A federal case from the U.S. District Court, Western District of Kentucky recently focused on a complaint filed by two plaintiffs who executed a note and mortgage with Fifth Third Bank. According to the original complaint, the mortgage lender filed a foreclosure action in Jefferson County, Kentucky against the two plaintiffs for unclear reasons, later dismissed the suit and released the mortgage through a Deed of Release, only to later sue the plaintiffs again six years later (2015) in an attempt to collect on the note which was the subject of the initial lawsuit. Fifth third bank withdrew a motion for summary judgment filed in the 2015 case, which is still pending in Circuit Court.
As alleged by the plaintiffs, Fifth Third Bank began “hard credit inquiries” for their consumer credit reports in early 2016, shortly after the motion for summary judgment was withdrawn. This, the plaintiffs argued, was an intentional violation of the Fair Credit Reporting Act (FCRA), as neither plaintiff had applied for credit with the lender during that time, and grounds for statutory or actual damages, punitive damages, and attorney fees. Fifth Third Bank next filed a motion for judgment on the pleadings, and the plaintiffs moved to supplement their response.
In its ruling, the Court noted that the same standards are applied to motions for judgment on pleadings as those applied to motions to dismiss under the Federal Rules of Civil Procedure, in addition to citing a Sixth Circuit ruling that motions for judgment on the pleadings are granted when there are no material issue of facts. Per the plaintiffs, however, a material issue of fact existed in regard to the underlying reason for why their credit reports were accessed by Fifth Third Bank, which did so without a permissible statutory purpose.
The opinion delves into the Fair Credit Reporting Act, federal law intended to protect consumers from unfair use of their information, as well as erroneous and arbitrary credit reports. The FCRA establishes guidelines for when creditors can obtain consumer credit reports for an authorized purpose, and when credit reporting agencies are allowed to furnish creditors with such reports. In order to succeed in their argument that Fifth Third Bank improperly acquired their credit reports and be entitled to actual or statutory damages, the court noted that the plaintiffs would need to prove the following:
- A consumer credit report, under definition of statute, existed;
- The defendant obtained and /or used it; and
- The defendant obtained / used the credit report without valid purpose under statute
In response, Fifth Third Bank argued that the plaintiffs did not allege a concrete injury-in-fact, that the credit reports were obtained for the reason of collecting debt, and that the plaintiffs are not entitled to compensation because they did not allege the lender acted intentionally.
In reviewing the merits of the plaintiffs’ claim, the Court noted that it must wait until later in the case to resolve the issue of whether or not the lender had a valid reason to obtain the credit reports, as well as whether Fifth Third Bank, which merged with Fifth Third Bank of Louisville, actually held the plaintiffs’ debt. The court did find that the plaintiffs’ claims should not be dismissed upon the fact that they did not plausibly allege the lender obtained their credit reports, as they alleged that the bank acted willfully. While the court ruled their § 1681n claims can proceed, their § 1681o claims for actual damages cannot, as they only alleged that Fifth Third Bank’s obtaining of their credit report lowered their credit score, and did not mention any actual damages such as denial or loss of credit or higher interest rates.