Zotta v. Nationscredit Financial Services Corp.

• Decision Date: 22 December 2003
• Docket Number: No. 4:02 CV 1650 DDN.,4:02 CV 1650 DDN.
• Citation: 297 F.Supp.2d 1196
• Parties: Gregg ZOTTA, et al., Plaintiffs, v. NATIONSCREDIT FINANCIAL SERVICES CORP., et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

Page 1196

297 F.Supp.2d 1196

Gregg ZOTTA, et al., Plaintiffs, v. NATIONSCREDIT FINANCIAL SERVICES CORP., et al., Defendants.

No. 4:02 CV 1650 DDN.

United States District Court, E.D. Missouri, Eastern Division.

December 22, 2003.

Blair K. Drazic, Blair K. Drazic, P.C., Creve Coeur, MO, for Plaintiffs.

Allen S. Boston, Michael J. Hickey, Keith J. Grady, Lewis and Rice, St. Louis, MO, James B. Dodd, Jacksonville, FL, Dustin B. Rawlin, Jones and Day, Cleveland, OH, Michael J. Pitzer, Sr., Jarrett T. Applegate, Rabbitt and Pitzer, G. Carroll Stribling, Jr., Husch and Eppenberger, LLC, St. Louis, MO, Lewis P. Perling, Kilpatrick Stockton LLP, Atlanta, GA, for Defendants.

MEMORANDUM

NOCE, United States Magistrate Judge.

This action is before the court upon the summary judgment motions of defendants NationsCredit Financial Services Corp. (NationsCredit) (Doc. 64), Experian Information Solutions, Inc. (Experian) (Doc. 66), and Equifax Credit Information Services, Inc. (Equifax) (Doc. 68), as well as defendants' joint motion to exclude expert testimony (Doc. 75). The parties have consented to the exercise of plenary authority by the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). A hearing was held on September 18, 2003.

I. BACKGROUND

A. Plaintiffs' petition

Plaintiffs Gregg Zotta and Marsha Zotta filed a four-count petition on December 20 2001, in the Circuit Court of St. Louis County, Missouri, asserting violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681, et seq. Defendants removed the action to this court on October 30, 2002. (Doc. 1.) Plaintiffs alleged the following in their petition.

NationsCredit is a "furnisher of information" under 15 U.S.C. § 1681s-2. Experian and Equifax are each a "consumer reporting agency" (CRA) under 15 U.S.C. § 1681a(f). Experian and Equifax issued reports that constitute consumer reports under the FCRA. They both inaccurately reported to one or more creditors, including The Austin Group, that plaintiffs had a mortgage account with NationsCredit that was paid one or more times late as "plus thirty." Plaintiffs instituted a consumer dispute with Equifax and Experian, which in turn contacted NationsCredit regarding the dispute. (Doc. 1 unnumbered attach. at 1-3.)

In Count I, Gregg Zotta alleges defendants negligently violated the FCRA. Specifically, he contends that, when contacted by Equifax and Experian, NationsCredit responded that plaintiffs' loan was current at the time of the dispute but had been delinquent during "99." Next, he alleges NationsCredit did not investigate or failed to conduct a reasonable investigation in that he had previously complained to it and it generated a document that said plaintiffs' payments were timely. Mr. Zotta asserts defendants failed to have reasonable procedures to insure maximum possible accuracy of the information disseminated concerning him. He alleges they both reported the "plus thirty" after a reasonable time following the receipt of the Universal Data Form (UDF) whereby NationsCredit directed defendants to remove "any delinquencies" from his file, because the late reports were the fault of the creditor due to "our error" and "no fault of customer." Moreover, he asserts that Experian negligently failed to conduct a reasonable investigation after receiving notice of a consumer dispute from plaintiffs and continued reporting the account as "plus thirty" and did not notify other credit bureaus of the inaccuracy. Further, he alleges that as a result of defendants' negligence his credit was reported incorrectly and his "credit standing was and will in the future be damaged and destroyed," causing him to sustain denials of credit, emotional distress, and expenses. He also alleges that "said report" caused him to lose a real estate loan with The Austin Group and incur unnecessary interest charges on a higher interest loan, and that he will suffer future deterioration in his credit rating because of an inability to make the higher house payments. He seeks compensatory damages in this count. (Id. at 3-4.)

In Count II, Mr. Zotta seeks compensatory and punitive damages for willful violation of the FCRA. He asserts Experian and Equifax willfully failed to comply with the FCRA because, having received a consumer dispute from plaintiffs and having previously received a UDF from the creditor, they recklessly failed to investigate or reasonably investigate that the account was reported delinquent notwithstanding the creditor's previous acknowledgment of its own mistake to "Defendant." He asserts NationsCredit willfully violated the FCRA because, having previously investigated a direct dispute from plaintiffs and generated a UDF from the bureaus, it acted recklessly with regard to investigating. He repeats the language from Count I describing the harm he has suffered and will suffer. (Id. at 4-6.)

