Kennedy v. Texas Trust Credit Union et al

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
SAN ANGELO DIVISION
JASON BRADLEY KENNEDY,
Plaintiff,
v. 	No. 6:25-CV-049-H
TEXAS TRUST CREDIT UNION, et al.,
Defendants.
ORDER
Before the Court is Defendant Texas Trust Credit Union’s (TTCU) Motion to
Dismiss for Failure to State a Claim (Dkt. No. 9) and the Findings, Conclusions, and
Recommendations (FCR) (Dkt. No. 19) of Magistrate Judge John R. Parker. The plaintiff,
Jason Kennedy, has objected to the FCR (Dkt. No. 20), and TTCU has responded to the
objections (Dkt. No. 21). The Court overrules the objections, accepts and adopts the FCR,
and dismisses with prejudice 1 Kennedy’s Fair Credit Reporting Act (FCRA) claims against
TTCU. Further, because Kennedy’s remaining claim for breach of contract against
Defendant Assurant, Inc. is pending under the Court’s supplemental jurisdiction, the Court
dismisses Kennedy’s claim against Assurant without prejudice to being refiled in state court.
1 The FCR recommends that the Court dismiss “Kennedy’s claims against TTCU without
prejudice.” Dkt. No. 19 at 10. The Court takes this to be a “clerical error.” See Wall v. Debt Relief
Grp., LLC, Civ. A. No. SA-09-CA-637, 2010 WL 11601104, at *1 n.1 (W.D. Tex. July 13, 2010).
“Generally, dismissals under Rule 12(b)(6) are on the merits and should be with prejudice.” Thomas
v. Esper, No. 5:18-CV-110, 2019 WL 3026951, at *7 n.9 (E.D. Tex. May 22, 2019) (citing Csorba v.
Varo, Inc., 58 F.3d 636, 636 (5th Cir. 1995)).
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1. 	Factual and Procedural Background 2
In April 2022, Kennedy opened an auto loan with TTCU. Dkt. No. 5 at 3. At the
same time, he purchased two insurance policies: an auto insurance policy from Geico and a
GAP insurance policy from Assurant. Id. In May 2024, Kennedy’s vehicle was badly
damaged in a hailstorm; at the time, Kennedy’s loan balance was $29,923.00. Id. The
following month, Geico paid TTCU $24,163.56, leaving $5,759.44 remaining on Kennedy’s
loan balance. Id. TTCU assured Kennedy that Assurant’s GAP insurance would cover the
remaining balance and filed an insurance claim on Kennedy’s behalf. Id. Shortly
afterwards, Assurant requested a police report from Kennedy, who explained that there was
no police report because the car was damaged by hail. Id. In early September 2024,
Assurant admitted that it had not paid TTCU the GAP insurance payment due to a system
error, and it mailed a check to TTCU the following week. Id. at 4.
Because the GAP insurance was supposed to cover the remaining balance, Kennedy
did not make monthly payments in July, August, or September 2024. Dkt. Nos. 5 at 3–4; 9
at 3–4. TTCU’s reports to Consumer Reporting Agencies (CRAs) marked Kennedy’s
account as 30 days delinquent in July 2024 and 60 days delinquent in August and
September 2024. Dkt. No. 5 at 4. Kennedy’s creditworthiness suffered as a result. Id.
Kennedy filed two disputes with three CRAs, first in November 2024 and again in
January 2025, to have his credit report altered. Id. at 4–5. The CRAs—Experian, Equifax,
and Transunion—forwarded each dispute to TTCU along with accompanying
2 The factual allegations are recited from the Magistrate’s FCR. See Dkt. No. 19 at 2–3. The Court
has reviewed the factual allegations in the amended complaint (Dkt. No. 5) and finds no error in the
Magistrate’s recitation of the alleged factual background. As noted in the FCR, “[t]he facts in this
case are largely undisputed.” Dkt. No. 19 at 2.
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documentation. Id. Both times, TTCU responded that the disputed information was
accurate and should remain unchanged. Id. at 5. Kennedy alleges that he suffers from
credit denials, lower credit limits, and emotional distress as a result of these events. Id. at 6.
Kennedy filed his amended complaint in June 2025, alleging that TTCU negligently
and willfully violated the FCRA by publishing inaccurate credit information, failing to
properly investigate Kennedy’s credit disputes, and failing to correct the inaccurate
information on his credit report. Id. at 7–9. He also brings a claim against Assurant for
breach of contract under Texas law for an alleged failure in honoring the GAP insurance
claim. Id. at 9–10.
After reviewing the filings and the applicable law, Magistrate Judge Parker issued a
FCR recommending that the Court dismiss Kennedy’s claims against TTCU without
prejudice, decline to exercise supplemental jurisdiction over Kennedy’s remaining state law
breach of contract claim against Assurant, and dismiss that state law claim without
prejudice to being refiled in state court. Dkt. No. 19 at 10. Kennedy timely objected (Dkt.
