Germain, Jon et al v. Bank of America, N.A.
Filing
75
OPINION AND ORDER denying 40 Motion to Certify Class under Rule 23; granting 47 Motion for Summary Judgment. Signed by District Judge Barbara B. Crabb on 11/7/14. (jat)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - JON GERMAIN and AMBER RHY,
on behalf of themselves and all others
similarly situated,
OPINION AND ORDER
13-cv-676-bbc
Plaintiffs,
v.
BANK OF AMERICA, N.A.,
Defendant.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - In this proposed class action, plaintiffs Jon Germain and Amber Rhy contend that
defendant Bank of America, N.A. violated the Fair Credit Reporting Act, 15 U.S.C. §§ 16811681 by obtaining their consumer reports without a permissible purpose after plaintiffs had
discharged their mortgages with defendants in bankruptcy. Plaintiffs argue that because
their credit relationship ended with defendant as soon as their mortgages were discharged,
defendant had no legitimate reason to obtain their consumer reports. Defendant contends
that it did have a legal purpose for each review it made of plaintiffs’ consumer reports and,
for that reason, was not in violation of plaintiffs’ rights under the Act.
Plaintiffs seek to certify three classes under Fed. R. Civ. P. 23(b)(3), corresponding
to the three different reasons defendant asserts as authority for its review of plaintiffs’
consumer reports: (1) a class of plaintiffs who had adjustable rate mortgages but whose
1
debts had been discharged in bankruptcy; (2) a class of plaintiffs who were subject to
defendant’s “ad hoc” policy of reviewing all accounts for which it lacked recent consumer
report data; and (3) a class of plaintiffs who undertook post discharge “loss mitigation”
activities such as seeking a deed in lieu of foreclosure.
Generally, courts decide certification before summary judgment, but my review of
defendant’s motion for summary judgment reveals that plaintiffs’ claims lack merit, which
means plaintiffs are not proper class representatives. Therefore, I conclude that summary
judgment should be decided before I take up the question of certification. Wiesmueller v.
Kosobucki, 513 F.3d 784, 786 (7th Cir. 2008) (“[T]he fact that a suit lacks merit does not
‘moot’ the question of class certification . . . . Which is not to say that the district judge may
never dismiss a case on summary judgment without first ruling on the plaintiff’s motion to
certify a class.”). Although this procedure might prejudice defendant because it means that
potential class members may still raise claims against defendant, it was defendant’s choice
to move for summary judgment without asking the court delay a decision until the issue of
certification had been resolved. Cowen v. Bank United of Texas, FSB, 70 F.3d 937, 941
(7th Cir. 1995) (“The bank elected to move for summary judgment before the district judge
decided whether to certify the suit as a class action. This is a recognized tactic . . . and does
not seem to us improper.”) (citations omitted).
I conclude that plaintiffs have failed to show that defendant ever obtained plaintiffs’
consumer reports without a legal purpose and that summary judgment must be granted in
favor of defendant. It follows, therefore, that plaintiffs are not proper class representatives
2
and that their motion for class certification must be denied.
From the parties’ proposed findings of fact, I find that the following facts are
undisputed.
UNDISPUTED FACTS
A. Defendant Bank of America
Defendant Bank of America, N.A. maintained three policies at issue in this lawsuit.
First, it obtained consumer reports from a consumer reporting agency, TransUnion, for all
customers who had adjustable rate mortgages to see how extended such customers were on
credit and to determine their ability to pay their mortgages. Defendant did this without
regard to whether the consumer’s debt had been discharged in bankruptcy.
Second,
defendant obtained consumer reports from TransUnion on an “ad hoc” basis with respect
to individuals for whom it did not have a recent credit score; these individuals included
customers whose mortgages had been discharged in bankruptcy. Defendant included these
individuals so that it could determine their eligibility for loan modification and loss
mitigation programs. Third, defendant reviewed the consumer reports of customers whose
mortgages had been discharged but who were in “loss mitigation” and attempting to avoid
foreclosure through measures such as a deed in lieu of foreclosure.
B. Plaintiff Jon Germain
In December 2004, plaintiff Jon Germain entered into a mortgage agreement for the
3
purchase of real estate. In or around 2005, Germain went into default on this loan; in 2007,
the loan servicer initiated foreclosure proceedings against Germain. In October 2008,
Germain filed for chapter 7 bankruptcy in the District Court for the Western District of
Wisconsin. Germain’s mortgage was discharged on February 19, 2009, along with other
debts. In September 2010, defendant became the servicer on the loan and it re-initiated
foreclosure. That action was dismissed in December 2010.
