Beattie v. Nations Credit Financial Services
| Decision Date | 27 May 2003 |
| Docket Number | No. 02-1744.,02-1744. |
| Court | U.S. Court of Appeals — Fourth Circuit |
| Parties | JERRY N. BEATTIE; JUDITH F. BEATTIE, <I>Plaintiffs-Appellants,</I> v. NATIONS CREDIT FINANCIAL SERVICES CORPORATION; BANK OF AMERICA, formerly known as Nationsbank, N.A.; NATIONS CREDIT MANUFACTURED HOUSING CORPORATION, <I>Defendants-Appellees,</I> and C&S FAMILY CREDIT, INCORPORATED; C&S SOVRAN CREDIT CORPORATION; INTERLINK MORTGAGE SERVICES, <I>Defendants.</I> |
Appeal from the United States District Court for the District of South Carolina, at Greenville. Margaret B. Seymour, District Judge. (CA-00-2005-6-24)
ARGUED: Alton Lamar Martin, Jr., CLARKSON, WALSH, RHENEY & TURNER, P.A., Greenville, South Carolina, for Appellants. William Stevens Brown, V, NELSON, MULLINS, RILEY & SCARBOROUGH, L.L.P., Greenville, South Carolina, for Appellees. ON BRIEF: Wes A. Kissinger, CLARKSON, WALSH, RHENEY & TURNER, P.A., Greenville, South Carolina, for Appellants.
Before NIEMEYER and TRAXLER, Circuit Judges, and C. Arlen BEAM, Senior Circuit Judge of the United States Court of Appeals for the Eighth Circuit, sitting by designation.
Jerry and Judith Beattie ("Beatties") brought this diversity action against the Bank of America and its subsidiary NationsCredit Financial Services Corporation ("NationsCredit") for, among other things, violation of the South Carolina Unfair Trade Practices Act ("SCUTPA"), libel, and negligence. The district court1 granted NationsCredit's motion for summary judgment, and the Beatties appeal. We affirm.
On December 17, 1993, the Beatties entered into a home loan agreement with NationsCredit in which the debt, evidenced by a promissory note, was secured by a mortgage on the Beatties' residence in Greenville, South Carolina. Several of the loan statements the Beatties received in 1999 did not reflect specific account activity, such as transactions from the prior month. However, the statements did show a decrease in the balance due on the loan. They claim to have made repeated attempts, by telephone and in writing, to contact NationsCredit about the status of their account, but they did not receive a response.
On October 11, 1999, the Beatties received, from Interlink Mortgage Services, a copy of a Lost Mortgage Satisfaction affidavit ("LMS")2 signed by NationsCredit's vice president Robert Hardman. The LMS, filed with the Greenville County, South Carolina Register of Deeds on September 8, 1999, indicated that the Beatties' mortgage was satisfied. Even so, the Beatties concede that they have never paid all of the amounts due on the loan. Armed with notice of this filing, they stopped making monthly payments. Despite the filed LMS, Nations-Credit attempted to collect the debt and informed the Beatties that their mortgage was in default. At some point after the LMS was filed, NationsCredit sent the Beatties' account to its internal foreclosure department.3 The Beatties deposed James Bright who had denied them credit based on his review of the Beatties' credit report. This report, he stated, revealed that their mortgage with NationsCredit was "in foreclosure."4 The Beatties filed the present action against NationsCredit on June 23, 2000.
We review de novo the district court's decision to grant Nations-Credit's motion for summary judgment, and we view the evidence in the light most favorable to the nonmoving party. Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 (4th Cir. 2002).
The Beatties argue that the district court erred in granting Nations-Credit summary judgment on their SCUTPA claim. NationsCredit counters that it is exempt from SCUTPA liability. Section 39-5-40(a) of the SCUTPA provides that the Act does not apply to "[a]ctions or transactions permitted under laws administered by any regulatory body or officer acting under statutory authority of this State or the United States or actions or transactions permitted by any other South Carolina State law." In its initial order granting NationsCredit's motion for summary judgment, the district court held that the company was exempt. However, in response to the Beatties' motion for reconsideration, the court held that NationsCredit was not exempt because it had failed to show that its attempts to collect on the Beatties' account, after an LMS was filed, were required by or permitted under a statute or agency regulation.
