Beattie v. Nations Credit, 4th Cir. (2003)

Rehearing granted, June 27, 2003
UNPUBLISHED
UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT
JERRY N. BEATTIE; JUDITH F.
BEATTIE,
Plaintiffs-Appellants,
v.
NATIONS CREDIT FINANCIAL SERVICES
CORPORATION; BANK OF AMERICA,
formerly known as Nationsbank,
N.A.; NATIONS CREDIT
MANUFACTURED HOUSING
CORPORATION,
Defendants-Appellees,
No. 02-1744
and
C&S FAMILY CREDIT, INCORPORATED;
C&S SOVRAN CREDIT CORPORATION;
INTERLINK MORTGAGE SERVICES,
Defendants.
Appeal from the United States District Court

for the District of South Carolina, at Greenville.
Margaret B. Seymour, District Judge.
(CA-00-2005-6-24)
Argued: February 26, 2003
Decided: May 27, 2003
Before NIEMEYER and TRAXLER, Circuit Judges, and
C. Arlen BEAM, Senior Circuit Judge of the
United States Court of Appeals for the Eighth Circuit,
sitting by designation.
BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Alton Lamar Martin, Jr., CLARKSON, WALSH,

RHENEY & TURNER, P.A., Greenville, South Carolina, for Appellants. William Stevens Brown, V, NELSON, MULLINS, RILEY &
SCARBOROUGH, L.L.P., Greenville, South Carolina, for Appellees.
ON BRIEF: Wes A. Kissinger, CLARKSON, WALSH, RHENEY &
TURNER, P.A., Greenville, South Carolina, for Appellants.
Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).
OPINION
PER CURIAM:
Jerry and Judith Beattie ("Beatties") brought this diversity action
against the Bank of America and its subsidiary NationsCredit Financial Services Corporation ("NationsCredit") for, among other things,
violation of the South Carolina Unfair Trade Practices Act
("SCUTPA"), libel, and negligence. The district court1 granted
NationsCredits motion for summary judgment, and the Beatties
appeal. We affirm.
I.
On December 17, 1993, the Beatties entered into a home loan
1
The Honorable Margaret B. Seymour, United States District Judge for

the District of South Carolina.
agreement with NationsCredit in which the debt, evidenced by a

promissory note, was secured by a mortgage on the Beatties residence in Greenville, South Carolina. Several of the loan statements
the Beatties received in 1999 did not reflect specific account activity,
such as transactions from the prior month. However, the statements
did show a decrease in the balance due on the loan. They claim to
have made repeated attempts, by telephone and in writing, to contact
NationsCredit about the status of their account, but they did not
receive a response.
On October 11, 1999, the Beatties received, from Interlink Mortgage Services, a copy of a Lost Mortgage Satisfaction affidavit ("LMS")2
signed by NationsCredits vice president Robert Hardman. The LMS,
filed with the Greenville County, South Carolina Register of Deeds
on September 8, 1999, indicated that the Beatties mortgage was satisfied. Even so, the Beatties concede that they have never paid all of
the amounts due on the loan. Armed with notice of this filing, they
stopped making monthly payments. Despite the filed LMS, NationsCredit attempted to collect the debt and informed the Beatties that
their mortgage was in default. At some point after the LMS was filed,
NationsCredit sent the Beatties account to its internal foreclosure
department.3 The Beatties deposed James Bright who had denied
them credit based on his review of the Beatties credit report. This
report, he stated, revealed that their mortgage with NationsCredit was
"in foreclosure."4 The Beatties filed the present action against
NationsCredit on June 23, 2000.
2
A "Lost Mortgage Satisfaction" is an affidavit that the creditor (mortgagee) files with the county indicating that the original mortgage was
lost. This particular affidavit further provided that the debt secured by the
lost mortgage was satisfied and the mortgage cancelled.
3
NationsCredit indicates that the LMS was filed in error, so the Beatties mortgage was listed as delinquent in NationsCredits records. This
delinquency status resulted in the collection activities.
4
Although Mr. Bright testified that the Equifax credit report he
reviewed indicated that the Beatties mortgage with NationsCredit was
in foreclosure, there is no additional evidence to support this contention.
The Equifax credit report in the record does not mention a foreclosure.
Also, the Trans Union credit report in the record only states that the
mortgage was delinquent, not in foreclosure.
II.
We review de novo the district courts decision to grant NationsCredits motion for summary judgment, and we view the evidence in
the light most favorable to the nonmoving party. Thompson v. Potomac Elec. Power Co., 312 F.3d 645, 649 (4th Cir. 2002).
A.
The Beatties argue that the district court erred in granting NationsCredit summary judgment on their SCUTPA claim. NationsCredit
counters that it is exempt from SCUTPA liability. Section 39-5-40(a)
of the SCUTPA provides that the Act does not apply to "[a]ctions or
transactions permitted under laws administered by any regulatory
body or officer acting under statutory authority of this State or the
United States or actions or transactions permitted by any other South
Carolina State law." In its initial order granting NationsCredits
motion for summary judgment, the district court held that the company was exempt. However, in response to the Beatties motion for
reconsideration, the court held that NationsCredit was not exempt
because it had failed to show that its attempts to collect on the Beatties account, after an LMS was filed, were required by or permitted
under a statute or agency regulation.
The South Carolina Supreme Court has stated that this exemption
"is intended to exclude those actions or transactions which are
allowed or authorized by regulatory agencies or other statutes." Ward
v. Dick Dyer & Assocs., Inc., 403 S.E.2d 310, 312 (S.C. 1991). The
Ward court indicated that the exemption is not meant to exclude every
activity regulated by another agency or statute, rather it is meant to
ensure that companies are not subjected to lawsuits for following an
agency regulation or statute. Id. Therefore, NationsCredit is not protected from lawsuits for "general activity." See id. There is no indication that a statute or agency regulation requires or permits NationsCredit to pursue collection and foreclosure activities on accounts purportedly satisfied by an LMS affidavit. Therefore, NationsCredit is
not exempt from liability under the SCUTPA. Accordingly, we
address the merits of the Beatties claim that NationsCredit violated
the Act.
The SCUTPA prohibits "[u]nfair methods of competition and

