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Waletzko v. CoreLogic Credco, LLC

United States District Court, W.D. Wisconsin

October 7, 2016



          WILLIAM M. CONLEY District Judge

         In this lawsuit, plaintiff Josephine Waletzko, who is very much alive, alleges that defendant CoreLogic Credco, LLC (“Credco”) violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., by furnishing her prospective lender with a credit report indicating that she may be dead.[1] Credco now moves for summary judgment. (Dkt. #81.) Because the evidence of record does not support plaintiff's claim that the inaccurate report caused her an actual injury, the court will grant Credco's motion and dismiss this case.


         As a preliminary matter, plaintiff moves to strike two declarations filed by defendant in support of its motion for summary judgment, both of which contain potentially material facts. Plaintiff first moves to strike the declaration of Jamie Chapman. (Dkt. #98.) Chapman is the Director of Solution Consulting at Quicken Loans, whose denial of Waletzko's home loan application is the basis for this lawsuit.[2](Decl. of Jamie Chapman (dkt. #86) ¶ 1.) Chapman's declaration includes facts regarding Quicken Loans' procedures for evaluating an applicant's credit report, as well as facts regarding the specific, inaccurate report from Credco at issue here, and the reasons for Quicken Loans' denial of Waletzko's application, which Quicken Loans described in a letter addressed to her. Chapman authenticates copies of the Credco report and letter, which are both attached to her affidavit.

         Specifically, plaintiff moves to strike two paragraphs in Chapman's declaration, both of which plaintiff claims assert facts that are not within Chapman's personal knowledge. See Fed. R. Civ. P. 56(c)(4). First, paragraph fourteen of Chapman's declaration alleges that: “On April 4, 2013, Quicken Loans mailed a [home loan application] denial letter to Plaintiff. Attached as Exhibit B is a true and accurate copy of the April 4, 2013 denial letter.” (Decl. of Jamie Chapman (dkt. #86) ¶ 14.) Plaintiff contends that Chapman lacks personal knowledge about whether Quicken Loans actually sent the letter. According to plaintiff, Chapman admitted at her 30(b)(6) deposition for Quicken Loans that: (1) she only “guessed” that Quicken Loans mailed the letter; (2) she did not know whether Quicken Loans kept notes about letters they sent; and (3) she did not know whether Quicken Loans or an outside vendor typically mailed denial letters.

         In response, defendant cites Chapman's testimony at her 30(b)(6) deposition that: (1) the copy of the letter addressed to Waletkzo was from Quicken Loans' company records; and (2) its business practice is to keep a copy of every application denial or withdrawal letter, which it sends for every denied or withdrawn application. Thus, the court agrees with defendant that as a witness familiar with Quicken Loans' business practices regarding denial letters, Chapman is capable of authenticating Waletzko's denial letter and asserting that its practice is to mail denial letters to the prospect. Since all of this testimony is admissible under Rule 56(c)(4), the jury would be free to infer (or reject an inference) that the mail was, in fact, timely sent.

         Second, plaintiff moves to strike paragraph twelve, which is supported by Chapman's assertion that “[t]he decision to deny Plaintiff's application was based on Plaintiff's credit score of 581 reported by Trans Union.” (Decl. of Jamie Chapman (dkt. #86) ¶ 12.) Plaintiff again claims that Chapman lacks personal knowledge to support that assertion because (1) it is based solely on the denial letter; and (2) the letter appears to reference a credit report dated March 28, 2013, which the parties now agree does not exist. Thus, plaintiff argues, “[o]ne cannot have personal knowledge about a credit report that is not in their possession, nor has been viewed by them.” (Pl.'s Mot. to Strike (dkt. #98) at 2.)

         Defendant explains in response, however, that Chapman testified at her 30(b)(6) deposition that the March date referenced in the letter was the date that Quicken “withdrew the loan from [its] system or denied the loan from [its] system, ” and thus did not reflect any credit report other than the one Credco prepared on February 22, 2013, which reflected her 581 score. (Dep. of Quicken Loans (dkt. #103) at 42:16-19.) Again, the court agrees with defendant. As an individual with knowledge of Quicken Loans' business practices regarding home loan applications, Chapman has sufficient knowledge to assert the basis for Quicken Loans' denial of Waletzko's home loan application, based on her review of the denial letter. Moreover, plaintiff wholly fails to explain why, under the facts of this case, it would be material if the March date actually reflected a second date that her credit score was reported by TransUnion.

