.
On October 30, 1998, a $87,117.00 promissory note in favor of Countrywide Home Loans, Inc. ("Countrywide") was executed in the names of "Alfredo Lara," "Ofelia Cervantes," and "Roberto Zuniga" (the "1998 Mortgage"). Doc. No. 63 ("Vazquez Decl.") ¶ 5, Exh. 1 at 9-10. A mortgage secured the note and was recorded against real property at 27 S. Lewis Ave., Waukegan, Illinois 60085 (the "Property"). See id.
All citations to electronically filed documents refer to the pagination assigned by the CM/ECF system.
In 2003, the 1998 Mortgage was refinanced. See Vazquez Decl. ¶ 6. On September 17, 2003, "Alfredo Lara," "Ofelia Cervantes," and "Roberto Zuniga" executed a $85,589.00 promissory note in favor of Countrywide (the "2003 Refinance"). Vazquez Decl. ¶ 6, Exh. 3 at 21-22. The 2003 Refinance was also secured by the Property. See id., Exh. 8. The subject of the present action is the September 2003 Refinance of the 1998 Mortgage. Specifically, the parties dispute whether these loans were the product of identity theft.
In October 2009, Mortgage Electronic Registration Systems, Inc. assigned the loan to BAC Home Loan Servicing, LP, f/k/a Countrywide Home Loan Servicing LP ("BAC Home Loans"). See Vazquez Decl., Exh. 9. Also in October 2009, BAC Home Loans initiated a judicial foreclosure against the named borrowers. See id., Exh. 10. In March 2012, BAC Home Loans' successor, Bank of America, National Association ("BofA") began reporting the mortgage to Experian. See SUF No. 13. In 2015, Defendant PennyMac acquired the loan from BofA, which was memorialized in subsequently recorded mortgage assignments, and Defendant PennyMac began to report on the mortgage. See Vazquez Decl., Exhs. 11-12.
In 2018, Plaintiff obtained documents from the IRS after his tax preparer suggested the IRS wanted to confirm his identity. Pacheco Decl., Exh. 10 at 44:13-46:1, 131:15-25. Plaintiff testified that these documents alerted him to potential identity theft in Illinois as the documents referenced Illinois employers. Id.
On July 24, 2018, Defendant PennyMac received an automated credit dispute verification ("ACDV") from TransUnion, whereby Plaintiff claimed "identity fraud" ("2018 ACDV"). Vazquez Decl., Exh. 13. Defendant PennyMac's credit reporting team forwarded the 2018 ACDV to its fraud team. See id. Defendant PennyMac reviewed "documents collected via loan application process: HUD1, Signed Note & Deed of Trust, Signature Affidavit." Id. Defendant PennyMac concluded that "[e]vidence does not support the allegation" and "confirmed this contains no suspicious activity." Id.
In February 2019, OneMain Financial Group LLC ("OneMain Financial") filed a collection lawsuit as to an account with OneMain Financial tied to the name "Alfredo Lara." Pacheco Decl., Exh. 8.
On July 27, 2020, Plaintiff filed a police report with the Chula Vista Police Department, in which Plaintiff provided the police with a narrative of his alleged identity theft and stated that he "only discovered the crime when he received a notice that [he] was being sued from one company for allegedly defaulting on a loan from several years ago." Vazquez Decl., Exh. 14 at 97.
Thereafter, Plaintiff filed a second dispute concerning the accounts on his credit report. On September 16, 2020, Defendant PennyMac received from Experian a second ACDV, where Plaintiff again claimed "identity fraud" ("2020 ACDV"). Id. at 92-103. The 2020 ACDV included a copy of his July 2020 police report. Id. Defendant PennyMac "reviewed the customer's HUD1, Deed of Trust, Name Affidavit and Note, signatures present on all documents" and stated "all provided loan docs match property address." Id. at 103. Defendant PennyMac concluded that "[c]ustomer has provided insufficient evidence to support allegation of loan validity. Resolution: Fraud reviewed and confirmed this contains no suspicious activity." Id.
B. Procedural History
Plaintiff initiated this action on December 16, 2020. See Doc. No. 1. On April 6, 2021, Plaintiff filed a First Amended Complaint against Defendant PennyMac as well as Experian Information Solutions, Inc., Merchants Credit Guide Company, and BofA, alleging violations of (1) the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (the "FCRA"); (2) the Consumer Credit Reporting Agencies Act, Cal. Civ. Code. § 1785.1 et seq. (the "CCRAA"); (3) the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (the "FDCPA"); (4) the Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788 et seq. (the "Rosenthal Act"); and (5) the California Identity Theft Act, Cal. Civ. Code § 1798.92 et seq. (the "CITA"). See id. ¶¶ 29-56. By July 2022, all defendants other than Defendant PennyMac settled and/or were dismissed. See Doc. Nos. 44, 60, 67.
