Forrest, Mary v. Universal Savings ( 2007 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 06-4337
MARY FORREST,
Plaintiff-Appellant,
v.
UNIVERSAL SAVINGS BANK, F.A.,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Eastern District of Wisconsin.
No. 06 C 445—Aaron E. Goodstein, Magistrate Judge.
____________
ARGUED SEPTEMBER 11, 2007—DECIDED OCTOBER 25, 2007
____________
Before RIPPLE, MANION, and WOOD, Circuit Judges.
MANION, Circuit Judge. Mary Forrest filed suit on behalf
of herself and a putative class against Universal Savings
Bank, N.A. (“Universal”) asserting that Universal had
violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C.
§ 1681 et seq., by obtaining her credit information for an
impermissible purpose. The parties consented to proceed
before a magistrate judge, and Universal then filed a
motion to dismiss. The magistrate judge granted Univer-
sal’s motion before a class was certified, and the case
was dismissed. Forrest appeals, and we AFFIRM.
2 No. 06-4337
I.
Universal Savings Bank, N.A. (“Universal”) sent Mary
Forrest a letter with other materials notifying her that
she was prequalified for a Visa credit card with a 10.99%
variable annual percentage rate, no annual fee, and a
credit line up to $15,000. The letter also stated that Forrest
was qualified to receive a DellTM DimensionTM 3000 desktop
computer, or a comparable or upgraded model, with the
card when she “transfer[ed] $5,000 of qualifying balances”
and “maintained a balance of $3,500 for at least 18 months”
on the card. In the case that Forrest did not have $5,000 to
transfer to the credit card, she could request up to $2,500
in cash advances to meet the $5,000 minimum balance.
Failure to maintain a $3,500 balance for the designated
time period would result in a one-time $500 fee.
In addition to the specific information regarding fees
and rate information set out in the letter, the enclosed
printed materials also detailed the proposal:
Upfront RewardsTM and Balance Transfer Information.
To establish an account and be eligible for an Upfront
RewardTM, you must transfer qualifying balances of at
least $5,000. You may also combine qualifying balance
transfers of at least $2,500 with a special account
opening advance of up to $2,500 to bring your bal-
ances up to $5,000. If your balance falls below $3,500
at any time during the first 18 months after your
account is open, you will be in default and your
account will be assessed a one-time fee of $500 (early
pay-down fee). See also the TERMS OF OFFER below.
Finally, the printed material stated that “[i]n making this
offer to you, we used credit information about you” to
determine that “you satisfied the credit eligibility require-
No. 06-4337 3
ments for the credit product offered in this mailing. If we
determine at the time you respond to the offer that you no
longer satisfy the credit eligibility requirements that we
previously established and you previously met, we may
not extend credit to you.”
Forrest did not submit an application to receive Univer-
sal’s Visa card; rather, she filed suit alleging that Univer-
sal willfully violated the FCRA by obtaining her credit
information without a permissible purpose because its
letter did not make a firm offer of credit. Forrest attached
to her complaint a copy of Universal’s letter and materials.
In response to Forrest’s complaint, Universal filed a mo-
tion to dismiss pursuant to Federal Rule of Civil Proce-
dure 12(b)(6) asserting that it had provided Forrest with a
firm offer of credit because the letter disclosed the mini-
mum opening credit line of $5,000, offered something of
value, and permissibly conditioned the offer of credit on
the consumer meeting pre-established credit and income
criteria. Forrest responded that her complaint stated a
claim under the FCRA because Universal’s letter did not
set forth a minimum amount of credit. The district court
granted Universal’s motion concluding that Universal
had extended a firm offer of credit for the reason that the
letter clearly stated that it was offering a line of credit, the
FCRA does not require that a minimum credit amount
must be offered, and the card itself had value. The case
was dismissed, and Forrest appeals.
II.