unfair or deceptive acts or practices in the conduct of any trade or
commerce." S.C. Code Ann. 39-5-20(a). In order to succeed on a
SCUTPA claim, the Beatties must show
(1) that the defendant engaged in an unlawful trade practice,
(2) that the plaintiff suffered actual, ascertainable damages
as a result of the defendants use of the unlawful trade practice, and (3) that the unlawful trade practice engaged in by
the defendant had an adverse impact on the public interest.
Havird Oil Co. v. Marathon Oil Co., 149 F.3d 283, 291 (4th Cir.
1998). The Beatties contend that NationsCredit engaged in an unlawful trade practice by falsely reporting to credit bureaus that their mortgage was in foreclosure. They also claim that they were damaged by
this false report because they were denied credit by Mr. Bright.
Finally, they assert that NationsCredits false reporting had an adverse
impact on the public interest.
The parties focused their attention, both in their briefs and at oral
argument, on the third element of the analysis, the adverse impact on
the public interest. We conclude, however, that the Beatties have
failed to establish both the first and third requirements of their
SCUTPA claim.
1.
Under South Carolina law, a trade practice is "unfair" when it is
"offensive to public policy or when it is immoral, unethical, or
oppressive." Johnson v. Collins Entmt Co., 564 S.E.2d 653, 665
(S.C. 2002) (quoting Young v. Century Lincoln-Mercury, Inc., 396
S.E.2d 105, 108 (S.C. Ct. App. 1989), revd in part on other grounds
by 422 S.E.2d 103 (S.C. 1992)). We assume the "public policy"
referred to by the South Carolina Supreme Court is that policy created
by applicable common law determinations, legislative enactments or
constitutional provisions. See Johnson, 564 S.E.2d at 666.
The Beatties do not direct our attention to any specific common
law, statutory or constitutional violation that might amount to an "un-
lawful trade practice," apparently relying upon what they perceive to

