Heard et al v. Nationstar Mortgage LLC et al
Filing
74
MEMORANDUM OPINION AND ORDER GRANTING 47 MOTION for Summary Judgment. The Court hereby enters Judgment in favor of Mr. and Ms. Heard on their FCRA claims. The Court also enters Judgment in favor of Mr. Heard on his TCPA claim. The Court will set the issue of damages for trial by separate Order. Signed by Judge Madeline Hughes Haikala on 8/22/2018. (JLC)
FILED
2018 Aug-23 AM 09:22
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
TOMMY & KATRINA HEARD,
Plaintiffs,
v.
NATIONSTAR MORTGAGE LLC,
Defendant.
}
}
}
}
}
}
}
}
}
}
Case No.: 2:16-cv-00694-MHH
MEMORANDUM OPINION AND ORDER
This case arises from defendant Nationstar Mortgage, LLC’s efforts to
collect purportedly overdue mortgage payments from plaintiffs Tommy and
Katrina Heard and Nationstar’s inaccurate reporting of the plaintiffs’ payment
delinquencies to credit bureaus. The Heards contend that Nationstar improperly
billed them for force-placed property insurance which caused Nationstar to escrow
their mortgage account. When the Heards made their mortgage payments without
the added escrow charge, Nationstar began reporting the unpaid difference as
delinquent.
The Heards argue that by reporting unverified delinquencies,
Nationstar violated their rights under the Fair Credit Reporting Act, 15 U.S.C. §
1681 et seq. Mr. Heard also contends that to collect the escrow charges Nationstar
1
subjected him to repeated, autodialed collection calls in violation of the Telephone
Consumer Protection Act, 47 U.S.C. § 227 et seq.
The Heards ask the Court to enter judgment in their favor on their FCRA
and TCPA claims, leaving the issue of damages for trial.
(Doc. 47, p. 6).
Nationstar opposes the Heards’ motion. (Doc. 51). For the reasons stated below,
the Court grants the plaintiffs’ motion and sets the issue of damages for trial.
I. STANDARD OF REVIEW
“The court shall grant summary judgment if the 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.” Fed. R. Civ. P. 56(a). To demonstrate that there is a genuine
dispute as to a material fact that precludes summary judgment, a party opposing a
motion for summary judgment must cite “to particular parts of materials in the
record, including depositions, documents, electronically stored information,
affidavits or declarations, stipulations (including those made for purposes of the
motion only), admissions, interrogatory answers, or other materials.” Fed. R. Civ.
P. 56(c)(1)(A). When considering the Heards’ summary judgment motion, the
Court must view the evidence in the record and draw reasonable inferences in the
light most favorable to the non-moving party, Nationstar. White v. Beltram Edge
Tool Supply, Inc., 789 F.3d 1188, 1191 (11th Cir. 2015). “The court need consider
2
only the cited materials, but it may consider other materials in the record.” Fed. R.
Civ. P. 56(c)(3).
II. FACTS
The parties’ dispute arises from a mortgage that the Heards obtained in 2001
for an investment property in Jacksonville, Alabama. (Doc. 48-2, p. 2). The
Heards refinanced the mortgage in 2005 through GMAC Mortgage, LLC. (Doc.
52, p. 30). Mr. Heard provided his cell phone number to GMAC as part of his loan
refinance application. (Doc. 48-1, pp. 35–36). GMAC transferred the mortgage to
Ocwen Loan Servicing, LLC, and Ocwen transferred the mortgage to Nationstar in
April 2015. (Doc. 48-2, p. 2; Doc. 48-15, p. 20). The facts surrounding Ocwen’s
servicing of the mortgage are somewhat murky, but it appears that just before
transferring the mortgage, Ocwen provided insurance for the Heards’ property
(force-placed insurance) under the mistaken belief that the Heards had not insured
their property. (Doc. 48-15, pp. 31, 172–73). Ocwen would have charged the
Heards for the cost of this insurance, and as a result, the Heards’ mortgage account
had a negative escrow balance, which was reflected in their account information
when Ocwen transferred the mortgage to Nationstar. (Doc. 48-15, p. 12).
