Pittman v. Experian Information Solutions, Inc. et al

Filing 96

ORDER Denying 88 Plaintiff's Motion for Summary Judgment and Granting 90 Defendant iServe's Motion for Summary Judgment. Signed by District Judge Victoria A. Roberts. (LVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
HOWARD PITTMAN,
Plaintiff,
vs

Case No: 14-13591
Honorable Victoria A. Roberts

EXPERIAN INFORMATION SOLUTIONS,
INC., ET AL,
Defendants.
____________________________________/
ORDER DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND
GRANTING DEFENDANT iSERVE’S MOTION FOR SUMMARY JUDGMENT
I.

NATURE OF THE ACTION
Howard Pittman (“Pittman”) brings multiple claims under the Fair Credit

Reporting Act (“FCRA”). This case hinges on the validity of a trial mortgage
modification plan, which was offered, but not signed as required under Michigan law.
For that reason, Pittman’s mortgage was not permanently modified and he cannot
enforce the terms of the Trial Modification Plan.
Pittman sues Experian Information Solutions, Inc., Trans Union, LLC, Equifax
Information Services, LLC, Servis One, Inc. (“BSI”), and iServe Servicing, Inc (“iServe”).
He has two separate claims against all Defendants for: (1) Negligent Violation of FCRA,
and; (2) Willful Violation of FCRA. Pittman also filed a breach of contract claim against
BSI.
Pittman and iServe filed cross motions for Summary Judgment. Pittman seeks
Summary Judgment on Counts I - Negligent Violation of FCRA by BSI, II - Willful

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Violation of FCRA by BSI, III - Negligent Violation of FCRA by iServe, IV - Willful
Violation of FCRA by iServe, and XI – Breach of Contract by BSI.
The Motion is DENIED.
iServe filed a Motion for Summary Judgment on Counts III – Negligent Violation
of FCRA and IV – Willful Violation of FCRA .
That Motion is GRANTED; Iserve is DISMISSED.
A.

Facts

iServe granted Pittman a Trial Modification Plan (“TMP”) on his mortgage in
December 2011 after he failed to make two mortgage payments in August and
September 2011. The TMP required Pittman to make three reduced mortgage
payments of $1,357.80 in a “timely manner” and stated, “After all trial period payments
are timely made and you have submitted all the required documents, your mortgage will
be permanently modified.” The TMP also stated, “Your credit score may be adversely
affected by accepting a trial period plan.” Pittman timely made the three trial payments
and continued to make payments for $1,357.80 each month to iServe. However, the
TMP was never signed by Pittman or iServe, nor was it ever made permanent in writing
by iServe.
Prior to the TMP, Pittman’s mortgage was held by Citicorp Trust Bank when he
obtained the loan in 2008. Under the original mortgage agreement, Pittman was
required to make monthly payments of $1980.42 and Citicorp agreed to deposit a
portion of the payments into an escrow account designated for property taxes. The loan
was transferred twice; first to iServe in July 2010 and then to BSI in June 2012.

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Pittman continued to make reduced payments on his mortgage after the transfer
from iServe to BSI. On April 25, 2013, iServe’s senior counsel advised Pittman through
email that the loan modification was permanent as far as he was aware (“According to
iServe’s understanding from HAMP and BSI, Mr. Pittman’s loan modification has been
made permanent…”). When Pittman obtained his credit reports in June 2014, he
learned BSI and iServe had reported his mortgage payments as past due. This
negatively impacted his credit history. Pittman sent letters to credit reporting agencies
(“CRAs), Experian Information Solutions, Inc., Equifax Information Services, and Trans
Union on June 11, 2014 and August 20, 2014, disputing the information furnished by
BSI and iServe. In October 2014, Pittman also learned BSI had not made property tax
payments from his escrow account.
This suit followed. Pittman argues he is entitled to summary judgment because
iServe and BSI were bound under the TMP to conduct a reasonable investigation and
rectify erroneous credit information.
iServe says it is entitled to summary judgment on the claims against it, because
Pittman failed to produce a signed permanent loan modification and thus the information
it reported was correct.
II.

APPLICABLE LAW
A.

Summary Judgment

Summary Judgment is proper if “the movant shows that there is no genuine
dispute as to any material fact…” Fed. R. Civ. P. 56(a). The moving party must support
its motion by citing to specific parts of the materials on record, including depositions,
documents, or other materials. Fed. R. Civ. P. 56. The party has the burden to

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demonstrate the basis for its motion and identify portions of the record that show an
absence of genuine issue for trial. Mt. Lebanon Per. Care Home, Inc. v. Hoover
Universal, Inc., 276 F. 3d 845 (6th Cir, 2002).
To overcome a motion for summary judgment, the non-moving party must show
specific facts that present a “genuine issue for trial.” Id. at 848. There must be enough
evidence such that a reasonable jury could find for the party; “the existence of a mere
scintilla of evidence… is insufficient.” Id. at 252. The court considers “the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits,” to determine whether there is a genuine issue as to any material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Pittman and iServe filed motions for summary judgment. The same standard of
review applies; parties have the burden to show there is no genuine dispute as to
material facts. B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 592 (6th Cir. 2001).
Each motion is reviewed on “its own merits” in order to draw reasonable inferences
against the moving party. Id.
III.

