Eicken v. Usaa Federal Savings Bank

• Decision Date: 26 July 2007
• Docket Number: Civil Action No. H-05-4139.
• Parties: Steven M. EICKEN, Plaintiff, v. USAA FEDERAL SAVINGS BANK and USAA Savings Bank, Defendants.
• Court: U.S. District Court — Southern District of Texas

498 F.Supp.2d 954

Steven M. EICKEN, Plaintiff, v. USAA FEDERAL SAVINGS BANK and USAA Savings Bank, Defendants.

Civil Action No. H-05-4139.

United States District Court, S.D. Texas, Houston Division.

July 26, 2007.

COPYRIGHT MATERIAL OMITTED

Neal Durant Cannon, Jr., Attorney at Law, Houston, TX, for Plaintiff.

Dwight M. Francis, Stacy R. Obenhaus, Gardere Wynne et al., Dallas, TX, Susan M. Halpern, Culp Dyer & Halpern LLP, Denton, TX, for Defendants.

MEMORANDUM AND ORDER

ELLISON, District Judge.

Pending before the Court are Plaintiffs Motion for Partial Summary Judgment, Defendants' Motion for Summary Judgment, Defendants' Motion to Strike and Objections to Plaintiffs Summary Judgment Evidence, and Defendants' Motion to Strike Attempts to Change Deposition Testimony on Errata Sheets. After considering the parties' filings and the applicable law, the Court finds that Defendants' Motion to Strike and Objections to Plaintiffs Summary Judgment Evidence, Docket No. 75, should be DENIED. Defendants' Motion to Strike Attempts to Change Deposition Testimony, Docket No. 74, is GRANTED IN PART, DENIED IN PART. Defendants' Motion for Summary Judgment, Docket No. 71, is GRANTED IN PART, DENIED IN PART. Plaintiffs Motion for Partial Summary Judgment, Docket No. 68, is DENIED.

I. BACKGROUND

This case arises from alleged violations by Defendants of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq., and the Fair Credit Billing Act ("FCBA"), 15 U.S.C. §§ 1666 et seq. Plaintiff's Claims

The following undisputed facts are drawn primarily from Plaintiffs First Amended Complaint. Plaintiff Steven Eicken, who is employed as a letter carrier, applied for a charge account owned by Defendant USAA Savings Bank ("USAA SB") in 1991. After receiving his credit card, Plaintiff used it to make purchases, and received monthly statements from USAA SB. Plaintiff never paid the total amount due, but continually carried a balance on his account.

On November 18, 2004, Plaintiff sent a letter titled "Notice of Billing Error" to the USAA SB legal department. The letter states that "[p]ursuant to 15 U.S.C. 1666, I am writing you ... within sixty days of receiving statements of my account dated 10/8/2004 and 11/8/2004 in connection with extensions of consumer credit. I hereby provide you notice that I believe said statements contain errors in the total amount you allege to be due, and other more specific items, as laid out more completely below." As to the source of these supposed errors, the letter refers to Plaintiffs "belief that you failed to give all the proper disclosures required by law to me prior to opening this account, and additional disclosures since then. Because you failed to provide these disclosures, the account could not legally be opened and I should not be responsible for the payment of interest, fees or other finance charges."

In a subsection detailing errors "pursuant to 15 U.S.C. 1666(b) (1) and (5)," the letter "disputes the accuracy" of "the current balance [then $8,717.70], the amounts and payments due and all finance charges and other fees charged since this account was opened." A subsequent section headed "Billing Error Pursuant to 15 U.S.C. 1666(b)(2)" states that "if the account was not able to be opened properly because of your failure to give the disclosures, then the amount of the indebtedness is called into question." The letter then requests the following "documentary evidence of indebtedness": 1) copies of all records of Plaintiffs written and signed authorizations for all purchases for which an extension of consumer credit is claimed to have been made; 2) for any claimed extension of consumer credit without Plaintiffs written authorization, a copy of all records of evidence of any authorization by Plaintiff, such as use of his PIN or other identifying information; 3) for any claimed extension of consumer credit with no proof of authorization, a statement by USAA SB of the factual and legal basis for the claim; 4) copies of documents showing that all required disclosures were given to Plaintiff at all relevant times, including evidence that any such disclosure was made to Plaintiff, by whom, when, how and where; 5) Plaintiff's original cardholder agreement, as well as any amendments made thereto; 6) an accounting of all interest, fees, or other charges assessed to the account since it was opened; 7) clarification of the amount(s) due pending the resolution of the billing errors, and when the amounts will need to be paid; and 8) any other documents upon which USAA SB may rely to support its claim that Plaintiff is indebted in the amount alleged.

