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In Johnson, an employee of the plaintiff opened a credit card in the plaintiff's name and withdrew $180,567.00 from the plaintiff's personal and business accounts over the span of three years.
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Case No. 6:19-cv-2252-CEM-LRH
2022-01-31
Michael JOHNSON, Plaintiff, v. CHASE BANKCARD SERVICES, INC., Defendant.
Brittany Michelle Wages, Scottie McPherson, Tucker H. Byrd, Jason Ward Johnson, Byrd Campbell, P.A., Winter Park, FL, for Plaintiff. Alisa M. Taormina, Kingsley Chinedu Nwamah, Pro Hac Vice, Brian C. Frontino, Stroock & Stroock & LaVan, LLP, Miami, FL, Christine E. Ellice, Pro Hac Vice, Stroock & Stroock & LaVan LLP, Los Angeles, CA, for Defendant.
Brittany Michelle Wages, Scottie McPherson, Tucker H. Byrd, Jason Ward Johnson, Byrd Campbell, P.A., Winter Park, FL, for Plaintiff.
Alisa M. Taormina, Kingsley Chinedu Nwamah, Pro Hac Vice, Brian C. Frontino, Stroock & Stroock & LaVan, LLP, Miami, FL, Christine E. Ellice, Pro Hac Vice, Stroock & Stroock & LaVan LLP, Los Angeles, CA, for Defendant.
ORDER
CARLOS E. MENDOZA, UNITED STATES DISTRICT JUDGE THIS CAUSE is before the Court on Defendant's Motion for Summary Judgment ("Motion," Doc. 65), to which Plaintiff filed a Response (Doc. 81), and Defendant filed a Reply (Doc. 90). For the reasons set forth below, the Motion will be granted.
I. BACKGROUND
Plaintiff is the owner of a business, Johnsons Properties. (Pl. Dep., Doc. 66-16, at 5). In or around September 2014, Plaintiff hired non-party Justina Holland to be the bookkeeper for Johnsons Properties. (Id. at 8, 14). During the time Holland was employed by Plaintiff's company, she opened a credit card account (the "Johnson Account") with Defendant using Plaintiff's name and personal identifying information. (Nolte Decl., Doc. 68, at 2–3; Johnson Aff., Doc. 81-1, at 1). Holland then stole $180,567.60 from Plaintiff's personal and business accounts to pay off charges on the Johnson Account. (Doc. 81-1 at 3). Additionally, Holland stole $56,910.72 from Plaintiff and his business accounts to make payments on her own account with Defendant (the "Holland Account"). (Id. at 3). This litigation arises from the disputes between Plaintiff and Defendant in the wake of Holland's actions.
Only excerpts of Plaintiff's deposition are filed on the record. For ease of reference, the Court cites the electronic filing page number.
When Plaintiff hired Holland, an internet-based background check was run on her, which included a criminal history check. (Doc. 66-16 at 12–13). The background check came back clear, with no record of any criminal history. (Id. at 13). This was not accurate. Holland had been arrested and pleaded no contest to grand theft of between $300 and $5000 for stealing money from her previous employer. (June 3, 2014 Plea Agreement, Doc. 69-3, at 2; Aug. 16, 2013 Capias Request, Doc. 69-2, at 2–3). Also, around the time Plaintiff hired her, Holland was arrested for failing to redeliver a hired vehicle. (Arrest Report, Doc. 69-4, at 2). During her employment, Holland pleaded no contest to this charge. (Feb. 12, 2015 Plea Agreement, Doc. 69-5, at 2). There is no evidence that Plaintiff had knowledge of either of these incidents during the time Holland was employed by Plaintiff's company.
