Longman v. Wachovia Bank, N.A., 2011 U.S. Dist. LEXIS 105450 (D. Conn. Sep. 16, 2011)
Facts: Plaintiff sued Wachovia alleging violations of the FCRA and state law defamation related to Wachovia's reporting of Plaintiff's lot loan note. Pl aintiff, a lot developer, financed a land purchase with a three-year balloon lot note with Wachovia. At the end of the three-year term Plaintiff informed Wachovia that he was unable to continue making monthly interest payments or the balloon payment and offered to continue to make payments if Wachovia would reduce the interest rate and lengthen the amortization period. Wachovia rejected Plaintiff's offer. Plaintiff then attempted to obtain an agreement with Wachovia for a short sale on the property, however the parties were unable to agree on the short sale terms. Although Plaintiff failed to pay the balloon obligation on the note, he continued to make monthly interest payments. Plaintiff then filed suit against Wachovia. After suit was filed Plaintiff began disputing Wachovia's negative reporting of the account with the CRAs. In response to each dispute Wachovia verified that the account was accurately reported on Plaintiff's credit file. Wachovia then moved for summary judgment on Plaintiff's claims. The Court held that: 1) the FCRA preempted Plaintiff's defamation claim; 2) he did not have private right of action under § 1681s-2; and 3) his complaint did not assert § 1681s-2(b) claim.
- Preemption. Section 1681t(b)(1)(F) expressly preempts the application of state law with respect to matters regulated under § 1681s-2. Therefore, because Plaintiff's claim that Wachovia reported false information to the CRAs asserts a violation of § 1681s-2(a), the Court determined that Plaintiff's defamation claim would be preempted by § 1681t(b)(1)(F).
- Preemption. Plaintiff argued that despite the language in § 1681t(b)(1)(F), § 1681h(e) permits recovery for state law defamation. Section 1681h(e) provides that: no consumer may bring any action. . . in the nature of defamation. . . with respect to the reporting of any information against any CRA, any user of information, or any furnisher, based on information disclosed pursuant to 1681g, 1681h, or 1681m of this title or based on information disclosed by a user of consumer report to or for a consumer against whom the user has taken adverse action based in whole or in part on the report, except as to false information furnished with malice or willful intent to injure such consumer. Plaintiff argued that because he alleged that Wachovia had intentionally reported false information to the CRAs his allegations satisfied the malice or willful intent provision in § 1681h(e).
- Preemption. Section 1681h(e) only applies to CRAs and those who take adverse actions against consumers based on consumer reports. Consequently, § 1681h(e) only applies where a plaintiff brings a claim against a CRA or against someone who has taken adverse action based on a consumer report. Because Plaintiff did not assert that Wachovia was a CRA or that Wachovia took action against him on the basis of a consumer report, the Court determined that Plaintiff defamation claim was preempted.
- Private Right of Action. The Court found that Plaintiff's § 1681s-2(a) claim failed as a matter of law because there is no private right of action under that section. Instead, federal agencies, federal officials, and specified state officials have exclusive authority to enforce § 1681s-2(a).
- Reasonable Investigation. Section 1681s-2(b) requires a furnisher of credit information, on receiving notice from a CRA that a consumer has disputed a debt, to investigate the dispute and to report the results of the investigation to the CRA. Here the Court granted summary judgment to Wachovia because Plaintiff never asserted claims related to his disputes to the CRAs in his Complaint. The complaint was filed prior to Plaintiff disputing the account with the CRAs and the Court was not inclined to grant Plaintiff leave to amend his complaint as discovery had closed. Wachovia had filed its motion for summary judgment and Plaintiff was put on notice of the deficiency by Wachovia when it filed its answer to the complaint.
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