Harmon v. Regions Bank, 2006-CA-00453-SCT.

• Decision Date: 07 June 2007
• Docket Number: No. 2006-CA-00453-SCT.,2006-CA-00453-SCT.
• Citation: 961 So.2d 693
• Parties: Martha M. HARMON and James V. Harmon v. REGIONS BANK.
• Court: Mississippi Supreme Court

961 So.2d 693

Martha M. HARMON and James V. Harmon v. REGIONS BANK.

No. 2006-CA-00453-SCT.

Supreme Court of Mississippi.

June 7, 2007.

Rehearing Denied August 16, 2007.

Rex F. Sanderson, Houston, attorney for appellants.

L. Bradley Dillard, R. Brannon Kahlstorf, Tupelo, attorneys for appellee,

Before SMITH, C.J., CARLSON and DICKINSON, JJ.

DICKINSON, Justice, for the Court:.

¶ 1. This case is before the Court on appeal from the Circuit Court for the First Judicial District of Chickasaw County Mississippi, by the Plaintiffs, Martha M. Harmon and James V. Harmon ("the Harmons"). The Circuit Court entered summary judgment in favor of the Defendant, Regions Bank. The Plaintiffs filed a Motion to Reconsider the Entry of Summary Judgment and a Motion for Authority to File Amended Complaint, which were denied by the Circuit Court. Aggrieved by the Court's Order Denying the Motion to Reconsider Summary Judgment and Motion to Amend, the Harmons timely filed their Notice of Appeal.

¶ 2. The Harmons raise three issues on appeal. First, the Harmons allege that the Circuit Court erred in deciding that the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, et seq., preempted their state law cause of action for harassment and defamation of their credit reputation. Second, the Harmons argue that the Circuit Court erred in failing to make findings of fact regarding the preemption issue. Third, the Harmons assert that the Circuit Court erred in denying their Motion to Amend their Complaint. While the first issue is dispositive here, each of these issues are addressed in the discussion below.

STATEMENT OF THE FACTS AND PROCEEDINGS

¶ 3. James and Martha Harmon executed a loan secured by their home on February 14, 1992, with Sunburst Bank in the amount of $35,210.00. Thereafter, the Harmons applied for and received a mortgage loan with Union Planters Bank on February 2, 1998, for the sum of $66,551.50. On November 26, 2001, the Harmons paid in full the loans made by Sunburst and Union Planters Bank and properly executed and filed the satisfaction of the deeds of trust. Sometime thereafter, Sunburst Bank and Union Planters Bank merged and were consolidated into Regions Bank.¹

¶ 4. According to the Harmons, after payment in full of the loan, Regions Bank began a "course of harassment" by telephone and letters demanding payment on the loan which had already been paid in full. Regions Bank ultimately made reports to credit reporting companies claiming that the Harmons' payments were in arrears.

¶ 5. According to the Harmons, in February of 2002, they received a delinquency notice from Regions Bank Mortgage printed on pink paper. Believing it to be a mistake, they discarded the notice. On March 1, 2002, upon receipt of a second delinquency notice, Martha contacted the local Regions Bank, which told her not to be concerned because the loans were paid. Subsequently, Martha was denied a business loan from another financial institution because, as the loan officer told her, her credit report contained a notice that the Harmons' home was in foreclosure.

¶ 6. Martha Harmon asserts that she then contacted a local Regions Bank employee who told her there was nothing Regions could do to clear up her credit report. Thereafter, the Harmons began receiving phone calls at their home and at work from local Regions Bank branches regarding money owed, offering settlement and informing them of the recent "foreclosure" of their home.

¶ 7. By letter dated September 1, 2002, the Harmons received notice that their loan was paid in full. Additionally, Regions Bank sent to a Regions Mortgage employee on October 18, 2002, a letter directing her to notify various credit reporting agencies to remove the delinquencies reported and to show that the loan was paid in full as of November 21, 2001.

¶ 8. The Harmons filed suit against Regions Bank on July 1, 2003, in the Circuit Court of the First Judicial District of Chickasaw County, Mississippi. Regions Bank denied all liability and filed a Motion for Summary Judgment on July 22, 2005.² On September 1, 2005, during the hearing on Regions Bank's Motion for Summary Judgment, the Harmons made a verbal motion to amend the complaint. The trial judge granted such motion, stating that he would allow the Harmons an opportunity to file a written Motion to Amend as long as it was filed before entry of final judgment. The Harmons failed to file a written motion to amend, and final judgment was entered on September 19, 2005. On September 26, 2005, the Harmons filed a Motion to Reconsider Summary Judgment and a Motion for Authority to File Amended Complaint. These Motions were denied by the Circuit Court and the Harmons bring these issues for disposition.

