McKeown v. Sears Roebuck & Co.
335 F.Supp.2d 917
Jul 28, 2004
Defendants CSC and Equifax argue alternatively that they are entitled to summary judgment because plaintiff has failed to show that he suffered any actual damages as a result of any credit history report either defendant issued. Actual damages for Fair Credit Reporting Act violations may include out-of-pocket losses, damages for injury to reputation and creditworthiness and for humiliation or mental distress. Cousin v. Trans Union Corp., 246 F.3d 359, 376 (5th Cir.2001). In order to obtain an award of "actual damages," a plaintiff must present evidence showing a "causal relation between the violation of the statute and the loss of credit, or some other harm ...." Crabill, 259 F.3d at 664. Defendants CSC and Equifax argue that plaintiff was able to secure a mortgage for the property he sought to purchase and that the lender never saw a credit report that either had issued.
Plaintiff argues that he was forced to accept a five-year adjustable-rate loan rather than the thirty-year fixed-rate mortgage that he sought because the five-year loan could be obtained by using the single credit history from Experian, the single credit reporting agency that had not reported plaintiff to be deceased in the information it provided Factual Data. (The notation of deceased on the Sears tradeline on the merged credit report from Factual Data came from defendant Trans Union and not from defendants CSC or Equifax. However, defendant Equifax did report to defendant Factual Data that plaintiff was deceased in place of providing a credit score for him. Factual Data noted this on its report.)
Plaintiff maintains that he had no choice but to accept the five-year mortgage; however, his evidence belies this assertion. According to plaintiff's wife, "the best thirty-year rate that was available to us was at 5.625%. [Plaintiff] declined that option." Joan McKeown Aff., dkt. # 65, ¶ 22. In addition, she testified that the rates for the *932 loan plaintiff accepted instead were 4.125% for five years, followed by then current interest rates not to exceed 9.125%. Plaintiff has not pointed to any evidence showing what kind of interest rate he might have obtained had it not been for the notation of deceased. In support of his proposed finding of fact that he was "forced to close his mortgage on less favorable terms because he was limited to those types of loans that could be obtained with a credit report from only Experian," plaintiff cites the affidavit of his mortgage broker, Thomas Duffy, in which Duffy states only that the terms of the adjustable rates loan were "quite different" from those of a traditional thirty-year loan. PPFOF, dkt. # 55, at 7, ¶ 58 (citing Duffy Aff., dkt. # 57, ¶¶ 17-19). Plaintiff has not adduced any evidence from which a jury could approximate the value of the risk. It is only speculation that market rates may be less favorable in five years. Because plaintiff has failed to show that he could support his assertion that his mortgage terms are less favorable than those he would have been able to obtain had it not been for the deceased notations, he will not be allowed to seek damages on this basis.
 Plaintiff contends that even if he cannot prove that he obtained less favorable loan terms, he should be able to recover actual damages for his mental distress, loss of sleep, nervousness and injury to reputation, work, family and sense of well being. "[A] denial of credit is not a necessary prerequisite for a § 1681e(b) claim"; damages for emotional distress may also be compensable. Kronstedt v. Equifax, CSC, 2001 WL 34124783, at *11 (W.D.Wis.2001). See also Cousin, 246 F.3d at 369 n. 15; Guimond v. Trans Union Credit Information Co., 45 F.3d 1329, 1333 (9th Cir.1995).
  First, defendant CSC contends that plaintiff's evidence of emotional distress is conclusory and therefore, insufficient. I disagree. In order to survive summary judgment on an emotional distress claim, a plaintiff must submit evidence that " 'reasonably and sufficiently explains the circumstance of his injury and does not resort to mere conclusory statements.' " Kronstedt, 2001 WL 34124783, at *12 (quoting United States v. Balistrieri, 981 F.2d 916, 932 (7th Cir.1992)). Plaintiff has submitted an affidavit from his wife, chronicling a change in plaintiff's behavior (subdued, stunned and distracted behavior), physical manifestations (flushing), restless sleeping between the time he learned of the notation of deceased until the mortgage closed and anxiety about the possibility of other credit errors, such as having a credit card denied in front of a business associate. PPFOF, dkt. # 55, at 10, ¶ 78 (citing Joan McKeown Aff., dkt. # 64, ¶¶ 11-18, 19-26, 45-50 and 63-75). This evidence is far more specific than the testimony that other courts have held to be too conclusory, e.g., Cousin, 246 F.3d at 370-71 (plaintiff testified that he felt "very upset [and] angry"); Schmit v. Trans Union LLC, 2004 WL 785098, at *4 (N.D.Ill. April 12, 2004) (blank assertion of emotional distress and no evidence linking it to erroneous report), and in fact, is more specific than evidence found to be sufficiently particular, e.g., Kronstedt, 2001 WL 34124783, at *12 (description of depth of frustration). In making its argument, defendant CSC relies on case law setting out standards for evaluating evidence " 'when the injured party provides the sole evidence of mental distress.' " Dft. CSC's Br., dkt. # 36, at 12-14 (quoting Biggs v. Village of Dupo, 892 F.2d 1298, 1304 (7th Cir.1990)). Notably, defendant CSC does not address the testimony of plaintiff's wife to which plaintiff referred in his proposed findings of fact relating to his alleged mental distress.
