Daugherty v. Equifax Information Services, LLC
Filing
108
MEMORANDUM OPINION AND ORDER: The Court ORDERS that Defendant Ocwen Loan Servicing, LLC's 95 MOTION for Summary Judgment be DENIED as to Count Four of the Plaintiff's Complaint alleging violations of the Fair Credit Reporting Act; the Court ORDERS that the motion be GRANTED as to Counts Six and Seven of the Plaintiff's Complaint, and that Count Eight of the Plaintiff's Complaint be DISMISSED with prejudice; the Plaintiff has agreed to voluntarily DISMISS Count Five of the Complaint. Signed by Judge Irene C. Berger on 10/26/2015. (cc: attys; any unrepresented party) (slr)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
BECKLEY DIVISION
DAVID M. DAUGHERTY,
Plaintiff,
v.
CIVIL ACTION NO. 5:14-cv-24506
EQUIFAX INFORMATION SERVICES, LLC,
and OCWEN LOAN SERVICING, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER
The Court has reviewed Defendant Ocwen Loan Servicing, LLC’s Motion for Summary
Judgment (Document 95) and accompanying exhibits, and the Memorandum in Support
(Document 96). The Court has also reviewed the Plaintiff’s Response in Opposition to Ocwen
Loan Servicing, LLC’s Motion for Summary Judgment (Document 101) and accompanying
exhibits, and the Reply Memorandum in Support of Defendant Ocwen Loan Servicing, LLC’s
Motion for Summary Judgment (Document 103). For the reasons stated herein, the Court finds
that the motion should be granted in part and denied in part.
PROCEDURAL HISTORY
The Plaintiff initiated the present action with the filing of a Complaint on June 8, 2014, in
the Circuit Court of Raleigh County, West Virginia. (Pl.s’ Compl., Document 1:1.) The Plaintiff
named Equifax Information Services, LLC (“Equifax”) and Ocwen Loan Servicing, LLC
(“Ocwen”) as Defendants, asserting that when Plaintiff sought to refinance a mortgage loan,
currently serviced by Ocwen, false or misleading statements on his credit report attributable to
both Defendants prevented him from doing so. (Compl. at 3.) The Plaintiff asserted a number of
claims against the Defendants, including violation of Section 1681s-2(b)(1)(A) of the Fair Credit
Reporting Act (“FRCA”), 15 U.S.C. §1681s-2(b)(1)(A), unlawful debt collection practices under
West Virginia Code §46A-2-127(d), and various claims sounding in West Virginia common law,
including negligence and the tort of outrage. (Id. at 6-9.) The Plaintiff also requested that the
court exercise equitable power to prevent foreclosure of his property, invoking the common-law
doctrine that equity abhors a forfeiture. (Id. at 9-11.)
On August 7, 2014, the case was removed to the United States District Court for the
Southern District of West Virginia. (Document 1:3.) Ocwen filed its Answer to the Plaintiff’s
complaint on August 8, 2014. (Document 4.) Ocwen denied any unlawful conduct and all
assertions of liability. (Id.) On July 8, 2015, Counsel for the Plaintiff notified the Court by letter
that all claims against Defendant Equifax had been settled. (Document 80.) The Defendant’s
motion for summary judgment is ripe for review.
STATEMENT OF FACTS
On July 20, 1999, the Plaintiff and his spouse executed a promissory note (the “loan”) with
EquiFirst Corporation for a property located at 16 Valley View Drive in Vienna, West Virginia
(the “property”), with an original principal amount of $100,860.00. (Def. Mem. in Supp. of Mot.
Summ. J. at ¶1.) The loan called for monthly payments, and a balloon payment of $82,666.34 due
on July 26, 2014. (Id.) The loan was transferred to Litton Loan Servicing, LLC on November 20,
2004. (Id. at ¶3). On November 1, 2011, Ocwen acquired the servicing rights to the loan. (Id. at
¶5.) When Ocwen acquired the loan, the Plaintiff was past due on his monthly payments, and the
Plaintiff was subsequently delinquent on payments for December 2011, January 2012 and
February 2012, for a total delinquency of $6,128.39. (Id. at ¶6.) In December 2011, Ocwen began
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furnishing monthly reports on the loan to the consumer reporting agencies (“CRAs”). From
November 2011 through April 10, 2012, Ocwen “accurately reported” the loan as overdue. (Id. at
¶9.) The April 10, 2012 report reflected the status of Plaintiff’s account from March 1, 2012
through March 31, 2012. (Id.) In April of 2012, the Plaintiff’s delinquency led Ocwen to
commence foreclosure proceedings against the Plaintiff. (Id. at ¶6.) On April 23, 2012, the
Plaintiff paid the past due balance and reinstated the loan. (Id.) With the exception of a late
payment in March of 2013, the Plaintiff has remained current on the loan since that date. (Def.
Mot. for Summ. J. at ¶8.)
When Ocwen acquired the loan, the date of origination was incorrectly listed. (Def. Mem.
in Supp. of Mot. Summ. J. at ¶5.) Ocwen realized the error in March 2012, and “corrected” the
opening date to July 20, 1999. (Id., at ¶7.) Equifax then added a second listed account, or
“tradeline,” for the Ocwen account. (Id.) One tradeline reported the account as current, while the
other tradeline continued to reflect the account as 120 days past due. (Id.) No other CRA reported
a second tradeline, and it is undisputed that Ocwen never reported a duplicate tradeline to Equifax.
