Butris v. Capital Management Services, LP et al
Filing
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OPINION and ORDER (1) Granting Defendant Capital Management Services, L.P.'s 15 Motion for Summary Judgment Pursuant to Fed. R. Civ. P. 56 and (2) Granting in Part and Denying in Part Plaintiff's 19 Motion to File a First Amended Complaint. Signed by District Judge Linda V. Parker. (Loury, R)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
NICKOLAS BUTRIS,
Plaintiff,
v.
Civil Case No. 13-14771
Honorable Linda V. Parker
CAPITAL MANAGEMENT
SERVICES, L.P. and UNITED
RECOVERY SYSTEMS, INC., as
successor to PLAZA RECOVERY, INC.,
Defendants.
__________________________________/
OPINION AND ORDER (1) GRANTING DEFENDANT CAPITAL
MANAGEMENT SERVICES, L.P.’S MOTION FOR SUMMARY
JUDGMENT PURSUANT TO FED. R. CIV. P. 56 AND (2) GRANTING IN
PART AND DENYING IN PART PLAINTIFF’S MOTION TO FILE A
FIRST AMENDED COMPLAINT
On November 19, 2013, Plaintiff Nickolas Butris filed this lawsuit against
Defendants Capital Management Services, LP (“Capital Management”) and United
Recovery Systems, Inc. (“United Recovery”). Plaintiff alleges violations of state
law and the federal Fair Credit Reporting Act (“FCRA”) in his Complaint. The
matter initially was assigned to the Honorable Lawrence P. Zatkoff, who entered
an order dismissing Plaintiff’s state law claim on November 26, 2013. On May 28,
2014, Judge Zatkoff reassigned the matter to the undersigned pursuant to
Administrative Order 14-AO-030. Pending at the time of the reassignment was
Capital Management’s motion for summary judgment pursuant to Federal Rule of
Civil Procedure 56 [ECF No. 15] and Plaintiff’s motion to file an amended
complaint [ECF No. 19], filed February 11 and March 7, 2014, respectively. This
Court held a hearing with respect to the motions on July 9, 2014.
I.
Factual and Procedural Background
According to Plaintiff’s Complaint, on or about July 23, 2013, he obtained
his credit report from Experian and noticed that Plaza Recovery, Inc. had obtained
a copy on May 8, 2012. (ECF No. 1 ¶ 7.) Plaza Recovery merged into United
Recovery on April 1, 2013. (Id. ¶ 8.)
On August 2, 2013, Plaintiff obtained his credit report from Equifax. (Id.
¶ 9.) He noticed that Capital Management had obtained his credit report on
December 11, 2012. (Id.) According to Capital Management’s General Counsel,
Cory R. Magnuson (“Mr. Magnuson”), Capital Management obtained the subject
credit report in connection with its attempts to collect a delinquent account with an
account number ending with “2455” (“the account”), which was owed to
Department Stores National Bank, a/k/a Macy’s, and placed with Capital
Management for collection. (ECF No. 15 Ex. 1 ¶ 2.) Capital Management is a
licensed debt collector in Michigan. (Id. ¶ 1.)
Mr. Magnuson explains that the account had been placed with Capital
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Management for collection on December 7, 2012. (Id. ¶ 3.) At the time,
Department Stores National Bank informed Capital Management that the account
was in default with a balance due of $5,599.70. (Id.) According to Capital
Management’s records, it also was informed that the guarantor of the account was
“Najah Butris”, with the address of 199 Partridge Drive, Troy, Michigan 48098,
and a social security number ending in “0315”. (Id. ¶¶ 3-4, citing Ex. A.) Using
this information, Capital Management requested a copy of the guarantor’s credit
report from Equifax to assist with Capital Management’s collection efforts. (Id.
