Saunders v. Branch Banking and Trust Co. of Va

• Decision Date: 14 May 2008
• Docket Number: No. 07-1108.,07-1108.
• Citation: 526 F.3d 142
• Parties: Rex Richard SAUNDERS, Plaintiff-Appellee, v. BRANCH BANKING AND TRUST COMPANY OF VIRGINIA, Defendant-Appellant, and Equifax Information Services, LLC; Experian Information Solutions, Incorporated; Trans Union LLC, Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

526 F.3d 142

Rex Richard SAUNDERS, Plaintiff-Appellee, v. BRANCH BANKING AND TRUST COMPANY OF VIRGINIA, Defendant-Appellant, and Equifax Information Services, LLC; Experian Information Solutions, Incorporated; Trans Union LLC, Defendants.

No. 07-1108.

United States Court of Appeals, Fourth Circuit.

Argued: March 20, 2008.

Decided: May 14, 2008.

ARGUED:

Alan Durrum Wingfield, Troutman & Sanders, L.L.P., Richmond, Virginia, for Appellant. Richard John Rubin, Santa Fe, New Mexico, for Appellee.

ON BRIEF:

Megan C. Rahman, Joshua Heslinga, Troutman & Sanders, L.L.P., Richmond, Virginia, for Appellant. Leonard A. Bennett, Newport News, Virginia, for Appellee.

Before MICHAEL and MOTZ, Circuit Judges, and IRENE M. KEELEY, United States District Judge for the Northern District of West Virginia, sitting by designation.

Affirmed by published opinion. Judge MOTZ wrote the opinion, in which Judge MICHAEL and Judge KEELEY joined.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

Rex R. Saunders brought this suit, alleging that Branch Banking & Trust Company of Virginia (BB & T) violated its duties as a furnisher of information under the Fair Credit Reporting Act, 15 U.S.C.A. §§ 1681-1681x (West 1998 & Supp.2007) (FCRA). After a full trial, the jury returned a verdict for Saunders, awarding him $1,000 in statutory damages and $80,000 in punitive damages. BB & T appeals, challenging the district court's denial of its motions for judgment as a matter of law and for remittitur. We affirm.

I.

On August 31, 2003, Saunders purchased an automobile from Richmond Mitsubishi, and the dealer assigned his loan for the car to BB & T. After experiencing mechanical trouble with the car, in late November Saunders traded it in for a new car at the dealership. The dealer paid the remaining debt on the original loan, leaving Saunders with no obligations under that loan.

The dealer then assigned the loan for the second car to BB & T. When Saunders did not receive a payment book for the new car in December, he telephoned BB & T, and a BB & T employee told him that he owed no money on any loan. He visited a BB & T branch and obtained a copy of his loan statement at the bank; it revealed that he owed nothing. In late January, he went to the Department of Motor Vehicles and found that his car's title showed no liens on the vehicle. Saunders contacted BB & T several more times; each time, BB & T employees informed him that he owed no money to BB & T.

On March 8, 2004, Saunders received a letter from BB & T, informing him his payments were "seriously delinquent," his loan was in default, and BB & T had accelerated the payment schedule so that he owed a total balance of $20,441.19, including principal, interest, late fees, and "other applicable charges," all of which was to be paid in full within 10 days. Prior to the March letter, BB & T had never informed Saunders that he owed money on this loan.

After receiving BB & T's March letter, Saunders met with Thomas Holben, a BB & T lending officer, and explained that BB & T had erred in failing even to acknowledge the existence of his loan prior to March 8.¹ Saunders told Holben that he would meet his obligations under the loan, but he refused to pay any penalties or late fees since he had expressed his willingness to pay numerous times and BB & T had repeatedly erred in stating that he owed no money. Although BB & T offered to wait to assess late fees until after he had made all of the remaining payments on the loan, the bank refused to waive the late fees or penalties. Saunders responded that he was unwilling to pay down the loan if BB & T was going to charge late fees and penalties resulting from its own admitted accounting errors.

At trial, Holben conceded that BB & T did not book the second loan into its computer system until March 4, 2004, and that BB & T did not provide Saunders with an account number until March 8. Holben also admitted that BB & T learned of the loan and the failure to record the loan because Saunders "kept contacting BB & T," attempting to pay down the loan. After the loan was booked into the computer system in March, BB & T documented numerous communications from Saunders and Saunders' attorney. BB & T's records entirely accord with Saunders' testimony. The bank records reveal that Saunders sought to resolve the dispute, informed BB & T of its error in failing to communicate with him earlier, and told BB & T that he had not paid earlier because BB & T had not provided him with an account number for the loan.