Based on the loan information from Ocwen, Nationstar added charges to the
Heards’ monthly mortgage payments to account for the negative escrow balance.
3
(Doc. 52, pp. 31–32). Mr. Heard was unaware of the escrow charges and set up
monthly automatic payments in the amount he had historically paid on the loan.
(Doc. 48-2, p. 3).
Because this payment amount was less than the amount
Nationstar billed to the Heards’ account, Nationstar began to record the shortfall as
late. (Doc. 48-7, pp. 13–14; Doc. 48-18, pp. 26–27).
Nationstar made a collection call to Mr. Heard’s cellular phone on June 4,
2015. (Doc. 48-7, p. 3). During this call, Mr. Heard learned that his monthly
payments had increased to reflect the addition of force-placed insurance which
resulted in an escrow balance on the account. (Doc. 48-2, p. 3). Mr. Heard
disputed the need for force-placed insurance and informed the representative that
he had maintained insurance on the property for several years. (Doc. 48-2, p. 3).
Mr. Heard had his insurer fax proof of his property insurance to Nationstar on June
5, 2015. (Doc. 48-7, pp. 4–5; Doc. 48-15, pp. 26–27).
Although Mr. Heard provided Nationstar with information indicating that
the force-placed insurance was unnecessary, Nationstar continued to bill Mr. Heard
for the escrow balance created by the force-placed insurance, and Nationstar’s
representatives continued to make collection calls to Mr. Heard’s cell phone.
(Doc. 48-7, pp. 13–14; Doc. 48-15, p. 14). During several of these calls, Mr.
Heard contested the amount of his mortgage payment, and the Nationstar
collections representative often would transfer his call to Nationstar’s escrow
4
department to correct the ongoing discrepancy. (Doc. 48-7, pp. 12–14). The
record of a call on July 24, 2015 indicates that Nationstar removed the escrow from
the Heards’ account and planned to adjust the monthly payment to reflect the
change. (Doc. 48-7, p. 9). Despite this, the Heards’ monthly statements continued
to reflect their mortgage payment plus an additional escrow charge.
The ongoing discrepancy between the Heards’ monthly payments and their
monthly statement caused a steady stream of collection calls to Mr. Heard’s cell
phone. (Doc. 48-7, pp. 15–34). Nationstar often would call Mr. Heard many times
a day. (Doc. 48-7, pp. 21–22; Doc. 48-14, pp. 9–10). Mr. Heard states that on
August 22, 2015, he told Nationstar to stop calling him on his cellular phone.
(Doc. 48-2, p. 5). Nationstar’s call records indicate that on October 29, 2015, Mr.
Heard first told Nationstar to stop calling him. (48-7, p. 19). Nationstar’s call
records also indicate that Mr. Heard told Nationstar collections representatives to
stop calling him on ten subsequent occasions. (Doc. 48-7, pp. 20–23, 26–27, 29–
30, 32).
Nationstar reported the Heards’ mortgage account as thirty days delinquent
for several months during 2015. (Doc. 48–18, pp. 27–28). In response to these
negative entries, the Heards individually sent credit disputes to Transunion,
Equifax, and Experian stating that the payment histories reported by Nationstar
were inaccurate due to the incorrect forced placement of insurance on the property
5
and the resulting escrow on the mortgage. (Doc. 48-23; Doc. 48-29). When
Nationstar received notice of these disputes, Nationstar checked the information in
the Heards’ credit reports against Nationstar’s records of the couple’s payment
history and reported that the Heards’ account was delinquent. (Doc. 48-18, pp. 27–
28; Doc. 48-19, pp. 32–33, 35; Doc. 48-20, p. 23). In fact, it was not. The Heards
claim that in addition to the time and effort they spent attempting to correct the
inaccuracies, Nationstar’s incorrect reporting of their mortgage account caused
them to be denied credit from their normal lenders and to pay higher rates with
other institutions. (Doc. 47, p. 5). Nationstar has since revised its reporting of the
mortgage loan and acknowledges that the account is current with no delinquencies.