DISCUSSION
A.

Pittman’s Trial Modification Plan is Not Legally Enforceable

Pittman says iServe and BSI violated FCRA by failing to investigate and rectify
inaccuracies in their reporting to CRAs. His argument hinges on whether there was a
signed permanent loan modification in place, because he was making lower monthly
payments than called for under his original mortgage agreement. As evidence of an
enforceable agreement, Pittman produced an unsigned copy of the TMP and an email
from iServe’s counsel.

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Michigan law says a loan modification must be signed by both the borrower and
the financial institution in order to be legally enforceable. Voydanoff v. Select Portfolio
Serv., Inc., 2011 Mich. App. LEXIS 2356 (Mich. Ct. App. 2011); Miles v. Ocwen Loan
Servicing, LLC., 2014 U.S. Dist. LEXIS 174700, 7 (E.D. Mich. 2014) (applying Michigan
law); Heikkinen v. Bank of Am., N.A., 2012 U.S. Dist. LEXIS 24463, 15 (E.D. Mich.
2012) (applying Michigan law). In each of these cases, the courts granted motions for
summary judgment on breach of contract claims against financial institutions, because
the plaintiffs did not have loan modification documents signed by them and their
respective financial institution.
Pittman argues estoppel as a basis for reliance on the TMP. However,
Michigan’s Statute of Frauds expressly forbids enforcement of a financial contract that is
not in writing and signed by an authorized representative of the financial institution.
Mich. Comp. Laws § 566.132(2); Heikkinen, 2012 U.S. Dist. LEXIS 24463 at 18. The
Michigan Statute of Frauds states:
(2) An action shall not be brought against a financial institution to enforce any of
the following promises or commitments of the financial institution unless the
promise or commitment is in writing and signed with an authorized signature by
the financial institution:
(a) A promise or commitment to lend money, grant or extend credit, or make any
other financial accommodation.
(b) A promise or commitment to renew, extend, modify, or permit a delay in
repayment or performance of a loan, extension of credit, or other financial
accommodation.

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(c) A promise or commitment to waive a provision of a loan, extension of credit,
or other financial accommodation.
Mich. Comp. Laws § 566.132(2).
Pittman did not produce a signed TMP, nor can he successfully argue reliance
based on estoppel, in light of Michigan’s clear law. Furthermore, the TMP explicitly
states it is not permanent and that Pittman’s credit may be adversely affected by
accepting its terms.
B.

FCRA Claims

The FCRA was enacted in 1970 to “ensure fair and accurate credit reporting,
promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins.
Co. of Am. V. Burr., 551 U.S. 47, 52 (2007). FCRA establishes a private right of action
for consumers to enforce some terms of the statute. Boggio v. USAA Fed. Sav. Bank,
696 F.3d 611, 617 (6th Cir. 2012).
To succeed on a FCRA claim, a consumer must prove, (1) he notified the CRA of
the dispute, (2) the CRA notified the furnisher of the dispute, and (3) the institution
furnishing the information (“furnisher”) failed to investigate or correct the disputed
charge. Taggart v. Northwest Mortgage, Inc., 2010 WL 114946, 9 (E.D. Penn. 2010); 15
U.S.C. § 1681 s- 2(b). Further, the consumer must show a reporting error was made.
Spence v. TRW, Inc., 92 F.3d 380, 382 (6th Cir, 1996) (affirming the dismissal of a
plaintiff’s FCRA claims on summary judgment because the plaintiff could not prove
information provided by CRAs was inaccurate).
To satisfy its duty to investigate, the furnisher must demonstrate it followed the
protocol outlined in 15 U.S.C. § 1681 s- 2(b): (1) conduct an investigation; (2) review the

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relevant information provided by the CRA; (3) report the results of the investigation to
the CRA; (4) If information is found to be incorrect, furnisher must report the results to
all CRAs that the initial information was reported to; (5) if the information is incorrect, the
furnisher must modify, delete, or permanently block the reporting of the information. 15
U.S.C. § 1681 s- 2(b).
Under the FCRA, the investigation must be “reasonable.” Boggio, 696 F.3d at
617. The plaintiff has the burden to show an investigation was not reasonable. Gibson
v. Prof’l Account Mgmt., LLC, 2013 U.S. Dist LEXIS 59388, 10 (E.D. Mich. 2013)
(Quoting Chiang v. Verizon New Eng., Inc., 595 F.3d 26, 37 (1st Cir. 2010)). To prove a
furnisher failed to conduct a reasonable investigation, the plaintiff must show inaccurate
information was reported. Spence, 92 F.3d at 382.
The parties do not dispute that Pittman met the first two elements of his claim; he
notified the CRAs of his dispute and the CRAs notified both iServe and BSI of Pittman’s
dispute. The parties dispute whether the third element has been met; iServe and BSI
say they conducted reasonable investigations into the dispute and rectified inaccuracies
in the reporting.
i.

