Manes v. JPMorgan Chase Bank, N.A.

Background

Avrohom Manes sued JPMorgan Chase Bank, N.A. and credit-reporting agencies over a business credit-card account opened in the name of Main Street Optical. Manes alleged that he sold the business in December 2017 and then notified Chase that he wanted the account closed or his name removed. Chase discontinued the original account and opened a new account for the new owners, but Manes alleged that Chase still treated him as responsible for debt incurred on the new account.

Manes alleged that Chase reported more than $20,000 in debt to credit-reporting agencies in December 2018. He said he learned of the negative report in late 2019 or early 2020 after he was denied credit for a new mortgage loan. In September 2020, his attorney sent written disputes to Chase and several credit-reporting agencies. Manes alleged that Chase later said the major agencies were not reporting the debt, even though Experian and Trans Union were doing so, and that Chase’s November 24, 2020 letter continued to hold him responsible for the debt.

Manes asserted claims under the Fair Credit Reporting Act, a federal law governing credit reporting; negligence and gross negligence; New York General Business Law § 349; breach of the duty of good faith and fair dealing; breach of contract; fraud; the Fair Debt Collection Practices Act; and intentional or negligent infliction of emotional distress. Chase moved to dismiss.

Fair Credit Reporting Act claim

The court held that the Fair Credit Reporting Act claim was timely. The lawsuit was filed on December 8, 2020. The court explained that each notice of a dispute can trigger a separate duty for a company that supplied information to a credit-reporting agency to investigate the disputed information. Accepting the complaint’s allegations as true at this stage, the court found that Manes discovered Chase’s alleged failure to investigate his September 2020 dispute on November 24, 2020. The claim therefore was filed within the applicable two-year period.

The court also noted a factual dispute about when Chase received notice of Manes’s dispute—September 16 or December 2, 2020—that could not be resolved on a motion to dismiss. The court stated that only the claim based on Chase’s alleged failure to investigate the 2020 dispute would proceed. The court denied Chase’s motion as to that claim.

Negligence and New York General Business Law § 349

The court held that the negligence and New York General Business Law § 349 claims were preempted by the Fair Credit Reporting Act. Preemption means that federal law displaces a state-law claim. The court found that both claims were based on the same conduct underlying the Fair Credit Reporting Act claim: Chase’s alleged inaccurate reporting and failure to investigate or correct the reported debt. The court dismissed both claims with prejudice.

Other claims

The court dismissed the good-faith-and-fair-dealing claim with prejudice because it duplicated the breach-of-contract claim. Both claims concerned Chase’s alleged failure to investigate and remedy the disputed debt.

The court dismissed the breach-of-contract claim because Manes did not identify the specific contract or contract terms that Chase allegedly breached. The opinion did not state that this dismissal was with prejudice.

The court dismissed the fraud claim because Manes did not plead the alleged fraud with the required detail. Some allegations did not identify a specific false statement, while others did not identify the time, place, speaker, or content of the alleged misrepresentations. The allegation concerning Chase’s October 2020 statement also did not adequately plead fraudulent intent. The opinion did not state that this dismissal was with prejudice.

Manes did not oppose dismissal of his Fair Debt Collection Practices Act and emotional-distress claims. The court treated those claims as abandoned and dismissed them with prejudice.

Leave to amend and disposition

The court denied in part and granted in part Manes’s request for permission to amend. It denied permission to amend the negligence, § 349, good-faith-and-fair-dealing, breach-of-contract, Fair Debt Collection Practices Act, and emotional-distress claims. The court denied amendment of the negligence and § 349 claims because they were preempted, and denied amendment of the contract claim because Manes had already had multiple opportunities to identify the allegedly breached contract terms. Because Manes had not previously amended the fraud claim, the court allowed him to seek permission to amend that claim.

The court’s final disposition was that Chase’s motion to dismiss was granted in part and denied in part. Manes’s Fair Credit Reporting Act claim may proceed. The listed negligence, § 349, good-faith-and-fair-dealing, breach-of-contract, fraud, Fair Debt Collection Practices Act, and emotional-distress claims were dismissed. The court set deadlines for any motion to file a third amended complaint and for Chase’s answer to the surviving claims.