(Doc. 28-15, pp. 14, 15).
III. DISCUSSION
A. MR. HEARD’S TCPA CLAIM
“The TCPA was enacted to address certain invasive practices related to
‘unrestricted telemarketing,’ and is designed to protect consumers from receiving
unwanted and intrusive telephone calls.” Schweitzer v. Comenity Bank, 866 F.3d
1273, 1276 (11th Cir. 2017) (citing Mims v. Arrow Fin. Servs., LLC, 565 U.S. 368,
372 (2012)). The TCPA makes it unlawful to use “any automatic telephone dialing
system or an artificial or prerecorded voice” to call “any telephone number
assigned to a . . . cellular telephone service,” without the express consent of the
6
party being called. 47 U.S.C. § 227(b)(1). Congress provided a private right of
action for those who receive calls made in violation of the TCPA’s prohibitions.
47 U.S.C. § 227(b)(3).
“The TCPA is essentially a strict liability statute” that “does not require any
intent for liability except when awarding treble damages.” Alea London Ltd. v.
Am. Home Servs., Inc., 638 F.3d 768, 776 (11th Cir. 2011). Because Nationstar
called a number assigned to a cellular phone service, (Doc. 48-1, pp. 47–48), the
question is whether Nationstar called Mr. Heard with his consent and whether
Nationstar called him using an automatic dialer.
1. Mr. Heard’s Consent to Receive Calls
“[A]utodialed ... calls to wireless numbers that are provided by the called
party to a creditor in connection with an existing debt are permissible as calls made
with the ‘prior express consent’ of the called party.” In re Rules & Reg.
Implementing the Tel. Consumer Prot. Act of 1991, 23 F.C.C. Rcd. 559, 559
(2008). Mr. Heard provided his cell phone number to GMAC in connection with
his initial application to refinance his mortgage. (Doc. 48-1, p. 34–35). The
transfer of the mortgage to Nationstar effectively gave Nationstar permission to
contact Mr. Heard in connection with his existing mortgage debt at the number he
provided to GMAC. Additionally, during several early calls from Nationstar, Mr.
7
Heard expressly authorized Nationstar to call his cell phone. (See, e.g., Doc. 48-7,
pp. 4, 7, 11).
As the collection calls continued, Mr. Heard withdrew his consent and
repeatedly told Nationstar collections representatives that he wanted them to stop
calling his cell phone. (See, e.g., Doc. 48-7, pp. 19–22, 24, 26–27, 29–30, 32).
Nationstar argues that Mr. Heard could not unilaterally revoke his prior consent
and that his oral revocations were ineffective. (Doc. 51, p. 18). The Court does
not agree.
In Osorio v. State Farm Bank, the Eleventh Circuit held that where the
creditor initially had obtained the debtor’s phone number, the debtor could orally
revoke his prior consent to receive calls at that number. 746 F.3d 1242 (11th Cir.
2014). The Osorio court reasoned that, absent statutory language to the contrary,
courts presume that Congress intended the common law meaning of a long-used
term like “consent,” id. at 1252–53, and “[c]ommon-law notions of consent
generally allow oral revocation.” Id. at 1255. The Eleventh Circuit has since
affirmed the proposition that oral revocation of consent is effective for purposes of
the TCPA. See Schweitzer, 866 F.3d at 1274. In addition, the D.C. Circuit, in a
recent opinion addressing a 2015 FCC ruling, affirmed the validity of the
Commission’s similar approach to consent. ACA Int’l v. FCC, 885 F.3d 687, 709–
10 (D.C. Cir. 2018). While parties may contract to limit the means of revoking
8
consent, Nationstar has not cited a contractual provision limiting Mr. Heard’s
common law right to orally revoke his consent to be called, so nothing prohibited
Mr. Heard’s unilateral revocation of consent.
Mr. Heard states that he first revoked consent on August 22, 2015. (Doc.
48-2, p. 5). Nationstar does not identify a particular date, but it does note that a
collections representative did not actually speak with Mr. Heard on August 22,
2015. (Doc. 52, p. 11). The first call entry in which a Nationstar representative
noted that Mr. Heard asked not to be called appears on October 29, 2015. (Doc.