We review a district court’s grant of a motion to dis-
miss de novo. Payton v. County of Carroll, 473 F.3d 845, 847
(7th Cir. 2007) (citations omitted). Taking all facts pleaded
4 No. 06-4337
in the complaint as true and construing all inferences in the
plaintiff’s favor, we review the complaint and all exhibits
attached to the complaint. Massey v. Merrill Lynch & Co.,
Inc., 464 F.3d 642, 645 (7th Cir. 2006) (citations omitted).
Where an exhibit and the complaint conflict, the exhibit
typically controls. Id. A court is not bound by the party’s
characterization of an exhibit and may independently
examine and form its own opinions about the document.
McCready v. eBay, Inc., 453 F.3d 882, 891 (7th Cir. 2006)
(citation omitted). “A complaint should only be dis-
missed if there is no set of facts, even hypothesized, that
could entitle a plaintiff to relief.” Massey, 464 F.3d at 645.
On appeal, Forrest claims that Universal’s letter is not a
firm offer of credit under the FCRA because it does not
offer a minimum line of credit. She therefore concludes
that Universal accessed her credit information in viola-
tion of the FCRA.
Under the FCRA, a lender may access and use credit
information “in connection with any credit or insurance
transaction that is not initiated by the consumer only if . . .
the transaction consists of a firm offer of credit or in-
surance.” 15 U.S.C. § 1681b(c)(1)(B)(I). A “firm offer of
credit” is “any offer of credit or insurance to a consumer
that will be honored if the consumer is determined, based
on information in a consumer report on the consumer,
to meet the specific criteria used to select the consumer
for the offer except that the offer may be further condi-
tioned . . . .” 15 U.S.C. § 1681a(l). Those conditions include
a consumer’s eligibility based on the information in his
application, verification of continued eligibility, and the
consumer furnishing any required collateral for the
extension of credit which is disclosed to the consumer
in the offer. Id.
No. 06-4337 5
In order for an offer of credit to constitute a firm offer, its
terms “must have sufficient value for the consumer to
justify the absence of the statutory protection of his
privacy.” Id. at 726. In sum, in ascertaining whether a
letter is a firm offer of credit, we “must determine wheth-
er the offer has value as an extension of credit alone.”
Murray v. GMAC Mortgage Corp., 434 F.3d 948, 955 (7th Cir.
2006). To determine whether a letter has value,
a court must consider the entire offer and the effect of
all the material conditions that comprise the credit
product in question. If after examining the entire
context, the court determines that the offer was a
guise for solicitation rather than a legitimate credit
product, the communication cannot be considered a
firm offer of credit.
Cole, 389 F.3d at 728. The amount of credit, including the
minimum credit amount, extended by the offer is an
important term for courts to evaluate in conjunction with
the other terms in ascertaining whether a firm offer has
been presented. Id. These other terms are also important
because they create conditions that establish whether it
is advantageous for the creditor to extend or for the
consumer to accept an offer, in other words, whether
the card has value for the consumer. Id.
The sole basis on which Forrest challenges Universal’s
letter is her claim that it does not constitute a firm offer
of credit because it does not contain a minimum amount
of credit offered. In response, Universal contends that
the minimum amount of credit is $5,000 because the
letter indicates that a consumer could not obtain the
credit card nor could he receive the free computer with-
out transferring indebtedness of at least $5,000 to the
account.
6 No. 06-4337
Reviewing its letter and accompanying materials, we
conclude that Universal extended Forrest a firm offer
of credit. Universal’s materials state: “To establish an
account and be eligible for an Upfront Reward, you must
transfer qualifying balances of at least $5,000.” (emphasis
added). To reach this $5,000 minimum, the card permits
the consumer to obtain up to $2,500 cash back to apply
to reaching the minimum, and exempts from fees the
initial transactions to set up the account. Thus, as set
forth in terms of Universal’s materials, the $5,000 balance
is a condition precedent to establishing a Universal
Visa account, and this necessitates that the card have a
$5,000 minimum credit line to cover the transferred debt.
