Deandrade v. Trans Union LLC

• Decision Date: 15 April 2008
• Docket Number: No. 07-1844.,07-1844.
• Citation: 523 F.3d 61
• Parties: Ovidio A. DEANDRADE, Plaintiff, Appellant, v. TRANS UNION LLC, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

523 F.3d 61

Ovidio A. DEANDRADE, Plaintiff, Appellant, v. TRANS UNION LLC, Defendant, Appellee.

No. 07-1844.

United States Court of Appeals, First Circuit.

Heard December 3, 2007.

Decided April 15, 2008.

Christopher M. Lefebvre with whom Law Offices of Claude Lefebvre & Sons was on brief for appellant.

Timothy P. Creech with whom Mark E. Kogan, Bruce S. Luckman, and Kogan, Trichon & Wertheimer, P.C., were on brief for appellee.

Before BOUDIN, Chief Judge, TORRUELLA, Circuit Judge, and STAHL, Senior Circuit Judge.

STAHL, Senior Circuit Judge.

Plaintiff-appellant Ovidio A. DeAndrade brought an action against Trans Union LLC ("Trans Union"); Equifax Information Services, LLC ("Equifax"); and KeyBank USA ("KeyBank") in Rhode Island federal district court, alleging various violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x ("FCRA").¹ The suit followed a dispute over a loan repayment between DeAndrade and KeyBank, and the credit bureaus' alleged failure to reinvestigate properly and delete the disputed debt from DeAndrade's credit report. Trans Union moved for summary judgment, and the district court accepted the magistrate judge's recommended decision granting the motion. DeAndrade now appeals. Finding that the material facts are undisputed and establish no FCRA violation, we affirm the district court's grant of summary judgment in favor of Trans Union.

I. Background

DeAndrade purchased new windows for his home from a company called NESCOR in July of 2001. At DeAndrade's request, NESCOR agreed to arrange mortgage financing for the windows, although it did not specify the identity of the lender. DeAndrade and his wife signed documents in connection with this financing, which created a lien on their home.² NESCOR initially organized the financing through Conseco Finance ("Conseco"). When DeAndrade received notice of the first payment owed to Conseco, however, the bill was greater than the amount that he had indicated to NESCOR that he would be willing to pay. DeAndrade complained, and NESCOR promised to remedy the situation, sending DeAndrade a check for $11,722.30 with instructions to use the funds to pay the balance due Conseco. Shortly thereafter, DeAndrade received an invoice from KeyBank for approximately $121, an amount consistent with the original terms of his agreement with NESCOR.³

DeAndrade made twenty-two monthly payments to KeyBank, from September 2001 until June 2003. The DeAndrades had never received copies of the loan documents, and at some point, apparently after speaking with a consumer attorney, DeAndrade's wife contacted KeyBank to obtain copies of the documents. The DeAndrades were "shocked" to discover that the documents granted a mortgage on their residence to KeyBank and that their signatures on the documents appeared to have been forged. As a result, the DeAndrades filed suit against KeyBank in Rhode Island Superior Court on August 20, 2003, requesting declaratory relief as to the validity of the KeyBank mortgage.⁴ In that complaint, DeAndrade alleged that he and his wife never signed any documents granting a mortgage on their home to KeyBank and never authorized NESCOR to do so on their behalf.

DeAndrade maintains that when he commenced the state lawsuit, he stopped sending the monthly payments to KeyBank and instead deposited them into an escrow account pending the resolution of that action. KeyBank notified the three major credit bureaus—Trans Union, Experian, and Equifax—of the alleged delinquent payments, and the bureaus updated DeAndrade's credit report accordingly. Through an attorney, DeAndrade then sent a letter dated July 16, 2004 to those three credit bureaus, advising them that the mortgage underlying the negative item reported by KeyBank had been fraudulently obtained and urging the bureaus to investigate the transaction.⁵ Attached to the letter were forty-nine pages of documentation, including the Rhode Island Superior Court complaint, provided in support of DeAndrade's allegations of fraud. Experian deleted the KeyBank item after receiving DeAndrade's letter, but Trans Union and Equifax did not.

On August 2, 2004, Trans Union sent a letter to DeAndrade indicating receipt of his request to investigate the disputed item. Trans Union then contacted KeyBank to verify the accuracy of the item. Trans Union did not forward the documents it had received from DeAndrade to KeyBank, but rather sent KeyBank an automated dispute verification form ("ACDV"). The ACDV stated that the customer "[d]isputes present/prev Acct Status" and believed the account to be "not his/hers." KeyBank's response verified DeAndrade's name, address, social security number, month and year of birth, telephone number, and delinquent payment history. Trans Union then sent DeAndrade a notice, dated August 11, 2004, informing him that KeyBank had confirmed the item's accuracy and advising him of his further rights under the FCRA. Trans Union continued to publish the KeyBank debt on DeAndrade's credit report, but DeAndrade did not contact Trans Union again before initiating this lawsuit.

