Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-01548/USCOURTS-casd-3_12-cv-01548-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1692 Fair Debt Collection Act

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

BRIDGET BREIDENBACH,

Plaintiff,

v.

EXPERIAN et al.,

Defendants.

 

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Case No. 3:12-cv-1548-GPC-BLM

ORDER GRANTING

DEFENDANT PENNSYLVANIA

HIGHER EDUCATION

ASSISTANCE

AGENCY/AMERICAN

EDUCATION SERVICES’

MOTION TO DISMISS

(ECF NO. 30)

On July 3, 2012, Plaintiff filed a complaint, alleging various claims related to the

collection of an alleged student loan debt. On August 17, 2012, Plaintiff filed her

currently operative First Amended Complaint (“FAC”), asserting claims for (1)

violations of the Fair Debt Collection Practices Act (“FDCPA”), (2) violations of

California’s Rosenthal Fair Debt Collections Practices Act (“Rosenthal Act”), (3)

violations of the Fair Credit Reporting Act (“FCRA”), (4) violations of California’s

Consumer CreditReporting Agencies Act (“CCRAA”), (5) violations ofthe Telephone

Consumer Protection Act (“TCPA”), and (6) negligence per se. Since the filing of her

FAC, several defendants have been or will soon be dismissed. Remaining are

defendants Pennsylvania Higher Education Assistance Agency d/b/a American

Education Services(“AES”);WeltmanWeinberg & Reis Co., LPA(“WWR”);National

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Enterprise Systems, Inc. (“NES”); and MRS BPO, LLC d/b/a MRS Associates

(“MRS”). 

Currently before the Court is AES’s Motion to Dismiss, which has been fully

briefed. (ECF Nos. 30, 40, 45). The Court finds AES’s Motion to Dismiss suitable for

disposition without oral argument. See CivLR 7.1.d.1. After considering the parties’

submissions, and for the reasons that follow, the Court hereby GRANTS AES’s

Motion to Dismiss asto all of Plaintiff’s claims against AES. Plaintiff is granted leave

to amend all claims except the FDCPA claim.

FACTUAL ALLEGATIONS

Plaintiff alleges that, in March 2011, she discovered her credit history contained

a delinquency reported by AES in collections with WWR. Plaintiff alleges that, on

June 27, 2011, she sent letters to AES and WWR disputing the alleged debt and

demanding that the negative information be removed from her credit history. Plaintiff

alleges that, on June 28, 2011, Plaintiff spoke with a representative of AES who

confirmed Plaintiff’s account with AES had a zero balance and that Plaintiff no longer

had any open or delinquent accounts with AES. Plaintiff alleges she provided

information to TransUnion, Experian, and Equifax disputing the alleged debt and that,

on July 5, 2011, Plaintiff confirmed all three credit reporting agencies had removed the

alleged debt from her credit history. 

Plaintiff alleges that, in attempting to collect the alleged debt, WWR used false,

deceptive, and/or misleading representations and that WWR failed to respond to

Plaintiff’s request for validation of the alleged debt.

Plaintiff alleges that, later that year, on December 12, 2011, Plaintiff received

a letter fromNES stating it was also attempting to collect the same debt that WWR was

attempting to collect. Plaintiff alleges that, on January 5, 2012, she sent a letter to NES

disputing the alleged debt and explaining the ongoing dispute with AES and WWR. 

Plaintiff alleges she sent a follow-up letter to NES on January 17, 2012, requesting

validation of the alleged debt.

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Plaintiff alleges that, on February 11, 2012, Plaintiff discovered TransUnion was

again reporting the alleged AES debt. Plaintiff alleges that, on February 13, 2012, she

contacted all three credit reporting agencies by phone to again dispute the alleged debt.

Plaintiff alleges that, having received no response to her January 17, 2012

request for validation from NES, she sent another letter to NES requesting validation

on February 17, 2012. Plaintiff alleges that, in response, she received a letter from

NES stating NES had received the account information from National Colligate Trust,

but that NES did not provide validation or proof of the debt.

