Longman v. Wachovia Bank, N.A.

11-4225-cv
Longman v. Wachovia Bank, N.A.
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2012
(Submitted: November 28, 2012 Decided: December 19, 2012)
Docket No. 11-4225-cv
STUART L. LONGMAN,
Plaintiff-Appellant,
v.
WACHOVIA BANK, N.A., N/K/A WACHOVIA BANK,
A DIVISION OF WELLS FARGO BANK N.A.,
Defendant-Appellee.*
Before:
SACK, CHIN, and LOHIER, Circuit Judges.
Appeal from a judgment of the United States
District Court for the District of Connecticut (Hall, J.)
dismissing, inter alia, plaintiff-appellant's claims for
violations of the Fair Credit Reporting Act, 15 U.S.C.
§ 1681s-2(a).
AFFIRMED.
*
The Clerk of the Court is directed to amend the
official caption in this case to conform to the listing of the
parties above.
Mark Stern, Marc T. Miller, Mark Stern &
Associates, LLC, Norwalk,
Connecticut, for Plaintiff-
Appellant.
David M. Bizar, Seyfarth Shaw, LLP,
Boston, Massachusetts, for
Defendant-Appellee.
PER CURIAM:
Plaintiff-appellant Stuart L. Longman appeals from
a judgment of the United States District Court for the
District of Connecticut (Hall, J.) entered September 20,
2011, in favor of defendant-appellee Wachovia Bank, N.A.,
n/k/a Wachovia Bank, A Division of Wells Fargo Bank
("Wachovia"). The district court, in a ruling filed
September 16, 2011, granted Wachovia's motion for summary
judgment and dismissed Longman's claims for willful
noncompliance with certain provisions of the Fair Credit
Reporting Act in 15 U.S.C. § 1681s-2(a) and for common law
defamation. We affirm.
BACKGROUND
The facts are generally undisputed. Construing the
few disputed issues of fact in Longman's favor, they may be
summarized as follows.
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Longman, an experienced real estate developer,
purchased land in Florida for $250,000, which he financed
with a "balloon" note from Wachovia secured by a mortgage on
the property. The note called for Longman to make monthly
interest payments for three years, after which the full
principal of $231,220.99 became due. Longman failed to make
the balloon payment when it became due.
Longman spoke with Wachovia employees about
resolving the situation and they advised him to continue
making monthly interest payments until the bank approved a
"short sale" of the property, i.e., a sale in which the
proceeds would satisfy the outstanding debt even though they
will fall short of the total balance due. Consequently,
Longman continued making monthly interest payments of
$1,436, which Wachovia received and credited. Despite these
payments, Wachovia began notifying credit reporting agencies
that Longman was late on his obligations because he never
made the balloon payment.
Longman filed this action below against Wachovia on
October 19, 2009, asserting, inter alia, claims for willful
noncompliance with the Fair Credit Reporting Act.
Specifically, he alleged that Wachovia knew its statements
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to the credit reporting agencies were false, see 15 U.S.C. §
1681s-2(a)(1), failed to correct them, see § 1681s-2(a)(2),
and failed to perform a reasonable investigation after
Longman notified the bank that its reporting was inaccurate,
see § 1681s-2(a)(8)(E).1
The complaint did not allege that Longman had
submitted a dispute to a credit reporting agency about the
accuracy of Wachovia's reports. See § 1681s-2(b)(1).
Longman only disputed Wachovia's reports with these agencies
after filing this action. In its answer filed January 4,
2010, Wachovia asserted as defenses that there was no
private cause of action for violations of § 1681s-2(a) and
that the complaint did not state a claim under § 1681s-2(b)
because that provision requires that the dispute be
submitted to a credit reporting agency. Wachovia's counsel
pointed out this deficiency to Longman's counsel at a
deposition on September 30, 2010. Finally, on March 8,
2011, Wachovia moved for summary judgment on all claims,
including any § 1681s-2(b) claim. Longman never attempted
1
Longman did not cite specific sections of the Fair
Credit Reporting Act in his complaint.
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to amend his complaint before the motion or in his motion
papers.
In a decision filed September 16, 2011, the
district court granted summary judgment in favor of Wachovia
on all claims, concluding, inter alia, that there was no
private right of action for violations of § 1681s-2(a) and
that the complaint failed to state a claim under § 1681s-
2(b). Although Longman did not request it, the district
court sua sponte denied leave to amend the complaint to add
a § 1681s-2(b) claim based on the disputes subsequently
filed with the credit reporting agencies because it would
have prejudiced Wachovia. Judgment was entered on September
20, 2011. This appeal followed.
DISCUSSION
A. Applicable Law
We review the lower court's grant of summary
judgment de novo, construing the facts in the light most
favorable to the non-moving party. Lopes v. Dep't of Soc.
Servs., 696 F.3d 180, 184 (2d Cir. 2012). We review the
court's denial of leave to amend for abuse of discretion.
McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d
Cir. 2007).
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The Fair Credit Reporting Act (the "Act"), 15
U.S.C. § 1681 et seq., regulates credit reporting procedures
to ensure the confidentiality, accuracy, relevancy, and
proper utilization of consumers' information. See 15 U.S.C.
