A District Court judge in Idaho has denied a plaintiff’s motion to dismiss counterclaims and affirmative defenses filed by a defendant in a Fair Credit Reporting Act case while also cautioning the plaintiff for citing fictional cases and relying on artificial intelligence when making his arguments.
The background: The case arose after the plaintiff filed a lawsuit alleging violations of the FCRA related to how an auto loan was handled and reported. The defendant responded by asserting multiple affirmative defenses and filing counterclaims tied to the underlying vehicle financing agreement.
- According to the counterclaims, the plaintiff purchased a vehicle through a retail installment contract that required monthly payments. The defendant alleged the plaintiff attempted to satisfy the loan using payment instruments and electronic payments that were ultimately determined to be nonnegotiable.
- Although the defendant initially issued a paid-in-full letter and released its lien, it later alleged those actions were taken in reliance on misrepresentations and that no valid funds were ever received.
- The plaintiff moved to dismiss the counterclaims, strike numerous affirmative defenses, and stay or bifurcate the counterclaims from the FCRA claims.
The ruling: Judge B. Lynn Winmill of the District Court for the District of Idaho denied the motion in full, finding that the defendant adequately pled its counterclaims and that dismissal at this stage was not appropriate.
- On the fraud claim, Judge Winmil concluded the defendant sufficiently alleged the who, what, when, where, and how of the alleged misconduct, including dates, payment methods, and why the representations were allegedly false.
- The court also rejected the argument that Idaho’s economic loss rule barred the fraud claim, emphasizing that the doctrine applies to negligence claims, not intentional torts like fraud. In doing so, the judge took issue with the plaintiff’s briefing, noting that several cited cases appeared to be misrepresented or fabricated. The judge stated he was “gravely concerned” by the apparent fabrication of quotations and warned that “mistaken reliance upon artificial intelligence for legal research is not a defense” to potential sanctions.
- On the breach of contract and foreclosure claims, the court held that factual disputes over lien releases and payment validity could not be resolved on a motion to dismiss.
- Judge Winmi also declined to strike the defendant’s affirmative defenses, finding no prejudice and noting that many of the challenged defenses simply disputed elements of the plaintiff’s claims.