Only Claims One, Two, Four, and Five are brought against Defendant PennyMac. See FAC. On April 26, 2021, Defendant PennyMac moved to dismiss these claims. See Doc. No. 22. The Court granted in part and denied in part Defendant PennyMac's motion. See Doc. No. 30 at 12-13. The following claims against Defendant PennyMac in the FAC remain after the Court's Order ruling on the motion to dismiss: (1) the FCRA willful claim; (2) the CCRAA willful claim; (3) the Rosenthal Act claim based on FDCPA § 1692e; and (4) the CITA claim. Defendant PennyMac moves for summary judgment as to each of these claims. See Doc. No. 62.
II. LEGAL STANDARD
"A party may move for summary judgment, identifying each claim or defense—or the part of each claim or defense—on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The party seeking summary judgment bears the initial burden of establishing the basis of its motion and of identifying the portions of the declarations, pleadings, and discovery that demonstrate absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party has "the burden of showing the absence of a genuine issue as to any material fact, and for these purposes the material it lodged must be viewed in the light most favorable to the opposing party." Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). A fact is material if it could affect the "outcome of the suit" under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. See id. If the moving party does not bear the burden of proof at trial, he may discharge his burden of showing no genuine issue of material fact remains by demonstrating that "there is an absence of evidence to support the nonmoving party's case." Id. at 325, 106 S.Ct. 2548.
The burden then shifts to the opposing party to provide admissible evidence beyond the pleadings to show that summary judgment is not appropriate. Id. at 324, 106 S.Ct. 2548. The party opposing summary judgment cannot " 'rest upon the mere allegations of denials of [its] pleading' but must instead produce evidence that 'sets forth specific facts showing that there is a genuine issue for trial.' " Estate of Tucker v. Interscope Records, 515 F.3d 1019, 1030 (9th Cir.) (quoting Fed. R. Civ. P. 56(e)), cert. denied, 555 U.S. 827, 129 S.Ct. 174, 172 L.Ed.2d 44 (2008). However, the non-moving party need not present a defense if the moving party's showing is insufficient. Neely v. St. Paul Fire & Marine Ins. Co., 584 F.2d 341, 344 (9th Cir. 1978); see also Adickes, 398 U.S. at 161, 90 S.Ct. 1598.
III. DISCUSSION
Plaintiff claims he is a victim of identity theft. Lara Decl. ¶ 5; FAC ¶ 15. Because of his alleged identity theft, Plaintiff claims he did not "obtain[ ] mortgage accounts in Illinois in Plaintiff's name with [Defendant PennyMac]." FAC ¶ 15. Thus, Plaintiff alleges that he is not obligated on the account "as the balances and late payments were created and caused as a result of identity theft." Id. ¶ 17; see Lara Decl. ¶ 6. Plaintiff further claims the account inaccurately appears "on Plaintiff's credit file and reflect[s] a balanced owed and/or past due payments that are negatively affecting Plaintiff's credit file and damaging Plaintiff's credit worthiness." FAC ¶ 18; see Lara Decl. ¶¶ 6-9. Defendant PennyMac moves for summary judgment as to each claim against it. See Doc. No. 62-1. Accordingly, the Court addresses each of Plaintiff's claims against Defendant PennyMac in turn.
A. FCRA Claim
Defendant PennyMac asserts there are no genuine issues of material fact as to Plaintiff's FCRA claim because its investigations were reasonable and Plaintiff cannot show a willful violation of the statute. Doc. No. 62-1 at 8-9.
1. Reasonable Investigation
First, Defendant PennyMac argues both its investigations "w[ere] more than reasonable." Id. at 8. In turn, Plaintiff asserts that Defendant PennyMac's investigations were unreasonable, or alternatively, that the reasonableness is a triable issue of fact for a jury. Doc. No. 64 at 11.
FCRA § 1681s-2 provides "[r]esponsibilities of furnishers of information to consumer reporting agencies" and outlines two categories of responsibility. 15 U.S.C. § 1681s-2. The first category, under subsection (a), provides a "[d]uty of furnishers to provide accurate information." Id. § 1681s-2(a). The second category, under subsection (b), provides "[d]uties of furnishers of information upon notice of dispute." Id. § 1681s-2(b). Plaintiff brings his first claim pursuant to the second category, under subsection (b).
Subsection 1681s-2(b) obligations are "triggered 'upon notice of dispute'—that is, when a person who furnished information to a CRA receives notice from the CRA that the consumer disputes the information." Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009). The code specifically states that after receiving a dispute notice "regarding the accuracy of any information provided by a person to a [CRA]," the furnisher must:
(A) conduct an investigation with respect to the disputed information;15 U.S.C. § 1681s-2(b)(1). The furnishers' duties "arise only after the furnisher receives notice of dispute from a CRA; notice of a dispute received directly from the consumer does not trigger furnishers' duties under subsection (b)." Gorman, 584 F.3d at 1154.
(B) review all relevant information provided by the consumer [CRA] pursuant to section 1681i(a)(2) of this title;
(C) report the results of the investigation to the [CRA];
(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other [CRAs] to which the person furnished the information . . . ; and
(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1) . . . (i) modify[,] . . . (ii) delete[, or] (iii) permanently block the reporting of that item of information [to the CRAs].