§ 1681(b). As part of this regulatory scheme, the Act
imposes several duties on those who furnish information to
consumer reporting agencies. See § 1681s-2. Among these
are duties to refrain from knowingly reporting inaccurate
information, see § 1681s-2(a)(1), and to correct any
information they later discover to be inaccurate, see §
1681s-2(a)(2).
Consumers have the right to dispute any information
reported to a credit reporting agency. See
§ 1681g(c)(1)(B)(iii); see also §§ 1681i(a)(1)(A), 1681s-
2(a)(8). If a dispute is filed with the agency, both the
agency and the furnisher of that information have a duty to
reasonably investigate and verify that the information is
accurate. See §§ 1681i(a)(1)(A), 1681s-2(b). If a dispute
is filed directly with the furnisher, the furnisher only has
a duty to investigate in certain circumstances established
by regulation. See § 1681s-2(a)(8); 16 C.F.R. § 660.4;
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Chiang v. Verizon New Eng. Inc., 595 F.3d 26, 35 & n.8 (1st
Cir. 2010).
In certain circumstances, a consumer may bring a
civil cause of action against any person who "willfully
fails to comply with any requirement imposed under" the Act
and recover actual or statutory damages, punitive damages,
costs, and attorneys' fees. See § 1681n(a). The principal
question presented in this case is whether a private cause
of action is available for violations of § 1681s-2(a). See
§ 1681s-2(c)(1).
B. Application
On appeal, Longman argues that the district court
erroneously concluded that there is no private right of
action for violations of § 1681s-2(a) and abused its
discretion by preemptively denying leave to amend the
complaint to plead a claim under § 1681s-2(b). We address
each argument in turn.
1. Violations of § 1681s-2(a)
Although we have not previously addressed whether
the Fair Credit Reporting Act provides a private cause of
action for violations of § 1681s-2(a), the statute plainly
restricts enforcement of that provision to federal and state
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authorities. Indeed, the statute provides that subsection
(a) "shall be enforced exclusively . . . by the Federal
agencies and officials and the State officials identified in
section 1681s of this title." 15 U.S.C. § 1681s-2(d)
(emphasis added). Thus, the district court correctly
concluded, as many other courts have held, that there is no
private cause of action for violations of § 1681s-2(a).
Accord, e.g., Boggio v. USAA Federal Sav. Bank, 696 F.3d
611, 615-16 (6th Cir. 2012); Sanders v. Mountain Am. Fed.
Credit Union, 689 F.3d 1138, 1147 (10th Cir. 2012);
SimmsParris v. Countrywide Fin. Corp., 652 F.3d 355, 358 (3d
Cir. 2011); Chiang, 595 F.3d at 35; Saunders v. Branch
Banking & Trust Co. of Va., 526 F.3d 142, 149 (4th Cir.
2008); Nelson v. Chase Manhattan Mort. Corp., 282 F.3d 1057,
1059 (9th Cir. 2002). Because the complaint only alleges
violations of subsection (a) -- i.e., knowingly disclosing
false information, see § 1681s-2(a)(1), failing to correct
false information, see § 1681s-2(a)(2), and failing to
investigate a dispute filed directly with a furnisher of
information, see § 1681s-2(a)(8) -- the district court
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properly granted summary judgment on Longman's Fair Credit
Reporting Act claims.
2. Violations of § 1681s-2(b)
Longman does not dispute the district court's
conclusion that the complaint failed to state a claim under
§ 1681s-2(b), but argues that the court erred by denying
leave to amend to correct the deficiency. We conclude that
the district court did not abuse its discretion in light of
Longman's delay and the prejudice to Wachovia. Longman had
ample warning of the need to amend, but he never sought
leave to do so. He first filed a dispute with a credit
reporting agency in November 2009 and Wachovia first pointed
out the complaint's deficiency in its answer filed in
January 2010. Nevertheless, Longman did not seek to add a
§ 1681s-2(b) claim before the district court denied leave
sua sponte nearly two years later, on September 16, 2011.
See City of New York v. Group Health Inc., 649 F.3d 151, 157
(2d Cir. 2011) (finding undue delay where plaintiff sought
leave to amend during summary judgment briefing but "was
aware of the flaws in its complaint" several years earlier).
The district court reasonably concluded that Wachovia would
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have been prejudiced by permitting an amendment at that late
point in the litigation, after completion of discovery and
the filing and briefing of a motion for summary judgment.
See AEP Energy Servs. Gas Holding Co. v. Bank of Am., N.A.,
626 F.3d 699, 726-27 (2d Cir. 2010) (finding sufficient
prejudice where plaintiff sought leave to amend years after
filing and after summary judgment motions were fully
briefed). Under these circumstances, the district court did
not abuse its discretion in denying leave to amend.2
CONCLUSION
For the foregoing reasons, the judgment of the
district court is AFFIRMED.
2
Longman also seems to argue an estoppel claim under
Florida law, but no such claim appears in the complaint. Nor did
Longman request leave below to amend his complaint to add an
estoppel claim. Moreover, even assuming he had asserted such a
claim below, the claim fails as a matter of law substantially for
the reasons stated by the district court.
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