969 F.3d 95
2d Cir.2020Background
- In 2004 Appellants Sprague and Zeigler obtained mortgages from Salisbury; foreclosure proceedings culminated in a judgment and a stipulated $40,000 deficiency judgment in 2014.
- In February 2016 Sprague ordered a credit report that inaccurately showed the mortgage as still open and delinquent for over two years.
- Sprague directly notified Salisbury of the error; Salisbury acknowledged the error on March 7, 2016 and said it would correct the report and notify credit reporting agencies, but the record shows correction did not occur until November 30, 2016.
- Appellants sued Salisbury in 2018 alleging FCRA violations for failing to reasonably reinvestigate and correct inaccurate information; the amended complaint did not allege that Appellants notified a consumer reporting agency (CRA) or that a CRA notified Salisbury.
- The district court dismissed the amended complaint with prejudice, concluding no private cause of action under §1681s–2(a) and that §1681s–2(b) duties are triggered only when a furnisher receives notice from a CRA; the Second Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a furnisher's §1681s–2(b) duties are triggered by direct consumer notice | Sprague argued direct notice to Salisbury that information was inaccurate should trigger investigation/correction duties | Salisbury argued §1681s–2(b) is triggered only after a CRA notifies the furnisher of a consumer dispute | Held: §1681s–2(b) duties require notice from a CRA (or reseller); direct notice from the consumer alone is insufficient |
| Whether dismissal with prejudice and denial of further amendment was proper | Appellants argued they could easily amend to plead CRA notice | Salisbury argued Appellants already had multiple chances and knew the facts (whether they notified a CRA) | Held: Denial of leave and dismissal with prejudice affirmed as further amendment would be futile given Appellants failed to plead facts they knew and previously failed to cure deficiencies |
Key Cases Cited
- Longman v. Wachovia Bank, N.A., 702 F.3d 148 (2d Cir. 2012) (no private right of action under §1681s–2(a))
- SimmsParris v. Countrywide Fin. Corp., 652 F.3d 355 (3d Cir. 2011) (§1681s–2(b) is triggered by notice from a CRA)
- Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147 (9th Cir. 2009) (same: furnishers’ duties under §1681s–2(b) require CRA notice)
- Chiang v. Verizon New England Inc., 595 F.3d 26 (1st Cir. 2010) (direct consumer notice does not trigger §1681s–2(b))
- Forman v. Davis, 371 U.S. 178 (1962) (repeated failure to cure deficiencies is a valid reason to deny leave to amend)