District Court (Utah) Says Furnisher May Have Reported Loan Properly Through Ch. 13 Proceedings; Denies Plaintiff’s Motion for Summary Judgment

In Rainer v. Experian Info. Solutions, Inc., 2019 U.S. Dist. LEXIS 39217 (D.Utah. March 11, 2019), Judge Sam denied an FCRA Plaintiff’s motion for summary judgment relating to how the Furnisher reported the Plaintiff’s Account through and after the Plaintiff’s Chapter 13 bankruptcy.  In 2008, Plaintiff borrowed $4,500 from Grantsville Federal Credit Union. AUFCU became the owner of Plaintiff’s account following a merger in approximately 2016. Plaintiff modified the loan to borrow additional money, increasing the amount borrowed and owed over time. Plaintiff did not repay the loan and received a discharge through [*2]  a Chapter 13 Bankruptcy on or about September 21, 2015. As explained in the Discharge of Debtor provided to AUFCU by the bankruptcy court, no attempt to collect the debt was permitted following the discharge. Grantsville and AUFCU charged the debt off, a process also referred to as “writing the debt off.” Charging off a debt indicates that the debt was not paid, but that it cannot be collected. Plaintiff alleges that AUFCU reported inaccurate information regarding the bankruptcy and charge off to Experian. He also asserts that AUFCU failed to make a reasonable investigation after learning that Plaintiff disputed the information on his Experian credit report. Judge Sam denied the Plaintiff’s summary judgment motion.

b. “Recent Balance: $2,851 as of Apr 2016“.  Mr. Rainer argues that AUFCU was incorrect when it reported a balance of “$2,851 as of Apr. 2016” to Experian. He says that this reporting was incorrect because it took place approximately seven months after his bankruptcy was discharged. Mr. Rainer admits that the Tenth Circuit has not addressed the reporting of past due balances after an account is discharged in bankruptcy, so he instead cites a handful of Ninth Circuit cases for the holding that “at least prior to discharge, reporting a loan balance and delinquent status per the original terms—as opposed to the modified terms of the confirmed. Chapter 13 plan—is neither inaccurate nor misleading under the FCRA.” ECF No. 45 at 10. Mr. Rainer then concludes that the implication of these cases is that a bankruptcy, reporting an account balance and delinquent status would be inaccurate. This argument is not persuasive. Not only are Ninth Circuit cases not precedent for this court, but Mr. Rainer’s interpretation does not necessarily follow from the court’s holding. The bankruptcy documents provided to AUFCU by the bankruptcy court expressly stated that discharge means that while no effort can be made to collect a debt, a debtor can still voluntarily make payments on the obligation. Declaration of Cherie Royce ¶ 21. The order of the court included the statement “a debtor may voluntarily pay any debt that has been discharged.” Id. Clearly this statement indicates that the debt exists and can be paid. It has just been discharged and therefore no attempt to collect can be made. Plaintiff’s argument implies that once the debt was discharged it was satisfied or ceased to exist and hence a report of a balance would be inaccurate. This is not necessarily correct. Defendant argues that it was accurate for AUFCU to state “$2,851 as of Apr. 2016” because the statement is true. See Declaration of Cherie Royce ¶¶ 22, 42, 43. Viewing the evidence in the light most favorable to AUFCU, the court finds a genuine factual dispute regarding the accuracy of the information reported to Experian by AUFCU.  c. AUFCU Reported $3,528 as a Charge Off.  The August 2016 Experian report included the following information, which Plaintiff alleges includes inaccurate information provided by AUFCU:  Status Account charged off. $3,528 written off. $5,090 past due as of Apr 2016. This account is scheduled to continue on record until Jul 2018.  Plaintiff asserts that this is inaccurate. Ms. Royce admitted that “$3,528 written off” is not accurate because it includes interest and late fees which are not collectable after a charge off. ECF No. 33-2 at 70:21-25 and 71:1-17. However, Ms. Royce’s testimony does not establish the undisputed facts that Plaintiff suggests it does. Ms. Royce testified unambiguously that this charge off did occur and was accurate when she said, “the $3,528 was charged off” and again when she clarified the amount was accurate “with interest and late fees accumulated on the loan.” She clearly stated that the amount charged off included interest and late fees that may not have been collectible.  Defendant notes that Plaintiff’s argument conflates two unrelated matters—the amount charged off and the amount that could have been collected. The status clearly indicates that the $3,528 was the amount charged off, which is accurate. That portion of the statement makes no reference to any collection, collectability, debt owed, or other matter. Ms. Royce clarified her testimony in her declaration, paragraph 53, which states that $3,528 was the amount charged off, and that the charge off was correctly reported to Experian. ECF No. 43-1 at 11. This testimony is supported by the business records cited to in Mr. Royce’s declaration. Ms. Royce’s testimony and the supporting records indicate that there is a genuine dispute regarding the accuracy of the charge off amount.  d. $5,090 Past Due as of Apr. 2016.” Plaintiff argues that the portion of the status indicating “$5,090 past due as of Apr. 2016” was an inaccurate report on the part of AUFCU to Experian. Ms. Royce testified that this amount “is the original amount of the loan that [Mr. Rainer] took out at Grantsville Federal Credit Union.” ECF No. 33-2 at 71:22-24. Ms. Royce also stated that the amount of the principle due had been reduced to $2,851, and she confirmed that at the time of her deposition the amount of $5,090 was not the amount past due, nor was it the correct current balance. Ms. Royce also testified, however, that she did not know why the balance of $5,090 was included in the Experian status because it was not part of her response to the verification request. Her testimony clearly creates a genuine dispute of material fact because she testified that she provided an ACDV that did not include the amount of “$5,090 past due as of Apr. 2016.”  B. Reasonable investigation into Plaintiff’s two disputes. . . . AUFCU responded reasonably by reviewing and confirming the amounts, responding with a consumer indicator for bankruptcy and discharge and reporting accurate and correct information. Again, drawing inferences in AUFCU’s favor, their actions were reasonable in that they followed appropriate procedure, reviewed all available information, and responded correctly. Summary judgment is not appropriate.