Judge Curtis A. Kin, Case 18STCP02482 2022-12-15 Tentative Ruling

Judge: Curtis A. Kin, Case: 18STCP02482, Date: 2022-12-15 Tentative Ruling

Case Number: 18STCP02482 Hearing Date: December 15, 2022 Dept: 72

On October 12, 2022, the Court entered judgment in favor plaintiff Sergio Larios. Thereafter, defendant Specialized Loan Servicing, LLC (“SLS”) filed its (1) Motion for Judgment Notwithstanding Verdict (“JNOV”) and (2) Motion for New Trial. The matter was argued before the Court on December 15, 2022. For the reasons that follow, the Motion for JNOV is GRANTED IN PART and the Motion for New Trial is DENIED:

1. As a preliminary matter, the Court SUSTAINS defendant’s objections to Exhibits J, P, and Q attached to the Declaration of Robert F. Brennan. Exhibit J is an Experian Credit Report, dated November 1, 2022, which was not part of the evidence at trial. Exhibits P and Q are declarations from jurors that are prohibited under Evidence Code section 1150(a).

2. In finding SLS liable under the Consumer Credit Reporting Agencies Act (“CCRAA”), the jury necessarily concluded SLS did not maintain reasonable procedures to comply with the requirement not to furnish incomplete or inaccurate information to a consumer credit reporting agency. (See Civ. Code §§ 1785.25(a) &(g).) There was ample evidence to support that finding. According to plaintiff’s expert Thomas Tarter, SLS’s transmission of the bankruptcy information about plaintiff to the credit agencies prior to verifying whether the information was logical or pertained to the right debtor was beneath the industry standard. Tarter testified that SLS’s use of a single factor for identification, namely, a social security number or employee identification number, was “alarming.” Instead, SLS should have used two or three factors (e.g., date of birth, location, or names) to verify whether the information matched. This was so, according to Tarter, because bankruptcy notations are a “red flag” that can drop a credit score, which may have “great impact” on a persons’ life. Indeed, while concluding that multi-factor identification is not necessary, even SLS’s consumer credit reporting expert John Ulzheimer recognized that single factor identification carried some risk of a “false positive” or “debtor mismatch.” Such evidence is sufficient to support the jury’s finding. Further, the Court finds that, in view of all the evidence concerning SLS’s procedures, the jury’s finding was not clearly wrong.

3. Punitive damages under the CCRAA are limited to $5,000 for each willful violation. (Civ. Code §§ 1785.31(a)(2)(B).) Here, there was ample evidence for the jury to find that SLS acted willfully in furnishing false information that plaintiff had a prior bankruptcy. Indeed, SLS does not contest otherwise in its post-trial motions. However, the Court agrees with SLS’s contention that the jury’s award of $820,000 in punitive damages is contrary to law. The evidence and common sense do not support plaintiff’s view that each day SLS failed to correct the misinformation constituted an act of furnishing by SLS. Nor would each time SLS failed to correct the information after receiving a call from plaintiff or his wife about it. There was, however, evidence to support a finding that SLS furnished the inaccurate bankruptcy information more than the original time it sent the information to the credit agencies on December 14, 2016. According to plaintiff’s expert Tarter, SLS sent monthly batch reports to all the credit bureaus. Each monthly batch report constituted furnishing of information to the credit agencies. In his view, when SLS did not change the credit information or bankruptcy designation for plaintiff for each subsequent month in the monthly reporting, that constituted furnishing of inaccurate information in the industry. Thus, because the bankruptcy notation for plaintiff was not changed until May 2017, the evidence is sufficient to support up to five willful violations (December, January, February, March, April) found by the jury. Thus, plaintiff is only entitled to a judgment awarding punitive damages of $25,000.

4. The Court does not find that the jury’s award of $2 million in non-economic damages was clearly wrong in view of all the evidence. Plaintiff testified that he suffered greatly, as this was the worst time in his life. He lost sleep. He lost weight. He suffered from stomach aches and headaches. He developed anxiety and suffered frustration. The ordeal also led to problems with him not getting along with his wife. He testified that suffered while trying to deal with SLS for two years, calling regularly and getting someone different to whom he would have to explain himself in addition to waiting to speak to someone or getting disconnected. As plaintiff explained, the SLS agents expressed no sense of urgency or prioritization of his problems, and, indeed, recordings of some calls were played for the jury to hear. Further, plaintiff, who testified he had never previously missed a payment to a lender, felt that his reputation suffered. Similarly, plaintiff’s wife of 36 years testified that the experience with SLS made plaintiff “not himself.” From 2016 through 2017, plaintiff was not sleeping or eating. His waist went from size 36 to 28, and his face became sunken in. He was irritable and could not sleep, causing him to resort to pills. As for their marriage, they had a good relationship prior to the SLS ordeal, but nothing she could do or say to plaintiff would help him. Ultimately, she left him for a month to stay with her sister in Alabama. As for plaintiff’s relationship with his family, plaintiff’s wife further testified that plaintiff no longer attended parties for his grandkids and became anti-social, whereas he had been fairly social before. As counsel for plaintiff argued during closing, his client was entitled to $2 million for his mental anguish, emotional distress, frustration, anxiety, and damage to reputation. The jury agreed, and the foregoing evidence does not counsel that the jury was clearly wrong in doing so.

5. The Court also finds the jury’s award of $80,000 was supported by the evidence and not clearly wrong. Plaintiff’s counsel argued for and presented evidence of $86,000 in damages arising from late fees, interest, and tax penalties. The jury was not clearly wrong to award $80,000 as a result.

For all the foregoing reasons, the Court GRANTS IN PART SLS’s Motion for JNOV and DENIES SLS’s Motion for New Trial. In accordance herewith, the Court will enter an Amended Judgment awarding damages in the sum of $2,105,000.