United States District Court, D. Maryland, Southern Division
J. HAZEL UNITED STATES DISTRICT JUDGE.
proposed Second Amended Complaint, Plaintiff Eric Stoer
alleges negligent and willful violations of the Fair Credit
Reporting Act (“FRCA”), 15 U.S.C. §§
1681 et seq., against Defendants VW Credit, Inc. and
Volkswagen Group of America, Inc. ECF No. 19-1. Presently
pending before the Court is Plaintiff's Motion for Leave
to File Second Amended Complaint. ECF No. 19. No hearing is
necessary. See Loc. R. 105.6 (D. Md. 2016). For the
following reasons, Plaintiff's Motion for Leave to File
Second Amended Complaint is granted.
his daughter purchase a car in 2013, Plaintiff entered a
financing agreement with Defendants. ECF No. 19-1 ¶ 1.
Plaintiff made timely payments from 2013 to December 2016.
Id. Plaintiff had an outstanding loan balance of
$14, 386.69 in December 2016 when Defendants contacted him
with an offer to buy back the vehicle for $30,
016.73. Id. The buy-back agreement would
have satisfied the remainder of the loan, including the
December payment, and put an additional $15, 630.04 in
Plaintiff's pocket. Id. The parties planned to
close on the buy-back in December, but Defendants
“delayed the settlement closing from December to
February.” Id. In the interim, Plaintiff
continued to submit monthly loan payments. Id.
January 2017, Plaintiff sought to refinance his second Home
Equity Line of Credit with Bank of America. Id.
During this process, Bank of America notified him that his
credit rating had dropped from 820 to 705 because Defendants
had reported that Plaintiff had missed loan payments.
Id. As a result, Bank of America declined to
refinance Plaintiff's loan. Id. ¶ 3.
January 1, 2017, Defendants falsely reported that Plaintiff
had missed his December loan payment, even though he had made
the payment “with a combination of a Defendants Gift
Card and a personal check.” Id. ¶ 20.
Plaintiff sent letters to Defendants informing them of their
error on January 17 and 26, 2017; Defendants did not correct
the error. Id. On January 13, 2017, Plaintiff's
January payment was due, which he paid in full. Id.
¶ 21. On January 27, 2017, however, Defendants notified
Plaintiff that his payment had not been received and placed
another negative report with the credit agencies.
Id. Again, Plaintiff wrote a letter to Defendants
notifying them of their error and included a copy of the
cashed check he had sent to Defendants; Defendants again
failed to correct the error. Id. Plaintiff
subsequently spoke with a number of Defendants'
representatives, none of whom were able to rectify the error.
Id. ¶¶ 27, 28, 35.
also filed complaints with various credit reporting agencies
(CRAs), but VW refused to acknowledge its error to the
agencies. Id. ¶¶ 27, 32. For example, on
March 5, 2017, Plaintiff filed an electronic complaint with
TransUnion to dispute the misinformation appearing on his
credit report. Id. ¶ 29. TransUnion then
notified Defendants of the complaint, but Defendants failed
to investigate. Id. ¶¶ 29-30. Plaintiff
also filed a complaint with Credit Karma, but Defendants did
not investigate the complaint and refused to acknowledge
their error to the agency. Id. ¶¶ 33-33.
initiated this action against Defendants on October 31, 2017.
ECF No. 1. On January 2, 2018, Plaintiff filed his First
Amended Complaint, ECF No. 11, alleging willful and/or
negligent violations of the Fair Credit Reporting Act
(“FRCA”), 15 U.S.C. §§ 1681 et
seq. (Count I) and state-law defamation (Count II).
Defendants filed a partial Motion to Dismiss on January 16,
2018, arguing that Plaintiff's defamation claim was
preempted by the FCRA. ECF No. 12. Defendants did not move to
dismiss Plaintiff's FCRA claim, noting that they intended
to answer that claim once the Court ruled on the partial
Motion to Dismiss. ECF No. 12-1 at 1 n. 2. The Court granted
Defendants' partial Motion to Dismiss, ECF No. 16, and
before Defendants filed an Answer to Plaintiff's
remaining FCRA claim, Plaintiff requested leave to file a
Second Amended Complaint, ECF No. 19. In substance, the
Second Amended Complaint merely supplements Plaintiff's
previous allegation that Defendants willfully and/or
negligently violated the FCRA through failures to reasonably
investigate Plaintiff's disputes to CRAs and inaccurate
reporting; breaking the allegations into separate counts. ECF
No. 19-2. Defendants opposed Plaintiff's Motion for
Leave, ECF No. 21, despite not having previously moved to
dismiss Plaintiff's FCRA allegations.
stage of the litigation, the parties may amend their
pleadings “only with the opposing party's written
consent or the court's leave.” Fed.R.Civ.P.
