United States District Court, N.D. Illinois
January 14, 2004.
ROBERT J. SCHAFFNER, NANCY A. SCHAFFNER, and IMAGINATIVE GRAPHICS, INC., Plaintiff's,
U.S. BANK N.A., doing business as U.S. BANK HOME MORTGAGE, Defendant
The opinion of the court was delivered by: JAMES J. BRADY, District Judge
Before the court is defendant's motion to dismiss the amended
complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the
following reasons, the motion is granted.
The following facts, taken from plaintiffs' amended complaint, are
accepted as true for purposes of this motion. Plaintiff's Robert J.
Schaffner and Nancy A. Schaffner own the corporate co-plaintiff
Imaginative Graphics, Inc. ("Imaginative"). Plaintiff's obtained a
business loan from Amalgamated Bank of Chicago ("Amalgamated Bank"),
which is not a party to this action. In the summer of 2001, plaintiffs
applied for additional financing from Amalgamated Bank. The financing was
delayed and ultimately denied, in part because of adverse credit
information reported by defendant
U.S. Bank N.A. ("U.S. Bank") to one or more of the major credit
bureaus. Attached to the amended complaint as Exhibit A is a document
titled "Underwriting Findings," which lists the adverse information as
one of the reasons for the denial of additional financing.
The adverse credit information related to a residential mortgage loan
that the Schaffners had obtained from U.S. Bank's predecessor. Payments
were made on time, and the loan was paid in full on April 16, 1999. U.S.
Bank, however, reported that the Schaffners had made late payments and
that the loan had been placed in collection or foreclosure. U.S. Bank
sent this misinformation to the major credit bureaus electronically; the
bureaus then sent the misinformation to Amalgamated Bank.
On September 9, 2002, shortly after the Underwriting Findings were
issued, U.S. Bank acknowledged its error and sent the credit bureaus a
"Universal Data Form" requesting that the bureaus "[r]emove all late
payments and the `collection' remarks" and indicating that the
residential mortgage loan had been paid in full in April 1999. (Amended
Complaint, Ex. B, Universal Data Form.)
As a result of the denial of their application for additional business
financing, plaintiffs were unable to pay Imaginative's bills during its
slow season. In addition, the Schaffners suffered distress and were
unable to pay their own salaries.
In November 2002, plaintiffs filed the instant action against U.S.
Bank. The complaint later was amended to cure a defect in its
jurisdictional allegations. Count I of the amended complaint alleges that
U.S. Bank's publication of false credit information defamed the
Schaffners. Count II, which is asserted by all plaintiffs, is a tortious
interference with economic advantage claim.
Defendant now moves to dismiss the complaint.
The purpose of a 12(b)(6) motion to dismiss is to test the sufficiency
of the complaint, not to resolve the case on the merits. 5A Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure
§ 1356, at 294 (2d ed. 1990). Dismissal is appropriate only if "`it
is clear that no relief could be granted under any set of facts that
could be proved consistent with the allegations.'" Ledford v.
Sullivan, 105 F.3d 354, 356 (7th Cir. 1997) (quoting Hishon v.
King & Spalding, 467 U.S. 69, 73 (1984)).
A. Count I Defamation
One of U.S. Bank's arguments is that plaintiffs' defamation claim is
preempted by § 1681h(e) of the Fair Credit Reporting Act ("FCRA"),
which provides in relevant part:
Except as provided in sections 1681n and 1681o of
this title, no consumer may bring any action or
proceeding in the nature of defamation, invasion
of privacy, or negligence with respect to the
reporting of information against . . . any person
who furnishes information to a
consumer reporting agency . . . based on
information disclosed by a user of a consumer
report to or for a consumer against whom the user
has taken adverse action, based in whole or in
part on the report except as to false information
furnished with malice or willful intent to injure
15 U.S.C. § 1681h(e).
Plaintiff's contend that § 1681h(e)'s exception for claims
involving "false information furnished with malice or willful intent to
injure [the] consumer" applies here. According to plaintiffs, they have
adequately alleged malice in the following paragraphs of the amended
13. U.S. Bank sent the major credit bureaus a
Universal Data Form requesting that the credit
bureaus "remove all late payments and the
collection remarks." A copy is attached as
Exhibit B. The report resulted from
error by U.S. Bank's predecessor. Exhibit
14. U.S. Bank therefore knew that the statements
[regarding late payments and collection or
foreclosure] were false.
(Amended Complaint, ¶¶ 13-14.)
The problem with these paragraphs is that they merely allege that U.S.
Bank knew that the information was false at some point in time after the
information was provided. The amended complaint wholly fails to allege
that defendant knew that the information was false at the time it
was furnished and thus furnished the information with malice. We
acknowledge that on a motion to dismiss, plaintiffs receive the benefit
of imagination, so long as the hypotheses are consistent with the
complaint. See Sanjuan v. American Bd. of Psychiatry & Neurology
Inc., 40 F.3d 247, 251 (7th Cir. 1994).
Nonetheless, we do not believe that hypothesizing that U.S. Bank knew the
information was false at the time it furnished the information would be
consistent with the complaint; this is precisely because of the artful
way in which plaintiffs have attempted to avoid the requirement of
Count I will be dismissed because it fails to allege that the credit
information was furnished with malice and accordingly is preempted by the
B. Count II Tortious Interference With
Prospective Economic Advantage
To state a claim for tortious interference with prospective economic
advantage, a plaintiff must allege "1) his reasonable expectation of
entering into a valid business relationship; (2) the defendant's
knowledge of the plaintiff's expectancy; (3) purposeful interference by
the defendant that prevents the plaintiff's legitimate expectancy from
ripening into a valid business relationship; and (4) damages to the
plaintiff resulting from such interference." Grund v. Donegan,
700 N.E.2d 157
, 160 (Ill.App. Ct, 1998).
U.S. Bank argues that plaintiffs have failed to allege the first,
second, and third elements of this tort. We agree. The amended complaint
does not expressly allege that plaintiffs had a
reasonable expectancy of receiving the additional financing, nor
does it allege facts indicating that this was the case. The allegation
that plaintiffs applied for financing is not sufficient to
allege that they reasonably expected to receive the financing. Cf.
Anderson v. Vanden Dorpel, 667 N.E.2d 1296, 1299-1300 (Ill. 1996)
(the hope of receiving a job offer is not a sufficient expectancy);
Buchanan v. Serbin Fashions, Inc., 698 F. Supp. 731, 734 (N.D.
Ill. 1988) (same). Moreover, plaintiffs do not allege that U.S. Bank knew
of the Schaffners' application for additional financing or that U.S. Bank
purposefully interfered with the financing.*fn2 Because Count II fails
to allege three of the four elements of a tortious interference with
prospective economic advantage claim, it will be dismissed.
We need not reach U.S. Bank's alternative arguments for dismissal.
Fox the foregoing reasons, defendant's motion to dismiss the amended
complaint is granted.