Aclys International v. Equifax
438 F. App'x 689
10th Cir.2011Background
- Aclys sued Equifax in Utah state court for negligence and negligent misrepresentation arising from Equifax's failure to report two judgments about borrowers Aclys lent to.
- Aclys had no direct contract with Equifax; Aclys relied on a credit report prepared by Equifax via FCC's investigation as the basis for extending credit.
- Judgments against the borrowers existed in California and Wisconsin at the time of the report and were not disclosed by Equifax.
- Aclys loaned over $5,000,000 to the borrowers who defaulted and fled, resulting in significant losses to Aclys.
- Equifax removed the case to federal court and moved for judgment on the pleadings, arguing the economic loss doctrine bars the tort claims.
- The district court granted the motion, holding Aclys’ claims were barred by the economic loss rule.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the economic loss doctrine bars Aclys' tort claims when no direct contract exists | Aclys asserts independent duty exists; doctrine does not apply. | Aclys' damages are purely economic and arise from contract-related duties; doctrine bars relief. | Yes, the economic loss doctrine bars the tort claims. |
| Whether Equifax owed an independent duty of care to Aclys for negligent misrepresentation | Utah law recognizes independent duties allowing tort claims. | No independent duty is shown outside contractual relationships; no duty to disclose in this context. | No independent duty was shown; no negligent misrepresentation claim permits recovery. |
| Whether Utah law recognizes a duty to disclose that would create an independent tort claim against a credit-reporting agency for omissions | There should be a duty to disclose known judgments. | Existing law imposes no such duty on Equifax in this context. | Utah law does not recognize such a duty here; claim fails. |
Key Cases Cited
- Sunridge Development Corp. v. RB & G Eng’g, Inc., 230 P.3d 1000 (Utah 2010) (outlines twofold purpose of the economic loss rule)
- Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 221 P.3d 234 (Utah 2009) (duty inquiry: independent duties determine applicability of ELR)
- Hermansen v. Tasulis, 48 P.3d 235 (Utah 2002) (negligent misrepresentation requires a duty to disclose)
- Sugarhouse Financial Co. v. Anderson, 610 P.2d 1369 (Utah 1980) (misrepresentation may be by omission where there is a duty to speak)
- Smith v. Frandsen, 94 P.3d 919 (Utah 2004) (duty to disclose is a necessary element of negligent misrepresentation)
- Price-Orem Inv. Co. v. Rollins, Brown, & Gunnell, Inc., 713 P.2d 55 (Utah 1986) (recognizes fault for faulty professional services within duties of care)
- Milliner v. Elmer Fox & Co., 529 P.2d 806 (Utah 1974) (accountant liability to third parties discussed)
- Grynberg v. Questar Pipeline Co., 70 P.3d 1 (Utah 2003) (context of Utah choice-of-law and duties in ELR analysis)
- Kokins v. Teleflex, Inc., 621 F.3d 1290 (10th Cir. 2010) (policy considerations in duty and economic loss inquiry)