Consumer Finance Litigation

The Tenth Circuit recently held that a borrower presented sufficient evidence of actual damages to sustain a FCRA claim against a loan servicing company. The Tenth Circuit also affirmed the district court's decision to dismiss the FCRA claim with respect to a willful violation and the FDCPA claim. In Llewellyn v. Allstate Home Loans, Inc., --- F.3d ---, 2013 WL 1238615 (10th Cir. Mar. 28, 2013), the plaintiff filed suit against a loan servicing company and law firm retained to commence foreclosure proceedings alleging violations of the FDCPA, FCRA, and state law. The district court granted the defendants' motion for summary judgment, and the plaintiff appealed. On appeal, the plaintiff argued that the district court erred in finding that he failed to prove actual damages or willfulness to support his FCRA claim. The plaintiff argued that he was entitled to actual damages because the defendant loan servicing company's credit reporting prevented him from obtaining other loans and ruined his credit. Specifically, the plaintiff relied on a statement from his broker to show that his credit was damaged by the reporting. The court dismissed the plaintiff's arguments, however, because the plaintiff did not submit any evidence that he submitted a loan application that was denied and because the broker's statement was inadmissible hearsay. Turning to the plaintiff's claim that he suffered emotional damages as a result of the defendant loan servicing company's credit reporting, the court found that the plaintiff presented sufficient evidence to survive summary judgment. The court determined that the plaintiff described his injury with reasonable detail and reasonably attributed his declining health to the defendant's credit reporting. Additionally, the court dismissed the defendant's argument that plaintiff was required to corroborate his testimony regarding his injury. Accordingly, the court reversed the district court's decision on the plaintiff's FCRA claim with respect to actual damages. Addressing the plaintiff's claim that he was entitled to statutory and punitive damages stemming from the defendant's willful violation of the FCRA, the court noted that the defendant continued negative credit reporting for four months after it was required to investigate the disputed information. In support of appeal, the plaintiff argued that the defendant acknowledged that the credit reporting was in error based on a letter sent by the co-defendant law firm noting that the loan should have been paid in full. However, the court concluded that the "client" referred to in the letter was not the defendant and, thus, the letter did not constitute an admission on the defendant's part. The court, therefore, concluded that the defendant did not willfully violate the FCRA. The court also affirmed the district court's decision finding that the defendant loan servicing company was entitled to summary judgment on the plaintiff's FDCPA claim. The court found that the defendant was not a "debt collector" under the FDCPA because the debt was not in default at the time the defendant acquired it. The court also dismissed the plaintiff's argument that the defendant should be liable under the FDCPA because it was acting as a debt collector's agent. Specifically, the court found that the plaintiff failed to submit evidence to establish an agency relationship. Accordingly, the court affirmed the district court's dismissal of the plaintiff's FDCPA claim. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.