Saylor v. Pinnacle Credit Services, LLC
Filing
78
MEMORANDUM OPINIONSigned by District Judge Anthony J Trenga on 7/16/2015. (jall)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Alexandria Division
KEITH T. SAYLOR,
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Plaintiff,
V.
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PINNACLE CREDIT SERVICES, LLC,
Civil Action No. l;14-cv-1709 (AJT/TCB)
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Defendant.
MEMORANDUM OPINION
This matter is before the Court on Defendant's Motion for Summary Judgment [Doc.
Nos. 32,47,48] and Plaintiffs Motion for Dismissal of Count IV of Complaint [Doc. No. 74]
(the "Motions"). A hearing on the Motions was held on June 26, 2015, following which, the
Court took the Motions under advisement. Upon consideration of the Motions, the memoranda
filed in support thereofand in opposition thereto and the argument presented by counsel at the
hearing, the Court concludes that there are no genuine issues of material fact and the Defendant
is entitled to summary judgment as a matter of law. Defendant's Motion for Summary Judgment
is therefore GRANTED and Plaintiffs Motion for Dismissal of Count IV is DENIED as moot.
I.
BACKGROUND
Defendant Pinnacle Credit Services, LLC ("Pinnacle" or "Defendant") is in the business
ofbuying delinquent debts at a steep discount [Doc. No. 1-14, 6] ("Compl."). This dispute
revolves around Defendant's handling of a delinquent credit card account in PlaintifTs name.
The Complaint alleges multiple violations by Defendant of the Fair Debt Collection Practices
Act ("FDCPA"), 15 U.S.C. § 1692 et seq. (Counts 1and II), and the Fair Credit Reporting Act
("FCRA"), 15 U.S.C. § 1681 et seq. (Counts 111 and IV), as well as common law defamation
(Count V), as a result of what information Defendant furnished to credit reporting agencies. This
Court has jurisdiction under 28 U.S.C. § 1331.' Based on the record before the Court, the
following is undisputed, unless indicated otherwise:^
In March 2007, Plaintiff Keith Saylor ("Plaintiff" or "Saylor") opened a Home Depot
branded Citibank business credit card account in his own name and used the account to make
purchases for his carpentry business ("the account"). Saylor Dep. 16:6-19, May 4,2015, Doc.
No. 32-3. Plaintiffdid not use the account for personal, family, or household purposes. Saylor
Dep. 18:11-15. The last payment received by Citibank was in May 2008. Castle Decl. TI 11,
Doc. No. 33-1. After Saylor became delinquent on his payments. Citibank charged off the
account in December 2008 and sold the charged off account to Fourscore Resource Capital LLC
("Fourscore") in February 2010. Castle Decl. ^ 11, Ex. A ^ 7. At that time, the unpaid balance
' Plaintifforiginally filed this action in the Circuit Court of Loudoun County onNovember 3,
2014 [Doc. No. 1-1]. Defendant was served with the Complaint on November 13,2014, and
timely removed the action to this Court on December 11,2014 under 28 U.S.C. 1446(b) [Doc.
No. 1].
^The Rule 16(b) Order entered in this action states that a"brief in opposition to amotion for
summary judgment must include a separately captioned section within the briefaddressing, in
numbered-paragraph form corresponding to the movant's section, each of the movant's
enumerated facts and indicating whether the non-movant admits or disputes the fact with
appropriate citations to the record" [Doc. No. 6]. The Order fiirther provides that "[t]he Court
may assume thatany fact identified by the movant as undisputed in the movant's briefthat is not
specifically controverted in the non-movant's brief in the manner set forth above is admitted for
the purpose ofdeciding the motion for summary judgment." Id. In Plaintiffs initial opposition
to the summary judgment motion, Plaintiff failed to include the section required by the 16(b)
Order. See Pltf.'s First 0pp., Doc. No. 54. Plaintiff did, however, include this section in his
supplemental opposition; and the Court has considered the record as a whole in determining
which facts are undisputed. See PItf's Supp. 0pp., 1-2, Doc. No. 58.
on the account was approximately $28,700. Castle Decl., Ex. A1 5. In June 2010, Fourscore
transferred the account to Pinnacle.^ Castle Decl. ^ 9.