48-7, p. 19). Before then, another representative noted that Mr. Heard said that he
had retained legal counsel. (Doc. 48-7, p. 18). The parties dispute whether this
was the point at which Nationstar should have stopped calling Mr. Heard, but
resolution of this factual question affects only the amount of damages that Mr.
Heard may recover if Nationstar made the calls using an automatic dialer.
Therefore, it is a question appropriate for trial.
2. Whether Nationstar Used an Automatic Dialer
The TCPA defines an “automatic telephone dialing system” as “equipment
which has the capacity (A) to store or produce telephone numbers to be called,
using a random or sequential number generator; and (B) to dial such numbers.” 42
U.S.C. § 227(a). The Heards emphasize the fact that Nationstar’s system dials
9
collection calls without the direct involvement of a collections representative.
(Doc. 47, p. 15). Nationstar contends that the Heards have not provided evidence
showing that Nationstar’s system has “the capacity to store or produce telephone
numbers to be called, using a random or sequential number generator.” (Doc. 51,
pp. 3–4).
The evidence concerning the features of Nationstar’s calling system is
largely undisputed.1 But the parties dispute whether those features fall within the
TCPA’s definition of an automatic dialer.
Because the parties are largely in
agreement on the relevant facts, the TCPA’s application to those facts is a legal
question for the Court to resolve.
To contact borrowers, Nationstar uses the Avaya Proactive Contact system
in conjunction with software known as iAssist. (Doc. 48-15, pp. 109–10; Doc. 524, p. 2). The Heards contend that Nationstar used this system to make two types of
calls falling within the TCPA’s prohibition: “blast” calls and predictive calls.
(Doc. 48, p. 5).
Regarding the first category, a representative for Nationstar
testified that these blasts are calls “made by the system” in which Nationstar sends
1
The parties offer competing testimony to support their arguments. Mr. Heard relies on a
recorded call in which a Nationstar collections representative states that he needs to confirm Mr.
Heard’s cell phone number because the representative is using an automatic dialer. (Doc. 48-15,
pp. 53, 55). The defendants rely on the declaration of Richard Volel, a vice president of
Nationstar’s call center operations. Mr. Volel states that Nationstar did not use an automatic
dialer to make collection calls. (Doc. 52-4, p. 2). Neither individual offers descriptive facts
regarding Nationstar’s call operations inconsistent with the facts recited below. Therefore, the
contradictory, conclusory testimony of these non-experts does not control the Court’s inquiry.
10
the customer “prerecorded messages.” (Doc. 48-16, pp. 35–37). As the Heards
note, these calls are prohibited by the TCPA’s plain language. See 47 U.S.C. §
227(b)(1)(B). The record indicates that Nationstar placed eleven prerecorded blast
calls to Mr. Heard’s cell phone. (Doc. 48-14, pp. 3–5, 7, 9, 11, 18). Although the
disputed factual issue of when Mr. Heard withdrew consent precludes the Court
from tallying in this opinion the number of calls for which Nationstar is liable,
there is no genuine dispute that once Mr. Heard withdrew his consent, Nationstar’s
blast calls violated the TCPA.
The analysis of predictive calls is more complex. Nationstar’s iAssist
program applies algorithms to customer information to predict when a customer is
most likely to answer the phone. (Doc. 48-16, pp. 31–32). iAssist then dials
numbers for collections representatives based on these predictions. (Doc. 48-17,
pp. 18–19, 21). If iAssist detects a voice response, then the system connects the
call to a representative. (Doc. 48-16, p. 54). Each day, Nationstar employees input
the necessary call data from the company’s loan files into iAssist. (Doc. 48-16, pp.
37–38). A collections representative must log into iAssist by entering his or her
personal extension before the software can begin forwarding calls to the
representative. (Doc. 48-15, p. 118; Doc. 48-17, p. 21).
