Villagran v. Central Ford, Inc.
| Citation | 524 F.Supp.2d 866 |
| Decision Date | 23 October 2007 |
| Docket Number | Civil Action No. H-05-2685. |
| Parties | Margarita VILLAGRAN, Plaintiff, v. CENTRAL FORD, INC., Defendant. |
| Court | U.S. District Court — Southern District of Texas |
Ashish Mahendru, Mahendru PC, Houston, TX, for Plaintiff.
Philip S. Gordon, Gordon Law Firm, Houston, TX, for Defendant.
Margarita Villagran sues on her own behalf and on behalf of a class of people sent mailings by Central Ford, Inc., an automobile dealership. Villagran alleges that the mailings violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., because they used information obtained without authorization from the addressees' credit reports, for a purpose not permitted under the Act. The FCRA allows companies such as Central Ford to use information obtained from consumers' credit reports for communications that extend "firm offers of credit." The FCRA prohibits the use of such information to advertise rather than extend "firm offers of credit." Villagran alleges that the mailing she and others received did not extend a "firm offer of credit." She seeks damages under 15 U.S.C. § 1681n(a), which provides that for each violation, the consumer may recover "any actual damages sustained by the consumer as a result of [a violation] or damages of not less than $100 and not more than $1,000," punitive damages, attorney's fees, and costs.
Villagran has amended her motion to certify a class action, (Docket Entry No. 55); Central Ford has responded, (Docket Entry No. 56); Villagran has replied, (Docket Entry No. 61); and Central Ford has surreplied, (Docket Entry No. 63). Central Ford has moved to dismiss or for summary judgment under Rules 12(b)(6), 12(c) and 56. (Docket Entry No. 70). Villagran has responded. (Docket Entry No. 74). Central Ford has also moved to strike the affidavit of Villagran's expert witness, Oscar Marquis, on the grounds that Villagran never disclosed Marquis as an expert witness and that Villagran failed to identify Marquis before the discovery deadline expired. (Docket Entry No. 71).
Based on the motions, responses, and replies; the record; the parties' submissions; and the applicable law, this court grants Central Ford's summary judgment motion and denies Villagran's motion to certify a class action. Central Ford's motion to strike is denied as moot. The reasons for these rulings are set out in detail below.
The FCRA allows consumer credit-reporting agencies to furnish certain information for credit transactions that a consumer did not initiate, as long as the creditor uses that information within the statute's limits. 15 U.S.C. § 1681b. A prospective creditor may purchase information ,about an individual's credit from a credit-reporting agency in order to prescreen the individual for creditworthiness based on preestablished eligibility criteria and to extend "firm offers of credit" to an individual who meets the criteria. A creditor may not, however, use such information merely for advertising.
The Fifth Circuit has explained the process by which prospective creditors may obtain and use information under the FCRA. "In the pre-screening process, credit reporting agencies compile lists of customers who meet specific criteria provided by the creditor, and then provide the lists to a creditor, who uses the lists to solicit customers with firm offers for credit in the form of pre-approved offers of credit." Kennedy v. Chase Manhattan Bank USA, NA, 369 F.3d 833, 841 (5th Cir.2004). Such preapproved "firm offers of credit" may be conditioned on the consumer meeting the creditor's previously established criteria for extending credit. Id. If the consumer meets the criteria, however, the credit must be extended. Id. at 841-42.
In 2005, Margarita Villagran received a mailing that stated it was from Central Ford. The mailing stated:
Dear Margarita Villagran,
Can you walk into a new car dealership pre-approved to purchase a new or preowned vehicle of your choice? Yes, you can. You have already been pre-approved* for a loan.
Now, we know what you must be thinking. You are asking yourself if this is really possible?
Yes, it is because Your Auto Loan Finance Source is a very different kind of finance company. We are prepared to handle the initial transaction entirely by phone, in only a few minutes. In fact, we're light years ahead of your typical finance companies. I have to point out that we aren't contacting you by accident. We are very careful to whom we extend an offer of auto financing. You will not even have to speak with anyone!
You must be wondering why we selected you for this incredible offer?
This offer has been extended to you because you have satisfied the strict criteria for credit worthiness used to identify select consumers for such programs.
What do we mean when we say you do not have to speak to anyone?
You must be wondering how this could work. Well it is simple.
You activate your pre-approval amount by following three easy steps.
