Court Opinion

ID: 9410711
Source: CourtListenerOpinion
Date Created: 2023-07-24 05:01:23.683528+00
Date Added: 2024-06-11T17:20:59.857909
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 22-2570
TAMARA S. FRAZIER,
                                                  Plaintiff-Appellant,
                                 v.

DOVENMUEHLE MORTGAGE, INC.,
                                                 Defendant-Appellee.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
           No. 1:20-cv-06721 — Gary Feinerman, Judge.
                     ____________________

       ARGUED APRIL 19, 2023 — DECIDED JULY 5, 2023
                ____________________

   Before HAMILTON, BRENNAN, and KIRSCH, Circuit Judges.
    BRENNAN, Circuit Judge. Tamara Frazier sued credit data
furnisher Dovenmuehle Mortgage, Inc. under 15 U.S.C.
§ 1681s-2(b) of the Fair Credit Reporting Act for allegedly
providing inaccurate information after unreasonably investi-
gating a dispute of its data. To prevail on this claim, Frazier
must make a threshold showing that Dovenmuehle’s data
was incomplete or inaccurate. That requirement can be
2                                                 No. 22-2570

satisﬁed by demonstrating the data furnished was (1) patently
incorrect, or (2) materially misleading, including by omission.
   Frazier contends that Dovenmuehle, upon notice of a data
dispute, provided credit reporting agency Equifax with an in-
accurate amended Pay Rate and Account History. For support
she relies on evidence about persisting inaccuracies in
Equifax’s credit reports produced using the amended data.
But given the full record, no reasonable jury could ﬁnd that
Dovenmuehle provided patently incorrect or materially mis-
leading information. So, we aﬃrm summary judgment for the
data furnisher. We also aﬃrm the district court’s disposition
of discovery and supplemental brieﬁng motions for related
reasons.
                              I.
   Dovenmuehle Mortgage, Inc., a mortgage subservicer,
helps lenders administer mortgage loans by accepting and
keeping track of payments. It also furnishes payment data to
credit reporting agencies like Equifax, Experian, or TransUn-
ion. These credit reporting agencies in turn compile and
process that consumer credit information to produce a credit
report for end-users, such as banks and landlords.
    When a consumer notiﬁes a credit reporting agency that
information on a credit report is incorrect, the agency will
identify the relevant data furnisher and transmit to it an Au-
tomated Consumer Dispute Veriﬁcation (ACDV) form. The
ACDV form presents the furnisher with account payment
data the credit reporting agency currently possesses and the
relevant data items the consumer disputes. Upon notice of a
dispute, the data furnisher has a statutory duty to investigate
the disputed data. The furnisher must also correct or verify
No. 22-2570                                                      3

the information by returning the ACDV form to the credit re-
porting agency with any amended or veriﬁed data inserted
next to the old data. See generally 15 U.S.C. § 1681s-2(b).
    In 2007, Tamara Frazier obtained a home mortgage loan
for which Dovenmuehle served as subservicer. Beginning in
October 2015, Frazier failed to make her monthly payments,
and by January 2016, she was 90 days delinquent. To resolve
the delinquency, Frazier successfully negotiated and settled
her debt through a short sale of her home, which closed on
January 14, 2016.
    Sometime in 2019 and 2020, Frazier realized this closed
mortgage account was reported as delinquent on her credit
reports, so she disputed the information to several credit re-
porting agencies, including Equifax. To conﬁrm the accuracy
of its records on Frazier’s mortgage, Equifax sent
Dovenmuehle four ACDV forms between 2019 and 2020. In
its ACDV responses, Dovenmuehle amended or veriﬁed the
following data items, among others. The contested items are
in bold:
       DATA ITEM                          CODING
                        Changed from “80,” meaning the account is
 Account Status         90–119 days past due, to “13,” meaning the
                        account is closed
                        Changed from empty to “3,” meaning 90
 Pay Rate
                        days delinquent
 Balance                Veriﬁed as $0
 Amount Past Due        Changed from empty to “$0”
 Date of Account        Changed from “11-26-2019” to “01-14-
 Information            2016” (date of short sale)
                        Changed from “01-01-2016” to “01-14-
 Date Closed
                        2016”
                        Changed from “09-01-2015” to “09-09-
 Date of Last Payment
                        2015”
4                                                     No. 22-2570

