Johnnie Teresa Marchisio v. Carrington Mortgage Services, LLC.

Case: 17-10584 Date Filed: 03/25/2019 Page: 1 of 60

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________

No. 17-10584
________________________

D.C. Docket No. 2:14-cv-14011-FJL

JOHNNIE TERESA MARCHISIO,
ADRIAN MARCHISIO,

Plaintiffs-Appellants-Cross Appellees,

versus

CARRINGTON MORTGAGE SERVICES, LLC,

Defendant-Appellee-Cross Appellant.

________________________

Appeals from the United States District Court
for the Southern District of Florida
________________________

(March 25, 2019)

Before ROSENBAUM, HULL and JULIE CARNES, Circuit Judges.

JULIE CARNES, Circuit Judge:
 Case: 17-10584 Date Filed: 03/25/2019 Page: 2 of 60

This is the second federal action filed by Plaintiffs Johnnie Teresa Marchisio

and Adrian Marchisio against Defendant Carrington Mortgage Services, LLC.

Defendant’s repeated failures to accurately report the status of Plaintiffs’ mortgage

loans prompted both actions. Specifically, as part of the parties’ settlement in 2009

of a foreclosure suit brought by Defendant, Plaintiffs turned over their property to

Defendant, which action mooted the foreclosure action and extinguished Plaintiffs’

debt on the two pending loans. But Defendant failed to report correctly the status

of the loans, and it continued trying to collect on the nonexistent debt, prompting

Plaintiffs to file their first federal action alleging violations of the Fair Credit

Reporting Act, 15 U.S.C. § 1681, et seq., among other things.

The parties eventually settled this first federal lawsuit (“First Action”),

entering into a settlement agreement that required Defendant to timely correct its

reporting of the second loan and to pay Plaintiffs $125,000. Defendant paid the

agreed-upon settlement amount, but failed to report the second loan as having a

zero balance within the deadline specified in the settlement agreement, instead

issuing three reports that continued to inaccurately report the existence of a

delinquent debt. Even with its eventual and tardy report of a zero balance,

however, Defendant incorrectly reported that Plaintiffs still owed a $34,985

balloon payment on this second loan due in March 2021.

2
 Case: 17-10584 Date Filed: 03/25/2019 Page: 3 of 60

Plaintiffs disputed with credit reporting agencies Defendant’s reporting of a

balloon payment due on the second loan. Advised of Plaintiffs’ disagreement with

the report, Defendant purportedly investigated the dispute. Yet, notwithstanding

their extensive litigation history with Plaintiffs, including two previous settlement

agreements acknowledging that Plaintiffs owed nothing on the second loan,

Defendant incorrectly confirmed to the reporting agencies that Plaintiffs had a

balloon payment pending. If that wasn’t bad enough, Defendant then began

charging Plaintiffs for lender-placed insurance on the property that Plaintiffs had

turned over to Defendant years earlier and no longer owned.

As a result, Plaintiffs filed this second federal action (“Second Action”)

alleging three claims: violation of the federal Fair Credit Reporting Act

(“FCRA”), violation of the Florida Consumer Collection Practices Act, Fla. Stat.

§ 559.55, et seq. (the “Florida Collections Act”), and breach of contract.

Defendant filed a motion for summary judgment as to all claims; Plaintiffs filed a

motion for partial summary judgment. The district court granted Plaintiffs’ motion

for summary judgment on the FCRA claim, concluding that Defendant had

willfully violated the FCRA and awarding statutory damages of $3,000, as well as

attorney’s fees and costs, all totaling $115,860.12. The district court, however,

denied Plaintiffs’ request for emotional distress and punitive damages, finding as a

matter of law that Plaintiffs had shown no entitlement to those damages. The

3
 Case: 17-10584 Date Filed: 03/25/2019 Page: 4 of 60

district court granted summary judgment to Defendant on Plaintiffs’ Florida

Collections Act claim for various reasons. Finally, although it concluded that

Plaintiffs had proved that Defendant breached its settlement agreement, the district

court granted summary judgment to Defendant on Plaintiffs’ breach of contract

claim, holding that Plaintiffs had failed to prove any recoverable damages.

The parties filed cross-appeals contesting the district court’s adverse rulings

on the above claims, as well as its award of fees, which Plaintiffs viewed as

inadequate and Defendant viewed as excessive. After careful review and with the

benefit of oral argument, we: (1) affirm the district court’s finding of a willful

FCRA violation, but reverse the court’s denial of emotional distress and punitive

damages; (2) reverse the grant of summary judgment for Defendant on the Florida

Collections Act claim; (3) reverse the grant of summary judgment for Defendant

on the breach of contract claim; (4) vacate the award of attorney’s fees to Plaintiffs

so that the district court can recalculate those fees at the conclusion of the

litigation; 1 and (5) remand for proceedings consistent with this opinion.

1
The district court calculated the amount of attorney’s fees due Plaintiffs based, in part, on the
fact that the latter had prevailed on only one claim. As this opinion has now reversed the grant
of summary judgment to Defendant on two additional claims, Plaintiffs may well prevail on
those claims at trial, meaning that we presume the district court’s original grant of attorney’s fees
in the amount of $94,000 to represent a floor when the district court recalculates attorney’s fees
at the conclusion of this litigation.
4
 Case: 17-10584 Date Filed: 03/25/2019 Page: 5 of 60

I. BACKGROUND

A. The Foreclosure Action
Defendant serviced two mortgage loans extended to Plaintiffs for the

purchase of a house. In August 2008, Plaintiffs defaulted on both loans. Through

its trustee, Defendant filed a foreclosure action on Plaintiffs’ property in state

court. The parties resolved the foreclosure through a settlement agreement on

December 9, 2009. The settlement agreement obligated Plaintiffs to convey the

deed to the property to Defendant. In exchange, Defendant agreed to report to the

credit reporting agencies (Equifax, TransUnion, and Experian) that the mortgage

was discharged with a zero balance owed. Plaintiffs filed the deed in lieu of

foreclosure on December 11, 2009, and vacated the property.

In April 2011, Plaintiffs obtained a dismissal of the foreclosure suit with

prejudice, the court confirming that Plaintiffs had transferred full ownership of the

property to Defendant. For more than a year, however, Defendant failed to meet

its obligations under the settlement agreement. Specifically, Defendant resumed

its debt collection efforts and reported Plaintiffs’ debt as delinquent, even though

Plaintiffs owed Defendant no money.

B. The First Federal Action
1. Partial Correction by Defendant

In response, in July 2012, Plaintiffs filed an action in the United States

District Court for the Southern District of Florida, Case No. 12-cv-14264-DLG,
5
 Case: 17-10584 Date Filed: 03/25/2019 Page: 6 of 60

alleging, among other things, that Defendant violated the FCRA and the Florida

Collections Act. In this First Action, Plaintiffs complained that, despite the state

court order, Defendant continued to seek payment on the discharged mortgage and

falsely reported to credit reporting agencies that the debt was delinquent.

During this First Action, Defendant corrected its misreporting of the first

loan by sending an automated universal dataform (“AUD”) to the credit reporting

agencies, requesting that they update the first loan to reflect that it had a zero

balance effective December 31, 2009. But Defendant continued to misreport that

Plaintiffs owed money under the second loan.

2. The Release and Settlement Agreement
The parties resolved the First Action, entering into a “Release and

Settlement Agreement” on January 23, 2013. It is this settlement agreement that

Plaintiffs now contend Defendant breached. In exchange for dismissal of the

district court action, Defendant agreed to (1) pay Plaintiffs $125,000 and (2)

“report the Second Loan as having a zero balance as of December 9, 2009 to the

same agencies and in the same fashion as it reported the First Loan, which

reporting shall be done as soon as reasonably possible, but in any case within 90

days.” The parties agreed that “[i]n the event of a material breach hereunder, the

prevailing party in any action commenced to enforce [the] Agreement shall be

awarded its reasonable attorneys fees, expenses, and costs.” The parties

6
 Case: 17-10584 Date Filed: 03/25/2019 Page: 7 of 60

acknowledged that “time is of the essence in the performance of the obligations of

this Agreement.”

3. Post-Settlement Activity

Despite a settlement agreement that should have resolved all outstanding

issues, Plaintiffs continued to be plagued by Defendant’s failure to accurately

report extinguishment of the second loan. Given Defendant’s intransigence,

Plaintiffs were forced to file a second lawsuit to prompt Defendant to cease falsely

reporting Plaintiffs’ debt.

a. Defendant’s Failure to Update Plaintiffs’ Credit Report

Rather than correct its reporting of Plaintiffs’ second loan, Defendant

continued to send automated monthly reports to the credit reporting agencies with

inaccurate information about the second loan. Defendant sent inaccurate reports in

February, March, and April 2013. The negative reports caused Plaintiffs’ credit

history to show the second loan as an open account with: (1) a balance of $61,356;

(2) a past due amount totaling $14,264; and (3) being late over 120 days. None of

this information was correct.

The settlement agreement required Defendant to report to the credit

reporting agencies, as soon as reasonably possible, but no later than 90 days, that

Plaintiffs’ second loan had a zero balance. Defendant missed this deadline. It was

only after Plaintiffs complained that Defendant, on April 25, 2013—two days after

7
 Case: 17-10584 Date Filed: 03/25/2019 Page: 8 of 60

the 90-day deadline—submitted an AUD to the credit reporting agencies

requesting that they update the second loan to show a zero balance, effective

December 29, 2009.2 Yet, even though it corrected the balance-due entry,

Defendant incorrectly reported the second loan as having a balloon payment of

$34,985, due on March 1, 2021.

b. Plaintiffs Finance Vehicle Purchases

On February 23, 2013—a month after settling the First Action, and while

Defendant was still falsely reporting that Plaintiffs owed it money on this second

loan and were behind on their payments—Plaintiffs financed the purchase of two

used vehicles. AutoNation Cadillac of West Palm Beach required Mr. Marchisio

to pay $5,000.00 down and finance the $8,211.71 balance at 17.99% interest.

Grieco Nissan required Mrs. Marchisio to pay $10,300.00 down and finance the

$6,070.73 balance at 24.49% interest. Plaintiffs allege that, because Defendant had

affirmatively misstated that Plaintiffs owed it money—and thereby had failed to

correct its reporting of the second loan—Plaintiffs had to make larger down

payments and pay higher interest rates on these automobile loans.

