A District Court judge in Kentucky has denied a defendant’s motion to enforce a settlement and denied a plaintiff’s motion for summary judgment and motion for reconsideration in a Fair Credit Reporting Act case over how a bank reported a debt to the credit reporting agencies.
The background: The case centers on how the defendant reported a debt of $2,512 to the credit reporting agencies. The plaintiff alleged that the reporting was inaccurate for several months after the parties entered into an agreed judgment related to the account.
- The plaintiff claimed the bank had agreed to accept $1,320 in full satisfaction of the obligation through a payment plan and that she complied with the agreed terms. Despite that arrangement, the plaintiff alleged the bank continued to report the account as charged off, past due, and carrying the full balance between November 2023 and February 2024.
- The lawsuit contends that the reporting during that period violated the FCRA because the debt should have reflected the payment arrangement and resolution.
- While the litigation was pending, attorneys for the parties exchanged emails discussing a possible settlement. The plaintiff’s attorney proposed a non-monetary settlement condition in October 2024. The defendant later indicated acceptance of the proposal with additional standard terms and circulated a draft settlement agreement.
- However, the plaintiff ultimately refused to sign the agreement and submitted an affidavit stating she had not authorized her attorney to settle the case. Months later, the defendant asked the court to enforce what it characterized as a binding settlement agreement.
The ruling: Judge Charles R. Simpson III of the District Court for the Western District of Kentucky declined to enforce the alleged settlement, explaining that Kentucky law requires an attorney to have express authority from a client before binding that client to a settlement.
- The judge noted that the record did not demonstrate the plaintiff had granted such authority to her former attorney. Judge Simpson also pointed out that the defendant had not presented evidence contradicting the plaintiff’s sworn declaration that she never authorized the settlement.
- As the judge explained, an attorney’s email stating that a case could be settled was not enough to establish binding authority in light of the client’s statement to the contrary.
- Judge Simpson also rejected the defendant’s argument that the settlement should still be enforced because it relied on the agreement. According to the ruling, the defendant failed to show it was “substantially and adversely affected” by relying on the alleged settlement.
- The judge also denied the plaintiff’s motion for reconsideration of an earlier order sealing certain filings. The court explained that sealing documents does not prevent a party from relying on them in litigation and stated that the plaintiff was “simply mistaken” in believing otherwise.
