UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

JAMES LOSSIA, JR. and

ALEXANDRA PLAPCIANU,

individually and on behalf of

others similarly situated, 

Plaintiffs,

Case No. 15-12540

vs.

HON. GEORGE CARAM STEEH

FLAGSTAR BANCORP, INC.,

a/k/a FLAGSTAR BANK,

Defendant.

____________________________/

ORDER GRANTING DEFENDANT’S MOTION

TO DISMISS FEDERAL CLAIM WITHOUT PREJUDICE [DOC. 5]

Plaintiffs James Lossia Jr. and Alexandra Plapcianu filed this proposed class

action lawsuit against Flagstar Bank alleging five state law claims and one federal claim. 

The federal claim is brought under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et

seq., and alleges that “Flagstar bank frequently furnishes inaccurate information to

consumer reporting agencies by reporting that customers did not have sufficient funds

in their checking accounts when the customers did in fact have sufficient funds.” 

Complaint ¶ 126. The matter is before the court on defendant’s motion to dismiss

plaintiffs’ complaint. Oral argument was held on October 21, 2015. For the reasons

stated below, defendant’s motion to dismiss the federal claim is GRANTED WITHOUT

PREJUDICE.

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FACTUAL BACKGROUND

In March 2015, plaintiffs filed a state court lawsuit in small claims court alleging

that Flagstar Bank “deliberately manipulated debits” in plaintiffs’ checking account. 

Plaintiffs dismissed their state court lawsuit and filed the present six-count class action

lawsuit in federal court on July 17, 2015. The only federal law claim alleges a violation

of the Fair Credit Reporting Act (FCRA), specifically 15 U.S.C. § 1681s-2. The gist of

the FCRA claim is that Flagstar Bank furnished false information to consumer reporting

agencies as a result of insufficient fund (“NSF”) fees assessed by Flagstar. Plaintiffs

allege that Flagstar knew this information was false, and “failed to correct and/or update

the false information provided to consumer reporting agencies in violation of 15 U.S.C. §

1681s-2.” 

The five state law claims - breach of contract and breach of the covenant of good

faith and fair dealing, unconscionability, conversion, unjust enrichment and violations of

Michigan Consumer Protection Laws - focus on the manipulation and re-ordering of

electronic check transactions. Defendant refers to another class action lawsuit, filed by

different plaintiffs, pending in Oakland County Circuit Court1

 which focuses on Flagstar

Bank’s alleged manipulation of customers’ account balances when engaged in point of

sale (POS) transactions using debit cards or ATM cards. Defendant argues that both

lawsuits cover the same subject matter - namely Flagstar’s overdraft fees - so the

plaintiffs’ federal case should be dismissed and should be brought as part of the similar

action pending in state court.

1

The OCCC case is Charlene Faris v. Flagstar Bank, Case No. 15-145287-CZ, filed

January 30, 2015.

2

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ANALYSIS

I. Dismissal Standard

Rule 12(b)(6) allows the Court to make an assessment as to whether the plaintiff

has stated a claim upon which relief may be granted. Under the Supreme Court’s

articulation of the Rule 12(b)(6) standard in Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 554-56 (2007), the Court must construe the complaint in favor of the plaintiff,

accept the allegations of the complaint as true, and determine whether plaintiff’s factual

allegations present plausible claims. “’[N]aked assertion[s]’ devoid of ‘further factual

enhancement’” are insufficient to “state a claim to relief that is plausible on its face”.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557, 570). 

To survive a Rule 12(b)(6) motion to dismiss, plaintiff’s pleading for relief must provide

“more than labels and conclusions, and a formulaic recitation of the elements of a cause

of action will not do.” D’Ambrosio v. Marino, 747 F.3d 378, 383 (6th Cir. 2014) (quoting

Twombly, 550 U.S. at 555) (other citations omitted). Even though the complaint need

not contain “detailed” factual allegations, its “factual allegations must be enough to raise

a right to relief above the speculative level on the assumption that all the allegations in

the complaint are true.” New Albany Tractor, Inc. v. Louisville Tractor, Inc., 650 F.3d

1046, 1051 (6th Cir. 2011) (citing Twombly, 550 U.S. at 555). 

