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Felts v. Wells Fargo Bank, N.A.

United States Court of Appeals, Eleventh Circuit

June 27, 2018

CHRISTINA FELTS, Plaintiff-Appellant,
WELLS FARGO BANK, N.A., a national association, Defendant-Appellee.

          Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:14-cv-02528-JDW-AEP

          Before TJOFLAT and WILSON, Circuit Judges, and ROBRENO, [*] District Judge.


         Christina Felts appeals from an order granting summary judgment in favor of her mortgage servicer, Wells Fargo Bank, N.A. ("Wells Fargo"), with respect to Felts' claim that Wells Fargo failed to conduct a reasonable investigation into the accuracy of its credit reporting of her mortgage loan, in violation of the Fair Credit Reporting Act ("the FCRA" or "the Act"), 15 U.S.C. § 1681 et seq. The district court found that Felts' FCRA claim against Wells Fargo failed as a matter of law because the undisputed material facts demonstrated that Wells Fargo's reporting of Felts' mortgage account as past due and delinquent during a forbearance plan was neither inaccurate nor materially misleading, and thus Felts failed to make the threshold showing that a reasonable investigation could have uncovered an inaccuracy. We affirm.


         In July 2009, Felts refinanced the mortgage on her Carmel, Indiana home through a new loan extended by the Federal National Mortgage Association, commonly known as Fannie Mae ("the Loan"). In connection with the Loan, Felts executed a Note and Mortgage that required her to make monthly mortgage payments of $2, 197.38. Wells Fargo acted as the servicer for the Loan. As servicer, Wells Fargo was responsible for collecting Felts' mortgage payments, communicating with Felts regarding the payment of the Loan, and reporting certain information to the consumer credit reporting agencies ("the CRAs") regarding Felts' compliance with her payment obligations under the Loan.

         In January 2012, Felts lost her job. Several months later, she contacted Wells Fargo to discuss a revised payment plan for the Loan. Following Felts' telephone conversations with a Wells Fargo representative, Felts enrolled in an unemployment forbearance program offered by Fannie Mae and administered by Wells Fargo ("the Plan"). The terms of the Plan were set forth in an August 3, 2012, letter from Wells Fargo to Felts ("the Plan Letter"). The Plan Letter explained that Felts was required to make "monthly forbearance plan payments" of $25.00 per month beginning in September 2012 and ending in February 2013. Doc. 119-3 at 1. The Plan Letter stated that "[e]ven though your monthly statement will continue to show your regular mortgage payment amount, while you're under the Plan be sure you make the . . . forbearance plan payments by the due dates noted in place of your regular monthly mortgage payments." Id.

         The Plan Letter further provided that, during the Plan's forbearance period, three conditions would apply: (1) if the loan was already in foreclosure, the foreclosure proceedings would be placed on hold; (2) Wells Fargo would "report to the credit bureaus that you are paying under a partial payment agreement for your Wells Fargo Home Mortgage"; and (3) the regular mortgage payments would accrue during the course of the Plan. Id. at 2. With respect to the third condition, the Plan Letter stated:

Even though your monthly forbearance plan payments are lower than your regular mortgage payments, the difference in the payment amounts accrues. We keep track of the total amount that accrues during the Plan period. The total accrued amount then becomes due and is your responsibility to pay after you complete the Plan, or when you become fully employed. When that happens, you can apply for payment assistance through a loan modification.


         The Plan Letter further noted that "[e]ven though you are participating in this Plan, you remain responsible for all other terms and conditions of your existing mortgage." Id. at 3.

         Prior to Felts' enrollment in the Plan, a Wells Fargo representative explained the terms of the Plan to Felts in a recorded telephone conversation. With respect to Felts' payment obligations, the representative explained that after the Plan ended, Wells Fargo would "take all that past due and they'll just tack it on to the end of the loan." Doc. 91-1 at 2-3. Felts asked whether her payments would still be considered late, clarifying "[b]ut you did say each month even though it's refigured as this it still shows up as a late payment?" Id. at 7. The Wells Fargo representative responded "[y]es. Because it's not the contractual payment." Id. Felts then confirmed that she understood.

