Zeller v. Samia

• Decision Date: 14 March 1991
• Docket Number: Civ. A. No. 89-1187-C.
• Citation: 758 F. Supp. 775
• Parties: David E. ZELLER, Plaintiff, v. Leonard J. SAMIA, d/b/a The Samia Companies, Defendant.
• Court: U.S. District Court — District of Massachusetts

758 F. Supp. 775

David E. ZELLER, Plaintiff, v. Leonard J. SAMIA, d/b/a The Samia Companies, Defendant.

Civ. A. No. 89-1187-C.

United States District Court, D. Massachusetts.

March 14, 1991.

COPYRIGHT MATERIAL OMITTED

Sibley P. Reppert, Valerie C. Samuels, Posternak, Blankstein & Lund, Boston, Mass., for defendant.

William T. Bogaert, Morrison, Mahoney & Miller, Boston, Mass., for plaintiff.

MEMORANDUM

CAFFREY, Senior District Judge.

This case is before the Court on the defendant's, Leonard J. Samia, motion for summary judgment and motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and 56(c). The plaintiff, David E. Zeller, commenced this action against the defendant seeking relief under the Fair Credit Reporting Act ("FCRA" or the "Act"). 15 U.S.C. § 1681 et seq. (1982 & Supp.1990). The first Count alleged by the plaintiff is for violation of section 1681h(e) of FCRA. Counts Two, Three, and Four are for violation of section 1681q of the Act. The plaintiff's amended complaint also alleges seven state common law and statutory claims. Jurisdiction of this Court is based upon 15 U.S.C. § 1681p, and pendent jurisdiction. For the reasons stated below, the defendant's motion for summary judgment and motion to dismiss should be granted. The plaintiff's pendent state claims should also be dismissed for lack of subject matter jurisdiction.

I.

Considering the facts in the light most favorable to the plaintiff, the relevant undisputed facts are as follows. This entire dispute arose out of a credit transaction that occurred in 1976, between the plaintiff and defendant in connection with their joint purchase of a beach cottage located in Hull, Massachusetts (the "Hull property"). At the time of their purchase of the cottage, the plaintiff signed a note, dated May 26, 1976, promising to pay the defendant $3,333.33, which constituted the plaintiff's share of the $10,000.00 down payment.

In 1985, the relationship between the two parties deteriorated, and in 1986, the defendant instituted litigation in Plymouth Probate Court in which he sued the plaintiff for partition and accounting in connection with the jointly owned Hull property. In preparation for the partition action, the defendant allegedly discovered the unpaid note. The defendant demanded that the plaintiff pay the balance due on the note or provide him with proof of payment. In June 1987, after the plaintiff failed to meet this request, the defendant reported a charge-off to Credit Data of New England ("Credit Data"). The charge-off totalled approximately $11,000.00 which included allegedly unpaid principal, interest, and costs.

In August and September of 1987, the defendant made several inquiries to Credit Data, which he said he made for the sole purpose of verifying that the charge-off he reported had been received and recorded by the agency. The plaintiff contends, however, that the defendant not only used the report to verify the recording of the charge-off, but also used the credit information against him during the partition and accounting proceeding involving the Hull property. In response to the defendant's request, he received from Credit Data the plaintiff's two-page credit report. The report included information concerning the plaintiff's entire credit history from the agency's existing credit files, not just information relating solely to the charge-off.

As a result of the defendant's placement of the charge-off and his subsequent inquiries, the plaintiff was rejected for credit with two mortgage lending institutions and a credit card company. The plaintiff then filed this action against the defendant seeking actual and punitive damages.

II.

The defendant has moved for summary judgment on Counts II, III, and IV of the plaintiff's amended complaint, pursuant to Fed.R.Civ.P. 56(c). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). The moving party may satisfy this burden by showing that there is an absence of evidence to support the non-moving party's case. Celotex, 477 U.S. at 325, 106 S.Ct. at 2553. Only after the moving party has met its burden of coming forward with proof of the absence of any genuine issue of material fact does the party opposing the motion bear the burden of responding. Id. at 321, 106 S.Ct. at 2551; Adickes, 398 U.S. at 159-60, 90 S.Ct. at 1609-10. The opposing party may not rest upon the mere allegations or denials in its pleading, but must respond with affidavits or otherwise to show the existence of a genuine issue for trial. Fed.R.Civ.P. 56(e); Adickes, 398 U.S. at 159-60, 90 S.Ct. at 1609-10. A dispute about a material fact is a "genuine issue" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). On summary judgment, the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). In light of this standard, this Court shall examine the defendant's motion for summary judgment.

