Martha M. Harmon v. Regions Bank ( 2005 )

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2006-CA-00453-SCT
MARTHA M. HARMON AND JAMES V. HARMON
v.
REGIONS BANK
DATE OF JUDGMENT: 09/19/2005
TRIAL JUDGE: HON. ANDREW K. HOWORTH
COURT FROM WHICH APPEALED: CHICKASAW COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANTS: REX F. SANDERSON
ATTORNEYS FOR APPELLEE: L. BRADLEY DILLARD
R. BRANNON KAHLSTORF
NATURE OF THE CASE: CIVIL - OTHER
DISPOSITION: AFFIRMED - 06/07/2007
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE SMITH, C.J., CARLSON AND DICKINSON, JJ.
DICKINSON, JUSTICE, FOR THE COURT:
¶1. This case is before the Court on appeal from the Circuit Court for the First Judicial
District of Chickasaw County, Mississippi, by the Plaintiffs, Martha M. Harmon and James
V. Harmon (“the Harmons”). The Circuit Court entered summary judgment in favor of the
Defendant, Regions Bank. The Plaintiffs filed a Motion to Reconsider the Entry of Summary
Judgment and a Motion for Authority to File Amended Complaint, which were denied by the
Circuit Court. Aggrieved by the Court’s Order Denying the Motion to Reconsider Summary
Judgment and Motion to Amend, the Harmons timely filed their Notice of Appeal.
¶2. The Harmons raise three issues on appeal. First, the Harmons allege that the Circuit
Court erred in deciding that the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et.
seq., preempted their state law cause of action for harassment and defamation of their credit
reputation. Second, the Harmons argue that the Circuit Court erred in failing to make
findings of fact regarding the preemption issue. Third, the Harmons assert that the Circuit
Court erred in denying their Motion to Amend their Complaint. While the first issue is
dispositive here, each of these issues are addressed in the discussion below.
STATEMENT OF THE FACTS AND PROCEEDINGS
¶3. James and Martha Harmon executed a loan secured by their home on February 14,
1992, with Sunburst Bank in the amount of $35,210.00. Thereafter, the Harmons applied for
and received a mortgage loan with Union Planters Bank on February 2, 1998, for the sum of
$66,551.50. On November 26, 2001, the Harmons paid in full the loans made by Sunburst
and Union Planters Bank and properly executed and filed the satisfaction of the deeds of
trust. Sometime thereafter, Sunburst Bank and Union Planters Bank merged and were
consolidated into Regions Bank.1
¶4. According to the Harmons, after payment in full of the loan, Regions Bank began a
“course of harassment” by telephone and letters demanding payment on the loan which had
already been paid in full. Regions Bank ultimately made reports to credit reporting
companies claiming that the Harmons’ payments were in arrears.
¶5. According to the Harmons, in February of 2002, they received a delinquency notice
from Regions Bank Mortgage printed on pink paper. Believing it to be a mistake, they
discarded the notice. On March 1, 2002, upon receipt of a second delinquency notice,
1
For purposes of clarity and consistency, “Regions Bank” is used to refer to all parties and
actions taken as part of this litigation by Union Planters, Sunburst and Regions Banks.
2
Martha contacted the local Regions Bank, which told her not to be concerned because the
loans were paid. Subsequently, Martha was denied a business loan from another financial
institution because, as the loan officer told her, her credit report contained a notice that the
Harmons’ home was in foreclosure.
¶6. Martha Harmon asserts that she then contacted a local Regions Bank employee who
told her there was nothing Regions could do to clear up her credit report. Thereafter, the
Harmons began receiving phone calls at their home and at work from local Regions Bank
branches regarding money owed, offering settlement and informing them of the recent
“foreclosure” of their home.
¶7. By letter dated September 1, 2002, the Harmons received notice that their loan was
paid in full. Additionally, Regions Bank sent to a Regions Mortgage employee on October
18, 2002, a letter directing her to notify various credit reporting agencies to remove the
delinquencies reported and to show that the loan was paid in full as of November 21, 2001.
