New v. CitiFinancial Auto Credit, Inc. et al

Filing 50

MEMORANDUM OPINION AND ORDER DENYING 46 MOTION for Leave to File Amended Complaint; and GRANTING CitiFinancial's 40 MOTION for Summary Judgment as to Mr. New's FCRA claim (Count III of the complaint) and CitiFinancial's Breach of Contract Counterclaim (Counterclaim I) and DENIED as to CitiFinancial's Unjust Enrichment Counterclaim (Counterclaim II). Signed by Chief Judge William Keith Watkins on 6/26/12. (Attachments: # 1 civil appeals checklist)(djy, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
SOUTHERN DIVISION
JAMES NEW,

)
)
Plaintiff,
)
)
v.
)
)
CITIFINANCIAL AUTO CREDIT,
)
INC., d/b/a CITIFINANCIAL AUTO, )
BRENT SAYLORS, and
)
PROVIDENCE ACCEPTANCE
)
CORPORATION,
)
)
Defendants.
)

CASE NO. 1:10-CV-905-WKW
[WO]

MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
Before the court is Defendant CitiFinancial Auto Credit, Inc.’s Motion for
Summary Judgment (Doc. # 40), which is accompanied by a supporting brief and
evidentiary submissions (Doc. # 41 & Attach. 1 to Doc. # 40). Plaintiff James New
filed a response in opposition (Doc. # 47), to which CitiFinancial replied (Doc. # 49).
The day before Mr. New filed his response in opposition, he filed a Motion for Leave
to File Amended Complaint (Doc. # 46), which CitiFinancial opposed (Doc. # 48).
After careful consideration of the arguments of counsel, the applicable law and the
record as a whole, the court finds that Mr. New’s Motion for Leave to File Amended

Complaint is due to be denied and CitiFinancial’s Motion for Summary Judgment is
due to be granted in part and denied in part.
II. JURISDICTION AND VENUE
The court properly exercises subject matter jurisdiction over this action,
pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367. Personal jurisdiction and venue
are adequately pleaded and not contested.
III. STANDARD OF REVIEW
On summary judgment, the evidence and the inferences from that evidence
must be viewed in the light most favorable to the nonmovant. See Jean-Baptiste v.
Gutierrez, 627 F.3d 816, 820 (11th Cir. 2010). Hence, “‘facts, as accepted at the
summary judgment stage of the proceedings, may not be the actual facts of the case.’”
Lee v. Ferraro, 284 F.3d 1188, 1190 (11th Cir. 2002) (quoting Priester v. City of
Riviera Beach, 208 F.3d 919, 925 n.3 (11th Cir. 2000)).
“Summary judgment is appropriate if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show there
is no genuine issue as to any material fact and that the moving party is entitled to
judgment as a matter of law.” Greenberg v. BellSouth Telecomms., Inc., 498 F.3d
1258, 1263 (11th Cir. 2007) (per curiam) (citation and internal quotation marks
omitted); see Fed. R. Civ. P. 56(a) (“The court shall grant summary judgment if the
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movant shows that there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”).
The party moving for summary judgment “always bears the initial responsibility
of informing the district court of the basis for its motion, and identifying those
portions of [the record, including pleadings, discovery materials and affidavits], which
it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986). The movant may meet this burden by presenting
evidence indicating there is no dispute of material fact or by showing that the
nonmoving party has failed to present evidence in support of some element of its case
on which it bears the ultimate burden of proof. Id. at 322–24.
If the movant meets its evidentiary burden, the burden shifts to the nonmoving
party to establish, with evidence beyond the pleadings, that a genuine issue material
to each of its claims for relief exists. Shiver v. Chertoff, 549 F.3d 1342, 1343 (11th
Cir. 2008); Fed. R. Civ. P. 56(c). When the nonmovant fails to set forth specific facts
supported by appropriate evidence sufficient to establish the existence of an element
essential to its case and on which the nonmovant will bear the burden of proof at trial,
summary judgment is due to be granted in favor of the moving party. Celotex Corp.,
477 U.S. at 323 (“[F]ailure of proof concerning an essential element of the nonmoving
party’s case necessarily renders all other facts immaterial.”).
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IV. BACKGROUND
A.