         After enrolling in the Plan, Felts made timely monthly payments of $25.00 per month through January 2013 in accordance with the terms of the Plan. She then secured new employment and applied for a loan modification with Wells Fargo. During a three-month trial period for the loan modification, Wells Fargo required Felts to make full payments on the Loan, which she did. Felts subsequently sold her home and paid off the entire remaining balance on the Loan by June 1, 2013.

         In June 2013, Felts attempted to purchase a new home in Bradenton, Florida. Her loan officer obtained her credit report and informed Felts that Wells Fargo had reported the Loan to the CRAs as "past due" and "delinquent." Specifically, Wells Fargo reported the Loan as "30 Days Past Due" in August 2012, "60 Days Past Due" in September 2012, "90 days past due" in October 2012, "120 Days Past Due" in November 2012, "150 Days Past Due" in December 2012, and "180 or more Days Past Due" in January 2013. Doc. 105, Ex. 36. As of June 2013, Felts' credit report also listed a past due amount of $22, 308 on the Loan. Doc. 114-3 at 6.

         Over the next year and a half, Felts filed numerous disputes with all three major CRAs - Experian Information Solutions, Inc. ("Experian"), Equifax, Inc. ("Equifax"), and Trans Union LLC ("Trans Union") - regarding the Loan. The CRAs then reported the disputes to Wells Fargo. In response to the disputes, Wells Fargo reported the account status of the Loan as "paid in full," and changed the "amount past due" to $0.00. Felts' updated credit report then reflected that there was no longer a past due amount on the Loan. However, Wells Fargo did not correct the delinquency information. Instead, on the dispute forms provided by the CRAs, Wells Fargo reported that Felts' account was past due from August 2012 through May 2013. A Wells Fargo loan specialist who processed one of the dispute forms testified that the account was considered past due for each of those months because Felts did not make her full contractual payment.

         Felts was ultimately denied financing for the Bradenton home. In October 2014, Felts brought the underlying action against Wells Fargo, Experian, Equifax, and Trans Union, alleging that they violated various provisions of the FCRA in connection with their reporting of the credit status and history of the Loan.

         With respect to Wells Fargo, Felts alleged that the company failed to conduct a reasonable investigation in response to Felts' credit reporting disputes regarding the Loan, as required under § 1681s-2(b) of the FCRA. Felts asserted that Wells Fargo's failure to conduct a reasonable investigation resulted in her denial of financing for the Bradenton home, which, in turn, required her to pay storage costs and rent for an additional six months. Felts further alleged that, because of her poor credit history, she was required to pay an initial deposit for an escrow account, a mortgage insurance premium, and appraisal and inspection costs for her current home. Felts claimed that she suffered stress, anxiety, depression, and related physical symptoms due to her overall experience with Wells Fargo. Following discovery, Felts and Wells Fargo filed cross-motions for summary judgment.[1]

         On August 31, 2016, the district court granted Wells Fargo's motion for summary judgment and denied Felts' cross motion. The court concluded that there was no genuine factual dispute as to the accuracy of the information Wells Fargo reported to the CRAs because there was no evidence of any factual inaccuracy or materially misleading impression. The district court then entered judgment for Wells Fargo. Felts appealed.


         We review summary judgment rulings de novo, applying the same legal standards used by the district court. Worley v. Fla. Sec'y of State, 717 F.3d 1238, 1240 (11th Cir. 2013). "Summary judgment is appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Jurich v. Compass Marine, Inc., 764 F.3d 1302, 1304 (11th Cir. 2014). "An issue of fact is 'material' if, under the applicable substantive law, it might affect the outcome of the case. An issue of fact is 'genuine' if the record taken as a whole could lead a rational trier of fact to find for the nonmoving party." Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1259-60 (11th Cir. 2004) (citations omitted). We "may affirm a decision of the district court on any ground ...

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