Martinez v. Celtic Bank

• Jurisdiction: United States,Federal
• Parties: LISA MARTINEZ, Plaintiff, v. CELTIC BANK, Defendant.
• Decision Date: 08 March 2024
• Court: U.S. District Court — Southern District of New York
• Docket Number: 22-CV-6327 (KMK)

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LISA MARTINEZ, Plaintiff, v. CELTIC BANK, Defendant.

No. 22-CV-6327 (KMK)

United States District Court, S.D. New York

March 8, 2024

Appearances:

Ari Hillel Marcus, Esq.

Yitzchak Zelman, Esq.

Marcus & Zelman, LLC

Asbury Park, NJ

Counsel for Plaintiff

Aylix Jensen, Esq.

John P. Boyle, Esq.

Michael Thomas Etmund, Esq.

Moss & Barnett PA

Minneapolis, MN

Counsel for Defendant

John Rossman, Esq.

Rossman Attorney Group, PLLC

Edina, MN

Counsel for Defendant

OPINION & ORDER

KENNETH M. KARAS, United States District Judge:

Plaintiff Lisa Martinez (“Plaintiff”) brings this Action against Celtic Bank (“Celtic” or “Defendant”) for violations of the Fair Credit Reporting Act (“FCRA”). See 15 U.S.C. § 1681s-2(b). Before the Court is Defendant's Motion for Partial Summary Judgment. (See Not. of Mot. (Dkt. No. 80).) For the foregoing reasons, Defendant's Motion is granted in part and denied in part.

I. Background

A. Factual Background

Plaintiff opened an Indigo Platinum Mastercard account with Celtic Bank (“Celtic” or “Defendant”) in 2019. (Def's 56.1 Statement (“Def's 56.1”) ¶¶ 2-3 (Dkt. No. 88); Pl's Resp. 56.1 Statement (“Pl's Resp. 56.1”) ¶¶ 2-3 (Dkt. No. 92).) Defendant does not service those cards itself and has instead used Genesis FS Card Services, Inc. (“Genesis”) as a servicer since 2015. (Def's 56.1 ¶ 1; Pl's Resp. 56.1 ¶ 1.)

1. The DRP

During the COVID-19 pandemic, Genesis-in its capacity as Celtic's servicer-enrolled eligible cardholders, including Plaintiff, in a Disaster Relief Program (“DRP”), which provided certain short-term relief to negatively impacted consumers. (Def's 56.1 ¶ 5; Pl's Resp. 56.1 ¶ 5.) That relief included reduced APR, reduced monthly minimum payments, and a waiver of certain late and overlimit fees. (Def's 56.1 ¶ 6; Pl's Resp. 56.1 ¶ 6.)

On May 27, 2020, Genesis received a telephone call from Plaintiff about her Account. The following excerpt from that call between Plaintiff (“P”) and a Genesis representative (“R”) is core to this case:

R: For the disaster relief program ma'am okay uhm you will be receiving a letter ma'am within two weeks and if you are qualified the account will receive a temporary reduction in annual percentage rate. We will reduce the minimum payment. Late fees and over the limit fees ma'am will be suppressed while you are on the program. Okay?

P: I would appreciate that. I can make my I mean I can make my minimum payments but I mean I just don't want to be reported to the credit bureau. This is not a good thing you know what I'm saying?

R: Ma'am uhm it shows also here on our end ma'am that once the account ma'am is registered on our disaster relief program uhm we will not report it ma'am to the credit bureau as a late.

P: Alright. Do I need . . . right now I shouldn't uhm alright so right now do I need to make a payment right now?

R: Your payment due date ma'am it will be on June 13, 2020 and it[']s up to you ma'am.

(Bryman Decl. Ex. C (“5/27 Call Tr.”) (Dkt. No. 84-3) (emphasis added).)^[1]Following that call, Genesis sent Plaintiff a payment reminder email around June 9, 2020, and Plaintiff submitted a $80.00 payment on June 13. (Def's 56.1 ¶¶ 11-12; Pl's Resp. 56.1 ¶¶ 11-12.) Defendant states that it mailed Plaintiff a bill on July 14, 2020, advising Plaintiff that her account was past due, a follow-up letter on July 24, 2020, and a delinquent payment reminder on August 11, 2020. (Def's 56.1 ¶¶ 13-15.)^[2] Defendant did not receive a payment from Plaintiff that month and thus reported to Credit Reporting Agencies (“CRAs”) that the account was 30 days delinquent for August 2020 (the “August 2020 delinquency”). (Def's 56.1 ¶ 17; Pl's Resp. 56.1 ¶ 17.)

2. Disputes with Genesis

Fast forward to December 15, 2021. Plaintiff placed two calls to Genesis about her account, advised that she was applying for a mortgage, and wondered why the August 2020 delinquency was still being reported given her earlier conversation. (See Def's 56.1 ¶ 19; Pl's Resp. 56.1 ¶ 19.)^[3]The Genesis representative responded that he would like to listen to the recording, as Plaintiff's account of the conversation did not match up with Genesis training practices. (Id.; id.)