Since 2003, the FCC has regarded predictive dialers like the one used by
Nationstar as automatic dialers within the meaning of the TCPA. In the Matter of
11
Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, 18 FCC
Rcd. 14014, 14091–93 (July 3, 2003). In 2015, the FCC reaffirmed its position in
its most recent ruling on the definition of autodialers. In re Rules and Regulations
Implementing the Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 7961,
7991–93 (2015). Recently, the Court of Appeals for the District of Columbia
Circuit determined that “the Commission’s ruling, in describing the functions a
device must perform to qualify as an autodialer, fail[ed] to satisfy the requirement
of reasoned decisionmaking.” ACA Int’l, 885 F.3d at 703. Accordingly, the D.C.
Circuit set aside that portion of the FCC’s 2015 rule. Id.2
In the absence of agency guidance, courts must interpret and apply statutory
provisions in accordance with the definitions Congress has given to statutory terms
contained therein. See Stansell v. Revolutionary Armed Forces of Colombia, 704
F.3d 910, 915 (11th Cir. 2013).
Nationstar argues that its system is not an
automatic dialer because it does not “store” caller information. That information,
Nationstar argues, is located on a separate “host system.” (Doc. 51, p. 6). But
Nationstar’s own representatives indicate that the information necessary for
2
The D.C. Circuit released its decision in ACA International after the parties to this case had
fully briefed the Heards’ motion for summary judgment. Nationstar since has moved for leave to
file supplemental briefing addressing the effect of D.C. Circuit’s decision on the issues in this
case. (Doc. 65). In a series of supplemental authority filings, Nationstar argued that the ACA
International decision set aside not only the FCC’s 2015 ruling but also the FCC’s 2003 and
2008 rulings on which the 2015 ruling was based. The Court has read and considered the
decision in ACA International. Because the Court does not rely on the FCC’s guidance in it
analysis below, the Court denies Nationstar’s motion for supplemental briefing as moot.
12
predictive calling is uploaded onto the Avaya/iAssist system daily. (Doc. 48-16, p.
38). The uploaded information is stored on Nationstar’s dialing system until it is
removed. This conclusion is supported by the fact that Mr. Heard received several
calls in the course of one day.
Thus, his caller information was stored in
Nationstar’s dialer throughout that day. (See, e.g., Doc. 48-7, pp. 21–23).
Nationstar does not explain why the period in which the information is kept
on its dialing system is too short to qualify under the TCPA as “store[d] []
telephone numbers to be called.” 42 U.S.C. § 227(a). Nationstar has not pointed
to evidence contradicting the Heards’ showing that caller information remains in
the dialing system for some period of time. The TCPA does not require that the
automatic dialer be the primary or permanent storage location for caller
information. See Lardner v. Diversified Consultants, Inc., 17 F. Supp. 3d 1215,
1221 (S.D. Fla. 2014) (“The statute has no requirement on how long a telephone
number is stored. If the equipment “has the capacity to store or produce telephone
numbers,” then it meets the statutory definition of an ATDS.”). The fact that
Nationstar stores the data elsewhere for longer periods of time is irrelevant.
The evidence shows that Nationstar’s dialer system could and did store
customer information for at least 24 hours. Nothing in the TCPA indicates that
Congress intended a narrow definition of the storage concept that would limit the
statute’s application to technology that stores telephone numbers for an extended
13
period of time. Rather, because the TCPA is “a consumer protection statute which
is remedial in nature,” this Court must interpret the statute broadly. Carmichael v.
Nissan Motor Acceptance Corp., 291 F.3d 1278, 1280 (11th Cir. 2002) (Noting
that remedial statutes “must be construed liberally in order to best serve Congress’
intent.”) (internal quotation marks omitted). Therefore, Nationstar’s system had
the capacity to “store” caller information within the meaning of the TCPA.