No. 20), and TTCU responded (Dkt. No. 21). TTCU’s motion to dismiss is now ripe and
before the Court. 3
2. 	Legal Standards
A party who seeks to object to any part of a Magistrate Judge’s FCR must file
specific written objections within 14 days after being served with a copy. 28 U.S.C.
§ 636(b)(1); Fed. R. Civ. P. 72(b)(2). Where a party timely objects, a magistrate judge’s
FCR regarding a dispositive matter is reviewed de novo. Fed. R. Civ. P. 72(b)(3). The
3 The Court also reviewed and considered Kennedy’s response to the motion to dismiss (Dkt. No.
14) and TTCU’s reply (Dkt. No. 15) when reviewing the FCR and objections.
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district court may then accept, reject, or modify the recommendations or findings, in whole
or in part. Id. Objections to the FCR must be “specific,” in that they must “put the district
court on notice of the urged error.” Williams v. K&B Equip. Co., 724 F.2d 508, 511 (5th Cir.
1984). “[A]n objection must identify the specific finding or recommendation to which
objection is made, state the basis for the objection, and specify the place in the magistrate
judge’s report and recommendation where the disputed determination is found.” Thompson
v. Bumpas, No. 4:22-CV-640, 2022 WL 17585271, at *1 (N.D. Tex. Dec. 12, 2022) (citing
United States v. Mathis, 458 F. Supp. 3d 559, 564 (E.D. Tex. 2020)). The district court need
not consider frivolous, conclusive, or general objections. See Battle v. U.S. Parole Comm’n,
834 F.2d 419, 421 (5th Cir. 1987).
3. 	Analysis
Having carefully reviewed Kennedy’s amended complaint, the motion to dismiss and
related filings, the FCR, Kennedy’s objections, and TTCU’s response to the objections, the
Court concludes that the FCR should be adopted in full. In short, as detailed thoroughly in
the FCR, Kennedy’s claims require dismissal for failure to state a claim against TTCU.
Kennedy’s claims are deficient because they rest upon erroneous conclusions of law.
Further, Kennedy’s objections, while specific and properly made, lack legal merit, and thus
do not warrant modifying or rejecting the FCR. Finally, because the Court concludes that
the claims against TTCU should be dismissed, the Court declines to exercise supplemental
jurisdiction over Kennedy’s state law breach of contract claim against Assurant.
As discussed comprehensively in the FCR, each of Kennedy’s claims against TTCU
should be dismissed. See Dkt. No. 19 at 5–9. Kennedy alleges TTCU violated the FCRA
because TTCU (1) published inaccurate credit information (2) failed to fully and properly
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investigate his credit disputes, and (3) failed to correctly report the results of an accurate
investigation. Dkt. No. 5 at 7–9. The Magistrate Judge determined that the disputed credit
information must be inaccurate in order to bring an FCRA claim. Dkt. No. 19 at 5–6 (citing
Spencer v. Specialized Loan Servicing, LLC, No. 3:19-CV-1536, 2021 WL 4552548, at *6 (N.D.
Tex. Sept. 1, 2021)). As noted in the FCR, Spencer cites several cases supporting the
conclusion that the disputed credit information must be inaccurate. Id. Thus, Kennedy
must show that the credit information was either patently incorrect or misleading in such a
way and to such an extent that it can be expected to adversely affect credit decisions.
Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 895 (5th Cir. 1998).
Kennedy’s first objection relates to the Magistrate Judge’s statement in the FCR that
he “concedes that the reported deficiencies are not ‘patently incorrect,’ as he admits that he
did not make payments on the dates at issue.” Dkt. No. 20 at 1–2 (citing Dkt. No. 19 at 6–
7). As noted in TTCU’s response to the objection, mere imprecision does not render
information inaccurate. Dkt. No. 21 at 2. 	Kennedy must indeed clear the threshold
requirement of showing that the credit reports at issue were (1) patently incorrect or (2)
misleading in such a way and to such an extent that they can be expected to adversely affect
credit decisions. Sepulvado, 158 F.3d at 895. Here, Kennedy has not, and cannot, dispute
that no payments were made in June, July, or August of 2024—thereby making his account
30 days past due in July and 60 days past due thereafter. Thus, there is no error in the FCR
on this issue. Concluding that Kennedy’s first objection lacks legal merit, the Court
overrules it.
Kennedy’s second objection is that the Magistrate Judge failed to consider that a
report can be actionable if it is technically correct but is misleading in a way that could
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adversely affect credit decisions. Dkt. 20 at 2–3. Specifically, Kennedy disputes the FCR’s
conclusion that the reason for the late payments is irrelevant even if the late payment is
technically correct on a report. Id. at 3. He contends that that information can be
“inaccurate” if it is misleading in a way that could adversely affect credit decisions, even if
“technically correct” and cites Pinner v. Schmidt, 805 F.2d 1258, 1262–63 (5th Cir. 1986). Id.
However, the FCR clearly notes that Kennedy does not allege TTCU ever told him he did
not have to make his monthly payments until the GAP insurance claim is approved and his
balance was paid in full. Dkt. No. 19 at 8 (“Kennedy does not provide the exact words
TTCU used or describe the context in which the assurance was given; instead, Kennedy
merely alludes to the general substance of what TTCU told him.”). The Court finds no
error in the Magistrate Judge’s conclusion and finding on this issue. Concluding that
Kennedy’s second objection lacks legal merit, the Court overrules it.
