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Butt v. FD Holdings, LLC

United States District Court, E.D. Michigan, Southern Division

June 6, 2019

MUHAMMAD M. BUTT, Plaintiff,
v.
FD HOLDINGS, LLC d/b/a, FACTUAL DATA, KROLL FACTUAL DATA, INC., and CBCINNOVIS, INC., Defendants.

          Mona K. Majzoub, United States Magistrate Judge

          OPINION AND ORDER GRANTING DEFENDANT FD HOLDINGS, LLC d/b/a FACTUAL DATA'S MOTION TO DISMISS THE “AMENDED” COMPLAINT (ECF #15)

          PAUL D. BORMAN, UNITED STATES DISTRICT JUDGE

         I. BACKGROUND

         Before the Court is Defendant FD Holdings, LLC d/b/a Factual Data's (“FD Holdings”) Motion to Dismiss Plaintiff Muhammad M. Butt's Amended Complaint (ECF #5) pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF #15.)

         On November 21, 2018, Plaintiff initiated this lawsuit by filing a one-count Class Action Complaint against Defendant Kroll Factual Data, Inc., d/b/a/ Factual Data, alleging violations of 15 USC § 1681e(b), the Fair Credit Reporting Act (“FCRA”), for failure to maintain reasonable procedures, individually and on behalf of a putative class.[1] (ECF #1.) On December 10, 2018, Plaintiff filed a Second Class Action FCRA Complaint against Kroll Factual Data, Inc., d/b/a Factual Data; FD Holdings, LLC, d/b/a Factual Data; and CBC Innovis, Inc.[2] (ECF #15.)

         On February 8, 2019, Defendant FD Holdings filed its Motion to Dismiss the December 10, 2018 Complaint. (ECF #15.) Plaintiff responded on February 27, 2019 (ECF #17), and FD Holdings filed its Reply on March 12, 2019 (ECF #18.) The Court held a hearing on the matter on May 8, 2019.

         II. FACTS

         The facts as alleged in the Amended Complaint are taken as true for purposes of the instant Motion to Dismiss. In re Delorean Motor Co., 991 F.2d 1236, 1240 (6th Cir. 1993). On January 22, 2014, Plaintiff filed a petition for Federal Chapter 7 bankruptcy. (Am. Compl., ECF #5, ¶17;) Def.'s Mot., (ECF #15-3, Ex. 3.)

         Plaintiff's attorney who filed the instant FCRA case is the same attorney who filed Plaintiff's Chapter 7 Bankruptcy Petition.

         The Bankruptcy Petition Schedule F (ECF #15-3, PgID 94) filed on January 22, 2014 requires a listing of unsecured nonpriority claims. On the far left column, the Schedule instructed the petitioner to list “Creditor's Name, Mailing Address Including Zip Code, and Amount Number.” As to the Mayflower matter, Plaintiff's counsel listed, as the creditor, “State of Michigan - 35th District, 660 Plymouth Rd., Plymouth, MI 48170.” The Schedule F column to the right, requiring “Date Claim was incurred and consideration for claim. . .” listed “No. 11C5291GC, Mayflower Auto Transport Inc. v. Muhammed Butt.” The far right column for listing “Amount of Claim” listed “$706.” Thus, Plaintiff's counsel failed to list Mayflower Auto Transport as an unsecured creditor in his bankruptcy filing, Schedule F.[3]

         Further, in this Bankruptcy Petition, Plaintiff's counsel did not list Mayflower as a creditor on the Bankruptcy Court Verification of Creditor Matrix. (Def.'s Mot., ECF #15-3, PgID 111-113). The initial page of the Verification (PgID 111) states in bold face: “VERIFICATION OF CREDITOR MATRIX, ” and then states in regular type: “The above named debtor hereby verifies that the attached Matrix Listing Creditors is true to the best of my knowledge.” (ECF #15-3, PgID 111.) That attached Matrix does not list Mayflower. (ECF #15-3, PgID 112-113.) The Matrix determines the parties that will receive notice of the bankruptcy proceedings.