On March 11, 2022, Plaintiff again inquired about her payment history, advising that, based on her understanding of the DRP, she could defer payments and thus pay at any time. (Def's 56.1 ¶ 28; Pl's Resp. 56.1 ¶ 28.) Additionally, Plaintiff filed complaints with the Consumer Financial Protection Bureau (“CFPB”) in February and March, 2022, raising similar concerns including that her payments “should not have been reported as late.” (See Def's 56.1 ¶¶ 32-33; Pl's Resp. 56.1 ¶¶ 32-33; see also Decl. of John K. Rossman in Supp. of Mot (“Rossman Decl.”), Exs. 1, 2 (Dkt. No. 82).) Defendant claims that Plaintiff was inconsistent and even misleading about the existence and nature of the delinquency in her various inquiries. (See Def's 56.1 ¶¶ 23-31; see also Mem of Law in Supp. of Mot. (“Def's Mem.”) 1, 14-16 (Dkt. No. 81).) It interpreted her complaints to challenge whether she ever missed a payment, not to challenge the reporting of a delinquency that she was properly assessed. (Def's Mem. 17-23.) The last statement by Plaintiff in her CFPB complaints provides enough evidence to dispute this account and, as discussed below, arguably should have put Defendant on notice regarding her objection to the credit report.

Genesis wrote Plaintiff in response on May 3, 2022, stating:

We have reviewed the payment history for your Account and determined that we did not receive the minimum payment for the July 2020 and August 2020 billing cycles by the due date. However, we have determined that when you initially called to request financial assistance on May 27, 2020, the agent did not thoroughly explain the above terms and as such, we have requested that the credit reporting agencies remove the delinquency from August 2020 from your credit report.

(Decl. of Evan Bryman (“Bryman Decl.”), Ex. X (“May 3, 2022 Ltr.”) (Dkt. No. 84-24).) Celtic followed up the next day with an email similarly advising that it would request that the CRAs remove the August 2020 delinquency from her credit report. (Def's 56.1 ¶ 31; Pl's Resp. 56.1 ¶ 31.)

Genesis followed through on that promise by filing five automated universal dataforms (“AUDs”) with various CRAs. AUDs are a vehicle for furnishers of credit information (like Defendant) to update or delete information that they determine to be incomplete or inaccurate. (Def's 56.1 ¶¶ 56-57; Pl's Resp. 56.1 ¶¶ 56-57.) Genesis submitted those forms on May 5, June 27, July 14, and August 17, 2022. (Id.; id.)

Genesis's account notes-records of customer interactions or actions taken on a given account (see Decl. of Yitzchak Zelman (“Zelman Decl.”) (Dkt. No. 92), Ex. A (“Dale Dep.”), at 24)-reflect similar events. Specifically, a May 5, 2022, entry states that Genesis sent an AUD requesting removal of the August 2020 delinquency, and a May 12, 2022, note includes language substantially similar to Genesis' letter quoted above. (See Pl's Resp. 56.1 ¶¶ 74-75; Def's Resp. ¶¶ 74-75.)

3. Disputes with CRAs

In addition to disputing the 30-day delinquency directly with Genesis and the CFPB, Plaintiff also submitted written disputes to the CRAs. Those CRA disputes are memorialized in six Automated Credit Dispute Verification (“ACDV”) requests, through which the CRAs asked Celtic to verify delinquencies reported on Plaintiff's account. As reflected below, each ACDV directed Defendant to verify information regarding Plaintiff's account status, payment rating, and account history, and some included additional detail:

• ACDV No. 1 (January 19, 2022)-The first ACDV disclosed Plaintiff's dispute as follows: “Dispute Code 1: 106: Disputes present/previous Account Status/Payment Rating/Account History. Verify Account Status, Payment Rating and Account History.” (Decl. of Misty Dale in Supp. of Mot. (“Dale Decl.”), Ex. Z (“1/19/22 ACDV”) (Dkt. No. 83-1).) In addition, the January 19, 2022, ACDV provided “|/PAID (A2) ||||BAL:0|ACT. DT:01/19/22||||||||||||||||||.” (Id.)

• ACDV No. 2 (February 17, 2022)-Like the January 19, 2022, ACDV, the February 17, 2022 ACDV disclosed Plaintiff's dispute as follows: “Dispute Code 1: 106: Disputes present/previous Account Status/Payment Rating/Account History. Verify Account Status, Payment Rating and Account History.” (Dale Decl. Ex. AA (“2/17/22 ACDV”) (Dkt. No. 83-2).) In addition, the February 17, 2022, ACDV provided, “I HAVE NEVER BEEN LATE ON THIS ACCOUNT I HAVE SPOKEN WITH THE CREDITOR AND THEY CONFIRMED THAT THEY ARE NOT REPORTING ANY LATE PAYMENTS. PLEASE CORRECT IT.” (Id.)

• ACDV No. 3 (April 14, 2022)-This ACDV included the same dispute code as the previous two requests but contained no additional information. (Dale Decl., Ex. BB (“4/14/22 ACDV”) (Dkt. No. 83-3).)

• ACDV No. 4 (May 11, 2022)-This request, from Equifax, contained the same dispute code as the other ACDVs, and provided that “CONSUMER STATES TO REMOVE THE LATE PAYMENT FOR YEAR 2020 JULY CONSUMER STATES THAT SHE NEVER LATE PAYING THIS ACCOUNT SHE ALREADY FILE THIS TO CFPB.” (Dale Decl., Ex. CC (“5/11/22 ACDV”) (Dkt. No. 83-4).)

• ACDV No. 5 (June 9, 2022)-Like the previous ACDVs, the June 9 request was coded to reflect a payment history / account status dispute and provided “CONSUMER STATES THAT SHE NVERLATE PAYMENT THIS ACCOUNT FROM JUNE 2020.” (Dale Decl., Ex. DD (“6/9/22 ACDV”) (Dkt. No. 83-5).)

• ACDV No. 6 (June 10, 2022)-This request contained the same dispute code as all the others and provided that “cons claims that I was never late in this acct.” (Dale Decl., Ex. EE (“6/10/22 ACDV”) (Dkt. No. 83-6).)

Defendant contends that it conducted an investigation after receiving each...