(Id. at ¶7)
Ocwen reports to each CRA using the e-Oscar system, a “web-based, automated” portal
run by the CRAs that “enables CRAs to create and data furnishers like Ocwen to respond” to credit
disputes using Automated Credit Dispute Verifications (“ACDVs”). (Id. at ¶16.) When a
consumer disputes an entry on a credit report, the CRA sends the dispute to the data furnisher
through e-Oscar, and, after “conducting an investigation,” the data furnisher responds through eOscar through an ACDV. (Id.) When a CRA sends a credit dispute to Ocwen via e-Oscar, a code
is assigned to the dispute describing the nature of the dispute. (Id. at ¶17.) The parties do not
dispute that the only two codes assigned by the CRAs to disputes filed by the Plaintiff in this case
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were “001,” which is used when the customer disputes ownership of the account, and “106,”
referring to a dispute about the “present/previous account status/payment history profile, payment
rating.” (Id. at ¶16.)
A. The March 2013 Disputes
In March 2013, the Plaintiff reviewed his credit report, anticipating efforts to refinance the
loan due to the pending balloon payment. (Document 101, at 1.) The Plaintiff then discovered
that his Equifax report contained two tradelines for the Ocwen loan. One tradeline reflected that
the loan was delinquent for March of 2013. The second tradeline inaccurately reported that the
Plaintiff’s account was over 120 days past due, and that foreclosure had begun. (Pl.s’ Mem. in
Opp. of Mot. Summ. J. at 1.) Shortly thereafter, on March 14, 2013, the Plaintiff sent a letter to
Ocwen stating that his “credit report with Equifax” reflected a delinquency of $6,128.00 with
Ocwen Loan Servicing, and also stated that his loan was in foreclosure. The Plaintiff requested
that Ocwen “please correct these records”. (Pl.s’ Mem. in Opp. of Mot. Summ. J., Ex. 8.) The
Plaintiff attached to the letter a credit report showing an Ocwen tradeline ending in 2012. The
tradeline reflected a delinquency of at least 120 days, and also stated that foreclosure proceedings
had begun. (Pl.s’ Mem. in Opp. of Mot. Summ. J., Ex -19, at 17.) On March 18, 2013, Ocwen
responded to Plaintiff’s letter, stating that “[a]s of March, 2012, your loan was due for the
November 26, 2011 contractual payment and the total amount past due on the loan was in the
amount of $6,128.39.” (Pl.’s Mem. in Opp. of Mot. Summ. J., Ex. 7.) The letter also noted that
foreclosure proceedings began on April 18, 2012 and stopped on April 23, 2012. (Id.)
The Plaintiff disputed the Ocwen tradeline with Equifax on March 20, 2013. Ocwen’s
service logs for the Plaintiff’s loan reflect that on March 20, 2013, an ACDV was received, stating
“Borrower’s concern with reporting: Not his/hers. Provide or confirm complete ID.” (Pl.s’ Mem.
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in Opp. of Mot. Summ. J., Ex 23, at 16.) The logs also show that on March 20, 2013, Ocwen
reported to “credit bureau” that the account was “[v]erified, hence bwr[sic] is responsible.” (Id. at
17). On March 20, 2013, Ocwen sent the Plaintiff a letter confirming receipt of the request for
research on his loan, and stating that “[i]t is Ocwen’s policy to perform all research and provide a
written response to you within twenty (20) days from the receipt of your letter.” (Pl.s’ Mem. in
Opp. of Mot. Summ. J., Ex 7.) The Plaintiff also claimed to have also submitted a dispute to
Equifax in March of 2013, disputing the account status and payment history. (Pl.s’ Mem. in Opp.
of Mot. Summ. J. at 2.) The Plaintiff claims the ACDV reported a “tradeline indicating a past due
amount of $6,128, an account status of 120 days past due, and the special comment code that
foreclosure proceedings started.”
Also in March of 2013, the Plaintiff engaged a credit repair service, Aggressive Credit
Repair (“ACR”). At the time, the Plaintiff had at least twelve additional adverse tradelines,
including tax liens and various delinquencies. (Def. Mem. in Supp. of Mot. Summ. J. at ¶12.) In
June and July of 2013, ACR and the Plaintiff disputed the Ocwen tradeline with Equifax, resulting
in several ACDVs. Ocwen’s logs reflect that the ACDVs only requested confirmation that Plaintiff
owned the account. (Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 24, at 24.) Ocwen responded to
each ACDV by verifying that the Plaintiff was responsible for the account.
B. The March 2014 Disputes
On March 19, 2014, the Plaintiff sent a letter to Ocwen complaining that Equifax was
showing his account as 120 days late in the Months of June, July, October and December of 2013,
and reporting an incorrect balance. (Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 19, at 15.) Attached
to the letter was an Equifax credit report showing that the Ocwen account was at least “120 days
or more than four payments past due,” that the “foreclosure process” had begun, and that the
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Plaintiff had missed payments in March, June, July, October and December of 2013. (Id. at 17.)
The Plaintiff also sent a copy of the letter to the Consumer Financial Protection Bureau (“CFPB”).