¶ 5.) Capital Management certified to Equifax that it was requesting the credit
report to assist in its collection of the debt and for no other purpose. (Id.) Capital
Management received a copy of the credit report on December 11, 2012, a redacted
copy of which is attached to Mr. Magnuson’s affidavit. (Id. ¶ 6, Ex. B.) This was
the only credit report obtained by Capital Management with respect to the account.
(Id. ¶ 7.)
Plaintiff alleges that, through counsel, he sent letters to United Recovery and
Capital Management on or about September 18, 2013, inquiring as to their purpose
in obtaining his credit report. (ECF No. 1 ¶ 10.) According to Plaintiff, neither
entity responded. (Id. ¶ 11.) Mr. Magnuson claims that Capital Management
never received any correspondence from Plaintiff. (ECF No. 15 Ex 1 ¶ 8.)
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Plaintiff initiated this lawsuit on November 19, 2013, asserting that neither
defendant had a federally permissible purpose for obtaining his credit report. (Id.
¶ 12.) He alleges the following claims against Defendants in his Complaint:
(I) Violation of the FCRA- Obtaining a Consumer Report by Use of
False Pretenses;
(II) Violation of the FCRA- Knowingly Obtaining a Consumer Report
without a Permissible Purpose;
(III) Violation of the FCRA- Willfully Obtaining a Consumer Report
without a Permissible Purpose; and
(IV) Invasion of Financial Privacy.
(ECF No. 1). As indicated, Judge Zatkoff sua sponte dismissed without prejudice
Count IV of Plaintiff’s Complaint on November 26, 2013, indicating that he was
declining to exercise supplemental jurisdiction over that state law claim. (ECF No.
5.)
On February 11, 2014, Capital Management filed its pending summary
judgment motion in which it argues that Plaintiff’s remaining claims fail because
Capital Management obtained the credit report at issue for a permissible purpose
under the FCRA. (ECF No. 15.) Capital Management also argues that Plaintiff
fails to plead facts to support his claims that it “knowingly” or “wilfully” violated
the FCRA. Plaintiff filed a response to the motion on March 3, 2014. (ECF No.
17.) Capital Management filed a reply brief on March 7, 2014. (ECF No. 18.)
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Also on March 7, Plaintiff filed his pending motion to file an amended
complaint pursuant to Federal Rule of Civil Procedure 15. (ECF No. 19.) Plaintiff
seeks to amend his complaint to include facts that he asserts will support his claim
that Defendants willfully violated the FCRA. Capital Management filed a response
to Plaintiff’s motion on March 17, 2014. (ECF No. 20.) United Recovery has not
responded to the motion and Plaintiff has not filed a reply brief.
II.
Applicable Standards
A.
Summary Judgment Motion
Summary judgment pursuant to Federal Rule of Civil Procedure 56 is
appropriate “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). The central inquiry is “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52 (1986). After adequate time for discovery and upon motion, Rule
56(c) mandates summary judgment against a party who fails to establish the
existence of an element essential to that party’s case and on which that party bears
the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
The movant has an initial burden of showing “the absence of a genuine issue
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of material fact.” Id. at 323. Once the movant meets this burden, the “nonmoving
party must come forward with ‘specific facts showing that there is a genuine issue
for trial.’ ” Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986) (quoting Fed. R. Civ. P. 56(e)). To demonstrate a genuine issue, the
nonmoving party must present sufficient evidence upon which a jury could
reasonably find for that party; a “scintilla of evidence” is insufficient. See Liberty
Lobby, 477 U.S. at 252.
“A party asserting that a fact cannot be or is genuinely disputed” must
designate specifically the materials in the record supporting the assertion,
“including depositions, documents, electronically stored information, affidavits or
declarations, stipulations, admissions, interrogatory answers, or other materials.”
Fed. R. Civ. P. 56(c)(1). The court must accept as true the non-movant’s evidence
and draw “all justifiable inferences” in the non-movant’s favor. See Liberty Lobby,
477 U.S. at 255.
B.