*933   Next, defendant CSC argues that damages for emotional distress under the act " 'must result from the publication of the inaccurate information to a third party.' " Id. at 10 (quoting Sarver v. Experian Information Solutions, Inc., 299 F.Supp.2d 875, 877 (N.D.Ill.2004)). Defendant relies on the holding in Casella v. Equifax Credit Information Services, 56 F.3d 469 (2d Cir.1995). In rejecting the testimony of the plaintiff and his companion regarding the apprehension and anxiety that the plaintiff felt over the prospect of dealing with the erroneous report, the court held that "a plaintiff can [not] recover for pain and suffering when he has failed to show that any creditor or other person ever learned of the derogatory information from a credit reporting agency." Id. at 475. The court derived its rule from the requirement that a plaintiff show that the defendant's actions caused the injury. To the extent that this rule relates to emotional distress caused by the embarrassment, I agree with it. A defendant cannot be held liable for the embarrassment a party suffers as a result of others learning of the derogatory information unless that defendant is responsible for their finding out. (For example, plaintiff cannot recover for the embarrassment he alleges to have suffered because a number of people in his community knew about the situation; they learned of the deceased notation from a television story that plaintiff's wife instigated and not from any defendant.)
However, it makes no sense to apply this requirement to other types of emotional distress. A consumer may suffer distress if he has difficulty in correcting his credit history or trouble managing his finances until his history is corrected; this is true regardless whether his erroneous information was actually published to a third party. The holding in Casella implies that recoverable emotional distress is limited to that caused by embarrassment or humiliation, id. at 475 (party cannot recover emotional distress damages "simply because he knew of an inaccurate and potentially damaging item in his credit report"; rejecting testimony about depression and anxiety suffered as a result of dealing with error), but the court provided no explanation for such a limitation. Other courts have routinely assumed or suggested that emotional distress damages are available when a party experiences a significant frustration and anxiety brought on by failed attempts to have the errors corrected. See, e.g., Cousin, 246 F.3d at 369 n. 15 (suggesting that recovery is available for mental distress other than embarrassment); Guimond v. Trans Union Credit Information Co., 45 F.3d 1329, 1332 (9th Cir.1995) (emotional distress "resulting from the incorrect information in her credit report"; no indication of publication to third party); Stevenson v. TRW, Inc., 987 F.2d 288, 297 (5th Cir.1993) (emotional distress resulting from shock of learning of bad credit record); Kronstedt, 2001 WL 34124783, at *12 (frustration over repeated failed attempts to have error corrected). I can think of no reason for allowing consumers to recover for the humiliation and embarrassment of having bankers and mortgage brokers learn of the derogatory credit information while barring them from recovering for the anxiety and stress they may encounter in coping with the error.
 In this case, plaintiff relies on the testimony of his wife regarding the frustration and anxiety he suffered for fear that he would lose the property he wished to purchase and that the error might cause other credit related problems. Although it is difficult to imagine that plaintiff suffered much emotional distress as a result of the notation of deceased reported by defendants CSC and Equifax when only a week elapsed between the time that plaintiff learned that he had been reported as deceased *934 and defendant CSC informed him that it had deleted the Sears tradeline, "evaluation of plaintiff's emotional distress claim is a task best left to the jury." Kronstedt, 2001 WL 34124783, at *13.
(Of course, in this case, the deceased notation was published to a third party: Duffy. This third party publication exemplifies the absurdity of applying the rule that the erroneous information must be published to a third party on claims of mental distress not arising out of embarrassment. None of plaintiff's stress is derived from the fact that Duffy knew of the notation; if anything, Duffy alleviated the stress by quickly finding an alternative loan to finance plaintiff's purchase. Even if the erroneous notation had been published broadly, it is difficult to conceive how this would have lead to emotional distress; anyone plaintiff may have encountered would have known that he was not deceased and therefore, that the notation was in error.)
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