On January 1, 2012, defendant conducted an account review, which included review
of Germain’s consumer report. It was defendant’s practice to conduct this type of review on
all customers with adjustable rate mortgages in order to determine their creditworthiness in
the event their mortgage payment increased. On March 7, 8 and 9, 2012, defendant
reviewed Germain’s consumer report as part of its “ad hoc” policy and also to determine his
eligibility for loan modification programs.
On March 14, 2012, defendant initiated
foreclosure proceedings against Germain for the third time. On March 19, 2012, Germain
proposed a deed in lieu of foreclosure. Defendant checked Germain’s consumer report to
determine his eligibility for loss mitigation programs related to this proposal. Subsequently,
Germain informed defendant that he no longer wanted to pursue that alternative, and, on
May 2, 2012, defendant denied Germain’s proposal for a deed in lieu of foreclosure.
On September 17, 2012, Germain and defendant began court-ordered mediation over
the foreclosure dispute. On November 29, 2012, the parties attended mediation and
defendant reviewed Germain’s consumer report. On December 26, 2012, defendant received
and processed Germain’s new proposal for a deed in lieu of foreclosure. (Plaintiff Germain
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denies that he sent the proposal on this date but does not identify an alternative date.) On
December 27, 2012 and February 19, 2013, defendant reviewed Germain’s consumer report
because its computer system identified Germain as being in “loss mitigation” related to the
deed in lieu of foreclosure request. On April 9, 2013, defendant accepted the deed to
Germain’s property in lieu of foreclosure and the property was transferred to defendant.
Germain suffered no actual harm as a result of defendant’s reviews of his consumer
report.
B. Plaintiff Amber Rhy
On October 30, 2009, plaintiff Amber Rhy filed for chapter 7 bankruptcy in the
District Court for the Western District of Wisconsin. In her bankruptcy petition, she stated
that she intended to retain the mortgaged real estate and make payments on the loan. On
February 18, 2010, the bankruptcy court discharged Rhy’s debts, including a mortgage
serviced by defendant. On March 22, 2010, defendant moved to reopen the foreclosure
proceeding against Rhy. (Neither party says when the foreclosure proceeding was initiated.)
Rhy contested the foreclosure. On January 1, 2012, defendant reviewed Rhy’s consumer
report to determine her creditworthiness and the risk associated with her mortgage so that
defendant could engage in loss mitigation. Plaintiff maintains possession of the real estate,
and the property has not been transferred to defendant.
Rhy suffered no actual harm as a result of defendant’s reviews of his consumer report.
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OPINION
A. Summary Judgment
Plaintiffs assert that defendant violated the Fair Credit Reporting Act, 15 U.S.C. §
1681b(f), under which it is unlawful to “use or obtain” a consumer report for any purpose
not authorized by the Act. Gelman v. State Farm Mutual Automobile Insurance Co., 583
F.3d 187, 191 (3d Cir. 2009); Cole v. U.S. Capital, 389 F.3d 719, 731 n.14 (7th Cir. 2004).
“The term ‘consumer report’ means 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—(A) credit or
insurance to be used primarily for personal, family, or household purposes; (B) employment
purposes; or (C) any other purpose authorized under section 1681b of this title.”
§
1681a(1). Section 1681b(a) of the Act allows entities to use or obtain a consumer report
if the entity:
(A) intends to use the information in connection with a credit
transaction involving the consumer on whom the information is to be
furnished and involving the extension of credit to, or review or
collection of an account of, the consumer; or
*
*
*
(F) otherwise has a legitimate business need for the information-(I) in connection with a business transaction that is initiated by
the consumer; or
(ii) to review an account to determine whether the consumer
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continues to meet the terms of the account.
The parties agree that defendant obtained plaintiffs’ consumer reports, so the only
question is whether defendant did so for a permissible statutory purpose. Godby v. Wells
Fargo Bank, N.A., 599 F. Supp. 2d 934, 938 (S. D. Ohio 2008) (“[C]ourts have found that
a plaintiff must establish three elements in order to sustain a claim of improper use or
acquisition of a credit report: (i) that there was a ‘consumer report’ within the meaning of
the statute; (ii) that the defendant used or obtained it; and (iii) that the defendant did so
without a permissible statutory purpose.”). (Defendant has moved for summary judgment
on the ground that plaintiffs cannot show that it acted willfully to violate the Act. Because
I conclude that plaintiffs have not shown that defendant violated the Act, I need not
consider this issue.)