(Def. Mem. in Supp. of Mot. Summ. J., at 6.) The Defendant responded by informing the Plaintiff
it had sent a request to the CRAs to correct any discrepancy in the loan balance, and also told him
it would provide him with a payment history. (Def. Reply in Supp. of Mot. Summ. J., at 6.)
The Plaintiff sent a similar letter to the CFPB on March 26, 2014. The letter stated that
his Equifax report showed late mortgage payments to Ocwen for March, July, October and
December of 2013, as well as a past-due balance of $6,128.00. The Plaintiff expressed suspicions
that Ocwen was deliberately refusing to correct the incorrect reports in order to “profit from [the
plaintiff’s] equity.” (Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 29, at 1-2.) Ocwen received notice
of all communications with the CFPB. (Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 26, at 8-10.) On
April 17, 2014, the Plaintiff updated the request, stating that he had “sent Ocwen a copy of my
Equifax report,” showing a delinquency of 120 days in March, June, July and October of 2013.
On or before June 9, 2014, the CFPB communicated with Ocwen about the account, and Ocwen
confirmed that the Plaintiff was current for June, July, October and December of 2013. The CFPB
issued a response to Plaintiff on June 9, 2014, noted the past due payment from March 2013, and
also noted that the balance of the account was currently correct. (Id.)
Ocwen’s logs reflect five phone calls from the Plaintiff on March 17, 2014, requesting,
inter alia, the payment due on the account, the fax number for the Research department, and the
credit reporting on the account in 2013. After initially informing the Plaintiff that the account was
current, Ocwen reported that the account was reported late in March 2013 due to a late payment.
(Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 26, at 1.) The Plaintiff then initiated a dispute with
Equifax. Equifax created an ACDV on March 18, 2014, requesting that Ocwen confirm that the
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loan was not “his/hers”. Ocwen informed the CRAs that the Plaintiff was responsible for the
account. (Id. at 2.) Later, on March 21, 2014, Ocwen updated the Plaintiff’s account information
by distributing an Automated Universal Dataform (“AUD”), which “[u]pdated and reported the
current balance of the loan … as per transaction history to all four credit bureaus. (Def. Mem. in
Supp. of Mot. Summ. J. at 7; Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 26, at 2.)
Ocwen also responded to ACDVs filed by the Plaintiff on April 23, 2014. (Pl.s’ Mem. in
Opp. of Mot. Summ. J. Ex. 30.) Ocwen’s logs reflect that through the ACDVs, Ocwen learned
that the account was listed “120 days past the due date.” Ocwen therefore reported that the account
was current as of March 2014. (Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 26, at 13.) Ocwen also
“modified” the Plaintiff’s account to reflect that the account was current, that there was a zero
balance, and also “modified the payment history profile.” (Pl.s’ Mem. in Opp. of Mot. Summ. J.
at 3; Def. Reply in Supp. of Mot. Summ. J. at 7.)
C. The June 2014 ACDVs
In June 2014, Plaintiff disputed the Ocwen tradeline several times, resulting in multiple
ACDVs. (Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 27 at 5-8). These ACDVs indicated that the
Plaintiff continued to dispute ownership of the inaccurate Ocwen tradeline, and also disputed the
account status and payment history. (Id.; Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 31.) Ocwen
informed Equifax that the account was “current,” that the Plaintiff did not have a past due balance,
and also updated the payment history profile. (Def. Reply in Supp. of Mot. Summ. J. at 8).
D. The June 2014 CFPB Inquiry and Subsequent Events
The CFPB submitted a second request to Ocwen on June 26, 2014. The CFPB specifically
inquired about whether Plaintiff was late with payments in March, June, July, October and
December 2013. (Def. Reply in Supp. of Mot. Summ. J. at 8.) The CFPB submitted a third request
on June 30, 2014. According to the Defendant’s logs, the CFPB noted that Ocwen “indicated that
7
[their] records show that the credit reporting correctly reflected the loan as current for the months
of March, June, July, October and December 2013.” (Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex.
27, at 9.) The CFPB requested that Ocwen “provide documentation” showing Ocwen had reported
the Plaintiff as current for that period of time. (Id. at 10.) Neither request mentions foreclosure,
or a duplicative tradeline. (Id.) On July 2, 2014, the log indicates that Ocwen completed an eOSCAR Credit Update, reporting the loan as “Paid as Agreed and Current” for the months of
March, June, July, October and December 2013.” (Id. at 11-12.)
On July 2, 2014, Ocwen sent
an AUD to each of the CRAs, showing that Plaintiff was current for all of 2013, not in foreclosure,
and had a zero balance. (Pl.s’ Mem. in Opp. of Mot. Summ. J. Ex. 32.) The Plaintiff commenced
this action on July 14, 2014. Since the commencement of this action, the Plaintiff has not been
turned down for credit, and Equifax deleted the inaccurate tradeline no later than September 2014.
(Def. Reply in Supp. Mot. Summ. J. at 9.) Quicken Loans agreed to refinance the Plaintiff’s
mortgage in May 2015. (Id.)
