The Court of Appeals of Nevada has affirmed the dismissal of a breach of contract and credit reporting lawsuit against an auto lender that deposited three checks marked as payment in full for a $21,000 loan balance, along with a $28,979.50 attorney fee award against the plaintiff.
The background: The dispute grew out of an attempt to settle an auto loan by writing three checks and adding a note in the memo line.
- The plaintiff financed the purchase of a vehicle through the defendant and later sent the lender a notice of rescission along with three checks of $660 each, each marked in the memo line as payment in full for the $21,000 that remained on the loan.
- The lender deposited the checks without objection, continued its collection efforts, and reported negative information about the account to the credit bureaus.
- Last year, the plaintiff sued in state court, claiming breach of contract through accord and satisfaction and negligent credit reporting, and asking for money damages and correction of his credit reports.
- The defendant moved to dismiss, arguing there was no bona fide dispute over the amount owed, no good faith tender, and no recognized claim in the state for negligent credit reporting.
- The trial court dismissed the case, finding among other things that the payments had gone to a third-party processor that had no authority to accept them as full satisfaction of the debt, and later awarded fees under the fee provision in the credit agreement and a state statute covering groundless claims.
The ruling: The Appeals Court affirmed the dismissal in a case the plaintiff pursued without a lawyer, holding that a unilateral offer to settle, even one a creditor cashes, does not create a binding accord and satisfaction without evidence that both sides agreed to it.
- Accord and satisfaction requires a genuine dispute over an unsettled amount, a payment tendered to resolve the entire dispute, and a creditor that understands and accepts the payment on those terms, the panel wrote, and the complaint never alleged a dispute over the amount owed or any agreement to settle one.
- What the plaintiff described was an offer of rescission, and the lender had no obligation to answer it. Quoting the Restatement of Contracts, the panel noted that receiving an unsolicited offer does not “impose on him any duty to speak.”
- The judges also pointed to precedent holding that an accord and satisfaction “can never be implied from language of doubtful meaning.”
- On the credit reporting claim, the panel held the Fair Credit Reporting Act does not give consumers a private claim against furnishers for reporting inaccurate information. The obligation to investigate is triggered only when a furnisher receives a dispute from a credit bureau, and the plaintiff never alleged he disputed the reporting with the bureaus at all.
- The fee award stood because the plaintiff challenged only the dismissal, not the amount of the fees or the contract provision authorizing them.