II. Fair Credit Reporting Act

The Fair Credit Reporting Act exists “to ensure fair and accurate credit reporting,

promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins.

Co. v. Burr, 551 U.S. 47, 52 (2007). In order to prevent furnishers of information from

providing inaccurate consumer-credit information, 15 U.S.C. §1681s-2 creates two

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obligations. First, a furnisher has a duty to provide accurate information to consumer

reporting agencies. §1681s-2(a). Second, a furnisher must conduct investigations and

promptly report and correct inaccurate information in response to consumer disputes,

but only when it receives notice from a consumer reporting agency about a particular

dispute. §1681s-2(b); 1681i(a)(2). 

A consumer does not have a private right of action to enforce a furnisher’s duties

under §1681s-2(a). §1681s-2(d); see also Yaldu v. Bank of Am. Corp., 700 F.Supp.2d

832, 842 (E.D. Mich. 2010)(no private right of action exists under subsection (a)). A

consumer plaintiff’s right to sue furnishers extends only to those obligations under

§1681s-2(b), i.e., the furnisher’s duty to make a reasonable inquiry into an alleged

dispute after receiving notice of the dispute from a consumer reporting agency. See

Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611, 615-16 (6th Cir. 2012). Defendant

alleges that plaintiffs’ FCRA claim must nevertheless be dismissed because plaintiffs

have failed to allege that Flagstar received notice of the dispute from a consumer

reporting agency. 

Defendant is correct that plaintiffs’ complaint does not assert that a credit

reporting agency notified Flagstar of a dispute. In their response to the motion to

dismiss, plaintiffs attempt to add additional facts. Specifically, plaintiff Lossia contacted

Chexsystems, a credit reporting agency, on July 16, 2015, by telephone and in writing,

disputing the information in the credit report and asking for an investigation. In support

of this assertion, plaintiffs attach Lossia’s Affidavit. Lossia acknowledges he never

received a response from Chexxystems, and made a second written dispute on

September 17, 2015. 

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The district court recognizes that whether statutory notice was actually given by a

credit reporting agency is generally outside the plaintiff’s knowledge at the pleading

stage. Khalil v. Transunion, 2008 WL 2782912, *8 (E.D. Mich. 2008). “The FCRA does

not require a CRA to tell a consumer when it notifies a furnisher of information about the

consumer’s dispute. As a result, a consumer may not, at the time of filing a complaint,

be in a position to allege that notification.” Id. (quoting Lang v. TCF Nat. Bank, 249 Fed.

Appx. 464, 466 (7th Cir. 2007). Courts have therefore permitted plaintiffs to amend their

complaints with information learned during discovery. See id.; Hawes v. Bank of

America, 2013 WL 4053143 (E.D. Mich. 2013) (additional evidence procured during

discovery indicated that defendant initiated a reinvestigation at the request of the credit

reporting agencies; court therefore permitted amendment of complaint). 

The court ordered defendant to provide basic initial disclosures within fourteen

days of the hearing. Based on the information provided, plaintiffs may chose to file an

amended complaint on or before November 23, 2015, stating a claim under the FCRA,

in compliance with Rule 12(b)(6) pleading standards. 

CONCLUSION

For the reasons stated, plaintiffs’ Fair Credit Reporting Act claim is dismissed

without prejudice. Plaintiff may file an amended complaint on or before November 23,

2015.

 

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Dated: November 4, 2015

S/George Caram Steeh 

GEORGE CARAM STEEH

UNITED STATES DISTRICT JUDGE

CERTIFICATE OF SERVICE

Copies of this Order were served upon attorneys of record on

November 4, 2015, by electronic and/or ordinary mail.

S/Marcia Beauchemin

Deputy Clerk

 

 

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