United States Court of Appeals
For the First Circuit
No. 07-1844
OVIDIO A. DEANDRADE,
Plaintiff, Appellant,
v.
TRANS UNION LLC,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. William E. Smith, U.S. District Judge]
Before
Boudin, Chief Judge,
Torruella, Circuit Judge,
and Stahl, Senior Circuit Judge.
Christopher M. Lefebvre with whom Law Offices of Claude
Lefebvre & Sons was on brief for appellant.
Timothy P. Creech with whom Mark E. Kogan, Bruce S. Luckman,
and Kogan, Trichon & Wertheimer, P.C., were on brief for
appellee.
April 15, 2008
STAHL, Senior Circuit Judge. Plaintiff-appellant Ovidio
A. DeAndrade brought an action against Trans Union, LLC ("Trans
Union"); Equifax Information Services, LLC ("Equifax"); and KeyBank
USA ("KeyBank") in Rhode Island federal district court, alleging
various violations of the Fair Credit Reporting Act, 15 U.S.C. §§
1681-1681x ("FCRA").1 The suit followed a dispute over a loan
repayment between DeAndrade and KeyBank, and the credit bureaus'
alleged failure to reinvestigate properly and delete the disputed
debt from DeAndrade's credit report. Trans Union moved for summary
judgment, and the district court accepted the magistrate judge's
recommended decision granting the motion. DeAndrade now appeals.
Finding that the material facts are undisputed and establish no
FCRA violation, we affirm the district court's grant of summary
judgment in favor of Trans Union.
I. Background
DeAndrade purchased new windows for his home from a
company called NESCOR in July of 2001. At DeAndrade's request,
NESCOR agreed to arrange mortgage financing for the windows,
although it did not specify the identity of the lender. DeAndrade
and his wife signed documents in connection with this financing,
1
The complaint also alleged a defamation claim against
KeyBank. Trans Union is the only defendant remaining in this
action; the claims against Equifax and KeyBank were dismissed after
DeAndrade reached settlements with those parties.
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which created a lien on their home.2 NESCOR initially organized
the financing through Conseco Finance ("Conseco"). When DeAndrade
received notice of the first payment owed to Conseco, however, the
bill was greater than the amount that he had indicated to NESCOR
that he would be willing to pay. DeAndrade complained, and NESCOR
promised to remedy the situation, sending DeAndrade a check for
$11,722.30 with instructions to use the funds to pay the balance
due Conseco. Shortly thereafter, DeAndrade received an invoice
from KeyBank for approximately $121, an amount consistent with the
original terms of his agreement with NESCOR.3
DeAndrade made twenty-two monthly payments to KeyBank,
from September 2001 until June 2003. The DeAndrades had never
received copies of the loan documents, and at some point,
apparently after speaking with a consumer attorney, DeAndrade's
wife contacted KeyBank to obtain copies of the documents. The
DeAndrades were "shocked" to discover that the documents granted a
mortgage on their residence to KeyBank and that their signatures on
the documents appeared to have been forged. As a result, the
2
The record is somewhat unclear as to what documents the
DeAndrades attest to signing and when they signed them. There is
a contract with NESCOR for the installation of the windows, dated
July 21, 2001, which both DeAndrade and his wife admit to signing.
DeAndrade also recalled signing five or six documents proffered by
a NESCOR representative, some of which may have related to a loan.
His wife recalled signing blank sheets of paper at the request of
that same representative.
3
After two months, KeyBank replaced the invoices with a
payment coupon book for monthly payments in the same amount.
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DeAndrades filed suit against KeyBank in Rhode Island Superior
Court on August 20, 2003, requesting declaratory relief as to the
validity of the KeyBank mortgage.4 In that complaint, DeAndrade
alleged that he and his wife never signed any documents granting a
mortgage on their home to KeyBank and never authorized NESCOR to do
so on their behalf.
DeAndrade maintains that when he commenced the state
lawsuit, he stopped sending the monthly payments to KeyBank and
instead deposited them into an escrow account pending the
resolution of that action. KeyBank notified the three major credit
bureaus--Trans Union, Experian, and Equifax--of the alleged
delinquent payments, and the bureaus updated DeAndrade's credit
report accordingly. Through an attorney, DeAndrade then sent a
letter dated July 16, 2004 to those three credit bureaus, advising
them that the mortgage underlying the negative item reported by
KeyBank had been fraudulently obtained and urging the bureaus to
investigate the transaction.5 Attached to the letter were forty-
4
The state court complaint also lists "Barbara Andrade,"
DeAndrade's wife, as a plaintiff, but she is not named as a
plaintiff in the federal case.