Plaintiffs take the position that defendant did not act with a permissible purpose
because its right to obtain their reports ended with the discharge of their mortgages, when
they were no longer personally liable for their debts. They contend that defendant had no
reason to review plaintiffs’ consumer reports under § 1681b(a)(3)(A), which provides that
banks may review consumer reports “in connection with a credit transaction involving the
consumer on whom the information is to be furnished and involving the extension of credit
to, or review or collection of an account of, the consumer,” because defendant was no longer
extending credit to or collecting a debt from them; and that defendant had no legitimate
purpose to review their consumer reports under § 1681b(a)(3)(F), which provides that a
bank may review consumer reports “in connection with a business transaction that is
7
initiated by the consumer” or to review an account to determine whether the consumer
continues to meet the terms of the account” because once plaintiffs’ mortgages were
discharged in bankruptcy, “[t]here were no credit transactions contemplated between the
parties, nor was there an account upon which to collect.” Godby, 599 F. Supp. 2d at 938.
For its part, defendant says that it is permitted to obtain a consumer report under §
1681b(a)(3)(A) if, during discharge, any loan modifications contemplated by the parties
relate to the collection of an account. Further, defendant says, discharge of the plaintiffs’
mortgages in bankruptcy did not end its relationships with plaintiffs because it had liens on
plaintiffs’ properties and plaintiffs contested the relinquishment of their properties to
defendants; thus, their credit relationship qualified as “accounts” that defendant was
permitted to review by obtaining consumer reports under § 1681b(a)(3)(A) and §
1681b(a)(F).
Defendant’s argument rests on its assertion that under the Fair Credit Reporting Act,
borrowers have accounts with their lenders after discharge of a debt. “Account” appears to
have multiple meanings under the statute. In the “definitions” section, § 1681a, “account”
is used both as “account under an open end credit plan” and as an “asset account” that does
not include “open end credit plans.” The latter meaning appears to apply exclusively to the
sections of the statute dealing with credit cards and debit cards. In any case, neither of these
definitions would resolve the questions in this litigation, so I turn to the relevant section of
the statute itself: § 1681b(a)(3)(A), (F).
Construing the term “account” with the terms around it, such as “credit transaction,”
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“extension of credit,” and “collections” in § 1681b(a)(3)(A) and “business transaction” and
“terms,” in § 1681b(a)(3)(F), suggests that an “account” is the result of a business or credit
transaction in which the parties enter into a credit relationship. Plaintiffs concede the
probability that “account” includes a relationship in which money or property is owed, but
they contend that with respect to § 1681b(a)(3)(A), the account must have resulted from
“a credit transaction involving the consumer” and, with respect to § 1681b(a)(3)(F), the
review of the account must relate to whether the consumer continues to be in compliance
with the terms of the account, so it must include only active accounts.
I turn then to the question whether defendant obtained plaintiffs’ consumer reports
as a the result of “a credit transaction involving the consumer.” Plaintiffs cite Pintos v.
Pacific Creditors Association, 605 F.3d 665, 670 (9th Cir. 2010), as support for their
position that plaintiffs were not “involved” in a credit transaction with defendant under §
1681b(a)(3)(A). In Pintos, the court held that the transaction at issue did not “involve” the
plaintiff because the defendant was a towing company who had obtained the plaintiff’s
consumer report after the plaintiff’s car was towed and sold without her permission. That
situation is far different from plaintiffs’ situation, in which they voluntarily entered into
mortgage loans and then failed to make payments.
However, plaintiffs maintain that “credit transaction involving the consumer” must
refer to defendant’s present purpose for obtaining their consumer reports under §
1681b(a)(3)(A). In other words, it was proper for defendant to obtain a consumer report
when the mortgage was initiated but not to obtain it again unless there was a new credit
9
transaction between the parties.
It is doubtful that the statute requires a new credit
transaction because it refers to both the extension of credit and the review or collection of
the account, but, even if the statute had this requirement, the anticipated transactions after
discharge qualify as “credit transaction[s] involving the consumer.” Loan modifications and
alternative agreements for debt fulfillment (such as deeds in lieu of foreclosure) are
distinguishable from the circumstances in Pintos in which the towing company’s only prior
involvement with the plaintiff was to impound her car. With loan modifications, the lenders
may investigate borrowers’ creditworthiness for the benefit of the consumer and for
resolution of a debt the consumer accepted voluntarily, even when the consumer did not
initiate the transaction. After discharge, the consumer is no longer indebted on the loan, but
he is indebted to the extent of the collateral (the mortgaged property). Because the discharged
debtor retains this obligation and took it on voluntarily, his situation is distinguishable from
the involuntary transaction in Pintos. It “involves” the consumer under § 1681b(a)(3)(A).