         Plaintiff's challenge to the declaration of Debra Rothrock is similarly unavailing. As Credco's Vice President of Project Management, Rothrock generally describes the procedures surrounding Credco's assembly of credit information reported by the three nationwide credit reporting agencies (“NCRAs”), Equifax, Experian and TransUnion, into something it calls a “trimerge” credit report for lenders. Plaintiff argues primarily that Rothrock's declaration should be stricken because Credco did not disclose her as an expert witness, but whatever merit there may be in plaintiff's conclusory argument that Rothrock's “report offers numerous statements of opinions that are based on [her] specialized knowledge, experience, training, and education, ” simply explaining how Credco assembles credit information is not among the objectionable opinions. (Pl.'s Mot. To Strike (dkt. #99) at 2.) Instead, Rothrock's declaration on this subject includes facts based on her four years of experience at Credco regarding the procedure by which Credco generates credit reports, not opinions requiring technical or specialized knowledge. Plaintiff's arguments that Rothrock lacks personal knowledge about the credit reporting industry discussed in her declaration fail for much the same reason, since her knowledge would likely include at least some knowledge about how NCRAs generate reports. Accordingly, the court will deny both of plaintiff's motions to strike.

         In turn, defendant asks for the court to sanction plaintiff under 28 U.S.C. § 1927 for moving to strike Chapman and Rothrock's declarations. While the court agrees that plaintiff's motions lack much merit, they do not rise to the level of frivolousness to constitute “a serious and studied disregard for the orderly process of justice.” Overnite Transp. Co. v. Chi. Indus. Tire Co., 697 F.2d 789, 795 (7th Cir. 1983). Thus, the court will not sanction plaintiff for filing her motions to dismiss, although it may be inclined to sanction any similarly frivolous motions filed later in this case.


         A. Credco's process for generating credit reports[4]

         The parties agree that Credco is a consumer reporting agency (“CRA”) under the definitions provided by the FCRA. Credco is also considered a “reseller” under the FCRA because it “assembles and merges information contained in the database of another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for purposes of furnishing such information to any third party” but “does not maintain a database of the assembled or merged information from which new consumer reports are produced.” 15 U.S.C. § 1681a(u).

         As a result, to obtain information from Credco, a lender submits information about a consumer applicant, which Credco passes along to the NCRAs without modification. The NCRAs then search their databases of assembled or merged credit information from various, so-called “furnishers” (e.g., credit card issuers) to determine what information might concern the consumer applicant identified by the lender. Credco offers no input into the NCRAs' process for selecting what information to report.

         After receiving the requested information from the various NCRAs, Credco uses a proprietary process to assemble that information into a trimerge credit statement for the identified applicant in accordance with the format required by that particular lender. In doing so, Credco does not modify the information reported by the three NCRAs, nor does Quicken Loans expect Credco to do so. (Decl. of Jamie Chapman (dkt. #86) ¶ 4.) Quicken Loans then uses its own proprietary rules to determine which information provided by Credco it considered relevant in evaluating an application.

         While Credco does not modify the information it receives from NCRAs before passing it on to lenders, Credco does have some processes in place to ensure the accuracy of the information, at least over the long run, including principally conducting data validation audits, which are designed to detect any discrepancies between the information reported by the NCRAs and the information included in the trimerge credit report, as well as employing rules to ensure that each NCRA is reporting information as it typically would. Credco's systems actually generate an error code when an NCRA provides information that does not comport with the lenders' or its own requirements.

         B. Quicken Loans' denial of Waletzko's loan application

         In May of 2012, Capital One Bank purchased the HSBC credit card portfolio. Afterward, the Bank reported plaintiff Josephine Waletzko, an HSBC card holder, as deceased to NCRAs Experian and Equifax.[5] Despite Waletzko's efforts to resolve the inaccuracy, Experian's and Equifax's “deceased” notations showed up on Credco's trimerge credit report prepared for Quicken Loans.[6] In turn, Quicken Loans' request was prompted by Waletzko's oral application for a mortgage over the phone on February 22, 2013. As reflected in Credco's trimerge report dated the same day, Equifax and Experian, but not TransUnion, indicate that Waletzko was deceased based on the report from Capital One.[7] In addition, Credco's trimerge report indicated that: (1) Waletzko's Visa credit card from Capital One had a charge-off date of “2009-10”; (2) all three NCRAs reported that Waletzko filed for and was discharged from bankruptcy in 2003 and 2004, respectively; and (3) all three NCRAs reported that Waletzko had delinquent accounts with Chase, GECRB/Care and CB/FSHNBGV. As the only NCRA that did not report Waletzko as deceased, Credco's trimerge report includes TransUnion's report that she had a FICO score of 581, stating four factors that weighed adversely: (1) “Serious delinquency and public record or collection filed”; (2) “Time since delinquency is too recent or unknown”; (3) “Length of time since derogatory public record or collection is too short”; and (4) “Number of accounts with delinquency.” (Decl. of Jamie Chapman Ex. A (dkt. #86-1).)