Next, to avoid Mr. Heard’s TCPA claim, Nationstar seizes on the statutory
requirement that an automatic dialer have “the capacity to store or produce
telephone numbers to be called, using a random or sequential number
generator.” (Doc 51, p. 9) (emphasis in Nationstar’s brief). As the D.C. Circuit
noted in ACA International, this phrase “has generated substantial questions over
the years.” 885 F.3d at 701.3 The phrase bolded above applies neatly in the
context of telemarketing where the targets of automated calls are groups of
individuals rather than specifically identified individuals. The application may be
less clear in the collections context. An entity attempting to collect a debt will not
3
In setting aside the FCC’s ruling, the D.C. Circuit noted that the commission seemed to be of
two minds on the phrase’s meaning. ACA Int’l, 885 F.3d at 701. The FCC’s ruling suggested
that there was a legally significant difference between devices that generate the numbers to be
called and devices that call numbers from a set list. Id. at 701–02. But the FCC also indicated
that it considered both such devices to have the characteristics of automatic dialers. Id. at 702–3.
The Commission’s seemingly inconsistent approach to the subject doomed the 2015 ruling, but
the D.C. Circuit noted that under the TCPA, the Commission could adopt the broader
interpretation of automatic dialers, encompassing devices that called numbers from an external
list. Id. at 703.
14
generate phone numbers randomly or sequentially without regard to whether the
person being called owes the company money. In that regard, an entity like
Nationstar will always make its collection calls with reference to a relatively
narrow, predetermined list of telephone numbers. But this fact does not prevent
the TCPA from applying to Nationstar’s predictive collection calls.4
Again,
Nationstar’s proposed interpretation of the TCPA is too restrictive.
As discussed, Nationstar’s system produces from the inputted call data a list
of numbers that the iAssist software sequences according to a borrower’s predicted
availability to receive calls. iAssist then dials the numbers as sequenced and
connects the call to a Nationstar representative only if someone answers the call
that iAssist initiated. Yes, Nationstar’s system is limited by the daily informational
inputs of Nationstar employees, but the system orders sequentially the many
numbers to call by analyzing customer information and assigning times for
Nationstar to contact particular numbers. (Doc. 48-16, pp. 31–32, 38; Doc. 48-17,
p. 18); 42 U.S.C. § 227(a)(1)(B).
Although a collections representative must log in before the system begins
dialing, that does not detract from the fact that the representative does not choose
4
Although the TCPA includes an established business relationship exception that exempts
certain debt collection calls, the TCPA does not make an exception for auto-dialed collection
calls made to a cellular phone. See Clark v. Allied Interstate, LLC, 2017 WL 2903358, at *3
(N.D. Ga. Jan. 20, 2017).
15
whom to call or dial the outgoing calls. Cf. Strauss v. CBE Grp., Inc., 173 F. Supp.
3d 1302, 1310–11 (S.D. Fla. 2016) (holding that a system in which a representative
used a manual clicker to initiate each call was not an automatic dialer because
“human intervention [was] essential at the point and time that the number is
dialed”). Additionally, the fact that Nationstar employees “scrub” and input loan
data for the system’s use does not obviate the role that Nationstar’s iAssist
software plays in selecting the numbers to call and initiating each call. (Doc. 4816, p. 38). To hold that a system is not an automatic dialer whenever an employee
examines and transfers information from an external database onto the dialing
system would unnecessarily limit the TCPA’s application. Although the language
Congress enacted in the TCPA may not anticipate and expressly address each new
innovation in the telecommunications field, defendants should not be able to
circumvent the TCPA’s prohibitions simply by disaggregating the functions of an
automatic dialer into nominally separate, but functionally complimentary systems.
Again, the TCPA is a remedial statute, and the Court may not harness its remedial
power by applying the statute narrowly.
Based on the facts in the record, the Court concludes that Nationstar’s
system satisfies the TCPA’s definition of an automatic dialer. Therefore, when
Mr. Heard withdrew his consent to be contacted on his cell phone, Nationstar’s
predictive calls violated the TCPA. Mr. Heard is entitled to summary judgment on
16
his TCPA claims for Nationstar’s blast and predictive calls following the date on
which Mr. Heard withdrew his consent.
B. THE HEARDS’ FCRA CLAIM
Both Mr. and Ms. Heard assert claims against Nationstar under FCRA
because Nationstar continued to report the couple as delinquent in their mortgage
payments after the couple sent letters disputing their credit reports, and the credit
reporting agencies provided Nationstar with notice of these disputes.