¶8. The Harmons filed suit against Regions Bank on July 1, 2003, in the Circuit Court of
the First Judicial District of Chickasaw County, Mississippi. Regions Bank denied all
liability and filed a Motion for Summary Judgment on July 22, 2005.2 On September 1,
2005, during the hearing on Regions Bank’s Motion for Summary Judgment, the Harmons
made a verbal motion to amend the complaint. The trial judge granted such motion, stating
that he would allow the Harmons an opportunity to file a written Motion to Amend as long
as it was filed before entry of final judgment. The Harmons failed to file a written motion
2
Regions Bank was substituted as the party defendant in this case by Order dated September
19, 2005, upon notification that Sunburst Bank and Union Planters Bank had merged with Regions
Bank.
3
to amend, and final judgment was entered on September 19, 2005. On September 26, 2005,
the Harmons filed a Motion to Reconsider Summary Judgment and a Motion for Authority
to File Amended Complaint. These Motions were denied by the Circuit Court and the
Harmons bring these issues for disposition.
ANALYSIS
¶9. The issues before this Court are as follows: (1) whether the trial court erred in finding
the Fair Credit Reporting Act preempts state law claims of defamation and harassment; (2)
whether the trial court erred in failing to make sufficient findings of fact; and (3) whether the
trial court erred in denying the Harmons’ Motion to Amend their Complaint.
I. Whether the Circuit Court erred in holding that the Fair Credit
Reporting Act preempts common law claims
¶10. The Court applies a de novo standard of review to a trial court’s grant or denial of a
motion for summary judgment. McKinley v. Lamar Bank, 919 So. 2d 918, 925 (Miss.
2005). Our rules of civil procedure require the trial court to grant summary judgment where
“the pleadings, depositions, answers to interrogatories and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.” Miss. R. Civ. P. 56(c). The facts
are viewed in the light most favorable to the nonmoving party, with the movant bearing the
burden of demonstrating that no genuine issues of material fact exist for presentation to the
trier of fact. Hardy v. Brock, 826 So. 2d 71, 74 (Miss. 2002). However, the party opposing
the motion must be diligent and “may not rest upon the mere allegations or denials of the
pleadings, but instead the response must set forth specific facts showing that there is a
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genuine issue of material fact for trial.” Harrison v. Chandler-Sampson Ins., Inc., 891 So.
2d 224, 228 (Miss. 2005) (citing Miller v. Meeks, 762 So. 2d 302, 304 (Miss. 2000)). If any
triable issues of material fact exist, the trial court’s decision to grant summary judgment will
be reversed.
¶11. This Court has held that preemption is proper in three circumstances: (1) where
Congress explicitly preempts state law; (2) where preemption is implied because Congress
has occupied the entire field; or (3) where preemption is implied because there is an actual
conflict between federal and state law. Cooper v. GMC, 702 So. 2d 428, 434 (Miss. 1997)
(citing English v. General Elec. Co., 496 U.S. 72, 78-9, 110 L. Ed. 2d 65, 110 S. Ct. 2270(1990)). Here, the federal Fair Credit Reporting Act applies to these claims and explicitly
preempts certain state law claims.
¶12. The federal Fair Credit Reporting Act (“FCRA”) was enacted to insure that consumer
credit reporting agencies were “exercis[ing] their grave responsibilities with fairness,
impartiality, and a respect for the consumer’s right to privacy.” 15 U.S.C. § 1681. This Act
mandates that consumer reporting agencies engage in fair and reasonable practices in
investigating and evaluating the creditworthiness and credit standing of consumers.
¶13. Regions Bank qualifies as an entity that furnishes information to consumer reporting
agencies and its actions are therefore covered by this Act. See 15 U.S.C. § 1681h (e)
(applying specific provision to furnishers of credit information); also Mitchell v. First Nat’l
Bank, 505 F. Supp. 176, 177 (M.D. Ala. 1981) (noting that a bank which did no more than
furnish information to a consumer reporting agency was not itself a consumer reporting
agency but did qualify under the FCRA).