         Quicken Loans' representative apparently informed Waletzko that her application was denied during that first phone call, and then referred her to Quizzle, its partner company, which provides credit repair resources. The parties' principal dispute centers around whether the deceased notations adversely impacted Waletzko's home loan application given TransUnion's negative credit report and her poor credit history generally. In particular, plaintiff claims that Quicken Loans considered the deceased notations in denying Waletzko's application, pointing to testimony from Chapman's 30(b)(6) deposition that Quicken Loans would require Waletzko to “provid[e] documentation to show that she's alive” before receiving a loan. (Dep. of Quicken Loans (dkt. #103) at 64:3-5.) Again pointing to testimony from Chapman's deposition, plaintiff also stresses the FHA guidelines that Quicken Loans follows would not permit an applicant to receive a loan if reported as deceased. (Id. at 64:19-65:1, 71:15-16.) Finally, plaintiff emphasizes that the automated underwriting programs that Quicken Loans uses would not approve an applicant's loan if her credit report only included one reported score out of the three NCRAs. (Id. at 72:11-16.)

         In response, defendant asserts that the deceased notations reported from Experian and Equifax did not weigh into Quicken Loans' denial of Waletzko's application because of its policy to ignore a deceased notation from an NCRA when at least one other NCRA reports a credit score. (Decl. of Jamie Chapman (dkt. #86) ¶¶ 4, 13.) More persuasively, defendant points to evidence that the Quicken Loans banker who spoke to Waletzko on the phone denied her application before it even reached the point where Quicken Loans would have considered her eligibility for a loan using the automated underwriting programs. (Dep. of Josephine Waletzko (dkt. #88) at 222:1-16; Dep. of Quicken Loans (dkt. #103) at 48:21-49:12.) Citing to Chapman's deposition testimony, defendant points out that even though Waletzko met the minimum score to be eligible for an FHA loan, the Quicken Loans banker who spoke to her on the phone would have determined that other factors, including her credit history and debt-to-income ratio, disqualified her from consideration for an FHA loan.[8] (Dep. of Quicken Loans (dkt. #103) at 62:9-22.) It is also undisputed that the Quicken Loans banker who first speaks with the applicant on the phone is charged with determining whether “the applicant is allowed to continue with the application process.” (Def.'s Resp. PFOF (dkt. #106) ¶ 90.)

         While defendant failed to include important details regarding Quicken Loans' application process in its proposed findings of fact, likely because it was unable to identify the individual banker who actually spoke to Waletzko and denied her application over the phone on February 22, 2013, Chapman's deposition testimony provides some welcome clarity as to why Quicken Loans identifies multiple reasons for denying Waletzko's application. First, the banker who speaks to an applicant over the phone determines whether the caller may be eligible for a loan during the pre-approval process by making a simple calculation of the applicant's debt-to-income ratio, and is authorized to end the application process at the outset if that ratio falls short of the required thresholds. (Dep. of Quicken Loans (dkt. #103) at 53:21-54:21.) Quicken Loans will not immediately deny that application and send a denial letter, however, if the applicant indicates that she might, for example, lower her debt-to-income ratio. (Id. at 38:10-39:11.) Second, when an application is denied, a denial letter is generated electronically, and the banker preparing the letter can select standard reasons for the denial from a drop-down box, as well as type in reasons in his or her own words. (Id. at 56:21-58:11) With the benefit of this additional context, it is more understandable why Quicken Loans has cited multiple reasons for denying Waletzko's home loan application; though critically, none of Quicken Loans' stated reasons are inconsistent with one another, nor do Quicken Loans' records in any way suggest that it considered the deceased notations in denying Waletzko's initial request for a loan.

         Defendant's strongest evidence that the deceased notations played no role in Quicken Loans' denial of Waletzko's loan application can be found in the follow up denial letter itself, dated April 4, 2013.[9] That letter lists as the reasons Quicken denied her application: “Credit history: Current/previous slow payments, judgments, liens or ...

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