Plaintiff alleges that, in its efforts to collect the alleged debt, NES made several

calls to Plaintiff’s cell phone using an automatic telephone dialing system and/or an

artificial or prerecorded voice without Plaintiff’s consent.

Plaintiff alleges she again disputed the alleged debt and that, on March 22, 2012,

she received letters from TransUnion and Equifax confirming the alleged AES debt

was again listed as a zero balance and all derogatory remarks related to the alleged debt

were deleted from her TransUnion and Equifax reports. Plaintiff alleges that, on April

20, 2012, she received confirmation that the debt was also removed from her Experian

report.

Plaintiff alleges that, just a few a days later, on March 26, 2012, Plaintiff

received a letter from MRS stating it too was attempting to collect the same AES debt. 

Plaintiff alleges that, on April 2, 2012, she called MRS to dispute the debt and request

validation. Plaintiff alleges the MRS representative refused to give his name and

refused to provide validation, stating MRS did not own the loan but that MRS was

collecting the debt on behalf of AES. Plaintiff alleges MRS made a number of calls to

Plaintiff – at least one in which an MRS representative refused to identify himself and

then called Plaintiff a profane name and several other calls using an automated dialer

and/or an artificial or prerecorded voice without Plaintiff’s consent.

Plaintiff alleges that, on June 7, 2012, she discovered the AES debt was again

being reported on her credit reports, this time by MRS. This suit followed.

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DISCUSSION

I. Legal Standard

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the

sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). 

Dismissal is warranted under Rule12(b)(6) where the complaint lacks a cognizable

legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.

1984); see Neitzke v. Williams, 490 U.S. 319, 326 (1989) (“Rule12(b)(6) authorizes

a court to dismiss a claim on the basis of a dispositive issue of law.”). Alternatively,

a complaint may be dismissed where it presents a cognizable legal theory yet fails to

plead essential facts under that theory. Robertson, 749 F.2d at 534. While a plaintiff

need not give “detailed factual allegations,” a plaintiff must plead sufficient facts that,

if true, “raise a right to relief above the speculative level.” Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 545 (2007).

“To survive a motion to dismiss, a complaint must contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” 

Ashcroft v. Iqbal,129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 547). 

A claim is facially plausible when the factual allegations permit “the court to draw [a]

reasonable inference that the defendant is liable for the misconduct alleged.” Id. In

other words, “the non-conclusory ‘factual content,’ and reasonable inferencesfromthat

content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss

v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009). “Determining whether a

complaint states a plausible claim for relief will . . . be a context-specific task that

requires the reviewing court to draw on its judicial experience and common sense.” 

Iqbal, 129 S. Ct. at 1950.

In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the

truth of all factual allegations and must construe all inferences from them in the light

most favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th

Cir. 2002); Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). Legal

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conclusions, however, need not be taken as true merely because they are cast in the

form of factual allegations. Ileto v. Glock, Inc., 349 F.3d 1191, 1200 (9th Cir. 2003);

W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).

II. Analysis

A. FDCPA

AES argues Plaintiff’s FDCPA claim against AES fails because AES is not a

“debt collector” under the FDCPA and because AES cannot be held vicariously liable

for the acts of WWR, NES, or MRS.

In opposition, Plaintiff does not address AES’s argument that AES is not a “debt

collector” under the FDCPA. Instead, Plaintiff argues AES may be held vicariously

liable for employing debt collectors to collect a debt that is not owed. Plaintiff asserts

that, under general agency principles, a creditor such as AES is liable for the actions

of debt collectors like WWR, NES, and MRS if the creditor exercised control over the

debt collector’s activities. Plaintiff argues she has sufficiently alleged that AES

exercised such control.