ANALYSIS

¶ 9. The issues before this Court are as follows: (1) whether the trial court erred in finding the Fair Credit Reporting Act preempts state law claims of defamation and harassment; (2) whether the trial court erred in failing to make sufficient findings of fact; and (3) whether the trial court erred in denying the Harmons' Motion to Amend their Complaint.

I. Whether the Circuit Court erred in holding that the Fair Credit Reporting Act preempts common law claims

¶ 10. The Court applies a de novo standard of review to a trial court's grant or denial of a motion for summary judgment. McKinley v. Lamar Bank, 919 So.2d 918, 925 (Miss.2005). Our rules of civil procedure require the trial court to grant summary judgment where "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." Miss. R. Civ. P. 56(c). The facts are viewed in the light most favorable to the nonmoving party, with the movant bearing the burden of demonstrating that no genuine issues of material fact exist for presentation to the trier of fact. Hardy v. Brock, 826 So.2d 71, 74 (Miss.2002). However, the party opposing the motion must be diligent and "may not rest upon the mere allegations or denials of the pleadings, but instead the response must set forth specific facts showing that there is a genuine issue of material fact for trial." Harrison v. Chandler-Sampson Ins., Inc., 891 So.2d 224, 228 (Miss.2005) (citing Miller v. Meeks, 762 So.2d 302, 304 (Miss.2000)). If any triable issues of material fact exist, the trial court's decision to grant summary judgment will be reversed.

¶ 11. This Court has held that preemption is proper in three circumstances: (1) where Congress explicitly preempts state law; (2) where preemption is implied because Congress has occupied the entire field; or (3) where preemption is implied because there is an actual conflict between federal and state law. Cooper v. GMC, 702 So.2d 428, 434 (Miss.1997) (citing English v. General Elec. Co., 496 U.S. 72, 78-9, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990)). Here, the federal Fair Credit Reporting Act applies to these claims and explicitly preempts certain state law claims.

¶ 12. The federal Fair Credit Reporting Act ("FCRA") was enacted to insure that consumer credit reporting agencies were "exercis[ing] their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy." 15 U.S.C. § 1681. This Act mandates that consumer reporting agencies engage in fair and reasonable practices in investigating and evaluating the creditworthiness and credit standing of consumers.

¶ 13. Regions Bank qualifies as an entity that furnishes information to consumer reporting agencies and its actions are therefore covered by this Act. See 15 U.S.C. § 1681h (e) (applying specific provision to furnishers of credit information); also Mitchell v. First Nat'l Bank, 505 F.Supp. 176, 177 (M.D.Ala.1981) (noting that a bank which did no more than furnish information to a consumer reporting agency was not itself a consumer reporting agency but did qualify under the FCRA).

¶ 14. The FCRA includes two preemption provisions, the first of which is relevant in this case and states, in pertinent part:

Except as provided in Sections 1681n and 1681o,[³] no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to [Sections 1681g, 1681h, or 1681m], or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report[,] except as to false information furnished with malice or willful intent to injure such consumer.

15 U.S.C. § 1681h(e) (footnote added).⁴

¶ 15. The tort list of § 1681h(e) is non-exhaustive and includes state law claims itemized and "in the nature" of those listed. Carlson v. Trans Union, LLC, 259 F.Supp.2d 517, 521 (N.D.Tex. 2003). Defamation as a cause of action is specifically enumerated by § 1681h(e). This Court adopted the definition of "invasion of privacy" as occurring "when disclosure would subject a person to embarrassment, harassment, physical danger, disgrace, or loss of employment or friends." Mississippi Dep't Of Wildlife, Fisheries & Parks v. Mississippi Wildlife Enforcement Officers' Ass'n, 740 So.2d 925, 936 (Miss.1999) (citing State ex rel. Petty v. Wurst, 49 Ohio App.3d 59, 550 N.E.2d 214, 216 (1989) (quoting Kilroy v. NLRB, 633 F.Supp. 136, 143 (S.D.Ohio 1985) aff'd 823 F.2d 553, 1987 WL 38055 (6th Cir.1987))). Thus, the Harmons' harassment claim is closely affiliated with and can be deemed "in the nature of" an invasion of privacy claim. Therefore, both claims fit within the FCRA preemption provision.

¶ 16. The Harmons claim they are excluded from preemption as their claim fits under the last line of § 1681h(e).⁵ At...