1681i[a][5]:Zahran v. Trans Union

David A. Szwak

1681i[a][5]:Zahran v. Trans Union

Postby David A. Szwak » Sun Nov 13, 2005 9:18 am

Zahran v. Transunion Corp.,
Not Reported in F.Supp.2d, 2003 WL 1733561, N.D.Ill., Mar 31, 2003

This case is now before the Court upon defendant Trans Union's motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth below, defendant's motion for summary judgment is granted as to all Counts of the complaint.

Pursuant to Local Rule 56, all facts contained herein are either undisputed and supported by accompanying documents or deemed admitted through a failure to properly respond to the allegation by the opposing party. [FN1]

FN1. In Malec v. Sanford, 191 F.R.D. 581 (N.D.Ill.2000), the Seventh Circuit discussed the proper method of establishing facts through the record--in accordance with the Federal Rules of Civil Procedure, the Local Rules, and the common law. Malec, 191 F.R.D. at 582-84. Many of the individually numbered factual assertions set forth by the plaintiffs do not conform with such requirements. Several paragraphs do not cite supporting documents (e.g. ¶¶ 1-3, 5, 11, 20, 25, 26, 34, 37, 48, 101, 105, 113, 123, 129, 148, 154, 156, 160-62, 174, 178-81, 199, 202, 215-18, 234, 238, 241, 242, 245, and 254). An equal number are irrelevant to the claims of the complaint (e.g. ¶¶ 3, 9, 18, 20, 21, 22, 24, 28, 29, 30, 31, 43, 44, 46, 47, 52, 84, 86, 94, 97-101, 125, 127, 139, 146, 149, 163-70, 172-75, 177, 203-08, 212, 222-25, 230-33, 255, 256, and [sic] 248-49). Other properly cited paragraphs were considered in reaching the determination of the Court.

Trans Union is a consumer reporting agency ("CRA") as that term is defined in the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681a. Plaintiffs Robin and Karen Zahran ("Zahrans"), who live in Oak Brook, Illinois, own approximately one thousand acres of property in Denmark, Wisconsin, including parcels used for farming as well as rental properties. Over the course of several years, the Zahrans have been involved in a number of lawsuits. A variety of tax liens and releases of tax liens have been recorded in their names in Illinois. The Zahrans have also been involved in numerous disputes with various creditors.
Beginning in February, 2000, the Zahrans commenced a series of disputes regarding information contained in their Trans Union credit reports. At that time, their reports included tax liens, civil judgments, a foreclosure judgment, a paid collection account, and accounts showing late payments to various creditors. Trans Union timely investigated each of the Zahrans claims and corrected or voluntarily changed a number of them. Not all of the Zahrans disputed accounts are the subject of this action. Discovery revealed that most of the disputed adverse credit references were accurately reported at all times by Trans Union. The errors in reporting, if any, were attributable to the errors of third parties such as the Court of Brown County.
The following items are the only ones in which some of the account information was not correct, as originally reported by Trans Union:

Civil Judgment, docket Accurate but for judgment ¶¶ 19-22
# 94LM3466 (El-Masry amount: $18,956 listed
Judgment instead of the correct amount
of $11,974
Civil Judgment, docket This judgment was entered, ¶¶ 23, 24
# 98C1221 (Wegner but the later reports did not
Implement Judgment) show that it had been vacated
on 9/10/1998
Denmark State Bank Accurate as to all terms ¶¶ 28-36
# 1505917915 except for the monthly
payment amount

The Wegner judgment:
On April 6, 1998, a default judgment against Robin Zahran and in favor of Wegner Implement, Inc., was entered in Small Claims Court in Brown County, Wisconsin. This judgment was reported to Trans Union. Subsequently, the judgment was vacated on September 1, 1998 on the Zahrans' motion. The order vacating the judgment was not reported to Trans Union by the court or the Zahrans. As a result, prior to the Zahrans' dispute of this item in February, 2000, Trans Union did not report that this judgment had been vacated. Though Trans Union, which obtains public record information from third party vendors, requests information on vacated judgments, it did not receive notice of the September 1998 order vacating the Wegner judgment until February 2000. (Trans Union's Statement of Facts, hereinafter "Facts," ¶ 75.)
The El-Masry judgment:
*2 In 1998, Robin Zahran was a defendant and counter-plaintiff in a lawsuit filed by Youseff El-Masry in the Circuit Court of Kane County, Illinois (Case No. 94 LM 3466). A judgment in favor of El-Masry, for $11,974.47, was entered against Robin Zahran on March 23, 1998. Zahran's 1999 appeal of some order was ultimately dismissed for lack of appellate jurisdiction. Robin Zahran never paid the judgment. Though the Zahrans claimed that this judgment should not be reported at all, as it was not final, they are incorrect and the only inaccuracy in reporting was that the judgment amount was incorrectly listed as $18,956. This was changed to reflect the correct amount within a short time. Otherwise, all information related to this item was at all times accurate.
Denmark State Bank:
Denmark State Bank held a series of mortgage notes on a portion of Zahrans' Wisconsin property. At various times Denmark State Bank reported that the loan terms called for monthly payments of $1,100. In fact, during the early years of this loan the Zahrans were required to pay $1,100 per month. At some point, the term of this loan was converted to a single annual payment. Nonetheless, Denmark State Bank or its computer services vendor (Metavante) periodically reinserted $1,100 as an amount in the field reporting monthly payment terms on the computer tapes sent to Trans Union. Denmark State Bank reported the $1,100 monthly payment term concerning the loan to Trans Union in 1997, 1998, 1999, and 2000. Apart from this term, all other information concerning this account was accurate as reported.
Plaintiffs filed this action in the Circuit Court of Cook County on February 9, 2001, and it was removed to the United States District Court for the Northern District of Illinois on March 9, 2001. The Defendant filed the current motion for summary judgment of the complaint in its entirety on April 26, 2002.
The Fair Credit Reporting Act ("FCRA")
The FCRA was enacted to ensure "consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information." 15 U.S.C. 1681(b). The Zahrans assert that Trans Union violated §§ 1681e, 1681i, & 1681n of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. Section 1681e(b) provides that "[w]henever 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." 15 U.S.C. § 1681e(b). Section 1681i(a)(5) provides that "[a] consumer reporting agency [must] maintain reasonable procedures designed to prevent the reappearance in a consumer's file, and in consumer reports on the consumer, of information that is deleted...." 15 U.S.C. § 1681i(a)(5)(C). Section 1681i(a)(1)(A) provides that a consumer reporting agency must reinvestigate any item disputed by the consumer. 15 U.S.C. § 1681i(a)(1)(A).

