A District Court judge in Kentucky has denied an objection from a bank on its motion for attorney’s fees in a Fair Credit Reporting Act case over how it reported an account to the credit bureaus after the plaintiffs dismissed the bank from their suit.
The background: The case centered on how the bank reported a retail-branded credit card account opened in 2015. The plaintiff stopped making payments in 2017 and subsequently filed for Chapter 13 bankruptcy. The bank charged off the account and reported it as a bankruptcy with a charged-off balance, in line with the Credit Reporting Resource Guide.
- The plaintiff later filed another bankruptcy again.
- The plaintiff claimed the bank furnished false and derogatory information by reporting a balance and not properly noting that the account was included in bankruptcy.
- She argued the bank failed to conduct a proper investigation of disputes lodged with credit bureaus and violated the FCRA by continuing to report inaccurate or incomplete information.
- After the plaintiff dismissed her claims against the bank with prejudice, the bank sought to recover its attorney’s fees, approximately $21,000, arguing the case was baseless and that opposing counsel multiplied the proceedings unnecessarily.
- A magistrate judge recommended denying the fee request, finding the lawsuit was not frivolous and that the plaintiff was entitled to legal safe harbors because the case never proceeded beyond discovery and no dispositive motions were filed.
The ruling: The defendant objected to the recommendation, leading Judge David J. Hale of the District Court for the Eastern District of Kentucky to weigh in, and he agreed with the Magistrate Judge, writing that “merely because [the plaintiff] did not ultimately prevail does not mean that the lawsuit necessarily was unreasonable or without adequate factual or legal foundation from its inception.”
- The court also rejected the bank’s claims of attorney misconduct, concluding there was no “truly egregious misconduct” warranting sanctions. The judge adopted the magistrate’s findings in full, denied the bank’s motion, and closed the case.
