United States District Court, N.D. Illinois
January 21, 2004.
SONNJA MOLTON, Plaintiff,
EXPERIAN INFORMATION SOLUTIONS, INC., Defendant
The opinion of the court was delivered by: MATHEW KENNELLY, District Judge
MEMORANDUM OPINION AND ORDER
Sonnja Molton sued Experian Information Solutions, Inc., CBC Credit
Services, First National Bank of Marin ("FNBM"), and Marlin Integrated,
claiming violations of the Fair Credit Reporting Act ("FCRA"),
15 U.S.C. § 1681 et seq. Molton settled her claims against CBC Credit
Services, FNBM and Marlin Integrated, and they were dismissed from the
case on May 29, 2003. The remaining defendant, Experian, a credit
reporting company, has moved for summary judgment on the ground that it
did not report any inaccurate information about Molton's credit status.
For the reasons stated below, the Court grants Experian's motion.
The facts relevant to resolving this case are not in dispute. Molton
has admitted most of the
facts outlined by Experian in its Rule 56.1(a)(3) Statement of
Material Facts, which we will summarize.*fn1 Molton held a credit card
issued by FNBM. Def.'s Facts ¶ 34. Molton's account became 30 days
past due in July 2000; 60 days past due in August 2000; 90 days past due
in September 2000; 120 days past due in October 2000; and 150 days past
due in November 2000. Id. ¶ 36. FNBM "charged off the
account on December 16, 2000 in the amount of $702.28. Id. ¶¶
35, 37. Molton owed the balance of $702.28 in full, and FNBM forwarded
the balance to Allied Interstate, a collection agency. Id. ¶¶
Molton called Experian on November 8, 2001 and requested a copy of her
credit file, which Experian sent to her that day. Id. ¶ 6.
Molton called Experian on December 10, 2001, saying that the FNBM account
was not hers. Id. ¶ 7. Experian sent a Consumer Dispute
Verification ("CDV") to FNBM describing Molton's claim as "Consumer
States: Not mine." Id. ¶ 8. On December 24, 2001, FNBM
verified that Molton was liable for the account and that the account's
status was correctly reported as charged-off in the amount of $702.28
after a lengthy delinquency. Id. ¶ 9. Experian claims*fn2
that it sent the results of its reinvestigation to Molton on January 2,
2002, within 30 days of Molton's request for an investigation.
Id. ¶ 10.
In April 2002, Molton paid Allied Interstate $351.50 on the FNBM
account. Id. ¶ 38. She called Experian on May 29, 2002 to
request another copy of her credit file, which Experian sent her that
day. Id. ¶ 11. Molton contacted Experian via the Internet on
July 10, 2002 and claimed that the FNBM account was paid. Id.
¶ 12. Experian sent a CDV to FNBM on July 10 describing Molton's
claim as "Consumer States: Status Disputed" and "Consumer Claims: Paid."
Id. ¶ 13. FNBM responded on July 25, 2002, asking Experian
to "(1) change the date of [Molton's] last payment to April 2002; (2)
reduce the `recent balance' amount from $702.28 to $350.78; and (3)
reduce the amount past due from $702 to $350." Id. ¶ 14. But
FNBM confirmed that Experian was correctly reporting the account as a
charge-off after a lengthy delinquency. Id. Experian updated the
account to reflect the changes requested by FNBM. Id. ¶¶
17-18. Experian claims*fn3 it sent Molton the results of its
reinvestigation on August 8, 2002, within thirty days of Molton's request
for an investigation. Id. ¶ 15. The correction summary sent
to Molton by Experian stated that the FNBM account was updated and that
Molton had a right under the Fair Credit Reporting Act to have a consumer
dispute statement placed on her credit report if she disagreed with the
results of the reinvestigation. Id. ¶ 16. Molton never asked
for a consumer dispute statement to be added to her credit report.
Id. ¶ 31.