 Date of First            Changed from “10-01-2015” to “10-31-
 Delinquency              2015”
                          Veriﬁed as “AU,” meaning paid in full for
 Special Comments Code
                          less than the remaining balance
                          Changed from “3” (90 days delinquent) in
                          December 2018 and January, June, Au-
 Account History          gust, and October 2019 to dashes “–” for
                          all months after December 2015, meaning
                          “no reporting”

   Frazier contends the amended codes Dovenmuehle gave
Equifax for Pay Rate and Account History are inaccurate. As
evidence she points to how Equifax interpreted and reported
the amended data in her credit reports. Equifax reported this
amended data to indicate she was currently delinquent on the
mortgage with missed payments in months following the set-
tlement in January 2016.
   In August 2020, Frazier applied for a new mortgage loan.
But the mortgage broker denied approval because her Equifax
credit report reﬂected late payments on her previous mort-
gage in months following the short sale.
   Frazier sued Dovenmuehle and Equifax in separate fed-
eral suits, alleging violations of the Fair Credit Reporting Act,
15 U.S.C. § 1681, et seq. See also Frazier v. Equifax Info. Servs.,
LLC, No. 1:20-cv-06725 (N.D. Ill.). She claimed that
Dovenmuehle violated § 1681s-2(b) by failing to conduct a
reasonable investigation of disputed data and providing false
and misleading information to credit reporting agencies.
Shortly after the district court extended discovery deadlines,
Dovenmuehle moved for summary judgment and to stay dis-
covery. Frazier opposed Dovenmuehle’s motions and asked
under Federal Rule of Civil Procedure 56(d) to continue brief-
ing on the summary judgment motion until further discovery
No. 22-2570                                                      5

could be completed. Frazier requested leave to depose
Dovenmuehle and Equifax. And, in order to prove damages,
she requested leave to obtain further evidence from the mort-
gage broker who denied her loan application. Vacating the
summary judgment brieﬁng schedule, the district court
granted Frazier leave to depose Dovenmuehle, precluded her
from deposing Equifax, and stayed any further discovery.
    After the summary judgment motion was briefed, Frazier
moved to supplement her response with deposition testi-
mony she obtained from Equifax in the parallel lawsuit. The
district court granted Dovenmuehle summary judgment and
denied Frazier’s motion to supplement as moot. Frazier
timely appealed the partial denial of discovery, the grant of
summary judgment, and the denial of her motion to supple-
ment brieﬁng.
                                      II.
    We ﬁrst review the grant of summary judgment for
Dovenmuehle because that resolution informs our disposition
of Frazier’s appeals regarding her other motions. Our review
is de novo. Markel Ins. Co. v. Rau, 954 F.3d 1012, 1016 (7th Cir.
2020).
                                      A.
   Frazier’s claim against Dovenmuehle arises under 15
U.S.C. § 1681s-2(b). 1 That statute has many components. In

    1   The relevant portion of § 1681s-2(b) reads:
(b) Duties of furnishers of information upon notice of dispute
(1) In general
6                                                             No. 22-2570

short, it requires a data furnisher to investigate and review
disputed information forwarded by a credit reporting agency
for completeness and accuracy, and then send veriﬁed or
amended data back to the agency.
   The federal circuit courts that have interpreted § 1681s-
2(b) agree on two threshold requirements for a claim under
the statute:

After receiving notice pursuant to section 1681i(a)(2) of this title of a dis-
pute with regard to the completeness or accuracy of any information pro-
vided by a person to a consumer reporting agency, the person shall—
    (A) conduct an investigation with respect to the disputed information;
    (B) review all relevant information provided by the consumer report-
    ing agency pursuant to section 1681i(a)(2) of this title;
    (C) report the results of the investigation to the consumer reporting
    agency;
    (D) if the investigation finds that the information is incomplete or in-
    accurate, report those results to all other consumer reporting agencies
    to which the person furnished the information and that compile and
    maintain files on consumers on a nationwide basis; and
    (E) if an item of information disputed by a consumer is found to be
    inaccurate or incomplete or cannot be verified after any reinvestiga-
    tion under paragraph (1), for purposes of reporting to a consumer
    reporting agency only, as appropriate, based on the results of the re-
    investigation promptly—
        (i) modify that item of information;
        (ii) delete that item of information; or
        (iii) permanently block the reporting of that item of information.
No. 22-2570                                                                     7

    1. The plaintiﬀ must make a prima facie showing that the
       data furnisher provided incomplete or inaccurate in-
       formation. 2
    2. The plaintiﬀ must also show that the incompleteness
       or inaccuracy was the product of an unreasonable in-
       vestigation—that is, had the furnisher conducted a rea-
       sonable investigation, it would have discovered that
       the data it provided was incomplete or inaccurate. 3
We agree with their interpretations and adopt these require-
ments.
   The district court resolved this case on the plaintiﬀ’s fail-
ure to prove inaccuracy, so we focus our discussion there.
This court has not set forth a standard for incompleteness or
inaccuracy under § 1681s-2(b), to the frustration of district
courts within our circuit. 4 We set that standard now and again

    2 See, e.g., Gross v. CitiMortgage, Inc., 33 F.4th 1246, 1251 (9th Cir. 2022);

Pittman v. Experian Info. Sols., Inc., 901 F.3d 619, 629 (6th Cir. 2018); Felts v.
Wells Fargo Bank, N.A., 893 F.3d 1305, 1313 (11th Cir. 2018); Seamans v. Tem-
ple Univ., 744 F.3d 853, 864–66 (3d Cir. 2014); Llewellyn v. Allstate Home
Loans, Inc., 711 F.3d 1173, 1185–86 (10th Cir. 2013); Chiang v. Verizon New
England, Inc., 595 F.3d 26, 29–30 (1st Cir. 2010); Saunders v. Branch Banking
and Tr. Co. of VA, 526 F.3d 142, 148 (4th Cir. 2008).
    3 See, e.g., Gross, 33 F.4th at 1252; Woods v. LVNV Funding, LLC, 27 F.4th

544, 550 (7th Cir. 2022) (citing Westra v. Credit Control of Pinellas, 409 F.3d
825, 827 (7th Cir. 2005)); Pittman, 901 F.3d at 629; Felts, 893 F.3d at 1312;
Maiteki v. Marten Transp. Ltd., 828 F.3d 1272, 1275 (10th Cir. 2016); Simm-
sParris v. Countrywide Fin. Corp., 652 F.3d 355, 359 (3d Cir. 2011); Chiang,
595 F.3d at 29–30; Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 430–31
(4th Cir. 2004).
    4  See, e.g., Lute v. TransUnion, LLC, No. 18-CV-07451, 2022 WL 971877,
at *4 (N.D. Ill. Mar. 31, 2022) (noting the Seventh Circuit has not addressed
the issue but adopting out-of-circuit test for incompleteness or
8                                                             No. 22-2570

follow the lead of our fellow circuits in holding that incom-
pleteness or inaccuracy under § 1681s-2(b) requires a showing
that the information the data furnisher provided was (1) pa-
tently incorrect, or (2) materially misleading, including by
omission. 5 By materially misleading, we mean “misleading in
such a way and to such an extent that it can be expected to
adversely aﬀect credit decisions.” Gorman, 584 F.3d at 1163
(quoting Sepulvado, 158 F.3d at 895); see also Seamans, 744 F.3d
at 865; Saunders, 526 F.3d at 148.
    Frazier maintains that completeness or accuracy under
§ 1681s-2(b) must be judged based, not on the ACDV response
the data furnisher provided, but on the credit report gener-
ated from it. But the text of § 1681s-2(b) says nothing about a
credit report, let alone a duty of a data furnisher with respect
to credit reports produced using its amended data. To the
contrary, the statute sets out the data furnisher’s duties to in-
vestigate disputes, correct incomplete or inaccurate