2
The effective date should have been December 9, 2009, but this error is not at issue here.

8
 Case: 17-10584 Date Filed: 03/25/2019 Page: 9 of 60

c. Mrs. Marchisio Receives Automated Calls from
Defendant

Mrs. Marchisio testified that several months later, in the fall of 2013,

Defendant called her cell phone several times using an autodialing system. On one

call that she answered, Defendant informed her that Plaintiffs’ home would be

foreclosed and that they owed a balloon balance. Call records that would have

shown Defendant’s outgoing calls were no longer available when requested by

Plaintiffs. However, Mr. Marchisio corroborated his wife’s testimony, testifying

that she contemporaneously reported Defendant’s calls to him.

d. Defendant Erroneously Verifies Inaccurate Reporting of
Second Loan
Chagrined at Defendant’s continuing false reports that Plaintiffs owed them

money, in August 2013, Plaintiffs filed a motion in the First Action to enforce the

settlement agreement. The district court, however, dismissed the action, declining

to exercise jurisdiction over the settlement agreement.3

Accordingly, on November 7, 2013, Plaintiffs informed the credit reporting

agencies that they disputed the information reported regarding the second loan. In

their dispute letters, Plaintiffs described the litigation history and the foreclosure

court order relieving them of their debt obligation. Plaintiffs also explained that

3
Shortly thereafter, Defendant re-foreclosed on the property and obtained yet another judgment
in state court that they held title to the property through the deed-in-lieu of foreclosure.
9
 Case: 17-10584 Date Filed: 03/25/2019 Page: 10 of 60

Defendant had agreed in the settlement of the First Action that Plaintiffs did not

owe any money under the mortgages.

Plaintiffs’ dispute letters triggered a process typically followed by credit

reporting agencies and furnishers of credit information to investigate disputed

credit reports. The credit reporting agencies create an automated credit dispute

verification form (“ACDV”) that summarizes what the credit reporting agencies

are reporting and the information the consumer is disputing. The credit reporting

agencies then forward the ACDV electronically to the credit furnisher, which in

this case was Defendant. The furnisher determines whether the disputed

information should be verified, modified, or deleted. The furnisher then sends the

completed ACDV to the credit reporting agencies providing the results of its

investigation.

Danh Nguyen, a member of Defendant’s research department, investigated

and processed the ACDVs generated by Plaintiffs’ dispute letters the day he

received them. Following standard procedure, Nguyen consulted Defendant’s

FISERV database to check the accuracy of Plaintiffs’ credit reports. Defendant

characterizes FISERV as “a universal database that houses all relevant information

regarding its borrowers’ loans.” But, for disputed reasons, the FISERV database

did not have information regarding the January 2013 settlement agreement.

Unaware of this latest settlement or the previous litigation history, Nguyen sent an

10
 Case: 17-10584 Date Filed: 03/25/2019 Page: 11 of 60

ACDV to the credit reporting agencies verifying as accurate the report that

Plaintiffs owed a balloon payment on the second loan. Consequently, Plaintiffs’

November 21, 2013 credit report continued to erroneously reflect a $34,985

balloon payment, due March 2021, for the second loan. As noted above, the

January 23, 2013 settlement agreement had required Defendant to report a zero

balance on this second loan as soon as reasonably possible, but no later than 90

days after the date of the agreement: that is, by April 23, 2013. Defendant’s

issuance of this November credit report incorrectly indicating the existence of a

balloon note meant that seven months after the deadline for issuing a report

showing a zero balance, Defendant had still failed to do so.

e. Defendant’s Insurer Charges Plaintiffs for Insurance
Coverage on Property Owned by Defendant
Defendant’s failure to update its databases to reflect settlement of the second

loan had other consequences. In addition to its other systems, Defendant stored

Plaintiffs’ loan information in an insurance tracking software system called Co-

Trak. Defendant’s insurance vendor, Southwest Business Corporation

(“Southwest”), used Co-Trak to administer property insurance for Defendant’s

loans.

On November 30, 2013, Southwest deleted Plaintiffs’ first loan from Co-

Trak. Although Defendant has a policy of not requiring insurance for second

loans, deletion of the first loan triggered the loading of the second loan into the

11
 Case: 17-10584 Date Filed: 03/25/2019 Page: 12 of 60

system. The record for the second loan indicated a balance due and expired

insurance. That caused Southwest to send automated lender-placed insurance

coverage letters to Plaintiffs on November 30, 2013 and December 31, 2013.

Those letters bore Defendant’s letterhead and were signed “Fire Insurance

Processing Center, Carrington Mortgage Services, L.L.C.” The letters informed

Plaintiffs that their loan agreement required them to keep fire insurance on the

property and that insurance would be purchased and charged to Plaintiffs if

Plaintiffs did not provide proof of insurance.

Shortly thereafter, on January 17, 2014, another lender-placed insurance

letter entitled “Notice of Lender Placed Fire Coverage”—also on Defendant’s

letterhead and bearing the same signature as the previous insurance letters—

informed Plaintiffs that insurance had been purchased for the property previously

owned by Plaintiffs and that Plaintiffs’ escrow account would be charged $2,659 in

monthly installments. Plaintiffs also received a nearly identical “Notice of Lender

Placed Fire Coverage” dated January 22, 2014. All of the insurance letters

informed Plaintiffs that “this communication is from a debt collector and it is for

the purpose of collecting a debt.”

C. The Second Federal Action

As a result of Defendant’s continuing wrongful insistence that Plaintiffs still

owed it money, Plaintiffs’ November 2013 effort to dispute the reporting of the

12
 Case: 17-10584 Date Filed: 03/25/2019 Page: 13 of 60

balloon payment for the second loan failed. Left with little other option to obtain

relief, Plaintiffs filed this second federal action against Defendant on January 8,

2014, alleging breach of the settlement agreement entered in the First Action and

violations of the FCRA and the Florida Collections Act.

1. Defendant Corrects Its Errors Shortly After Plaintiffs’ Filing of
this Action

Although Plaintiffs’ previous efforts to end their ongoing nightmare had

failed, their filing of a second federal action apparently caught Defendant’s

attention. On January 28, 2014, shortly after Plaintiffs filed this Second Action,

Defendant finally saw fit to issue an AUD requesting that the credit reporting

agencies delete from Plaintiffs’ credit reports any reference to a balloon-payment

obligation. Defendant also cancelled the lender-placed insurance, effective

January 28, 2014, and issued Plaintiffs a refund. Thus, by the end of January 2014,

more than four years after settlement of the foreclosure action and prompted only

by two subsequent lawsuits, Defendant finally managed to update its databases,

correct its previous errors, and accurately report the status of Plaintiffs’ second

loan.

2. Procedural History of this Action
On November 13, 2015, Plaintiffs filed an Amended Complaint, alleging:

Count I, Violation of FCRA; Count II, Violation of Florida Collections Act; Count

III, Breach of Contract (i.e., Breach of the Second Settlement); Count IV,

13
 Case: 17-10584 Date Filed: 03/25/2019 Page: 14 of 60

Preliminary Injunctive Relief; and Count V, Permanent Injunctive Relief. The

parties filed cross-motions for summary judgment in July 2016.

Defendant filed a motion for summary judgment on all claims. Plaintiffs

filed a verified Declaration in opposition to Defendant’s motion for summary

judgment. Plaintiffs also filed a motion for partial summary judgment on some

aspects of its claims and of Defendant’s defenses. As discussed below, the district

court granted summary judgment for Defendant on some things and for Plaintiffs

on others.

II. STANDARD OF REVIEW

We review de novo the district court’s rulings on the parties’ cross motions

for summary judgment. Owen v. I.C. Sys., Inc., 629 F.3d 1263, 1270 (11th Cir.

2011). Summary judgment is appropriate when “there is no genuine dispute as to

any material fact” and the moving party is entitled to judgment as a matter of law.

Fed. R. Civ. P. 56(a). A genuine issue of material fact exists when “the evidence is

such that a reasonable jury could return a verdict for the nonmoving party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court reviews the

evidence and draws all reasonable inferences in the light most favorable to the non-

moving party. Owen, 629 F.3d at 1270.

14
 Case: 17-10584 Date Filed: 03/25/2019 Page: 15 of 60

III. DISCUSSION

A. Plaintiffs’ FCRA Claim (Count I)
1. The District Court’s Ruling
Consistent with the settlement agreement of the First Action, in which

Defendant agreed to correct its false reporting that a balance was due on the second

loan, in April 2013 Defendant finally disseminated revised reports to indicate that

Plaintiffs had a zero balance on this loan. Yet, in making this correction,

Defendant introduced a new false entry into the report: the existence of a balloon

payment of almost $35,000 due in 2021 on this (non-existent) second loan.

Defendant was put on notice of this newest problem through an attempt by

Plaintiffs in August 2013 to enforce the earlier settlement agreement: an attempt

that was rebuffed by the district court on jurisdictional grounds. Plaintiffs then

filed the dispute letter with credit reporting agencies that led to the filing of the

present FCRA claim. Plaintiffs disputed the existence of a balloon loan, which

communication prompted the agencies to contact Defendant for the latter to

investigate and inform the agencies whether the disputed information was accurate.

As set out more fully in the factual discussion, the databases available to

Defendant’s investigative employee continued to show that a balloon payment was

due. None of them included information regarding the settlement agreement. Had

they included this information, the employee would have been aware that, in its

settlement of Plaintiffs’ earlier claims, Defendant had agreed that Plaintiffs owed
15
 Case: 17-10584 Date Filed: 03/25/2019 Page: 16 of 60

nothing on this particular loan. But unaware of the settlement, the employee

incorrectly confirmed to the credit reporting agencies that Plaintiffs did have a

balloon payment due in the future.

Plaintiffs’ present claim alleges that Defendant failed to conduct a

reasonable investigation of the disputed entry, as required by the FCRA. The

district court agreed that Defendant had failed to conduct a reasonable

investigation. It further concluded that, given all the litigation concerning the

question whether Plaintiffs owed anything more on the second loan, Defendant’s

conduct was willful, and it granted summary judgment on that element. Defendant

appeals these decisions. As to damages, the court awarded statutory damages of

$3,000, which Defendant does not oppose, assuming the existence of a violation.

The court, however, ruled that Plaintiffs were not entitled to any damages for

emotional distress or as punitive damages. Plaintiffs appeal the district court’s

grant of summary judgment to Defendant as to these damages.