In reply, AES asserts that Plaintiff “concedes that AES is not a ‘debt collector’

for FDCPA purposes.” AES then argues that Plaintiff has failed properly allege a claim

for vicarious liability because original creditors cannot be vicariously liable for a debt

collector’s violations of the FDCPA. AES asserts that, even if that were not the case,

Plaintiff has not alleged facts demonstrating that AES directed WWR, NES, or MRS

to collect the alleged debt. AES notes that none of Plaintiff’s citations to her FAC

actually support Plaintiff’s claim that AES controlled the actions of WWR, NES, or

MRS.

General principles of agency form the basis of vicarious liability under the

FDCPA. See Clark v. Capital Credit & Collection Serv., Inc., 460 F.3d 1162, 1173

(9th Cir. 2006). Thus, to be vicariously liable for another’s violation of the FDCPA,

the “principal” must exercise control over the conduct or activities of its “agent.” Id. 

Several circuit courts have held, however, that – because the FDCPA only imposes

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liability on debt collectors – vicarious liability may only be imposed if both the

principal and the agent are debt collector as defined by the FDCPA. See Police v. Nat’l

Tax Funding, L.P., 225 F.3d 379, 404 (3d Cir. 2000) (concluding a company may be

held vicariously liable for acts of agent because company and agent were debt

collectors); see also Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 108 (6th Cir.

1996) (declining to impose vicarious liability on non-debt collectors); see also Fox v.

Citicorp Credit Serv., Inc., 15 F.3d 1507 (9th Cir. 1994) (imposing vicarious liability

on company for acts of its attorney where company was also a debt collector); see also

Oei v. N. Star Capital Acquisitions, LLC, 486 F. Supp. 2d 1089, 1097 (C.D. Cal. 2006)

(“Vicariousliability under the [FDCPA] has similarly been restricted to principals who

themselves are statutory ‘debt collectors.’”).

Here, Plaintiff’s FDCPA claim against AES rests on a theory of vicarious

liability as it must given the rule that creditors are generally excluded from the

definition of “debt collector” under the FDCPA. See 15 U.S.C. § 1692a(6). Plaintiff,

however, does not allege that AES is itself a debt collector as required to impose

vicarious liability; thus, Plaintiff’s FDCPA claim against AES must be dismissed. 

Accordingly, because Plaintiff cannot allege that AES is a “debt collector,” AES’s

motion to dismiss Plaintiff’s FDCPA claim is GRANTED WITHOUT LEAVE TO

AMEND.

B. Rosenthal Act

AES argues that, while certain sections of the Rosenthal Act apply to original

creditors, Plaintiff has failed to plead facts sufficient to demonstrate AES attempted to

collect any debt and that AES cannot be held vicariously liable for the acts of WWR,

NES, or MRS.

In opposition, Plaintiff asserts she has alleged facts sufficient to demonstrate

AES is directly liable under the Rosenthal Act for “repeatedly directing multiple debt

collectors to collect on a debt AES knew was not owed.” Plaintiff further argues AES

is vicariously liable for violations of the Rosenthal Act for the same reasons AES is

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vicariously liable for violations of the FDCPA, i.e., for directing debt collectors to

collect on an amount not owed.

AES makes no argument in reply.

Unlike the FDCPA, the Rosenthal Act does not specifically exclude creditors

from the definition of a “debt collector.” See Cal. Civ. Code § 1788.2(c). A creditor,

however, must still fall within the definition of a “debt collector,” which the Rosenthal

Act defines as “any person who, in the ordinary course of business, regularly, on behalf

of himself or herself or others, engages in debt collection.” “Thus, unlike the FDCPA,

which creates a private right of action only against debt collectors, and not original

creditors (with limited exceptions), the [Rosenthal Act] creates a private right of action

against both debt collectors and original creditors.” Offril v. J.C. Penny Co., Inc., 2009

WL 69344, at *2 n.1 (N.D. Cal. Jan. 9, 2009).

Here, the Court finds Plaintiff has failed to sufficiently allege a Rosenthal Act

claim against AES. As a preliminary matter, Plaintiff fails to identify which provision

of the Rosenthal Act AES allegedly violated. Plaintiff pleads only that AES violated

sections 1788 through 1788.32 of the Rosenthal Act, which provisions comprise the

entire act. 