The Ninth Circuit in Gorman v. Wolpoff & Abramson, LLP addressed the issue of whether section 1681s-2(b)(1)(A) "requires a furnisher to conduct a 'reasonable' investigation." Id. at 1155. The court concluded that "[r]equiring furnishers, on inquiry by a CRA, to conduct at least a reasonable, non-cursory investigation comports with the aim of the statute to 'protect consumers from the transmission of inaccurate information about them.' " Id. at 1157 (quoting Kates v. Crocker Nat'l Bank, 776 F.2d 1396, 1397 (9th Cir. 1985)). Accordingly, the Ninth Circuit explained that "the furnisher's investigation pursuant to § 1681s-2(b)(1)(A) may not be unreasonable." Id.
The duty to conduct a reasonable investigation, as previously discussed, arises only after the furnisher receives from a CRA a notice of dispute. 15 U.S.C. § 1681s-2(b)(A). The notice "must include 'all relevant information regarding the dispute that the [CRA] has received from the consumer.' " Gorman, 584 F.3d at 1157 (quoting 15 U.S.C. § 1681i(a)(2)(A)). The notice thus provides the furnisher with information on "the nature of the consumer's challenge to the reported debt," and receipt of the notice "gives rise to the furnisher's obligation to conduct a reasonable investigation." Id. "The pertinent question is thus whether the furnisher's procedures were reasonable in light of what it learned about the nature of the dispute from the description in the CRA's notice of dispute." Id. However, the Ninth Circuit "emphasize[d] that the requirement that furnishers investigate consumer disputes is procedural. An investigation is not necessarily unreasonable because it results in a substantive conclusion unfavorable to the consumer, even if that conclusion turns out to be inaccurate." Id. at 1161. "Indeed, the reasonableness of any investigation involving identity theft is likely to be a highly individualized and fact-intensive inquiry." Romero v. Monterey Fin. Servs., LLC, No. 19cvl781 JM, 2021 WL 268635, at *3 (S.D. Cal. Jan. 27, 2021); Gorman, 584 F.3d at 1160 ("Johnson . . . recognized that the reasonableness of an investigation depends on the facts of the particular case, most importantly the CRA's description of the dispute in its notice." (citing Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 431 (4th Cir. 2004))).
The Ninth Circuit has held that "summary judgment is generally an inappropriate way to decide questions of reasonableness because 'the jury's unique competence in applying the "reasonable man" standard is thought ordinarily to preclude summary judgment.' " In re Software Toolworks Inc., 50 F.3d 615, 621 (9th Cir. 1994) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 450 n.12, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)). However, the court instructs that "summary judgment is not precluded altogether on questions of reasonableness." Gorman, 584 F.3d at 1157. "It is appropriate 'when only one conclusion about the conduct's reasonableness is possible.' " Id. (quoting In re Software Toolworks Inc., 50 F.3d at 622); see also Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1332 (9th Cir. 1995) ("The reasonableness of the procedures and whether the agency followed them will be jury questions in the overwhelming majority of cases."). Therefore, the Court must consider the sufficiency of Defendant PennyMac's two investigations in response to Plaintiff's disputes.
Defendant PennyMac urges that it "looked to its loan file, including the Countrywide origination file" as Plaintiff had not responded to Experian's request for other documents. Doc. No. 62-1 at 9. Defendant PennyMac provides the 2018 and 2020 ACDVs and records that summarize its investigations. See Vazquez Decl., Exh. 14 at 92-103. Defendant PennyMac does not specifically address the 2018 ACDV in its FCRA claim analysis.
The fact that Plaintiff did not respond to a request for documents alone is not dispositive on the issue of reasonableness. See Romero, 2021 WL 268635, at *4 ("Certainly, Monterey's apparent request for additional information, and Plaintiff's undisputed failure to do so, weighs in favor of the reasonableness of the investigation. These facts are not so weighty, however, to require a finding that Monterey's investigation as reasonable as a matter of law, and Monterey cites no authority suggesting otherwise.").
In his 2018 ACDV, Plaintiff sent a dispute to TransUnion claiming the account was fraudulently opened and did not belong to him. Id., Exh. 13 at 89. In response to the 2018 ACDV, Defendant PennyMac looked into the dispute and reached the following result: "I reviewed the following documents collected via loan application process: HUD1, Signed Note & Deed of Trust, Signature Affidavit, and the signatures appear to be the same." Id. Defendant PennyMac also concluded that the "[e]vidence does not support allegation" and "[f]raud reviewed and confirmed no suspicious activity." Id.
Citing to the 2018 ACDV, Plaintiff asserts in opposition that "PennyMac simply reviewed the origination file of the Account." Doc. No. 64 at 12 (citing Vazquez Decl., Exh. 13). He elaborates that "PennyMac never contacted Plaintiff or any of the co-borrowers to discuss or inquire about the potential fraud and identity theft surrounding the Account." Id. (citing Teed Decl., Exh. A at 69:20-25, 70:9-25, 71:1-4).