Plaintiffs argue that the account must be an active one under § 1681b(a)(3)(F)
because that section requires the lender review the account to determine whether “the
consumer continues to meet the terms of the account.” Plaintiffs cannot cite any part of the
statute for support on that point and the case law is not in their favor. Levine, 554 F.3d
1314, 1318 (11th Cir. 2009)(“[W]e cannot say that the term ‘account’ necessarily means
‘an open account.’ Nor have judicial opinions established that the Act forbids the sale of
reports for consumers whose accounts are closed.”).
Moreover, plaintiffs do not show that determining compliance would be relevant only
10
for nondischarged accounts. After a chapter 7 discharge, the consumer is not personally
liable for the loan, but he or she still “owes” the lender in the form of the property (the
collateral). 11 U.S.C. §§ 726-27. In other words, the consumer must either make new
arrangements with the lender to keep the property, return it to the lender or wait for it to
be foreclosed upon. Thus, until the borrower fulfills his debt, he has a credit relationship in
the form of an obligation to the lender, even after discharge. In plaintiff’s situation, the
bank continued to act as a lender and continued to face significant risks that depend on the
consumer’s ability to pay and his creditworthiness. In those circumstances, review of the
account to determine whether the consumer is meeting the terms is relevant to defendant’s
legitimate business purposes.
I conclude that discharge of a debt alone does not extinguish defendant’s right to
obtain plaintiffs’ consumer reports. Until the borrower has fulfilled his debt obligation,
lenders may still use the borrower’s consumer report to review the account. This conclusion
does not dispose of all the issues raised by plaintiffs’ suit. It remains necessary to decide
individual questions about the status of plaintiffs’ obligations to defendant and whether
defendant reviewed the account for legitimate purposes.
Before I address those questions, I note that there is little case law on the question
of the effect of a discharge on a lender’s rights to obtain consumer reports, but two district
courts have held that discharge of a debt extinguishes the lender’s rights in this regard. In
Godby, 599 F. Supp. 2d at 942, the court held that the defendant did not have a “legitimate
business need” for the plaintiff’s credit information and that the account review could not
11
have been conducted “in connection with a transaction initiated by the consumer” because
the only transaction between the parties initiated by the plaintiff was the mortgage loan and
that had been discharged in bankruptcy. In Barton v. Ocwen Loan Servicing LLC, No. CIV.
12-162 MJD, 2013 WL 5781324, at *4 (D. Minn. Oct. 25, 2013), the court held that once
the lender learned that the debt had been discharged or had been given the name of the
borrower’s bankruptcy attorney to verify the discharge, it had no permissible purpose to
review the borrower’s report. At that point, no credit relationship existed and the lender had
no basis for a good faith belief that a credit relationship continued to exist.
I find the reasoning in these cases unpersuasive. In Godby, the court relied heavily
on cases that did not involve a mortgage or circumstances similar to those in this case. For
example, the court relied on Duncan v. Handmaker, 149 F.3d 424, 426 (6th Cir. 1998),
which involved the defendant’s review of the plaintiff’s consumer report after the plaintiff
sued on a matter unrelated to the mortgage or debt (the plaintiff accused the defendant’s
clients of failing to inspect the property before closing on the loan). That situation is
distinguishable from one in which a borrower remains obligated to the creditor as is the case
for plaintiffs. The court also relied on Smith v. Bob Smith Chevrolet, Inc., 275 F. Supp. 2d
808, 816 (W.D. Ky. 2003), in which the defendant sought a consumer report to verify the
value of its collateral by determining whether the plaintiff was making payments on the
collateral, for which it had no loan with the defendant. In Smith, the court held that the
purpose for obtaining the consumer report did not come under § 1681b(a)(3). Smith is
distinguishable from this case on its facts. In this case, defendant was seeking information
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about borrowers to determine whether they would qualify for loan modifications on its loans
with the borrowers.
Moreover, in both Godby, 599 F. Supp. 2d at 942, and Barton, 2013 WL 5781324,
at *4, the courts did not address the questions whether a credit relationship continues after
discharge when there is a continuing involvement of the consumer, such as when the
consumer retains possession, seeks loan modifications or contests foreclosure. In Barton,
2013 WL 5781324, at *4, the court did not explore the ramifications of the plaintiff’s
request for a short sale and her continuing possession of the mortgaged property with respect
to her Fair Credit Reporting Act claim.