TO ACTIVATE YOUR PRE — APPROVAL LOAN:
Step 1. From a touch tone phone, CALL TOLL FREE 1-888-205-9489 and enter your 10 DIGIT LOAN APPROVAL CODE () Step 2 Your identity will be verified and you will receive up to the amount for which you are PRE — APPROVED*.
Step 3. SELECT VEHICLE at your authorized dealer.
This process is convenient, secure, and you DON'T have to speak with a sales representative during this call!!
Can you trade in your current vehicle? Absolutely. Appraisers from all over the state will be on hand to MAXIMIZE YOUR TRADE VALUE. With $0 CASH DOWN* * your payments may never be lower. After your purchase of a new or quality pre-owned vehicle, your trade will be PAID OFF REGARDLESS OF WHAT YOU OWE.* *
Activate your pre-approval loan now with MY AUTO LOAN FINANCE SOURCE. Just follow the three easy steps above. This event is valid through this Saturday. Don't miss this opportunity, call today!
P.S. The activation hot-line is available 24 hours a day.
P.P.S. Please act now as your approval will expire this Saturday.
. The mailing contained the following language near the bottom, in smaller type:
*PRESCREEN & OPT — OUT NOTICE This "prescreened" offer 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). If you do not want to receive prescreened offers of credit from this or any other companies, call the consumer reporting agencies toll free, 1-888-567-8668 or write Equifax Options, P.O. Box 740123, Atlanta, GA 30374, Experian Information Systems, Inc., P.O. Box 919, Allen TX 75013, Trans Union LLC, P.O. Box 97328, Jackson MS 39288 or by calling 1-888-50PTOUT. Your new vehicle car payment cannot exceed 20% of your gross monthly income; vehicle totaled with your current monthly payments must not exceed 50% of your gross income. You must be at least 18 years of age. Lender assumes no responsibility for incorrect information supplied by various credit reporting agencies. Any equity deficit in your current vehicle must be paid or refinanced with new Vehicle. Credit severity may affect down payment. Bankruptcies must be discharged. If in compliance with provisions listed above, you are guaranteed to receive a loan for the purchase of a 2003 or newer vehicle from MDA Capital. * *Upon completion of a vehicle purchase. Vehicles with lien amounts exceeding actual cash value may require a supplemental fee. Status may vary from time data was computed. WAC See dealer for details.
(Id.).
Villagran did not respond to the mailing other than by filing this lawsuit. Villagran has alleged that she did not authorize Central Ford to access or use information from her credit report. Villagran alleges that Central Ford used information from her credit report to send her a mailing that did not extend a "firm offer of credit" and therefore violated section 1681b of the FCRA. Villagran argues that the "purported offer" in the mailing she received (Docket Entry No. 23, Ex. A at 3).1
Villagran submitted a copy of the mailing she received. She alleges that Central Ford "sent or caused to be sent" mailings "identical or similar to" the one she received "to approximately one hundred thousand individuals in and around the Houston area." (Docket Entry No. 55 at 2). Villagran also submitted a chart summarizing the number of mailings that Parkway ordered between April 28, 2005 and August 1, 2005. (Docket Entry No. 55, Ex. B). She seeks to represent a class of approximately 100,000 individuals whose names were on lists Central Ford used in 2005 to send these mailings. The lists and the names they contained are not available and apparently cannot be recreated. The number of potential class members is based on information as to the number of mailings.
In this suit, Villagran asserts that each mailing is an FCRA violation. She alleges a right to receive $1,000 in statutory damages for each violation, as well as an injunction, punitive damages, and her attorney's fees.
Rule 12(b)(6) allows dismissal if a plaintiff fails "to state a claim upon which relief may be granted." FED. R. Civ. P. 12(b) (6). The Supreme Court recently clarified the standards that apply in a motion to dismiss for failure to state a claim. In Bell Atlantic Corp. v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007), the Court confirmed that Rule 12(b)(6) must be read in conjunction with Rule 8(a), which requires "a short and plain statement of the claim showing that the...
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...analyzed the details of an insurer's firm offer of insurance, rather than a lender's firm offer of credit]; Villagran v. Central Ford, Inc. (S.D. Tex. 2007) 524 F.Supp.2d 866, 871 [trial court analyzed a motion to dismiss for failure to state a claim (equivalent to a demurrer), rather than ......