Count III largely mirrors Count I but involves Marsha rather than Greg Zotta. (Id. at 6-8.) Similarly, Count IV parallels Count II but involves Marsha. (Id. at 8- 9.) On October 30, 2002, defendants removed the action to this court. (Doc. 1.) Plaintiffs' petition does not allege the specific date or time period of any of defendants' actions or failure to act.

Several documents are attached to plaintiffs' petition and are also found elsewhere in the record. A November 18, 1999 letter to Mr. Zotta from "Customer Service" at NationsCredit advises him that a UDF will be submitted to various credit reporting depositories, such as Equifax and Experian, advising them "to correct any inaccurate history" which may have been reported on his account. (Id. Ex. 1.) On November 18 Ed Wulbern, a researcher with NationsCredit, signed a form regarding Greg Zotta and subscriber NationsCredit. Wulbern checked a "Change" box and wrote, "[p]lease remove any delinquencies from this account, due to our error (with statements) and no fault of customer." (Id. Ex. 3.) In a November 19, 1999 memorandum concerning Mr. Zotta, Wulbern wrote to a person identified as "Grant," [t]his is to confirm that due to a situation beyond the customer's control," NationsCredit had adjusted Mr. Zotta's account "from being 30/60 days rolling delinquency to zero delinquencies for any time during 1999." (Id. Ex. 2.)

In a February 11, 2000 letter to Experian, Greg Zotta wrote,

I was recently declined a credit card from Next Card Visa because of adverse information on my credit report which is inaccurate and needs to be corrected immediately. The Experian credit report states that I was 30 days late in paying my mortgage 11-1999, and 10-1999, with Nations Credit. I have never paid late. Nations Credit was in error reporting the delinquency. Ed Wulbern, a supervisor with Nations Credit Research Department, said he would correct the error, and would be sending out a[UDF] to all the credit bureaus including your company. I am enclosing copies of the correspondence I received from Ed Wulbern to corroborate my contention that I was not late and this adverse information needs to be removed from my file immediately.

(Id. Ex. 4.) Mr. Zotta added that he planned to refinance his property and that if the incorrect information was not removed from his file he would be damaged financially. (Id.)

On February 25, 2000, "Barbara Jackson" signed a Consumer Dispute Verification (CDV) form regarding Mr. Zotta that had been sent to NationsCredit by Experian. The CDV listed the NationsCredit loan as "OPEN/CUR WAS 30-2 02/03/00." Written next to an unchecked "Change Data As Shown" box were the words "loan was delinquent during `99', now current." (Id. Ex. 7.)

A March 10, 2000 "Correction Summary" prepared by Experian for Mr. Zotta shows that five items, including NationsCredit information about him, were "reinvestigated." Four of the items had outcomes of "Deleted" or "Updated," but the NationsCredit information "Remain[ed]." The comment section of Experian's report (1) described the NationsCredit account's status as "open/current, was past due 30 days"; (2) reflected an account history as "30 days as of 11-1999, 10-1999"; (3) indicated that as of September 2005 the account "was scheduled to go to a positive status"; (3) stated, "CONSUMER STATES WAS NEVER LATE"; and (4) concluded, "[t]his item was verified and updated on 3-2000." (Id. Ex. 6.)

After answering separately and raising affirmative defenses, including that plaintiffs' claims were time-barred (Docs.14, 19, 28), defendants each moved for summary judgment.

B. NationsCredit

NationsCredit moves for summary judgment, arguing, as to Counts I and III, that plaintiffs failed to create a genuine issue of material fact (1) that NationsCredit breached its limited duties as a furnisher of information under § 1681s-2(b) and (2) that its investigation under the FCRA was the proximate cause of their alleged injuries. Consequently, it argues that summary judgment also must be granted on plaintiffs' willful-violation claims, Counts II and IV. Finally, NationsCredit argues that summary judgment should be granted on all counts because plaintiffs cannot establish actual damages resulting from the alleged FCRA violations, i.e., their allegations of emotional distress are based solely on their own testimony and lack medical corroboration, and that they are not entitled to any punitive damages. (Doc. 64.)

Plaintiffs respond that (1) they are not required to demonstrate credit denials, (2) in any event, they have evidence of credit denials, i.e., Mary Elliott's deposition testimony, (3) a fact issue is made on the willfulness of defendant's cursory investigation procedures. According to plaintiffs, "NationsCredit's defense is that [its] loan department is so reckless in correcting credit reports that someone later conducting a reasonable investigation could reasonably be expected to find no trace of [Wulbern]'s attempts at correction." (Doc. 70.)

Plaintiffs proffer a deposition transcript in which Wulbern testified that he...