Godby v. Wells Fargo Bank, N.A.

• Decision Date: 30 September 2008
• Docket Number: Case No. 1:07cv229.
• Citation: 599 F.Supp.2d 934
• Parties: Wanda GODBY, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.
• Court: U.S. District Court — Southern District of Ohio

599 F.Supp.2d 934

Wanda GODBY, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.

Case No. 1:07cv229.

United States District Court, S.D. Ohio, Western Division.

September 30, 2008.

Steven Charles Shane, Bellevue, KY, for Plaintiff.

Caroline Gentry, Porter Wright Morris & Arthur, Jennifer Nicole Fuller, Dayton, OH, for Defendant.

OPINION & ORDER

MICHAEL R. BARRETT, District Judge.

This matter is before the Court upon the parties' Motions for Summary Judgment (Docs. 19, 20); Memoranda in Opposition (Docs. 23, 24); and Replies (Docs. 31, 32).

I. BACKGROUND

The parties agree that the material facts are not in dispute.

This matter arises out of a mortgage agreement between the parties. In September of 2003, Defendant agreed to provide a home mortgage loan to Plaintiff and her husband for the purchase of property. (Doc. 17, Midge Baker Depo. at 9) On December 30, 2005, Plaintiff and her husband divorced, and Plaintiff moved out of the property the following month. (Doc. 20-2, Wanda Godby Aff. ¶ 3) On March 22, 2005, Plaintiff and her ex-husband filed for Chapter 7 bankruptcy and listed Defendant as a creditor. (Doc. 1, ¶ 5) Plaintiff filed a "Debtor's Statement of Intention" to surrender the property. (Doc. 20, Ex E) However, Plaintiff continued to be the titleholder of record until July 27, 2007. (Doc. 19, Ex. A) Neither party has explained why Plaintiff remained on the title.¹

Plaintiff's debt, including the mortgage account, was discharged on July 19, 2005. (Id. ¶ 6) Defendant received notice that the debt had been discharged. (Baker Depo. at 12-13)

On March 2, 2007, Defendant conducted an account review of titleholders for property in which it had an interest as required by the respective security instruments. (Baker Depo. at 13-14) Because Plaintiff was still the titleholder for the property, she was included in this group. (Id. at 23-24) Defendant maintains that in conducting the account review, it was provided with only the titleholder's FICO score. (Id. at 13) Defendant explains that an account review is classified as a "soft hit," which is an inquiry that can only be viewed by the consumer, and never by any third party, including any creditor or potential creditor. (Id. at 16)

In her Complaint, Plaintiff brings one claim for violation of the Fair Credit Reporting Act ("FCRA"). Plaintiff alleges that Defendant obtained credit information for an impermissible purpose in violation of 15 U.S.C. § 1681b(f) and under false pretenses in violation of 15 U.S.C. § 1681q.

II. ANALYSIS

A. Motion for Summary Judgment Standard

Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party has the burden of showing an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden of production, the non-moving party cannot rest on his pleadings, but must present significant probative evidence in support of his complaint to defeat the motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The mere existence of a scintilla of evidence to support the non-moving party's position will be insufficient; the evidence must be sufficient for a jury to reasonably find in favor of the non-moving party. Id. at 252, 106 S.Ct. 2505.

B. Fair Credit Reporting Act

The parties do not dispute that the FCRA is applicable. Defendant admits that it is a "user" of credit information as that term is defined in the Act. Plaintiff brings claims under two sections of the FCRA: (1) obtaining a consumer report by use of false pretenses, § 1681q; and (2) obtaining a consumer report for an impermissible purpose, § 1681b(f).²

Plaintiff cites to this Court's decision in Thibodeaux v. Rupers for the proposition that courts read these two sections together to find that the FCRA imposes civil liability upon any person who willfully obtained information from a credit reporting agency under false pretenses. 196 F.Supp.2d 585, 590 (S.D.Ohio 2001), citing Kennedy v. Border City S & L Ass'n, 747 F.2d 367, 368 (6th Cir.1984). However, as this Court acknowledged in Thibodeaux, Congress amended the FCRA in 1996, and in essence codified the pre-amendment case law reading these sections together. Id. Therefore, reliance on § 1681q, a criminal liability statute, is unnecessary, as the civil liability provisions now cover the act of obtaining a consumer report without a permissible purpose. See Phillips v. Grendahl, 312 F.3d 357, 364 (8th Cir.2002).³

15 U.S.C. § 1681b(f) provides:

A person shall not use or obtain a consumer report for any purpose unless—

(1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and

(2) the purpose is certified in accordance with section with section 1681e of this title by a prospective user of the report through a general or specific certification.