Molton applied in August 2002 for a residential mortgage of $73,742
with Countrywide Home Loans, Inc. Id. ¶ 44. Countrywide
denied the application on September 6, 2002, checking off three
reasons for the denial on a standard form: (1) "Garnishment,
attachment, foreclosure, collection or judgment repossession or suit";
(2) "Delinquent credit obligations (past or present); and (3)
"Insufficient income to support loan." Id. ¶ 47; Def.'s Ex.
W. Countrywide Home Loans relied on a credit report received from
Landsafe Credit. Id. ¶ 49; Def.'s Ex. W. The Landsafe Credit
Merge Report relied upon by Countrywide stated that Molton had several
collection accounts and delinquent credit obligations in addition to the
FNBM account. Id. ¶ 49.
Molton claims, and Experian admits, that she filled out one of
Experian's correction forms on September 23, 2002, and sent it to
Experian. Pl.'s Facts ¶ 3. With it she enclosed a letter from Allied
Interstate, dated April 30, 2002, stating: "the above referenced account
has been settled in full. Therefore, there remains no further outstanding
obligations pertaining to this account." Id.; Pl.'s Ex. A.
Molton also included a copy of the money order showing proof of a $351.50
payment by Molton to Allied Interstate. Id.; Pl.'s Ex. G.
Citibank denied Molton credit in a letter dated October 2, 2002. Def.'s
Facts ¶ 52. And Molton contacted Experian again, this time via the
Internet on October 9, 2002, to request a reinvestigation of the FNBM
account, again claiming that the account was paid. Id. ¶ 19.
That day, Experian sent a CDV to FNBM describing Molton's dispute as
"Consumer States: Consumer states inaccurate info. "ACCT PD TO ALLIED
INTERSTATE 04/04/02 PH 800-833-5313. VERIFY AND UPDATE." Id.
¶ 20. In her deposition, Molton stated that this summary of her
dispute was reasonable and told FNBM everything it needed to know about
the dispute. Id. ¶ 21. On October 22, 2002, FNBM advised
Experian that Molton's account had an outstanding charge-off balance of
$350.78. Id. ¶ 22. Experian sent a confirmation of the
results of its investigation to Molton on November 7, 2002, thirty days
after Molton requested the investigation. Id. ¶ 23.
However, on September 26, 2002, FNBM had sent Molton a letter in which
it agreed to update her account's status to "paid charge-off/less than
fall balance" within 90 days. Id. ¶ 24. Molton testified at
her deposition that this designation with the comment of "Account legally
paid in fall for less than fall balance" was what she had wanted.
Id. ¶ 25. Molton filed her complaint on November 5, 2002.
Id. ¶ 28. Molton's credit report reflected this agreed upon
status by December 3, 2003, which was within 90 days of FNBM's September
26, 2002 letter. Id. ¶ 27; Def.'s Ex. K. As a result of the
lawsuit, Experian sent another CDV to FNBM on December 6, 2002, saying
"CONS STATES ACCT HAS BEEN PAID IN FULL SINCE APRIL 2002." Id.
¶ 29. "FNBM responded on December 19, 2002 that the account was
correctly reported as `settled/charge-off' with a comment that the
`account legally paid in fall for less than fall balance.'" Id.
Standard of Review
Summary judgment is proper when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c). The Court must look at the evidence "as a jury might,
construing the record in the light most favorable to the nonmovant and
avoiding the temptation to decide which party's version of the facts is
more likely true." Payne v. Pauley, 337 F.3d 767, 770 (7th Cir.
2003). The Court's "function is not to weigh the evidence but merely to
determine if `there is a genuine issue for trial.'" Bennett v.
Roberts, 295 F.3d 687, 694 (7th Cir. 2002) (citation omitted). To
avoid summary judgment, the nonmovant "must produce more than a scintilla
of evidence to support his position." Pugh v. City of Attica,
Indiana, 259 F.3d 619, 625 (7th Cir. 2001) (citation omitted).
[EDITORS NOTE: THIS PAGE IS BLANK.]