Because I conclude that issues beyond the discharge of the debt must be considered
in order to determine whether defendant violated the Fair Credit Reporting Act, I will take
up each plaintiff’s circumstances.
Germain had an adjustable rate mortgage, retained possession of his home and was
contesting foreclosure after a chapter 7 discharge of his mortgage loan. Although such a
discharge ends a borrower’s personal liability for the loan, it does not eliminate the mortgage
lien, which means that so long as another agreement is not reached and the borrower does
not make his or her mortgage payments, the creditor may foreclose on the property. 11
U.S.C. §§ 726-27. Because Germain remained in possession of his property, he remained
responsible to make payments or face foreclosure. Either option posed risks to defendant:
in the first instance, Germain might be unable to make his payments; and, in the second
instance, foreclosure involved costs and potential losses for defendant. Because Germain still
13
held an obligation to defendant from the credit that defendant had extended to him, I
conclude that a credit relationship and “account” existed between them. Therefore, it was
permissible under the Fair Credit Reporting Act for defendant to obtain Germain’s consumer
report to review his account. §§ 1681b(a)(3)(A), (F).
Further, for each consumer report review it conducted, defendant has either provided
a reason for reviewing Germain’s account under § 1681b(a)(3)(A) or an assertion that it
reviewed the account to determine whether Germain was in compliance under §
1681b(a)(3)(F).
It reviewed Germain’s consumer report in January 2012 because his
mortgage had an adjustable interest rate and defendant sought to evaluate its risks by
determining the creditworthiness of a customer whose rate might fluctuate. Although
Germain had discharged the mortgage loan, the existence of the lien meant that he was still
required either to make those payments or to hand over the real estate, giving defendant a
legitimate reason to evaluate his ability to pay using his consumer report. Later, in March
2012, defendant obtained Germain’s consumer report in order to determine whether he
qualified for any loan modification programs, including the federal government’s Home
Affordable Modification Program. Loan modification involves an agreement between the
parties on alternative terms for the borrower to fulfill his preexisting obligation to the lender.
In this situation also, defendant had a legitimate reason to determine Germain’s present
creditworthiness.
On March 26, 2012, December 27, 2012 and February 19, 2013, defendant obtained
Germain’s consumer report because Germain had asked defendant to accept a deed in lieu
14
of foreclosure on his property. Because this transaction also posed risks for defendant, if,
for example, Germain had taken out other loans on the property, it was permissible for
defendant to determine the extent to which Germain had extended his credit as well as his
compliance with the account.
Finally, on November 29, 2012, defendant obtained
Germain’s consumer report when defendant and Germain were in mediation to resolve their
dispute over foreclosure. Because the parties remained in negotiation over resolution of
Germain’s obligations, defendant had a legitimate reason to know Germain’s compliance
with the account, his present ability to pay and his creditworthiness.
Defendant obtained plaintiff Rhy’s consumer report on January 1, 2012, nearly two
years after her debts had been discharged in bankruptcy. Defendant says that it obtained
the report to determine Rhy’s eligibility for loss mitigation measures. As of January 2012,
Rhy remained in possession of the property, was contesting the foreclosure on her home and
had stated that she intended to make payments in order to remain in possession. Like
plaintiff Germain, Rhy was still obligated to defendant for money owed on the collateral,
although not on the loan. Because she continued to be in a credit relationship and “account”
with defendant and intended to make payments, defendant had a right to review the account
under § 1681b(a)(3)(A) to assess Rhy’s creditworthiness and ability to pay.
Accordingly, I conclude that plaintiffs Germain and Rhy have not shown that
defendant violated the Fair Credit Reporting Act on any of the occasions on which it
obtained their consumer reports.
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B. Certification of Class Action
Plaintiffs have moved for certification of their lawsuit as a class action. They propose
three subclasses, based on defendant’s policies for reviewing consumer reports: (1) a class
of plaintiffs who had adjustable rate mortgages but whose debts had been discharged in
bankruptcy; (2) a class of plaintiffs who were subject to defendant’s “ad hoc” policy of
reviewing all accounts for which it lacked consumer report data on a periodic basis; and (3)
a class of plaintiffs who undertook post discharge “loss mitigation” activities such as seeking
a deed in lieu of foreclosure for whom defendant pulled a consumer report.