In October 2013, Saylor mailed credit dispute letters to TransUnion, Equifax, and
Experian (collectively, the "credit reporting agencies" or "CRAs"), disputing, as Pinnacle
reported, that with accruing interest the account had a past due balance in excess of $37,000
owed to Pinnacle. Saylor Dep. 39:13-18. In response to this dispute. Pinnacle reported on the
credit reporting dispute verification it received from the CRAs that it did not report the account
as "charged off," as Plaintiff claimed, because the amount had been charged off in December
2008 by Citibank, not Pinnacle. Castle Decl.
12, 16; Castle Dep. 132:2-5, May 11,2015, Doc.
No. 58-1. Pinnacle further reported that the account was listed as a "collection account" because
the account was past due and had been referred to a third party debtcollection agency. Castle
Decl. ^ 16; Castle Dep. 132:6-16. In November 2013, Pinnacle received notices from the CRAs
that Plaintiff was disputing the account. Vita Decl.
10, 14, 18, Doc. No. 47-1. Pinnacle also
received copiesof Mr. Saylor's five page letters lo Equifax and Trans Union to which he
attached his credit reports and identification. Vita Decl.
12, 16.
Pinnacle has written policies and procedures that govern its reinvestigation of consumer
disputes once it receives notice of a dispute from a CRA. Vita Decl.
7, 8, 9. These
procedures include having an employee review any documents attached to the dispute
notifications to determine whether the documents support the dispute. Vita Decl. ^ 7. If no
documents are attached, or no proof is presented, the employee will instruct Pinnacle's computer
system to automatically populate the demographic and financial fields of the Automated Credit
^Plaintiff has withdrawn his challenge to Defendant's claim ofownership ofthe account. See
Pltfs Withdrawal of Mot. to Am. Pltf.'s Compl., 1-2, Doc. No. 77.
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Reporting Dispute Verification ("ACDV") witii tlie most current information in Pinnacle's
computer system. Vita Decl. ^ 9. When a credit reporting dispute does not claim fraud, identity
theft or previous payments, the procedure involves having Pinnacle's computer system compare
the demographic and financial data on the ACDV with Pinnacle's data, and submit updates
and/or corrections with its ACDV response. Id Pinnacle followed these policies and procedures
when it responded to Plaintiffs credit reporting dispute. Vita Decl.
13, 17, 20. Pinnacle
conducted its investigation in accordance with its procedures applicable to disputes that do not
involve claims of fraud, identify theft, or previous payments. Id. In November 2014, after this
action was filed, Pinnacle deleted the account from PlaintilFs credit report. Vita Decl. ^21. On
May 15,2015, Defendant filed the pending Motion for Summary Judgment [Doc. Nos. 32,47,
48].
II.
STANDARD OF REVIEW
Summary judgment is appropriate only if the record shows that "there is nogenuine
disputeas to any material fact and the movant is entitled to judgment as a matterof law." Fed.
R. Civ. P.56(c); see alsoAnderson v. Liberty Lobby. Inc., 477 U.S. 242,247-48 (1986); Evans v.
Techs. Apps. &Serv. Co., 80 F.3d 954, 958-59 (4th Cir. 1996). The party seeking summary
judgment has the initial burden to show the absence of a material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986). A genuine issue of material fact exists "if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248.
Once a motion for summary judgment is properly made and supported, the opposing party has
the burden of showing that a genuine dispute exists. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586-87 (1986). To defeat a properly supported motion for summary
judgment, the non-moving party "must set forth specific facts showingthat there is a genuine
issue for trial." Anderson, All U.S. at 247-48 ("|T]he mere existence of .some alleged factual
dispute between the parties will not defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue of material fact.") (emphasis in
original). Whether a fact is considered "material" is determined by the substantive law, and
"[ojnly disputes over facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment." Id. at 248. The facts shall be viewed, and
all reasonable inferences drawn, in the light most favorable to the non-moving party. Id. at 255;
see also Lettieri v. Equant Inc., 478 F.3d 640, 642 (4th Cir. 2007).
III.
A.
