The Court of Appeals for the Fifth Circuit has affirmed a ruling awarding a defendant more than $32,000 in attorney’s fees under a Texas credit reporting statute, rejecting arguments from a plaintiff who filed three separate lawsuits over the same item on his credit report.
The background: The dispute traces back more than a decade, when the plaintiff filed for bankruptcy.
- The bankruptcy was discharged, but the defendant, a credit reporting agency, continued to include the filing in the plaintiff’s credit file.
- After unsuccessful attempts to have the item removed, the plaintiff, representing himself, sued the defendant in Texas state court. That case was dismissed on summary judgment, the dismissal was affirmed on appeal, and the Supreme Court of Texas declined to review it.
- The plaintiff sued a second time over the same reporting. The defendant removed the case to federal court, where it was dismissed on the pleadings, and the plaintiff’s appeal was dismissed as well.
- The plaintiff then filed a third suit in state court, this time seeking more than $1.3 million in damages. The defendant again removed the case, and a District Court judge dismissed the claims because they had already been litigated.
- The defendant moved for its attorney’s fees under the Texas statute, requesting $28,911.40. A magistrate judge recommended granting the motion, and the District Court judge awarded $32,006.30, more than the defendant had asked for, calling the amount “reasonable and necessary” to defend the suit.
- The plaintiff sought reconsideration of both the dismissal and the fee award, and appealed after that motion was denied. He argued the fees could not be awarded without a finding that his claims were frivolous or brought in bad faith, that the Fair Credit Reporting Act preempts the Texas fee provision, and that the defendant failed to properly divide its fees among his three lawsuits.
The ruling: The Appeals Court affirmed both the dismissal and the fee award, drawing a sharp distinction between the fee standards under federal and Texas law.
- A motion for reconsideration cannot be used to raise arguments that could have been made earlier, the court noted, and the plaintiff failed to identify any legal defect in the underlying dismissal of his claims.
- On the fee award, the court explained that the Texas statute “allows a recovery of attorneys’ fees to the prevailing party unconditionally,” while the FCRA permits a fee award only when the losing party acted in bad faith or for purposes of harassment. Because the fees were awarded under the Texas statute, no frivolousness finding was required.
- The court also rejected the plaintiff’s preemption argument, noting he cited no authority for it, and observed that consumers can avoid the Texas statute’s mandatory fee shifting entirely by pursuing only FCRA claims.
- The plaintiff’s argument that the fees were not segregated among his three suits was forfeited because he never raised it before the magistrate judge, and his challenge to the court awarding more than the requested amount was forfeited because he did not raise it in his reconsideration motion.
