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Fredrickson v. Cannon Federal Credit Union

United States District Court, D. New Mexico

December 22, 2017




         A good reputation is worth more than silver or gold. In today's world, a good reputation for creditworthiness can mean the difference between being employed and searching for work, between feeling secure and enduring anxiety, and between owning a home and not.

         Recognizing the importance of one's credit reputation, Congress enacted the Fair Credit Reporting Act (FCRA) to regulate credit reporting. Like common law principles of defamation, the FCRA empowers individuals to vindicate their credit reputations by suing those who make false allegations against them. Like common law principles of defamation, however, truth is always a defense against FCRA claims.


         In March 2010, Alvin Fredrickson and his wife, Donna Fredrickson, refinanced the mortgage on their home with Cannon Federal Credit Union (Cannon). (Doc. 1 at 3.) In refinancing their home mortgage, Mr. and Mrs. Fredrickson both signed a note dated March 22, 2010 (Original Note). (Id.) According to the terms of the Original Note, the Fredricksons agreed to pay $290 monthly, [1] with a final “balloon” payment of $11, 255.26 in March of 2022. (Doc. 97, Ex. A.) The annual interest rate was seven percent, the principal was $59, 556.07, and the total payment would be $86, 365.26. (Id.)

         The Original Note stated that “modification of amortization of the sums secured by this Mortgage . . . shall not operate to release, in any manner, the liability of the original borrower . . . .” (Doc. 97, Ex. B.) The Original Note also stated:

Any Borrower who co-signs this Mortgage, but does not execute the Note, (a) is co-signing this Mortgage only to mortgage, grant and convey that Borrower's interest in the Property to Lender under the terms of this Mortgage, (b) is not personally liable on the Note or under this Mortgage . . . .


         Mr. and Mrs. Fredrickson later divorced, and in 2014, Ms. Fredrickson renegotiated the mortgage with Cannon. (Doc. 1 at 4.) The terms of the new agreement were memorialized in the “2014 Note.” (Id.) The 2014 Note required weekly payments of $100 instead of regular payments of $290, and a balloon payment of $39, 986.97 in March of 2020 instead of an $11, 255.26 payment in March of 2022. (Id.) The collateral, interest rate, and principal balance remained unchanged. (See Doc. 109 at 9.) The 2014 Note contained the same contractual provisions as the Original Note regarding modification of amortization and borrowers who do not execute the note. (See Doc. 1 at 4-5.) Although Mr. Fredrickson was listed as a borrower on the 2014 Note, he was not involved with the negotiation of the 2014 Note, did not sign it, and was not notified of the modification. (Id. at 4-5; Doc. 102 at 16 n.10.)

         In 2015, Ms. Fredrickson and Cannon modified the 2014 Note, again “without Mr. Fredrickson's knowledge, consent or signature.” (Doc. 102 at 6.) The 2015 modification (2015 Note) lowered the interest rate from seven percent to 3.25 percent and changed the payments from $100 a week to $400 a month. (Id. at 6-7.)

         In 2016, Mr. Fredrickson learned that credit reporting agencies (CRAs) Equifax, Experian, and TransUnion were reporting that he was obligated to pay on the 2015 Note with Cannon. (See Id. at 6; Doc. 1 at 6.) Mr. Fredrickson believed that, because he was not consulted when Ms. Fredrickson modified the Original Note, he was released from his obligations when the 2014 Note was created. (See Doc. 1 at 6-7.) Concerned about his financial reputation, Mr. Fredrickson sent a dispute letter to each of the three CRAs, explaining that he had not signed the 2014 Note, so he should be released from the 2014 Note and any subsequent note. (See Id. at 7.) With his letter to each CRA, Mr. Fredrickson attached a copy of the 2014 Note, highlighting a section that read, “If more than one person signs this Note, each of us is fully and personally obligated to pay the full amount owed and to keep all of the promises made in this Note.” (Id.) The CRAs, in turn, asked Cannon to investigate the debt. (Id.)

