Lauren Lloyd v. Midland Funding, LLC
639 F. App'x 301
6th Cir.2016Background
- In 2010 Lloyd settled a $7,288.72 credit-card debt with Midland for $4,000; Midland’s counsel sent a letter saying it would “cease all legal actions.”
- Midland did not file a dismissal in the pending state collection suit; the state court entered a default judgment against Lloyd on October 6, 2010.
- Lloyd discovered the judgment on her credit report when applying for a loan in 2012; Midland moved to set aside the judgment in August 2012 and the court removed it in October 2012.
- Credit bureaus removed the judgment within six months after Midland’s corrective action; Lloyd notified Experian, Equifax, and TransUnion.
- Lloyd sued Midland in state court (removed to federal court) under the FCRA, FDCPA, and Tennessee state-law claims (abuse of process, fraud, breach of contract), alleging credit-score harm and higher interest costs.
- The district court granted Midland summary judgment on all claims; the Sixth Circuit affirmed in part and reversed in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Midland violated FCRA by failing to investigate/reporting the judgment | Midland caused the inaccurate reporting and failed to investigate after notice | Midland did not furnish judgment information to CRAs and thus had no §1681s-2(b) duty | Midland not a furnisher of the judgment; no FCRA liability (affirmed) |
| Whether FDCPA claims are timely | Lloyd learned of the judgment in Feb 2012 and sued within one year under discovery rule | FDCPA has a one-year statute; judgment entered Oct 2010, lawsuit filed Sept 2012; no diligent discovery earlier | FDCPA claims time-barred; even with a discovery rule Lloyd lacked reasonable diligence (affirmed) |
| Whether state-law claims are preempted by FCRA | Lloyd’s fraud and breach claims arise from Midland’s failure to dismiss case and resulting judgment | Midland argued those claims relate to furnisher duties and are preempted by FCRA | Fraud and breach are not preempted because they do not depend on furnisher duties; preemption did not apply (reversed re: breach; fraud fails on merits) |
| Whether breach-of-contract (and fraud) survive summary judgment | Midland breached settlement by not dismissing suit, causing damages to Lloyd | Midland treated account as paid, corrected mistake when notified; no fraudulent intent; minimal damages shown | Fraud fails (no evidence of knowing falsehood). Breach-of-contract survives summary judgment as triable (damages question remanded) |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary-judgment admissibility standard)
- Int’l Union v. Cummins, 434 F.3d 478 (6th Cir. 2006) (appellate review of summary judgment)
- Brazos River Auth. v. GE Ionics, Inc., 469 F.3d 416 (Rule 30(b)(6) corporate-deposition principles)
- PPM Fin., Inc. v. Norandal USA, Inc., 392 F.3d 889 (Rule 30(b)(6) witness scope)
- Shazor v. Prof’l Transit Mgmt., Ltd., 744 F.3d 948 (summary-judgment evidence need not be trial-admissible form)
- Sevier v. Turner, 742 F.2d 262 (discovery-rule reasonable-diligence standard)
- Ruth v. Unifund CCR Partners, 604 F.3d 908 (diligence requirement for tolling discovery-rule)
- Hodge v. Craig, 382 S.W.3d 325 (Tenn. fraud elements)
- Life Care Ctrs. of Am., Inc. v. Charles Town Assocs., 79 F.3d 496 (Tenn. breach-of-contract elements)