Neither party disputes that Trans Union is a "consumer reporting agency" as defined under 15 U.S.C. § 1681a(f), that the credit reports produced were "consumer reports" under 15 U.S.C. § 1681a(d), and that the Zahrans are "consumers" under 15 U.S.C. § 1681a(c). Although some of the disputed items appearing on the Zahrans' report pertain to business ventures, business ventures on which the consumer is personally liable are rightfully included on a consumer credit report under the FCRA. 15 U.S.C. § 1681b(a)(1)(F)(i); see Salei v. American Express Travel Related Services Co., 134 F.3d 372, 373 (6th Cir.1997). Additionally, the FCRA does not concern purely commercial dealings, as they are not of a consumer nature. [FN2] Podell v. Citicorp Diners Club, Inc., 914 F.Supp. 1025, 1036 (S.D.N.Y.1996).

FN2. It may be possible to determine that some of the reports in question are not governed by the FCRA because they were utilized for commercial purposes concerning the Zahrans' farming activities. Reprenentative Sullivan, a sponsor of the FCRA, stated that the FCRA "does not apply to reports utilized for business, commercial, or professional purposes." 116 Cong. Rec. 36,572 (1972). Likewise, the Federal Trade Commission (FTC) has concluded that "[t]he FCRA does not cover reports furnished for transactions that consumers enter into primarily for connection with businesses they operate." 16 C.F .R. Part 600 App., at 387 (1995). That position however appears to conflict with the way that courts have defined a consumer report. Comeaux v. Brown & Williamson
Tobacco Co., 915 F.2d 1264, 1273-75 (9th Cir.1990) ("If a consumer reporting agency provides a report based on a reasonable expectation that the report will be put to a use permissible under the FCRA, then that report is a 'consumer report' under the FCRA" regardless of whether the report is actually used for a business purpose); Ippolito v. WNS, Inc., 864 F.2d 440, 453 (7th Cir.1988) ("even if a report is used or expected to be used for a non-consumer purpose, it may still fall within the definition of a consumer report if it contains information that was originally collected by a consumer reporting agency with the expectation that it would be used for a consumer purpose"). Because this Court concludes that the defendants did not violate the FCRA, the Court does not need to further explore the issue of whether all reports are governed by the FCRA.

A private right of action for willful and negligent non-compliance with the FCRA may result in the recovery of actual damages, attorney's fees and costs, and punitive damages is provided under 15 U.S.C. §§ 1681n and 1681o. Casella v. Equifax Credit Information Services, 56 F.3d 469, 474 (2d Cir.1995).
In order to state a claim under the FCRA, the plaintiff must demonstrate: (1) inaccurate information was included in their consumer credit reports; (2) the inaccuracy was due to the consumer reporting agency's failure to follow reasonable procedures to assure maximum possible accuracy; (3) the consumer suffered injury; and (4) the injury was caused by the inclusion of the inaccurate entry. Philbin v. Trans Union Corp., 101 F.3d 957, 963 (3d Cir.1996). An additional source of liability is imposed when a credit report contains a factual deficiency or error that could have been remedied by reinvestigation. Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151, 1160 (11th Cir.1991); Gaudreau v. Trans Union Corp ., No. 00 C 50356, 2001 WL 936122, at *2 (N.D.Ill. Aug. 17, 2001). A negligent violation of §§ 1681i or 1681e(b) subjects the credit reporting agency to liability for actual damages. 15 U.S.C. § 1681o; Pinner v. Schmidt, 805 F.2d 1258, 1262 (5th Cir.1986). A knowing or willful violation subjects the credit reporting agency to liability for punitive damages. 15 U.S.C. § 1681n.

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