Molton claims that Experian violated two sections of the FCRA and
defamed her. Specifically, she claims Experian violated
15 U.S.C. § 1681i by (1) failing to conduct a reasonable reinvestigation
into her claims of inaccurate reporting; (2) failing to provide FNBM with
the letter Molton gave Experian from Allied Interstate saying Molton's
account had been settled in full; (3) failing to review the Allied
Interstate letter and proof of payment provided by Molton; (4) failing to
delete inaccurate information from Molton's file after completing its
reinvestigation; and (5) failing to note Molton's dispute in her credit
file. Compl. ¶ 22. She also claims Experian violated
15 U.S.C. § 1681e(b) by "failing to employ and follow reasonable procedures
to assure maximum possible accuracy of [her] credit report, information and
file." Id. As a preliminary matter, the Court notes that because Molton
admitted that she "never requested that a consumer dispute statement be
added to her personal credit report," Def.'s Facts ¶ 31; Pl.'s Resp.
to Facts ¶ 31, she cannot claim that Experian violated § 1681i(c)
by failing to note Molton's dispute in her credit report. If a consumer
is not satisfied with the results of the requested reinvestigation, "the
consumer may file a brief statement setting forth the nature of the
dispute." 15 U.S.C. § 1681i(b). "Whenever a statement of dispute is
filed . . . the consumer reporting agency shall, in any subsequent
consumer report containing the information in question, clearly note
that it is disputed by the consumer. . . ." 15 U.S.C. § 1681i(c).
Because Molton concedes that she never filed a statement of dispute,
Experian cannot be held liable for failing to append such a statement
to her credit report.
Molton alleges other violations of § 1681i and § 1681e(b).
Because the two sections involve different elements, the Court will
address each section separately. See Henson v. CSC Credit
Services, 29 F.3d 280 (7th Cir. 1994). The Court will
conclude by addressing Molton's defamation claim.
1. § 1681e reasonable procedures to assure
maximum possible accuracy
Under the FCRA, "[w]henever a consumer reporting agency prepares a
consumer report it shall follow reasonable procedures to assure maximum
possible accuracy of the information concerning the individual about whom
the report relates." 15 U.S.C. § 1681e(b). However, "[i]n order to
state a claim under 15 U.S.C. § 1681e(b), a consumer must
sufficiently allege `that a credit reporting agency prepared a report
containing `inaccurate' information.'" Henson, 29 F.3d at 284
(citing Cahlin v. General Motors Acceptance Corp.,
936 F.2d 1151, 1156 (11th Cir. 1991)). In Henson the Seventh Circuit went
on to explain that
the credit reporting agency is not automatically
liable even if the consumer proves that it
prepared an inaccurate credit report because the
FCRA "does not make reporting agencies strictly
liable for all inaccuracies." A credit reporting
agency is not liable under the FCRA if it followed
"reasonable procedures to assure maximum possible
accuracy," but nonetheless reported inaccurate
information in the consumer's credit report.
Id. (quoting Cahlin, 936 F.2d at 1156, and
holding "that, as a matter of law, a credit reporting agency is not
liable under the FCRA for reporting inaccurate information obtained from
a court's Judgment Docket, absent prior notice from the consumer that the
information may be inaccurate"). But if the credit reporting agency can
demonstrate that it only reported accurate information, "[the] court need
not inquire further as to the reasonableness of the procedures adopted by
the credit reporting agency." Cahlin, 936 F.2d at 1156 (citation
omitted). Experian, therefore, is correct that if the information it
reported was accurate, it is entitled to summary judgment because, as a
matter of law, Molton cannot
establish a violation of § 168 le(b). Id. Molton does
not respond directly to Experian's claim that it is entitled to summary
judgment because it published accurate information; instead Molton argues
that there is a genuine issue as to the reasonableness of Experian's
In Cahlin v. General Motors Acceptance Corp., the Eleventh
Circuit faced the same question as we do today: "whether a credit report
containing derogatory information about an account which was charged off
by a creditor for accounting purposes and which was later settled by the
consumer for an amount less than the full balance due is `accurate.'"
