Judge Theresa M. Traber, Case Number: 22STCV07538, Date: 2023-12-04 Tentative Ruling

This is an action for violation of the Consumer Credit Reporting Agencies Act. Plaintiff alleges that Defendants reported false and derogatory information on his consumer credit report. Plaintiff claims that the inaccurate information resulted from the theft of his identity and that Defendants failed to investigate or correct their reporting after Plaintiff gave notice of the theft.

Defendant’s Demurrer to the First Amended Complaint is SUSTAINED with leave to amend only with respect to the allegations pertaining to Civil Code section 1785.25(a), and otherwise OVERRULED.

A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, 147 Cal.App.4th at p. 747.) The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; see also Shields v. County of San Diego (1984) 155 Cal.App.3d 103, 133 [stating, “[o]n demurrer, pleadings are read liberally and allegations contained therein are assumed to be true”].) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

Before filing a demurrer, the demurring party shall meet and confer in person or by telephone with the party who has filed the pleading subject to the demurrer and file a declaration detailing their meet and confer efforts. (Code Civ. Proc., § 430.41(a).) However, an insufficient meet and confer process is not grounds to overrule or sustain a demurrer. (Code Civ. Proc., § 430.41(a)(4).)

The Declaration of Christopher Fredrich in support of the motion states that the parties met and conferred by email on June 9 and 28, 2023, and by telephone on June 19 and 28, 2023, but were not successful in resolving this dispute. (Declaration of Christopher R. Fredrich ISO Demurrer ¶¶ 2-3.) Defendant has therefore satisfied its statutory meet and confer obligation.

The First Amended Complaint asserts a single cause of action against both Defendants for violation of the California Consumer Credit Reporting Accountability Act. Although the pleadings do not specify which portions of the Act are asserted against each Defendant, closer examination reveals two plausible theories of liability against Defendant JPMorgan Chase: (1) violation of Civil Code section 1785.25(a), and (2) violation of Civil Code section 1785.20.3. (See FAC ¶¶ 37, 44.)[1]

Defendant first argues that Plaintiff has failed to plead sufficient facts to state a cause of action for violation of Civil Code section 1785.25(a). This subdivision states 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.” (Civ. Code § 1785.25(a).) According to Defendant, the First Amended Complaint offers no factual allegations to support this claim, only conclusory statements that inaccurate information was furnished to Equifax.

A review of the pleadings confirms Defendant’s contentions. Plaintiff alleges that he discovered on December 22, 2022 that his consumer credit reports contained incorrect information and that he had been the victim of identity theft. (FAC ¶¶ 18-19, 21.) Upon discovering the theft, Plaintiff alleges that he sent dispute letters to both Defendants informing them of these facts, but that Defendants did nothing. (¶ 13.) However, the First Amended Complaint is devoid of specifics on what information was provided, at what time the information was furnished, and the nature of the inaccuracies. Even under the favorable construction of the pleadings that is required on demurrer, more detail is required to state a claim under this statute.

Defendant also argues that Plaintiff has failed to plead sufficient facts to state a cause of action for violation of Civil Code section 1785.20.3. This section provides:

Any person who uses a consumer credit report in connection with the approval of credit based on an application for an extension of credit, and who discovers that the consumer's first and last name, address, or social security number, on the credit application does not match, within a reasonable degree of certainty, the consumer's first and last name, address or addresses, or social security number listed, if any, on the consumer credit report, shall take reasonable steps to verify the accuracy of the consumer's first and last name, address, or social security number provided on the application to confirm that the extension of credit is not the result of identity theft, as defined in Section 1798.92.

Defendant contends that this section is inapplicable to Plaintiff’s claims because Plaintiff does not contend that he was ever approved for a line of credit. (See FAC ¶ 1.) In so arguing, Defendant misconstrues Plaintiff’s contentions. The plain language of section 1785.20.3 requires a creditor who extends a line of credit based on a consumer credit report to ensure that the information on the application matches that credit report, and, if a discrepancy arises, to verify that the application was not using a stolen identity. Construing the allegations in the light most favorable to the non-moving party, Plaintiff alleges that Defendant approved a line of credit to a third party using Plaintiff’s stolen identity and failed to conduct the verification required by section 1785.20.3. (See FAC ¶ 17.) That Plaintiff was never approved for a line of credit because he is not a customer of Chase Bank is irrelevant. Defendant has therefore failed to demonstrate that the First Amended Complaint is insufficient with respect to this theory of the case.

Accordingly, Defendant’s Demurrer to the First Amended Complaint is SUSTAINED only with respect to the allegations pertaining to Civil Code section 1785.25(a) and otherwise OVERRULED.

When a demurrer is sustained, the Court determines whether there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318). When a plaintiff “has pleaded the general set of facts upon which his cause of action is based,” the court should give the plaintiff an opportunity to amend his complaint, since plaintiff should not “be deprived of his right to maintain his action on the ground that his pleadings were defective for lack of particulars.” (Reed v. Norman (1957) 152 Cal.App.2d 892, 900.) Accordingly, California law imposes the burden on the plaintiffs to demonstrate the manner in which they can amend their pleadings to state their claims against a defendant. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) “Denial of leave to amend constitutes an abuse of discretion unless the complaint shows on its face it is incapable of amendment. [Citation.] Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given." (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.)

Here, Plaintiff has not demonstrated how the First Amended Complaint might be revised to cure the defects described herein. However, as these defects are purely the result of a lack of detail in the allegations, the manner in which the pleadings might be cured is self-evident. The Court will therefore exercise its discretion to grant Plaintiff leave to amend.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.

[1] Although the First Amended Complaint also identifies sections 1785.15 and 1785.16 as bases for the single cause of action, these allegations on their face pertain only to a credit reporting agency and therefore are not relevant to the moving Defendant. (See FAC ¶¶ 47-51.)