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consumer reporting agency . . . 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).

Plaintiffs contend that § 1681h(e)’s exception for claims
involving “false information furnished with malice or willful
intent to injure [the] consumer” applies here. According to
plaintiffs, they have adequately alleged malice in the following
paragraphs of the amended complaint:

13. U.S. Bank sent the major credit bureaus a Universal

Data Form requesting that the credit bureaus “remove all

late payments and the collection remarks.” A copy is

attached as Exhibit B. The report resulted from error by

U.S. Bank’s predecessor. Exhibit C.

14. U.S. Bank therefore knew that the statements

[regarding late payments and collection or foreclosure]

were false.

(Amended Complaint, @1 13-14.)

The problem with these paragraphs is that they merely allege
that U.S. Bank knew that the information was false at some point in
time after the information was provided. The amended complaint
wholly fails to allege that defendant knew that the information was
false at the time it was furnished and thus furnished the
information with malice. We acknowledge that on a motion to
dismiss, plaintiffs receive the benefit of imagination, so long as

the hypotheses are consistent with the complaint. See Sanjuan v

American Bd. of Psychiatry & Neurology, Inc,, 40 F.3d 247, 251 (7th



DATE:

ENTER:

-7-

January 14, 2004

Ohh

John f. brady, United States District Yuage



-3-

In November 2002, plaintiffs filed the instant action against
U.S. Bank. The complaint later was amended to cure a defect in its
jurisdictional allegations. Count I of the amended complaint
alleges that U.S. Bank’s publication of false credit information
defamed the Schaffners. Count II, which is asserted by all
plaintiffs, is a tortious interference with economic advantage
claim.

Defendant now moves to dismiss the complaint.

DISCUSSION

The purpose of a 12(b)(6) motion to dismiss is to test the
sufficiency of the complaint, not to resolve the case on the
merits. 5A Charles Alan Wright & Arthur R. Miller, ‘ede
Practice and Procedure § 1356, at 294 (2d ed. 1990). Dismissal is
appropriate only if “‘it is clear that no relief could be granted
under any set of facts that could be proved consistent with the
allegations.’” Ledford v. Sullivan, 105 F.3d 354, 356 (7th Cir.
1997) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)).
A. Count ~_De: i

One of U.S. Bank’s arguments is that plaintiffs’ defamation
claim is preempted by § 1681h(e) of the Fair Credit Reporting Act
(“FCRA”), which provides in relevant part:

Except as provided in sections 168in and 1681lo of this

title, 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 person who furnishes information to a


-5-
Cir. 1994). Nonetheless, we do not believe that hypothesizing that
U.S. Bank knew the information was false at the time it furnished
the information would be consistent with the complaint; this is
precisely because of the artful way in which plaintiffs have
attempted to avoid the requirement of pleading malice.’
Count I will be dismissed because it fails to allege that the
credit information was furnished with malice and accordingly is
preempted by the FCRA.

B. Count II - Tortious Interference
With Prospective Economic Advantage

To state a claim for tortious interference with prospective
economic advantage, a plaintiff must allege “1) his reasonable
expectation of entering into a valid business relationship; (2) the
defendant’s knowledge of the plaintiff's expectancy; (3) purposeful
interference by the defendant that prevents the plaintiff's
legitimate expectancy from ripening into a valid business
relationship; and (4) damages to the plaintiff resulting from such
interference.” Grund v. Donegan, 700 N.E.2d 157, 160 (I11. App.
ct. 1998).

U.S. Bank argues that plaintiffs have failed to allege the
first, second, and third elements of this tort. We agree. The

amended complaint does not expressly allege that plaintiffs had a

¥ Plaintiff’s overly general allegation that “U.S. Bank’s actions were
intentional or reckless, warranting substantial punitive damages” (Complaint, 4
17) is insufficient for the same reason.


Minute Ortier Form (06/97)

United States District Court, Northern District of Illinois

Nass Meginrate Judee John F. Grady “ina Avie ude

CASE NUMBER 02 C 8062 DATE January 14, 2004
CASE Schaffner et al v. U.S. Bank NA
TITLE

[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the

nature of the motion being presented.)

MOTION:

DOCKET ENTRY:

(1) o Filed motion of [ use listing in “Motion” box above.] |
(2) o Brief in support of motion due
@) a Answer brief to motion due___. Reply to answer brief due__.
(4) a Ruling/Hearing onset for sat
(5) o Status hearing[held/continued to] [set for/re-set for]on__——ssetfor_— sat
(6) Qa Pretrial conference[held/continued to] [set for/re-set forlon__setfor__-—s at__.
(e) Qo Trial[set for/re-set for]on__sat
(8) a [Bench/Jury trial] [Hearing] held/continued to__at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) O General Rule 21 OFRCP41(a)(1) 0 FRCP41(a)(2).
(0) som [Other docket entry] Defendant’s motion to dismiss the amended complaint [9-1] is granted. ENTER
MEMORANDUM OPINION.

qi) x {For further detail see order (on reverse side of/attached to) the original minute order.)