15(a)(2). Courts are to “freely give leave when justice
so requires, ” id., “unless the
amendment would be prejudicial to the opposing party, there
has been bad faith on the part of the moving party, or the
amendment would have been futile.” Steinburg v.
Chesterfield Cnty. Planning Comm'n, 527 F.3d 377,
390 (4th Cir. 2008).
Court first considers whether Defendants will be prejudiced
by Plaintiff's Second Amended Complaint. Plaintiff
requested leave to amend before Defendants even filed
responsive pleadings to Plaintiff's § 1682s-2 FCRA
allegations. Defendants now claim that Plaintiff's FCRA
allegations are “insufficiently pled” and that
Defendants will suffer prejudice by being “forced to
incur additional fees and costs preparing yet another motion
to dismiss.” ECF No. 21 at 3. This argument fails,
however, because Defendants chose not to move to dismiss
Plaintiff's FCRA allegations when they were pled in less
detail and with fewer specifics in Plaintiff's Amended
Complaint. ECF No. 12-1 at 1 n. 2. Plaintiff's First
Amended Complaint alleged that Defendants willfully and/or
negligently violated the FCRA by failing to investigate
Plaintiff's complaints after receiving notice of those
complaints from various CRAs and by reporting inaccurate
information to the CRAs after receiving dispute notices. ECF
No. 11 ¶¶ 37-42. Plaintiff's Second Amended
Complaint merely breaks these allegations into separate
discussions of Defendants' liability for willful and
negligent noncompliance and specifically cites to
§1681s-2(b) but does not genuinely add causes of action
that stray beyond the factual boundaries of Plaintiff's
prior allegations. The FCRA contains two general liability
provisions: 15 U.S.C. §§ 1681o & 1681n. Section
1681o holds “any person who is negligent in failing to
comply with any requirement imposed under this subchapter
with respect to any consumer” liable for that
negligence, and section 1681n establishes liability for any
person who willfully fails to comply with the FCRA. While
other FCRA provisions contain details of the ways that CRAs
and furnishers must comply with the act, sections 1681o and
1681n establish liability (i.e. causes of action). Thus,
Plaintiff's “three new causes of action” do
not expand the claim or increase the burden on Defendants.
Defendants now believe that Plaintiff's more detailed
§1681s-2 allegations are insufficient to state an FCRA
violation for willful or negligent failures to investigate,
then the FCRA allegations in Plaintiff's Amended
Complaint were certainly insufficient. Thus, rather than
suffering prejudice, Defendants have been granted a second
bite at the motion-to-dismiss apple that they apparently
mistakenly failed to take advantage of previously. If
anything, Plaintiff's more detailed allegations will make
it easier for Defendants to defend against Plaintiff's
suit. In sum, Defendants will not suffer prejudice if the
Court grants Plaintiff's Motion for Leave to Amend.
the Court must address whether Plaintiff moved to amend in
bad faith. Given that Plaintiff requested leave to amend
before Defendants even answered Plaintiff's FCRA
allegations and that the Second Amended Complaint only
supplements Plaintiff's previous FCRA allegations, the
Court does not credit Defendants' protestations that
Plaintiff acted in bad faith. As discussed, the First Amended
Complaint includes an allegation that Defendants willfully
and/or negligently violated the FCRA by failing to
investigate complaints forwarded to them by CRAs and by
reporting inaccurate information to the CRAs after receiving
disputes. ECF No. 11 ¶¶ 37-45. Plaintiff also
included allegations about his damages. Id. ¶
24. These same allegations are repeated in more detail in
Plaintiff's Second Amended Complaint and separated into
different counts. Thus, the Court is not convinced that
Plaintiff moved to amend in bad faith.
the Court rejects Defendants' argument that
Plaintiff's amendment would be futile. “Determining
whether amendment would be futile does not involve ‘an
evaluation of the underlying merits of the case.'”
Wonasue v. Univ. of Maryland Alumni Ass'n, 295
F.R.D. 104, 107 (D. Md. 2013) (internal citation omitted).
Rather, “the merits of the litigation” are
relevant to a court's ruling on a motion for leave to
amend only if “a proposed amendment may clearly be seen
to be futile.” Davis v. Piper Aircraft Corp.,
615 F.2d 606, 613 (4th Cir.1980). Thus, “[l]eave to
amend . . . should only be ...