Cunningham v. Ocwen Financial et al

Filing 152

ORDER ADOPTING REPORT AND RECOMMENDATIONS: The defendants' Objections are not persuasive and they are, therefore, OVERRULED. The Report and Recommendation (Docket No. 142 ) is ACCEPTED and made the findings of fact and conclusions of law of t his court. For the reasons expressed therein, it is hereby ORDERED that the defendants' Motion for Partial Dismissal (Docket No. 131 ) is GRANTED IN PART and DENIED IN PART, as detailed in the Report and Recommendation. Signed by District Judge Aleta A. Trauger on 2/19/2014. (xc:Pro se party by regular and certified mail.)(DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(eh)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
CRAIG CUNNINGHAM,

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Plaintiff,
v.
OCWEN FINANCIAL, LITTON
LOAN SERVICING, and OCWEN
LOAN SERVICING, LLC,
Defendants.

Case No. 3:12-cv-0440
Judge Trauger

MEMORANDUM AND ORDER
On December 10, 2013, the Magistrate Judge issued a Report and Recommendation
(Docket No. 142), to which the defendants have filed timely Objections (Docket No. 150), and
the plaintiff, proceeding pro se, has filed a Response in opposition (Docket No. 151). The
Report and Recommendation (“R&R”) recommends that the defendant’s Partial Motion to
Dismiss (Docket No. 131) be granted in part and denied in part.
When a magistrate judge issues a report and recommendation regarding a dispositive
pretrial matter, the district court must review de novo any portion of the report and
recommendation to which a specific objection is made. Fed. R. Civ. P. 72(b); 28 U.S.C. §
636(b)(1)(C); United States v. Curtis, 237 F.3d 598, 603 (6th Cir. 2001); Massey v. City of
Ferndale, 7 F.3d 506, 510 (6th Cir. 1993). Objections must be specific; an objection to the
report in general is not sufficient and will result in waiver of further review. See Miller v.
Currie, 50 F.3d 373, 380 (6th Cir. 1995).
The defendants object to a single conclusion made by the Magistrate Judge: his decision
to permit the plaintiff’s “re-aging claim” under the Fair Credit Reporting Act, 15 U.S.C. § 1681
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et seq. (“FCRA”), to proceed past their motion to dismiss.1 The relevant portion of the R&R to
which the defendants object states:
There is a complete lack of precedent regarding [Cunningham’s] claims of reaging. Under the FCRA, Reporting Agencies are required to report delinquencies
to [consumer reporting agencies (“CRAs”)] within 90 days of an account
becoming delinquent. Section 1681s-2(a)(5). The FRCA permits CRAs to report
such delinquencies for a period of 7 years. Re-aging occurs when a Reporting
Agency or a CRA modifies the date of last activity on a delinquent account to
extend the reporting date beyond the permissible 7-year timeframe.
Plaintiff alleges that Ocwen and/or Litton re-aged, reinserted information
regarding a loan account attributable to him to show that it was “seriously
delinquent” when it had previously been shown as “paid in full with no
delinquencies” and remained so. Further, Plaintiff asserts that Defendants did so
after the account had been disputed and Defendants had determined that the
information was inaccurate. While re-aging or reinsertion is clearly governed by
Section 1681s-2(a) and beyond Plaintiff’s reach, any knowing re-aging or
reinsertion of inaccurate information subsequent to an adequate investigation
logically falls under Section 1681s-2(b)(1)(E) as well.
(Docket No. 142 at 4-5.) The defendants maintain that the Magistrate Judge erred by effectively
creating an unprecedented implied private right of action for “re-aging” claims against loan
furnishers from the FCRA’s Section 1681s-2(b).
Generally, Section 1681s-2 sets forth certain responsibilities of furnishers, including loan
providers like the defendants. Two particular sections of the statute are relevant here. Section
1681s-2(a) sets forth duties assigned to furnishers of information at the initial time that the
furnishers provide information to CRAs. For instance, Section 2(a)(5) expressly requires that,
within 90 days of initially providing information regarding a delinquent account to a CRA, the

