Court Opinion

ID: 813903
Source: CourtListenerOpinion
Date Created: 2012-12-19 15:38:20+00
Date Added: 2024-06-11T18:00:50.270253
License: Public Domain

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.

                              -2-
         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

                              -3-
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.

                               -4-
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).

                               -5-
            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;

                               -6-
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

                              -7-
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

                                -8-
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

                              -9-
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.

                               -10-