Kruckow v. Merchants Bank et al
MEMORANDUM OPINION AND ORDER. 1. Plaintiff's Motion to Reconsider (Doc. No. 101 ) is GRANTED. 2. Consistent with this Order, the Court vacates its prior Memorandum Opinion and Order to the extent that it dismissed Plaintiffs claims for violating FCRA, invasion of privacy, vicarious liability, and civil conspiracy for the November 8, 2013 report. (Written Opinion) Signed by Judge Donovan W. Frank on 12/01/2017. (BJS)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Dana D. Kruckow,
Civil No. 16-2418 (DWF/DTS)
OPINION AND ORDER
Merchants Bank, Rushford State Bank,
Craig Schroeder, individually, and Paul A.
Thomas J. Lyons, Jr, Esq., Consumer Justice Center P.A., counsel for Plaintiff.
Charles E. Nelson, Esq., Kathryn E. Wendt, Esq., and Kirstin D. Kanski, Esq., Lindquist
& Vennum LLP, counsel for Defendant Merchants Bank.
John P. Boyle, Esq., and Sarah E. Doerr, Esq., Moss & Barnett, PA, counsel for
Defendant Rushford State Bank.
Kristin B. Rowell, Esq., Anthony Ostlund Baer & Louwagie P.A., counsel for Defendant
Charles A. Bird, Esq., and Grant M. Borgen, Esq., Bird, Jacobsen & Stevens, P.C.,
counsel for Defendant Paul A. Kruckow.
The plaintiff brought this action after learning in divorce proceedings that her
then-husband had obtained a number of loans by allegedly forging her signature as a
co-signer. After this revelation, the plaintiff filed suit against the banks, the loan officer,
and her husband alleging violations of the Fair Credit Reporting Act (“FCRA”) 1 as well
as various state law claims. The Court dismissed the plaintiff’s complaint in part. The
matter is now before the Court on the plaintiff’s motion to reconsider. For the reasons
discussed below, the Court grants the plaintiff’s motion.
The Court assumes the reader’s familiarity with the facts of the case, which are
more fully set out in the Court’s July 19, 2017 Memorandum Opinion and Order (Doc.
No. 83). In short, Defendant Paul A. Kruckow allegedly misrepresented Dana’s 2 (his
then-wife) intent to be jointly liable for various loans from Defendants Merchants Bank
and Rushford State Bank. The misrepresentations took many forms, ranging from
forging Dana’s signature to verbal representation. As relevant here, Paul told Rushford
Loan Officer Schroeder that Dana intended to be jointly liable for two loans, which
would close on November 15, 2013. Schroeder and Rushford allegedly did not require
Paul to submit any documentation to show Dana’s intent, including, for example, an
application for the loan. Although Paul had worked with Schroeder to borrow money
before, who was then at Merchants Bank, Paul had never borrowed money from
15 U.S.C. § 1681, et seq.
Because both Paul Kruckow and Dana Kruckow are both parties to this action, the
Court will use the parties’ first names, which should not be read to connote familiarity
and is used simply for readability.
Rushford up to that point. 3 Based on Paul’s verbal representation, Schroeder and
Rushford pulled Dana’s credit report on November 8, 2013.
As relevant here, Plaintiff brought claims against Rushford Bank and Schroeder
for violating the FCRA and various state laws for the credit report obtained on
November 8, 2013, in advance of two loans closed on November 15, 2013. The Court
dismissed the claims against Rushford and Schroeder for the November 8, 2013 report
because the Court concluded that Plaintiff had failed to plausibly allege that the banks
and Schroeder did not have a permissible purpose to obtain the report. Additionally, the
Court dismissed Plaintiff’s claims for invasion of privacy, vicarious liability, and civil
conspiracy for the November 8, 2013 report based on the conclusion that Rushford Bank
and Schroeder had a permissible purpose. Plaintiff now moves the Court to reconsider its
dismissal of the claims associated with the November 8, 2013 report.
“A ‘motion for reconsideration’ is not described in the Federal Rules of Civil
Procedure, but such a motion is typically construed either as a Rule 59(e) motion to alter
or amend the judgment or as a Rule 60(b) motion for relief from judgment.” Peterson v.
The Travelers Indem. Co., 867 F.3d 992, 997 (8th Cir. 2017) (quoting Auto Servs. Co. v.
KPMG, LLP, 537 F.3d 853, 855 (8th Cir. 2008)). This Court’s Local Rules authorize a
party to move for reconsideration after obtaining leave, upon a showing of “compelling
In its Memorandum Opinion and Order, the Court misstated that the November 8
report was obtained during the life of a loan with Rushford State Bank.
circumstances.” D. Minn. LR 7.1(j). 4 Non-final orders are challenged under Rule 60(b).
See, e.g., Broadway v. Norris, 193 F.3d 987, 990 (8th Cir. 1999) (noting that motions
under Rule 59(e) are directed only to judgments, “not any non[-]final order,” and hence a
motion for reconsideration directed to a non-final order should be considered under
Rule 60(b), which by its terms applies to both judgments and orders); see also ElderKeep v. Aksamit, 460 F.3d 979, 984 (8th Cir. 2006) (“[M]otions for reconsideration are
nothing more than Rule 60(b) motions when directed at non-final orders.”) (internal
quotation marks omitted).
Under Rule 60(b), the Court may relieve a party from an order due to, among
other things, “mistake, inadvertence, surprise, or excusable neglect.” Fed. R. Civ. P.
60(b)(1). “The rule ‘provides for extraordinary relief which may be granted only upon an
adequate showing of exceptional circumstances.’” Jones v. Swanson, 512 F.3d 1045,
1048 (8th Cir. 2008) (quoting United States v. Young, 806 F.2d 805, 806 (8th Cir. 1986)).