2. Reasonableness and Willfulness of Defendant’s Conduct

It is obvious that Defendant failed to conduct a reasonable investigation of

Plaintiffs’ challenge of Defendant’s report that Plaintiffs owed a balloon payment

on the second loan, and we therefore affirm the district court’s grant of summary

judgment on this issue. The FCRA requires that credit reporting agencies and

those entities that furnish information to them (“furnishers”) investigate any

16
 Case: 17-10584 Date Filed: 03/25/2019 Page: 17 of 60

disputed information. Thus, when a consumer disputes information with a credit

reporting agency, the agency must “conduct a reasonable reinvestigation to

determine whether the disputed information is inaccurate.” 15 U.S.C.

§ 1681i(a)(1)(A). As part of this investigation, the agency is required to notify the

furnisher of the information that it has been disputed. Id. § 1681i(a)(2). Upon

receipt of this notice, the furnisher of information must: (1) “conduct an

investigation with respect to the disputed information”; (2) “review all relevant

information provided by the consumer reporting agency” in connection with the

dispute; and (3) “report the results of the investigation to the credit reporting

agency.” Id. § 1681s-2(b)(1)(A)–(C). Should the investigation determine that the

disputed information is “inaccurate or incomplete or cannot be verified,” the

furnisher must “as appropriate, based on the results of the reinvestigation promptly

. . . modify[,] . . . delete [or] permanently block the reporting” of that information

to consumer reporting agencies. Id. § 1681s-2(b)(1)(E). See generally Hinkle v.

Midland Credit Mgmt., Inc., 827 F.3d 1295, 1301 (11th Cir. 2016).

“The ‘appropriate touchstone’ for evaluating a furnisher’s investigation

under § 1681s-2(b) is ‘reasonableness.’” Felts v. Wells Fargo Bank, N.A., 893

F.3d 1305, 1312 (11th Cir. 2018) (quoting Hinkle, 827 F.3d at 1301–02). “[W]hat

constitutes a ‘reasonable investigation’ will vary depending on the circumstances

of the case.” Id. “When a furnisher ends its investigation by reporting that the

17
 Case: 17-10584 Date Filed: 03/25/2019 Page: 18 of 60

disputed information has been verified as accurate, the question of whether the

furnisher behaved reasonably will turn on whether the furnisher acquired sufficient

evidence to support the conclusion that the information was true.” Id.

We agree with the district court that, as a matter of law, Defendant’s

investigative efforts were not reasonable. Defendant argues that the erroneous

verification of a balloon payment by Nguyen, the investigative employee,

constituted a mere isolated human error that was promptly corrected. This

argument is unpersuasive. First, Nguyen didn’t make an error: he accurately

reported what he found in the databases provided by his employer. The error can

be laid at the feet of Defendant, which had failed to create a reliable system for

inputting information regarding the settlement of litigation that might impact the

data found on the relevant databases. Aware that whatever system it had to

accomplish this was unreliable and aware that incorrect information concerning

Plaintiffs’ loan balance was still being reported, it was incumbent on Defendant to

take steps to ensure that news of the terms of the settlement agreement be

communicated to those who generate reports to reporting agencies. Given

Defendant’s decision not to take those steps, it was quite foreseeable that any

investigation of the disputed information here would yield an incorrect conclusion

by the employee-investigator.

18
 Case: 17-10584 Date Filed: 03/25/2019 Page: 19 of 60

Defendant’s position is that, on an ad hoc basis, it would log into databases

pertinent information concerning relevant litigation. Yet, as the district court

noted, there was a large “disconnect” between Defendant’s system for debt

verification and its ad hoc handling of settlement-related changes to debt

obligations. That disconnect manifested itself on multiple occasions over several

years through Defendant’s: (1) failure to sufficiently log the settlement of the

foreclosure suit and subsequent resumption of foreclosure litigation; (2) failure to

sufficiently log the dismissal of the resumed foreclosure litigation with prejudice

and subsequent debt collection efforts; (3) failure to sufficiently log settlement of

the first district court action and subsequent breach of the settlement agreement;

and (4) failure to provide sufficient notification and access to settlement terms to

its verifiers, causing the subsequent verification of erroneous credit reports despite

detailed dispute letters documenting the relevant litigation history.

In short, Defendant failed to conduct a reasonable investigation. The above

egregious facts also support the district court’s conclusion that Defendant’s

conduct was willful. Under 15 U.S.C. § 1681n(a), any person who willfully fails

to comply with any requirement imposed under this subchapter is liable to the

affected consumer for actual, statutory, or punitive damages. Collins v. Experian

Info. Sols., Inc., 775 F.3d 1330, 1336 (11th Cir. 2015), on reh’g sub nom. Collins

v. Equable Ascent Fin., LLC, 781 F.3d 1270 (11th Cir. 2015). The Supreme Court

19
 Case: 17-10584 Date Filed: 03/25/2019 Page: 20 of 60

has held that “reckless disregard of a requirement of FCRA would qualify as a

willful violation within the meaning of § 1681n(a).” Safeco Ins. Co. of Am. v.

Burr, 551 U.S. 47, 71 (2007); see also Harris v. Mexican Specialty Foods, Inc.,

564 F.3d 1301, 1310 (11th Cir. 2009) (“A violation is ‘willful’ for the purposes of

the FCRA if the defendant violates the terms of the Act with knowledge or reckless

disregard for the law.”). Recklessness means “conduct violating an objective

standard: action entailing an unjustifiably high risk of harm that is either known or

so obvious that it should be known.” Safeco, 551 U.S. at 68 (quotations omitted).

Assuming arguendo that Defendant’s continued reporting of false

information regarding Plaintiffs’ debt was not intentionally done, the question then

is whether Defendant acted in reckless disregard of its obligations under the

FCRA, as the district court concluded. On the record before us, it clearly did so.

Defendant’s actions—during an exceedingly long period of time in which

Plaintiffs sought to have Defendant cease its false reporting of a debt that

Defendant well knew Plaintiffs did not owe—entailed “an unjustifiably high risk of

harm that is either known or so obvious that it should be known.” Id.

No other conclusion can be drawn given the number of times that Defendant

was put on notice of the false information being reported, yet, each time failed to

take steps to insure that its records accurately reflected the absence of any debt by

Plaintiffs. Defendant failed to take appropriate measures after entering into a

20
 Case: 17-10584 Date Filed: 03/25/2019 Page: 21 of 60

settlement agreement with Plaintiffs in 2009 during the foreclosure action, in

which Defendant agreed that Plaintiffs’ prior two loans were extinguished and that

Plaintiffs owed Defendant nothing, but after which Defendant continued to report

that Plaintiffs had a balance due. Following the 2013 settlement of Plaintiffs’

resulting federal litigation, which demanded that Defendant correct its false report,

Defendant belatedly corrected the false information found in earlier reports, but

then Defendant began falsely reporting that Plaintiffs had a balloon payment due

on the second loan. Yet, Defendant failed to take any corrective action when

Plaintiffs sought to have the federal district court enforce the settlement agreement

by requiring Defendant to live up to its agreement and stop reporting that a balloon

payment was due. That event alone clearly disclosed to Defendant and its counsel

that Defendant was continuing to report false information concerning Plaintiffs’

non-existent debt. Yet again, Defendant made no correction nor any effort to

insure that the pertinent databases revealed the existence of the settlement and the

fact that no debt was owed by Plaintiffs. Meaning that when Plaintiffs took the

predictable next step of disputing this debt with the credit reporting agencies, the

outcome of the investigation by Defendant’s employee was also quite predictable:

the employee would incorrectly verify the existence of a continuing debt.

Also obvious is that this is not a case like Llewellyn v. Allstate Home Loans,

Inc., 711 F.3d 1173, 1185 (10th Cir. 2013), and the numerous other cases cited by

21
 Case: 17-10584 Date Filed: 03/25/2019 Page: 22 of 60

Defendant, where courts found no willful violation based on a single human error

that was promptly corrected.4 None of those cases involved a pattern of conduct

exposing a knowingly flawed system for documenting changes to debt obligations,

much less a four-year litigation history concerning the debt at issue. That history

here included multiple orders and agreements acknowledging discharge of the debt

that went undocumented in the lender’s debt verification system and thus

unchecked, despite being specifically identified in the dispute letters being

investigated and in litigation filed a few months before the inquiry. In short, no

reasonable jury could find that Defendant’s erroneous verification of the inaccurate

credit report in November 2013 was not reckless.

3. Emotional Distress Damages
Although it found, as a matter of law, that Defendant had acted unreasonably

and even recklessly in its investigation of Plaintiffs’ dispute—and awarded

statutory damages of $3,000—the district court granted Defendant summary

judgment as to Plaintiffs’ claim for emotional distress damages, finding that

Plaintiffs had failed to show that Defendant’s violation of the FCRA had caused

Plaintiffs any emotional distress. Specifically, the district court concluded that any

4
Defendant’s repeated assertion that willfulness requires “intent to consciously thwart
Plaintiffs’ right to remove inaccuracies from their credit report” relies on case law that predates
the recklessness standard of Safeco.

22
 Case: 17-10584 Date Filed: 03/25/2019 Page: 23 of 60

emotional distress suffered as a result of Defendant’s actions had begun before

Defendant’s FCRA violation in November 2013.

The district court was correct in stating there must be a causal connection

between the violation and the emotional harm. “[F]ailure to produce evidence of

damage resulting from a FCRA violation mandates summary judgment.” Nagle v.

Experian Info. Sols., Inc., 297 F.3d 1305, 1307 (11th Cir. 2002) (citing Cahlin v.

General Motors Acceptance Corp., 936 F.2d 1151, 1160 (11th Cir. 1991)).

For sure, Plaintiffs had already experienced substantial stress as a result of

Defendant’s actions taken prior to the erroneous re-verification of the non-existent

debt. Mr. Marchisio stated that, following Defendant’s breach of the settlement

agreement in late April 2013, he “felt flushed and shaky, nervous, [and] tense.” He

further described having arguments with his wife and experiencing anxiety and

rapid heartbeats. He stated that “[t]he increasing stress from dealing with

[Defendant] made my health worse. On May 9, 2013, I was hospitalized and

treated for congestive heart failure, anxiety and exacerbated hypertension caused

by anxiety.”