On April 14, 2004, BB & T repossessed Saunders' new car and informed Saunders that he could only redeem it by paying the full amount due, including principal, interest, late fees, and a "repossession expense." Saunders tried to obtain a new loan from a credit union in order to redeem the BB & T loan and avoid further interactions with BB & T. However, BB & T had reported Saunders' loan as "in repo[ssession] status" to the credit reporting agencies (CRAs), causing Saunders' credit score to drop from 754 to 599. Because of this substantial drop in his credit score, Saunders could not obtain a new loan from the credit union at a favorable interest rate.

Saunders contacted the CRAs (including Trans Union), lodging a dispute over the recorded information about the BB & T debt and triggering the CRAs' obligation to reinvestigate pursuant to 15 U.S.C.A. § 1681i(a). Trans Union issued an automated consumer dispute verification form to BB & T. BB & T had previously reported the repossession to Trans Union, resulting in a negative score on the loan, and in response to the dispute verification form, BB & T updated the record to reflect a "profit and loss writeof[f],"² resulting in the worst possible score for Saunders on the loan. The dispute verification form provided BB & T with two opportunities to indicate that Saunders had contested the legitimacy of the debt with BB & T. BB & T therefore could have indicated that it considered the debt uncollectible and also reported that Saunders had disputed the debt; if BB & T had done so, Trans Union would have reported both the debt and the dispute and would not have considered the debt in determining Saunders' total credit score. Thus, BB & T's decision to report the debt but not the dispute resulted in a much lower credit score for Saunders than a report of both the debt and the dispute.

Holben conceded that BB & T reported this account as a "charge-off," reflecting that Saunders had made no payments. On direct examination, Saunders' counsel asked Holben if BB & T had intended to report Saunders' loan as it had, without any indication that Saunders contested the debt. Holben responded: "With no payments made; correct." Even as the case went to trial, the record indicated that BB & T still had not changed or updated its reporting to the CRAs to reflect the ongoing dispute with Saunders about the legitimacy of the debt.

On October 24, 2005, Saunders brought this suit, alleging that BB & T violated its duties as a furnisher of information under FCRA, 15 U.S.C.A. § 1681s-2(b)(1), by failing to report the dispute. At the conclusion of the trial, the court instructed the jury on BB & T's statutory duties as a furnisher of information. The trial court also instructed the jury that it could find BB & T had violated FCRA by failing to report the ongoing dispute only if the jury concluded that BB & T's conduct excused Saunders from making his payments on the loan, i.e., if the jury considered the dispute meritorious. After deliberation, the jury returned a verdict finding that BB & T had intentionally violated its duties under FCRA. The jury awarded Saunders no compensatory damages but did award the maximum possible statutory damages of $1,000 and punitive damages of $80,000.

On appeal, BB & T argues that the district court erred in denying its motion for judgment as a matter of law, because Saunders presented insufficient evidence to establish a willful violation of FCRA. BB & T also maintains that a punitive damages award of $80,000 violates the due process clause of the Constitution, and thus the district court erred in denying its motion for remittitur of the award to $4,000.

II.

BB & T initially contends that the district court should have granted its motion for judgment as a matter of law. We review de novo a district court's denial of a motion for judgment as a matter of law. Anderson v. Russell, 247 F.3d 125, 129 (4th Cir.2001). A court may award judgment as a matter of law only if there is no legally sufficient evidentiary basis for a reasonable jury to find for the non-moving party. Fed.R.Civ.P. 50(a). Thus, when a jury has returned its verdict, a court may grant judgment as a matter of law only if, viewing the evidence in a light most favorable to the non-moving party and drawing every legitimate inference in that party's favor, the court determines that the only conclusion a reasonable jury could have reached is one in favor of the moving party. Figg v. Schroeder, 312 F.3d 625, 635 (4th Cir.2002).

We consider first the relevant legal principles governing this FCRA claim and then the arguments offered by BB & T.

A.

"Congress enacted FCRA 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, 2205-06, 167 L.Ed.2d 1045 (2007) (citing 84 Stat. 1128, 15 U.S.C. § 1681). To this end, FCRA requires CRAs to follow procedures in reporting consumer credit information that both "meet[ ] the needs of commerce" and are "fair and equitable to the consumer." 15 U.S.C.A. § 1681(b).

In addition to the duties it imposes on CRAs, FCRA also imposes duties on "furnishers of information." § 1681s-2. Under § 1681s-2(a), FCRA prohibits any person from furnishing information to a CRA that the person knows is inaccurate. Additionally, any person who "regularly and in the ordinary course of business furnishes...