Motion for Leave to Amend
Pursuant to Federal Rule of Civil Procedure 15(a), leave to amend is “freely”
granted “when justice so requires.” See Fed. R. Civ. P. 15(a). The United States
Supreme Court has advised that a plaintiff should be allowed the opportunity to
test a claim on the merits if the facts and circumstances underlying the claim
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suggest that it may be a proper subject of relief. Foman v. Davis, 371 U.S. 178, 182
(1962). However, the Court further instructed that a motion to amend a complaint
should be denied if the amendment is brought in bad faith or for dilatory purposes,
results in undue delay or prejudice to the opposing party, or would be futile. Id.
III.
Analysis
A.
Capital Management’s Summary Judgment Motion
The FCRA regulates access to consumer credit reports by providing that
credit bureaus may furnish a consumer’s credit report only for certain permissible
purposes identified in 15 U.S.C. § 1681b. For purposes of Capital Management’s
motion, § 1681b provides that a credit reporting agency may furnish a consumer
credit report “[t]o a person which it has reason to believe . . . intends to use the
information in connection with a credit transaction involving the consumer on
whom the information is to be furnished and involving . . . review or collection of
an account of, the consumer . . ..” 15 U.S.C. § 1681b(a)(3)(A) (emphasis added).
A person who negligently obtains a credit report for a purpose not authorized by
the statute may be liable for actual damages, attorney’s fees, and costs. 15 U.S.C.
§ 1681o. The FCRA authorizes an additional award of punitive damages if the
violation is “willful.” Id. § 1681n.
Capital Management has presented evidence through Mr. Magnuson’s
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affidavit to show that it obtained the credit report at issue from Equifax in
connection with its collection of an account of a consumer, Najah Butris– a
permissible purpose under the FCRA. In his response brief, Plaintiff responds that
the credit report Capital Management obtained was his, that he is not Najah Butris,
and that Najah Butris is his father. Plaintiff attaches a different credit report to his
response brief that contains his personal information and reflects an inquiry by
Capital Management on December 11, 2012. (ECF No. 17 Ex. 2.) Plaintiff also
argues in response to Capital Management’s motion that a careful review of the
credit report attached to Mr. Magnuson’s affidavit reflects that the report actually
belongs to Plaintiff, as his name, age, and social security number are listed in the
body of the report. (See ECF No. 15 Ex. 1, Ex. B.)
As an initial matter, Plaintiff presents no admissible evidence to support his
contention that he is not known or formerly known as Najah Butris and that Najah
Butris is his father. In response to a properly made summary judgment motion, the
non-movant must demonstrate a genuine issue of material fact for trial by
presenting evidence, such as depositions, affidavits or declaration, or other
materials. See Fed. R. Civ. P. 56(c); Alexander v. CareSource, 576 F.3d 551, 55859 (6th Cir. 2009). The non-movant may not rely simply on allegations or denials
in its own pleading. Alexander, 576 F.3d at 558. Second, Plaintiff’s contention
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that it is his credit report attached to Mr. Magnuson’s affidavit has no bearing on
whether Capital Management requested the credit report for a lawful purpose.
Capital Management requested the credit report at issue, using the
information provided to it by Department Stores National Bank (i.e., the name
“Najah Butris”, an address for that individual, and a social security number ending
in 0315). Equifax produced a report using that information. Even if the Court
accepts Plaintiff’s unsupported assertion that he is not known or formerly known
as Najah Butris and that he and Najah Butris are different people, there is no
evidence suggesting that Capital Management was aware that the social security
number it had for the guarantor of the account would pull up a report for someone
else.
As such, the undisputed evidence indicates that Capital Management
reasonably believed that it had a permissible purpose to request the credit report.