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The plaintiff’s Verified Third Amended Complaint includes claims against the defendants
under the FCRA, the Fair Debt Collection Practices Act, and the Real Estate Settlement
Procedures Act. In the R&R, the Magistrate Judge recommended dismissal of all but two of the
plaintiff’s FCRA claims: (1) a claim for failure to investigate under the FCRA, and (2) the “reaging” claim under the FCRA.
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furnisher must report the date of first delinquency of the affected account.2 Section 1681s-2(b),
on the other hand, sets forth specific responsibilities for furnishers of information upon notice of
a consumer’s dispute of previously-provided information. For example, Section 1681s-2(b)
requires that, following notice of a consumer dispute with regard to the completeness or accuracy
of information provided by a furnisher to a CRA, the reporting furnisher must conduct an
investigation and report the results of the investigation to the CRA. 15 U.S.C. § 1681s2(b)(1)(A)-(C). Additionally, Section 1681s-2(b)(1)(E) requires that, if an item of information
disputed by a consumer is found to be inaccurate after investigation, a furnisher must promptly
modify, delete, or permanently block the reporting of the inaccurate information.
Congress has made clear that there is no private right of action under Section 1681s-2(a);
however, it is settled that the FCRA expressly creates a private right of action against a furnisher
who fails to satisfy the duties identified in Section 1681s-2(b). Boggio v. USAA Fed. Sav. Bank,
696 F.3d 611, 618 (6th Cir. 2012) (“[I]f a consumer can establish that a furnisher willfully
violated one of its duties, then under Section 1681n, the consumer may recover actual or
statutory damages, as well as punitive damages.”) Here, the Magistrate Judge concluded that,
although Cunningham’s re-aging claim has some relation to Section 1681s-2(a)’s requirement
that a furnisher provide a date of first delinquency to CRAs, Cunningham’s re-aging claim also

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The full text of Section 1681-2(a)(5) provides:
A person who furnishes information to a consumer reporting agency regarding a
delinquent account being placed for collection, charged to profit or loss, or
subjected to any similar action shall, not later than 90 days after furnishing the
information, notify the agency of the date of delinquency on the account, which
shall be the month and year of the commencement of the delinquency on the
account that immediately preceded the action.
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falls within the scope of Section 1681-2(b) because, after the defendants were notified about
Cunningham’s dispute of the allegedly delinquent account, they were required to perform an
investigation and, if necessary, modify, delete, or permanently block the reporting of the
inaccurate information (here, the date of first delinquency). Accordingly, he concluded that
Cunningham had stated a plausible claim for relief.
In their Objections, the defendants argue that the only language in the FCRA that
arguably applies the concept of re-aging to furnishers like Ocwen and Litton is the requirement
that furnishers initially report a date of first delinquency and, therefore, a private right of action
as to falsifying information to “re-age” a delinquent account is not contemplated by the statute.
The defendants further argue that, because the FCRA provides a private right of action against
CRAs for placing accounts for collection which antedate the report by more than seven years in
Section 1681c, Congress clearly did not intend for individuals to also be able to sue furnishers
for providing improper information as to the date of delinquency. Moreover, the defendants
contend that, because the Magistrate Judge’s decision is unprecedented, it must be erroneous.
The defendants’ argument is meritless. Despite the fact that Congress neglected to use
“re-aging” as a term of art in Section 1681s-2(b), Cunningham’s allegation that Ocwen and/or
Litton knowingly reinserted inaccurate information regarding a loan account to show that it was
delinquent falls within the plain language of Section 1681s-2(b)(1)(E).
The defendants’ Objections are not persuasive and they are, therefore, OVERRULED.
The Report and Recommendation (Docket No. 142) is ACCEPTED and made the findings of
fact and conclusions of law of this court. For the reasons expressed therein, it is hereby
ORDERED that the defendants’ Motion for Partial Dismissal (Docket No. 131) is GRANTED
IN PART and DENIED IN PART, as detailed in the Report and Recommendation.
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It is so ORDERED.
_______________________________
ALETA A. TRAUGER
United States District Judge

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