ANALYSIS
Plaintiffs Claim that Defendant Violated the FDCPA(Counts I and II)
"To establish a violation of the FDCPA, three requirements must be satisfied: (1) the
plaintiffwho has been the target of collection activity must be a 'consumer' as defined in
§ 1692a(3); (2) the defendant collecting the debt must be a 'debt collector' as defined in
§ 1692a(6); and (3) the defendant must have engaged in any act or omission in violation of the
FDCPA." Morgan v. Credit Adjustment Bd. Inc., 999 F. Supp. 803, 805 (E.D. Va. 1998). The
FDCPA defines "debt," in relevant part, as "any obligation or alleged obligation ofa consumer
to pay money arising out of a transaction in which the money, property, insurance, or services
which are the subject of the transaction are primarily for personal, family, or household
purposes." Boosahda v. Providence Dane LLC, 462 F. App'x 331, 336 (4th Cir. 2012) (citing 15
U.S.C. § 1692a(5)). A"consumer" is defined as "any natural person obligated or allegedly
obligated to pay any debt." 15 U.S.C. § 1692a(3).
Here, the parties agree that the account at issue was not a personal account to which the
FDCPA would apply. Plaintiff stated, under oath at his deposition, that he made purchases at
Home Depot in connection with his carpentry business and that he did not recall purchasing
anything for personal use. Saylor Dep. 18:11-15. Plaintiff has therefore failed to establish an
element of his FDCPA claims, and the Court will grant judgment in Defendant's favor on Counts
I and 11."
B.
Plaintiffs Claims that Defendant Violated the FCRA (Counts III and IV)
1.
Accuracy ofPinnacle's Reporting
In supportof its FCRA claims. Plaintiffargues that Defendant violated the FCRA by
engaging in the following conduct: (I) reporting that the account had an outstanding balance
after the statute of limitations had run for enforcement of the debt; (2) failing to report that the
account was "charged off; (3) reporting that the account was a "collection account"; and (4)
reporting a business account on a report that pertained to consumer debt. Defendant argues that
it is entitled to summary judgment on Counts III and IV because (I) all information it provided
to CRAs about Saylor's debt was accurate, as a matter of law; and (2) Pinnacle conducted a
reasonable investigation of Plaintiffs dispute challenging the amount of debt so that even if
Pinnacle's reporting was inaccurate, PlaintifTis not entitled to damages because he caimot show
that Pirmacle willfully failed to conduct a reasonable investigation.
Plaintiff claims that Defendant "treated" and reported the account as a consumer debt and
therefore subjected itselfto the FDCPA. However, the statutory scope of the FDCPA is limited
to consumer debts, which the account was clearly not. Moreover, PlaintifTs account was never
characterized as a "consumer account" for the purposes of the FDCPA. At most, it was treated
as a reportabledebt under a consumer account reporting statute, the FCRA.
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First, Plaintiff argues Pinnacle violated the FCPA by reporting an account on which the
applicable five year statute of limitations had run. See Va. Code § 8.01-246 (providing a five
year statute of limitations period for written contracts). This claim is without merit as a matter of
law. First, under applicable Virginia law "[t]he running of the statute of limitations merely bars
the creditor's remedy but does not extinguish the debt." Fid & Cas. Co. ofNew Yorkv.
Lackland, 8 S.E.2d 306, 307 (1940). For this reason, and as the parties acknowledged at the
summary judgment hearing, the running of the statute of limitations is merely an affirmative
defense to any lawsuit.
With respect to Plaintiffs claims that Pinnacle violated the FCPA when it reported the
account as a "collection" account and failed to report that the account was charged-offby
Citibank, the Court concludes as a matter of law that Defendant accurately and truthfully
disclosed the status of the account as a collection account and that it did not violate the FCPA
when it did not report that Citibank had charged off the account in 2008. It is undisputed that
Pinnacle bought and held the account as a collection account and had, in fact, referred the
account to third-party collectors. See Castle Decl. ^ 16; Castle Dep. at 132:6-16. There is no
express statutory requirement that Defendant report how the account was treated over the entire
life of the account or during periods that preceded Pinnacle's ownership of the account.