Kennedy’s third objection is that the Magistrate Judge failed to allow the allegations
in the amended complaint to logically infer that the existence of GAP insurance, combined
with the prediction the insurer would eventually pay off the balance, meant Kennedy owed
no more payments on the vehicle and his remaining balance was zero. Dkt. No. 20 at 3.
The FCR states “TTCU claimed only that the insurance payout would cover his balance—
which was ultimately the case, Dkt. No. 5 at 4—without also stating that Kennedy no
longer needed to make payments.” Dkt. No. 19 at 8. The Magistrate Judge further notes
“Kennedy asks the Court to go further and adopt his interpretation of the facts—that
TTCU’s assurances discharged his obligation to make monthly payments.” Id. n.3. As
further noted, “Courts are not required to accept such legal conclusions as true.” Id. (citing
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The Court finds no error in the Magistrate
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Judge’s findings and conclusion on this issue because Kennedy failed to allege sufficient and
plausible facts from which a discharge of his obligations may be inferred. Thus, the Court
overrules the third objection.
Kennedy’s fourth objection is that the FCR fails to find sufficient factual allegations
to support the claim that TTCU’s investigation of Kennedy’s credit disputes was
unreasonable. Dkt. No. 20 at 4. Specifically, he contends that the FCR’s dismissal of this
claim without discovery is inappropriate. Id. The Magistrate Judge was not required to
allow the claim to remain for further discovery if the threshold showing of inaccuracy was
not met. As stated in the FCR, “Kennedy’s FCRA claim cannot survive without a
threshold showing of inaccuracy.” Dkt. No. 19 at 9 (citing Spencer, 2021 WL 4552548, at *6
(N.D. Tex. Sep. 1, 2021)). Kennedy’s fourth objection does not overcome this fatal flaw,
and so the Court overrules it.
Kennedy’s fifth objection is that the Magistrate Judge erroneously held that his
remedy is to file a consumer statement under 15 U.S.C. § 1681i(b)–(c). Dkt. 20 at 4. More
precisely, Kennedy contends that the consumer statement is a supplemental right and not a
substitute for a private right of action under the FCRA. Id. However, as pointed out by
TTCU in its response to the objection, “[t]he Magistrate Judge did not conclude that
plaintiff had stated a claim under the FCRA and that the remedy for such a claim was to file
a consumer statement.” Dkt. No. 21 at 7. “Instead, the appropriate remedy is to submit a
consumer statement explaining the context around the delinquent payments.” Dkt. No. 19
at 9 (citing 15 U.S.C. § 1681i(b)–(c)). Accordingly, the FCR states that Kennedy failed to
state a claim and he should instead avail himself of the right to submit a consumer statement
explaining the delinquent payments. The Magistrate Judge did not err in such a conclusion.
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Kennedy’s sixth, and final, objection is that the Court should continue to exercise its
supplemental jurisdiction over his state law claim against Assurant. Dkt. No. 20 at 4–5. He
argues that judicial economy favors retaining jurisdiction. Id. The FCR states that this
lawsuit is still in its early stages, trial has not yet occurred, and no prejudice would result to
either party if the breach of contract claim is dismissed without prejudice to being refiled in
state court. Dkt. No. 19 at 9–10. The Magistrate Judge notes that “[t]he general rule in the
Fifth Circuit is that courts should decline to exercise supplemental jurisdiction when all
federal claims are dismissed before trial, although this rule is “neither mandatory nor
absolute.” Id. at 9 (quoting Brookshire Bros. Holding v. Dayco Prods., Inc., 554 F.3d 595, 602
(5th Cir. 2009)). The Court agrees, and Kennedy’s sixth objection is overruled.
The Court has reviewed the well-reasoned FCR and found it compelling and
accurate. Accordingly, the Court overrules Kennedy’s objections and adopts the FCR’s
findings and conclusions in full. Even having construed the pleadings in the light most
favorable to Kennedy—as Fifth Circuit case law requires—as outlined in the FCR, the
Court concludes that Kennedy has failed to state a claim against TTCU. See Baker v. Putnal,
75 F.3d 190, 196 (5th Cir. 1996). In sum, the Court agrees with the FCR that Kennedy’s
claims against TTCU warrant dismissal. See Dkt. No. 19 at 5–9. The Court also agrees
with the recommendation to abstain from exercising its supplemental jurisdiction over
Kennedy’s state law breach of contract claim.
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4. 	Conclusion
The Court overrules Kennedy’s objections and adopts the FCR in full.4 Having
reviewed the FCR de novo, the Court hereby adopts the FCR, dismisses Kennedy’s claims
against TTCU with prejudice, and dismisses his claim against Assurant without prejudice to
being refiled in state court.
So ordered on March 23, 2026.
__________________________________________
JAMES WESLEY HENDRIX
UNITED STATES DISTRICT JUDGE
4 Except as described at note 1, supra.
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