Poehl v. Countrywide Home Loans, Inc.

Decision Date19 June 2008
Docket NumberNo. 07-3249.,No. 07-2988.,07-2988.,07-3249.
Citation528 F.3d 1093
PartiesClayton R. POEHL, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. COUNTRYWIDE HOME LOANS, INC., Defendant-Appellee. Diane C. Ludditt-Poehl, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. Capital One Auto Finance, Inc., Defendant-Appellee.
CourtU.S. Court of Appeals — Eighth Circuit

Joe D. Jacobson, argued, David T. Butsch, James J. Simeri, on the brief, Clayton, MO, for appellants.

Thomas Hefferon, argued, Washington, DC, Jason Maschmann, on the brief, St. Louis, MO, Joseph F. Yenouskas, on the brief, Washington, DC, for appellee in No. 07-2988.

Linda B. Dubnow, argued, Chicago, IL, Christopher M. Hohn, Thomas L. Azar, St. Louis, MO, Kristin H. Sculli, Chicago, IL, on the brief, for appellee in No. 07-3249.

Before MURPHY, COLLOTON, and SHEPHERD Circuit Judges.

MURPHY, Circuit Judge.

In these consolidated appeals, arising under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., Clayton R. Poehl and Diane C. Ludditt-Poehl appeal from adverse judgments on the pleadings granted by two district court judges in favor of Countrywide Home Loans, Inc.1 and Capital One Auto Finance, Inc.2 Appellants Poehl and Ludditt-Poehl claim that their credit reports were accessed by appellees in violation of FCRA and that the district courts erred in their rulings. We affirm.

I.

Appellants both received flyers in the mail. Poehl received two mailers from Countrywide stating that he had been preapproved for a loan of up to 90% of the value of his home with a minimum loan amount of $50,000. Ludditt-Poehl received a mailer from Capital One informing her than she had been preapproved for an auto financing loan with a maximum amount of $30,000 and a minimum of $10,000. These mailers implicated FCRA which only permits the use of an individual's credit information without his consent for certain purposes, one of which is the extension of a "firm offer of credit."

Poehl's first mailer, dated June 2005, states on the front side "You're already pre-approved for a refinance loan from Full Spectrum® Lending!" and includes additional loan details on the reverse, including "Minimum loan amount $50,000 in all states except Michigan, $10,000 min. in Michigan." It also sets forth restrictions and conditions on the loan:

This offer is based on information obtained from a credit bureau. You received this offer because you met the criteria at the time this information was obtained. Your loan amount and terms may vary, or the offer may be withdrawn, if you no longer meet the credit, income, debt, and property value criteria. Loans are available for up to 90% loan-to-value ratio. Property value is established by an appraisal. A security interest will be taken on your home. You may opt-out of the credit repository prescreening process by contacting: [various credit reporting agencies].

The mailer further states that "On-time payments may result in a reduction in interest rate during the first four years of the 15 or 30 year loan. Restrictions apply. Ask for details." No specific information regarding the terms, duration, or interest rate of the loan was provided.

Poehl received the second mailer in January 2006. It states in relevant part: "Congratulations! You've been pre-approved for a refinance loan from Countrywide Home Loans' Full Spectrum® Lending Division for up to 90% of the value of your home!" and "Simply make all your payments on time, and your rate will drop each year for the first four years — by as much as 1.5%." At the bottom of the front side the mailer states "See PRESCREEN & OPT-OUT NOTICE on the other side of the loan summary page for details." The reverse side sets forth additional loan information and identical restrictions and conditions as contained in the June 2005 mailer. This mailer also did not contain specific loan information.

In April 2006 Ludditt-Poehl received a mailer from Capital One informing her that she was "already PRE-APPROVED for auto financing of up to $30,000 through Capital One Auto Finance® — with no money down!" A notation at the bottom of the front page says "See PRESCREEN & OPT-OUT NOTICE on reverse under Important Information for more information about prescreened offers." The prescreened notice states "This `pre-screened' offer of credit is based on information in your credit report indicating that you meet certain criteria. This offer is not guaranteed if you do not meet our criteria, including providing acceptable property as collateral." The mailer also stated that the minimum loan amount was $10,000. The mailer did not set forth the terms, duration, or interest rate of the loan.

