Judge Partially Grants MSJ for Defendant in FCRA, FDCPA Suit Over Disputed Rental Debt

A District Court judge in Alabama has denied a plaintiff’s motion for summary judgment and granted a defendant’s motion on most of the claims it violated the Fair Credit Reporting Act and the Fair Debt Collection Practices Act after it attempted to collect on an unpaid debt related to an apartment rental.

A copy of the ruling in the case of Scaife v. National Credit Systems can be accessed by clicking here.

The plaintiff, who filed the lawsuit on behalf of his son, alleged the defendant violated the FCRA by failing to conduct an investigation after disputing the debt and violated the FDCPA by failing to communicate with the credit reporting agencies and for misrepresenting the amount of the debt. The plaintiff’s son lived in the apartment for six years prior to moving out in 2017. When he moved out, the owner charged the son for damage in the apartment due to smoking and an unpaid water bill. The owner placed the account with the defendant for collection. The defendant sent the plaintiff’s son a collection letter seeking to recover on the unpaid balance.

The plaintiff’s father wrote back to the defendant, disputing the debt.

Two years later, the plaintiff’s son obtained a copy of his credit report, which included the debt in question. He contacted one of the credit reporting agencies to dispute the debt, who, in turn, notified the defendant. The defendant verified the debt with the owner and continued to report the debt, although it claims to have told the credit reporting agencies that the debt was disputed, although that was not noted on the credit report.

First, Judge Corey Maze of the District Court for the Northern District of Alabama, ruled that the plaintiff lacked standing to sue on some of the 1692e claims because the father can not use his own injuries to establish standing for his son to sue. As for the remaining FDCPA claim, Judge Maze ruled that a genuine issue of fact exists as to whether the defendant reported the dispute to the credit reporting agencies and denied the defendant’s motion for summary judgment on that claim.

In regards to the FCRA claim, Judge Maze ruled that the issue of whether the plaintiff owed the full amount of the debt or something less than that had nothing to do with the defendant’s reporting of the debt to the credit reporting agencies.

“But unlike the FDCPA , the FCRA makes a furnisher liable for failing to report a dispute only if the dispute is meritorious,” Judge Maze wrote. “That is because while the FDCPA is concerned with how the failure to report the dispute influences the debtor, the FCRA is concerned only with the failure to report disputes ‘that could materially alter how the reported debt is understood’ by CRAs. Here, the Scaifes have not pointed to any factual inaccuracies in the information NCS provided the CRAs. Instead, they have merely shown that Andrew may not be legally obligated to pay the $734 under Alabama law or his final lease contract. So the court finds that NCS’s alleged failure to report that Andrew disputed the debt did not materially alter how the CRAs understood his reported debt.”

A settlement was subsequently reached in the case and it was dismissed on May 3.

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