Bryant v. TRW, Inc.
| Decision Date | 20 September 1982 |
| Docket Number | No. 80-1380,80-1380 |
| Citation | 689 F.2d 72 |
| Parties | Bennie BRYANT, Plaintiff-Appellee, v. TRW, INC., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Roselyn C. Komisar, Sidney L. Frank, Frank & Stefani, Troy, Mich., Eric D. Green (argued), Boston University School of Law, Boston, Mass., for defendant-appellant.
Forrest Walpole (argued), Walpole, Holmes & Schrope, Caro, Mich., Sidney L. Frank, Troy, Mich., for plaintiff-appellee.
Before EDWARDS, Chief Judge, ENGEL, Circuit Judge, and PHILLIPS, Senior Circuit Judge.
Defendant, a credit reporting agency, appeals from an adverse judgment based on a jury verdict of $8,000 in actual damages and an attorney's fee award of $13,705, which resulted from a suit prosecuted by plaintiff, an individual who was seeking credit for the purchase of a house. The verdict represented a finding that defendant had supplied inaccurate information to a mortgage company and had thereby caused the denial of plaintiff's home loan application. The home loan was eventually approved.
The credit reporting agency was TRW Inc., an Ohio corporation; the prospective mortgagor was an individual named Bennie E. Bryant; and the mortgage company was the Hammond Mortgage Corporation of Southfield, Michigan.
The central issue in this case-which has stirred considerable interest in the credit industry-is whether or not defendant violated section 607(b) of the Fair Credit Reporting Act (FCRA), 1 15 U.S.C. § 1681e(b), which reads:
Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.
Negligent noncompliance with any requirement of the FCRA gives rise to liability for "any actual damages" and "reasonable attorney's fees," FCRA § 617, 15 U.S.C. § 1681o; willful noncompliance, in addition, gives rise to liability for punitive damages, FCRA § 616, 15 U.S.C. § 1681n.
The dispute that resulted in this appeal began to form in August 1976, when plaintiff applied to the Hammond Mortgage Corporation for a federally-insured home loan under a program administered by the Veterans' Administration. At the request of Hammond, defendant prepared a "consumer report" 2 on plaintiff. For the background and outline of the instant litigation, we rely on the opinion of the District Judge:
Beginning sometime in the early 1970's defendant, one of the largest consumer reporting agencies in Michigan, issued consumer reports on plaintiff. On a number of occasions these consumer reports were inaccurate and on a number of occasions plaintiff discussed in person with representatives of defendant his concerns and also went to his creditors principally retail merchants, in an endeavor to straighten out information sent to defendant on his accounts.
In May of 1976 defendant issued a consumer report in the form of a mortgage report on plaintiff in connection with a mortgage application on a house purchase. This consumer report contained inaccurate information on plaintiff's account with a retail merchant. Plaintiff went to defendant and called its attention to the inaccuracy. The mortgage loan did not close for unrelated reasons.
In August, 1976 plaintiff again signed a mortgage loan application for a home purchase. On September 7 the mortgage company ordered a consumer report in the form of a mortgage report. On September 28 an employee of defendant called the mortgage company to advise that the mortgage report would contain four items of derogatory information on plaintiff. The mortgage company immediately advised plaintiff. Plaintiff the same day went to defendant's office and discussed in detail the four items. Three of these items did not appear in the May report even though at least one of these items related to events prior to May, 1976 and logically should have been part of the May report. Subsequent to September 28 the creditors involved advised defendant the information they previously furnished was erroneous.
At the September 28 personal meeting between plaintiff and a representative of defendant, a memorandum was placed in plaintiff's file which reads:
The mortgage report was sent to the mortgage company on September 30 in its original form without any further attempt on defendant's part to verify the derogatory items. 3
The mortgage loan was initially denied on the basis of the mortgage report. Subsequently, with a revision in the mortgage report and through plaintiff's personal efforts the mortgage loan closed.
Plaintiff testified as to the embarrassment, anxiety, humiliation and emotional stress he suffered as a consequence of his difficulties over the two reports. No out-of-pocket expenses or actual dollar losses were proven.
