Villagran v. Freeway Ford, Ltd.
| Decision Date | 10 September 2007 |
| Docket Number | Civil Action No. H-05-2687. |
| Parties | Margarita VILLAGRAN, Plaintiff, v. FREEWAY FORD, LTD., et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Ashish Mahendru, Mahendru PC, Houston, TX, for Plaintiff.
William T. Green, Attorney at Law, Houston, TX, for Defendants.
Margarita Villagran sues on her own behalf and on behalf of a class of people sent mailings by Freeway Ford, Ltd., an automobile dealership, and its general partner, Stephen E. Prather, Inc. 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 the defendants 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 mailings did not extend "firm offers 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 moved for partial summary judgment on her claim that the mailing she and others on the same mailing list received, as well as three other similar mailings, violated the FCRA because they did not extend "firm offers of credit." (Docket Entry. No. 65). The defendants have responded, (Docket Entry No. 67), and Villagran has replied, (Docket Entry No. 69). The defendants have crossmoved for summary judgment that, as a matter of law, the mailing sent to Villagran did constitute a "firm offer of credit." The defendants have alternatively cross-moved for partial summary judgment that, even if the mailing to Villagran did violate the FCRA, the violation was not willful. (Docket Entry No. 66). As to the other mailings, the defendants argue that Villagran may not assert a claim based on a mailing she did not receive and that did not use information obtained by accessing her credit report. Villagran has responded, (Docket Entry No. 68), and the defendants have replied, (Docket Entry No. 73). Villagran has also moved to strike the defendants' summary judgment evidence. (Docket Entry No. 70). The defendants have responded to that motion. (Docket Entry No. 71). In addition, Villagran has amended her motion to certify a class action, (Docket Entry No. 78), and the defendants have responded, (Docket Entry No. 79).
Based on the motions, responses, and replies; the record; the parties' submissions; and the applicable law, this court denies Villagran's motion to strike; denies Villagran's summary judgment motion; grants the defendants' summary judgment motion; and denies Villagran's motion to certify a class action.1 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 June 2005, Margarita Villagran received a mailing from the defendants, Freeway Ford, Ltd. and Stephen E. Prather, Inc. The mailing stated:
Dear Margarita,
Are you considering the purchase of a new vehicle but concerned about not being able to secure the financing you need?
Margarita, you received this offer due to your payment history and you have qualified to participate in the Freeway Ford Guaranteed Approval Event.
You have been Pre-Approved for $27,525 towards the purchase of your next car or truck!
At Freeway Ford, we take great pride in helping individuals purchase the vehicle of their choice regardless of their credit situation.
At Freeway Ford we understand that bad things happen to good people. We will not promise you miracles, we do guarantee that we will do everything in our power to make you a satisfied customer by putting you in the driver's seat of the vehicle that you choose.
This is how we are different: we take your problem and make it our challenge. No gimmicks, no pressure, you deserve to be treated with honesty and dignity. Do not think that because you were turned down somewhere else or could not get the consideration you were looking for, that we too will not be able to secure financing for you. We have a 100% Approval success rate in providing financing for people with special finance needs.
Please call Mr. Greene toll free at 1-800-743-2144 before July 2nd, 2005 for more information about our programs or stop by and see us. We do appreciate your time and hope that we can earn your business.
Sincerely,
Steve Prather
. The mailing contained the following language near the bottom, in smaller type:
This offer may not be used in conjunction with any other advertised offer or discounted plan. Only one trade in may be accepted on each purchase. You must present this offer to Freeway Ford upon arrival. Information from a consumer credit profile was used in conjunction with this offer. This offer has been extended because criteria have been satisfied for the offer. This offer may not be extended if after responding to this offer you do not meet the criteria used in this selection process. Furthermore we must verify income and employment, review recipient's and spouse's credit and analyze equity position in collateral prior to final loan approval. You have the right to prohibit recipient's credit profile from being used for similar prescreened offers by requesting by telephone to Experian at 1 — 888-567-8688.
(Id.).
Villagran did not respond to the mailing other than by filing this lawsuit. Villagran has alleged and provided summary judgment evidence that she did not authorize the defendants to access or use information from her credit report. Villagran alleges that the defendants 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, as well as in the three mailings sent to others, (Docket Entry No. 26 at 4).2
Villagran has submitted copies of the mailing she received and three other mailings offering various credit incentives, sent by the defendants, which were not sent to Villagran. Villagran seeks to represent a class of approximately 80,000 individuals whose names were. on lists the defendants used in 2005 to send these mailings. The lists are not available; the number 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.
Villagran moves for partial summary judgment on her claim that the defendants' mailings violate the. FCRA because they did not constitute "firm offers of credit" under the Act. Villagran primarily relies On Seventh Circuit cases as authority for her motion. These cases are Cole v. U.S. Capital, 389 F.3d 719 (7th Cir.2004), and Murray v. GMAC Mortgage Corp., 434 F.3d 948 (7th Cfr.2006). Cole held that to be a "firm offer of credit," a mailing must contain sufficient information to allow the recipient to determine from the four corners of the mailing whether it is of value as an extension of credit. 389 F.3d at 726-27. In Cole, the court held that the mailing at issue did not meet the criteria to be a "firm offer of credit." The court cited the small amount of credit offered — $300 — to purchase a vehicle and the absence of such "material terms" as the precise interest rate, the method by which the interest will be compounded, and the repayment period, which made it "impossible for a court to determine from the pleadings whether the offer has value." Id. In Murray, the court affirmed that the test was whether the mailing had sufficient value on its face to be a "firm offer of credit." The court clarified that the issue was whether the mailing extended an offer that had value to the "normal" consumer, an objective inquiry rather than a consumer-specific evaluation. The court affirmed that to be a "firm offer," the...
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...impermissibly accessed individual private credit information and will be liable under the FCRA. See, e.g., Villagran v. Freeway Ford, Ltd., 525 F.Supp.2d 819, 821 (S.D.Tex.2007) (explaining that "[a] prospective creditor may purchase information about an individual's credit from a credit-re......