Finally, Plaintiffclaims that Defendant violated the FCPA when it reported information
on Saylorthat exceeded that properly reportable in a "consumer report," specifically a non-
reportable business debt account, not a reportable consumer debt. The FCRA broadly defines
the term "consumer report" to mean "any written, oral, or other communication of any
information by a consumer reporting agency bearing on a consumer's credit worthiness, credit
standing, credit capacity, character, general reputation, personal characteristics, or mode of living
which is used or expected to be used or collected in whole or in part for the purpose of serving as
a factor in establishing the consumer's eligibility for credit." 15 U.S.C. § 1681a(d)(l)(A)). It is
undisputed that Saylor became delinquent on an account that was opened in his name personally
and on which he was personally responsible. For these reasons, his delinquency on that business
account may be reasonably seen as having a "bearing on an individual's credit worthiness" and
was properly reported. The record also contains undisputed evidence that as a matter of industry
wide practice, based on the requirements of the FCPA, when a consumer is personally liable for
a business account, the consumer's information, rather than the business name, will be added to
the consumer credit databases. See Canter Decl., Ex. E, Doc. No. 59-3. For these reasons, the
Court concludes that there are no genuine issues of material fact with respect to the propriety of
Defendant's reporting concerning the account and that Plaintiff has failed as a matter of law to
establish any violation of the FCPA.^
2.
Reasonableness ofPinnacle's Investigation
In order to recover damages under the FCPA, Plaintiffmust show that any inaccuracy in
Defendant's reporting with respect to the account was the result of a willful failure to conduct a
reasonable investigation. See ^ 168 In.'' To prove willfulness, a plaintiff must show that the
' Saylor contends that a reasonable fact tinder could draw the necessary inferences to impose
liability under the FCPA from Defendant's deletion of the account from Saylor's reportafter this
action was filed. The Court concludes as a matter of law that Defendant's deletion of the account
from Saylor's report after the action was filed would not permit a reasonable inference that
Defendant had engaged in false reporting with respect to that account.
^Plaintiffconcedes that it cannot establish actual damages and seeks to recover only statutory
damages under § 168In only for Pinnacle's willful noncompliance. See Pltf.'s First 0pp., 3;
Pltf.'s Supp. 0pp., 8.
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defendant "knowingly and intentionally committed an act in conscious disregard for the rights of
the consumer." Dalton v. Capital Associated Indus., Inc., 257 F.3d 409,418 (4th Cir. 2001).
Here, the record fails to establish willfulness as a matter of law. It is undisputed that
Defendant conducted an investigation into Plaintiffs credit reporting dispute pursuant to
Defendant's established policies and procedures. Those procedures included reviewing Saylor's
five page letters to the CRAs that were attached to Saylor's disputes and the ACDV forms;
determining whether the documents supported the dispute; verifying the data on the ACDV with
Pinnacle's data in its computer system; and submitting updates and/or corrections with its ACDV
response. Because Saylor did not claim fraud, identity theft or previous payments, the
circumstances did not require any further investigation. Moreover, because Pinnacle had
followed its standard procedures and concluded based on that investigation that it had properly
reported the account, a reasonable fact finder could not infer, based on that investigation, that
Pinnacle willfully disregarded Plaintiffs rights; and Plaintiff has not proffered any other
evidence from which a reasonable fact finder could find that Pinnacle acted "in conscious
disregard for the rights" of the Plaintiff.
C.
Plaintiffs Defamation Claim (Count V)
Because there were no false statements in what Pinnacle reported to the CRAs, Plaintiff
has also failed to state a claim for defamation, which requires the publication of a false
statement. Nor is the evidence sufficient to establish that Plaintiff would be entitled to
compensatory or punitive damages with respect to any false statement. There is no evidence of
any actual damages and in order to recover punitive damages in a defamation case, the plaintiff
must prove actual malice by "clear and convincing evidence that [the defendant] either knew the
statements he made were false at the lime he made them, or that he made them with a reckless
disregard for their truth." Ingles v. Dively. 246 Va. 244, 253,435 S.E.2d 641, 646 (1993)
(emphasis added). In short, to recover punitive damages, Plaintiff must meet a higher standard
than that for willfulness. For the reasons staled above, the record before the Court is insufficient
to establish willfulness and it is therefore insulTicicnl a fortiori to establish that Defendant acted
with malice.
CONCLUSION
For the above reasons, the Defendant's Motion for Summary Judgment is GRANTED as
to all counts and the action will be dismissed.
The Court will issue an appropriate Order.
Anthony J. 'Yrtfgi
United States District Judge
July 16, 2015
Alexandria, Virginia
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