Whelan v. Trans Union Credit Reporting Agency, CV-93-2155.

• Decision Date: 08 September 1994
• Docket Number: No. CV-93-2155.,CV-93-2155.
• Parties: George M. WHELAN and Mary Ann Whelan, Plaintiffs, v. TRANS UNION CREDIT REPORTING AGENCY, IAG Federal Credit Union and TRW, Defendants.
• Court: U.S. District Court — Eastern District of New York

862 F. Supp. 824

George M. WHELAN and Mary Ann Whelan, Plaintiffs, v. TRANS UNION CREDIT REPORTING AGENCY, IAG Federal Credit Union and TRW, Defendants.

No. CV-93-2155.

United States District Court, E.D. New York.

September 8, 1994.

COPYRIGHT MATERIAL OMITTED

Edward P. Kelly, Fisher, Fallon, Salerno, Betlesky & Kelly, New York City, for plaintiffs.

Mark E. Kogan, Marion, Satzberg, Trichon & Kogan, Philadelphia, PA, for defendant, Trans Union Corp.

Herbert Teitelbaum, of counsel, Teitelbaum, Hiller, Rodman, Paden & Hibsher, New York City, for defendant Trans Union Corp.

Roger Goodnough, Hart & Hume, New York City, for defendant IAG.

Brett Lev, Jones, Day, Reavis & Pogue, New York City, for defendant TRW, Inc.

MEMORANDUM AND ORDER

GLASSER, District Judge:

Defendants Trans Union Credit Reporting Agency ("Trans Union"), IAG Federal Credit Union ("IAG") and TRW Inc., sued here as TRW ("TRW"), each moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. This court granted IAG's motion from the bench on August 19, 1994; the merits of that motion, as addressed on the record, will not be reviewed herein. Presently before the court are the motions of defendants Trans Union and TRW. For the reasons described below, both motions are granted.

FACTS

This action arises out of the efforts of plaintiffs George M. Whelan and Mary Ann Whelan to refinance a mortgage on their property at 19 Mianus Drive, Bedford, New York (the "Bedford Property") in January 1992. Sometime prior to January 1992, the Whelans had obtained a mortgage on the Bedford Property through IAG, the employee credit union used by Mr. Whelan's former employer, IBM. In early January 1992, Mrs. Whelan, who had been a real estate agent at Caldwell Banker Real Estate for more than sixteen years, decided to explore the possibility of refinancing the Bedford Property to take advantage of the low mortgage rates then available. She accordingly approached Fran Gillespie, a registered mortgage broker at Dearie Mortgage Service Group with whom she had enjoyed extensive business contacts. Before the Whelans submitted an application for refinancing or paid any fee, Mrs. Gillespie ran a pre-approval credit check on their record. At this point, Mrs. Gillespie discovered that the Whelans' credit reports from TRW and Trans Union contained derogatory information — specifically, the reports indicated that the Whelans were 180 days late in their mortgage payments to IAG.

Mrs. Whelan immediately telephoned the credit grantor at IAG, who informed her that "`it was an error and 30 others went out this month in error.'" M. Whelan Dep. at 22.¹ The same afternoon, Mr. Whelan went to IAG's office in Rye, New York and picked up a letter dated January 9, 1992, which was addressed "To Whom It May Concern" and stated as follows:

Mr. Whelan's account ... is current and to date with payments. Mr. Whelan has been current with his payments for the past (12) months.

This is and sic TRW error in reporting and is being investigated and will be corrected.

Affidavit of Brett M. Lev, Sworn to June 30, 1994 ("Lev Aff.") Ex. D; see also G. Whelan Dep. at 108. The Whelans provided Mrs. Gillespie with the letter, but Mrs. Gillespie nonetheless advised them not to pursue the refinancing; according to Mrs. Gillespie, the letter was unsatisfactory because it failed to address the period involving the allegedly delinquent payments: November and December 1991. Affidavit of Edward P. Kelly, Sworn to Aug. 11, 1994 ("Kelly Aff.") Ex. 2. The Whelans did not submit an application for refinancing at this time.