5
The letter stated, in part:
My clients has [sic] alleged that the mortgage
and the promissory note that was given in
favor of Key Bank was procured by fraud. . . .
I assume that you will do an investigation on
this matter. Please do not verify the
accuracy of the Key Bank trade-line until you
receive sufficient information to satisfy you
that the signatures on both the promissory
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nine pages of documentation, including the Rhode Island Superior
Court complaint, provided in support of DeAndrade's allegations of
fraud. Experian deleted the KeyBank item after receiving
DeAndrade's letter, but Trans Union and Equifax did not.
On August 2, 2004, Trans Union sent a letter to DeAndrade
indicating receipt of his request to investigate the disputed item.
Trans Union then contacted KeyBank to verify the accuracy of the
item. Trans Union did not forward the documents it had received
from DeAndrade to KeyBank, but rather sent KeyBank an automated
dispute verification form ("ACDV"). The ACDV stated that the
customer "[d]isputes present/prev Acct Status" and believed the
account to be "not his/hers." KeyBank's response verified
DeAndrade's name, address, social security number, month and year
of birth, telephone number, and delinquent payment history. Trans
Union then sent DeAndrade a notice, dated August 11, 2004,
informing him that KeyBank had confirmed the item's accuracy and
advising him of his further rights under the FCRA. Trans Union
continued to publish the KeyBank debt on DeAndrade's credit report,
but DeAndrade did not contact Trans Union again before initiating
this lawsuit.
On December 21, 2004, DeAndrade filed suit in the United
States District Court for the District of Rhode Island, claiming
note and mortgage are valid.
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that Trans Union had violated a provision of the FCRA, 15 U.S.C. §
1681i, by "failing to conduct a lawful reinvestigation" of the
disputed debt and failing to delete the allegedly inaccurate item
from DeAndrade's credit report. DeAndrade maintained that Trans
Union's refusal to delete the disputed item harmed him by
negatively impacting his ability to obtain needed credit, such as
a home refinancing.
Trans Union moved for summary judgment, arguing that the
suit was an impermissible collateral attack on the validity of the
KeyBank loan through the FCRA, that DeAndrade had in any case
ratified the loan and therefore the information published on his
credit report was accurate, and that DeAndrade had failed to adduce
evidence of negligent or willful noncompliance with the FCRA.6
Considering the ratification issue to be dispositive, the
magistrate judge addressed that issue only and found that DeAndrade
had ratified the KeyBank debt, rendering Trans Union's report of
that debt accurate. Noting that inaccuracy is a necessary element
of an FCRA claim, the magistrate judge recommended granting Trans
Union's summary judgment motion. The district court accepted the
6
Trans Union also put forward an argument regarding
DeAndrade's "defamation" claim; however, as the magistrate judge
noted, DeAndrade did not allege a defamation claim against Trans
Union.
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magistrate judge's recommended decision and granted summary
judgment to Trans Union.7
II. Discussion
We review the district court's grant of summary judgment
de novo, with all reasonable inferences resolved in favor of the
nonmoving party. Fenton v. John Hancock Mut. Life Ins. Co., 400
F.3d 83, 87 (1st Cir. 2005). Summary judgment is appropriate where
there is no genuine issue of material fact, and the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
"A dispute is genuine if the evidence about the fact is such that
a reasonable jury could resolve the point in the favor of the non-
moving party. A fact is material if it carries with it the
potential to affect the outcome of the suit under the applicable
7
In its order adopting the magistrate judge's report and
recommendation, the district court noted that during the hearing on
plaintiff's objection to the magistrate judge's report, DeAndrade
for the first time raised an argument predicated on the Federal
Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601-1667f. DeAndrade
argued that another factor militating against ratification was
KeyBank's alleged failure to comply with TILA disclosure
requirements. The district court ruled that argument was waived
because it was not raised before the magistrate judge. See
Fireman's Ins. Co. of Newark, N.J. v. Todesca Equip. Co., 310 F.3d
32, 38 (1st Cir. 2002). While a TILA violation may have provided
grounds for rescission of the mortgage agreement, DeAndrade waived
that argument below and makes no serious effort to press it on
appeal; accordingly, we will not consider it. United States v.
Zannino, 895 F.2d 1, 17 (1st Cir. 1990) ("[I]ssues adverted to in
a perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived.").
