Opinion ID: 1043964
Heading Depth: 3
Heading Rank: 1

Heading: Test for Actual Damages for Loss of Credit

Text: The Court of Appeals has implicitly recognized a right to recover damages for loss of available credit in certain circumstances, although none of the plaintiffs in these cases prevailed on appeal. See, e.g., Filson v. Wells Fargo Home Mortg., Inc., No. M2007-01842-COA-R3-CV, 2008 WL 3914899 (Tenn.Ct.App. Aug. 25, 2008) (breach of contract); Crowe v. First Am. Nat'l Bank, No. W2001-00800-COA-R3-CV, 2001 WL 1683710 (Tenn.Ct.App. Dec. 10, 2001) (conversion); Rey v. Hestle, No. 01A01-9110-CV-00399, 1992 WL 102231 (Tenn.Ct.App. May 15, 1992) (legal malpractice). Similarly, other state and federal courts have impliedly acknowledged a cause of action for loss of available credit, from which we discern three criteria necessary for recovery. First, a plaintiff must have suffered a demonstrable loss of credit. E.g., Divenuta v. Bilcare, Inc., No. 09-3657, 2011 WL 1196703, at  (E.D.Pa. Mar. 30, 2011) (striking damages for breach of contract claim based on injury to credit score, where plaintiff merely argued that credit score is a matter of record and if necessary, one could make an inquiry to the credit raters and find out what [plaintiff's] exact score was during any particular time period); Garza v. Sallie Mae, Inc., No. SA-10-CV-510-XR, 2010 WL 3784197, at -6 (W.D.Tex. Sept. 21, 2010) (denying motion to dismiss breach of contract claim where plaintiff alleged that he suffered damage to his credit rating, his credit balances increased, and his amount of available credit disappeared); Hoffman v. Asseenontv.com, Inc., 404 N.J.Super. 415, 962 A.2d 532, 538 (N.J.Super.Ct.App.Div. 2009) (affirming dismissal of claim for consumer fraud where plaintiff alleged that improper charge reduced his available credit, but nothing in the record supports the critical assumption that American Express imposed any credit limit on plaintiff's purchases or use of the card); Kim v. BMW of Manhattan, Inc., No. 601447/05, 2005 WL 3963831 (N.Y.Sup. Ct. 2005) (dismissing RICO claim where plaintiffs failed to allege credit card had a pre-set limit); Auto. Ins. Co. of Hartford, Conn. v. Davila, 805 S.W.2d 897, 908 (Tex. App. 1991) (reforming judgment to delete loss of credit damages for breach of good faith and fair dealing claim where plaintiff merely testified that her credit was totally ruined), disapproved on other grounds by Hines v. Hash, 843 S.W.2d 464, 469-70 (Tex. 1992). Second, the defendant must have proximately caused the loss of credit. E.g., Divenuta, 2011 WL 1196703, at  (finding insufficient evidence demonstrating a causal connection between [defendant's] failure to pay incentive compensation allegedly owed to [plaintiff] under the terms of his offer letter and any alleged decline in his credit score); Erdman v. White, 411 N.E.2d 653, 659 (Ind.App. 1980) (finding sufficient evidence to show a causal link between the [defamatory] letter sent by [defendant] to ... the Bank and the subsequent failure of [plaintiff] to obtain a sufficient line of credit to operate his business); Mead v. Johnson Grp., Inc., 615 S.W.2d 685, 688 (Tex. 1981) (finding some evidence to support the jury finding of proximate cause); Bailey v. Fleming, No. 14-95-01470-CV, 1997 WL 634166, at  (Tex.App. Oct. 16, 1997) (finding evidence sufficient to support the trial court's finding that [plaintiff] did in fact suffer damage to his credit and that [defendant] was the proximate cause of such damage). Third, the loss of credit must have caused actual harm to the aggrieved party, such as lost profits or added costs. For example, Pennsylvania has long recognized that some further injury must be shown to recover damages for loss of credit. See Johnson v. Four States Enters., Inc., 355 F.Supp. 1312, 1318 (E.D.Pa. 1972) (under state law, loss of credit, standing alone, is not proof of damage, unless the loss of credit connects itself with some tangible pecuniary loss of which the loss of credit was the cause. (citing Eckel v. Murphey, 15 Pa. 488, 495 (1850))). The Supreme Court of Texas appears to have gone a step further in holding that a plaintiff does not suffer actual damage merely from the inability to obtain a loan. St. Paul Surplus Lines Ins. Co. v. Dal-Worth Tank Co., 974 S.W.2d 51, 53 (Tex. 1998) (per curiam). In short, courts generally require plaintiffs to show something more than mere loss of credit. In particular, plaintiffs fail to recover when they proffer little or no evidence that the loss of credit caused by the defendant led to a subsequent, concrete injury. E.g., Divenuta, 2011 WL 1196703, at  ([E]ven if [plaintiff] could prove that his credit score declined as a result of [defendant's] alleged breach, to recover damages [plaintiff] would still have to demonstrate that the decline in his credit resulted in a `tangible pecuniary loss.' (quoting Four States Enters., Inc., 355 F.Supp. at 1318)); St. Paul Surplus Lines Ins. Co., 974 S.W.2d at 53 ([Plaintiff] had strong credit before filing for bankruptcy, perhaps as much as $2.75 million, and weak credit afterwards, maybe as little as $250,000. But there is no evidence that the decline injured [plaintiff] in any way because [it] never needed to use the credit and never tried to do so.); Pourmemar v. Chase Home Fin., L.L.C., No. 01-10-00474-CV, 2011 WL 5026189, at  (Tex.App. Oct. 20, 2011) (finding no evidence of actual damages due to loss of credit reputation). Plaintiffs may recover for loss of credit when they can demonstrate how the credit they lost would have resulted in specific profits or savings. E.g., Erdman, 411 N.E.2d at 659 ([Plaintiff] also testified as to the importance of having a large line of credit available in order to purchase airplanes that suddenly became available....); Tempo, Inc. v. Rapid Elec. Sales & Serv., Inc., 132 Mich.App. 93, 347 N.W.2d 728, 733 (1984) (per curiam) (withdrawn credit line resulted in additional interest of $90,000 and lost discounts of $4,500); EMC Mortg. v. Jones, 252 S.W.3d 857, 873 (Tex.App. 2008) ([Plaintiff] concluded that [defendant's] reporting of the foreclosure on his credit report would result in his having to pay an additional $163,000 [in higher interest].); see also Cortez v. Keystone Bank, Inc., No. 98-2457, 2000 WL 536666, at  (E.D.Pa. May 2, 2000) (denying motion for summary judgment on RESPA claim where plaintiffs offered evidence that their available credit was decreased by the amount of outstanding interest charges on the account during any given week and they were thus unable to earn interest on other accounts).