         Further, Mayflower was not listed on the Bankruptcy Court “Notice Chapter 7 Bankruptcy case, Meeting of Creditors, and Deadlines, ” setting a meeting of Creditors Date, February 20, 2014. (Def.'s Mot., Ex. 4, ECF #15-4, PgID 114). That Certificate of Notice states “Notice by First Class Mail was sent to the following persons/entities by the Bankruptcy Noticing Center on January 24, 2014.” (ECF #15-4, PgID 116.) The Notice lists, inter alia, Credit Acceptance, another creditor with a 35th District Court judgment against Plaintiff; it did not list Mayflower.

         Thus, while Plaintiff's attorney had listed on the Matrix, the State 35th District Court, he did not reference Mayflower on the Matrix or the Certificate of Notice. (Def.'s Mot., ECF #15-3, PgID 112, ECF #15-4, PgID 116).

         On April 22, 2014, Plaintiff debtor was granted a Chapter 7 discharge under Title 11 USC §727 (ECF #15-5, PgID 114).[4] The Bankruptcy Court's 2 page “Discharge Order” did not list the specific debts discharged. (Am. Compl., ECF #15-5, PgID 117.) Significantly, creditor Mayflower, which had not been listed on the Matrix or the Discharge Order, would not receive any such Certificate of Notice of the Discharge. In re Butt, No. 14-40820, ECF #20, p. 3 (Bankr. E.D. Mich. Apr. 22, 2014).

         The State 35th District Court, which was listed on the Matrix and on the Certificate of Notice, would have received notice of both the bankruptcy filing per the Matrix, and the discharge of Mayflower on April 28, 2014. (Am. Compl., ECF #5, ¶19 and ¶20; Def.'s Mot., ECF #15-2, PgID 75.) A docket entry in the 35thDistrict Court Mayflower action dated April 28, 2014 reported “DISCHARGE OF DEBTOR FILED.” (ECF #15-2, PgID 75; Def.'s Mot., ECF #15-1, PgID 65-71.) However, given the Bankruptcy Court filings/rulings, that was incorrect as to Mayflower, because it was never listed as a creditor.

         In September 2018, Plaintiff applied for a residential home loan through Hall Financial Group (“Hall”). (Am. Compl., ECF #5, ¶21.) Hall purchased a credit report on Plaintiff from Defendant FD Holdings. Plaintiff alleges that the credit report listed the March 2012, $706 judgment “filed” in the Mayflower action. Plaintiff alleges that Hall declined approval of Plaintiff's loan application in light of the Mayflower judgment. (Am. Compl., ECF #5, p.6 ¶23.)

         Plaintiff alleges that he “was forced to seek the assistance of counsel to remedy the demonstrably false information” reported on the credit report. (Am. Compl., ECF #5, p.6 ¶24.) Plaintiff's hired counsel in the instant FCRA case was his Bankruptcy counsel. Plaintiff's counsel did not contact FD Holdings with regard to the credit report. Instead he filed the instant lawsuit against FD Holdings.

         Of great significance is that the 35th District Court's docket for the Mayflower action indicates that Plaintiff, or more likely his counsel, contacted that Court on October 3, 2018, to clarify that Mayflower had been omitted from the Bankruptcy Petition's Creditor Matrix: “PURSUANT TO CALL FROM D02 [Plaintiff], RAN PACER [Public Access System for the Federal Judiciary]; THIS PLTF [Mayflower] IS **NOT** LISTED ON HIS CREDITOR MATRIX.” (ECF #15-2, PgID 75.) Thus, on October 3, 2018, the 35th District Court confirmed from Plaintiff's call that Plaintiff's Mayflower debt had not been listed as discharged, per the official the Federal Bankruptcy Court PACER Website.

         This clearly explains the problem that Plaintiff's counsel created for his client. Thus, while Plaintiff's counsel alleged that he filed this lawsuit on November 21, 2018 to “remedy” the situation, it was a situation that he created by not listing unsecured creditor Mayflower on the Schedule F, on the Creditor Matrix and on the Creditor Meeting notice in his Chapter 7 Bankruptcy filings, all of which resulted in ...


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