Factual Background
The facts are fairly straightforward and undisputed. On August 29, 2005, James

and Vicki New purchased a 2006 GM Hummer H3 from Jim Jard Automotive Group.
(Woods’s Aff. ¶ 4–5 (Attach. 1 to Doc. # 40).) The News financed the purchase of
the Hummer with a $38,034 loan from CitiFinancial. (Def.’s Ex. 3; Woods’s Aff. ¶
6.)
In November 2008, Mr. New entered into a consignment agreement with
Defendants Brent Saylors and the Providence Acceptance Corporation (“PAC”) to sell
the Hummer. As part of the agreement, Mr. Saylors and PAC agreed to pay off Mr.
New’s loan with CitiFinancial. (New’s Aff. 1 (Pl.’s Ex. 1).) Mr. Saylors and PAC
sold the Hummer to a third party and mailed a check to CitiFinancial to pay off the
balance on the loan. CitiFinancial received this check on November 26, 2008.
(Woods’s Aff. ¶ 7.) CitiFinancial released the title to the Hummer and wrote Mr. New
a letter stating the loan was paid in full. (Dec. 8, 2008 Letter (Pl.’s Ex. 2).) However,
on December 9, 2008, CitiFinancial discovered that there were insufficient funds in
the account to cover the amount of the check. (Woods’s Aff. ¶ 8.)
CitiFinancial wrote Mr. New another letter, advising him that he should
continue making payments on the loan. (Dec. 11, 2008 Letter (Pl.’s Ex. 3).) By this
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time, the Hummer and the title had been delivered to the new owner. The News and
CitiFinancial attempted to resolve the issue. Mr. New made a payment on the loan on
December 21, 2008. (Def.’s Ex. 4.) CitiFinancial informed the News that “as a
courtesy” it would “suspend[ ] credit reporting on the account until a resolution [was]
reached.” (March 30, 2009 Letter (Pl.’s Ex. 1-A).)
However, in December 2009, the News discovered that the loan had been
reported “charged off as bad debt.” (TransUnion 2009 Report (Pl.’s Ex. 4).) In early
January 2010, the News gave notice to Equifax and TransUnion that they disputed the
loan being marked as charged off. (New’s Aff. 2; Pl.’s Ex. 1-B.) However, after
Equifax and TransUnion conducted investigations into the dispute, they refused to
recode the loss. (Pl.’s Ex. 1-C.) To date, there is an outstanding balance of
$19,576.87 on the loan. (Woods’s Aff. ¶ 9.)
B.

Procedural Background
CitiFinancial removed the case from the Circuit Court of Houston County,

Alabama, on October 26, 2010. Mr. New’s motions for default judgment have been
granted against Mr. Saylors and PAC, and Mr. New has submitted a brief addressing
the issue of damages against these Defendants. (Docs. # 33 & 39.) Additionally, a
memorandum opinion and order has been issued, granting CitiFinancial’s Motion for
Judgment on the Pleadings as to Mr. New’s claims for breach of contract and
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negligence (Counts I and II of the complaint). See New v. Citifinancial Auto Credit,
Inc., No. 1:10-CV-905-WKW, 2011 WL 3503128 (M.D. Ala. Aug. 10, 2011).
V. DISCUSSION
CitiFinancial’s summary judgment motion requests that Mr. New’s remaining
claim against it, a claim under the Fair Credit Reporting Act (“FCRA”), be dismissed
and that summary judgment be granted on its counterclaims against Mr. New for
breach of contract and unjust enrichment. (Def.’s Summ. J. Mot. 1.) Because Mr.
New’s Motion for Leave to File Amended Complaint potentially affects the summary
judgment analysis of his FCRA claim, this motion will be addressed first.
A.

Mr. New’s Motion for Leave to File Amended Complaint
Mr. New filed this motion the day before he filed his response to CitiFinancial’s