“Rule 60(b) is a motion grounded in equity and exists to prevent the judgment from
becoming a vehicle of injustice.” Harley v. Zoesch, 413 F.3d 866, 870 (8th Cir. 2005)
(internal quotation marks omitted).
Here, the Court dismissed the claims against Rushford and Schroeder for the
November 8, 2013 report because the Court concluded that Plaintiff had failed to
plausibly allege that the banks and Schroeder did not have a permissible purpose to
obtain the reports. In her motion to reconsider, Plaintiff correctly points out that the
The Court granted in part Plaintiff’s motion to reconsider on September 14, 2017.
(Doc. No. 100.)
Court misstated that the November 8, 2013 report was pulled during the life of a loan
held at Rushford. Instead, the report was obtained in advance of two loans closing on
November 15, 2013, which were the first loans Paul ever held with Rushford. Plaintiff
argues that because Rushford had never issued a loan to the Kruckows, Rushford and
Schroeder could not have reasonably believed that they had a permissible purpose to pull
Dana’s credit report.
“To state a claim for civil liability based on Section 1681b, a plaintiff must allege
both that the defendant used or obtained the plaintiff’s [consumer] report for an
impermissible purpose, and that the violation was willful or negligent.” Braun v. United
Recovery Sys., LP, 14 F. Supp. 3d 159, 166 (S.D.N.Y. 2014) (collecting cases). One of
the permissible purposes for pulling a credit report is when the information will be used
“in connection with a credit transaction involving the consumer.” 15 U.S.C.
§ 1681b(a)(3)(A). Paul allegedly misrepresented Dana’s intent to be involved in a credit
transaction, but Defendants are not liable under FCRA if they reasonably believed that
Dana was involved in the transaction. “Courts have applied this ‘reasonable belief’
standard to [consumer reporting agencies] and users of consumer reports to determine
whether their reasons for providing or acquiring the reports are permissible.” Glanton v.
DirecTV, LLC, 172 F. Supp. 3d 890, 896 (D.S.C. 2016) (collecting cases); accord Bentley
v. Tri-State of Branford, LLC, Civ. No. 14-1157, 2016 WL 2626805, at *2 (D. Conn.
May 6, 2016) (“Several courts have found that section 1681b(f) applies the ‘reason to
believe’ aspect of section 1681b(a)(3)(A) to users.”); see also Bickley v. Dish Network,
LLC, 751 F.3d 724, 732 (6th Cir. 2014) (granting summary judgment for a business
where an imposter caused the business to obtain in good faith the victim’s credit report);
Hudson v. Babilonia, 192 F. Supp. 3d 274, 299 (D. Conn. 2016) (granting summary
judgment on FCRA claims for reports tied to a fraudulent loan when the lender had “no
reason to believe the loan was fraudulent”).
Here, the Court concludes that Dana has adequately pleaded a FCRA claim for the
November 8, 2013 report. Rushford Bank and Schroeder argue that they had reason to
believe that they had a permissible purpose because Paul told them that Plaintiff intended
to be jointly liable for the loans, and Schroeder had been the Kruckows’ loan officer at
Merchants Bank. Rushford Bank and Schroeder, however, allegedly undertook no effort
to confirm that Plaintiff intended to be jointly liable for the loans. See Rand v. Citibank,
Civ. No. 14-4772, 2015 WL 510967, at *4 (N.D. Cal. Feb. 6, 2015) (denying a motion to
dismiss a FCRA claim because Citibank “knew or should have known” that the plaintiff
did not initiate the transaction). Plaintiff has therefore plausibly alleged a FCRA
violation. And because the FCRA claim for the November 8, 2013 claim should have
survived a motion to dismiss, the Court also concludes that Plaintiff’s claim based on the
November 8, 2013 report for invasion of privacy, vicarious liability, and civil conspiracy
should have similarly survived. (See Doc. No. 83 at 16-22 (denying the Defendants’
motion to dismiss to the extent that the FCRA claim survived).) Thus, the Court
concludes that circumstances exist to vacate, in part, the Court’s prior order.
Rushford and Schroeder’s arguments to the contrary are unpersuasive. They argue
that Plaintiff has failed to identify any procedure that should have been implemented to
identify that Dana intended to be jointly liable for the loans. Similarly, Rushford and
Schroeder argue that FCRA does not require written authorization to pull a credit report.
Defendants’ arguments have some appeal: Indeed, they relied on Paul’s representation
that his spouse intended to be jointly liable for the loan. But Dana alleges that
Defendants undertook no effort to confirm her intent to be liable for the loan. Given that
Dana did not intend to be a party to the loan, Defendants did not in fact have a
permissible purpose to pull Dana’s credit report. Thus, the question is whether
Defendants had reason to believe that a permissible purpose existed. Because Schroeder
and Rushford allegedly undertook no effort to confirm Dana’s involvement, the Court
declines to find on a motion to dismiss that there was reason to believe a permissible
purpose existed for the November 8, 2013 report. The Court therefore grants Plaintiff’s
Based on the files, record, and proceedings herein, IT IS HEREBY ORDERED
Plaintiff’s Motion to Reconsider (Doc. No. ) is GRANTED.
Consistent with this Order, the Court vacates its prior Memorandum
Opinion and Order to the extent that it dismissed Plaintiff’s claims for violating FCRA,
invasion of privacy, vicarious liability, and civil conspiracy for the November 8, 2013
Dated: December 1, 2017
s/Donovan W. Frank
DONOVAN W. FRANK
United States District Judge
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