During her employment, Holland's primary duty was bookkeeping, but she also performed administrative functions, such as checking the mail, maintaining Plaintiff's schedule, and helping manage the properties owned by Plaintiff's business. (Doc. 66-16 at 8, 15–16). As part of her job duties, Holland had access to Plaintiff's personal identifying information, (Doc. 66-16 at 22), and to the checkbooks for Plaintiff's personal and business bank accounts, which were kept in Plaintiff's desk, (id. at 23–24). Holland could also view bank statements and write checks from Plaintiff's accounts for Plaintiff to sign, but she did not have express authorization to sign the checks herself. (Id. at 23). Plaintiff did not review any of his bank statements; he relied on Holland to put together a spreadsheet of his accounts for his review. (Id. at 24–25). In July 2018, Plaintiff was contacted by law enforcement officers, who had discovered Holland's theft. (Doc. 81-1 at 2 (noting that Plaintiff discovered the Johnson Account in July 2018); Doc. 66-16 (discussing being contacted by law enforcement)). After confirming the theft with his bank, Plaintiff terminated Holland's employment. (Doc. 66-16 at 41). Holland has since pleaded guilty to "fraud, aggravated identity theft, theft, and false use of a social security number" due to her actions associated with this litigation. (Doc. 81-1 at 3).
Upon investigation, the following information regarding the Johnson and Holland Accounts was discovered. The Johnson Account was opened in June 2015, and for over three years it was regularly used. (Doc. 68 at 2; see also generally Johnson Account Statements, Doc. 68-1 (showing statements from June 9, 2015, through Feb. 27, 2019)). Throughout that time, payments were routinely made on the account from Plaintiff's personal and business checking accounts. (Doc. 73 at 15, 22). Plaintiff's personal and business checking accounts were also used to make approximately thirty payments on the Holland Account. (Doc. 81-1 at 3).
After discovering Holland's theft, Plaintiff immediately contacted Defendant and reported that the Johnson Account was fraudulently opened. (Doc. 81-1 at 2). Defendant conducted an internal investigation and determined that it would not refund to Plaintiff any money and that it would hold Plaintiff responsible for the balance on the Johnson Account. (Doc. 73 at 14). Defendant based this determination on a number of factors, including the fact that payments had been made from seven of Plaintiff's accounts for over three years and that Plaintiff "hired and entrusted a bookkeeper to fully do everything ... regarding his books" and did not review her work. (Id. at 14–15). Defendant reported the Johnson Account to the credit reporting agencies ("CRAs"), stating that it was a delinquent account for which Plaintiff was responsible. (See Doc. 81-1 at 3).
Plaintiff submitted five disputes with the various CRAs regarding the Johnson Account. (See Rivera Decl., Doc. 67, at 3; see also generally Automated Consumer Dispute Verification Docs., Doc. 75). Plaintiff also provided Defendant information, including a letter from Plaintiff explaining Holland's identity theft, an identity theft report filed with the Federal Trade Commission, and the police report relating to Holland's identity theft. (Doc. 81-1 at 2). Defendant's conclusion that Plaintiff was responsible for the Johnson Account did not change, and Defendant continues to report the Johnson Account to the CRAs as a delinquent account for which Plaintiff is responsible. (Id. at 3; Doc. 73 at 16–17).
As a result, Plaintiff filed this litigation. In his Second Amended Complaint (Doc. 32), Plaintiff alleges the following claims: Declaratory Judgment (Count I), seeking a determination that "the [Johnson Account] is invalid and that Plaintiff is entitled to a refund of all payments" made thereon; conversion (Count II), alleging that Defendant converted both the funds paid on the Johnson Account and those paid on the Holland Account; unjust enrichment (Count III), based on the payments made on both the Johnson and Holland Accounts; and a claim for violation of the Fair Credit Reporting Act ("FCRA") (Count IV), 15 U.S.C. § 1681s-2(b), relating to Defendant's investigation and reporting of the Johnson Account debt to the CRAs. (See generally Doc. 32). Defendant has now moved for summary judgment on all claims. (See generally Doc. 65).
