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Wright v. Experian Information Solutions, Inc.

United States District Court, D. Colorado

August 14, 2014

GARY A. WRIGHT, Plaintiff,



Defendants Experian and Trans Union, both credit reporting agencies (CRAs), published reports that attributed a federal tax lien to Plaintiff Garry A. Wright. Plaintiff disputes that he is responsible for the lien and argues Defendants violated various laws regulating CRAs by inaccurately reporting otherwise. Because it is reasonable to interpret the federal lien as applying to Plaintiff, Defendants violated no law by including it on Plaintiff's credit report. This Court therefore grants Defendants' motions for summary judgment.



This dispute revolves around the parties' competing interpretations of a notice of federal tax lien (NFTL) issued by the IRS on May 15, 2009. The Court reproduces in relevant part of the NFTL on the following page:

(Doc. # 85-8 at 15.)

For present purposes, two items in the above reproduction merit further discussion because they go to the heart of the agreements and disagreements between the parties in this case.

First, the parties dispute the import of the part of the above section of the NFTL for "Name of Taxpayer, " where it states "Attorneys Title Insurance Agency of Wright Gary A Member." On the one hand, the parties agree that the NFTL can be interpreted to apply against Attorneys Title Insurance Agency of Aspen, LLC (ATA).[1] On the other hand, the parties disagree about whether, given the way the NFTL is worded, it also can be interpreted to apply against Plaintiff.

Second, the "Kind of Tax" category in the reproduction indicates that this lien is for "[Form] 941" employment taxes. If the IRS believes a business is liable for 941 employment taxes, the IRS can pursue theories of tax liability designed to hold a responsible member of a company personally liable for failure to pay 941 employment taxes. See, e.g., Med. Practice Solutions, LLC v. Comm'r, 98 T.C.M. (CCH) 242 (2009), supplemented, 99 T.C.M. (CCH) 1392 (2010). There is no dispute that, as a general matter, the IRS has relied on such a theory of 941 tax liability in the past. At the same time, the parties disagree about whether the IRS had the intention and ability to pursue such a theory of tax liability against Plaintiff.[2]

Regardless of how one reads the NFTL, its issuance caused the Pitkin County Clerk to record the following information about Plaintiff, which the Court reproduces in relevant part:

Full Name Cross Party Name Record Date Doc Type Reception Wright Gary A Internal Revenue Service 5/27/2009 FED TAX LIEN 559399

(Doc. # 85-1 at 7.)

The parties provide no further evidence on why the Pitkin County Clerk decided to present the information in the table as it did above. For example, neither party provides testimony about how Pitkin County interprets NFTLs, nor do the parties address whether there are any procedures when liens are asserted against multiple parties or pursuant to NFTLs related to 941 tax liability.

The same information contained in the Pitkin County Clerk's record appears in substantially the same form in a record created by LexisNexis, a data collection company. See, e.g., (Doc. # 86-7 at 2.) Both Defendants relied on the LexisNexis report-rather than the underlying NFTL-in determining that the NFTL applied to Plaintiff. Further, at all times relevant here, both Defendants reported the NFTL on the credit reports they compiled about Plaintiff. See, e.g., (Doc. ## 85 at ¶ 10; 87 at ¶¶ 25-26).[3]


On September 10, 2009, Plaintiff first disputed the validity of the NFTL in a letter sent to the IRS. In the letter, Plaintiff provided copies of a check sent to and then cashed by the IRS before May 12, 2009. Plaintiff alleged that this check covered the full amount of the lien. Plaintiff argued that the evidence of the check established the NFTL was prematurely and therefore erroneously filed. Plaintiff asked that the IRS withdraw the NFTL. (Doc. # 86-4 at 4.)

On December 15, 2010, the IRS filed a Certificate of Release of Federal Tax Lien related to Plaintiff's case. In language and formatting that is identical to what appears in the NFTL, the release identifies the "Name of the Taxpayer" associated with the release as "Attorneys Title Insurance Agency of Wright Gary A Member." The release states that this taxpayer "has satisfied the taxes" subject to the NFTL, that the "lien... for these taxes... has been released, " and that the "proper officer in the office where the notice of Internal revenue tax lien was filed..., is authorized to note... the release of this lien." (Doc. # 86-4 at 7.)

The Court notes two additional facts about the May 2009 and December 2010 communications between Plaintiff and the IRS.

First, the argument Plaintiff raised in the September 2009 letter is different from the principal one he raises in this case. In the September 2009 letter, Plaintiff argued only that the NFTL as a whole was invalid: he never raised the separate argument that regardless of the NFTL's validity, it could apply only to ATA.

