District Court (Pa.) Denies FCRA Furnisher’s MSJ against Husband Whose Ex-Wife Was Supposed to Pay the Car Loan

In Hillis v. Trans Union, LLC, 2014 WL 2581094 (E.D.Pa. 2014), Judge Davis denied a furnisher’s summary judgment in a FCRA claim brought by a divorced husband who claimed that his ex wife was obligated to pay the auto loan under their divorce decree.

On April 10, 2007, the Hillises were divorced. ( See Decree of Divorce 6, Def.’s Mot. Summ. J. Ex. D, ECF No. 35–6 at 7.) Their divorce decree awarded possession of the minivan to Carolyn Hillis. ( Id. at 2, ECF No. 35–6 at 3.) The decree also required Ms. Hillis to pay the balance due on the Car Loan, and to “indemnify and hold [Plaintiff] and his property harmless” in the event she failed to meet this obligation. ( Id. at 3, ECF No. 35–6 at 4.  Santander later acquired the Car Loan account from Franklin. ( See Aug. 24, 2012 Letter, Pl.’s Resp. Opp’n Mot. Summ. J. Ex. 5, ECF No. 37–2 at 31.) In August 2012, Santander began reporting the Car Loan to credit reporting agencies in a way that caused it to appear as an unfavorable entry on Plaintiff’s credit report. ( See G. Hillis Dep. 15:4–8, ECF No. 35–5 at 6.) In January 2013, Plaintiff disputed the Car Loan entry with the three major credit reporting agencies: Trans Union, LLC (“Trans Union”); Equifax Information Services, LLC (“Equifax”); and Experian Information Solutions, Inc. (“Experian”). ( See id. at 65:3–11, ECF No. 35–5 at 18.) Plaintiff apparently lodged this complaint because he believed the Car Loan was his ex-wife’s responsibility to pay and, therefore, it should not have appeared on his credit report. ( See id. at 36:18–22.) The three agencies contacted Santander about Plaintiff’s dispute, but Santander did not instruct them to change the way they reported the Car Loan account, nor did Santander mark the account as “disputed.” ( See W. Nightengale Dep. 42:1–7, 46:20–47:3, 47:21–48:10, ECF No. 37–2 at 63, 65–67.) In fact, Santander has no policy in place regarding consumers who have rights of indemnification relating to debts on their credit reports. ( Id. at 88:15–18, 90:5–24, ECF No. 37–2 at 71–72.)  In February or March of 2013, Plaintiff applied for a credit-limit increase for a charge card he held with Fifth Third Bank (“Fifth Third”). (G. Hillis Dep. 57:2–18, 58:13–20, ECF No. 35–5 at 16–17.) Fifth Third rejected Plaintiff’s application and sent him a letter dated April 9, 2013, explaining the reasons for its decision.FN2 ( See Apr. 9, 2013 Letter, Def.’s Mot. Summ. J. Ex. G, ECF No. 35–9.) The letter states that Fifth Third was “unable to act favorably” on Plaintiff’s application for the following reasons: “Sufficiently obligated with Fifth Third Bank,” “Number of credit inquiries,” and “Use of revolving credit.” ( Id.) The letter goes on to say that Fifth Third obtained Plaintiff’s credit score from Trans Union and used it in the decision to deny him additional credit. ( Id.) “Key factors” that harmed Plaintiff’s credit score were: “Serious delinquency,” “Proportion of balances to credit limits on revolving accounts too high,” “Time since delinquency is too recent or unknown,” “Amount past due on accounts,” and “Too many inquiries last 12 months.” ( Id.)

The District Court held that the furnisher’s reporting was technically accurate, but not complete because it failed to also report that the husband had an indemnity right against the wife under the divorce decree.  The District Court did not explain how the METRO-2 coding permitted such reporting, however.

It is true that the Hillises’ Texas divorce decree did not abrogate Plaintiff’s obligation to Franklin, and later Santander, relating to the Car Loan. See, e.g., Blake v. Amoco Fed. Credit Union, 900 S.W.2d 108, 110–11 (Tex.App.1995). The information about the Car Loan that Santander provided to the credit reporting agencies was, therefore, “technically accurate.” But this information was not as complete as it could have been. Although Plaintiff still technically owed the Car Loan balance to Santander, paying the balance was primarily his ex-wife’s responsibility under the divorce decree. Thus, the Car Loan’s delinquent status and eventual charge-off more clearly reflect Ms. Hillis’s inability to repay debts than Plaintiff’s. In addition, Plaintiff had an indemnification right against his ex-wife for any portion of the Car Loan balance he was forced to repay. A jury could reasonably find that Santander’s omission of these details might be “expected to have an adverse effect” on Plaintiff’s credit prospects.  Furthermore, the record strongly suggests that Santander’s reporting of the Car Loan played a role in Fifth Third’s 2013 denial of Plaintiff’s request for a credit-limit increase. In reaching its decision, Fifth Third used Plaintiff’s Trans Union credit score, which was unfavorably impacted by one or more serious delinquencies in Plaintiff’s credit history. A jury could sensibly infer that the Car Loan was one such delinquency, because after the credit reporting agencies stopped reporting the Car Loan, Plaintiff’s credit score rose, and Fifth Third increased his credit limit. From these facts, a reasonable jury could also conclude that the information about the Car Loan that Santander provided, or chose not to provide, to Trans Union caused Plaintiff to lose a credit opportunity. This alone is sufficient to create a triable issue of fact and defeat summary judgment. See Seamans, 744 F.3d at 866.