At 15 U.S.C. § 1681b(a)(3), the FCRA provides a list of permissible purposes:⁴

(a) In general. Subject to subsection (c) of this section, any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

...

(3) To a person which it has reason to believe—

(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer;

...

(F) otherwise has a legitimate business need for the information—

(i) in connection with a business transaction that is initiated by the consumer; or (ii) to review an account to determine whether the consumer continues to meet the terms of the account.

Based on this statutory language, courts have found that a plaintiff must establish three elements in order to sustain a claim of improper use or acquisition of a credit report: (i) that there was a "consumer report" within the meaning of the statute; (ii) that the defendant used or obtained it; and (iii) that the defendant did so without a permissible statutory purpose. McFarland v. Bob Saks Toyota, Inc., 466 F.Supp.2d 855, 867 (E.D.Mich.2006), citing Phillips v. Grendahl, 312 F.3d at 364; Gillom v. Ralph Thayer Automotive Livonia, Inc., 444 F.Supp.2d 763, 771 (E.D.Mich. 2006). In addition, the plaintiff must demonstrate that the defendant acted with the requisite degree of culpability—either negligence, 15 U.S.C. § 1681o(a), or willfulness, 15 U.S.C. § 1681n(a)—in order to impose civil liability under the FCRA. Id. (citations omitted).

The parties only dispute whether Defendant's account review was a permissible purpose and whether Plaintiff has demonstrated that Defendant acted with the requisite degree of culpability.

1. Permissible purpose

The parties argue that 15 U.S.C. § 1681b(a)(3)(A) and § 1681b(a)(3)(F) are the relevant provisions in determining whether Defendant accessed Plaintiff's credit information for a permissible purpose.

The Court finds that there is no evidence that as of the date of the account review, Defendant intended to use Plaintiff's information in connection with a credit transaction involving Plaintiff. There were no credit transactions contemplated between the parties, nor was there an account upon which to collect. Therefore, Defendant did not have a permissible purpose under section 1681b(a)(3)(A).

Defendant cites to Levine v. World Fin. Network Nat'l. Bank, 437 F.3d 1118 (11th Cir.2006), for the proposition that FCRA allows a consumer reporting agency to sell an "account review" to a creditor to allow the creditor to "review an account to determine whether the consumer continues to meet the terms of the account." Defendant argues that it follows that a creditor is permitted to purchase a report for the purpose of reviewing a customer's credit score.

In Levine, the Eleventh Circuit noted that the FCRA does not explicitly state whether an account review under section 1681b(a)(3)(F) includes the review of accounts that have been paid in full and closed. 437 F.3d at 1121. The court explained:

The statute contains overlapping language in two provisions: Section 1681b(a)(3)(A) permits the sale of a credit report to a creditor who "intends to use the information in connection with a credit transaction involving the consumer on whom the information is furnished and involving the extension of credit to, or review or collection of an account of, the consumer." Section 1681b(a)(3)(F)(ii) permits the sale of a credit report to a creditor in order to "review an account to determine whether the consumer continues to meet the terms of the account."

Id. at 1121-22. The court noted that "[t]here is a difference in opinion on whether the ambiguous language in FCRA contains an absolute prohibition against the sale of credit reports to former creditors whose accounts are closed and paid in full." Id. at 1122, citing Wilting v. Progressive County Mut. Ins. Co., 227 F.3d 474, 476 (5th Cir.2000) (per curiam) ("[N]either [FCRA] nor the FTC's commentary on [FCRA] suggests that a report may only be permissibly obtained during particular points in the parties' relationship."); Letter from Clarke W. Brinckerhoff, Federal Trade Commission, to Kenneth J. Benner, American Council on Consumer Awareness (Aug. 30, 1999) ("Once an account is closed because the consumer has paid the debt in full ... it is our view that no permissible purpose exists for a [consumer reporting agency] to provide file information ... to the creditor. Because there no longer exists any account to `review' and the consumer is not applying for credit, the FCRA provides no permissible...