In reviewing all the evidence presented, and viewing it in the light most favorable to Plaintiff, a reasonable jury could find that Defendant PennyMac's 2018 ACDV investigation was unreasonable. Defendant PennyMac appears to have only reviewed its own file in response to Plaintiff's 2018 ACDV, which raised an issue of identity theft and thereby challenged the legitimacy of those exact documents. And yet Defendant PennyMac has not put forth evidence that its investigation included any research or investigation outside of reviewing its own file such that the Court can conclude as a matter of law that the investigation was reasonable. Accordingly, the Court finds there is a genuine issue of material fact whether Defendant PennyMac's 2018 ACDV investigation was reasonable.
In his 2020 ACDV, Plaintiff sent a letter to Experian disputing information and accounts, including the PennyMac account, tied to his name claiming identity fraud. Vazquez Decl., Exh. 14 at 92. The dispute included a copy of Plaintiff's July 2020 police report. Id. at 94-99. Plaintiff stated that he is a "victim of identity theft," "all addresses in Illinois are not correct," and he has "never lived in Illinois." Id. at 94-95. Defendant PennyMac's research result in response to the 2020 ACDV reads as follows: "The customer claims true identity fraud, account fraudulently opened. I have reviewed the customers HUD1, Deed of Trust, Name Affidavit and Note, signatures are present on all docs, all provided loan docs match property address. Fraud reviewed and confirmed this contains no suspicious activity." Id. at 102. Further, Defendant PennyMac's ACDV records states that "[c]ustomer has provided insufficient evidence to support allegation of loan validity. Resolution: Fraud reviewed and confirmed this contains no suspicious activity." Id. at 103.
In its investigation, Defendant PennyMac asserts that it reviewed "information available to it—not only its origination file, but also [P]laintiff's dispute letter to Experian and the accompanying police report" attached to the 2020 ACDV. Doc. No. 65 at 2 (citing SUF Nos. 33-38; Doc. No. 64-3 ("Teed Decl."), Exh. A at 77:1-8, 77:25 to 78:6, 102:23 to 103:5). As evidence, Defendant PennyMac points to review of its loan file, which include "numerous documents bearing the signature of 'Alfredo Lara' and two co-borrowers, including a promissory note, HUD-1 settlement statement, signature affidavit, and mortgage—with the signature affidavit and mortgage executed before a notary," as well as a social security card. Doc. No. 65 at 3 (citing SUF, Nos. 1-10, 28-32). In addition to the two ACDVs, to show such conclusion, Defendant PennyMac puts forth a copy of the 1998 Mortgage documents, Plaintiff's responses to interrogatories, the 2003 Refinance documents, the uniform loan application and executed documents, HUD-1 settlement statement, resident alien card and social security card received for "Alfredo Lara," excerpts from Plaintiff's deposition, and Experian's notice to Plaintiff. Doc. No. 62-1 at 8-9; Doc. No. 65 at 3; see Doc. No. 70 ("Pacheco Decl."), Exhs. 7, 10, 13; Vazquez Decl., Exhs. 1-8, 13, 14.
However, again, Defendant PennyMac does not present evidence to show its investigation included any research or investigation outside of reviewing its own file when the ACDV clearly challenged the validity of the underlying mortgage and loan file itself. In opposition, Plaintiff puts forth evidence from Defendant PennyMac's supervisor of foreclosure operations affirmatively demonstrating that in response to both ACDVs, Defendant PennyMac only reviewed the Account's origination file and never contacted Plaintiff, the other co-borrowers, or the alleged identity thief, nor did they research Plaintiff's address history or contact the police report referenced in the 2020 ACDV. Doc. No. 64 at 12-13 (citing Teed Decl. ¶ 4, Exh. A at 77:14-18, 78:15-25, 79:1, 80:6-24, 103:14-25, 104:1-5).
Therefore, viewing the evidence in the light most favorable to the non-moving party, a reasonable jury could find that Defendant PennyMac's 2020 ACDV investigation, in which it only reviewed its file, was unreasonable given the claim in Plaintiff's dispute was identity theft and Plaintiff provided a copy of a police report reflecting claims of fraud. As such, there is a genuine dispute of material fact as to whether Defendant PennyMac's investigation in response to Plaintiff's 2020 ACDV was reasonable. Accordingly, Defendant PennyMac is not entitled to summary judgment on the FCRA claim as to both disputes on this basis.
2. Willful Violation
Second, Defendant PennyMac argues that Plaintiff cannot show a willful FCRA violation. Doc. No. 62-1 at 9.
