A District Court judge in Illinois has partially denied a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case related to a delay in how quickly the defendant deleted a tradeline from the plaintiff’s credit report that resulted from the settlement of an underlying collection lawsuit.
The background: The case stemmed from a credit card account that was sold to the defendant and later placed into collection. After a default judgment in state court, the plaintiff retained counsel and the two sides entered into a settlement agreement that resolved the collection lawsuit.
- As part of that settlement, the defendant agreed that, within a defined number of days after receiving the fully executed agreement, it would request deletion of the tradeline from the credit reporting agencies. The agreement also limited the defendant’s obligation to submitting the deletion request and providing proof to the plaintiff’s counsel.
- The defendant executed its side of the agreement in November 2022, but did not submit a tradeline deletion request to the credit reporting agencies until January 2023, when it says it received the fully executed agreement from the attorney who was representing it in the underlying collection lawsuit.
- The plaintiff discovered the continued reporting when reviewing her credit and filed suit, asserting that the post-settlement reporting violated the FDCPA.
The ruling: Judge John Robert Blakey of the District Court for the Northern District of Illinois rejected the defendant’s argument that its obligation to request deletion did not begin until the defendant’s internal legal department personally received the fully executed settlement.
- Judge Blakey pointed to the principle that notice to outside counsel can be imputed to the client and found no language in the settlement agreement requiring personal receipt by the defendant itself.
- The judge also declined to grant summary judgment based on the FDCPA’s bona fide error defense, finding that the defendant’s internal policies did not include mechanical or orderly procedures designed to prevent this type of post-settlement reporting delay.
- While Judge Blakey acknowledged that the tradeline was eventually deleted, he ruled that continued furnishing after the settlement deadline could constitute FDCPA violations.