Yet, Plaintiffs correctly note that the district court did not evaluate whether

Defendant’s subsequent FCRA violation “exacerbated again” their emotional

distress. Mr. Marchisio maintained that, after taking medication, exercising, and

refraining from discussing issues with Defendant, his health had improved by early

23
 Case: 17-10584 Date Filed: 03/25/2019 Page: 24 of 60

August 2013. Yet, Defendant’s erroneous verification of the accuracy of

Plaintiffs’ credit reports in November 2013, and its subsequent initiation of lender-

placed insurance on property no longer owned and for which no debt was owed,

triggered additional anxiety, rapid heartbeats, and marital distress. As to the latter,

Mr. Marchisio noted that because of the marital discord caused by Defendant, he

and his wife no longer sleep in the same bed and their marriage is “not the same.”

Both Plaintiffs state that “[h]ad [Defendant] made the corrections, it would have

reduced our stress and the problems with the Settlement that we were dealing

with.” In short, Plaintiffs indicate that the “added stress” of the erroneous

verification of the balloon payment in November 2013 “made things much worse.”

Plaintiffs’ testimony raises genuine issues of material fact concerning

emotional distress. A fact finder might well conclude that Defendant’s FCRA

violation caused Plaintiffs’ additional emotional distress, given Plaintiffs’

testimony that this new violation “added stress” and “made things much worse”

and Mr. Marchisio’s health improvements before Defendant’s November 2013

violation. We therefore reverse the district court’s grant of summary judgment to

Defendant on the claim of emotional distress damages.

4. Punitive Damages

The district court sua sponte denied an award of punitive damages, noting

that “[t]he finding of willfulness is not based on any intentional or purposeful

24
 Case: 17-10584 Date Filed: 03/25/2019 Page: 25 of 60

misdeed by the Defendant that would support the award of punitive damages.”

Plaintiffs argue that the court is “not entitle[d] to take the question from the jury

and decide it as a matter of law.”

The court’s punitive damages decision presents two problems. First,

Plaintiffs were not required to raise punitive damages on summary judgment and

the court summarily disposed of the issue without hearing from either party.

Second, 15 U.S.C. § 1681n(a)(2) provides for “such amount of punitive damages

as the court may allow” for “willful” FCRA violations. And “willful” violations

include reckless conduct. Safeco, 551 U.S. at 68. Thus, the “intentional or

purposeful” standard used by the district court does not comport with the Supreme

Court’s definition of willfulness.

Moreover, neither the court nor Defendant cited any controlling authority for

the proposition that punitive damages should only be awarded for intentional

misconduct. Defendant cites Cousin v. Trans Union Corporation, 246 F.3d 359,

374 (5th Cir. 2001) for the proposition that punitive damages are inappropriate

where defendant’s “system [was] not perfect” but defendant “never attempted to

mislead [plaintiff] with respect to his consumer report or his rights.” But Cousin,

issued before Safeco, employed a stricter standard for willfulness and overturned a

willfulness liability verdict. It had nothing to do with denying punitive damages

despite a willfulness finding.

25
 Case: 17-10584 Date Filed: 03/25/2019 Page: 26 of 60

To be clear, we make no ruling here concerning whether there may be any

limits on a plaintiff’s ability to receive punitive damages under the FCRA where

the willful conduct at issue involves only reckless, not intentional conduct. We

simply reverse the sua sponte grant of summary judgment to Defendant to allow

factual development of this issue at trial.

B. Florida Collections Act Claim (Count II)
The Florida Collections Act regulates the activities of consumer collection

agencies within Florida. LeBlanc v. Unifund CCR Partners, 601 F.3d 1185, 1190

(11th Cir. 2010). The Florida Collections Act also defines and protects an

individual’s right to privacy with regards to consumer collections practices in the

state. Id. In particular, Florida Statute Section 559.72 provides:

In collecting consumer debts, no person shall:
****

(9) Claim, attempt, or threaten to enforce a debt when such person
knows that the debt is not legitimate, or assert the existence of some
other legal right when such person knows that the right does not exist.

****

(18) Communicate with a debtor if the person knows that the debtor is
represented by an attorney with respect to such debt and has knowledge
of, or can readily ascertain, such attorney’s name and address . . . .

Fla. Stat. § 559.72.

Plaintiffs allege that, in violation of § 559.72(9), Defendant attempted to

collect a debt that Defendant knew was not legitimate when Defendant (1) placed

26
 Case: 17-10584 Date Filed: 03/25/2019 Page: 27 of 60

auto-dialed calls to Plaintiffs in the fall of 2013, attempting to collect money from

Plaintiffs on the non-existent debt and (2) sent letters between November 2013 and

January 2014 requiring Plaintiffs to provide proof of fire insurance on property

they had deeded to Defendant years before and charging Plaintiffs for lender-

placed insurance on that property. Two of these letters were sent after Defendant

became aware that Plaintiffs had retained counsel. Accordingly, Plaintiffs argue

that in sending these two particular letters, Defendant also violated that part of the

Florida statute prohibiting communication with a debtor whom one knows to be

represented by an attorney: § 559.72(11).

The district court granted summary judgment for Defendant on each of these

claims. We address each in turn.

1. The Automated Calls

The district court rejected Plaintiffs’ Florida Collections Act claim based on

the automated calls Mrs. Marchisio received in the fall of 2013 because Plaintiffs

offered “no evidentiary confirmation” to corroborate their own testimony that such

calls had even occurred. The district court noted that telephone-call records for

this time period were no longer available when sought by Plaintiffs. The court

questioned the veracity of Plaintiffs’ statements because “[b]y that point both the

State Foreclosure Case and the First District Court Case had been concluded” and

“[t]he surrounding events and circumstances therefore leave unclear why the

27
 Case: 17-10584 Date Filed: 03/25/2019 Page: 28 of 60

Defendant would have caused these calls to be placed---that is, if the calls in fact

had been made.” The court thus deemed the evidence insufficient to survive

summary judgment.

Construing the evidence in the light most favorable to Plaintiffs, we find

Mrs. Marchisio’s testimony that she had received debt collection calls from

Defendant in the fall of 2013 sufficient to create a disputed issue of fact as to

whether the calls had occurred. See United States v. Stein, 881 F.3d 853, 858–59

(11th Cir. 2018) (en banc) (“A non-conclusory affidavit which complies with Rule

56 can create a genuine dispute concerning an issue of material fact, even if it is

self-serving and/or uncorroborated.”). Mrs. Marchisio testified that in the fall of

2013, Defendant called her several times informing her that Plaintiffs’ home would

be foreclosed and that they owed a balloon balance. Mr. Marchisio corroborated

his wife’s testimony, testifying that she contemporaneously reported the nature of

Defendant’s calls to him. Because we do not make credibility determinations on

appeal of a summary judgment ruling, we must assume Plaintiffs’ testimony to be

true. Strickland v. Norfolk S. Ry. Co., 692 F.3d 1151, 1154 (11th Cir. 2012)

(“Credibility determinations, the weighing of the evidence, and the drawing of

legitimate inferences from the facts are jury functions, not those of a judge . . . .”)

(quotation omitted).

28
 Case: 17-10584 Date Filed: 03/25/2019 Page: 29 of 60

As to the district court’s observation that it is “unclear why the Defendant

would have caused these calls to be placed,” the lack of clarity as to Defendant’s

motivation does not, on these facts, necessarily undermine Plaintiffs’ testimony.

Over the years, Defendant engaged in repeated conduct to collect a debt no longer

owed by Plaintiffs. It is not clear why Defendant persisted in these efforts despite

prior settlements and court orders. Indeed, the alleged calls came at a time when

Defendant had filed a re-foreclosure for no apparent reason. Ultimately, a jury will

have an opportunity to assess Plaintiffs’ credibility in order to determine whether

Defendant made the automated calls at issue.

2. Lender-Placed Insurance Letters
a. District Court’s Ruling Applying Bona Fide Error
Defense
As to the claims relating to the insurance-billing letters sent to Plaintiffs, the

district court granted summary judgment to Defendant, concluding that Defendant

was protected by the bona fide error defense. As set out in the background section

of this opinion, the failure of Defendant to update its databases and to make sure

the appropriate people within the company were informed of its settlement

agreement with Plaintiffs had consequences beyond the misreporting of a non-

existent debt to credit reporting agencies. The erroneous retention, as a pending

debt, of Plaintiffs’ second loan in Defendant’s databases caused the insurance

tracking software system used by Defendant’s insurance vendor, Southwest, to

29
 Case: 17-10584 Date Filed: 03/25/2019 Page: 30 of 60

purchase and bill Plaintiffs for fire insurance for property they no longer owned,

based on a debt they no longer owed.

In analyzing Defendant’s potential liability under § 559.72(9), the district

court assumed that “the ‘debt,’ whether it be the underlying Second Loan, the need

for hazard insurance, or the bill for the ‘forced place’ insurance, was not legitimate

and that the Defendant knew or should have known that it was not legitimate.” 5

The court further assumed that Defendant could be held liable for Southwest’s

actions as its agent. Ultimately, however, the court concluded that Defendant was

entitled to the Florida Collections Act’s bona fide error defense, for two principal

reasons: (1) the insurance letter error occurred “in the context of corrective action”

(that is, Defendant’s attempt to correct its database in November 2013, which

triggered the sending of the letters by Southwest) and (2) Defendant responded

promptly to the issue after it first learned of the problem when Plaintiffs filed suit

in January 2014.

Our review of the district court’s decision granting summary judgment to

Defendant on this claim therefore focuses on whether Defendant established a bona

fide error defense, as a matter of law, when the evidence is viewed in the light

5
Defendant does not challenge the district court’s assumption that each of these activities
satisfies the threshold requirement that the act occurred in the collection of consumer debt. For
purposes of this opinion, we will adopt that assumption and confine our analysis to the issues
raised in the briefing.
30
 Case: 17-10584 Date Filed: 03/25/2019 Page: 31 of 60

most favorable to Plaintiffs or whether, as Plaintiffs argue, there is a disputed issue

of fact on this point.

b. Bona Fide Error Defense–Generally

Florida law provides for a bona fide error defense to civil actions alleging

violations of the Florida Collections Act:

A person may not be held liable in any action brought under this section
if the person shows by a preponderance of the evidence that the
violation was not intentional and resulted from a bona fide error,
notwithstanding the maintenance of procedures reasonably adapted to
avoid such error.