The first issue raised by the defendant is whether FCRA is applicable to the plaintiff's claims alleged under section 1681q of the Act. FCRA provides for civil liability for those who do not comply with the requirements of the Act. 15 U.S.C. §§ 1681n, 1681o. Sections 1681n and 1681o impose liability on a user of credit information for willful or negligent noncompliance with any provision of the Act.¹ Although section 1681q on its face only provides a basis of criminal liability, courts have held that this section also provides a basis of civil liability under sections 1681n and 1681o. See Yohay v. Alexandria Employees Credit Union, Inc., 827 F.2d 967, 972 (4th Cir.1987). Kennedy v. Border City Sav. & Loan Ass'n, 747 F.2d 367, 369 (6th Cir.1984); Hansen v. Morgan, 582 F.2d 1214, 1219 (9th Cir.1978); New Palm Gardens, Inc. v. Bentley, No. 82-1361-MA (D.Mass. Aug. 11, 1983) (Lexis, Genfed Library). Section 1681q imposes liability on any person who "knowingly and willfully obtained information on a consumer from a consumer reporting agency under false pretenses." 15 U.S.C. § 1681q. See Hansen, 582 F.2d at 1219.

Certain FCRA requirements are imposed only in connection with the use of "consumer reports," as opposed to consumer information in general. See, e.g., 15 U.S.C. §§ 1681b, 1681c, 1681e; see also Ippolito v. WNS, Inc., 864 F.2d 440, 449 (7th Cir.1988), cert. dismissed, 490 U.S. 1061, 109 S.Ct. 1975, 104 L.Ed.2d 623 (1989). Other provisions of the Act apply without regard to whether "consumer reports" are involved. See, e.g., 15 U.S.C. §§ 1681r, 1681s. Where liability is premised on a violation of section 1681q, as is the case here, however, courts disagree as to whether this section pertains to all consumer information obtained from consumer reporting agency or just to "consumer reports" as defined by the Act. Compare Kennedy, 747 F.2d at 369 (§ 1681q pertains to all information obtained from a reporting agency, not merely consumer reports); New Palm Gardens, No. 82-1361-MA (same); Rice v. Montgomery Ward & Co., 450 F.Supp. 668, 671 (M.D.N.C.1978) (same); with Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d 1264, 1273 (9th Cir.1990) (§ 1681q only applies to information that constitutes a "consumer report" under the Act); Matthews v. Worthen Bank & Trust Co., 741 F.2d 217, 219 (8th Cir.1984) (same). Under the more restrictive test, there are two steps. First, the Court must determine whether the information requested by the user constitutes a "consumer report." If it is found that a consumer report is involved, it must then be determined whether the information was obtained under false pretenses. Although the First Circuit has not addressed this issue, it is unnecessary for this Court to decide which is the proper interpretation of section 1681q, because the result in this case is the same under either analysis, as will be demonstrated below.

The more restrictive view interprets section 1681q to apply only to consumer reports, not all consumer information. Thus, the starting point of this Court's consideration of the issues is whether the information collected and released by the reporting agency constitutes a "consumer report." See Comeaux, 915 F.2d at 1273; Matthews, 741 F.2d at 219. The defendant argues that no liability can attach under FCRA because the credit report it received was not a "consumer report" within the meaning of section 1681a(d), because the report was requested for a nonconsumer purpose.² FCRA defines a consumer report as:

Any written, oral, or other communication of any information by a consumer reporting agency bearing a consumer's creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for (1) credit or insurance to be used primarily for personal, family, or household purposes, or (2) employment purposes, or (3) other purposes authorized under 1681b....

15 U.S.C. § 1681a(d) (emphasis added). Section 1681b, which completes the definition of a consumer report, provides in relevant part:

A consumer reporting agency may furnish a consumer report under the

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