Plaintiff's decision not to raise a dispute about the NFTL's scope is all the more curious because, in his letter to the IRS, he seemed to recognize that the NFTL affected him personally. Although Plaintiff indicates that the "[t]axpayer entity [i.e., ATA]" filed the check to satisfy payment of the lien amount, he urged the IRS to provide him "prompt attention" because "the undersigned individual taxpayer is in the process of attempting to refinance his primary residence." (Doc. # 86-4 at 4 (emphasis added.) In the same letter, Plaintiff provided a list of CRAs and banks for the IRS to contact after the lien had been withdrawn. This list included Timberline Bank of Aspen, Plaintiff's local bank, where he would later seek financing on a home loan. ( Id. ); see also (Doc. # 97 at 2).

Second, there is an important distinction between the relief Plaintiff sought in May 2009 and the relief the IRS granted in December 2010. Plaintiff asked for a withdrawal of the NFTL in his letter to the IRS. If a taxpayer obtains a withdrawal, the IRS is required by statute to erase the NFTL as if it "had not been filed, " 26 U.S.C. § 6323(j), and to notify CRAs of the erasure, id. § 6323(j)(2). In this case, however, the IRS did not withdraw the NFTL; rather, it granted Plaintiff only a release. Although a release removes the NFTL as an encumbrance on Plaintiff's property, it does not trigger either the erasure or notification requirements obtained through a withdrawal. See 15 U.S.C. § 1681c(a)(3); see also Danshera Cords, Lien on Me: Virtual Debtors Prisons, the Practical Effects of Tax Liens, and Proposals for Reform, 49 U. Louisville L. Rev. 341 (2011) (discussing the effects on a credit report of obtaining a release instead of a withdrawal of an NFTL).

At his deposition, Plaintiff admitted that he did not understand the difference between a withdrawal and a release. Further, the IRS sends what it calls a Form 10916C if it grants a request for a withdrawal of an NFTL, but Plaintiff conceded at his deposition that he could not remember ever receiving such a form. (Doc. # 85-2 at 19-20.)

Plaintiff has never appealed what was ultimately an adverse ruling from the IRS on his request for a withdrawal, and the IRS has never withdrawn the lien. Plaintiff has also never sought clarification from the IRS that the NFTL issued here applied only against ATA, notwithstanding the contrary interpretations of the NFTL proffered by Defendants. See, e.g., (Doc. ## 85 at ¶ 31; 89 at ¶ 15; 85-2 at 19-20.)


After Plaintiff obtained the release from the IRS, he lodged a dispute about the validity of the NFTL with Defendants. In particular, Plaintiff sent a first round of nearly identical letters to Defendants in July 2012, in which he advanced two arguments. First, Plaintiff reiterated the argument he made to the IRS that the NFTL was invalidly issued in the first instance. As support for this argument, he provided much of the prior correspondence to the IRS, along with the IRS release. Second, he argued that the NFTL could not apply to him personally-it could apply only to ATA. Plaintiff asked that the NFTL be removed from his credit report. (Doc. ## 85-7 at 12-28; 86-5.)

In response, Defendants updated their records on Plaintiff to establish that the NFTL had been released, but they did not erase the NFTL from the report. In making this determination, Defendants solely relied on investigations performed by LexisNexis on the validity of Plaintiff's claims. (Doc. ## 85-7, 86-6.)

Finding Defendants' actions insufficient, Plaintiff sent them a second round of nearly identical letters in September 2012. Defendants again consulted with LexisNexis. For a second time, LexisNexis verified that the report relied upon by Defendants was accurate based on the records in Pitkin County. In turn, Defendants relied on this verification by LexisNexis. (Doc. ## 85-7, 86-9.)[4]

Dissatisfied with Defendants' response, Plaintiff brought suit, advancing claims under the Fair Credit Reporting Act (FCRA) and its Colorado equivalent. (Doc. #1.) Those claims are the subject of the instant motions for summary judgment.


Summary judgment is appropriate if the moving party demonstrates there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(a). In applying this standard, the Court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998).


Plaintiff's first two claims are based on 15 U.S.C. § 1681e(b) of FRCA and the analogous Colorado state provision, Colo. Rev. Stat. § 12-14.3-103.5. Plaintiff alleges that Defendants' initial reporting of the NFTL-before Plaintiff lodged his dispute with either Defendant-constituted a violation of these laws.

To prevail on these claims, Plaintiff must establish: "(1) [Defendants] failed to follow reasonable procedures to assure the accuracy of [their] reports; (2) the report in question was, in fact, inaccurate; (3) [Plaintiff] suffered injury; and (4) [Defendants'] failure caused his injury." Eller v. Trans Union, LLC, 739 F.3d 467, 473 (10th Cir. 2013).