Regardless of the specific provision, however, Plaintiff has failed to allege facts

sufficient to permit the Court to draw the reasonable inference that AES was actually

engaged in debt collection or that it even directed WWR, NES, or MRS to collect a

debt. Plaintiff claims paragraphs 33, 34, and 48 of her FAC contain allegations

demonstrating that AES directed WWR, NES, and MRS to collect a debt not owed. 

None of those paragraphs, however, contain any such allegations. Thus, to the extent

Plaintiff relies on a theory of vicarious liability, Plaintiff has failed to sufficiently

allege that AES controlled the conduct or activities of WWR, NES, or MRS. 

Moreover, even if Plaintiff did sufficiently allege that AES directed WWR, NES, and

MRS to collect a debt not owed, it does not necessarily follow that NES had sufficient

control over the conduct and activities of WWR, NES, and MRS to establish the

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agency relationship required for vicarious liability. Plaintiff may, however, have

knowledge or information that would allow her to supplement her allegations to

overcome these deficiencies. Accordingly, AES’s motion to dismiss Plaintiff’s

Rosenthal Act claim is GRANTED WITH LEAVE TO AMEND.

C. FCRA

AES argues Plaintiff’s FCRA claim against AES fails because Plaintiff does not

state which provision of the FCRA that AES allegedly violated. AES further argues

“the only FCRA provisions that could arguably apply to Plaintiff’s allegations against

AES are contained in 15 U.S.C. § 1681s-2,” but that “no private right of action exists

for violations of Section 1681s-2(a).”

In opposition, Plaintiff does not address AES’s argument that no private right of

action exists for violations of section 1681s-2. Instead, Plaintiff argues she has

sufficiently alleged a claim under section 1681s-2(b). Plaintiff further argues AES is

vicariously liable under the FCRA for the same reasons it is vicariously liable under

the FDCPA and the Rosenthal Act.

In reply, AES asserts that Plaintiff “effectively concedes that there is no private

right of action under FCRA section 1681s-2(a).” AES further asserts that, while

Plaintiff claims to have stated a claim under section 1681s-2(b), the language Plaintiff

quotes comes from section 1681s-2(a).

AES correctly notes the language Plaintiff quotes comesfromsection 1681s-2(a)

– not section 1681s-2(b) as Plaintiff asserts. Section 1681s-2(a)(2)(B)states “A person

who . . . has furnished to a consumer reporting agency information that the person

determines is not complete or accurate, shall promptly notify the consumer reporting

agency of that determination . . . and shall not thereafter furnish to the agency any of

the information that remains not complete or accurate.” Plaintiff quotes this section in

her opposition brief.

Sections 1681n and 1681o create privates rights of action for violations of the

FCRA. Section 1681s-2(c) provides that sections 1681n and 1681o “do not apply to

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any violation of . . . subsection (a) of this section, including any regulations issued

thereunder.” In other words, there is no private right of action for violations of section

1681s-2(a). Instead, as provided in section 1681s-2(d), enforcement ofsection 1681s2(a) is left to federal and state officials. See Gorman v. Wolpoff & Abramson, LLP,

584 F.3d 1147, 1154 (9th Cir. 2009). Private rights of action may, however, be

maintained under section 1681s-2(b). Gorman, 584 F.3d at 1154.

Here, Plaintiff’s FCRA claim against AES failsfor three reasons. First, Plaintiff

quotes and therefore relies on section 1681s-2(a), which may only be enforced by

federal and state officials. 