FCRA Claims Against iServe and BSI

Pittman says iServe erred in reporting his payments as overdue during the
months of August 2011, September 2011 and January 2012 and incorrectly reported his
loan payments as 120 days past due. Pittman also says BSI incorrectly reported late
payments to the CRAs. Specifically, Pittman says BSI incorrectly reported he was 120
days past due on his account between September 2012 and July 2013.

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Pittman argues iServe and BSI were bound by the TMP, and because he was
offered and fulfilled the TMP requirements, his account was not past due with iServe or
BSI. Pittman says if iServe and BSI had conducted reasonable investigations, they
would have discovered this error and notified the CRAs of their mistake.
To support his contention, Pittman relies on: the mortgage agreement; the TMP;
his affidavit and attached bank statements; documents pertaining to the transfer of the
loan to BSI; his letters to CRAs disputing reports from iServe and BSI; letters from his
counsel to iServe and BSI; dispute verification forms; results sent by the CRAs to iServe
and BSI; and, emails between BSI, iServe, and his counsel.
iServe submits the following in support of its motion for Summary Judgment: (1)
there was no enforceable loan modification agreement between iServe and Pittman and
the information reported to the CRAs was correct; (2) the disputed information was
reported after iServe transferred the loan to BSI; (3) iServe properly investigated the
disputed credit information and reported Pittman’s credit information correctly; and (4)
Pittman cannot prove a right to damages caused by iServe on his credit report. iServe
also relies on affidavits from iServe and CRA employees, dispute verification forms and
results sent by the CRAs to iServe, and the loan modification agreement presented by
Pittman.
BSI says it was not bound by the trial modification agreement entered into while
iServe was the loan servicer. BSI contends the loan modification was never fully
executed into a permanent modification under iServe. BSI says Pittman was still
responsible for making the original monthly mortgage payments of $1,980.42. Because

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Pittman continued to make reduced payments of $1,357.80, BSI says it correctly
reported the loan as past due.
The Court only reaches the threshold question of whether there were reporting
errors by iServe and BSI; an error is an essential part of an FCRA claim. Spence, 92
F.3d at 382. Exhibits submitted by Pittman show he failed to make a mortgage payment
to iServe during the months of August and September 2011. After the TMP, Pittman
made lower payments on his mortgage than his original agreement. As discussed
above, Pittman is barred by Michigan law from arguing estoppel and has not presented
a signed permanent loan modification. Because the TMP was neither permanent nor
enforceable, and because he was on notice that his credit score could be adversely
affected during the trial period, Pittman cannot show iServe or BSI made an error in
reporting his loan payments as overdue.
The Court denies summary judgment in favor of Pittman and grants summary
judgment in favor of iServe on Counts III and IV.
B.

BSI Breach of Contract

Pittman brings a claim against BSI for breach of contract for failing to pay
property taxes out of the escrow account as required under his mortgage agreement.
To support his claim, Pittman relies on property tax statements and his mortgage
agreement.
To establish this claim, Pittman must prove three elements: (1) a contract exists
between the parties; (2) BSI breached the contract; and (3) damages resulted to him as
a result of the breach. Bank of Am., NA v. First Am. Title Ins. Co., 499 Mich 74, 100
(2016).

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BSI states a question of fact exists on two material issues. The first is whether
Pittman materially breached the mortgage contract initially by failing to pay the entire,
original sum of his mortgage payment. BSI argues Pittman committed a material breach
of contract first and cannot maintain an action against it for failing to perform. Chrysler
Int’l Corp. v. Cherokee Exp. Co., 134 F.3d 738, 742 (6th Cir. 1998) (finding an export
company could not maintain claims against an automotive manufacturer because the
export company committed the first substantial breach of contract).
Second, BSI says Pittman cannot prove he has been damaged by the alleged
breach. BSI says it granted a permanent modification on September 6, 2016, which
included an agreement that all surplus monies in the escrow account would be returned
to Pittman.
For these reasons, the Court denies Pittman’s motion on this count.
IV.

CONCLUSION
Pittman’s Motion for Summary Judgment against both iServe and BSI is

DENIED. iServe’s Motion for Summary Judgment is GRANTED; it is DISMISSED from
this case. Claims against BSI survive.
IT IS ORDERED.
/s/ Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: November 30, 2016
The undersigned certifies that a copy of this
document was served on the attorneys of
record by electronic means or U.S. Mail on
November 30, 2016.
s/Linda Vertriest
Deputy Clerk

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