Fla. Stat. § 559.77(3). “In applying and construing this section, due consideration

and great weight shall be given to the interpretations of the Federal Trade

Commission and the federal courts relating to the federal Fair Debt Collection

Practices Act [“FDCPA”].” 6 Id. § 559.77(5); Gann v. BAC Home Loans Servicing

LP, 145 So. 3d 906, 908 (Fla. 2d Dist. Ct. App. 2014).

As we held in a FDCPA case, “[a] debt collector asserting the bona fide

error defense must show by a preponderance of the evidence that its violation of

the Act: (1) was not intentional; (2) was a bona fide error; and (3) occurred despite

the maintenance of procedures reasonably adapted to avoid any such error.”

6
15 U.S.C. § 1692k(c) of the Fair Debt Collection Practices Act includes a bona fide error
defense nearly identical to the Florida Collections Act: “[a] debt collector may not be held liable
in any action brought under this subchapter if the debt collector shows by a preponderance of
evidence that the violation was not intentional and resulted from a bona fide error
notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.”

31
 Case: 17-10584 Date Filed: 03/25/2019 Page: 32 of 60

Edwards v. Niagara Credit Sols., Inc., 584 F.3d 1350, 1352–53 (11th Cir. 2009)

(discussing 15 U.S.C. § 1692k(c)).

Focusing their challenge on the second and third prongs of the above

standard, Plaintiffs emphasize the faulty procedures employed by Defendant for

tracking loan settlement terms. Defendant counters that the true cause of

Southwest sending the erroneous letters was Southwest’s failure to follow

Defendant’s stated policy of not tracking insurance for loans that are second liens.

c. Whether Defendant’s Sending of the Lender-Placed
Insurance Letters Constituted a Bona Fide Error
“As used in the [FDCPA] ‘bona fide’ means that the error resulting in a

violation was made in good faith; a genuine mistake, as opposed to a contrived

mistake.” Id. at 1352–53 (quotations omitted). “To be considered a bona fide

error, the debt collector’s mistake must be objectively reasonable.” Id.

Given our conclusion below concerning Defendant’s policies and

procedures, we will assume that Defendant’s mistake in sending out the lender-

places insurance letters was a bona fide error, as set out in the second prong of the

test. Defendant had a policy that insurance not be tracked for second loans.

Nevertheless, deletion of the first loan from the Co-Trak system caused the

insurance letters to automatically be mailed to Plaintiffs. This error occurred

despite Defendant’s policy that insurance not be tracked for second loans, which

the district court inferred to mean that the mailing of the insurance letters was a

32
 Case: 17-10584 Date Filed: 03/25/2019 Page: 33 of 60

genuine, not a contrived mistake. Viewed objectively, we will assume that the

automatic issuance of lender-placed insurance letters following the deletion of the

first loan from the Co-Trak database constitutes a genuine mistake, as opposed to a

contrived error.

Plaintiffs focus on Defendant’s lack of procedures to disseminate loan

settlement terms, which failure Plaintiffs say caused the Co-Trak database to

contain faulty information regarding the status of Plaintiffs’ second loan. We

understand Plaintiffs’ point, but this contention is best considered in connection

with the third prong of the test: the requirement that Defendant maintained

procedures reasonably adapted to avoid the error. See Johnson v. Riddle, 443 F.3d

723, 729 (10th Cir. 2006) (“the bona fide prong and the procedures prong will

often merge”). We turn to that question now.

d. Genuine Issues of Fact Exist Regarding Whether
Defendant Maintained Procedures Reasonably Adapted
to Avoid the Violation
As we have stated, “the procedures component of the bona fide error defense

involves a two-step inquiry.” Owen, 629 F.3d at 1273–74 (citing Johnson, 443

F.3d at 729). “The first step is whether the debt collector ‘maintained’—i.e.,

actually employed or implemented—procedures to avoid errors.” Id. (quotations

omitted). The second step is “whether the procedures were ‘reasonably adapted’ to

33
 Case: 17-10584 Date Filed: 03/25/2019 Page: 34 of 60

avoid the specific error at issue.” Id. This is a “fact-intensive inquiry” analyzed

“on a case-by-case basis.” Id.

Defendant defines the issue narrowly, urging us to consider only whether it

had policies and procedures that reasonably precluded issuance of the lender-

placed insurance letters to Plaintiffs based on their second loan. Defendant asserts

that the facts demonstrate that Southwest should not have mailed those letters

because it was a second lien which Southwest should not have been tracking under

the policies and procedures in place.7 Thus, Defendant asserts that “the specific

error here had nothing to do with [Defendant’s] general practices concerning

borrowers who have had loans discharged through settlement.”

Plaintiffs, in turn, focus on Defendant’s practices concerning recording and

dissemination of settlement terms. Plaintiffs highlight four deficiencies in

Defendant’s system for tracking settlements as the cause for the Co-Trak database

to contain erroneous information that triggered sending of the insurance letters.

Plaintiffs maintain that: (1) Defendant does not store settlement agreements on the

Nautilus system, the system that contains images of loan applications, mortgages,

and promissory notes; (2) Defendant does not notate settlement terms on the

7
Defendant’s “Insurance Policy” provides: “Outsourced Insurance Tracking . . .
Responsibilities . . . The Insurance Vendor is responsible for determining the acceptability of
insurance policies and ensuring that approved insurance coverage remains in force on all
properties for the life of all loans being serviced. The exceptions to this are condominiums and
2nd liens, which are not tracked.”

34
 Case: 17-10584 Date Filed: 03/25/2019 Page: 35 of 60

FISERVE database; (3) despite the probability that the status of a loan will be

affected by litigation, Defendant has no policy to place flags on accounts subject to

litigation; (4) settlement terms are disclosed to Defendant’s business departments

only if Defendant’s legal department determines such disclosure is proper.

Moreover, Plaintiffs assert that Defendant cannot show that it has any procedures

in place to make sure that the terms of the settlement are conveyed to the proper

parties that need to be involved.

As framed by the parties, the issue turns on the second step of Owen; that is,

“whether the procedures were ‘reasonably adapted’ to avoid the specific error at

issue.” Owen, 629 F.3d at 1273–74. Owen obligates us to first determine “the

specific error at issue.” Id. Defendant frames the error as sending lender-placed

insurance letters in contravention of its policy not to require insurance for second

loans. Plaintiffs frame the error as failing to input settlement terms in the Co-Trak

system. As Owen makes clear, however, the specific error at issue is the statutory

violation alleged. In this case, the specific error is the sending of lender-placed

insurance letters erroneously asserting that Plaintiffs were obligated to insure

property they no longer owned.

Defendant identifies only its policy not to insure second loans as a policy

that is reasonably adapted to avoid issuance of illegitimate lender-placed insurance

letters. The policy cited is an internal policy and Defendant fails to explain

35
 Case: 17-10584 Date Filed: 03/25/2019 Page: 36 of 60

whether and how this policy is communicated to Southwest or Defendant’s

employees. Yet, although Defendant characterizes this practice as a “policy and

procedure,” we are hard pressed to discern from this record what procedures

Defendant or Southwest implemented to enforce its policy of not insuring second

loans. The Supreme Court has interpreted the provision of the FDCPA requiring

the debt collector to maintain “procedures reasonably adapted to avoid any such

error.” Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573,

587 (2010). The Court noted that “[t]he dictionary defines ‘procedure’ as ‘a series

of steps followed in a regular orderly definite way.’” Id. (citing Webster’s Third

New International Dictionary 1807 (1976)). The Court concluded that “the

statutory phrase is more naturally read to apply to processes that have mechanical

or other such ‘regular orderly’ steps to avoid mistakes—for instance, the kind of

internal controls a debt collector might adopt to ensure its employees do not

communicate with consumers at the wrong time of day, § 1692c(a)(1), or make

false representations as to the amount of a debt, § 1692e(2).” Id. Here, Defendant

has not documented a regular and orderly process for enforcing its stated policy not

to insure second loans.

Even the policy itself appears irregular. Rather than absolute, Defendant’s

policy of not insuring second loans appears to apply only so long as the first loan is

in place. The automated tasks performed by the Co-Trak system define at least

36
 Case: 17-10584 Date Filed: 03/25/2019 Page: 37 of 60

part of Defendant’s procedures regarding insurance on second loans. The record

reflects that Defendant’s system requires insurance on second loans when the first

loan is discharged and deleted from the system and the second loan is open and

showing a balance due. In effect, the second loan becomes a primary loan

requiring insurance. Given that apparent practice dictated by Defendant’s

software, the question becomes what procedures Defendant implemented to insure

that the Co-Trak systems acts on accurate information when evaluating the need

for insurance. And that depends on the procedures Defendant follows to input

account status and balance information in the Co-Trak system. Were those

procedures reasonable? Construing all facts in Plaintiffs’ favor, as we must on

summary judgment, we agree with Plaintiffs that one cannot state, as a matter of

law, that Defendant’s procedures to guard against the dissemination of insurance-

billing letters for properties secured by second loans were reasonably adapted for

that purpose. Accordingly, we reverse the district court’s grant of summary

judgment to Defendant on its bona fide error defense to allow the trier of fact to

make that determination.8

8
For similar reasons, we conclude that Defendant is not entitled to summary judgment based on
the bona fide error defense on the claim that two of its lender-placed insurance letters were sent
to Plaintiffs after Defendant became aware that Plaintiffs were represented by counsel.
Defendant again maintains that it has a policy against such a violation. This policy requires that
“once it is learned that an attorney represents the borrower, all contact may be made only with
the attorney, unless the attorney either failed to respond within a reasonable amount of time, or
consents to our direct contact with the borrower.” But, once again, Defendant does not explain
37
 Case: 17-10584 Date Filed: 03/25/2019 Page: 38 of 60

e. Disputed Issues of Fact Exist Concerning Whether
Southwest Was Defendant’s Agent

Because it granted Defendant summary judgment on its bona fide error

defense, the district court did not reach the question whether Southwest was

Defendant’s agent for purpose of generating and disseminating to Plaintiffs the

lender-placed insurance letters demanding payment of fire insurance on property

that Defendant well knew Plaintiffs owed no debt. Defendant argues, however,

that even if the bona fide error defense does not succeed, it should still prevail

because Southwest was not its agent. Even though the district court did not reach

these issues, we are empowered to affirm summary judgment on the present claim,

were we to agree with Defendant, because we “may affirm the district court’s

ruling on any basis the record supports.” Fla. Wildlife Fed’n Inc. v. United States

Army Corps of Engineers, 859 F.3d 1306, 1316 (11th Cir. 2017). Once again, we

decline to grant Defendant summary judgment on this argument, finding factual

questions that must be resolved by a finder of fact.