Plaintiff also alleges that Defendants violated 15 U.S.C. § 1681i by performing an inadequate reinvestigation of Plaintiff's credit report after he informed Defendants about what he perceived to be inaccuracies in the NFTLs. Prevailing on a § 1681i claim requires establishing essentially the same four elements relevant for an investigation claim, along with establishing a fifth element not in dispute here-namely, that Plaintiff notified Defendants about the alleged inaccuracy. See Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 890 (9th Cir. 2010).

All claims in this case can be resolved on the reasonableness of the procedures employed by Defendants in their investigation and reinvestigation of Plaintiff's claims- the first element listed above.[5]


As an initial matter, there is a split of authority on how to assess the reasonableness of a procedure employed by a CRA under the facts relevant here: namely, when a CRA does not analyze the underlying document that triggers the reported debt but rather relies on interpretations of the same provided by third parties.

Citing one side of this split, Defendants unsurprisingly invoke the CRAs' favorite line of cases, starting with Henson v. CSC Credit Services, 29 F.3d 280 (7th Cir. 1994), which concerned an agency that had reported an unpaid judgment entered in a court docket sheet that indisputably could not be attributed to the alleged debtor. Notwithstanding the CRA's reporting of this inaccuracy, the Seventh Circuit laid out a seemingly broad rule that "as a matter of law, a credit reporting agency is not liable under the FCRA for reporting inaccurate information obtained from a court's Judgment Docket, absent prior notice from the consumer that the information may be inaccurate." Id. at 285; see also Zahran v. Transunion Corp., CIV. 01C1700, 2003 WL 1733561, at *5 (N.D. Ill. Mar. 31, 2003) (applying a similar standard).

Defendants' interpretation of Henson and its progeny is that, even assuming the NFTL was inaccurate, they should be absolved of responsibility merely because they relied on the report provided by LexisNexis and had no prior knowledge of an inaccuracy. In a similar vein, Defendants seem to suggest that, as long as they relied on information from LexisNexis in the reinvestigations triggered by Plaintiff's disputes, they are insulated from FCRA liability regardless of whether the underlying reinvestigation failed to uncover an inaccuracy.

This interpretation of the Seventh Circuit's position in Henson, however, has been criticized by other courts not as willing to absolve CRAs from FCRA liability merely because they rely on reputable third parties' inaccurate reporting. These courts have suggested that "if there is an easily available procedure that would greatly improve accuracy at a minimal cost, " then summary judgment may not be appropriate regardless of whether or not the CRA relied on the report of a third party. O'Brien v. Equifax Info. Servs., LLC, 382 F.Supp.2d 733, 739 (E.D. Pa. 2005).[6]

The Ninth Circuit's decision in Dennis v. BEH-1, LLC, 520 F.3d 1066 (9th Cir. 2008), provides a good example of how this more searching standard applies under facts similar to this case. In Dennis, a tenant in Los Angeles was sued by his landlord for unpaid rent but reached a settlement with the landlord in which both parties agreed that no judgment would be entered against the tenant. Notwithstanding this agreement, the court docket entry describing the agreement inaccurately reported that a "[j]udgment [e]ntered" against the tenant. A subsequent docket entry correctly reflected that the case was dismissed without prejudice, which meant that under the relevant state law, no judgment had entered against Plaintiff. Id. at 1068.

Experian reported the case as if judgment had been entered against the tenant, and when the tenant protested, Experian hired a third-party to investigate the disputed information. The third party misread the underlying court documents as reflecting that judgment had entered against the tenant, when in fact these same documents confirmed the opposite was true. The district court granted summary judgment to Experian on the tenant's reasonable investigation and reinvestigation claims under FCRA. Id. at 1068-69.

The Ninth Circuit reversed on both claims. As to the reasonable investigation claim, the Ninth Circuit held that "Experian remains free to argue (based, perhaps, on the inaccurate [docket entry]) that it should be exonerated"; however, such an issue could not be resolved as a matter of law. In other words, the Ninth Circuit decided that Experian could argue to a jury that its initial reporting was reasonable because of the contradictory filings that appeared on the court docket sheet.

As to the reinvestigation claim, the Ninth Circuit reversed and entered summary judgment in favor of the tenant, reasoning that "Experian could have caught [the third party's] error if it had consulted the Civil Register in [the tenant's] case, which can be viewed free of charge" online. In other words, because the Los Angeles court file "contained exactly what [the tenant] and the court Register said that it contained, " no reliance on the third party investigation could absolve Experian from liability based on its failure to appreciate what was plain as day to anyone who took the time to review the relevant documentation. Id. at 1070.