Bryant v. TRW, Inc., 487 F.Supp. 1234, 1346-37 (E.D. Mich. 1980).
At the close of evidence, the District Judge read the following, and we think correct, instructions to the jury:
The Fair Credit Reporting Act required that TRW, Inc., when it prepared a consumer report on Bennie Bryant, follow reasonable procedures to assure maximum possible accuracy of the information concerning Mr. Bryant.
If you find that TRW, Inc. was negligent in following the requirements of the law, you should award Mr. Bryant the actual damages sustained by him because of such negligence.
If you find TRW, Inc. willfully failed to follow the requirements of the law, Mr. Bryant is entitled to his actual damages and you may also award punitive damages.
If you find TRW, Inc. followed reasonable procedures you should find for it.
The jury returned a verdict of $8,000 in actual damages; it awarded no punitive damages. The trial judge granted plaintiff's motion for attorney's fees in the amount of $13,705, which was calculated on the basis of an hourly rate.
Defendant filed a motion for judgment n.o.v. and an alternative motion for a new trial, arguing principally that section 607(b) of the FCRA does not give rise to liability when a consumer reporting agency, like defendant, accurately reports the information it receives from a consumer's creditors. The motions were denied. Bryant v. TRW, Inc., 487 F.Supp. 1234 (E.D. Mich. 1980).
The September 30 mortgage report, as noted by the District Judge in his factual summary, contained "four items of derogatory information on plaintiff." They were:
Ford Motor Credit 4-72 high $3700 auto reported
3-75 paid account, was 17
times 30 days late
Hughes & Hatchers open for over 10 years limit
$700 high $174 balance $159
was 30 days delinquent is now
current
J.L. Hudsons-time pay opened 3-75 limit & high $500
balance $285 $22.00 past due 30
days delinquent
Grinnells opened 3-76 high $231.16 24 @
$11.96 last paid 8-15-76 due
for 7-22-76, as of 9-2-76.
A review of the testimony in this record indicates to us that in the instance of at least two of the four entries set out immediately above, Hudson's and Grinnell's, plaintiff presented evidence from which the jury could have found inaccuracies that contributed meaningfully to the October 26, 1976, denial of plaintiff's home loan application.
Based on the testimony of Joseph L. Busher, Jr., the manager of Hudson's Customer Credit Relations Department, we think the Hudson's entry was an inaccurate (and misleading) description of plaintiff's status with Hudson's. Busher explained that a customer with a time payment account is obligated to make a minimum payment every month. App. 151. A payment in excess of the minimum would not affect that obligation. If no payment is made in a given month, the account is considered to be "one payment delinquent" on the first day of the following month. App. 158. Payments made thereafter are credited first to the delinquency and then to the current monthly obligation.
Plaintiff's minimum monthly payment was $22 in 1976. As his payment record, App. 362, indicates, he missed his payments in December 1975 and February 1976. Those delinquencies were made up with double payments in April and May 1976. He then made his June payment, so as of that time plaintiff was paying as agreed and was not delinquent.
Plaintiff made two $22 payments in July, which, of course, satisfied his July obligation. However, they did not cancel his August obligation. No payment was made in August, so as of September 1 plaintiff's account was one payment delinquent. A $22 payment was made September 2. Although this rectified the August delinquency, App. 159-60, the September payment remained due. However, plaintiff had until the last day of September to make his September payment, App. 160, and thus, the account could be considered delinquent again no earlier than October 1.
On September 28, defendant's tentative report listed plaintiff's account as 30 days delinquent. And on September 30 the mortgage report indicating the same was issued.
The Hudson's entry was inaccurate for two reasons. First, on September 30 Bryant's account was not delinquent. Second, as Busher testified, delinquencies in time payment accounts are measured in terms of payments, not days:
Q As of the 1st day of September he was delinquent for the August payment, right?
A Right, sir.
Q At that point isn't he one day delinquent?
A No, he is delinquent a payment.
Turning to the Grinnell's...
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