(1) Actual Agency

Defendant contends that “although [it] retained [Southwest] as its vendor to

ensure that insurance policies were paid when due, no principal-agent relationship

existed concerning mailing the letters.” “Generally, the existence of an agency

how that policy is communicated or implemented, leaving for the jury to decide whether
Defendant has procedures reasonably adapted to enforce that policy.

38
 Case: 17-10584 Date Filed: 03/25/2019 Page: 39 of 60

relationship is a question of fact; however, when the moving party fails to produce

any supportive evidence or when the evidence presented is so unequivocal that

reasonable persons could reach but one conclusion, that question of fact becomes a

question of law to be determined by the court.” Hickman v. Barclay’s Int’l Realty,

Inc., 5 So. 3d 804, 806 (Fla. 4th Dist. Ct. App. 2009). “[A]n agency relationship

may be express or implied from apparent authority, and the burden of proving the

agency belongs to the party asserting it.” Regions Bank v. Maroone Chevrolet,

L.L.C., 118 So. 3d 251, 255 (Fla. 3d Dist. Ct. App. 2013).

“Essential to the existence of an actual agency relationship is (1)

acknowledgment by the principal that the agent will act for him, (2) the agent’s

acceptance of the undertaking, and (3) control by the principal over the actions of

the agent.” Goldschmidt v. Holman, 571 So. 2d 422, 424 n.5 (Fla. 1990). “The

key element in establishing actual agency is the control by the principal over the

actions of the agent.” Hickman, 5 So. 3d at 806. “And it is the right of control, not

actual control or descriptive labels employed by the parties, that determines an

agency relationship.” Id.

Given the nature of the Insurance Administration Agreement between

Defendant and Southwest, we will assume that a jury could properly determine, as

Defendant contends, that Southwest is a typical service provider contracted to

perform a task and that no agency relationship existed here. But the evidence is

39
 Case: 17-10584 Date Filed: 03/25/2019 Page: 40 of 60

not so unequivocal that we can rule as a matter of law that no agency relationship

existed. Id. at 806–07.

Construed in a light most favorable to Plaintiffs, the evidence shows that

Defendant controlled issuance of Plaintiffs’ insurance letters. Defendant consented

to have Southwest act on its behalf in sending lender-placed insurance collection

letters to its borrowers. The Insurance Administration Agreement provided that

“the form and content of [lender-placed insurance] notices shall have been

previously reviewed and approved by [Defendant].” As reviewed and approved by

Defendant, the lender-placed insurance letters in this case were sent on

Defendant’s letterhead and were signed “Fire Insurance Processing Center,

Carrington Mortgage Services, L.L.C.” The Insurance Administration Agreement

also established Defendant’s authority to obtain and review periodic reports on

Southwest’s activities.

Highlighting Defendant’s control as established in the Insurance

Administration Agreement, the evidence reflects, as the district court found,

“[Southwest’s] dependence on the Defendant both for accurate data and for

instructions to take corrective action.” The court further noted that “[Southwest]

did not feel it could take corrective action until January 29, 2014 when the

Defendant expressly and specifically instructed it to stop.” The facts presented on

summary judgment support the district court’s observations. Under these

40
 Case: 17-10584 Date Filed: 03/25/2019 Page: 41 of 60

circumstances, where Southwest depended on Defendant for accurate loan

information and Defendant exercised power to intervene in Southwest’s

administration of Plaintiffs’ insurance, a jury could reasonably find that Southwest

acted as Defendant’s agent in sending the lender-placed insurance letters to

Plaintiffs.

(2) Apparent Agency

Construed in a light most favorable to Plaintiffs, sufficient evidence of

apparent agency also exists to preclude summary judgment for Defendant.

“[A]pparent authority is a form of estoppel [which arises] from ‘the authority a

principal knowingly tolerates or allows an agent to assume, or which the principal

by his actions or words holds the agent out as possessing.’” Regions Bank, 118 So.

3d at 255 (quoting Jackson Hewitt, Inc. v. Kaman, 100 So. 3d 19, 31 (Fla. 2d Dist.

Ct. App. 2011)). Apparent agency exists only where the principal creates the

appearance of authority. Id. Plaintiffs must prove three elements to establish an

apparent agency: (1) a representation by the purported principal; (2) a reliance on

that representation by a third party; and (3) a change in position by the third party

in reliance on the representation. Mobil Oil Corp. v. Bransford, 648 So. 2d 119,

121 (Fla. 1995). “It is well settled under Florida law that, [t]he existence of an

agency relationship, the nature and extent of the agent’s authority, and the

inclusion within the scope of that authority of a particular act are ordinarily

41
 Case: 17-10584 Date Filed: 03/25/2019 Page: 42 of 60

questions to be determined by the jury or by the trier of facts in accordance with

the evidence adduced in the particular case.” Citibank, N.A. v. Data Lease Fin.

Corp., 828 F.2d 686, 691 (11th Cir. 1987) (quotations omitted).

Here, the Insurance Agreement granted Defendant control over the content

of the lender-placed insurance letters. Defendant dictated, or at least allowed,

Southwest to issue those letters, not just under Defendant’s letterhead, but as

signed by “Fire Insurance Processing Center, Carrington Mortgage Services,

L.L.C.” A jury could reasonably conclude that Southwest acted with apparent

authority on behalf of Defendant and that Plaintiffs relied on the representations

Defendant authorized Southwest to make when they dealt with Defendant. See

Almerico v. RLI Ins. Co., 716 So. 2d 774, 783 (Fla. 1998) (holding under Fla. Stat.

§ 626.342(2) that “civil liability may be imposed upon insurers who cloak

unaffiliated insurance agents with sufficient indicia of agency to induce a

reasonable person to conclude that there is an actual agency relationship”).

In short, contrary to Defendant’s urging, we cannot conclude as a matter of

law that no agency relationship existed between Defendant and Southwest. Again,

this will be a decision for the finder of fact.

f. Defendant’s Alleged Lack of Actual Knowledge of a
Violation

As a final alternative ground for affirmance, Defendant argues that it lacked

actual knowledge of the lender-placed insurance letter violations. We have stated

42
 Case: 17-10584 Date Filed: 03/25/2019 Page: 43 of 60

that “[i]n contrast to the FDCPA, Section 559.72(9) of the [Florida Collections

Act] requires a plaintiff to demonstrate that the debt collector defendant possessed

actual knowledge that the threatened means of enforcing the debt was

unavailable.” LeBlanc, 601 F.3d at 1192 n.12. Defendant construes those cases as

requiring that Plaintiffs prove that Defendant had actual knowledge that Southwest

sent the lender-placed insurance letters to Plaintiffs and maintains that no such

evidence exists. We disagree.

The statute provides that:

In collecting consumer debts, no person shall:

****
(9) Claim, attempt, or threaten to enforce a debt when such person
knows that the debt is not legitimate, or assert the existence of some
other legal right when such person knows that the right does not exist.

Fla. Stat. § 559.72(9). The statute merely requires that Defendant know the debt is

not legitimate or the asserted legal right does not exist. The statute does not

preclude a principal from being held liable for the debt-collection efforts of its

agent when the principal knows that the debt is illegitimate. None of the cases

cited by Defendant addresses a principal’s liability for the illegitimate collection

efforts of its agent.

Here, Defendant indisputably knew at the time its alleged agent, Southwest,

sent the insurance letters that Plaintiffs no longer owned the property and had no

outstanding debt. And Defendant as the “principal is bound by the acts of his
43
 Case: 17-10584 Date Filed: 03/25/2019 Page: 44 of 60

agent.” Thomkin Corp. v. Miller, 24 So. 2d 48, 49 (Fla. 1945). “Even where an

agent’s act is unauthorized, the principal is liable if the agent had the apparent

authority to do the act and that apparent authority was reasonably relied upon by

the third party dealing with the agent.” Benson v. Seestrom, 409 So. 2d 172, 173

(Fla. 2d Dist. Ct. App. 1982).

Plaintiffs also submitted evidence that Defendant knew each time Southwest

sent a letter to Plaintiffs on its behalf because the system notated it in Defendant’s

FISERVE database.9 At any rate, Southwest’s knowledge that it sent the letters

may be imputed to Defendant if Plaintiffs establish a principal/agent relationship.

Ruotal Corp., N. W., Inc. v. Ottati, 391 So. 2d 308, 309 (Fla. 4th Dist. Ct. App.

1980) (“It is axiomatic that knowledge of the agent constitutes knowledge of the

principal as long as the agent received such knowledge while acting within the

scope of his authority.”).

Again, the record evidence is insufficient to justify summary judgment for

Defendant based on its alleged lack of actual knowledge of a Florida Collections

Act violation.

9
The system put in place by Defendant and Southwest generated the insurance letters
automatically. We reach no conclusion whether such computerized records of automated
activities provide “actual knowledge” of what transpired to a system administrator.

44
 Case: 17-10584 Date Filed: 03/25/2019 Page: 45 of 60

C. Plaintiffs’ Breach of Contract Claim (Count III)

1. Defendant’s Breach of the Reporting Provision (¶ 3(b))
a. Basis for District Court’s Grant of Summary Judgment to
Defendant

“For a breach of contract claim, Florida law 10 requires the plaintiff to plead

and establish: (1) the existence of a contract; (2) a material breach of that contract;

and (3) damages resulting from the breach.” Vega v. T-Mobile USA, Inc., 564 F.3d

1256, 1272 (11th Cir. 2009) (emphasis added). “To constitute a vital or material

breach, a defendant’s non-performance must be such as to go to the essence of the

contract.” Sublime, Inc. v. Boardman’s Inc., 849 So. 2d 470, 471 (Fla. 4th Dist. Ct.

App. 2003).

To reprise the sequence of events necessary to understand Plaintiffs’ breach

of contract claim, in 2009, Plaintiffs and Defendant settled the foreclosure action

filed by Defendant against Plaintiffs’ property. The terms of the settlement

required Plaintiffs to vacate the premises and convey the deed for the property to

Defendant. In return, Defendant agreed to report to credit reporting agencies that

the mortgage was discharged with a zero balance. Failing to live up to this

agreement, however, Defendant instead reported to agencies that Plaintiffs were in

default on their debt, and it continued to seek repayment on the non-existent debt.