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¶14. The FCRA includes two preemption provisions, the first of which is relevant in this
case and states, in pertinent part:
Except as provided in Sections 1681n and 1681o,[3 ] no consumer may bring
any action or proceeding in the nature of defamation, invasion of privacy, or
negligence with respect to the reporting of information against any consumer
reporting agency, any user of information or any person who furnishes
information to a consumer reporting agency, based on information disclosed
pursuant to [Sections 1681g, 1681h, or 1681m], or based on information
disclosed by a user of a consumer report to or for a consumer against whom
the user has taken adverse action, based in whole or in part on the report[,]
except as to false information furnished with malice or willful intent to injure
such consumer.
15 U.S.C. § 1681h(e) (footnote added).4
¶15. The tort list of § 1681h(e) is non-exhaustive and includes state law claims itemized
and “in the nature” of those listed. Carlson v. Trans Union, LLC, 259 F. Supp. 2d 517, 521
(N.D. Tex. 2003). Defamation as a cause of action is specifically enumerated by § 1681h(e).
This Court adopted the definition of “invasion of privacy” as occurring “when disclosure
would subject a person to embarrassment, harassment, physical danger, disgrace, or loss of
employment or friends.” Mississippi Dep’t Of Wildlife, Fisheries & Parks v. Mississippi
3
These exceptions are not applicable here as they apply to willful and negligent
noncompliance with the statute. Since the Harmons did not bring this action under the Fair Credit
Reporting Act, they are not bound by the liability limitations encompassed in those sections.
4
Regions Bank alternatively asserts that these claims may be preempted under §
1681t(b)(1)(F). That sections provides:
No requirement or prohibition may be imposed under the laws of any State with
respect to any subject matter regulated under [15 U.S.C. § 1681s-2], relating to the
responsibilities of persons who furnish information to consumer reporting agencies.
Section 1681s-2 has a temporal aspect and outlines duties of furnishers of information after actual
knowledge of the reporting of false information can be established. As this claim was instituted
based on facts arising before notice was given to Regions Bank and § 1681h(e) specifically covers
tort claims in its provisions, it is the correct provision for analysis.
6
Wildlife Enforcement Officers’ Ass’n, 740 So. 2d 925, 936 (Miss. 1999) (citing State ex rel.
Petty v. Wurst, 550 N.E.2d 214, 216 (Ohio Ct. App. 1989) (quoting Kilroy v. NLRB, 633 F.
Supp. 136, 143 (S.D. Ohio 1985) aff’d 823 F.2d 553 (6 th Cir. 1987))). Thus, the Harmons’
harassment claim is closely affiliated with and can be deemed “in the nature of” an invasion
of privacy claim. Therefore, both claims fit within the FCRA preemption provision.
¶16. The Harmons claim they are excluded from preemption as their claim fits under the
last line of § 1681h(e).5 At issue is whether the Harmons put forth any evidence that the
conduct of Regions Bank was performed with malice or a willful intent to injure them. We
find that they did not.
¶17. Although the FCRA does not define malice, the Fifth Circuit has previously applied
the common law standard for malice when both parties agreed to such application. See
Cousin v. Trans Union Corp., 246 F.3d 359, 375 (5th Cir. 2001) (requiring the plaintiff to
show that “the defendant when he published the words (1) either knew they were false, or
(2) published them in reckless disregard of whether they were true or not”). While neither
party in this case agreed to the use of the common law standard, neither mentioned a standard
to be used nor did they address any standard in their briefs. Thus, we believe the common
law standard for malice should be used to determine whether the Harmons alleged facts
sufficient to withstand summary judgment.6
5
The Harmons cite Am. Bankers Ass’n v. Gould, 412 F.3d 1081 (9th Cir. 2005), as their sole
authority that the claims are not preempted. Other than mentioning FCRA preemption, that case is
not helpful or dispositive here.
