Marino v. Ocwen Loan Servicing LLC, No. 19-15530 (9th Cir. 2020)
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The Ninth Circuit affirmed the district court's grant of summary judgment for Ocwen in an action brought by plaintiffs, alleging violation of the Fair Credit Reporting Act's prohibition against obtaining a consumer credit report without a permissible purpose. Specifically, plaintiffs alleged that Ocwen willfully violated the FCRA when it obtained credit reports about consumers whose mortgage loans had been discharged in bankruptcy.
The panel encouraged courts in this circuit to determine whether the defendant committed a violation of the FCRA before turning to questions of negligence and willfulness. In this case, Ocwen was permitted under 15 U.S.C. 1681b(a)(3)(A) to review plaintiffs' accounts and credit reports to determine whether it could offer them alternatives to foreclosure, and it thus did not violate the Act. Therefore, the issue of willfulness is essentially moot. However, for the sake of completeness, and at the risk of stating the obvious, the panel noted its agreement with the district court that Ocwen did not willfully violate the FCRA.
Court Description: Fair Credit Reporting Act. The panel affirmed the district court’s summary judgment in favor of the defendant in an action alleging a violation of the Fair Credit Reporting Act’s prohibition against obtaining a consumer credit report without a permissible purpose. Plaintiffs alleged that defendant Ocwen Loan Servicing, LLC, willfully violated the FCRA when it obtained credit reports about consumers whose mortgage loans had been discharged in bankruptcy. The district court did not consider whether Ocwen’s conduct amounted to a violation of the FCRA. Rather, it found that, as a matter of law, any violation by Ocwen could not have been willful; thus, plaintiffs could not recover statutory or punitive damages. The panel held that, to show that a violation was willful, a plaintiff must show that the defendant either knowingly violated the FCRA or recklessly disregarded the Act’s requirements. Ocwen argued that because the liens on the plaintiffs’ homes survived their bankruptcies, and because the plaintiffs continued to hold title to their homes, Ocwen and the plaintiffs continued to have credit relationships that justified Ocwen’s periodic review of their credit reports. Among other FCRA provisions, Ocwen cited 15 U.S.C. § 1681b(a)(3)(A), which provides that a consumer report may be obtained when the user “intends to use the MARINO V. OCWEN LOAN SERVICING 3 information in connection with a credit transaction involving the consumer on whom the report is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer.” First, for the purpose of preventing the law in the area from stagnating, the panel considered whether Ocwen committed violations of the FCRA. Analogizing to the field of qualified immunity, the panel stressed that courts should be reluctant to skip the threshold question of whether a defendant violated the FCRA. The panel concluded that Ocwen was permitted under § 1681b(a)(3)(A) to review the plaintiffs’ accounts and credit reports to determine whether it could offer them alternatives to foreclosure, and it therefore did not violate the Act. Second, the panel agreed with the district court that Ocwen did not willfully violate the FCRA. Judge Bea concurred in the result and in the reasoning on which that decision was based: to affirm the district court’s grant of summary judgment because plaintiffs did not raise a triable issue of fact as to whether Ocwen recklessly or willfully violated the FCRA. Judge Bea wrote that he would not include discussion of whether Ocwen’s conduct constituted a statutory violation.
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