motion for summary judgment. (See Doc. # 46.) Mr. New seeks to amend his
complaint to correct a typographical error. Instead of identifying the FCRA claim
under 15 U.S.C. § 1681 et seq., Mr. New’s complaint identifies the statute as 15
U.S.C. § 1681e(b). (Doc. # 46 ¶ 5; Pl.’s Compl. ¶ 24 (Attach. 2 to Doc. # 1).)
CitiFinancial opposes the motion, arguing that allowing the amended complaint would
be futile. (Doc. # 48, at 2.)
Pursuant to Federal Rule of Civil Procedure 15(a)(2), a party who seeks to
amend a pleading outside of the license of Rule 15(a)(1) may do so with the court’s
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leave. Rule 15(a)(2) states that “[t]he court should freely give leave when justice so
requires.” However, “[a] proposed amendment may be denied for futility ‘when the
complaint as amended would still be properly dismissed.’” Coventry First, LLC v.
McCarty, 605 F.3d 865, 870 (11th Cir. 2010) (quoting Cockrell v. Sparks, 510 F.3d
1307, 1310 (11th Cir. 2007)).
The proposed amended complaint identifies CitiFinancial as a furnisher of
information. Under the FCRA, furnishers of information have a duty to provide
accurate information to consumer reporting agencies, § 1681s-2(a), and a duty to
conduct an investigation as to the completeness or accuracy of provided information
upon receiving notice of a consumer’s dispute from a consumer reporting agency.
§ 1681s-2(b).
The FCRA does not provide a private right of action to redress a furnisher of
information’s violation of its duty under § 1681s-2(a). See 15 U.S.C. § 1681s-2(c);
see also Peart v. Shippie, 345 F. App’x 384, 386 (11th Cir. 2009) (per curiam)
(“[T]he [FCRA] explicitly bars private suits for violations of [§ 1681s-2(a)].”); Green
v. RBS Nat’l Bank, 288 F. App’x 641, 642 (11th Cir. 2008) (per curiam) (holding that
the FCRA does not provide a private right of action to redress a violation of § 1681s2(a)); Quale v. Unifund CCR Partners, 682 F. Supp. 2d 1274, 1280–81 (S.D. Ala.
2010).
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The FCRA does provide a private right of action when a furnisher of
information violates its duty under § 1681s-2(b). See 15 U.S.C. § 1681s-2(b)(1); see
also Peart, 345 F. App’x at 386; Green, 288 F. App’x at 642; Quale, 682 F. Supp. 2d
at 1281. To be liable, however, the furnisher of information must have received notice
of a consumer’s dispute from a consumer reporting agency. See Green, 288 F. App’x
at 642 (“The FCRA does provide a private right of action for a violation of § 1681s2(b), but only if the furnisher received notice of the consumer’s dispute from a
consumer reporting agency.”).
Mr. New’s proposed amended complaint alleges that the consumer credit report
obtained by Mr. New “contained false and/or inaccurate information because
[CitiFinancial], as a furnisher of information to consumer reporting agencies, failed
to follow reasonable procedures to investigate and assure the maximum possible
accuracy of the information which [CitiFinancial] reported to consumer credit
reporting agencies relating to [Mr. New] . . . .” (Attach. 1 to Doc. # 46, ¶ 15.) Mr.
New does not allege that he disputed the information in his consumer report, let alone
that CitiFinancial was informed by a consumer reporting agency of a dispute. Mr.
New’s proposed amended complaint does not properly allege a violation of § 1681s2(b).

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Notwithstanding this pleading deficiency, the record has been scoured in search
of facts to support the claim, but there are none. It is undisputed that the News gave
notice to the consumer reporting agencies Equifax and TransUnion that they disputed
the loan being marked as charged off, Pl.’s Ex. 1-B, and that both Equifax and
TransUnion conducted investigations into this matter. (Pl.’s Ex. 1-C.) However, at
no time in this eighteen-month-old case has Mr. New asserted or adduced facts that
CitiFinancial was informed by Equifax, TransUnion, or any other consumer reporting
agency of the News’ dispute. Because there is an absence of allegations or facts in the
record as to an essential element of a § 1681s-2(b) claim, Mr. New’s Motion for Leave
to File Amended Complaint is due to be denied as futile.
B.

Mr. New’s Fair Credit Reporting Act Claim (Count III)
Because Mr. New’s Motion for Leave to File Amended Complaint is due to be

denied, CitiFinancial’s Motion for Summary Judgment on Count III of the original
complaint must be addressed. Mr. New’s complaint alleges that CitiFinancial violated
§ 1681e(b) of the FCRA. (Pl.’s Compl. ¶ 24.) However, the duty to ensure the
accuracy of a consumer report under § 1681e(b) only applies to consumer reporting
agencies.1 The parties do not dispute that CitiFinancial is a furnisher of information,

1

“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 report relates.” § 1681e(b).
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and not a consumer reporting agency. (Pl.’s Resp. Br. 4; Def.’s Reply Br. 3.) Thus,
summary judgment is due to be granted on Mr. New’s FCRA claim against
CitiFinancial under § 1681e(b). See Rush v. Macy’s N.Y., Inc., 775 F.2d 1554, 1557
(11th Cir. 1985) (upholding a dismissal of an FCRA claim against Macy’s because it
was only a furnisher of information, and not a consumer reporting agency).
C.

CitiFinancial’s Breach of Contract Counterclaim
In its First Amended Answer, CitiFinancial asserts a counterclaim against Mr.