Id. at 1158. Because the Seventh Circuit relied heavily on
Cahlin in Henson, we will rely on Cahlin
because it is directly on point. Cahlin involved a car loan
extended to the plaintiff by General Motors Acceptance Corp. ("GMAC").
Cahlin leased a car from GMAC but decided to return it less than three
months after he signed the lease. Id. at 1154. Several months
later, GMAC sent notices to Cahlin, stating he owed $3,842.44 on the
lease. Id. Cahlin paid $2,000 to GMAC's collection agency as
full satisfaction for his debt, and GMAC discharged him of his debts
previously owed. Id. at 1154-55. While the dispute was being
settled, GMAC informed a credit reporting agency that Cahlin's account
was delinquent and had been charged off by GMAC. Id. Cahlin's
credit report thus reflected a charge off with a balance due of
$3,843.44.*fn4 Id. After Cahlin paid $2,000 to GMAC's
collection agency, Cahlin's credit report was changed to reflect a zero
balance but it continued to show that there had been a charge
off. Id. When Cahlin saw his credit report, he filed a customer
dispute, attaching a copy of the general release that GMAC
had sent him. Id. The credit reporting agency did not
alter Cahlin's credit report. Id. Cahlin complained to GMAC,
which sent a letter to the credit reporting agency requesting that the
charge off be removed from Cahlin's report and replaced with a rating
signifying that a debt had been paid within 30 days of billing.
Id. The credit reporting agency replaced the charged-off rating
with a debt paid within 30 days of billing rating, but it noted the
charge off in the "previous history" section of Cahlin's credit report.
Id. Cahlin complained to the credit reporting agency again.
Id. The agency called GMAC, which instructed the agency to
remove any reference to the charge off from Cahlin's credit report.
Id. The credit reporting agency did so. Id.
To determine whether the credit report was accurate, the Eleventh
Circuit first looked to "the intent of the creditor who transmitted the
information about a particular account." Id. at 1158. The
Eleventh Circuit concluded that GMAC had "intended the account to be
reported as a `paid charge off' or the equivalent" and that its
instruction to delete the charge off from Cahlin's record was "largely
motivated by a desire to mollify Cahlin and avoid potential litigation,
not to correct any reporting errors." Id. Similarly, in this
case FNBM had to charge off the account because Molton was delinquent and
never paid the balance in full. Molton later settled the account with a
collection agency for only half the amount she owed. We agree with the
Eleventh Circuit that
[i]n interpreting the meaning of "accuracy" within
[§ 1681e(b)], we cannot conclude that a debt
which has been charged off by the creditor and is
later settled for an amount less than the original
balance due should be reported without any
derogatory references on a credit report. This
information, which reflects the efforts required
to collect a debt, is clearly of interest to
potential creditors and would be effectively
hidden by a credit report that treated the account
as being in good standing.
Id. Molton's partial payment of the outstanding debt,
though relinquishing her from liability for the full
amount of the debt, did not constitute a payment in full. The
description of the account as charged off was both intended by FNBM and
accurate. As in Cahlin, the fact that FNBM decided to amend
Molton's credit report to include the statement "paid charge-off/less
than full balance" did not render prior reports inaccurate, because the
amendment represented FNBM's attempt to mollify Molton and did not
reflect a change in FNBM's view of the status of her account. And, as in
Cahlin, the lag time between April 30, 2002 when Allied
Interstate recognized Molton's account as settled and August 8, 2002 when
Molton's credit report reflected the reduced unpaid balance does not
constitute a period of inaccuracy. Based on the undisputed facts,
Molton's credit report at all times accurately reflected the status of
her FNBM account as intended by FNBM. Experian, therefore, is entitled to
summary judgment on Molton's § 1681e(b) claim.