be the general unfairness of inaccurate credit reporting. See, e.g.,
Havird, 149 F.3d at 291 & n.2. Thus, we must consider the facts "surrounding the transaction and its impact on the market place" in determining whether or not a particular occurrence is unfair under the
SCUTPA. Young, 396 S.E.2d at 108. After reviewing the record, we
find as a matter of law that the Beatties have failed to establish the
"wrongfulness of the defendants actions." Williams-Garrett v. Murphy, 106 F. Supp. 2d 834, 845 (D.S.C. 2000). Assuming for the sake
of argument that NationsCredit actually reported that the Beatties
mortgage was in foreclosure, such a communication cannot be seen
as being immoral, unethical or oppressive. Indeed, although the words
are clearly susceptible to interpretations to the contrary, it is not
wholly unreasonable for NationsCredit to have believed, if it did so,
that reference of the defaulted loan to its internal foreclosure department had placed the account "in foreclosure."
Notwithstanding the above analysis and in an effort to fully and
fairly consider the Beatties claim, we conducted our own search for
potentially actionable public policy language that might support the
finding of a SCUTPA-defined unlawful trade practice. Our quest
revealed only one subsection of the Fair Credit Reporting Act
("FCRA") that might arguably suffice. That portion of the Act states
that a supplier of information to a credit bureau "shall not furnish any
information relating to a consumer to any consumer reporting agency
if the person knows or consciously avoids knowing that the information is inaccurate." 15 U.S.C. 1681s-2(a)(1)(A). However, as outlined in more detail below, on the facts of this case, the FCRA does
not provide the Beatties with a private cause of action. More specifically, this particular statutory language may be enforced only by federal and state agencies and officials, 15 U.S.C. 1681s-2(d), and the
prohibition appears to apply only to malicious and willfully intentional acts, transgressions neither alleged nor demonstrated in this litigation. See 15 U.S.C. 1681h(e). Accordingly, the Beatties have
failed to establish that NationsCredit engaged in "an unlawful trade
practice" as required by Havird.
2.
We now evaluate the "public interest" element. Specific facts are
required to prove an adverse impact on the public interest. Jefferies
v. Phillips, 451 S.E.2d 21, 23 (S.C. Ct. App. 1994). South Carolina
law states that "the public interest prong of the [SCUTPA] inquiry [is]
satisfied by evidence of a potential for repetition of the unfair or
deceptive act." Daisy Outdoor Adver. Co. v. Abbott, 473 S.E.2d 47,
50 (S.C. 1996) (emphasis added). Thus, the Beatties must "alleg[e]
and prov[e] facts" that demonstrate that NationsCredits unfair practices, if any, have the potential for reiteration. Id. at 49. This may be
done either by showing that similar unfair activities occurred in the
past, making it more likely that they will occur in the future absent
deterrence, or by showing that NationsCredits procedures create a
potential for repetition. Id. at 51.5
The Beatties produced the pleadings in a similar case, Patricia W.
McCain v. NationsCredit Financial Services Corp., No. 2000-CP-236932, filed in the South Carolina Court of Common Pleas for Greenville County on November 22, 2000, in support of the proposition that
NationsCredits unfair trade practices have a potential for reoccurrence. McCain alleged that NationsCredit, after an LMS was filed,
falsely reported to credit reporting agencies that her mortgage was in
foreclosure. The district court held that the McCain case was irrelevant to the Beatties case6 and rejected the "potential for repetition"
5
The South Carolina Supreme Court specifically held that these are not
the only ways to show a potential for repetition. Daisy, 473 S.E.2d at 51.
6
The district courts decision that knowledge of the existence of the
McCain case, standing alone, was irrelevant is seemingly based on an
interrogatory presented to NationsCredit by the Beatties, which asked
NationsCredit to list any actions brought against the company for
improper billing, improper late fees, or billing errors. NationsCredit did
not report the McCain case, and the Beatties filed a motion for sanctions.
The district court denied this motion, saying that the McCain case did not
allege improper billing or fees. In granting NationsCredits motion for
summary judgment on the Beatties SCUTPA claim, the district court
stated that "there were no specific factual allegations of improper billing,
improper late fees, or billing errors in the McCain action that would tend
to show that the facts supporting the McCain action would be relevant
to the within action."
argument. We agree with the result reached by the district court but
apply slightly different reasoning.
The Federal Rules of Civil Procedure state that
[w]hen a motion for summary judgment is made and supported . . . an adverse party may not rest upon the mere allegations or denials of [its] pleading, but [its] response, by
affidavits or as otherwise provided in this rule, must set
forth specific facts showing that there is a genuine issue for
trial.
Fed. R. Civ. P. 56(e). Thus, the bare allegations of McCains complaint offered without further evidentiary support did not establish an
adverse impact on the public interest and were not sufficient to withstand NationsCredits factually supported request for summary judgment. Accordingly, the Beatties failed to prove that NationsCredit
violated the SCUTPA and the district court properly granted NationsCredits motion for summary judgment on this issue.
B.
The district court granted NationsCredits motion for summary
judgment on the Beatties libel claim, stating that they failed to prove
that NationsCredit submitted false information to consumer reporting
agencies "with malice or willful intent," as required by the FCRA, 15
U.S.C. 1681h(e).7 The Beatties contend that their credit report was
false and libelous because "the statements were published with such
recklessness as to show a conscious indifference toward [their]
rights." Jones v. Garner, 158 S.E.2d 909, 914 (S.C. 1968) (defining
actual malice). The Beatties essentially argue that NationsCredit
should not have reported their account as being in foreclosure to the
7
"[N]o consumer may bring any action or proceeding in the nature of

defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of
information, or any person who furnishes information to a consumer
reporting agency, . . . except as to false information furnished with malice or willful intent to injure such consumer." 15 U.S.C. 1681h(e)
(emphasis added).
credit reporting agencies because the account was only being

reviewed by NationsCredits foreclosure department and no foreclosure action had been filed.
Even assuming that the credit report actually listed the mortgage as
in foreclosure, a fact that is, as earlier indicated, only adopted for purposes of the summary judgment motion, NationsCredit did not report
the alleged foreclosure "with malice" because, as we have noted, such
a report was, at least in NationsCredits view, accurate. "Malice" is
established only if "the defendant acted with ill will toward the plaintiff or acted recklessly or wantonly, meaning with conscious indifference toward the plaintiffs rights." Murray v. Holnam, Inc., 542
S.E.2d 743, 750 (S.C. Ct. App. 2001). There is simply no such evidence. The district court properly granted summary judgment in favor
of NationsCredit on this issue.
C.
The Beatties also claim that NationsCredit was negligent in reporting the purported foreclosure to the credit bureaus. "To prevail in an
action for negligence, the plaintiff must prove the following three elements: (1) a duty of care owed by defendant to plaintiff; (2) defendants breach of that duty by a negligent act or omission; and (3)
damages to plaintiff proximately resulting from the breach of duty."
Trivelas v. South Carolina Dept of Transp., 558 S.E.2d 271, 275
(S.C. Ct. App. 2001). The district court dismissed the Beatties negligence claim, holding that, since the relationship between the Beatties
and NationsCredit arises from contract, they cannot bring a tort claim
without showing that NationsCredit had a duty independent of its contractual commitments. See Tommy L. Griffin Plumbing & Heating Co.
v. Jordon, Jones & Goulding, Inc., 463 S.E.2d 85, 88 (S.C. 1995) ("In
most instances, a negligence action will not lie when the parties are
in privity of contract."). To overcome this obstacle, the Beatties claim
an independent duty existed under the FCRA.
In order to show that the defendant owes him a duty of care
arising from a statute, the plaintiff must show two things:
(1) that the essential purpose of the statute is to protect from
the kind of harm the plaintiff has suffered; and (2) that he
10
is a member of the class of persons the statute is intended

to protect.
Rayfield v. South Carolina Dept of Corr., 374 S.E.2d 910, 914 (S.C.
Ct. App. 1988). The Beatties do not meet this standard. The FCRA
section that the Beatties depend upon, 15 U.S.C. 1681s-2(b), protects credit reporting agencies, not consumers. See Carney v.
Experian Info. Solutions, Inc., 57 F. Supp. 2d 496, 502 (W.D. Tenn.
1999) ("[T]he statutorily created obligation imposed on a furnisher of
information is owed only to the consumer reporting agency not to the
consumer, and an individual such as plaintiff cannot state a claim
under 15 U.S.C. 1681s-2(b).").
The Beatties also attempt to establish that NationsCredit was negligent for failing to provide detailed receipts for payments made on the
mortgage, as required by the South Carolina Consumer Protection Act
("SCCPA"), South Carolina Code Annotated 37-3-302. The district
court found that NationsCredit violated the SCCPA by failing to provide details of previous payments. However, the court also determined that the Beatties did not suffer any actual damages from this
violation. We agree with this assessment. Since the Beatties failed to
prove that they suffered any damages as a result of NationsCredits
breach of duty under the SCCPA, the district court properly dismissed
the negligence claim.
III.
The district court appropriately granted NationsCredits motion for
summary judgment. We affirm.
AFFIRMED

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Rehearing granted, June 27, 2003

UNITED STATES COURT OF APPEALS

Appeal from the United States District Court

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

Affirmed by unpublished per curiam opinion.

ARGUED: Alton Lamar Martin, Jr., CLARKSON, WALSH,

Unpublished opinions are not binding precedent in this circuit. See

The Honorable Margaret B. Seymour, United States District Judge for

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

agreement with NationsCredit in which the debt, evidenced by a

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

The SCUTPA prohibits "[u]nfair methods of competition and

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

lawful trade practice," apparently relying upon what they perceive to

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

"[N]o consumer may bring any action or proceeding in the nature of

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

credit reporting agencies because the account was only being

BEATTIE v. NATIONS CREDIT FINANCIAL SERVICES

is a member of the class of persons the statute is intended

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