This week the Eighth Circuit affirmed a Minnesota district court order granting summary judgment to a mortgage company, holding that it complied with all of its responsibilities under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. 1681s-2(b), because it investigated dispute notices sent to it by credit reporting agencies and verified the plaintiff's account was being reported correctly. Anderson v. EMC Mortgage Corp., -- F.3d --, 2011 WL 409095 (8th Cir. Feb. 9, 2011).
Plaintiff-Appellant Chad Anderson ("Anderson") filed the underlying action against Defendant-Appellee EMC Mortgage Corp. ("EMC") and others (who were separately dismissed prior to the appeal) after a dispute arose over whether Anderson had timely made a mortgage payment to EMC in December 2006. The facts revealed that Anderson did in fact timely mail his December 2006 payment to EMC, which even credited his account. However, the check was subsequently lost and EMC did not present a substitute check to Anderson's bank until mid-March 2007. In the interim, Anderson had made timely January, February and March 2007 payments to EMC, and had also emptied and closed the bank account on which the December check had been drawn. The substitute check was subsequently refused when EMC presented it to Anderson's bank in March 2007. EMC, in turn, "uncredited" the December payment and began reporting Anderson's account as more than 30 days past due. After significant back-and-forth with EMC over the status of his account, Anderson made an extra payment in May to bring his account current, but not before, he alleged, the effect on his credit rating led to him losing favorable financing for a real estate purchase.
The Eighth Circuit noted at the outset that Anderson's complaint failed to state a claim under Section 1681s-2(b) of the FCRA because it did not allege a "triggering" event by a CRA that required EMC, as a furnisher of credit information, to investigate Anderson's dispute. However, EMC did not move to dismiss the complaint on those grounds. Instead, it engaged in discovery and moved for summary judgment, at which time it relied on certain Automated Consumer Dispute Verification ("ACDV") notices as evidence that it investigated and verified the information it was reporting on Anderson's account. The trial court examined Minnesota precedent relating to dishonoring a check after untimely presentment, and determined as a matter of law that EMC properly reported that Anderson's account was more than 30 days late as a result of the dishonored check. It therefore granted summary judgment to EMC.
Anderson did not appeal on the grounds that the trial court got Minnesota negotiable instruments law wrong. Instead, he argued that a compilation of his credit scores titled "Your Credit Report," which was attached to an affidavit submitted in support of his summary judgment opposition brief, contained an error because it stated that Experian Information Solutions, Inc. (a CRA) was reporting Anderson's EMC account delinquent in May and June, instead of April and May 2007. The Court of Appeals rejected this argument out of hand. First, the Court held, Anderson had not argued the issue below. Second, the mistake on the compilation report did not appear to have been caused by Experian, but rather by the compiler. Third, there was no evidence that Anderson ever disputed the compilation report with Experian or EMC, or that EMC failed to investigate the error upon notice from Experian or any other CRA as Section 1681s-2(b) requires. Accordingly, the Eighth Circuit affirmed the trial court's ruling in EMC's favor.