inaccuracy); Levine v. JPMorgan Chase & Co., 46 F. Supp. 3d 871, 875 (E.D.
Wis. 2014) (adopting out-of-circuit test); Sutherland v. Urb. P’ship Bank, No.
11 CV 03455, 2012 WL 567787, at *4 (N.D. Ill. Feb. 21, 2012) (“The Seventh
Circuit has not picked a side or otherwise defined in detail the accuracy
standard for claims under § 1681s–2(b).”).
    5 See, e.g., Twumasi-Ankrah v. Checkr, Inc., 954 F.3d 938, 943 (6th Cir.
2020) (citing Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611, 617 (6th Cir.
2012)); Seamans, 744 F.3d at 865; Llewellyn, 711 F.3d at 1186; Carvalho v.
Equifax Info. Servs., LLC, 629 F.3d 876, 890 (9th Cir. 2010) (citing Gorman v.
Wolpoff & Abramson, LLP, 584 F.3d 1147, 1163 (9th Cir. 2009)); Saunders, 526
F.3d at 148 (citing Dalton v. Cap. Associated Indus., Inc., 257 F.3d 409, 415
(4th Cir. 2001)); see also Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890,
895 (5th Cir. 1998) (adopting the misleading standard for 15 U.S.C.
§ 1681e(b)); Koropoulos v. Credit Bureau, Inc., 734 F.2d 37, 39–40 (D.C. Cir.
1984) (same).
No. 22-2570                                                   9

information, and report the results of an investigation to the
credit reporting agency. See § 1681s-2(b)(A)–(E). In fact,
§ 1681s-2(b)(E) clariﬁes that the duty to correct data applies
“for purposes of reporting to a consumer reporting agency
only.” An accompanying regulation points the same way:
“Accuracy” in § 1681s-2(b) concerns the “information that a
furnisher provides to a consumer reporting agency about an
account or other relationship.” 12 C.F.R. § 1022.41(a).
   It follows that completeness or accuracy under § 1681s-
2(b) is determined based on the information the data
furnisher provides to the credit reporting agency. Just as the
reasonableness of a data furnisher’s investigation is assessed
objectively based on the content of the ACDV the furnisher
received, see Woods, 27 F.4th at 550; Maiteki, 828 F.3d at 1275;
Chiang, 595 F.3d at 29–30, completeness or accuracy is evalu-
ated objectively based on the content of the furnisher’s ACDV
response. Cf. Bibbs v. Trans Union LLC, 43 F.4th 331, 342–44 (3d
Cir. 2022) (applying a “reasonable reader standard” to hold
that a credit report was not materially misleading under 15
U.S.C. § 1681e(b), a FCRA provision applicable to credit re-
porting agencies). So, whether Dovenmuehle’s ACDV re-
sponses were patently incorrect or materially misleading
must be evaluated objectively based on those responses.
                              B.
   Having clariﬁed the legal standard, we turn to the two al-
leged inaccuracies Frazier highlights in Dovenmuehle’s
ACDV responses.
   First, Frazier takes issue with the dashes in the Account
History section for all months after December 2015. She says
the dashes are “a veriﬁcation of the inaccurate … late
10                                                 No. 22-2570

payments” reﬂected in the old data. But Frazier must be held
to the admission in her Statement of Facts that the dashes
meant “‘no reporting’ … for all months following the Short
Sale.” The mortgage was settled in January 2016, so it is accu-
rate to show no reporting of payments for all months after
December 2015. Given Frazier’s admission, we do not address
any alternative interpretation of the dashes by Equifax—
whether as reﬂected in credit reports or deposition testimony.
We take no position on whether such evidence would be rel-
evant to whether the dashes are misleading.
    Second, Frazier contends the Pay Rate of “3” (90 days de-
linquent) can only signify that her mortgage loan account was
currently delinquent—which would be inaccurate—rather
than historically delinquent as of the time the account was set-
tled. At oral argument, her counsel also maintained the “3”
was in the wrong place and that its correct location was in the
Account History section. Oral Arg. at 07:00–08:10. It is not
clear whether the “3” code is an incorrect indicator of current
delinquency or a correct one of historical delinquency. So, the
Pay Rate of “3” is not patently incorrect. The dispositive ques-
tion thus is whether the code as presented on the ACDV form
would materially mislead a reasonable observer to conclude
that Frazier is currently delinquent.
    Like the district court, we conclude that, when reviewed
in context, the Pay Rate of “3” is not materially misleading.
The “3” code is directly beside an Account Status code of “13,”
which means the account is closed. A few columns down, the
Balance and Amount Past Due state $0. Date Closed is accu-
rately marked as “01-14-2016,” and so is the Date of Last Pay-
ment as “09-09-2015.” Finally, the Special Comments Code
was veriﬁed as “AU,” which represents that Frazier’s loan was
No. 22-2570                                                       11