The South Carolina Supreme Court has stated that this exemption "is intended to exclude those actions or transactions which are allowed or authorized by regulatory agencies or other statutes." Ward v. Dick Dyer & Assocs., Inc., 403 S.E.2d 310, 312 (S.C. 1991). The Ward court indicated that the exemption is not meant to exclude every activity regulated by another agency or statute, rather it is meant to ensure that companies are not subjected to lawsuits for following an agency regulation or statute. Id. Therefore, NationsCredit is not protected from lawsuits for "general activity." See id. There is no indication that a statute or agency regulation requires or permits Nations-Credit to pursue collection and foreclosure activities on accounts purportedly satisfied by an LMS affidavit. Therefore, NationsCredit is not exempt from liability under the SCUTPA. Accordingly, we address the merits of the Beatties' claim that NationsCredit violated the Act.
The SCUTPA prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." S.C. Code Ann. § 39-5-20(a). In order to succeed on a SCUTPA claim, the Beatties must show
(1) that the defendant engaged in an unlawful trade practice, (2) that the plaintiff suffered actual, ascertainable damages as a result of the defendant's use of the unlawful trade practice, and (3) that the unlawful trade practice engaged in by the defendant had an adverse impact on the public interest.
Havird Oil Co. v. Marathon Oil Co., 149 F.3d 283, 291 (4th Cir. 1998). The Beatties contend that NationsCredit engaged in an unlawful trade practice by falsely reporting to credit bureaus that their mortgage was in foreclosure. They also claim that they were damaged by this false report because they were denied credit by Mr. Bright. Finally, they assert that NationsCredit's false reporting had an adverse impact on the public interest.
The parties focused their attention, both in their briefs and at oral argument, on the third element of the analysis, the adverse impact on the public interest. We conclude, however, that the Beatties have failed to establish both the first and third requirements of their SCUTPA claim.
Under South Carolina law, a trade practice is "unfair" when it is "`offensive to public policy or when it is immoral, unethical, or oppressive.'" Johnson v. Collins Entm't Co., 564 S.E.2d 653, 665 (S.C. 2002) (quoting Young v. Century Lincoln-Mercury, Inc., 396 S.E.2d 105, 108 (S.C. Ct. App. 1989), rev'd in part on other grounds by 422 S.E.2d 103 (S.C. 1992)). We assume the "public policy" referred to by the South Carolina Supreme Court is that policy created by applicable common law determinations, legislative enactments or constitutional provisions. See Johnson, 564 S.E.2d at 666.
The Beatties do not direct our attention to any specific common law, statutory or constitutional violation that might amount to an "unlawful trade practice," apparently relying upon what they perceive to be the general unfairness of inaccurate credit reporting. See, e.g., Havird, 149 F.3d at 291 & n.2. Thus, we must consider the facts "surrounding the transaction and its impact on the market place" in determining whether or not a particular occurrence is unfair under the SCUTPA. Young, 396 S.E.2d at 108. After reviewing the record, we find as a matter of law that the Beatties have failed to establish the "wrongfulness of the defendant's actions." Williams-Garrett v. Murphy, 106 F. Supp. 2d 834, 845 (D.S.C. 2000). Assuming for the sake of argument that NationsCredit actually reported that the Beatties' mortgage was in foreclosure, such a communication cannot be seen as being immoral, unethical or oppressive. Indeed, although the words are clearly susceptible to interpretations to the contrary, it is not wholly unreasonable for NationsCredit to have believed, if it did so, that reference of the defaulted loan to its internal foreclosure department had placed the account "in foreclosure."
Notwithstanding the above analysis and in an effort to fully and fairly consider the Beatties' claim, we conducted our own search for potentially actionable public policy language that might support the finding of a SCUTPA-defined unlawful trade practice. Our quest revealed only one subsection of the Fair Credit Reporting Act ("FCRA") that might arguably suffice. That portion of the Act states that a supplier of information to a credit bureau "shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or consciously avoids knowing that the information is inaccurate." 15 U.S.C. § 1681s-2(a)(1)(A). However, as outlined in more detail below, on the facts of this case, the FCRA does not provide the Beatties with a private cause of action. More specifically, this particular statutory language may be enforced only by federal and state agencies and officials, 15 U.S.C. § 1681s-2(d), and the prohibition appears to apply only to malicious and willfully intentional acts, transgressions neither alleged nor demonstrated in this litigation. See 15 U.S.C. § 1681h(e). Accordingly, the Beatties have failed to establish that NationsCredit engaged in "an unlawful trade practice" as required by Havird.
We now evaluate the "public interest" element. Specific facts are required to prove an adverse impact on the public interest. Jefferies v. Phillips, 451 S.E.2d 21, 23 (S.C. Ct. App. 1994). South Carolina law states that "the public interest prong of the [SCUTPA] inquiry [is] satisfied by evidence of a...
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