When a consumer gives notice to a credit reporting agency of a disputed
credit report entry, the agency must conduct a reasonable investigation into the
consumer’s dispute. 15 U.S.C. § 1681i(a)(1). As part of this investigation, the
agency must reach out to the person or entity that furnished the disputed
information and provide the furnisher with “all relevant information regarding the
dispute that is received by the agency from the consumer.”
15 U.S.C. §
1681i(a)(2). The furnisher must review the information provided by the consumer
and “conduct an investigation with respect to the disputed information.” 15 U.S.C.
§ 1681s–2(b)(1)(A) & (B). The furnisher then must report the outcome of its
investigation to the enquiring credit agency.
15 U.S.C. § 1681s–2(b)(1)(C).
Failure to fulfill these obligations can render a furnisher, such as Nationstar, civilly
liable to the affected consumer. 15 U.S.C. § 1681o.
17
“Reasonableness” is the touchstone for assessing the adequacy of a
furnisher’s investigation upon receiving notice of a dispute from a credit reporting
agency. Hinkle v. Midland Credit Mgmt., 827 F.3d 1295, 1302 (11th Cir. 2016).
Whether a furnisher’s investigation was reasonable is determined by reference to
the circumstances of the case, including whether the furnisher is an original
creditor, a collection agency, or a down-the-line debt buyer. Hinkle, 827 F.3d at
1303.
When the furnisher possesses account level documentation, “such as
applications,
agreements,
billing
statements,
promissory
notes,
notices,
correspondence, payment checks, payment histories, or other evidence of
indebtedness,” the furnisher can more accurately assess a credit dispute with
greater ease than could a furnisher with little account-specific documentation.
Hinkle, 827 F.3d at 1298, 1303. Section 1681s–2(b) requires all furnishers to
conduct a careful inquiry into disputed credit information which requires the
furnisher either to rely on personal knowledge or to acquire documentary evidence
that is sufficient to prove that the disputed information is true before reporting the
information as verified. Hinkle, 827 F.3d at 1303. If a reasonable investigation
neither confirms nor disproves the information, then the furnisher may report that
the disputed information is unverifiable. Hinkle, 827 F.3d at 1303.
Nationstar’s representatives responded to the dispute notices from Experian,
Transunion, and Equifax by checking the information in the Heards’ credit report
18
against Nationstar’s records of the Heards’ payment history. (Doc. 48-18, pp. 27–
28; Doc. 48-19, pp. 32–33; Doc. 48-20, p. 21). One representative may have
looked at the original note on the underlying mortgage, but the representatives
otherwise did not seek documentary support for the reported information beyond
the billing and payment information in Nationstar’s system. (Doc. 48-18, pp. 34–
34; Doc. 48-19, pp. 39–40; Doc. 48-20, pp. 24–25). One representative indicated
that the type of dispute raised by the Heards is not the type of dispute she would
have addressed even if she read the specifics in the couple’s dispute letters. (Doc.
48-20, p. 21).
Here, Nationstar’s reporting of the Heards’ mortgage contained “a factual
deficiency or error that could have been remedied by uncovering additional facts
that provide a more accurate representation about a particular entry.” Cahlin v.
Gen. Motors Acceptance Corp., 936 F.2d 1151, 1160 (11th Cir. 1991) (emphasis in
original). Nationstar had account-level documentation for the Heards’ mortgage,
and thus a reasonable inquiry would be more involved for Nationstar than for a
furnisher without these records. See Hinkle, 827 F.3d at 1302-1303, 1306. Mr.
Heard repeatedly contacted Nationstar about the escrow error and provided
Nationstar with information — proof of property insurance — that would have
corrected the error.
(Doc. 48-7, pp. 4–5, 7–15).
Nationstar acknowledged
receiving this information. (Doc. 48-7, p. 5; Doc. 48-15, pp. 26–27).