New for breach of contract. (Doc. # 22, at 18.) In order to succeed on its breach-ofcontract claim, CitiFinancial must show (1) there was a valid contract binding the
parties; (2) CitiFinancial performed under the contract; (3) Mr. New did not perform;
and (4) resulting damages. Shaffer v. Regions Fin. Corp., 29 So. 3d 872, 880 (Ala.
2009) (listing the elements of a breach-of-contract claim under Alabama law).
Elements one, two, and three are satisfied. It is undisputed that the loan
agreement was a valid, binding contract, see Doc. # 32 ¶ 10; Pl.’s Resp. Br. 6, that
CitiFinancial performed under the loan agreement by loaning Mr. New money to
obtain the Hummer, see Doc. # 32 ¶ 4; Woods’s Aff. ¶ 6, and that there is a current
balance of $19,576.87 due on the loan. (See Pl.’s Resp. Br. 6; Woods’s Aff. ¶ 9.)
The parties dispute whether Mr. New performed under the contract.
CitiFinancial alleges that Mr. New “breached the contract by failing or refusing to pay
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the money owed CitiFinancial.” (Doc. # 22, 18.) Mr. New argues that his obligations
under the loan agreement were extinguished when CitiFinancial accepted the check
from Mr. Saylors and PAC and released the vehicle’s title to the third-party purchaser.
(Pl.’s Resp. Br. 6.) Mr. New asserts that CitiFinancial’s counterclaims are only proper
against Mr. Saylors and PAC. (Pl.’s Resp. Br. 6.)
Mr. New’s argument has already been rejected in this court’s previous opinion.
It was found that Mr. New’s “own admitted nonperformance under the contract . . .
[was] fatal to his breach of contract claim,” New, 2011 WL 3503128, at *2, because
a party’s delegation of his contractual duties does not relieve that party of any duty to
perform or any liability for breach of contract. See Ala. Code § 7-2-210(1). Mr. New
delegated his duty to pay to Mr. Saylors and PAC when he entered into a consignment
agreement with them. Mr. Saylors and PAC failed to carry out the duty to pay when
they wrote a worthless check to CitiFinancial. See Ross v. State Life Ins. Co., 143 So.
827, 827–28 (Ala. 1932) (“In the absence of an agreement to the contrary, a check is
merely a conditional payment, and is presumptively received, not as a payment, but
as a convenient means of getting the money.” (internal quotations omitted)). Thus,
Mr. New is still liable for the outstanding balance on the loan. Because there is no
genuine issue of material fact, and CitiFinancial has presented evidence supporting

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each element of its breach-of-contract counterclaim, summary judgment is due to be
entered in its favor on this claim.
D.

CitiFinancial’s Unjust Enrichment Counterclaim
CitiFinancial also asserts a counterclaim against Mr. New for unjust enrichment

in the amount of the unpaid balance on the loan. (Doc. # 22, at 19.) “The doctrine of
unjust enrichment . . . permit[s] the court in equity and good conscience to disallow
one to be unjustly enriched at the expense of another.” Flying J Fish Farm v. Peoples
Bank of Greensboro, 12 So. 3d 1185, 1193 (Ala. 2008) (citations omitted). However,
under Alabama law, unjust enrichment, as an equitable remedy, may only be relied
upon when there is no adequate remedy at law. See, e.g., Am. Family Care, Inc. v.
Irwin, 571 So. 2d 1053, 1061 (Ala. 1990) (“[T]he presence of an adequate remedy at
law precludes the enforcement of a constructive trust[,]” which “is [an equitable]
remedy created to prevent unjust enrichment.”); see also Teleprompter of Mobile, Inc.
v. Bayou Cable TV, 428 So. 2d 17, 20 (Ala. 1983) (“[A]n injunction, like any other
equitable remedy, will only issue where there is no adequate remedy at law.”).
Because summary judgment is due to be granted on CitiFinancial’s breach-of-contract
claim, CitiFinancial has an adequate remedy at law to recover the unpaid balance on
the loan. Thus, CitiFinancial’s unjust enrichment claim is precluded and summary
judgment is due to be denied. See, e.g., Pearson’s Pharmacy, Inc. v. Express Scripts,
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Inc., 505 F. Supp. 2d 1272, 1278 (M.D. Ala. 2007) (dismissing an unjust enrichment
claim with prejudice because plaintiffs had an adequate remedy at law for damages
under a theory of breach of contract); Vision Bank v. 145, LLC, No. 10-00521-KD-B,
2011 WL 5289070, at *9 (S.D. Ala. Nov. 4, 2011) (granting plaintiff’s summary
judgment motion on defendant’s counterclaim for unjust enrichment because there
was an adequate remedy at law for damages under a theory of breach of contract); but
see Wells Fargo Bank, N.A. v. Vergos, No. 11-00439-CB-N, 2012 WL 206169, at *3
(S.D. Ala. Jan. 24, 2012) (holding that, on summary judgment, the plaintiff-bank was
entitled to recover on the unpaid balance on a loan from the defendant-borrow under
both a theory of breach of contract and unjust enrichment).
VI. CONCLUSION
For the foregoing reasons, it is ORDERED that Mr. New’s Motion for Leave
to File Amended Complaint (Doc. # 46) is DENIED and that CitiFinancial’s Motion
for Summary Judgment (Doc. # 40) is GRANTED as to Mr. New’s FCRA claim
(Count III of the complaint) and CitiFinancial’s Breach of Contract Counterclaim
(Counterclaim I) and DENIED as to CitiFinancial’s Unjust Enrichment Counterclaim
(Counterclaim II).
DONE this 26th day of June, 2012.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE
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