A number of courts have held that the FCRA requires that “users” of credit reports
only have “reason to believe” that the report is being requested for a permissible
purpose. See, e.g., Cappeta v. GC Servs. Ltd. P’ship, 654 F. Supp. 2d 453, 459-60
(E.D. Va. 2009) (concluding that “so long as a user has reason to believe that a
permissible purpose exists, that user may obtain a consumer report without
violating the FCRA”); Korotki v. Attorney Servs. Corp., 931 F. Supp. 1269, 127
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(D. Md. 1996), aff’d 131 F.3d 135 (4th Cir. 1997) (holding that to prove her FCRA
claim, the plaintiff must have shown that the defendant obtained her credit report
when it reasonably should have known that she had not initiated a business
transaction with the debtor); see also Daniel v. Bluestem Brands, No. 13-11714,
2014 U.S. Dist. LEXIS 2383, at *13-14 (E.D. Mich. Jan. 9, 2014) (unpublished
op.) (concluding that the plaintiff could not show that the defendant violated the
FCRA by obtaining her credit report from multiple agencies, even where the
plaintiff’s identify was stolen and she was not the actual person who initiated the
business contact with the user, because the defendant reasonably believed that it
had a permissible purpose for seeking the credit report associated with the
information provided by the identity thief); Merritt v. Elan Fin. Servs., No. 1213860, 2013 WL 7884848 at *3 (E.D. Mich. Feb. 28, 2013) (same), adopted by,
2013 WL 7884814 (E.D. Mich. May 02, 2013), aff’d, 2014 WL 1228267 (6th Cir.
Mar. 25, 2014). In its response brief and at the motion hearing, Plaintiff cites to
Pintos v. Pacific Creditors Association, 565 F.3d 1106 (9th Cir. 2009) (citing
Andrews v. TRW, Inc., 225 F.3d 1063 (9th Cir. 2000), rev’d on other grounds, 534
U.S. 19 (2001)); however, the Ninth Circuit’s decision does not address the
“reason to believe” defense and otherwise is not relevant to the present matter.
At the motion hearing, Plaintiff’s counsel also argued that there is an issue
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of fact with respect to whether the credit report attached to Capital Management’s
motion is the credit report it obtained. Counsel pointed out that the document
bears the name “Transunion” in the top right corner of each page. Mr. Magnuson
attests, however, that the document attached to his affidavit as Exhibit B is a
redacted copy of the credit report Capital Management received from Equifax and
that it is the only credit report it obtained with regard to the account. (ECF No. 15
Ex. 1 ¶¶ 6, 7.) Again, Plaintiff cites no materials in the record to refute Capital
Management’s evidence as required under Rule 56. See Fed. R. Civ. P. 56(c)(1).
In short, Plaintiff fails to establish a genuine issue of material fact to support
his claims alleging that Capital Management violated the FCRA. The Court
therefore is granting Capital Management’s motion for summary judgment and is
dismissing it as a party to this lawsuit.
B.
Plaintiff’s Motion
Plaintiff seeks to amend his Complaint to plead facts to support his claim
that Defendants wilfully violated the FCRA. For the reasons stated in the
preceding section, such an amendment would be futile with respect to Capital
Management. See Foman, 371 U.S. at 182 (identifying “futility of amendment” as
a basis for denying a motion to amend). United Recovery has not opposed
Plaintiff’s motion and the Court believes that the additional facts included in his
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proposed amended complaint might render his willful violation claim plausible.
Therefore, the Court is allowing Plaintiff to file an amended complaint against
United Recovery, only.
Accordingly,
IT IS ORDERED, that Defendant Capital Management Services’ Motion
for Summary Judgment Pursuant to Federal Rule of Civil Procedure 56 [ECF No.
15] is GRANTED and Capital Management Services is DISMISSED AS A
PARTY to this lawsuit;
IT IS FURTHER ORDERED, that Plaintiff’s Motion to File a First
Amended Complaint [ECF No. 19] is GRANTED IN PART AND DENIED IN
PART in that Plaintiff may file an amended complaint against United Recovery,
only, within fourteen (14) days of this Opinion and Order.
S/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: July 11, 2014
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, July 11, 2014, by electronic and/or U.S.
First Class mail.
S/ Richard Loury
Case Manager
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