An FCRA "violation must be negligent or willful." Romero, 2021 WL 268635, at * 2 (citing 15 U.S.C. §§ 1681n, 1681o). "To prove a negligent violation, a plaintiff must show that the defendant acted pursuant to an objectively reasonable interpretation of the statute." Marino v. Ocwen Loan Servicing LLC, 978 F.3d 669, 673 (9th Cir. 2020). Negligent noncompliance provides for "any actual damages sustained by the consumer as a result of the failure." 15 U.S.C. § 1681o(a)(1). "To prove a willful violation, a plaintiff must show not only that the defendant's interpretation was objectively unreasonable, but also that the defendant ran a risk of violating the statute that was substantially greater than the risk associated with a reading that was merely careless." Marino, 978 F.3d at 673 (citing Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007)). "That is, the defendant must have taken action involving 'an unjustifiably high risk of harm that is either known or not so obvious that it should be known.' " Taylor v. First Advantage Background Servs. Corp., 207 F. Supp. 3d 1095, 1101 (N.D. Cal. 2016) (quoting Bateman v. Am. Multi-Cinema, 623 F.3d 708, 711 n.1 (9th Cir. 2010)). "The statutory requirement of willfulness does not require proof of an intent to cause harm, but only an intent to fail to comply with the FCRA." Id. at 1110 (quoting Centuori v. Experian Info. Sols., Inc., 431 F. Supp. 2d 1002, 1011 (D. Ariz. 2006)). Furthermore, "[c]ourts in this circuit have found that '[w]illfulness under the FCRA is generally a question of fact for the jury.' " Id. (collecting cases) (quoting Edwards v. Toys "R" Us, 527 F. Supp. 2d 1197, 1210 (C.D. Cal. 2007)). As to a willful violation, a plaintiff may recover actual damages or statutory damages between $100 and $1000, as well as any appropriate punitive damages. 15 U.S.C. § 1681n(a).
The Court acknowledges that Ninth Circuit precedent "encourage[s] courts in this circuit to determine whether the defendant committed a violation of the FCA before turning to questions of negligence and willfulness." Marino, 978 F.3d at 674. However, the Ninth Circuit noted that "this is not an ironclad rule." Id. Neither party argues that the Court should defer consideration of Defendant PennyMac's willfulness. And in any event, the issue of whether a violation occurred in this case is intimately tied to the nature of both the reasonableness and willfulness issues—to which the Court finds there are triable issues of fact.
Here, Plaintiff only asserts his FCRA claim as a willful violation. FAC ¶ 44. Defendant PennyMac argues that "Plaintiff cannot demonstrate a violation of FCRA § 1681s-2(b), let alone PennyMac's willful violation." Doc. No. 62-1 at 9.
The evidence discussed above similarly applies to Plaintiff's willfulness allegation. The Court accordingly finds, in viewing the evidence in the light most favorable to Plaintiff, a jury could conclude both of Defendant PennyMac's investigations where it merely reviewed its own file in response to Plaintiff's disputes based on identity theft were in reckless disregard to its statutory duty—a willful violation of the statute. The Court cannot conclude on this record that Defendant PennyMac violations were not willful as a matter of law. Because there is a genuine issue of fact as to whether Defendant willfully violated the FCRA, summary judgment is not appropriate on this basis.
Accordingly, because there are triable issues of fact, the Court DENIES Defendant PennyMac's motion for summary judgment as to Plaintiff's FCRA willful violation claim as to both disputes.
B. CCRAA Claim
Defendant PennyMac asserts that Plaintiff's CCRAA claim for a willful violation fails. Doc. No. 62-1 at 9.
The CCRAA "provides that [a] person shall not furnish information on a specific transaction or experience to any consumer credit reporting agency if the person knows or should know the information is incomplete or inaccurate." Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 888 (9th Cir. 2010) (quoting Cal. Civ. Code § 1785.25(a)). The Ninth Circuit "operate[s] under the assumption that California courts would interpret the FCRA and CCRAA consistently." Id. at 890.
The Court notes that both parties agree that the CCRAA claim must be interpreted consistently with the FCRA. See Doc. No. 62-1 at 9-10; Doc. No. 64 at 15; Doc. No. 65 at 4. The Court agrees.
As discussed above, the evidence presented shows there is a triable issue of fact as to whether Defendant PennyMac's investigations in response to both the 2018 ACDV and 2020 ACDV were reasonable and amounted to a willful FCRA violation. Thus, the Court reaches the same conclusion as to the CCRAA willful violation claim. In viewing the evidence in the light most favorable to Plaintiff, there is a genuine issue of fact as to whether Defendant PennyMac knew or should have known the information in its file after receiving both the 2018 ACDV and 2020 ACDV was inaccurate. Accordingly, the Court DENIES Defendant PennyMac's motion for summary judgment as to the CCRAA claim for both investigations, based upon a willful allegation.
C. Rosenthal Act Claim
Defendant PennyMac contends that Plaintiff's Rosenthal Act Claim fails on the grounds that Plaintiff cannot show Defendant PennyMac's investigation was inadequate, Defendant PennyMac is not a "debt collector," and Defendant PennyMac did not engage in "debt collection." Doc. No. 62-1 at 10-11.