On December 21, 2004, DeAndrade filed suit in the United States District Court for the District of Rhode Island, claiming that Trans Union had violated a provision of the FCRA, 15 U.S.C. § 1681i, by "failing to conduct a lawful reinvestigation" of the disputed debt and failing to delete the allegedly inaccurate item from DeAndrade's credit report. DeAndrade maintained that Trans Union's refusal to delete the disputed item harmed him by negatively impacting his ability to obtain needed credit, such as a home refinancing.

Trans Union moved for summary judgment, arguing that the suit was an impermissible collateral attack on the validity of the KeyBank loan through the FCRA, that DeAndrade had in any case ratified the loan and therefore the information published on his credit report was accurate, and that DeAndrade had failed to adduce evidence of negligent or willful noncompliance with the FCRA.⁶ Considering the ratification issue to be dispositive, the magistrate judge addressed that issue only and found that DeAndrade had ratified the KeyBank debt, rendering Trans Union's report of that debt accurate. Noting that inaccuracy is a necessary element of an FCRA claim, the magistrate judge recommended granting Trans Union's summary judgment motion. The district court accepted the magistrate judge's recommended decision and granted summary judgment to Trans Union.⁷

II. Discussion

We review the district court's grant of summary judgment de novo, with all reasonable inferences resolved in favor of the nonmoving party. Fenton v. John Hancock Mut. Life Ins. Co., 400 F.3d 83, 87 (1st Cir.2005). Summary judgment is appropriate where there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). "A dispute is genuine if the evidence about the fact is such that a reasonable jury could resolve the point in the favor of the non-moving party. A fact is material if it carries with it the potential to affect the outcome of the suit under the applicable law." Sánchez v. Alvarado, 101 F.3d 223, 227 (1st Cir.1996) (citations omitted).

If a consumer disputes the accuracy or completeness of any item contained in his or her consumer report, 15 U.S.C. § 1681i(a) requires consumer reporting agencies to "conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate."⁸ The magistrate judge reasoned that "[a] necessary element of Plaintiff's [§ 1681i] claim is that the information Trans Union reported was inaccurate." Deandrade v. Trans Union, LLC, No. 1:04-cv-00534, slip op. at 9 (D.R.I. Nov. 29, 2006) (unpublished). This court has yet to opine on the question whether a plaintiff must show that the disputed information contained in a consumer report is inaccurate in order to prevail on a § 1681i FCRA claim.⁹ The magistrate judge's recommended decision and Trans Union's brief on appeal cite a string of cases in support of the proposition that a showing of inaccuracy is essential. The relevant language in those cases, however, largely addresses claims brought under § 1681e(b), not § 1681i; indeed, in most of the cases cited, either no § 1681i claim was asserted or the question of accuracy is not addressed directly. See, e.g., Dalton v. Capital Associated Indus., 257 F.3d 409, 415 (4th Cir.2001) (holding that "a consumer reporting agency violates § 1681e(b) if (1) the consumer report contains inaccurate information and (2) the reporting agency did not follow reasonable procedures to assure maximum possible accuracy"); Spence v. TRW, 92 F.3d 380, 382 (6th Cir.1996) (holding that plaintiff could not prevail on his § 1681e(b) claim "without proving the information in question was inaccurate"); Henson v. CSC Credit Servs., 29 F.3d 280, 284 (7th Cir.1994) (holding that "[i]n order to state a claim under 15 U.S.C. § 1681e(b), a consumer must sufficiently allege that a credit reporting agency prepared a report containing `inaccurate' information") (emphasis added) (citations omitted); Wadley v. Ford Motor Credit Co., 397 F.Supp.2d 781, 783 (E.D.Va.2005) (plaintiff alleged claim under § 1681s-2(a), "which prohibits an entity from furnishing information relating to a consumer to a consumer reporting agency if `(i) the [entity] has been notified by the consumer . . . that specific information is inaccurate; and (ii) the information is, in fact, inaccurate.'") (emphasis in original); Dauster v. Household Credit Servs., Inc., 396 F.Supp.2d 663, 664 (E.D.Va. 2005) (where plaintiff had conceded information reported by credit agency was accurate, plaintiff failed to state claim under FCRA § 1681e(b)); see also Wantz v. Experian Info. Solutions, 386 F.3d 829, 833-34 (7th Cir.2004) (affirming summary judgment for defendant on § 1681i(a) claim not on grounds that disputed information was accurate, but rather on grounds that disputed information...