E. The Plaintiff’s Credit Applications
The record indicates that during the relevant period, the Plaintiff sought consumer credit
on several occasions, and inquired with multiple lenders about refinancing his Ocwen loan. On or
about June 17, 2013, the Plaintiff sought to refinance his loan with Ocwen through Embrace Home
Loans. In May 2014, the Plaintiff communicated with Quicken Loans about refinancing the loan.
The Plaintiff informed Quicken that he was having problems with his mortgage on his credit report,
and Quicken Loans “quickly ended the loan application.” (Pl.s’ Mem. in Opp. Mot. Summ. J. Ex.
2, at 61:23-63:9.) The Plaintiff also applied for a home loan with One Community Federal Credit
Union in May 2014. (Id. at 16:22-17:16.) The Plaintiff did not proceed with the application
8
because of the reported foreclosure. (Id.) Finally, the Plaintiff was declined by Chase Bank USA,
NA for a Disney Visa Platinum Card on May 6, 2014. (Pl.s’ Mem. in Opp. Mot. Summ. J. at 8.)
F. The Plaintiff’s Alleged Emotional Distress
The Plaintiff also testified that as a result of his credit problems and inability to refinance
his mortgage, he suffered emotional trauma. (Pl.s’ Mem. in Opp. Summ. J. at 9.) The Plaintiff
testified about significant anxiety about his ability to resolve the pending balloon payment, and a
resulting decline in quality of life. (Id.) The Plaintiff testified that he has felt more “stressed out
than normal” since discovering the inaccurate Ocwen tradeline, and that his sleep has been
significantly disturbed. (Id.) However, as Ocwen notes, the Plaintiff does not provide any
evidence showing that he has sought medical treatment for his anxiety, or that he is currently under
the care of any mental health practitioner.
STANDARD OF REVIEW
The well-established standard in consideration of a motion for summary judgment is that
“[t]he court shall grant summary judgment 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)–(c); see also Hunt v. Cromartie, 526 U.S. 541, 549 (1999); Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Hoschar v.
Appalachian Power Co., 739 F.3d 163, 169 (4th Cir. 2014). A “material fact” is a fact that could
affect the outcome of the case. Anderson, 477 U.S. at 248; News & Observer Publ’g Co. v.
Raleigh-Durham Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A “genuine issue” concerning
a material fact exists when the evidence is sufficient to allow a reasonable jury to return a verdict
in the nonmoving party’s favor. FDIC v. Cashion, 720 F.3d 169, 180 (4th Cir. 2013); News &
Observer, 597 F.3d at 576.
9
The moving party bears the burden of showing that there is no genuine issue of material
fact, and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp.,
477 U.S. at 322–23. When determining whether summary judgment is appropriate, a court must
view all of the factual evidence, and any reasonable inferences to be drawn therefrom, in the light
most favorable to the nonmoving party. Hoschar, 739 F.3d at 169. However, the non-moving
party must offer some “concrete evidence from which a reasonable juror could return a verdict in
his favor.” Anderson, 477 U.S. at 256. “At the summary judgment stage, the non-moving party
must come forward with more than ‘mere speculation or the building of one inference upon
another’ to resist dismissal of the action.” Perry v. Kappos, No.11-1476, 2012 WL 2130908, at
*3 (4th Cir. June 13, 2012) (unpublished decision) (quoting Beale v. Hardy, 769 F.2d 213, 214
(4th Cir. 1985)).
In considering a motion for summary judgment, the court will not “weigh the evidence and
determine the truth of the matter,” Anderson, 477 U.S. at 249, nor will it make determinations of
credibility. N. Am. Precast, Inc. v. Gen. Cas. Co. of Wis., 2008 WL 906334, *3 (S.D. W. Va. Mar.
31, 2008) (Copenhaver, J.) (citing Sosebee v. Murphy, 797 F.2d 179, 182 (4th Cir. 1986). If
disputes over a material fact exist that “can be resolved only by a finder of fact because they may
reasonably be resolved in favor of either party,” summary judgment is inappropriate. Anderson,
477 U.S. at 250. If, however, the nonmoving party “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case,” then summary judgment should be
granted because “a complete failure of proof concerning an essential element . . . necessarily
renders all other facts immaterial.” Celotex, 477 U.S. at 322–23.
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DISCUSSION
Ocwen seeks summary judgment on Count Four, in which Plaintiff seeks actual and
punitive damages under 15 U.S.C. §1681(n) and (o) for Ocwen’s allegedly willful and negligent
violations of 15 U.S.C. §1681(s)-2(b)(1)(A). Ocwen also seeks summary judgment on Count Five,
which alleges violations of West Virginia Code Section 46A-2-127(d), Count Six, alleging
negligence, and Count Seven, alleging the tort of outrage. Ocwen also requests that the Court
dismiss Count Eight, “equity abhors a forfeiture,” for failing to state a claim upon which relief can
be granted. The Plaintiff opposes summary judgment on all counts except Count Five, which the
Plaintiff agrees to dismiss. (Document 101, at 21.)
A. The Plaintiff’s FCRA Claim
Count Four of the Plaintiff’s Complaint alleges that the Defendant violated 15 U.S.C.
§1681s-2(b)(1)(A). (Compl. at 8.) This section provides, in pertinent part, that after receiving
notice of a dispute, a furnisher of information, such as Ocwen, must “conduct an investigation with
regard to the disputed information.” 15 U.S.C. §1681s-2(b)(1)(A).1 It is well-established that a
private plaintiff has a cause of action for violations of Section 1681s-2(b)(1)(A). See Ayers v.
