Eleventh Circuit Holds That a Legal Dispute May Not Form the Basis of a Claim Under the Fair Credit Reporting Act
On April 25, 2019, the Eleventh Circuit Court of Appeals issued its decision in Hunt v. JPMorgan Chase Bank, N.A., concluding that a plaintiff must assert a factual inaccuracy, rather than the existence of a disputed legal question, to bring suit against a furnisher of credit information for violation of the Fair Credit Reporting Act (“FCRA”).
When plaintiff Mark Donald Hunt missed a payment on his home loan in December 2012, JPMorgan Chase Bank, N.A. (“JPMC”) sent him an “acceleration warning.” When Hunt still failed to pay, JPMC continued reporting the loan to consumer reporting agencies (“CRAs”) as past due. Then, in May 2013, JPMC filed a foreclosure action against Hunt, seeking acceleration of the loan and a foreclosure judgment. The state court ultimately entered a final judgment of foreclosure in JPMC’s favor in May 2014, and Hunt did not satisfy the judgment until June 2015, after JPMC transferred the loan to another lender in March 2015.
Hunt filed suit against JPMC in October 2017, alleging that JPMC violated 15 U.S.C. § 1681s-2(b) by failing to reasonably investigate his disputes to the CRAs that JPMC “inaccurately” reported that Hunt’s mortgage loan was past due because JPMC’s acceleration of the loan and foreclosure action relieved him of any ongoing monthly payment obligation. Hunt further alleged that JPMC continued inaccurately to report his mortgage loan as “past due” after he satisfied the foreclosure judgment in June 2015 (after JPMC had transferred the loan to another lender). The district court dismissed the suit, finding that Hunt indisputably was in default from May 2013 to February 2015 and that JPMC accurately reported the account as past due. In so holding, the district court found that Hunt failed to assert a factual inaccuracy in JPMC’s credit reporting rather than the existence of a legal dispute (i.e., that he was not legally obligated to make monthly payments after JPMC filed the foreclosure action seeking loan acceleration) to state a claim. The district court further held that Hunt failed to present any authority to support his claim that JPMC had a duty to update its credit reporting after it transferred the account to another lender in March 2015.
The Eleventh Circuit affirmed, agreeing that Hunt was required to allege a factual inaccuracy, not the existence of a disputed legal question, to state an FCRA claim against JPMC. The Eleventh Circuit further noted that it was “unconvinced” by Hunt’s argument that JPMC’s filing of the foreclosure action, and request to accelerate the loan, relieved him of any ongoing monthly payment obligation. The Eleventh Circuit held that Hunt’s claim was also subject to dismissal because he could not prevail without demonstrating that, had JPMC conducted a reasonable investigation, it would have discovered that the information it reported was inaccurate. Because JPMC reported information that Hunt did not dispute was accurate to the CRAs regarding Hunt’s failure to pay the loan beginning in December 2012, Hunt could not demonstrate that a reasonable investigation would have revealed any factual inaccuracy in that information.
The Eleventh Circuit declined to decide whether JPMC had a duty under the FCRA to update the CRAs regarding Hunt’s satisfaction of the foreclosure judgment after it had transferred the account to another lender. Rather, the Eleventh Circuit held that Hunt never alleged that he disputed the post-satisfaction reporting with the CRAs, or that the CRAs reported such a dispute to JPMC. Accordingly, and fatal to Hunt’s claim, JPMC was under no obligation to conduct a § 1681s-2(b) investigation.
The Eleventh Circuit’s opinion is in line with the First Circuit’s often-cited opinion in Chiang v. Verizon New England Inc., 595 F.3d 26 (1st Cir. 2010), holding that a plaintiff’s required showing for a § 1681s-2(b) violation is a factual inaccuracy rather than the existence of a disputed legal question, and will be a helpful tool in defending claims under § 1681s-2(b).
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This article is for general information purposes only. It is not intended as legal advice, and you should not consider it as such.