It is undisputed that the Whelans contacted neither TRW nor Trans Union regarding the alleged inaccurate information contained in the January 1992 credit reports. At deposition, the Whelans conceded that they took no steps to correct the reports after contacting IAG in January 1992 because they believed that "the issue was to be cleared by IAG." M. Whelan Dep. at 98, 66; G. Whelan Dep. at 109; see also Pls.' 3(g) Statement ¶ 9. For its part, IAG alleges that it forwarded to Mr. Whelan a second "To Whom It May Concern" letter, dated March 3, 1992, in which it indicated that the erroneous information was the result of "an internal problem with its credit data reporting." Affidavit of Roger A. Goodnough, Sworn to June 30, 1994 ("Goodnough Aff.") Ex. I; J. In addition, IAG alleges that it prepared documents known as "Bullseye Reports," dated January 13, 1992 and March 3, 1992, which it transmitted to TRW to notify TRW of the error. Goodnough Aff.Ex. I; J. TRW maintains that its records reveal that prior to the lawsuit, TRW received no correspondence from subscribers or other third parties relating to either plaintiff. Affidavit of Kelly Currie, Sworn to June 27, 1994 ("Currie Aff.") ¶¶ 9-11.

In July 1992, Mrs. Whelan approached Kelly Germa at Sears Mortgage about refinancing the mortgage on the Bedford Property. Once again, before an application was completed, Ms. Germa advised Mrs. Whelan that derogatory information appeared on the Whelans' credit reports.² Mrs. Whelan contacted IAG by telephone regarding the inaccurate information; however, she did not contact TRW or Trans Union. M. Whelan Dep. at 66, 98. Mrs. Whelan testified at deposition that she was satisfied that the erroneous information had been corrected in August 1992, when she obtained accurate reports from TRW and Trans Union. M. Whelan Dep. at 74. However, the Whelans never submitted any application to refinance the Bedford Property, either before or after August 1992. M. Whelan Dep. at 77-78; G. Whelan Dep. at 117.

The Whelans put the Bedford Property up for sale in September 1992, and ultimately sold the property in March 1993. According to Mrs. Whelan, they "sold their property at a big differential because it was sold in a very low price range in the state market." M. Whelan Dep. at 77.

Plaintiffs thereafter commenced this action in the New York State Supreme Court, Queens County, on or about March 26, 1993,³ and defendants removed the action to this court by Notice of Removal filed May 14, 1993. In their Complaint, plaintiffs allege seven causes of action against defendants. The first through fourth causes of action allege that defendants breached their obligations to plaintiffs under the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq. (the "FCRA"), and the New York Fair Credit Reporting Act, N.Y.Gen.Bus. Law §§ 380 et seq. (the "NYFCRA"), and that such breach was willful and/or recklessly indifferent, entitling plaintiffs to recover both actual and punitive damages. The fifth cause of action alleges that the reports prepared and/or published by defendants defamed plaintiffs, and the sixth cause of action alleges a claim for unreasonable invasion of plaintiffs' privacy. Finally, in their seventh cause of action, plaintiffs seek attorneys' fees under the FCRA and the NYFCRA.

Subsequent to the commencement of this action, on April 15, 1993, IAG forwarded a letter to Trans Union advising it to "change Mr. George M. Whelan's profile to show a current/satisfactory payment record for 12/91" under the IAG account. Kelly Aff.Ex. 3. IAG forwarded a second letter to Trans Union dated March 28, 1994, together with a Trans Union Consumer Dispute Verification Form, stating that it "had already corrected this members sic credit profile back in April of 1993," and advising Trans Union to delete all delinquent or negative reported information. Kelly Aff.Ex. 3.

DISCUSSION

I. Summary Judgment Standards

Summary judgment is appropriate when the moving party establishes that there exist no genuine issues of material fact that bar the court from granting judgment as a matter of law. Fed.R.Civ.P. 56(c).

When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts ... In the language of the Rule, the nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." ... Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial."

Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citations omitted) (emphasis in original). Therefore, summary judgment may be granted if "the evidence is merely colorable, ... or is not significantly probative." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). It is axiomatic that in ruling on a motion for summary judgment, the judge's function is not himself to weigh the evidence and determine the truth of an issue, but merely to determine whether there is an issue to be tried. Id. at 249, 106 S.Ct. at 2510-11.

II. Analysis

Both TRW and Trans Union are consumer reporting agencies as defined in the FCRA.⁴ In their first through fourth causes of action, plaintiffs allege that defendants breached their obligations as consumer reporting agencies "by failing to ensure that the consumer reports they prepared and/or contributed to ... were accurate to the maximum possible extent," and that defendants "failed to follow reasonable procedures to assure the accuracy of the reports" they prepared and/or contributed to. See Compl. ¶¶ 14-16, 26. Plaintiffs further allege that defendants' violation of the FCRA and the NYFCRA was "willful and/or recklessly indifferent."⁵See Compl. ¶¶ 22, 31. The court construes these allegations as pleading claims under §§ 607 and 611 of the FCRA, 15 U.S.C. §§ 1681e(b) and 1681i(a).⁶

A. The § 1681e(b) Claim

Turning first to plaintiffs' claims under § 1681e(b), that section states in relevant part as follows:

Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the

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