Equifax Info. Servs., No.03-551, 2003 WL 23142201, at *5 (E.D.Va. Dec. 16, 2003). Congress
has also empowered private plaintiffs to seek civil damages for willful or negligent violations of
the FCRA. Damages for willful breaches of the FCRA are governed by 15 U.S.C. §1681n, which
allows a private plaintiff to claim actual and punitive damages for a Defendant’s willful violation.
1
The Court notes that the Plaintiff’s Complaint does not address the remaining prongs of 15 U.S.C. §1681s-2(b)(1),
including whether Ocwen “reviewed all relevant information” provided by Equifax under 15 U.S.C. §1681s2(b)(1)(B), and reported their findings to Equifax under 15 U.SC. §1681s-2(b)(1)(B). The Plaintiff also does not
contest whether Ocwen satisfied the statutory timeline for completing investigations, set forth in 15 U.S.C. §1681s2(b)(2). Therefore, the Court’s analysis will focus exclusively on whether Ocwen satisfied the standard for Summary
Judgment on the Plaintiff’s claim under 15 U.S.C. §1681s-2(b)(1)(A).
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Plaintiffs may also claim actual damages for a Defendant’s negligent conduct under 15 U.S.C.
§1681o.
The FCRA provides consumers with a reliable and systematic method to dispute and
correct inaccurate information in credit reports. Johnson v. MBNA America Bank, NA, 357 F.3d
426, 430-31 (4th Cir. 2004.) The Fourth Circuit has interpreted Section 1681s-2(b)(1)(A) of the
FRCA to require that, when a customer disputes a tradeline on a credit report through a CRA, the
furnisher of the tradeline must conduct a “reasonable,” rather than a superficial or minimal
investigation. Johnson v. MBNA America Bank, NA, 357 F.3d 426, 430-31. The Fourth Circuit
has thus “infused a qualitative component” into the obligations of a data furnisher. To satisfy the
reasonable investigation standard, a data furnisher must conduct a “searching inquiry” into the
dispute. Jones v. Experian Information Systems, Inc., et. al., 2012 WL 2905089, at *4 (E.D.Va.
2012), citing Johnson, at 430-31. The duty is triggered when a data furnisher receives notification
of a dispute from the CRA. 15 U.S.C. §1681s-2(b)(1); Mavilla v. Absolute Collection Service,
Inc., et. al., 539 F.Appx. 202 (4th. Cir. 2013) (unpublished). A reasonable investigation requires
the data furnisher to go beyond a cursory review of internal records. Johnson, 357 F.3d at 431.
Nor may a data furnisher restrict an investigation to information provided by the CRA. Saunders
v. Equifax Information Services, L.L.C., 2006 WL 2850647 (E.D.Va. October 3, 2006)
(unpublished), aff’d sub nom. Saunders v. Branch Banking and Trust Co. of Va, 526 F.3d 142 (4th
Cir. 2008). However, a “reasonable” investigation does not require the data furnisher to consult
external sources.
Jones, 2012 WL 2905089, at *5. To determine whether a furnisher’s
investigation is reasonable, the fact-finder must weigh the “cost of verifying the accuracy of the
information” against the “possible harm of reporting inaccurate information.” Akalwadi v. Risk
Management Alternatives, Inc., 336 F. Supp. 2d 492, 510 (D.Md. 2004), quoting Johnson, 357
12
F.3d at 432. It is generally a question of fact for the jury as to whether a data furnisher conducted
a reasonable investigation under Section 1681s-2(b)(1)(A). Akalwadi, at 510, citing Bruce v. First
U.S.A. Bank, N.A., 103 F.Supp. 2d 1135, 1143 (E.D.Mo. 2000). Thus, the threshold task for the
Court is to determine if any issue of material fact exists as to whether Ocwen conducted a
reasonable investigation of the Plaintiff’s disputes.
Ocwen argues that as a matter of law, its investigation of the Plaintiff’s disputes was
reasonable. (Def. Mem. in Supp. of Mot. Summ. J. at 11.) (Id.) Ocwen states that it never reported
two tradelines, and that the Plaintiff never explicitly informed Ocwen that Equifax showed two
separate Ocwen tradelines on the Plaintiff’s report. (Id.) Ocwen acknowledges the high volume
of ACDVs on the account, but claims to have reasonably investigated each in a timely fashion.
(Id. at 12.) Ocwen notes that all of the ACDVs from Equifax regarding the Plaintiff’s account fell
into two categories: disputes about the Plaintiff’s ownership of the account, and disputes about the
account’s status, payment history and payment rating. (Id. at 7.) For those ACDVs that disputed
ownership of the account, Ocwen claims that it conducted a reasonable investigation by
“access[ing] the underlying loan documents and verify[ing] that the account belonged” to the
Plaintiff. (Id.) For ACDVs that disputed the status and payment history of the account, Ocwen
claims that it “accessed its servicing records” and “verified the payment history and account
status.” (Id.) Ocwen also emphasizes that “[o]n numerous occasions,” Ocwen reported to Equifax
that the Plaintiff’s account was current. (Id.)
