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Armeni v. Trans Union LLC, Inc.

United States District Court, W.D. Virginia, Charlottesville Division

July 28, 2016

Daniel Armeni, Plaintiff,
Trans Union LLC, Inc., ET AL., Defendants.



         This case is before the Court upon Plaintiff Daniel Armeni’s (“Armeni”) motion for entry of default judgment (Docket No. 26) and Defendant BSI Financial Services, Inc.’s[1] (“BSI”) motion to vacate entry of default, grant enlargement and leave to file a responsive pleading, and oppose entry of default judgment (Docket No. 33). Because Defendant has failed to show insufficient process or demonstrate the requisite good cause to set aside entry of default, and Plaintiff has pled sufficient facts to support his claims, I will deny BSI’s motion and grant Armeni’s motion.

         I. BACKGROUND

         This case arises out of purported violations of the Federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq. Armeni instituted this action on November 19, 2015. In his complaint, Armeni alleged various claims against Trans Union, LLC (“Trans Union”), Experian Information Solutions, Inc. (“Experian”), and BSI.[2]


         1. Initial Consumer Credit Report Errors

         Armeni alleges that, in June 2014, he obtained copies of his credit report from Trans Union and Experian, two companies which produce consumer credit reports. In so doing, he discovered that these companies inaccurately represented his credit information. (Compl. ¶¶ 10, 23). In particular, Armeni’s credit report with Trans Union stated that he was $56, 000 past due on a mortgage account with BSI, a loan servicing company. Id. ¶ 11. According to his complaint, the home subject to this mortgage was foreclosed upon in August 2013. Subsequently, the home was put up for sale. Armeni states that the “home sold for approximately $526, 000, which was $10, 000.00 more than the amount owed . . . on the loan.” Id. ¶ 12. Armeni’s credit report from Experian “was double reporting the foreclosure of the BSI account, creating the appearance that two different foreclosures occurred-one in August 2013 and one in September 2014.” Id. ¶ 24.

         2. Armeni’s Dispute Letters

         Armeni claims that he sent a dispute letter to Trans Union on or around June 11, 2014, alleging that the company inaccurately reported information regarding the BSI mortgage account. (Compl. ¶ 13). The letter stated that he did not owe any past balance on the mortgage “as BSI had been paid in full after the August 2013 foreclosure sale.” Id. Trans Union subsequently investigated the BSI account and provided their investigation results to Armeni. After this investigation, Trans Union updated Armeni’s credit profile to show that he owed a balance of $0 on the BSI account, but nonetheless verified the inaccurate information that the account had “settled for less than the full balance.” Id. ¶¶ 15, 19. Afterward, Armeni contacted the Consumer Financial Protection Bureau (“CFPB”), notifying the CFPB of Trans Union’s supposed inaccurate reporting. In response to his complaint to the CFPB, Trans Union removed the inaccurate information on September 12, 2014. However, Trans Union subsequently reinstated this information. Id. ¶¶ 17-19.

         3. BSI’s Reporting and Investigation

         Armeni further alleges that when credit reporting agencies like Trans Union and Experian receive consumer disputes, they translate them into Automatic Consumer Dispute Verification (“ACDV”) forms using a dispute system called “e-Oscar.” (Compl. ¶¶ 60-61). “[T]he ACDV form is the method by which BSI has elected to receive consumer disputes.” Id. ¶ 62. Armeni claims that BSI received such a report from Trans Union after he sent a dispute letter to the credit reporting agency. Id. ¶ 65.

         According to Armeni, BSI does not engage in a substantive investigation of consumer credit disputes. Instead, BSI only reviews “its own internal computer screen for the account and repeats back to the ACDV system the same information that BSI had already reported to the [credit reporting agencies].” Id. ¶ 67. According to Armeni, BSI knew that his account had been paid in full, but reported otherwise to Trans Union. Additionally, BSI failed to note that Armeni’s account was disputed despite the fact that Armeni “had previously disputed the debt directly to BSI on numerous occasions.” Id. ¶ 86.


         On December 18, 2015, the Secretary of the Commonwealth of Virginia filed a certificate of compliance (Docket No. 5) demonstrating service of process upon BSI. On this occasion, Armeni’s complaint and summons were sent to 3001 South Lamar, Suite 320, Austin, Texas 78704. Id. After BSI did not file a responsive pleading, Armeni attempted service upon BSI twice more. Certificates of compliance for these service attempts were filed on January 21, 2016, and February 8, 2016, respectively. (Docket Nos. 16, 18). In the second instance, the complaint and summons were addressed to 1425 Greenway Drive, Suite 400, Irving, Texas 75038, while on the third occasion, such documents were mailed to 350 N. Saint Paul St., Dallas, Texas 75201-0000. Id.

         On March 17, 2016, Armeni moved for entry of default against BSI. (Docket No. 20). Default was entered by the clerk the following day. (Docket No. 21). Later, on June 7, 2016, Armeni moved for entry of default judgment. (Docket No. 26). Subsequently, on June 20, 2016, BSI filed a notice of appearance. (Docket No. 28).

         On June 28, 2016, BSI filed its motion to set aside entry of default, grant enlargement of time and leave to file a responsive pleading, and oppose Armeni’s motion for default judgment. (Docket No. 33). Oral argument on the motions was held on July 25, 2016.


         Ordinarily, a defendant is required to serve an answer or some other responsive pleading “within 21 days of being served with [a] summons and complaint.” Fed.R.Civ.P. 12; King v. Flinn & Dreffin Engineering Co., No. 7:09-cv-00410, 2012 WL 4459568, at *2 (W.D. Va. May, 16, 2012). “When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed.R.Civ.P. 55(a). Once a party has moved for default judgment, “a court may either grant the motion pursuant to Rule 55(b)(2), or set aside the entry of default for good cause pursuant to Rule 55(c).” Red Light Management, Inc. v. Dalton, No. 3:15-cv-00051, 2016 WL 1337329, at *3 (W.D. Va. Apr. 5, 2016). In determining whether or not a defaulting party has demonstrated sufficient good cause to set aside an entry of default:

a district court should consider whether the moving party has a meritorious defense, whether it acts with reasonable promptness, the personal responsibility of the defaulting party, the prejudice to the party, whether there is a history of dilatory action, and the availability of sanctions less drastic.

Mavila v. Absolute Collection Service, Inc., 539 Fed. App’x 202, 204-05 (4th Cir. 2013) (quoting Payne ex rel. Estate of Calzada v. Brake, 439 F.3d 198, 204-05 (4th Cir. 2006)).



         BSI’s argument to set aside entry of default has two strands. First, BSI argues that it was improperly served Armeni’s complaint and summons. Second, BSI argues that it can show the requisite good cause to vacate an order of default.

         1. Improper Service of Process

         “[W]hen service of process is ineffective a court does not acquire personal jurisdiction over a party, and a default judgment resulting from such defective service is void.” Capital Concepts Inc. v. CDI Media Grp. Corp., No. 3:14-cv-00014, 2014 WL 3748249, at *4 (W.D. Va. July 29, 2014) (quoting Bank United v. Hamlett, 286 B.R. 839, 743 n.3 (W.D. Va. 2002)). “However, returns of service of process . . . act as prima facie evidence of valid service.” Id. In such a case, a defendant must “at the very least, present credible evidence to rebut the presumption of ...

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