"The Rosenthal Act was enacted 'to prohibit debt collectors from engaging in unfair or deceptive acts or practices in the collection of consumer debts.' " Davidson v. Seterus, Inc., 21 Cal.App.5th 283, 230 Cal. Rptr. 3d 441, 447 (2018) (quoting Cal. Civ. Code § 1788.1(b)). "The Rosenthal Act is 'a remedial statute [that] should be interpreted broadly in order to effectuate its purpose.' " Davidson, 230 Cal. Rptr. 3d at 447 (quoting Komarova v. Nat'l Credit Acceptance, Inc., 175 Cal. App.4th 324, 95 Cal. Rptr. 3d 880, 892 (2009)); Bostwick v. SN Servicing Corp., No. 21-cv-02560-LB, 2021 WL 2515714, at *5 (N.D. Cal. June 18, 2021). The Rosenthal Act is California's "adopted state version of the FDCPA." Riggs v. Prober & Raphael, 681 F.3d 1097, 1100 (9th Cir. 2012) (citing Cal. Civ. Code § 1788 et seq.). "The Rosenthal Act mimics or incorporates by reference the FDCPA's requirements, including [§ 1692e], and makes available the FDCPA's remedies for violations." Id. (citing Cal. Civ. Code § 1788.17).
The Court notes that the parties do not dispute the fact that the Rosenthal Act claim at issue in this action is analyzed congruent to the FDCPA. See Doc. No. 62-1 at 10; Doc. No. 64 at 15-16.
FDCPA § 1692e provides that a "debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § 1692e. A violation occurs pursuant to this statute when a "debt collector" "use[s] . . . any false representation or deceptive means to collect or attempt to collect any debt or to obtain information concerning a consumer." Id. § 1692e(10). Additionally, a violation may occur when a "debt collector" "[c]ommunicat[e]s or threaten[s] to communicate to any person credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed." Id. § 1692e(8). Further, a "debt collector" may not make a false representation of "the character, amount, or legal status of any debt." Id. § 1692e(2)(A).
1. Investigations
First, Defendant PennyMac asserts that Plaintiff's "Rosenthal Act claim is premised on PennyMac's purportedly inadequate investigation of [P]laintiff's identity theft claims," and thus Plaintiff's Rosenthal Act claims "fails for the same reasons enumerated above." Doc. No. 62-1 at 10.
As the Court previously discussed, the evidence presented shows there is a triable issue of fact as to whether Defendant PennyMac's investigations were reasonable. Thus, the Court reaches the same conclusion on the Rosenthal Act claim. Summary judgment based on Defendant PennyMac's adequate investigations argument is not appropriate.
2. "Debt Collector" and "Debt Collection"
Next, Defendant PennyMac argues that it is not a "debt collector" subject to the FDCPA or the Rosenthal Act. Doc. No. 62-1 at 10. It also seeks summary judgment on the Rosenthal Act claim on the basis that it did not engage in "debt collection" under the statute. Id. at 11.
"The definition of 'debt collector' found in the state statute is broader than that contained in the FDCPA." Izenberg v. ETS Servs., LLC, 589 F. Supp. 2d 1193, 1199 (C.D. Cal. 2008); see Davidson, 230 Cal. Rptr. 3d at 455 ("The Rosenthal Act does not mirror the FDCPA, and clearly does not do so with respect to the definition of 'debt collector.' "). As a California Court of Appeal pointed out:
It is significant that although our Legislature adopted a number of the FDCPA's provisions, including, under section 1788.17, all of the substantive provisions applicable to debt collectors under the FDCPA, as well as the remedies for violations of those provisions, the Legislature did not incorporate into the Rosenthal Act 15 U.S.C. § 1692a of the federal act—i.e., the section that defines 'debt collector' for the purposes of the FDCPA.Davidson, 230 Cal. Rptr. 3d at 455. As such, the Court looks to the Rosenthal Act's definition in considering whether Defendant PennyMac is a "debt collector."
The Rosenthal Act defines "debt collector" as "any person who, in the ordinary course of business, regularly, on behalf of that person or others, engages in debt collection." Cal. Civ. Code § 1788.2(c). Further, the Act provides that "[t]he term includes any person who composes and sells, or offers to compose and sell, forms, letters, and other collection media used or intended to be used for debt collection." Id. The Rosenthal Act defines "debt collection" as "any act or practice in connection with the collection of consumer debts." Cal. Civ. Code § 1788.9(b). Under the Act,
a debt collector is a person who regularly engages in the act or practice of collecting money, property or their equivalent that is due or owing by a natural person as a result of a transaction between that person and another person, in which the natural person acquired property, services, or money on credit, primarily for personal, family, or household purposes.Davidson, 230 Cal. Rptr. 3d at 448.