Second, assuming Plaintiff is asserting a claim under section 1681s-2(b),

Plaintiff fails to sufficiently allege a claim under that section. Plaintiff’s FCRA claim

rests on her allegation that AES “repeatedly re-reported” the alleged debt. Section

1681s-2(b), however, only requires a “furnisher of information” to investigate any

disputes and correct any inaccuracies. It does not contain the same language ofsection

1681s-2(a) prohibiting a person from re-reporting inaccurate or incomplete

information. Plaintiff alleges AES investigated and removed the inaccurate

information, (ECF No. 4, FAC ¶ 24), which is what section 1681s-2(b) requires. Thus,

Plaintiff may not now amend her complaint to state a claim for direct liability against

AES for violation of section 1681s-2(a) without contradicting her current position.

Lastly, to the extent Plaintiff’s FCRA claim against AES rests on a theory of

vicarious liability, Plaintiff has failed to sufficiently allege the required agency

relationship as discussed above. Plaintiff may, however, have knowledge or

information that would allow her to supplement her allegations to overcome this

deficiency. Accordingly, AES’s motion to dismiss Plaintiff’s FCRA claim is

GRANTED WITH LEAVE TO AMEND.

D. CCRAA

AES argues Plaintiff has failed to state facts sufficient to state a claim under the

CCRAA. AES argues Plaintiff has failed to allege any facts demonstrating AES knew

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or should have known that any information it reported to the credit reporting agencies

was incomplete or inaccurate. AES asserts that the “only allegations that address

AES’s reporting of credit information to credit bureaus concede that the information

was deleted as soon as Plaintiff disputed it.”

In opposition, Plaintiff argues she has alleged facts sufficient to demonstrate that

AES knew or should have known it was reporting incomplete and/or inaccurate

information. Plaintiff further argues AES is vicariously liable under the CCRAA for

the same reason AES is liable under the FDCPA, Rosenthal Act, and FCRA.

In reply, AES reiterates that Plaintiff has pled no facts demonstrating that AES

knew or should have known that any information it reported was incomplete or

inaccurate. AES further argues that Plaintiff has failed to allege any facts to support

a theory of vicarious liability.

The CCRAA provides: “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.” Cal. Civ. Code §

1785.25(a).

The Court agrees with AES that Plaintiff has failed to sufficiently allege that

AES knew or should have known that any information it reported was incomplete

and/or inaccurate. To the contrary, as noted above, Plaintiff alleges that AES took

steps to remove the inaccurate information fromPlaintiff’s credit reports once Plaintiff

notified AES of its existence. Thus, Plaintiff has failed to state a claim against AES

for direct liability under the CCRAA and, as discussed above, has failed to sufficiently

allege facts in support of her theory of vicarious liability. Plaintiff may, however, have

knowledge or information that would allow her to supplement her allegations to

overcome these deficiencies. Accordingly, AES’s motion to dismiss Plaintiff’s

CCRAA claim is GRANTED WITH LEAVE TO AMEND.

E. TCPA

AES argues Plaintiff’s claims against AES for willful and negligent violation of

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the TCPA should be dismissed because Plaintiff alleges no facts demonstrating AES

engaged in any conduct that would violate that TCPA or that AES should be

vicariously liable for any such violations.

In opposition, Plaintiff asserts AES may be held vicariously liable for violations

of the TCPA and that Plaintiff has alleged facts sufficient to demonstrate AES should

be held vicariously liable for such violations.

In reply, AES argues Plaintiff has failed to allege any facts to support a theory

of vicarious liability.

While Plaintiff may proceed on a theory of vicarious liability with regard to her

TCPA claims, see In re Jiffy Lube Int’l, Inc. v. Text Spam Litig., 847 F. Supp. 2d 1253,

1258 (S.D. Cal. 2012), Plaintiff has – as set forth above – failed to sufficiently allege

that AES is vicariously liable for the acts of WWR, NES, or MRS. Plaintiff may,

however, have knowledge or information that would allow her to supplement her

allegations to overcome this deficiency. Accordingly, AES’s motion to dismiss

Plaintiff’s TCPA claims is GRANTED WITH LEAVE TO AMEND.

