919 F.3d 1288
11th Cir.2019Background
- Plaintiffs (Johnnie and Adrian Marchisio) deeded their house to Carrington in 2009 as part of a foreclosure settlement that required Carrington to report the two mortgages as discharged (zero balance). Carrington repeatedly misreported the second loan as delinquent and later as having a $34,985 balloon payment.
- Plaintiffs sued in 2012 (First Action); they settled in January 2013: Carrington agreed to pay $125,000 and to report the second loan as zero-balanced “as soon as reasonably possible, but in any case within 90 days.”
- Carrington continued to send automated negative reports in Feb–Apr 2013, missed the 90-day deadline, then issued a late correction that nevertheless added an erroneous future balloon payment entry.
- Plaintiffs financed two vehicles on Feb 23, 2013 and allege they paid larger down payments and higher interest because of Carrington’s false reporting. After Plaintiffs disputed the entry with CRAs in Nov 2013, Carrington’s investigator (relying on incomplete internal databases) verified the inaccurate balloon entry; Carrington’s insurance vendor also sent lender-placed insurance letters charging Plaintiffs for property they no longer owned.
- Plaintiffs filed a second federal suit (Jan 2014) asserting FCRA violations, Florida Collections Act violations, and breach of the settlement. The district court granted mixed summary judgment results; the Eleventh Circuit affirmed some rulings and reversed others and remanded for trial on multiple issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Carrington conducted a reasonable investigation and acted willfully under FCRA after CRAs forwarded Plaintiffs’ dispute | Carrington failed to reasonably investigate (ignored settlement history); conduct was willful/reckless | Investigator’s verification was an isolated human/database error promptly corrected | Court affirmed unreasonable investigation and willfulness; remanded emotional distress and punitive damages issues for trial |
| Entitlement to emotional distress and punitive damages under FCRA | Emotional distress was exacerbated by the November 2013 verification and lender-placed insurance; punitive damages available for willful (reckless) conduct | District court found no causal link and denied punitive damages sua sponte as requiring intentional misconduct | Reversed summary judgment denying emotional distress and punitive damages; factual issues for jury |
| Whether automated calls and lender-placed insurance letters violated the Florida Collections Act (including communications after representation) | Calls occurred; insurance letters were improper attempts to collect debt known to be unlegitimate and some letters were sent after counsel retained | No corroborating call records; bona fide error defense applies to insurance letters; vendor (Southwest) not agent | Reversed summary judgment for Carrington: genuine issues exist about calls, bona fide error procedures, agency, and actual knowledge; remanded for trial |
| Breach of settlement agreement and damages (¶3(b) reporting and ¶7 non-disparagement) | Carrington breached by failing to report ‘as soon as reasonably possible’ (and missed 90-day deadline); damages include higher auto financing costs | Carrington argues 90-day window sufficed and tardy correction caused no contract damages; emotional-distress damages not recoverable on contract claim | Reversed grant for defendant on breach claim; emotional-distress damages on contract barred under Florida law, but disputed economic damages (auto financing) and whether reporting could reasonably have been corrected before Feb 23 are factual issues for trial |
Key Cases Cited
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (willfulness under FCRA includes reckless disregard)
- Hinkle v. Midland Credit Mgmt., Inc., 827 F.3d 1295 (11th Cir. 2016) (reasonableness is touchstone for furnisher investigation under §1681s-2(b))
- Felts v. Wells Fargo Bank, N.A., 893 F.3d 1305 (11th Cir. 2018) (what constitutes reasonable investigation depends on evidence the furnisher had)
- Owen v. I.C. Sys., Inc., 629 F.3d 1263 (11th Cir. 2011) (procedures prong of bona fide error defense under FDCPA/Florida law)
- Edwards v. Niagara Credit Sols., Inc., 584 F.3d 1350 (11th Cir. 2009) (elements of bona fide error defense)
- Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, 559 U.S. 573 (2010) (statutory requirement that collectors maintain procedures reasonably adapted to avoid errors)
- Nagle v. Experian Info. Sols., Inc., 297 F.3d 1305 (11th Cir. 2002) (plaintiff must show damages causally linked to FCRA violation)