Moreover, pursuant to the Rosenthal Act, "debt collection" is defined as "any act or practice in connection with the collection of consumer debts." Cal. Civ. Code § 1788.2(b). The Act defines "consumer debt" and "consumer credit" as "money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction." Id. § 1788.2(f). Under the Act, "[t]he term 'consumer debt' includes a mortgage debt." Id. "Consumer credit transaction" is defined under the Act as "a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from the other person primarily for personal, family, or household purposes." Id. § 1788.2(e); see also Davidson, 230 Cal. Rptr. 3d at 449 ("The obtaining of a mortgage involves a transaction in which a natural person acquires property by way of borrowing the funds used to obtain the property from which another person or entity without full immediate payment and with the promise to pay back those funds. It is readily apparent that persons who obtain mortgages very often do so in order to purchase a primary or even secondary residence, which may be considered to be a 'personal, family, or household purpose[ ].' " (omission in original) (quoting Cal. Civ. Code § 1788.2(e))). According to the Attorney General of California, " '[d]ue' generally means 'having reached the date at which payment is required' " and " '[o]wing' generally means 'due to be paid.' " 85 Ops. Cal. Atty. Gen. 215, 2002 WL 31440180, at *2 (Oct. 29, 2002) (quoting Webster's 3d New International Dictionary at 699, 1613 (1971)). And the "legislative purposes appear to be focused entirely upon debts that have become delinquent and subject to immediate collection activities." Id.
Here, Defendant PennyMac states somewhat summarily that it is not a "debt collector" and did not engage in "debt collection" subject to the Rosenthal Act. Doc. No. 62-1 at 10. However, Defendant's own evidence reveals a triable issue of fact on these points. The February 11, 2021 letter, which Plaintiff also points to, states:
This is an attempt by a debt collector to collect a debt and any information obtained will be used for that purpose.Pacheco Decl., Exh. 6 at 86; Lara Decl., Exh. 7.
A reasonable jury could conclude that Defendant PennyMac is a debt collector and did engage in debt collection when it sent Plaintiff this letter. Therefore, summary judgment as to Plaintiff's Rosenthal Act claim is not appropriate on these grounds. Accordingly, the Court DENIES Defendant PennyMac's motion as to the Rosenthal Act claim.
D. CITA Claim
Defendant PennyMac asserts that Plaintiff's CITA claim is time-barred and Plaintiff cannot establish Defendant PennyMac's investigation was diligent. Doc. No. 62-1 at 11-12.
1. Timeliness
First, Defendant PennyMac argues that Plaintiff's CITA claim is time-barred. Id. at 11.
Under CITA, "[a] person may bring an action against a claimant to establish that the person is a victim of identity theft in connection with the claimant's claim against that person." Cal. Civ. Code § 1798.93(a). A "victim of identity theft" can bring an action under CITA for civil penalties, injunctive relief, and damages against a "claimant." Id. § 1798.93(a)-(c). A CITA action must be "brought within four years of the date the person who alleges that he or she is a victim of identity theft knew or, in the exercise of reasonable diligence, should have known of the existence of facts which would give rise to the bringing of the action." Id. § 1798.96.
In considering a statute of limitations issue, the Ninth Circuit has provided the following:
In determining when an action has accrued under a discovery-based statute of limitations, "[t]he question of when [the alleged wrongdoing] was or should have been discovered is a question of fact. It may be decided as a matter of law only when uncontroverted evidence irrefutably demonstrates plaintiff discovered or should have discovered the fraudulent conduct." . . . "Where the cause of action was belatedly discovered, the issue whether the plaintiff exercised reasonable diligence is a question of fact."Nev. Power Co. v. Monsanto Co., 955 F.2d 1304, 1307-08 (9th Cir. 1992) (first quoting Mosesian v. Peat, Marwick, Mitchell & Co., 727 F.2d 873, 877 (9th Cir. 1984), cert denied, 469 U.S. 932, 105 S.Ct. 329, 83 L.Ed.2d 265 (1984); and then quoting Timmel v. Moss, 803 F.2d 519, 521 (9th Cir. 1986)); see also In re United Ins. Mgmt., Inc., 14 F.3d 1380, 1385-86 (9th Cir. 1994) ("The extent to which a plaintiff used reasonable diligence is tested by an objective standard. A district court may, therefore, grant a summary judgment motion if the uncontroverted evidence irrefutably demonstrates that a plaintiff discovered or should have discovered the fraud but failed to file a timely complaint." (quoting Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1417 (9th Cir. 1987))); Davis v. Birr, Wilson & Co., 839 F.2d 1369, 1370 (9th Cir. 1988).