6
The Fifth Circuit has also used the New York Times Co. v. Sullivan standard that a
statement is made with actual malice if it was made “with knowledge that it was false or with
7
¶18. Malice, in its legal sense, means a wrongful act done intentionally, without just cause
or excuse. Memphis Steam Laundry-Cleaners, Inc. v. Lindsey, 192 Miss. 224, 237-38, 5 So.
2d 227, 231 (1941). Malice in law is not necessarily personal hate or ill will, but it is “the
intent, without justification or excuse, to commit a wrongful act.” Black’s Law Dictionary
976 (8th ed. 2004). Malice is usually shown by circumstantial evidence and may be inferred
from the fact that a defendant may have acted with reckless disregard for a plaintiff's rights.
Strong v. Nicholson, 580 So. 2d 1288, 1293 (Miss. 1991). Because malice is a jury question,
Owens v. Kroger Co., 430 So. 2d 843 (Miss. 1983), summary judgment is improper “unless
only one conclusion may reasonably be drawn from the evidence.” Brown v. Watkins, 213
Miss. 365, 373, 56 So. 2d 888, 891 (1952).
¶19. The Harmons’ Complaint, filed July 1, 2003, outlines the facts surrounding their loan
history but never alleges malicious conduct on the part of Regions Bank. Regions Bank first
asserted the preemption defense in its answer and then again by its Motion for Summary
Judgment filed on July 22, 2005. The Harmons filed an amended complaint on July 14,
2005, adding Regions Bank as a party defendant but never inserted evidence or allegations
of bad faith or malice even after notice of preemption. In their Response to Motion for
Summary Judgment, the Harmons stated that “the Defendants have acted with actual malice,
gross negligence which evidences a willful, wanton or reckless disregard for the safety of
reckless disregard of whether it was false or not” when requested. 376 U.S. 254, 84 S. Ct. 710, 11
L. Ed. 2d 686 (1964). See Morris v. Equifax Info. Servs., LLC, 457 F.3d 460, 471 (5th Cir. 2006)
(applying New York Times standard to FCRA preemption case).
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others, or committed actual fraud against the Plaintiffs.” However, no evidence of willful
intent or malice on the part of Regions Bank was presented.
¶20. Most indicative of their failure to plead malice, the Harmons’ Motion to Reconsider
Summary Judgment focuses on Regions Bank’s false reporting, stating that “[t]he
Defendant’s reporting of false information on the credit history of the Plaintiffs is the basis
of this case.” While the Harmons sufficiently pled that the information provided by Regions
Bank was false as required under § 1681h(e), they failed to address whether such information
was “furnished with malice or willful intent to injure.”
¶21. Under Mississippi’s civil procedure rules, it is the plaintiff’s responsibility to plead
fraud with particularity and present facts which would show malice in order to escape
disposition on summary judgment. See Miss. R. Civ. P. 9(b) (“In all averments of fraud or
mistake, the circumstances constituting fraud or mistake shall be stated with particularity”).
In the case sub judice, no material facts were presented that called into question whether
Regions Bank acted with malice in addressing the Harmons or reporting the false
information.
¶22. The reporting of false information is obvious; however, the Harmons have not shown,
proved or pled that the information was false due to malicious or willful intent to defame
their reputations. Therefore, the Harmons’ defamation and harassment claims are preempted
by § 1681h(e) of the Fair Credit Reporting Act.
II. Whether the Circuit Court erred in failing to make sufficient
findings of fact
9
¶23. The Harmons assert that the trial court failed to make findings of fact in that the trial
judge did not address the reasons why their claim did not fall within the exception to
preemption in the FCRA. This issue is without merit.