19
In their letters to the credit reporting agencies, the Heards explained that
their dispute specifically concerned the improper escrowing of their mortgage
account for property insurance that they did not need. (Doc. 48-23; Doc. 48-29).
The credit agencies were legally obligated to forward this information along with
their automated dispute forms, 15 U.S.C. § 1681i(a)(2), and the evidence indicates
that the Heards’ disputes were transmitted to Nationstar with additional
information concerning the particular error that the Heards sought to correct.
(Doc. 48-18, pp. 21–22; Doc. 48-19, 17–18, 28).5
5
Nationstar contends that although the Heards’ credit dispute notices were sent with images
attached, there is no evidence that these images were viewable. (Doc. 51, p. 27). Two of the
Nationstar representatives, whom the plaintiffs deposed, noted that images transmitted with
dispute forms are often unreadable especially if they are handwritten. (Doc. 48-18, p. 22; Doc.
48-19, pp. 37–38). The Heards’ letters were not handwritten. (Doc. 48-23; Doc. 48-29).
Nationstar’s representatives do not recall dealing with the Heards’ dispute or viewing the images
sent along with the Heards’ credit dispute forms. (Doc. 48-18, pp. 20–21; Doc. 48-19, pp. 25,
28, 38).
As noted above, there is evidence that the Heards submitted dispute letters to the credit reporting
agencies and that the agencies sent these letters to Nationstar. Nationstar has not produced
evidence that the files accompanying the credit disputes were unreadable, and as such Nationstar
has, at best, created only a metaphysical doubt about whether the company’s representatives
knew or should have known the specifics of the Heards’ dispute. The non-movant must do more
than this to create a genuine dispute of material fact. See In re Delco Oil, Inc., 599 F.3d 1255,
1262 (11th Cir. 2010) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S.
574, 586 (1986)).
Additionally, given that Congress enacted FCRA to ensure that those involved in reporting
consumer credit discharge their “grave responsibility” to the consumer and the financial system
with care, 15 U.S.C. § 1681(a)(4), the Court declines to hold that a furnisher of credit
information may avoid its obligation to reasonably investigate a credit dispute by relying on
technology that frequently fails to read or transmit a debtor’s description of the dispute.
20
Nationstar argues that the notices sent to them by the agencies were vague
and indicated only that the Heards generally disputed the reporting of their
payment history. (Doc. 51, p. 6). In light of this, Nationstar claims that it was
reasonable for its personnel to simply check the Heards’ payment history and
perhaps the original note. (Doc. 51, pp. 25–27). But a furnisher may not “truncate
its investigation simply because the [credit reporting agency] failed to exhaustively
describe the dispute in its § 1681i(a)(2) notice.” Hinkle, 827 F.3d at 1306 (citing
Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1157 n. 11 (9th Cir. 2009)).
Even if the credit agencies gave a less than detailed description of the Heards’
dispute, this did not relieve Nationstar of its responsibility to review documents in
its possession. Id.
Under the circumstances, it was not reasonable for Nationstar to simply
cross-reference the Heards’ payment history with the information in the Heards’
credit report when the credit dispute concerned a more specific factual issue that
Mr. Heard had raised many times with Nationstar. The evidence in the record
indicates that Nationstar did not investigate the dispute further before verifying the
Heards’ credit information to the reporting agencies. Therefore, the Court enters
judgment in Mr. and Ms. Heard’s favor on their FCRA claims. The Court leaves
the issue of damages for trial.
21
IV. CONCLUSION
For the reasons stated above, the Court enters judgment in favor of Mr. and
Ms. Heard on their FCRA claims. The Court also enters judgment in favor of Mr.
Heard on his TCPA claim. The Court will set the issue of damages for trial by
separate order.6
DONE and ORDERED this August 22, 2018.
_________________________________
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE
6
A trial is the appropriate forum for addressing certain of the parties’ arguments relating to
damages including: when Mr. Heard withdrew his consent, whether the class action settlement
in Wright v. Nationstar Mortgage, LLC precludes Mr. Heard from seeking damages for certain
calls, and whether Nationstar’s violation of the TCPA was willful.
22
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