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law." Sánchez v. Alvarado, 101 F.3d 223, 227 (1st Cir.
1996)(citations omitted).
If a consumer disputes the accuracy or completeness of
any item contained in his or her consumer report, 15 U.S.C. §
1681i(a) requires consumer reporting agencies to "conduct a
reasonable reinvestigation to determine whether the disputed
information is inaccurate."8 The magistrate judge reasoned that
"[a] necessary element of Plaintiff's [§ 1681i] claim is that the
information Trans Union reported was inaccurate." Deandrade v.
Trans Union, LLC, No. 1:04-cv-00534, slip op. at 9 (D.R.I. Nov. 29,
2006)(unpublished). This court has yet to opine on the question
whether a plaintiff must show that the disputed information
8
15 U.S.C. § 1681i(a) states, in relevant part:
(a) Reinvestigations of disputed information
(1) Reinvestigation required.--
(A) In general.--Subject to subsection (f) of this
section, if the completeness or accuracy of any
item of information contained in a consumer's file
at a consumer reporting agency is disputed by the
consumer and the consumer notifies the agency
directly, or indirectly through a reseller, of such
dispute, the agency shall, free of charge, conduct
a reasonable reinvestigation to determine whether
the disputed information is inaccurate and record
the current status of the disputed information, or
delete the item from the file in accordance with
paragraph (5), before the end of the 30-day period
beginning on the date on which the agency receives
the notice of the dispute from the consumer or
reseller.
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contained in a consumer report is inaccurate in order to prevail on
a § 1681i FCRA claim.9 The magistrate judge's recommended decision
and Trans Union's brief on appeal cite a string of cases in support
of the proposition that a showing of inaccuracy is essential. The
relevant language in those cases, however, largely addresses claims
brought under § 1681e(b), not § 1681i; indeed, in most of the cases
cited, either no § 1681i claim was asserted or the question of
accuracy is not addressed directly. See, e.g., Dalton v. Capital
Associated Indus., 257 F.3d 409, 415 (4th Cir. 2001)(holding that
"a consumer reporting agency violates § 1681e(b) if (1) the
consumer report contains inaccurate information and (2) the
reporting agency did not follow reasonable procedures to assure
maximum possible accuracy"); Spence v. TRW, 92 F.3d 380, 382 (6th
Cir. 1996)(holding that plaintiff could not prevail on his §
1681e(b) claim "without proving the information in question was
inaccurate"); Henson v. CSC Credit Servs., 29 F.3d 280, 284 (7th
Cir. 1994)(holding that "[i]n order to state a claim under 15
U.S.C. § 1681e(b), a consumer must sufficiently allege that a
9
At the hearing on plaintiff's objection to the magistrate
judge's report, counsel for DeAndrade appeared to concede the
issue, stating "I think [the magistrate judge's] approach was
correct in that once he found that the debt was ratified, it was a
valid debt, that we don't have to get to the reinvestigation
issue." However, DeAndrade asserts in his reply brief on appeal
that he has not conceded this issue, although his appellate briefs
offer no developed argumentation on the subject. Nevertheless,
because this is an important threshold question of law and the
magistrate judge's treatment of it warrants clarification, we will
discuss it here.
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credit reporting agency prepared a report containing 'inaccurate'
information")(emphasis added)(citations omitted); Wadley v. Ford
Motor Credit Co., 397 F. Supp. 2d 781, 783 (E.D. Va.
2005)(plaintiff alleged claim under § 1681s-2(a), "which prohibits
an entity from furnishing information relating to a consumer to a
consumer reporting agency if "(i) the [entity] has been notified by
the consumer . . . that specific information is inaccurate; and
(ii) the information is, in fact, inaccurate.")(emphasis in
original); Dauster v. Household Credit Servs., Inc., 396 F. Supp.
2d 663, 664 (E.D. Va. 2005)(where plaintiff had conceded
information reported by credit agency was accurate, plaintiff
failed to state claim under FCRA § 1681e(b)); see also Wantz v.
Experian Info. Solutions, 386 F.3d 829, 833-34 (7th Cir.
2004)(affirming summary judgment for defendant on § 1681i(a) claim
not on grounds that disputed information was accurate, but rather
on grounds that disputed information was never reported to
potential creditor and therefore plaintiff failed to show actual
damages). But see Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d
1151, 1160 (11th Cir. 1991)("[A] section [1681i] claim is properly
raised when a particular credit report contains a factual
deficiency or error that could have been remedied by uncovering
additional facts that provide a more accurate representation about
a particular entry.")(emphasis in original).