10
The settlement agreement does not contain a choice of law provision, but both parties apply
Florida law in briefing the contract dispute. See Fioretti v. Massachusetts Gen. Life Ins. Co., 53
F.3d 1228, 1235 (11th Cir. 1995) (explaining the doctrine of lex loci contractus).
45
 Case: 17-10584 Date Filed: 03/25/2019 Page: 46 of 60

The breach of this first settlement agreement is not a part of Plaintiffs’

present claim. Instead that breach underlay Plaintiffs’ claims in the First Action,

filed in 2012. During the litigation of the First Action, Defendant actually

corrected its misreporting of Plaintiffs’ first loan by sending corrected automated

reports to credit reporting agencies, indicating that the first loan had a zero balance.

For reasons unclear, however, Defendant failed to correct reports showing that

Plaintiffs’ second loan likewise had a zero balance. Accordingly, in the second

settlement agreement between the parties, Defendant agreed to report to agencies

that likewise no money was owed on this second loan.

Although Defendant eventually transmitted to credit reporting agencies the

existence of a zero balance on the second loan, Plaintiffs contend in the present

action that Defendant’s compliance was tardy under the terms of the settlement

agreement, and that therefore Defendant breached ¶ 3(b) of the contract.

Paragraph 3(b) required Defendant to:

report the Second Loan as having a zero balance as of December 9,
2009 to the same agencies and in the same fashion as it reported the
First Loan, which reporting shall be done as soon as reasonably
possible, but in any case within 90 days.

(emphasis added).

Defendant, however, neglected to send corrected reports to credit reporting

agencies regarding this second loan until April 25, 2013, which was two days after

expiration of the maximum 90-day time period set out in ¶ 3(b). The district court
46
 Case: 17-10584 Date Filed: 03/25/2019 Page: 47 of 60

concluded that Defendant had breached its settlement agreement through its

tardiness, but it did not reach the question whether the breach was material because

it concluded that Plaintiffs had made “an insufficient argument for damages.”

Because damages are an essential element of a breach-of-contract claim, the

district court granted summary judgment to Defendant on this claim.

In reaching this conclusion, however, the court addressed only Plaintiffs’

claim for damages arising from the emotional distress that their ordeal with

Defendant had caused them and for damages arising from the issuance of a false

1099 tax form11 as a result of the inaccurate information recorded by Defendant

concerning the second loan. The court failed to address the damages alleged by

Plaintiffs to have resulted from the higher deposits and loan interest rates that

Plaintiffs were required to pay in financing the purchase of two automobiles.

b. Damages
We address first the question whether Plaintiffs have alleged viable damages

as a result of any breach of the settlement agreement by Defendant because,

without such damages, Plaintiffs’ breach-of-contract claim cannot succeed.

(1) Emotional Distress Damages

11
Plaintiffs do not challenge on appeal the grant of summary judgment as to that part of the
claim involving issuance of the 1099 form.

47
 Case: 17-10584 Date Filed: 03/25/2019 Page: 48 of 60

Examining first Plaintiffs’ claim that they were entitled to pursue damages

based on emotional distress caused by Defendant’s breach of the settlement

agreement, we agree with the district court that these damages are not available for

a breach of contract claim under Florida law. Defendant cites Florida caselaw in

support of its argument that such damages are unavailable. Specifically, it notes

that the Florida Supreme Court “is committed to the rule . . . that there can be no

recovery for mental pain and anguish unconnected with physical injury in an action

arising out of the negligent breach of a contract whereby simple negligence is

involved.” Kirksey v. Jernigan, 45 So. 2d 188, 189 (Fla. 1950). Further, as a

general rule, damages for mental distress caused by a breach of contract are not

allowed under Florida law unless the breach amounts to an independent, willful

tort. Gellert v. E. Air Lines, Inc., 370 So. 2d 802, 805 (Fla. 3d Dist. Ct. App.

1979). Indeed, “where the gravamen of the proceeding is breach of contract, even

if such breach be willful and flagrant, there can be no recovery for mental pain and

anguish resulting from such breach.” Floyd v. Video Barn, Inc., 538 So. 2d 1322,

1325 (Fla. 1st Dist. Ct. App. 1989) (quotations omitted) (affirming no damages for

mental and emotional suffering available for breach of contract where videographer

failed to record a wedding).

Plaintiffs have not alleged, much less established, a willful tort independent

of the contract arising from Defendant’s breach of the settlement agreement.

48
 Case: 17-10584 Date Filed: 03/25/2019 Page: 49 of 60

Significantly, Plaintiffs cite no Florida authority in support of their argument that

they can properly seek emotional distress damages based on Defendant’s breach of

the settlement agreement. Instead, Plaintiffs rely on two non-Florida cases that are

inapt for purposes of this issue. 12

Plaintiffs also argue that “[s]ince emotional distress damages are recoverable

for FCRA, FDCPA, and [Florida Collections Act] violations, it cannot reasonably

be denied that emotional distress is a foreseeable consequence of the breach of a

contract specifically intended to resolve prior violations of those same statutes.”

(emphasis in original). We find this argument unpersuasive. That Plaintiffs might

have another vehicle for pursuing emotional distress damages based on a particular

act by Defendant does not mean that we are empowered to ignore controlling

Florida law that precludes those damages for this particular cause of action.

Nevertheless, Plaintiffs contend that “it would be contrary to public policy to

allow a violator of the FCRA, the Florida Collections Act, and the FDCPA—who

12
In arguing that emotional distress damages are permitted if they were the foreseeable result of
a breach of the settlement agreement, Plaintiffs cite Sheely v. MRI Radiology Network, P.A., 505
F.3d 1173 (11th Cir. 2007). In Sheely, however, the plaintiff had sought emotional distress
damages based on an intentional violation of the federal Rehabilitation Act provision prohibiting
discrimination against the disabled by recipients of federal funds. Neither the facts nor the legal
analysis there apply to this case, which involves a contract dispute under Florida law.

Plaintiffs also rely on language found in McGinnis v. American Home Mortgage Servicing, Inc.,
901 F.3d 1282 (11th Cir. 2018), which addressed the question whether the amount of a jury’s
punitive damages award violated due process in a case where the defendant mortgage holder was
found liable under Georgia law for conversion, wrongful foreclosure, interference with property
rights, and intentional inflection of emotional distress. Id. at 1287. Again, neither the legal
issues nor the facts of that case jibe with this case.
49
 Case: 17-10584 Date Filed: 03/25/2019 Page: 50 of 60

would otherwise be liable for emotional distress damages—to avoid those damages

simply by entering into a settlement agreement with which it fails to comply.”

This argument ignores the fact that, through the settlement agreement reached to

resolve the First Action, Defendant compensated Plaintiffs $125,000 for its past

violations of the FCRA, FDCPA, and Florida Collections Act: a negotiated figure

that presumably included compensation for any emotional distress suffered. As to

any additional emotional distress that Plaintiffs may have suffered as a result of

Defendant’s post-settlement violations of the FCRA and the Florida Collections

Act, Plaintiffs have sought damages for that distress in the present action and will

be able to pursue those damages at trial.

(2) Damages Based on Increased Financing Costs in
Connection with Purchase of Automobiles

While we agree with the district court that emotional distress damages are

not cognizable as to the breach of contract claim, there was another item of

damages for this claim that the district court overlooked. Specifically, Plaintiffs

allege that Defendant’s failure to timely correct its erroneous reports indicating the

existence of a continuing debt on the second loan, as the settlement agreement

required it to do, caused Plaintiffs to suffer from adverse financing terms when

purchasing two vehicles subsequent to the agreement. Plaintiffs submitted

declarations and financing documents showing that each obtained car loans on

February 23, 2013, with interest rates of 17.99% and 24.49% and a larger down
50
 Case: 17-10584 Date Filed: 03/25/2019 Page: 51 of 60

payment than would otherwise be required absent the false information in the

credit reports issued by Defendant.

This evidence, viewed in the light most favorable to Plaintiffs, raises a

triable issue of damages so long as Plaintiffs can establish a triable issue as to

whether the agreement required Defendant to issue its correction prior to the date

that Plaintiffs financed their newly-purchased cars: February 23, 2013. We turn to

that question next.

c. Whether Defendant’s Failure to Correct Its Records Prior
to February 23, 2013 Constituted A Breach of ¶ 3(b) of
the Settlement Agreement

As noted, ¶ 3(b) of the January 23, 2013 settlement agreement required

Defendant to “report the Second Loan as having a zero balance . . . as soon as

reasonably possible, but in any case within 90 days.” That Defendant did not

correct its reporting of the second loan until April 25, 2013, two days after the

maximum time allotted by ¶ 3(b), is undisputed. Thus, Defendant breached the

requirement that it correct its reports to credit agencies concerning the absence of

any debt by Plaintiffs to Defendant no later than 90 days following the settlement

agreement.

That breach, however, does not help Plaintiffs in their efforts to prove

damages related to the financing terms of their newly-purchased automobiles

because this financing occurred on February 23, 2013, which was before the 90-

51
 Case: 17-10584 Date Filed: 03/25/2019 Page: 52 of 60

day April 23 deadline. Defendant argues that the timing of Plaintiffs’ automobile

financing purchase ends any contention that its breach harmed Plaintiffs because

Defendant had carte blanche to wait until the 90th day to issue its corrections, and

the fact that it missed that deadline by two days caused Plaintiffs no harm in

connection with their earlier February financing of the automobiles.

Defendant is dead wrong in its insistence that it had no obligation to correct

the erroneous reports before expiration of the 90-day period. Rather, the

agreement clearly states that the corrected reporting shall be done “as soon as

reasonably possible.” The 90-day provision means only that the correction had to

be issued by that deadline, no matter what arguments Defendant might later make

as to how long it reasonably took to issue the corrected report. It did not exempt

Defendant from a duty to report, “as soon as reasonably possible,” the correct

information “to the same agencies and in the same fashion as it reported the First

Loan.” Moreover, the agreement also reflected the parties’ acknowledgement that

“time is of the essence in the performance of the obligations of this Agreement.”