2. § 1681i duty to reinvestigate
When a consumer informs a credit reporting agency that she disputes
the "completeness or accuracy" of her credit report, "the agency shall
reinvestigate free of charge and record the current status of the
disputed information, or delete the item from the file,. . . before
the end of the 30-day period beginning on the date on which the agency
receives the notice of the dispute from the consumer."
15 U.S.C. § 1681i(a)(1)(A). Molton claims that Experian did not conduct a
reasonable reinvestigation of her complaints that her credit report was
inaccurate. More specifically, she claims that it was unreasonable for
Experian to rely on FNBM's communications without further investigation. The
Seventh Circuit has recognized that "a credit reporting agency may be
required, in certain circumstances, to verify the accuracy of its initial
source of information." Henson, 29 F.3d at 287. The Court went on to
[w]hether the credit reporting agency has a duty
to go beyond the original source will depend, in
part, on whether the consumer has alerted the
reporting agency to the possibility that the
source may be unreliable or the reporting agency
itself knows or should know that the source is
unreliable. The credit reporting agency's duty
will also depend on the cost of verifying the
accuracy of the source versus the possible harm
inaccurately reported information may cause the
Id. In this case there is no dispute that Molton brought
the alleged error to Experian's attention on multiple occasions. But
Experian argues that the trier of fact need not weigh the above factors
to determine whether it violated § 1681i, because a credit reporting
agency cannot be found to have violated § 1681i if it reported
In Cahlin the Eleventh Circuit agreed. "[A § 1681i] claim
is properly raised when a particular credit report contains a
factual deficiency or error that could have been remedied by
uncovering additional facts that provide a more accurate representation
about a particular entry." Cahlin, 936 F.2d at 1160 (emphasis
in original). The Eleventh Circuit found that "no additional amount of
factual investigation by [the credit reporting agency] would have
revealed any `inaccuracy' in its reporting of the GMAC account because
there was none," and thus the district court properly granted summary
judgment to the credit reporting agency on Cahlin's § 1681i claim.
As discussed in the previous section, Molton's account was accurately
described as a charge off. As soon as Molton informed Experian on July
10, 2002, that she had settled the balance, Experian contacted FNBM and
reduced the amount past due from $702 to $350 and continued to denote
the account as charged off. This was accurate. As in Cahlin,
Experian is entitled to summary judgment on Molton's § 1681i claim;
"[n]o reasonable investigation on the part of [Experian] could have
uncovered any inaccuracy in [Molton's] report because there was never
any factual deficiency in the report." Id.
Although Molton settled the account with a collection agency, she
paid only 50 cents on the dollar. In passing the FCRA, Congress
recognized the need for "procedures that were not only `fair and
equitable to the consumer,' but that also met the `needs of commerce' for
accurate credit reporting." Id. at 1158 (quoting
15 U.S.C. § 1681). The statement on Molton's credit report that FNBM had
charged off Molton's pervious balance was not only accurate; it was
consistent with the dual purposes of the FCRA. Id.
Experian argues that it is entitled to summary judgment on Molton's
defamation claim because Experian accurately reported Molton's credit
status and Molton cannot prove that Experian acted with "malice or
willful intent to injure." 15 U.S.C. § 1681h(e). Under § 1681h(e)
of the FCRA,
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 consumer reporting
agency . . . based on information disclosed
pursuant to section 1681g, 1681h, or 1681m of this
title, or 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 such consumer.
15 U.S.C. § 1681h(e) (emphasis added). We have already
concluded that at all times Experian reported Molton's credit status
accurately, which precludes a finding that "false information [was]
furnished with malice or willful intent to injure [Molton]." See
Moline Experian Information Solutions, Inc., 289 F. Supp.2d 956,
959 (N.D. Ill. 2003). Experian, therefore, is entitled to summary
judgment on Molton's defamation claim.
For the reasons stated above, the Court grants Experian's motion for
judgment [docket #21-1]. Experian's motion to strike plaintiff's
responses to Experian's statement of facts is denied as moot [docket #
25-1]. The Clerk is directed to enter judgment in favor of defendant
Experian Information Solutions, Inc.