To certify each subclass, plaintiff must show “(1) the class is so numerous that joinder
of all members is impracticable; (2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses
of the class; and (4) the representative parties will fairly and adequately protect the interests
of the class.” Fed. R. Civ. P. 23(a). In addition, because plaintiffs seek to certify their
subclasses under Fed. R. Civ. P. 23(b)(3), they must show that “common questions of law
and fact predominate over individual questions and that the class action form is superior to
other methods for adjudicating the controversy” and that a class action is “superior” to other
methods of adjudication.
Although commonality, typicality and predominance are separate factors under the
rules, the analysis of these factors tends to merge into one question: whether the proposed
class is “sufficiently cohesive to warrant adjudication by representation.” Amchem Products,
Inc. v. Windsor, 521 U.S. 591, 623 (1997). See also Telephone Company of the Southwest
16
v. Falcon, 457 U.S. 147, 157 n. 13 (1982) (“The commonality and typicality requirements
of Rule 23(a) tend to merge.”); Messner v. Northshore University HealthSystem, 669 F.3d
802, 814 (7th Cir. 2012) (“While similar to Rule 23(a)’s requirements for typicality and
commonality, the predominance criterion is far more demanding.”) (internal quotations
omitted). Plaintiff argues that there is sufficient cohesion with respect to all of the classes
because the questions addressed by the litigation are the same: (1) Are post discharge
reviews of consumer reports allowed under the Fair Credit Reporting Act?; and (2) Were
defendant’s policies a willful violation?
Plaintiffs make a compelling argument that the consumer report distributor
TransUnion could determine which consumers qualify for any of the subclasses by cross
checking information it already had. However, even if the plaintiffs who qualify for each
class may be identified easily, the questions proposed by plaintiffs are too general to resolve
their litigation. With respect to the first and second subclasses, simply asking whether a
bank may obtain consumer reports for those who have discharged their loan debt does not
advance plaintiffs’ claims. The answer to that question is “It depends.” In other words,
resolution of those common questions does not resolve the litigation. Wal-Mart Stores, Inc.
v. Dukes, 131 S. Ct. 2541, 2551 (2011) (“The] common contention, moreover, must be of
such a nature that it is capable of classwide resolution—which means that determination of
its truth or falsity will resolve an issue that is central to the validity of each one of the claims
in one stroke.”).
As discussed above, the precise nature of the post discharge relationship must be
17
determined with respect to each consumer. Were the consumers in possession of the
property? Were they contesting foreclosure? Did they inform the bank that they wanted
to modify their loans or make payments to stay in possession?
The answers to such
questions are necessary to determine whether the bank and the class members continued to
have a credit relationship and “account” for which review of their consumer reports would
be permissible under § 1681b(a)(3)(A) or (F). Furthermore, it would be necessary to review
the circumstances of each instance in which the lender obtained the consumer report to
determine whether the lender did so “in connection with a credit transaction,” §
1681b(a)(3)(A) or “to determine whether the consumer continues to meet the terms of the
account.” § 1681b(a)(3)(F). These individualized questions predominate over the common
ones for these subclasses. Fed. R. Civ. P. 23(b)(3).
With respect to the third subclass, many of the individual questions discussed above
have already been answered (e.g., “yes, the class member is contesting foreclosure and
attempting to obtain a deed in lieu of foreclosure”). However, “loss mitigation” is a broad
category. Answers to specific questions about the risk posed to the lender and the intentions
of the borrower are necessary to allow the court to determine whether a credit relationship
and “account” existed between the parties. Therefore, it appears likely that individualized
questions predominate over common ones for this subclass as well.
The biggest obstacle for plaintiffs with respect to this subclass is that they are not
good representatives.
“A decision that the claim of the named plaintiffs lacks merit
ordinarily, though not invariably . . . disqualifies the named plaintiffs as proper class
18
representatives.” Cowen, 70 F.3d at 941 (citations omitted). Plaintiffs’ circumstances
foreclose their claims on the merits under my reading of the Fair Credit Reporting Act. To
be effective class representatives, plaintiffs’ interests must align with those of all the
prospective class members. I have determined that they have no viable claims against
defendant. Without any adequate class representatives, class certification must be denied.
ORDER
IT IS ORDERED that
1. Defendant Bank of America, N.A.’s motion for summary judgment, dkt. #47, is
GRANTED.
2. Plaintiffs Jon Germain’s and Amber Rhy’s motion for class certification, dkt. #40,
is DENIED.
3. The clerk of court is directed to enter judgment for defendant and close the case.
Entered this 7th day of November, 2014.
BY THE COURT:
/s/
BARBARA B. CRABB
District Judge
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