Ocwen relies heavily upon two cases from outside the Fourth Circuit in seeking summary
judgment on the Plaintiff’s FCRA claim: Westra v. Credit Control of Pinellas, 409 F.3d 825 (7th
Cir. 2005) and Malm v. Household Bank (SB), N.A., 2004 U.S. Dist. LEXIS 12981 (D. Minn. July
7, 2004). In Westra, a victim of identity theft disputed a medical bill through a CRA, and provided
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the CRA with a description of the fraud and information about the perpetrator. Westra, 409 F.3d
at 825. The CRA generated a dispute verification form, and sent the form to the data furnisher.
Id. The form did not refer to fraud or identity theft, or include the victim’s documentation. Id. As
a result, the data furnisher verified the account information as accurate. Id. The victim later
brought suit against the data furnisher under Section 1681s-2(b)(1)(A), claiming that the
investigation was unreasonable. Id. at 827. The defendant moved for summary judgment, and the
District Court granted the motion. Id. On appeal, the Seventh Circuit found that the data
furnisher’s investigation, which involved verification of the victim’s name, date of birth, and
mailing address, was reasonable because the CRA provided “scant information” about the dispute.
Id. The Seventh Circuit also disagreed with the victim’s assertion that the CRA should have
“contacted him directly” about the account, finding that “[w]hile that would have undoubtedly
helped matters in the instant case,” requiring data furnishers to individually contact every customer
that disputed an account would “be terribly inefficient,” and was not required by the FCRA. Id.
Similarly, in Malm, the District Court for the District of Minnesota found that in the absence of
additional information from the CRA, a data furnisher had reasonably investigated an ACDV that
disputed ownership of an account by verifying that the plaintiff’s name, date of birth and other
identifying information matched its internal records. Malm, 2004 U.S. Dist. 12981, at *14-15.
Ocwen argues that, like the defendants in Westra and Malm, Equifax provided “scant information”
about the Plaintiff’s disputes, and that in light of the information provided, Ocwen’s investigation
was reasonable as a matter of law. (Pl.s’ Mem. in Supp. of Mot. Summ. J. at 13.) Ocwen urges
the Court to follow these cases, and argues that “[g]iven the cursory notice and scant information
provided” by Equifax and the Plaintiff, its investigation of each ACDV was reasonable. (Id.)
14
The Plaintiff, meanwhile, argues that Ocwen fails to satisfy the standard for summary
judgment on the FCRA claim. (Def. Mem. in Opp. of Mot. Summ. J. at 12-13.) The Plaintiff
argues that under Johnson, Ocwen was obligated to conduct more than a mere “data conformity”
review of the Plaintiff’s numerous disputes. (Id. at 14.) The Plaintiff argues that this sort of
cursory investigation is “especially inadequate” where “the furnisher has additional information
regarding a consumer dispute from the consumer himself.” (Id.) Noting Ocwen’s reliance on
Westra, the Plaintiff distinguishes Westra by noting that here, the Plaintiff had provided additional
information to Ocwen in the form of multiple letters. (Id.) To support this distinction, the Plaintiff
refers the Court to Alabran v. Capital One Bank, 2005 WL 3338663 (E.D.Va. December 8, 2005)
(unpublished). (Id.) In that case, the Eastern District of Virginia found that the “scant information”
test set forth by Westra was inapplicable where the plaintiff had “lodged the dispute directly with
the furnisher” as well as with the CRAs. Alabran, 2005 WL 3338663, at *7.
The Plaintiff emphasizes that a “simple investigation” would have notified Ocwen that a
customer cannot have “two tradelines for the same account,” and that suggestions that Ocwen
required additional notice are “inflammatory.” (Pls. Mem. in Opp. of Mot. Summ. J. at 15.)
Moreover, the Plaintiff argues that Ocwen cannot be excused from liability simply because it
received and responded to ACDVs from Equifax. Instead, the Plaintiff argues that the ACDVs,
taken with the additional information the Plaintiff provided directly to Ocwen and the inquiries by
the CFPB, required Ocwen to conduct a more vigorous investigation. (Id.) In support of this point,
the Plaintiff also notes that any actions Ocwen took to “correct” inaccurate information on the
Plaintiff’s credit report ultimately “failed,” because the inaccurate tradeline remained. (Document
101, at 16.)
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After careful review, the Court finds Ocwen fails to establish that summary judgment
should be granted on the Plaintiff’s claim under Section 1681s-2(b)(1)(A). Ocwen repeatedly
emphasizes three facts in seeking summary judgment: (1) that the Plaintiff never explicitly
informed Ocwen that the Plaintiff’s Equifax credit report showed two tradelines for his Ocwen
account; (2) that the Plaintiff never provided Ocwen with a complete copy of the erroneous Equifax
report, reflecting the two tradelines; and (3) that Ocwen never reported two tradelines to Equifax
or any other CRA. However, these facts do not establish that there is no genuine issue of material
fact as to whether Ocwen conducted a reasonable investigation of the Plaintiff’s disputes under
Section 1681s-2(B)(1)(A). They do not establish, that as a matter of law, Ocwen reasonably
investigated the Plaintiff’s CRA disputes.