         A Cannon employee, Erin Watson, investigated Mr. Fredrickson's disputed debt. (Doc. 97 at 6.) Ms. Watson reviewed the loan documents and loan history. (Id.) She consulted with the vice president of lending and Cannon's CEO, as well as Cannon's attorney. (Id. at 6-7.) In consulting Cannon's attorney, Ms. Watson sent an email to the attorney's office summarizing the dispute and detailing the timeline of Mr. Fredrickson's loan history. (Id., Ex. K.) In her email, Ms. Watson also attached various relevant documents, including Mr. Fredrickson's dispute letter, loan documents over the years, and a part of Mr. Fredrickson's divorce decree. (Id.) Cannon's attorney informed Cannon that it was correctly reporting Mr. Fredrickson's debt. (See Id. at 30:4-33:2.) At the conclusion of its investigation, Cannon concluded that it was correctly reporting Mr. Fredrickson's liability, and Cannon did not change its reports to CRAs. (See Doc. 1 at 7-8.)

         Convinced that his credit reputation was being unjustly maligned, Mr. Fredrickson brought suit against Cannon under the Fair Credit Reporting Act (FCRA), as well as various state law theories. (Id. at 9-11.) Cannon moved for summary judgment on Mr. Fredrickson's claims.


         “The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In considering a summary judgment motion, the Court views “the evidence and the reasonable inferences to be drawn from the evidence in the light most favorable to the nonmoving party.” See Parker Excavating, Inc. v. Lafarge W., Inc., 863 F.3d 1213, 1220 (10th Cir. 2017) (citation omitted).


         I. Jurisdiction.

         Cannon claims that Mr. Fredrickson has no Article III standing to sue. (Doc. 97 at 23.) Article III of the U.S. Constitution requires a plaintiff to have suffered a concrete and particularized “injury in fact” before bringing suit. See Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1548 (2016), as revised (May 24, 2016). Cannon believes that Mr. Fredrickson's alleged injuries are too nebulous because Mr. Fredrickson has refused to quantify his emotional damages. (See Doc. 97 at 23-24.)

         A plaintiff asserting emotional damages may survive a motion for summary judgment even without providing corroborating evidence, as long as the plaintiff “reasonably and sufficiently explains the circumstances surrounding the injury and does not rely on mere conclusory statements.” Llewellyn v. Allstate Home Loans, Inc., 711 F.3d 1173, 1183 (10th Cir. 2013) (citation omitted). In Llewellyn, the plaintiff alleged in his affidavit that discovering the defendant's negative reports about his creditworthiness caused him to experience emotional distress, which manifested in “drenching night sweats, panic attacks, ” “great stress and anxiety, ” and the feeling that he “could not recover.” Id. at 1182-83, 1183 n.3. The Llewellyn Court ruled that the plaintiff's alleged emotional damages survived summary judgment because, “viewing Plaintiff's affidavit in the light most favorable to him and drawing all reasonable inferences in his favor, ” the plaintiff's claims were “not so incredible or conclusory” that they could be ignored. Id. at 1182-83.

         In this case, Mr. Fredrickson explained that he takes pride in his identity as an Air Force veteran because Air Force veterans are held in high esteem and are characterized by excellence. (See Doc. 102, Ex. J, at 86:13-18.) Mr. Fredrickson goes on to say that Cannon's reports “portrayed [him] as a deadbeat . . . contrary to [his] dignity and respect and honor.” (Id. at 85:17-19.) Mr. Fredrickson worried about the effect of Cannon's report on his reputation, and this concern caused Mr. Fredrickson to experience anxiety, difficulty sleeping, and loss of appetite. (Id. at 85:12-16.) Mr. Fredrickson's description of his symptoms is comparable in detail with the Llewellyn plaintiff's description of his symptoms, and Mr. Fredrickson's assertion that Cannon's reporting caused those symptoms is not so incredible or conclusory that it can be ignored. Viewing Mr. Fredrickson's claims in the light most favorable ...

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