No notices required, advised in open court. Document

No notices required. Number
X_ | Notices MAILED by judge's staff.

Notified counsel by telephone.

Docketing to mail notices.

Mail AO 450 form. LYNOI LIYLSIA “sn
Cony SER)
courtroom GE: Nd SENYT yu
KAM deputy's
inttials Dhbidcteckivgd #f J
central Clerk's Office

(Reserved for use by the Cour)


-~6-
reasonable expectancy of receiving the additional financing, nor
does it allege facts indicating that this was the case. The
allegation that plaintiffs applied for financing is not sufficient
to allege that they reasonably expected to receive the financing.
Cf. Anderson vy, Vanden Dorpel, 667 N.E.2d 1296, 1299-1300 (Ill.
1996) (the hope of receiving a job offer is not a sufficient
expectancy); Buchanan v. Serbin Fashions, Inc., 698 F. Supp. 731,
734 (N.D, Ill. 1988) (same). Moreover, plaintiffs do not allege
that U.S. Bank knew of the Schaffners’ application for additional
financing or that U.S. Bank purposefully interfered with the
financing.*? Because Count II fails to allege three of the four
elements of a tortious interference with prospective economic
advantage claim, it will be dismissed.
We need not reach U.S. Bank’s alternative arguments for
dismissal.
CONCLUSION
For the foregoing reasons, defendant’s motion to dismiss the

amended complaint is granted.

2 Plaintiffs’ only argument as to the second element, knowledge, is that
Exhibit A to the amended complaint, the Underwriting Findings, “shows that the
investors to whom the credit application was submitted included U.S. Bank” and
therefore U.S. Bank had specific knowledge that plaintiffs were applying for
additional financing. (Plaintiffs’ Response to Motion to Dismiss at 10.) We are
not persuaded. Although the Underwriting Findings document lists U.S. Bank as
an “investor,” it is not clear from Exhibit A that the application was in fact
submitted to U.S. Bank. The allegations of the amended complaint fail to allege
knowledge as well.



02-8062.041-JCD January 14, 2004

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ROBERT J. SCHAFFNER, NANCY A.
SCHAFFNER, and IMAGINATIVE
GRAPHICS, INC.,

)
)
)
)
Plaintiffs, )
)
v. ) No. 02 C 8062
) 7)
U.S. BANK N.A., doing business as_ ) aD,
U.S. BANK HOME MORTGAGE, ) 4,
) Vo “ty
Defendant. ) 9g 7]

MEMORAND! 0!

Before the court is defendant's motion to dismiss the amended
complaint pursuant to Federal Rule of Civil Procedure 12(b) (6).
For the following reasons, the motion is granted.

BACKGROUND

The following facts, taken from plaintiffs’ amended complaint,
are accepted as true for purposes of this motion. Plaintiffs
Robert J. Schaffner and Nancy A. Schaffner own the corporate co-
plaintiff Imaginative Graphics, Inc. (“Imaginative”). Plaintiffs
obtained a business loan from Amalgamated Bank of Chicago
(“Amalgamated Bank”), which is not a party to this action. In the
summer of 2001, plaintiffs applied for additional financing from
Amalgamated Bank. The financing was delayed and ultimately denied,

in part because of adverse credit information reported by defendant

2/


-~2-
U.S. Bank N.A. (“U.S. Bank”) to one or more of the major credit
bureaus. Attached to the amended complaint as Exhibit A is a
document titled “Underwriting Findings,” which lists the adverse
information as one of the reasons for the denial of additional
financing.

The adverse credit information related to a residential
mortgage loan that the Schaffners had obtained from U.S. Bank's
predecessor. Payments were made on time, and the loan was paid in
full on April 16, 1999. U.S. Bank, however, reported that the
Schaffners had made late payments and that the loan had been placed
in collection or foreclosure. U.S. Bank sent this misinformation
to the major credit bureaus electronically; the bureaus then sent
the misinformation to Amalgamated Bank.

On September 9, 2002, shortly after the Underwriting Findings
were issued, U.S. Bank acknowledged its error and sent the credit
bureaus a “Universal Data Form” requesting that the bureaus
“[r]emove all late payments and the ‘collection’ remarks” and
indicating that the residential mortgage loan had been paid in full
in April 1999. (Amended Complaint, Ex. B, Universal Data Form.)

As a result of the denial of their application for additional
business financing, plaintiffs were unable to pay Imaginative’s
bills during its slow season. In addition, the Schaffners suffered

distress and were unable to pay their own salaries.