The record reveals that the Plaintiff discovered the inaccurate Equifax report in March
2013, and immediately disputed the inaccurate report. The Plaintiff continued to dispute the
inaccurate tradeline through June 2014. Ocwen received numerous ACDVs from Equifax as a
result of these disputes, requesting that Ocwen confirm that the Plaintiff was the proper owner of
the account, and also requesting confirmation of the account status and payment history. When
Ocwen received ACDVs seeking confirmation that the Plaintiff was responsible for the account,
Ocwen uniformly reviewed its records and confirmed Plaintiff’s identity and that he was
responsible for the Ocwen loan. In April and June of 2014, when Ocwen received requests to
verify the account status and payment history, Ocwen made several corrections to the Plaintiff’s
account, and reported that the account was current.
The record also reveals that the Plaintiff informed Ocwen in writing about specific
inaccuracies in his Equifax report on two separate occasions, and provided Ocwen with credit
reports from Equifax which inaccurately reflected missed payments, serious delinquencies and/or
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foreclosure proceedings on the Plaintiff’s account. Ocwen also received inquiries and information
from the CFPB about the Plaintiff’s account. Despite actions taken by Ocwen in response to these
inquiries and to the ACDVs, the Plaintiff’s Equifax credit report continued to reflect inaccurate
information about the Ocwen account through at least June 2014. Analyzing these facts in the
light most favorable to the non-moving Plaintiff, they indicate that Ocwen had available for review
additional information about potential inaccuracies with the Plaintiff’s account, had direct
communications with the Plaintiff about the inaccuracies, had knowledge that the Plaintiff’s credit
report inaccurately showed that the Ocwen account was past due, and, in at least one instance, that
foreclosure proceedings had commenced.
Possibly in an effort to mitigate the impact of the Plaintiff’s letters and the CPFB
communication, the Defendants urge that Westra and Malm counsel for granting summary
judgment in this case, because Ocwen only received “scant information” about the Plaintiff’s
disputes. Viewing the evidence as required, the Court is unpersuaded. As a preliminary matter,
Westra and Malm do not reflect the law of the Fourth Circuit. The Court also notes that Westra
and Malm involved disputes limited to the ownership of an account, and did not encompass the
payment history or status of the account. More significantly, in neither case did the plaintiff
contact the data furnisher directly, in addition to submitting a dispute to a CRA.
Viewing the
evidence in the light most favorable to the Plaintiff, these distinctions are significant. The letters
and attached credit reports provided Ocwen with significantly more information than the ACDVs.
Moreover, the Court in Malm explicitly noted that had the relevant credit dispute in that case
included more “specific notice about the Plaintiff’s concerns,” the Defendant may have been
“compelled to conduct a more thorough review, thus creating an issue of reasonableness.” Malm,
2004 U.S. Dist. LEXIS 12981, at *12.
Fourth Circuit precedent holds that a reasonable
17
investigation must be “searching,” rather than limited to brief reviews of internal records. The
Court therefore finds that in light of the direct communication by the Plaintiff with Ocwen, the
multiple ACDVs regarding the ownership, payment history and account status of the Ocwen
account, the inquiries by the CFPB and the modifications made by Ocwen to the Plaintiff’s
tradeline, a genuine issue of material fact remains as to whether Ocwen reasonably investigated
the Plaintiff’s dispute. And while the Court notes the Defendant’s arguments that genuine issues
of material fact may exist as to whether the Defendant suffered actual damages under 15 U.S.C.
§1681n and 15 U.S.C. §1681o, the Court concludes that, in light of the finding that there exist
issues of material fact as to whether Ocwen’s investigation was reasonable, issues of damages
under the FCRA are appropriately left for resolution at trial.
B. Negligence
Count Six of the Plaintiff’s Complaint argues that Ocwen’s “significant communications
and activities” with the Plaintiff, in conjunction with the Plaintiff’s existing loan with Ocwen,
created a “special relationship” which, under West Virginia law, required Ocwen to provide the
Plaintiff with “accurate information about his loan account and its obligations and rights
hereunder.” (Compl. at ¶41-42.) The Plaintiff further asserts that the Defendant breached that
obligation by “refusing to respond to … inquiries,” noting but failing to correct inaccuracies in the
Plaintiff’s Equifax credit report, “advising Plaintiff to contact [Equifax],” rather than resolving the
inaccuracies directly, and “ultimately denying Plaintiff assistance.” (Id. at ¶43.) The Plaintiff
alleges that this misconduct led to “severely negative credit reporting” which rendered futile the
Plaintiff’s efforts to refinance his loan. (Id. at ¶44.)
"In order to prove actionable negligence there must be shown a duty on the part of the
person charged with negligence . . . ." Syl. Pt. 2, Atkinson v. Harman, 151 W. Va. 1025, 158 S.E.2d
18
169, 171 (W. Va. 1967). The law provides many sources from which a duty may arise, for
example, a statute, the common law, or public policy. See generally 65 C.J.S. Negligence § 35
(2014). Besides these traditional sources, West Virginia law also recognizes that a duty in tort can
arise from a "special relationship" between the parties. See O'Brien v. Quicken Loans, Inc., Nos.
2:12CV5138, 2:12CV5262, 2013 U.S. Dist. LEXIS 74363, 2013 WL 2319248, at *10 (S.D.W.