paid in full for less than the remaining balance. A debtor can-
not be currently delinquent on a loan that no longer exists.
With this full context, no reasonable jury could ﬁnd that the
“3” code meant Frazier was currently delinquent on her debt.
See generally Lash v. Sparta Cmty. Hosp. Dist., 38 F.4th 540, 542
(7th Cir. 2022) (citation omitted) (“A genuine issue of material
fact exists when the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.”). Accord-
ingly, the Pay Rate of “3” is not materially misleading as a
matter of law. And given the strength of this contextual evi-
dence, any alternative interpretation of the “3” code by
Equifax or Frazier’s expert would fail to present a genuine is-
sue of material fact on accuracy. We do not address whether
Equifax’s interpretation of the “3” code is relevant to whether
it is materially misleading. 6
    This conclusion places our court in line with a case on
which the district court relied, Bibbs v. Trans Union LLC, 43
F.4th 331 (3d Cir. 2022). Though that case involves the accu-
racy of a credit report under 15 U.S.C. § 1681e(b), given our
adoption of the patently incorrect or materially misleading
standard from § 1681e(b) caselaw, the analogy is tight. In
Bibbs, the Third Circuit held that a “120 Days Past Due” Pay
Status notation was not materially misleading as to whether
the appellants’ accounts were currently—rather than histori-
cally—past due in light of “multiple conspicuous statements
reﬂecting that the accounts are closed and Appellants have no
ﬁnancial obligations to their previous creditors.” 43 F.4th at
343–44. This was despite § 1681e(b)’s mandate for credit

   6 Other credit reporting agencies correctly reported Dovenmuehle’s
ACDV response data to show that Frazier was only historically delin-
quent, but we do not address the relevancy of this fact.
12                                                    No. 22-2570

reporting agencies to assure “maximum possible accuracy.”
Id. at 344. No similar language exists in § 1681s-2(b), so con-
text can play a large role in determining completeness or ac-
curacy here.
                                III.
    Turning to the district court’s partial denial of discovery
and its denial of Frazier’s motion to supplement brieﬁng, we
review for abuse of discretion. Perez v. Staples Cont. & Com.
LLC, 31 F.4th 560, 568 (7th Cir. 2022); Wanko v. Bd. of Trs. of Ind.
Univ., 927 F.3d 966, 969 (7th Cir. 2019). In her Rule 56(d) dis-
covery motion, Frazier sought to depose Equifax on “how to
interpret the ACDV responses provided by DMI to Equifax.”
She also sought discovery from the mortgage broker to estab-
lish damages. She later moved to supplement her summary
judgment response with Equifax’s deposition testimony that
she obtained in the parallel litigation against it.
   Frazier made the tactical choice to sue Equifax separately,
creating this procedural situation. But Frazier ultimately took
Equifax’s deposition, so her appeal of the denial of the motion
to depose Equifax is moot. In any case, how Equifax inter-
preted Dovenmuehle’s ACDV responses would not change
the outcome of summary judgment, so any error in denying
leave to depose Equifax or to oﬀer supplemental brieﬁng on
Equifax’s deposition testimony is harmless. And because we
aﬃrm summary judgment for Dovenmuehle, Frazier’s appeal
regarding the motion to obtain discovery from the mortgage
broker is also moot.
                                                        AFFIRMED.