F. Negligence Per Se

AES argues Plaintiff’s negligence per se claim fails because “negligence per se

is not a separate cause of action, but creates an evidentiary presumption that affects the

standard of care in a cause of action for negligence.” AES argues that, assuming

Plaintiff’s cause of action is for common law negligence, the FCRA would bar the

cause of action. AES asserts that section 1681h(e) of the FCRA bars common law

negligence actions unless a plaintiff “demonstrates that information was ‘furnished

with malice or willful intent to injure’ the plaintiff,”and that Plaintiff has failed to

allege facts sufficient to demonstrate such intent.

In opposition, Plaintiff asserts her claimfor “negligence per se” is a common law

claim for negligence with negligence per se as its basis. Plaintiff, however, does not

address AES’s argument that the FCRA barssuch a claim. Instead, Plaintiff assertsshe

has sufficiently alleged a negligence claim.

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In reply, AES notes that Plaintiff failed to address the FCRA bar to negligence

claims. AES reiterates that Plaintiff has failed to allege facts demonstrating it acted

with the intent required to overcome the FCRA bar.

Section 1681h(e) of the FRCA provides:

Except as provided in sections 1681n and 1681o of thistitle, no consumer

may bring any action or proceeding in the nature of defamation, invasion

of privacy, or negligence with respect to the reporting of information

against any consumer reporting agency, any user of information, or any

person who furnishes information to a consumer reporting agency, based

on information disclosed pursuant to section 1681g, 1681h, or 1681m of

thistitle, or based on information disclosed by a user of a consumer report

to or for a consumer against whom the user has taken adverse action,

based in whole or in part on the report except as to false information

furnished with malice or willful intent to injure such consumer.

15 U.S.C. § 1681h(e). Section 1681t(b)(1)(F) provides that “No requirement or

prohibition may be imposed under the laws of any State . . . with respect to any subject

matter regulated under . . . section 1681s-2 of this title, relating to the responsibilities

of persons who furnish information to consumer reporting agencies.” 

Considering sections 1681h and 1681t together, this Court agrees with the

district courts which have held that, to the extent a plaintiff’s state law claims implicate

the responsibilities of persons who furnish information to consumer reporting agencies,

such claims are preempted by section 1681t(b)(1)(F) – regardless of whether the

plaintiff pleads malice or willful intent to injure. See Miller v. Bank of America, Nat’l

Ass’n, 858 F. Supp. 2d 1118, 1125-27 (S.D. Cal. 2012); El-Aheidab v. Citibank (South

Dakota), N.A., 2012 WL 506473 (N.D. Cal. Feb. 15, 2012). Thus, Plaintiff’s

negligence claim must be dismissed with prejudice to the extent Plaintiff asserts AES

negligently reported negative credit information.

Plaintiff also alleges AES was negligent in failing to refrain from unlawful debt

collection as required by the FDCPA and the Rosenthal Act and in failing to refrain

from making calls to Plaintiff’s cell phone using an auto-dialer without Plaintiff’s

consent as required by the TCPA. As set forth above, however, Plaintiff has failed to

adequately allege that AES was engaged in debt collection or that AES should be

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vicariously liable for the acts of WWR, NES, or MRS. Plaintiff may, however, have

knowledge or information that would allow her to supplement her allegations to

overcome this deficiency. Accordingly, AES’s motion to dismiss Plaintiff’s negligence

claim is GRANTED WITH LEAVE TO AMEND.

CONCLUSION

After considering the parties’ submissions, and for the foregoing reasons, IT IS

HEREBY ORDERED that:

1. AES’s Motion to Dismiss is GRANTED;

2. All of Plaintiff’s claims against AES are DISMISSED;

3. Plaintiff is GRANTED LEAVE TO AMEND all claims except her

FDCPA claim and may therefore file an amended complaint on or before

March 29, 2013.

DATED: March 13, 2013

HON. GONZALO P. CURIEL

United States District Judge

13 3:12-cv-1548-GPC-BLM

Case 3:12-cv-01548-GPC-BLM Document 61 Filed 03/13/13 Page 13 of 13