Va. May 28, 2013) (citing Glascock v. City Nat'l Bank of W. Va., 213 W. Va. 61, 576 S.E.2d 540,
545 (W. Va. 2002)). In this context of a borrower-servicer relationship, West Virginia law requires
the Plaintiff to establish a “special relationship” by showing that the servicer performed services
that go beyond the normal scope of a borrower-servicer relationship. Carter v. Nat'l City Mortg.,
Inc., 2015 U.S. Dist. LEXIS 25766, at #18 (N.D.W.V. March 3, 2015). The Court finds that the
Plaintiff has made no such showing in this case. To the contrary, the evidence on the record reveals
that Ocwen has provided the Plaintiff with routine lender services. There exists no genuine
disputes as to material fact on this issue, and therefore, the Defendant is entitled to summary
judgment on this claim.
C. Tort of Outrage
Count Seven of the Plaintiff’s Complaint alleges the Tort of Outrage. (Compl. at 10.) In
moving for summary judgment on this Count, Ocwen correctly states that as a matter of West
Virginia law, a plaintiff must show that a defendant’s conduct was “atrocious, intolerable, and so
extreme and outrageous as to exceed the bounds of decency” to establish the Tort of Outrage,
which is also known as Intentional Infliction of Emotional Distress. (Def. Mem. in Supp. of Mot.
Summ. J. at 19, citing Syl. Pt. 3, Travis v. Alcon Labs., Inc., 202 W. Va. 369, 504 S.E.2d 419
(W.Va. 1998). A plaintiff must also show that the defendant acted with intent to inflict emotional
distress, or acted recklessly when “certain or substantially certain” such distress would result from
19
his conduct. Travis, 202 W.Va. at 375, 504 S.E.2d at 425, citing Hines v. Hills Department Stores
Inc., 193 W.Va. 91, 98, 454 S.E. 2d 385, 454 (1994) (per curiam). Finally, the plaintiff must show
that the actions caused the plaintiff to suffer emotional distress, and that the emotional distress was
“so severe that no reasonable person could be expected to endure it.” Id.
In this case, the Plaintiff sets forth several facts in support of this claim. The Plaintiff
argues that the existence of two tradelines in the Equifax credit reports, each providing different
facts about the Ocwen account, is per se evidence of outrage. (Pl. Mem. in Opp. to Mot. Summ. J.
at 21.) The Plaintiff also alleges that Ocwen “completely disregard[ed] Plaintiff’s repeated
showings that Ocwen was verifying inaccurate tradelines.” (Id.) Finally, the Plaintiff alleges that
Ocwen’s “refusal to investigate” the disputes in this case “could be found to go beyond all possible
bounds of decency,” and thus be “regarded atrocious and utterly intolerable in a civilized
community.” In the view of the Court, the Plaintiff sets forth no facts which would allow a trier
of fact to find that Ocwen’s conduct satisfies the standard for Outrage under West Virginia law.
Most notably, the Plaintiff fails to plead or assert any facts which suggest Ocwen acted with the
intent to cause emotional distress, or that even if Ocwen was “reckless” in investigating his credit
disputes, it was “certain or substantially certain” that such conduct would cause emotional distress.
The Plaintiff’s testimony about his concern and worry and the emotional costs of his recurring
credit problems, without more, is insufficient to support a genuine dispute of material fact
regarding the requisite elements of this claim. The Defendant is entitled to summary judgment as
to the Plaintiff’s claim for the Tort of Outrage.
D. Equity Abhors a Forfeiture
The Eighth and final Count of the Plaintiff’s Complaint is uniquely phrased as “[e]quity
[a]bhors a [f]orfeiture.” (Compl. at 10.) In moving for summary judgment on this Count, the
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Defendant correctly asserts that “equity abhors a forfeiture” fails to establish a cause of action.
(Def. Reply in Supp. of Mot. Summ. J. at 20.) The Plaintiff, by contrast, argues that the Court
should apply the common-law doctrine that equity abhors a forfeiture in order to preserve the
Plaintiff’s home. (Pl. Mem. in Opp. Summ. J. at 21.) However, the Plaintiff provides no
precedential support for the use of that doctrine in this case. The Plaintiff instead argues that
because the Plaintiff has not finalized the terms of the pending refinancing with Quicken Loans,
the Court should consider Ocwen’s misconduct, and take such action as is necessary to prolong
the Plaintiff’s ability to reside in his home. (Id.) There is no basis in law for such a claim, and the
Court, therefore, finds that the same must be dismissed.
CONCLUSION
Wherefore, after careful consideration and for the reasons stated herein, the Court
ORDERS that Defendant Ocwen Loan Servicing, LLC’s Motion for Summary Judgment
(Document 95) be DENIED as to Count Four of the Plaintiff’s Complaint (Document 1:1),
alleging violations of the Fair Credit Reporting Act, 15 U.S.C. §1681s-2(b)(1)(A). The Court
further ORDERS that the motion be GRANTED as to Counts Six and Seven of the Plaintiff’s
Complaint, and that Count Eight of the Plaintiff’s Complaint be DISMISSED with prejudice. The
Plaintiff has agreed to voluntarily DISMISS Count Five of the Complaint.
The Court DIRECTS the Clerk to send a copy of this Order to counsel of record and to
any unrepresented party.
ENTER:
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October 26, 2015
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