Losch v. Nationstar Mortg. LLC, 20-10695

• Decision Date: 28 April 2021
• Docket Number: No. 20-10695,20-10695
• Citation: 995 F.3d 937
• Parties: Henry LOSCH, a.k.a. John Losch, Plaintiff - Appellant, v. NATIONSTAR MORTGAGE LLC, d.b.a. Cooper, Mr., Defendant, Experian Information Solutions, Inc., Defendant - Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

995 F.3d 937

Henry LOSCH, a.k.a. John Losch, Plaintiff - Appellant,

v.NATIONSTAR MORTGAGE LLC, d.b.a. Cooper, Mr., Defendant,Experian Information Solutions, Inc., Defendant - Appellee.

No. 20-10695

United States Court of Appeals, Eleventh Circuit.

April 28, 2021

Susan Mary Rotkis, Price Law Group, APC, TUCSON, AZ, Aaron M. Swift, Swift Law, PA, SAINT PETERSBURG, FL, for Plaintiff - Appellant.

Christopher A. Hall, Adam W. Wiers, Jones Day, CHICAGO, IL, Maria Helena Ruiz, Kasowitz Benson Torres & Friedman, LLP, MIAMI, FL, for Defendant - Appellee.

Before JORDAN, NEWSOM, and TJOFLAT, Circuit Judges.

NEWSOM, Circuit Judge:

In 2017, Henry Losch found himself in dire financial straits, so he filed for Chapter 7 bankruptcy and discharged his debts—including the mortgage on his home. Not long thereafter, though, Losch discovered that his credit report still showed that he was delinquent on the mortgage. Concerned, he contacted the reporting agency, Experian, to correct the error. But Experian's own inquiry with its data furnisher led it to confirm—inaccurately, as it turns out—its previous reporting. It thus continued to report the outstanding mortgage. Losch filed suit under the Fair Credit Reporting Act.

On appeal, we must decide whether Experian violated the FCRA's requirements that a credit-reporting agency (1) employ "reasonable procedures to assure maximum possible accuracy of the information concerning the individual" when preparing a credit report, 15 U.S.C. § 1681e(b), and (2) conduct a "reasonable reinvestigation" of disputed information when notified of a potential inaccuracy, id. § 1681i(a). The district court held that Experian didn't violate the FCRA and granted it summary judgment. Because we disagree that the measures that Experian took after Losch notified it of the inaccuracy in his report were "reasonable" as a matter of law, we vacate the district court's judgment and remand.

I

A

In 2012, Henry Losch took out a mortgage through CitiMortgage on his home in Apopka, Florida. Five years later, he declared Chapter 7 bankruptcy. In an attempt to keep his house, however, Losch reaffirmed his mortgage, and thus retained the debt, instead of allowing the bankruptcy trustee to liquidate it. Even so, despite the reaffirmation, and for reasons unexplained in this litigation, the trustee subsequently sold the Apopka property. CitiMortgage then transferred the servicing of Losch's mortgage to Nationstar, which began sending Losch past-due notices.

Those notices prompted Losch—who no longer had any reason to hold onto the mortgage—to move the bankruptcy court to rescind his reaffirmation. Although his motion came after the statutory deadline, the bankruptcy court granted it, and Losch rescinded the reaffirmation.

Believing that he had a "fresh start," Losch was dismayed when he found that his Experian credit report still showed that he had a debt with Nationstar for nearly $140,000, with a past-due balance of more than $10,000. In June 2018, he wrote to Experian to dispute the report:

I am writing this letter to dispute the Nationstar Mortgage account - account no. 614148XXXX. This mortgage was discharged in my chapter 7 bankruptcy that I filed in 2017. We filed a reaffirmation of this mortgage, but we rescinded the reaffirmation in 2018 and the court approved that so I no longer own this debt. Please correct the information on my credit report.

After receiving Losch's dispute letter, Experian sent an automated consumer data verification (ACDV) form to the furnisher, Nationstar, seeking to verify the alleged debt.¹ Nationstar responded that the loan balance was correct and added past-due amounts that had since accumulated. Experian then relayed the same information to Losch. Experian took no further steps to verify the debt on Losch's account, and it didn't correct Losch's credit report until February 2019, after this litigation had commenced.