Between December 2004 and September 2005, Plaintiff mailed eight more "notices of billing error" to USAA SB. Each letter is virtually identical to the first, updating only the dates of the account statements allegedly being disputed and the current balance and minimum payment due. Defendant USAA SB never responded directly to the substance of these letters — that is, to Plaintiffs allegations of billing errors and requests for documents. However, USAA SB began sending its own letters to Plaintiff in November 2004, expressing concern about his past due account. On November 29, 2004, USAA SB wrote, "We have given you every opportunity to settle your seriously past due USAA credit card account. We are willing to establish any reasonable payment arrangements to remedy your delinquency, but we must have your immediate cooperation." Subsequent correspondence informed Plaintiff of the adverse credit actions that could be taken against him due to his failure to make payments, and invited discussions regarding settlement. Plaintiff's only response, however, was another series of letters (also virtually identical to one another) setting forth his position that the warnings sent by USAA SB did not resolve the claimed billing errors. Further, the letters state that "my billing error remains unresolved and my entire balance is still in dispute, as you have not corrected the error, performed a reasonable investigation, sent adequate written clarification or sent copies of the requested documentary evidence."

Plaintiff filed the instant lawsuit in December 2005. The suit alleges that Defendants committed numerous violations of the TILA, the FCBA, and the FCBA's implementing regulation (12 C.F.R. § 226.13, or "Regulation Z"). Plaintiff argues that once he began sending his "notices of billing error," the FCBA obligated Defendants to respond to them, and barred Defendants from any other communications or actions regarding his account. More specifically, Plaintiff claims that Defendants unlawfully failed to send written acknowledgments of his error notices; did not correct his account; did not perform a "reasonable investigation"; did not send "written explanations or clarifications," as requested; failed to provide documentary evidence, as requested; initiated collection actions in the form of monthly statements, letters and email messages, and telephone calls; restricted and ultimately closed his account; and reported Plaintiff to various credit agencies. In all, Plaintiff contends that Defendants committed 180 violations of the relevant statutes and regulations. None of the claims in the instant lawsuit, however, arises from any alleged billing error, including the errors asserted in the "notices" that Plaintiff sent to USAA SB.

Plaintiff claims that he is entitled to statutory damages under the TILA of $1000 per violation, for a total of $180,000. Further, Plaintiff seeks attorneys' fees and costs, as well as injunctive relief (ordering that Defendants correct the negative entries on his credit reports, reopen Plaintiffs account, resume accepting monthly minimum payments, and credit any fees or charges assessed in violation of the FCBA).

Defendants' Counterclaim

Defendants deny that they violated the TILA, FCBA, or Regulation Z, and counterclaim for sums owed by Plaintiff for goods and services he purchased using his USAA SB credit card. Defendants also present a much broader set of facts surrounding the instant dispute, examining in more detail the history of Plaintiff's USAA SB account.¹

By early 2004, Plaintiff had amassed substantial debt on a variety of credit cards, totaling almost $54,000. Plaintiffs last statement reflecting purchase activity on his USAA SB card is dated July 9, 2004. During that purchase period, Plaintiff charged $3,835.79, most of which — $3,033.35 — was paid to a merchant called "Debt Relief Services" ("DRS"). DRS was in the business of selling advice and assistance to individuals saddled with large amounts of credit card debt. Plaintiff does not dispute that he purchased and made use of DRS materials starting in July 2004.

On July 26, Plaintiff sent USAA SB a letter that he obtained from DRS, claiming with regard to his most recent statement that "[t]here appears to be a billing error which needs to be corrected." The letter requested four types of documents: all past billing statements, the original cardholder agreement, a report of all payments USAA had received on the account, and "the bank's original bookkeeping journal entry representing a deposit of funds for advancement of money and/or credit for the above account." Further, the letter states that "[u]ntil your company provides verified documentary evidence requested in this account, I hereby dispute the amount in its entirety," and requests that USAA report Plaintiffs account as "disputed" to credit reporting agencies. Defendants did not take any action responsive to this letter, and Plaintiff appears never to have pursued it further.

The next day (July 27), Plaintiff sent another DRS letter to USAA, this time declaring his "intent to tender partial payment and other consideration as satisfaction in full" of his account, and promising further correspondence and a check. Plaintiff sent the follow-up letter, also obtained from DRS, on August 4. The letter was titled ...