¶24. The Harmons assert no authority for the proposition that findings of fact are necessary
other than calling attention to the trial judge’s explanation that because this Court reviewed
de novo, he would not make Rule 52 findings of fact. However, Rule 52 of the Mississippi
Rules of Civil Procedure only requires findings of fact in actions tried by the court without
a jury and where a party files a motion no later than ten days after entry of judgment. Even
though evidence may be received by way of sworn affidavits, deposition testimony, and other
such evidence, a Rule 56 summary judgment hearing is not an action “tried upon the facts
without a jury” so as to trigger Rule 52 applicability. Neither of those circumstances
contemplated by Rule 52 are present here, therefore, findings of fact are not necessary.
¶25. Additionally, the record shows that the trial court addressed the issues of false
reporting and fraud at both the hearing on Regions’ Motion for Summary Judgment and the
hearing on the Harmons’ Motion to Reconsider. The trial judge specifically stated at the
hearing on summary judgment:
This Court is of the opinion that it is the intention under the Fair Credit
Reporting Act that the very type of claim that’s being asserted here is
preempted; that is to say that this claim cannot be brought in this proceeding
in this court outside the confines of the Fair Credit Reporting Act. I don’t see
any allegations of fraud and they’re supposed to be slapping me in the
face if there are any.
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¶26. Again, at the hearing on the Motion to Reconsider, the trial judge noted, “I don’t think
the Court could fairly conclude that there was a presumption of malice or willful intent
without further evidence.”
¶27. This Court is duly bound to respect the lower court’s findings of fact when they are
supported by reasonable evidence in the record and are not manifestly wrong. See Byrd v.
Bowie, 933 So. 2d 899, 905 (Miss. 2006). There was no mandatory requirement of findings
of fact; however, the findings were sufficient in this case. Therefore, this issue is without
merit.
III. Whether the trial court erred in denying the Harmons’ Motion to
Amend the Complaint
¶28. Motions for leave to amend a complaint are at the sound discretion of the trial court.
Wal-Mart Super Ctr. v. Long, 852 So. 2d 568, 570 (Miss. 2003). The Court reviews such
determinations under an abuse of discretion standard. Moeller v. Am. Guar. & Liab. Ins.
Co., 812 So. 2d 953, 961 (Miss. 2002). Unless convinced that the trial court abused its
discretion, the Court is without authority to reverse. Id. Although the trial court has
discretion to allow an amendment, it should not allow amendment when to do so would
prejudice the defendant. Preferred Risk Mut. Ins. Co. v. Johnson, 730 So. 2d 574, 579
(Miss. 1998).
¶29. Here, the Harmons requested leave to amend their complaint at the hearing on the
Defendant’s motion for summary judgment on September 1, 2005. The trial judge, on the
record, granted leave but asserted:
11
Your motion to amend the complaint would need to . . . be filed before a
motion to reconsider and before we have a final order. It has to be before we
have a final order . . . If I enter a final judgment, then I won’t have jurisdiction
to decide any other things that you might have that you want me to consider,
so I would like to give you an opportunity to do that.
However, the Harmons did not file their Motion to Amend Complaint until September 26,
2005, seven days after the entry of final judgment. A motion to amend is not timely where
it is filed after summary judgment is entered. Hartford Cas. Ins. Co. v. Halliburton Co., 826
So. 2d 1206, 1219-20 (Miss. 2001). Therefore, this issue is without merit, and the trial court
properly denied the amendment.
CONCLUSION
¶30. Accordingly, the trial court correctly granted Regions Bank’s motion for summary
judgment as this claim is preempted by the Fair Credit Reporting Act. The Harmons failed
to raise sufficient allegations of malice or willful intent to injure. For this reason, we affirm
the trial court.
¶31. AFFIRMED.
SMITH, C.J., WALLER, P.J., AND CARLSON, J., CONCUR. RANDOLPH,
J., CONCURS IN RESULT ONLY. DIAZ, P.J., EASLEY AND GRAVES, JJ.,
DISSENT WITHOUT SEPARATE WRITTEN OPINION. LAMAR, J., NOT
PARTICIPATING.
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