B

In December 2018, Losch sued Experian and Nationstar in federal district court for violating the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq . Alt hough Losch brought claims against both Experian and Nationstar, only his claims against Experian are relevant here.² In his second amended complaint, he alleged that Experian violated the FCRA by failing (1) to establish and/or follow reasonable procedures in preparing his credit report, 15 U.S.C. § 1681e(b) ; (2) to conduct a reasonable reinvestigation after receiving Losch's dispute letter, id. § 1681i(a)(1); (3) to provide Nationstar with all relevant information regarding the dispute, id. § 1681i(a)(2)(A); and (4) to correct or delete the disputed information from Losch's credit file, id. § 1681i(a)(5)(A). Losch contended that the violations were willful and that he was entitled to punitive damages, statutory damages, and attorney's fees. Id. § 1681n. In the alternative, he alleged that he was entitled to damages for Experian's negligent noncompliance with the Act. Id. § 1681o .

The district court granted Experian summary judgment, concluding that under both § 1681e and § 1681i, its actions were reasonable as a matter of law. The court held that "[c]ontrary to Losch's argument, the statute does not impose any duties on the credit-reporting agency other than notifying the furnisher of the dispute and examining any information the consumer submits." In its view, Losch should have provided Experian with "specific information from which it could have discovered that he no longer owed money on the Nationstar mortgage," and his failure to do so was "dispositive." Finally, the court explained, Losch's theory of liability was a "bridge too far" because it would require credit-reporting agencies to examine court orders and other documents to determine their legal effect.

Losch timely appealed.³

II

Before reaching the merits, a threshold question: Does Losch have Article III standing? Neither party raised the standing issue, either before the district court or on appeal. But they vigorously contested whether Losch had shown any damages sufficient to survive summary judgment⁴ —which, given Article III's "injury in fact" requirement, prompted us to ask for supplemental briefing about standing. After careful consideration, we conclude that Losch has standing to pursue his claims under § 1681e(b) and § 1681i.

To have Article III standing, a plaintiff must show that he "(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016). This case primarily involves the injury-in-fact requirement—and in particular, the sub-requirement of "concrete[ness]." See id. at 1548 ("To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’ " (quoting Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) )).

An "intangible injury," such as the alleged violations of the FCRA here, may nonetheless constitute a concrete injury. See id . at 1549. In deciding whether an intangible harm is concrete, we consider "both history and the judgment of Congress." Muransky v. Godiva Chocolatier, Inc. , 979 F.3d 917, 926 (11th Cir. 2020) (en banc) (quoting Spokeo , 136 S. Ct. at 1549 ). Although that test can often be difficult to apply, its application to the FCRA provisions at issue here is made considerably easier by our decision in Pedro v. Equifax, Inc. , 868 F.3d 1275, 1279–80 (11th Cir. 2017).

As in this case, the plaintiff in Pedro asserted that a credit-reporting agency had violated § 1681e(b) ’s requirement to "follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." We explained that "the harm caused by the alleged violation of the Act—the reporting of inaccurate information about [the plaintiff's] credit to a credit monitoring service"—bore a close relationship to the common-law tort of defamation, which was traditionally actionable per se . Pedro , 868 F.3d at 1279–80. Losch alleges the same harms here: Experian, he claims, repeatedly reported a non-existent delinquent mortgage debt on his credit report to third parties. Under Pedro ’s reasoning, Losch needn't show that the false reporting caused his credit score to plummet; the false reporting itself was the injury. See id. ; see also Restatement (First) of Torts § 558 (Am. L. Inst. 1938) ; Restatement (Second) of Torts § 558 (Am. L. Inst. 1965). For the same reason, Losch needn't show that Experian's false reporting of the mortgage would be worse for his credit score than true reporting of a discharged-in-bankruptcy status; the injury isn't the one to his credit score, but rather, the false reporting about his debt.

In response, Experian says that Losch hasn't shown that it sent his credit report to third parties, as the defamation analogy would require. But as Losch points out, the reports themselves show otherwise. Losch's January 3, 2019 report, for instance, indicates that Experian supplied the report at least 26 times to six different entities. At oral argument, Experian sought to distinguish those communications by explaining that they were in response to "soft" inquiries, not "hard" inquiries—that is, inquiries not tied to a specific credit application, as opposed to those that are (and can thus affect a person's credit score). See Oral Arg. Tr. at 18:24–19:04; see also Brown v. Vivint Solar, Inc. , 2020 WL 1332010, at *1 n.2 (M.D. Fla. Mar. 23, 2020). For "soft" inquiries, Experian says, "most" merely involve "prescreen inquiries," where the creditor receives "only confirmation that a consumer meets a set of criteria selected by the creditor," as opposed to the consumer's complete report. Oral Arg. Tr. at 18:36–18:45; Doc. 85-1...