United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER DENYING DEFENDANT'S MOTION FOR
BERNARD A. FRIEDMAN SENIOR UNITED STATES DISTRICT JUDGE
matter is presently before the Court on the motion of
defendant Monterey Financial Services, Inc. for summary
judgment [docket entry 22]. Plaintiff has filed a response in
opposition and defendant has filed a reply. Pursuant to E.D.
Mich. LR 7.1(f)(2), the Court shall decide this motion
without a hearing.
has brought this action under the Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. § 1681. She alleges that
defendant incorrectly reported to credit reporting agencies
the amount she owed under a defaulted lease agreement, in
violation of § 1681s-2(a); and that defendant failed to
conduct a reasonable investigation when she complained of the
error, in violation of § 1681s-2(b). Defendant seeks
summary judgment on the grounds that it correctly reported
the delinquency, that it conducted a reasonable
investigation, and that plaintiff cannot prove she suffered
any actual damages.
appears to concede that she is indebted to defendant. The
debt arises from plaintiff's default on a lease, a copy
of which is attached to defendant's motion as Ex. 1A. The
lessor is Wags Lending, LLC. The lessee is plaintiff. The
property is a Boston Terrier, the “agreed upon
value” of which is $2, 495. On September 20, 2016,
plaintiff took delivery of the dog and paid $1, 819.24, which
consisted of $1, 644.70 in “capitalized cost reduction,
” $149.54 for the first monthly payment, and $25 in
“warranty cost.” Plaintiff agreed to make eleven
monthly lease payments in the amount of $149.54 by the 20th
day of each month following the lease date. If plaintiff
decided to purchase the dog at the end of the lease, she
could do so for an additional payment of $127.70. If she
decided not to purchase the dog, she agreed to pay a $63.85
“disposition fee.” The lease was assigned to
defendant on September 23, 2016. See Owens Decl.
concedes that she made no payments after taking possession of
the dog. Plaintiff alleges that on April 25, 2017, she
“obtained her credit files and noticed Monterey
Collection Services reporting the Errant Trade Line with an
incorrect balance of $2, 413.00.” Compl. ¶ 7.
Plaintiff has not submitted a copy of those credit reports,
but she has submitted pages from her Equifax and TransUnion
credit reports dated August 10, 2017. The Equifax credit
report indicated that plaintiff's account with defendant
had been charged off and that the “reported
balance” was $1, 645. Pl.'s Ex. 5. On the same
date, plaintiff's TransUnion credit report showed two
accounts with defendant, one with a charge off amount of $1,
645 and another that had been “placed for
collection” with a balance of $2, 413. Pl.'s Ex. 6.
not clear from plaintiff's complaint or from her response
to the instant motion what amount plaintiff believes
defendant could correctly have reported, but it is clear she
believes the $2, 413 amount defendant reported in April and
August 2017 was incorrect. See Compl. ¶¶
5, 7, 11; Pl.'s Br. at 3. Defendant stands by this
figure. See Def.'s Br. at 5-6, 7, 14, 16; Owens
Decl. ¶¶ 10-11, 15; Def.'s Reply at 3-4.
motion for summary judgment is denied because it has not
shown that the $2, 413 delinquency it reported was accurate.
Defendant arrived at this amount by adding
(1) the original $1, 644.94 balance from Plaintiff's loan
servicing account; (2) the $127.70 “Purchase
Option” provided for in the Lease; (3) $620.42 in
collection fees; and (4) $20.00 in late fees for missed
payments from October 2016 through January 2017.
Owens Decl. ¶ 11. Except for the $20 in late fees, which
is allowed under ¶ 4 of the lease, defendant has not
identified any lease provisions that justify these components
of the $2, 413 total.
defendant has not shown that there was an “original $1,
644.94 balance from Plaintiff's loan servicing
account.” Defendant's vice-president, John Owens,
avers that plaintiff made no lease payments and that her
account was transferred from defendant's loan servicing
department to its collections department on January 30, 2017.
Owens Decl. ¶ 8. At that time, as plaintiff had missed
four lease payments, her balance was $598.16 (4 x $149.54),
not $1, 644.94 (11 x $149.54). Defendant had the option of
terminating the lease early due to plaintiff's failure to
“make any payments required under this Lease when due,
” Lease ¶¶ 8(b) and 9, and in that event
plaintiff agreed to pay a sum that included past-due and
remaining lease payments,  but defendant does not indicate that it
had exercised this option by January 30, 2017, or that it
ever did so.
accuracy of the “$1, 644.94 balance from
Plaintiff's loan servicing account” depends on
whether defendant terminated the lease early because if it
did not do so, plaintiff's obligation for past-due
monthly lease payments was $598.16 as of January 30, 2017;
$1046.78 as of April 25, 2017 (when plaintiff alleges she
first discovered that defendant reported a delinquency of $2,
413); and $1, 495.40 as of August 10, 2017 (when
plaintiff's TransUnion report showed delinquencies of
both $1, 645 and $2, 413). As defendant has not shown when,
or whether, it exercised its option to terminate the lease
early, on this record it is not possible to determine the
accuracy of the $1, 644.94 component of the $2, 413
delinquency defendant reported to the credit reporting
agencies in April and August 2017.
next asserts that it included in the $2, 413 amount
“the $127.70 Purchase Option provided for in the
Lease.” Defendant has not shown that the lease
permitted inclusion of this item. Paragraph 2 of the lease
gave plaintiff “an option to purchase the Pet at the
end of the Lease term for $127.70.” Defendant has shown
that plaintiff exercised this option or that any other lease
provision permitted defendant to include this item in the
amount it reported as being delinquent.
also asserts that it included in the $2, 413 amount
“$620.42 in collection fees.” Defendant has not
shown that the lease permitted inclusion of this item. In its
reply brief, defendant argues that this amount is authorized
by ¶ 9 of the lease, which in the event of default
permits defendant to “[a]dd amounts we spend protecting
our interest to your Lease obligation and charge rent on the
added amount, or ask you to pay these amounts right
away.” Defendant does not explain how it incurred
$620.42 “protecting our interest, ” an amount
Owens avers was added immediately upon plaintiff's
account being transferred from the loan-servicing department
to the collection department. Owens Decl. ¶ 10-11.
short, defendant has not shown that the $2, 413 delinquency
it reported to the credit reporting agencies was accurate.
Nor has defendant shown that it conducted a reasonable
investigation when plaintiff complained about the inaccuracy.
Defendant claims that as part of its investigation it
“reviewed the Lease.” Def.'s Br. at 7, 16.
For the reasons stated above, had defendant conducted a
reasonable, “fairly searching inquiry, ”
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