Here, Defendant PennyMac asserts that a reasonably diligent person would have been on notice of identity theft well before 2016, which is four years prior to Plaintiff's filing of the present action in 2020. Doc. No. 62-1 at 12. Specifically, Defendant PennyMac contends that "it had been seventeen years since origination in his name, eleven years since BAC Home Loans filed a judicial foreclosure against him, eight years since BofA first reported the mortgage, and five years since PennyMac first reported." Id. Further, Defendant PennyMac proffers that "[o]n his tax preparer's advice, plaintiff obtained wage and income transcripts from an IRS office, which summarized his Form W-2's for Illinois employers, and receipt of California and Illinois government benefits, as early as December 2012." Id. at 12 (citing SUF Nos. 22-23). Defendant PennyMac urges the Court that "these events imputed knowledge of the allegedly fraudulent mortgage in his name" such that a "reasonably diligent person" would have been put on notice of identity theft. Doc. No. 65 at 7. In support of its argument that there is no genuine issue of fact as to Plaintiff's CITA claim timeliness, Defendant PennyMac puts forth the following evidence: responses to interrogatories, a copy of the promissory note from the 2003 refinancing, signature/name affidavit, a uniform residential loan application and other executed documents, HUD-1 settlement statement, copies of resident alien card and social security card, excerpts of Plaintiff's deposition, copies of the mortgage assignments, foreclosure complaint, and a letter from OneMain Financial dated March 21, 2019. See Vazquez Decl., Exhs. 3-7, 10-12; Pacheco Decl., Exhs. 8-10. Defendant PennyMac appears to assert that the evidence verifies the dates provided in the timeline discussed above, such that Plaintiff would have known of the alleged identity theft upon exercising reasonable diligence more than four years prior to the filing of this action.
Plaintiff testified that he first learned of the identity theft in early 2018 when his tax preparer suggested he verify his identity. Pacheco Decl., Exh. 10 at 44:13 to 46:1. Plaintiff also testified that he had been using the same tax preparer since around 2015, and she had only suggested Plaintiff go to the IRS in 2018. Id. at 132:12-22. Plaintiff further declares that he first received a copy of his credit report in 2018. Doc. No. 64 at 21 (citing Lara Decl. at 3). However, the police report Plaintiff gave states that he "only discovered the crime when [he] received a notice that [he was] being sued from one company for allegedly defaulting on a loan from several years ago," and that lawsuit was filed in 2019. Vazquez Decl., Exh. 14 at 97; see Pacheco Decl., Exh. 8.
Plaintiff further provides in his declaration that he has lived in San Diego since 1982, has never resided in Illinois nor purchased a home there, has no affiliation with Illinois, and does not know the co-borrowers. Lara Decl. at 2. Further, Plaintiff asserts that he had no reason to know about the identity theft earlier because "the Account originated in Illinois." Doc. No. 64 (citing Lara Decl. ¶ 7). Additionally, Plaintiff declares that he "had no idea that they PennyMac Account was opened in his name and received no communication or correspondence regarding these events at that time as all documentation was sent to the identity thief at the Illinois address." Id. (citing Lara Decl. at 3). And the evidence reveals that the mortgage and related documents are tied to the previously mortgaged Illinois address. See Vazquez Decl., Exhs. 1-3, 5.
Both Plaintiff's alleged dates of discovery, either in early 2018 or 2019, fall within the statute of limitations as the present action was filed in 2020—and this issue does not seem to be in dispute. As discussed above, Defendant PennyMac instead argues that Plaintiff should have learned about the identity theft well before 2016. Viewing the evidence in the light most favorable to the non-moving party, there is a genuine issue of material fact as to when the reasonable person with diligence would have learned of the existence of facts that gave rise to the present action. Accordingly, Defendant PennyMac is not entitled to summary judgment based on the statute of limitations.
2. Investigation
Second, Defendant PennyMac argues that Plaintiff "cannot establish his entitlement to a civil penalty under the CITA," specifically because Defendant PennyMac "diligently investigated" Plaintiff's notification of possible identity theft. Doc. No. 62-1 at 12. Defendant PennyMac generally asserts that Plaintiff cannot establish reasonable investigation "among other elements," but it does not elaborate on other elements to which it moves for summary judgment. Id. Specifically, it does not seem to attack whether Plaintiff is the victim of identity theft. Id. Thus, the Court only addresses the investigation issue because it is the only one Defendant PennyMac specifically raises.
The CITA provides that "[a] civil penalty, in addition to any other damages, of up to thirty thousand dollars ($30,000) if the victim establishes by clear and convincing evidence all of the following: . . . [t]hat the claimant failed to diligently investigate the victim's notification of a possible identity theft." Cal. Civ. Code § 1798.93(c)(6)(B).
As discussed above, the evidence presented shows there is a triable issue of fact as to whether Defendant PennyMac's investigations were reasonable. Thus, the Court reaches the same conclusion as to the CITA claim. In viewing the evidence in the light most favorable to the non-moving party, there is a genuine issue of fact as to whether Defendant PennyMac diligently investigated Plaintiff's notifications of possible identity theft. See Cutler ex rel. Jay v. Sallie Mae, Inc., No. EDCV-13-2142-MWF (DTBx), 2015 WL 1909482, *8 (C.D. Cal. Apr. 24, 2015).
Accordingly, the Court DENIES Defendant PennyMac's motion for summary judgment as to Plaintiff's CITA claim.
IV. CONCLUSION
For the foregoing reasons, the Court DENIES Defendant PennyMac's motion for summary judgment. As the claims must proceed to trial, the Court will issue a scheduling order setting forth all relevant pretrial deadlines and hearings in due course.
IT IS SO ORDERED.