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It is thus clear that to prevail on a § 1681e(b) claim,
a plaintiff must demonstrate that his or her credit report sports
an actual inaccuracy. Looking at the statutory language, however,
it is not immediately obvious that § 1681e(b) and § 1681i should be
interpreted identically in this regard.10 See Kaiser Aluminum &
Chem. Corp. v. Bonjorno, 494 U.S. 827, 835 (1990)(The "starting
point for interpretation of a statute is the language of the
statute itself.")(citations omitted). 15 U.S.C. § 1681e(b) states:
"Whenever a consumer reporting agency prepares a consumer report it
shall follow reasonable procedures to assure maximum possible
accuracy of the information concerning the individual about whom
the report relates." This language is not ambiguous; it creates an
obligation on the part of the consumer reporting agency to ensure
the preparation of accurate reports independent from § 1681i's
reinvestigation requirement. Section 1681i requires consumer
reporting agencies to "reinvestigate free of charge" if "the
completeness or accuracy of any item of information contained in a
consumer's file at a consumer reporting agency is disputed by the
10
In fact, courts have been careful to draw distinctions
between the burdens imposed by § 1681e(b) and § 1681i in other
contexts. See, e.g., Cushman v. Trans Union Corp., 115 F.3d 220,
225 (3d Cir. 1997)(holding that because § 1681i's reinvestigation
requirement may mandate a more thorough investigation than that
contemplated by § 1681e(b), "[j]udgment as a matter of law, even if
appropriate on a § 1681e(b) claim, thus may not be warranted on a
§ 1681i claim"); Henson, 29 F.3d 280 at 286-87 (affirming motion to
dismiss plaintiff's § 1681e(b) claim but remanding for
consideration of plaintiff's § 1681i claim).
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consumer and the consumer notifies the agency directly of such
dispute." 15 U.S.C. § 1681i(a)(1)(A). It is thus not necessarily
apparent, on the face of the statute, that a § 1681i plaintiff must
also adduce sufficient evidence to show that the disputed
information was in fact inaccurate, as opposed to merely showing
that the plaintiff disputed its accuracy and had informed the
agency accordingly.
Nevertheless, the weight of authority in other circuits
indicates that without a showing that the reported information was
in fact inaccurate, a claim brought under § 1681i must fail. See
Dennis v. BEH-1, LLC, ___ F.3d ___, 2008 WL 795378, at *2 (9th
Cir. Mar. 27, 2008)(§ 1681i creates no duty to reinvestigate where
"the credit report accurately reflect[s] the status of the
information contained in the public records") (citing Williams v.
Colonial Bank, 826 F. Supp. 415, 418 (M.D. Ala. 1993)); Kuehling v.
Trans Union, LLC, 137 F. App'x 904, 908 (7th Cir. July 6, 2005)
(unpublished) ("Without evidence of some inaccuracy in the Trans
Union report or reinvestigation, Kuehling cannot establish that
Trans Union violated the FCRA--either § 1681e(b) or §
1681i(a)(1)(A)"); Cahlin, 936 F.2d at 1160. But see Wadley v.
Experian Info. Solutions, Inc., 241 F. App'x 132, 136 (4th Cir.
July 17, 2007)(unpublished)(vacating and remanding grant of summary
judgment to defendant credit agency where district court found
plaintiff failed to establish that credit report contained
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inaccurate information but did not address plaintiff's § 1681i
claim, and plaintiff argued that agency "had a duty to
reinvestigate the credit report . . . regardless of whether the []
report was accurate."); Dickens v. Trans Union Corp., 18 F. App'x
315, 319 (6th Cir. Aug. 23, 2001)(unpublished)("Although a showing
of inaccuracy is an essential element of a § 1681e(b) claim . . .
it is unclear whether a showing of inaccuracy is required for §
1681i liability . . . .") (citations omitted).
We find the reasoning of the majority of other appellate
courts persuasive. The FCRA is intended to protect consumers
against the compilation and dissemination of inaccurate credit
information. See Equifax v. Fed. Trade Comm'n, 678 F.2d 1047, 1048
(11th Cir. 1982)(noting stated purpose of FCRA is "to prevent
consumers from being unjustly damaged because of inaccurate or
arbitrary information in a credit report")(citations omitted); S.
