The United States Court of Appeals for the Eighth Circuit recently affirmed the lower court's grant of summary judgment in favor of defendant mortgage servicer as to the borrower's claim under the federal Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 181o, 1601s-2(b). A copy of the opinion is attached.
Defendant EMC Mortgage Company ("EMC") credited Plaintiff-borrower's ("Plaintiff") loan account with a payment received in December 2006, but presented a substitute check to Plaintiff's bank in March 2007 due to the original check having been lost or destroyed. However, by March of 2007, Plaintiff had closed that bank account and the payment was dishonored by Plaintiff's bank. EMC "un-credited" Plaintiff's account for December and, although Plaintiff had otherwise kept current with his payments, EMC notified the credit reporting agencies ("CRAs") that Plaintiff's account was thirty days past due. Plaintiff then made an "extra payment" to bring his EMC account current, but by that time supposedly lost favorable financing for a real estate purchase because of the adverse credit reports.
Plaintiff brought suit against EMC alleging that EMC violated the federal Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681o, 1681s-2(b), by "furnish[ing] inaccurate information." After the case was removed to federal court, the district court granted of summary judgment in favor of EMC as to the FCRA claim because the Plaintiff's "account was more than thirty days past due as a matter of law when EMC reported that account status in April and May 2007." The Eighth Circuit affirmed.
On appeal, Plaintiff argued "that summary judgment was inappropriate because the district court noted that an 'Experian entry is inaccurate insofar as it states that Plaintiff's account was delinquent in May and June (as opposed to April and May),' and EMC failed to investigate and correct this inaccuracy." The Plaintiff's argument was based primarily upon a document entitled "Your Credit Report" dated June 25, 2009, which is a summary of credit reports from the CRAs.
The Eighth Circuit disagreed with the Plaintiff, holding that "the 'Your Credit Report' document failed to raise a genuine issue of material fact whether EMC violated 15 U.S.C. §§ 1681o and 1681s-2(b) by failing to investigate and correct an immaterial discrepancy as to which two months in 2007 Anderson's account was thirty days past due." The Court reasoned that "a furnisher's obligation to conduct a reasonable investigation under § 1681s-2(b) arises when it receives a notice of dispute from a CRA, and it need investigate only 'what it learned about the nature of the dispute from the description in the CRA's notice of dispute.'"
In this case, dispute notifications from the "CRAs notified EMC that its reporting of the account as past-due for two months had been challenged. EMC investigated, correctly determined that the reported account status was accurate, and verified that information to the CRAs." EMC's "duties as a furnisher of information under the FCRA required no more." Accordingly, the Court affirmed the judgment of the lower court.
The Court also noted that "the duties of EMC as a furnisher of credit information under 15 U.S.C. § 1681s-2(b) are triggered by notice that its information is being disputed from a CRA, not from the consumer. See § 1681i(a)(2)." The Plaintiff's "complaint alleging that EMC reported inaccurate data failed to allege a triggering CRA notice and therefore failed to state a claim against EMC under the FCRA." However, "rather than challenge the sufficiency of Plaintiff's Complaint, EMC moved for summary judgment after the close of discovery."
Ralph T. Wutscher
Kahrl Wutscher LLP
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