In addition, the letter provides value to the consumer
through the offer of a Visa credit card; the card may be
used anywhere Visa is accepted and is not restricted to
the purchase of a particular product. Cf. Cole, 389 F.3d at
728 (concluding that there was no firm offer where the
“relatively small amount of credit combined with the
unknown limitations of the offer—that it must be used
to purchase a vehicle—raises questions of whether the
offer has value to the consumer.”). The letter and accompa-
nying materials set forth the card’s terms, including
the annual percentage rate, balance calculation method,
finance charges, and fees, so that a consumer is able “to
determine whether it is advantageous . . . to accept the
offer.” Id. Further, there is no annual fee, and none of
the fees and rates is a significant amount.
Forrest contends that other language negates the view
that $5,000 was the credit minimum. Specifically, Forrest
points to the passage in Universal’s letter which stated,
“Supplies are limited—act now before someone beats you
to this valuable $600 reward” and “P.S. LIMITED AVAIL-
No. 06-4337 7
ABILITY.” However, the offer of a free computer was a
bonus above and beyond the offer of the card itself, and
the availability of the computer did not affect the value of
the card to the consumer. While there are numerous
references to the $5,000 transfer requirement to receive
the computer, these references do not conflict with or
rebut the same initial requirement to transfer $5,000 to
open an account with Universal for a Visa card. Therefore,
we conclude Universal’s “offer has value as an extension
of credit alone,” Murray, 434 F.3d at 955, and “offers
value to the consumer,” Perry v. First Nat’l Bank, 459 F.3d
816, 826 (7th Cir. 2006).
Forrest also points to Universal’s statement that the
consumer’s “initial credit limit will depend on whether
you meet our established income and credit standards.”
Forrest asserts that this statement would lead a reason-
able consumer to believe that Universal is not offering
a minimum line of credit. Universal stated that the “initial
credit limit,” not the credit minimum, will be dependent
on this verification, and this verification does not modify
the $5,000 minimum credit line necessitated by the open-
ing of an account. Moreover, the FCRA specifically per-
mits that a firm offer be conditioned upon verification that
the consumer continues to meet the qualifications of the
offer “by using information in a consumer report on the
consumer, information in the consumer’s application for
the credit or insurance, or other information bearing on
the credit worthiness or insurability of the consumer.”
15 U.S.C. § 1681a(l)(2)(a). The FCRA also permits verifica-
tion “of the information in the consumer’s application
for the credit or insurance, to determine that the con-
sumer meets the specific criteria bearing on credit worthi-
ness or insurability.” 15 U.S.C. § 1681a(l)(2)(b).
8 No. 06-4337
Forrest also contends that the district court made imper-
missible inferences by supplying a minimum line of credit
which is not offered in the letter when ruling on Univer-
sal’s motion to dismiss. The district court permissibly re-
viewed Universal’s letter and materials which were
attached to Forrest’s complaint and ultimately decided that
“[t]here is no ambiguity in the fact that Universal was
offering a line of credit.” Because this determination was
based on the language of the cover letter and the other
materials in the mailing, we conclude that the district
court did not run afoul of the section 12(b)(6) standard in
granting Universal’s motion. See Local 15, Int’l Bhd. of Elec.
Workers, AFL-CIO v. Exelon Corp., 495 F.3d 779, 782 (7th Cir.
2007) (“Any written instrument, such as an arbitration
award, that is attached to a complaint is considered part of
that complaint.”) (citations omitted). Moreover, because
in cases such as this we review questions of law de novo,
any inferences the district court made are irrelevant
because we conclude for the aforementioned reasons that
Universal’s mailing constitutes a firm offer of credit.
III.
Considering the entirety of Universal’s offer, including
its minimum credit line, we conclude that it presented
Forrest with an offer of value. Accordingly, Universal
properly accessed Forrest’s credit information in provid-
ing Forrest with a firm offer of credit, and the district
court properly granted Universal’s motion to dismiss.
We AFFIRM.
No. 06-4337 9
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—10-25-07