This Court endorses the version of the rule articulated in cases such as Dennis and O'Brien. [7] Thus, the principal question to be resolved in this case is whether there is an easily available a procedure that would greatly improve accuracy of Defendants' reporting of NFTLs such as Plaintiff's and do so at minimal cost.


Plaintiff attempts to draw an analogy between his circumstances and the facts presented in cases like Dennis, in which: (1) an indisputably inaccurate report was reported to a CRA by a third party, (2) the CRA repeated information provided by the third party with damaging results to a FCRA plaintiff, and (3) such a result could have been avoided if the CRA had reviewed more closely the records relied upon by the third party. Plaintiff concludes, therefore, that this Court cannot determine reasonableness as a matter of law because the NFTL was inaccurate and Defendants never looked at the NFTL itself, either in their initial investigation or the reinvestigation.

This argument fails at the outset, however, because there is no irrefutable evidence that the NFTL applies only to ATA and not Plaintiff. For example, unlike in Dennis, where a subsequent docket entry corrected a prior entry that incorrectly applied a judgment as entering against the plaintiff, there is no clarification from the IRS that, notwithstanding the mention of Plaintiff's name on the original NFTL, the record should be construed as applying only to ATA.

Plaintiff never asked the IRS for such clarification for the NFTL. Instead, he uses experts and business partners to parse the language of the NFTL in an attempt to achieve the same result. Somewhat tendentiously, these individuals suggest that even though the NFTL includes Plaintiff's name in the box provided for "Name of Taxpayer, " this fact does not mean that Plaintiff is a named taxpayer for purposes of the NFTL. See, e.g., (Doc. # 97-9, 97-14.)

Even if this Court accepts these experts' conclusions at face value and assumes there is a reasonable dispute about whether the NFTL applies against Plaintiff personally, Plaintiff still cannot prevail. Rather, this Court finds that it was reasonable to interpret the NFTL as extending to Plaintiff and that no additional procedure implemented by Defendants would have allowed them to more accurately determine the scope of the NFTL's applicability.

In reaching this conclusion, this Court notes at the outset that a broad interpretation of the applicability of the NFTL was accepted by Plaintiff himself in his initial letter to the IRS. As Plaintiff then stated, ATA as the "taxpayer entity" had paid the entirety of the amount referenced in the NFTL, but Plaintiff himself needed the NFTL removed because he, as "the undersigned individual taxpayer[, was] in the process of attempting to refinance his primary residence." (Doc. # 86-4 at 4 (emphasis added).)

Further, regardless of how one considers the language Plaintiff employed in his first letter to the IRS, it is undisputed that Plaintiff's name appears on the NFTL and that NFTLs dealing with 941 tax liability can issue against both a business entity and its member. The first fact is apparent from the face of the NFTL; the second is a legal theory indisputably employed by the IRS but ignored by Plaintiff's experts. Given these two undisputed facts, it is reasonable to conclude that, according to prior practice, the IRS intended the NFTL to issue against both taxpayers listed on the document.[8]

Next, it is beyond dispute that Pitkin County interpreted the NFTL as giving notice of a lien against Plaintiff personally and that it was reasonable for LexisNexis to rely on this interpretation.[9] As an initial matter, Pitkin County's interpretation of the NFTL was reasonable in the first instance, for the reasons explained above. Moreover, Plaintiff provides no credible evidence of irregularities in the way that Pitkin County reported NFTLs or any other record, such that it would have been prudent or necessary to view records issued by that office with a gimlet eye.[10]

Finally, it was reasonable for Defendants to rely on LexisNexis's repetition of this information because the document itself can reasonably be interpreted to apply against Plaintiff. Although a more thorough investigation of the lien would have included a review of the NFTL itself, it would have been reasonable for Defendants to have interpreted the NFTL in exactly the same way that Pitkin County did, i.e., that the NFTL issued against Plaintiff personally. Thus, Defendants are entitled to summary judgment on Plaintiff's reasonable investigation claims.

The above analysis also undermines Plaintiff's reinvestigation claims. As to this question, it seems to be a disputed fact question as to whether any reinvestigation included a review of the NFTL itself or again a review of only the Pitkin County records.

This dispute is immaterial. Again, the only reasonable additional step[11] that Defendants may not have taken in reinvestigating Plaintiff's dispute was a review the NFTL itself. Yet for the reasons discussed above, in reviewing this document in its original form, Defendants could still reach the reasonable conclusion that the NFTL applied to Plaintiff personally.


Accordingly, it is hereby ORDERED that Defendants' Motions for Summary Judgment (Doc. ## 85, 87) are GRANTED and this case is dismissed WITH PREJUDICE. It is

FURTHER ORDERED that all other pending motions (Doc. ## 83, 127, 131, 132, 133) are DENIED AS MOOT.

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