Indeed, it seems quite unlikely that Defendant reported “as soon as

reasonably possible” the correct information inasmuch as it sent automated reports

on February 11, March 11, and April 10, 2013 that repeated the same incorrect

information about Plaintiffs’ debt. How much time would it reasonably have taken

to correct the entries on these automated monthly reports? One can reasonably

52
 Case: 17-10584 Date Filed: 03/25/2019 Page: 53 of 60

assume that by the March and April reports, Defendant could surely have gotten its

act together. But for our purposes here, the question is whether it was reasonably

possible for Defendant to have issued a corrected report by the time that Plaintiffs

financed their automobiles, on February 23. The financing occurred a month after

the settlement agreement. If it was reasonably possible to have issued a corrected

report by February 23, Defendant breached ¶ 3(b) by failing to do so, and Plaintiffs

will have stated a viable claim for damages as a result of that breach.

The district court’s observations certainly suggest that a month was plenty of

time for Defendant to have issued a corrected report to credit reporting agencies.

The court noted that Defendant’s insistence on waiting until the end of the 90-day

period to issue accurate reports was not “in the spirit of the deadline” and that

“[t]he overall record shows than when prompted, the Defendant is able to issue

AUD’s to the [credit reporting agencies] quickly and expeditiously.” The latter

observation appears accurate. Yet, focused as it was on the emotional distress

damages, and not on the potential automobile-financing-charge damages, the

district court did not draw any formal conclusion concerning whether Defendant

could have issued a corrected report by February 23. Accordingly, we conclude

that this question will require factual development at trial. We therefore reverse

the district court’s grant of summary judgment on the breach of contract claim

53
 Case: 17-10584 Date Filed: 03/25/2019 Page: 54 of 60

based on Defendant’s alleged breach of ¶ 3(b)’s “as soon as reasonably possible”

provision, and remand for proceedings consistent with the above discussion.

2. Defendant’s Alleged Breach of the Non-Disparagement
Provision (¶ 7)

As explained in the preceding section, ¶ 3(b) of the January 23, 2013

settlement agreement required Defendant to report as soon as reasonably possible

to credit reporting agencies that the second loan had a zero balance. It took

Defendant 92 days—until April 25—to do so (and even then Defendant added a

false report that Plaintiffs had a balloon note due in 2021). During that 92-day

period, Defendant continued to issue their regular, monthly automated reports—on

February 11, March 11, and April 10—which reports incorrectly showed the

existence of a second loan on which Plaintiffs were delinquent. Because Plaintiffs’

only viable damages arise from the financing of newly-purchased automobiles on

February 23, on remand the jury’s resolution of the breach of contract claim under

¶ 3(b) will turn on its determination whether it was reasonably possible for

Defendant to have issued a corrected report prior to February 23.

Plaintiffs argue that even if it were not reasonably possible for Defendant to

have issued a corrected report by February 23, Defendant should still be found to

have breached the settlement agreement based on ¶ 7’s non-disparagement

provision, which states that “[t]he parties agree that they will not make any

statements disparaging, deprecating, or denigrating each other from the date of this

54
 Case: 17-10584 Date Filed: 03/25/2019 Page: 55 of 60

Agreement forward, with respect to any or all of the matters alleged in the

Litigation.” Plaintiffs contend that because the automated monthly report issued

on February 11, 2013 erroneously indicated that Plaintiffs were delinquent on a

loan with a past-due balance of almost $15,000, Defendant disparaged them.

Moreover, because ¶ 7 contains no language requiring Defendant to communicate

the correct information to credit reporting agencies as soon as reasonably possible,

Plaintiffs argue that it does not matter whether it was reasonably possible for

Defendant to disseminate a corrected report by February 11.

The disparagement clause is broadly-worded and includes any type of

conduct or communications that might “deprecate” or “denigrate” Plaintiffs. We

agree with Plaintiffs that the issuance of a report falsely indicating that Plaintiffs

are behind in their payments on a loan is one type of communication that would

constitute disparagement. But we disagree that we can ignore the language in the

specific provision governing Defendant’s duty to issue a corrected report that gives

Defendant a reasonable period of time to do so. “[I]t is a general principle of

contract interpretation that a specific provision dealing with a particular subject

will control over a different provision dealing only generally with that same

subject.” Kel Homes, LLC v. Burris, 933 So. 2d 699, 703 (Fla. 2d Dist. Ct. App.

2006). Here, there is a specific provision that spells out the time requirement for

Defendant to correct its previous inaccurate reports to credit reporting agencies.

55
 Case: 17-10584 Date Filed: 03/25/2019 Page: 56 of 60

Once again, that provision requires Defendant to “report the Second Loan as

having a zero balance as of December 9, 2009 to the same agencies and in the

same fashion as it reported the First Loan, which reporting shall be done as soon as

reasonably possible.”

Were we to deprive Defendant of the brief window of time that ¶ 3(b) allows

for it to issue a corrected report, we would be essentially expunging language from

the contract that the parties had agreed on. Nothing in the settlement agreement

suggests the parties intended the non-disparagement provision to entirely

eviscerate ¶ 3(b)’s provision concerning the time permitted Defendant to issue a

corrected report. If, for example, a scheduled, automated monthly report

containing incorrect information about the second loan was due to be, and was

actually, disseminated on January 24—the day after the parties had entered into the

settlement agreement and with no ability by Defendant to stop its issuance—surely

Plaintiffs would not argue that ¶ 7’s anti-disparagement provision deprived

Defendant of the reasonable period of time to correct that was allowed by ¶ 3(b),

which was the key section of the settlement agreement and the provision that

specifically governed the time period within which Defendant was required to act.

Again, given our own knowledge of this record, we are very doubtful that

the evidence at trial will show that Defendant could not have issued a correct

report prior to February 11, when the disparaging, incorrect report was issued. Or

56
 Case: 17-10584 Date Filed: 03/25/2019 Page: 57 of 60

to put it another way, we are doubtful that it was not reasonably possible for

Defendant to insure that the information included in its regular, monthly February

11 report was accurate and in compliance with the directives of the settlement

agreement. Nevertheless, it is up to the jury to decide this question and if the jury

concludes that it was reasonably possible for Defendant to have issued a correct

report by February 11, 13 the date on which it disparaged Plaintiffs, then Plaintiffs

will have presumably established a breach of contract based on both the

disparagement and the duty-to-correct-report provisions of the settlement

agreement. If the jury concludes only that it was reasonably possible for

Defendant to have issued a correct report prior to the securing of financing by

Plaintiffs on February 23, then Plaintiffs will have established liability as to the

duty-to-correct-report claim under ¶ 3(b).

In short, we reverse the district court’s grant of summary judgment to

Defendant on Plaintiffs’ breach of contract claim and remand for proceedings

consistent with the guidance set out above.

D. Attorney’s Fees
Defendant has appealed the district court’s award of attorney’s fees to

Plaintiffs as being too high; Plaintiffs appeal, asserting that the award was too low.

13
Again, we focus on the February 11 report because Plaintiffs have not established a viable
claim for breach-of-contract damages arising after the disparaging March 11 and April 10
reports.
57
 Case: 17-10584 Date Filed: 03/25/2019 Page: 58 of 60

We review an award of attorney’s fees “for abuse of discretion; nevertheless, that

standard of review still allows us to closely scrutinize questions of law decided by

the district court in reaching a fee award.” Perez v. Wells Fargo N.A., 774 F.3d

1329, 1342 (11th Cir. 2014) (quotation omitted). An abuse of discretion review

requires us to “affirm unless we find that the district court has made a clear error of

judgment, or has applied the wrong legal standard.” United States v. Frazier, 387

F.3d 1244, 1259 (11th Cir. 2004) (en banc).

Because we have reversed in large part those portions of the district court’s

order granting summary judgment to Defendant and because the district court

based its award of attorney’s fees, in part, on the number of claims on which

Plaintiffs prevailed, we remand the attorney’s fees issue for further proceedings

consistent with this opinion. Perez, 774 F.3d at 1342.

That said, based on the record it was reviewing, we see nothing in the

district court’s analysis and fee award that constitutes an abuse of discretion as to

either party. Nevertheless, as the district court reduced Plaintiffs’ request, in part,

based on Plaintiffs’ failure to prevail on all claims—an approach suggested by

Defendant—and should Plaintiffs prevail on any additional claims on remand, we

assume that the present award of $94,000 will act as a floor when the district court

determines the appropriate attorney’s fees for Plaintiffs.

58
 Case: 17-10584 Date Filed: 03/25/2019 Page: 59 of 60

IV. CONCLUSION

For the reasons explained above, we AFFIRM in part, REVERSE in part,

and REMAND for further proceedings in accordance with this opinion, as follows.

Count I–Fair Credit Reporting Act

We affirm the district court’s grant of summary judgment to Plaintiffs on the

question of whether Defendant willfully violated this Act. But we conclude that

genuine issues of material fact exist concerning Plaintiffs’ claimed emotional

distress damages and that punitive damages are not precluded as a matter of law,

and thus we reverse the district court’s grant of summary judgment to Defendant

on those claimed damages. We remand for a jury trial Plaintiffs’ claims for

emotional distress damages and punitive damages under this statute.

Count II–Florida Consumer Collections Practices Act

We reverse the district court’s grant of summary judgment to Defendant on

this claim. Specifically, we conclude that (1) genuine issues of material fact exist

regarding whether Defendant made debt collection calls to Plaintiffs in the fall of

2013; (2) genuine issues of material fact exist regarding whether Defendant

maintained procedures reasonably adapted to avoid violations of the Florida

Consumer Collections Practices Act that would entitle Defendant to the bona fide

error defense; and (3) genuine issues of material fact exist regarding whether

59
 Case: 17-10584 Date Filed: 03/25/2019 Page: 60 of 60

Defendant’s vendor, Southwest, was acting as Defendant’s agent when it sent

lender-placed insurance letters to Plaintiffs. We remand this claim for a jury trial.

Count III–Breach of Contract

We affirm the district court’s grant of summary judgment to Defendant on

Plaintiffs’ claim for emotional distress damages based on Defendant’s breach of

the parties’ contract. We nevertheless reverse the district court’s grant of summary

judgment to Defendant on the breach-of-contract claim, concluding that a genuine

issue of material fact exists as to (1) whether Defendant breached ¶ 3(b) or ¶ 7 of

the settlement agreement and (2) whether Plaintiffs have proved damages caused

by any such breach.

Attorney’s Fees

With respect to attorney’s fees, we vacate and remand the award of

attorney’s fees to permit the district court to determine the appropriate fee award

upon the conclusion of this litigation.

60