Rep. No. 108-166, 108th Cong., 1st Sess. 5-6 (2003)("The driving
force behind the [1996 amendments to the FCRA] was the significant
amount of inaccurate information that was being reported by
consumer reporting agencies and the difficulties that consumers
faced getting such errors corrected."). At the very least, it is
difficult to see how a plaintiff could prevail on a claim for
damages under § 1681i without a showing that the disputed
information disclosed by the credit agency was, in fact,
inaccurate. See Wantz, 386 F.3d at 829 (holding that plaintiff
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could not demonstrate a violation of § 1681i absent evidence that
defendant credit agency "disclosed incorrect information . . . to
a third party"); cf. Salei v. Am. Exp. Travel Related Servs. Co.,
134 F.3d 372 (Table), 1997 WL 809956, at *3 (6th Cir. Dec. 19,
1997) (unpublished) ("Even if a showing of inaccuracy is not a
predicate to liability, damages would be almost impossible to prove
without it . . . ."). Thus, if there is no genuine issue as to
whether the KeyBank debt reported by Trans Union was inaccurate,
DeAndrade's claim fails as a matter of law.
The magistrate judge reasoned that the KeyBank item
reported by Trans Union was accurate because DeAndrade ratified the
KeyBank loan, and the district court accepted the magistrate
judge's recommended decision. However, "[w]e are not committed to
the district court's reasoning, but, rather, may affirm its order
on any independent ground made apparent by the record." United
States v. Cabrera-Polo, 376 F.3d 29, 31 (1st Cir. 2004); see also
InterGen N.V. v. Grina, 344 F.3d 134, 141 (1st Cir. 2003).
To determine whether a consumer has identified a factual
inaccuracy on his or her credit report that would activate §
1681i's reinvestigation requirement, "[t]he decisive inquiry" is
whether the defendant credit bureau could have uncovered the
inaccuracy "if it had reasonably reinvestigated the matter."
Cushman, 115 F.3d at 226 (citations omitted). The KeyBank debt
reported by Trans Union does not fall under this rubric. Here,
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there is no dispute that DeAndrade received windows financed by a
mortgage on his home; what DeAndrade is attacking is the mortgage's
validity. Whether the mortgage is valid turns on questions that
can only be resolved by a court of law, such as whether DeAndrade
ratified the loan. This is not a factual inaccuracy that could
have been uncovered by a reasonable reinvestigation, but rather a
legal issue that a credit agency such as Trans Union is neither
qualified nor obligated to resolve under the FCRA. See Cahlin, 936
F.2d at 1160 ("No reasonable reinvestigation on the part [of the
credit agency] could have uncovered an inaccuracy in Cahlin's
report because there was never any factual deficiency in the
report.").
We therefore find it unnecessary to reach the question of
ratification. The information reported by Trans Union was accurate
not because DeAndrade had ratified the loan (although that may also
be true), but because it did not state any factual deficiency that
could have been resolved by a reasonable reinvestigation conducted
by the credit bureau. KeyBank did in fact have documentation
granting it a mortgage on the residence of one DeAndrade who was in
fact the same DeAndrade that had been making the loan payments and
is the plaintiff in this case. Determining whether DeAndrade was
entitled to stop making those payments is a question for a court to
resolve in a suit against KeyBank--and DeAndrade did file a state
suit against KeyBank--not a job imposed upon consumer reporting
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agencies by the FCRA. If a court had ruled the mortgage invalid
and Trans Union had continued to report it as a valid debt, then
DeAndrade would have grounds for a potential FCRA claim. In
essence, DeAndrade has crossed the line between alleging a factual
deficiency that Trans Union was obliged to investigate pursuant to
the FCRA and launching an impermissible collateral attack against
a lender by bringing an FCRA claim against a consumer reporting
agency. See Wadley, 396 F. Supp. 2d at 679-680 ("The FCRA does not
provide a cause of action to collaterally attack an accurate credit
report."); Williams, 826 F. Supp. at 418 ("A credit reporting
agency has no duty, as a part of its reinvestigation, to go behind
public records to check for accuracy or completeness when a
consumer is essentially collaterally attacking the underlying
credit information."). The Williams court noted that the FCRA
provides an alternative remedy for consumers in cases such as this:
pursuant to § 1681i(c), they may submit a statement detailing their
version of the dispute to be included in their credit report. Id.
It is no fault of Trans Union that DeAndrade apparently chose not
to avail himself of that option.
III. Conclusion
For the foregoing reasons, we affirm the summary judgment
order of the district court.
Affirmed.
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