Neither Poehl nor Ludditt-Poehl consented to the disclosure of their credit information to Countrywide or Capital One. Neither responded to their respective mailers. Each filed a putative class action. Poehl alleged that Countrywide violated FCRA by obtaining information from his credit report without his consent in order to prescreen him for eligibility to receive a home loan.3 Ludditt-Poehl made a similar claim against Capital One. The defendants in both cases moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), arguing that the mailers were firm offers of credit so access of the Poehl and Ludditt-Poehl credit reports was permissible under FCRA. The district courts granted both motions on the ground that the mailers offered "some value" to the recipient that was more than nominal and were therefore firm offers of credit under FCRA.4

On their appeals Poehl and Ludditt-Poehl argue that the district court used an improper test for determining whether the mailers were firm offers of credit. Appellants contend that the "some value" test is but one of three factors that must be met. They say the mailer must also be an "offer" and be "firm," as those terms are defined under the common law. Appellants argue that since the prescreened mailers from Countrywide and Capital One do not satisfy these factors, they are not firm offers of credit and appellees violated FCRA by accessing their credit reports without consent. Because we find that the mailers met the requirements of firm offers of credit as that term is defined under the statute, we affirm.

II.

We review a district court's grant of judgment on the pleadings de novo. Williams v. Bradshaw, 459 F.3d 846, 848 (8th Cir.2006). A grant of judgment on the pleadings is appropriate "where no material issue of fact remains to be resolved and the movant is entitled to judgment as a matter of law." Faibisch v. Univ. of Minn., 304 F.3d 797, 803 (8th Cir.2002). We view all facts pleaded by the nonmoving party as true and grant all reasonable inferences in favor of that party. Syverson v. FirePond, Inc., 383 F.3d 745, 749 (8th Cir.2004).

A.

Congress enacted the Consumer Credit Protection Act (CCPA) in 1968 to provide comprehensive protection of consumers in various aspects of financial dealings. CCPA has several subchapters each of which regulates an aspect of the credit industry. See Sullivan v. Greenwood Credit Union, 520 F.3d 70, 73 (1st Cir. 2008); Brothers v. First Leasing, 724 F.2d 789, 791 (9th Cir.1984). One of these subchapters — FCRA — was enacted in 1970 "to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." Safeco Ins. Co. of Am. v. Burr, ___ U.S. ___, 127 S.Ct. 2201, 2205, 167 L.Ed.2d 1045 (2007); see also 15 U.S.C. § 1681. FCRA has several mechanisms to protect consumer credit information, some of which apply to credit reporting agencies while others apply to users of the information provided by those agencies, such as Countrywide and Capital One. Section 1681b outlines the permissible uses of consumer credit reports, one of which is to extend credit to a consumer. See 15 U.S.C. § 1681b(a)(3)(A); Sullivan, 520 F.3d at 73.

Congress amended FCRA in 1996 to permit creditors to purchase prescreened lists of consumers who meet the creditor's specific criteria without the consumers' consent as long as the purchaser intends to give the consumer a "firm offer of credit." § 1681b(c)(1)(B)(i). Creditors interested in extending firm offers of credit provide the credit reporting agency with their credit specifications and the agency generates a list of consumers who meet that criteria based on information contained in their credit reports. See § 1681b(c). This method prevents creditors from accessing a consumer's full credit report, which cannot be disclosed without the consumer's consent.

FCRA also requires that firm offers of credit sent to consumers contain certain disclosures. For example, the creditor must notify the consumer that information from the consumer's credit report was used, 15 U.S.C. § 1681m(d)(1)(A), that the offer was extended because the consumer met the creditor's selection criteria, § 1681m(d)(1)(B), and that the offer may be conditioned on meeting credit worthiness criteria or continuing to meet selection criteria, or on furnishing collateral, § 1681m(d)(1)(C). Creditors must also inform the consumer that he can opt out of prescreened offers, § 1681m(d)(1)(D), and provide information as to how to do so, § 1681m(d)(1)(E). Appellants do not claim that appellees failed to comply with these requirements.

FCRA provides for a private right of action if a creditor willingly, knowingly, or recklessly violated its provisions. See § 1681n; Safeco, 127 S.Ct. at 2208-10 (willful failure to comply with FCRA's mandates includes reckless failure); see also § 1681o (private right of action for negligent failure). For a corporation that willfully fails to comply with FCRA's mandates the Act provides that the court may award either actual damages or statutory damages which range from $100 to $1000 per consumer, as well as punitive damages, costs, and attorney fees. See § 1681n(a).

B.

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