Defendant also filed a Third Party Complaint (Doc. 28) against Plaintiff and one of his companies. The claims asserted therein are not at issue in this Order.
II. LEGAL STANDARD
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material if it may "affect the outcome of the suit under the governing law." Id.
"The moving party bears the initial burden of showing the court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial." Allen v. Bd. of Pub. Educ., 495 F.3d 1306, 1313–14 (11th Cir. 2007). In ruling on a motion for summary judgment, the Court construes the facts and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). However, when faced with a "properly supported motion for summary judgment," the nonmoving party "must come forward with specific factual evidence, presenting more than mere allegations." Gargiulo v. G.M. Sales, Inc. , 131 F.3d 995, 999 (11th Cir. 1997) (citing Anderson , 477 U.S. at 248–49, 106 S.Ct. 2505 (1986) ); see also LaRoche v. Denny's, Inc. , 62 F. Supp. 2d 1366, 1371 (S.D. Fla. 1999) ("The law is clear ... that suspicion, perception, opinion, and belief cannot be used to defeat a motion for summary judgment.").
"[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson , 477 U.S. at 249, 106 S.Ct. 2505. "[T]he proper inquiry on summary judgment is ‘whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’ " Stitzel v. N.Y. Life Ins. Co. , 361 F. App'x 20, 22 (11th Cir. 2009) (quoting Anderson , 477 U.S. at 251–52, 106 S.Ct. 2505 ). Put another way, a motion for summary judgment should be denied only "[i]f reasonable minds could differ on the inferences arising from undisputed [material] facts." Pioch v. IBEX Eng'g Servs. , 825 F.3d 1264, 1267 (11th Cir. 2016) (quoting Allen v. Tyson Foods, Inc. , 121 F.3d 642, 646 (11th Cir. 1997) ).
III. ANALYSIS
A. Unjust Enrichment
To prove unjust enrichment, "the [p]laintiff must establish that: (1) the plaintiff conferred a benefit on the defendant; (2) the defendant knew of the benefit; (3) the defendant accepted or retained the benefit; and (4) it would be inequitable for the defendant to retain the benefit without paying for it." Brush v. Miami Beach Healthcare Grp. Ltd. , 238 F. Supp. 3d 1359, 1369 (S.D. Fla. 2017) (citing Com. P'ship 8098 Ltd. P'ship v. Equity Contracting Co. , 695 So. 2d 383, 386 (Fla. 4th DCA 1997) ).
Defendant argues that it is entitled to summary judgment because Plaintiff cannot establish element four—that it would be inequitable for Defendant to retain the benefit without paying for it. For purposes of this discussion, the Court assumes arguendo that Defendant incurred a benefit from Plaintiff in the form of the money paid to Defendant on the Johnson and Holland Accounts and that Defendant knew of and accepted that benefit. "When a defendant has given adequate consideration to someone for the benefit conferred, a claim of unjust enrichment fails." Am. Safety Ins. Serv., Inc. v. Griggs , 959 So. 2d 322, 331–32 (Fla. 5th DCA 2007). Here, Defendant gave consideration for the benefit it incurred—it extended lines of credit and paid for goods and services pursuant to those lines of credit. Plaintiff argues that this consideration does not matter because Plaintiff is the one that conferred the benefit, but he was not the recipient of any such consideration. However, Plaintiff provides no authority for the proposition that the consideration must be paid to the individual conferring the benefit. Indeed, Plaintiff's contention appears to be contrary to Florida law. See, e.g. , id. (concluding that the plaintiff's unjust enrichment claim failed because the defendant paid consideration for the benefit it received, regardless of to whom that consideration was paid); State Farm Mut. Auto. Ins. Co. v. At Home Auto Glass LLC , No. 8:21-cv-239-TPB-AEP, 2021 WL 6118102, at *8 (M.D. Fla. Dec. 27, 2021) (dismissing an unjust enrichment claim where the defendants performed windshield repairs for the plaintiff's insureds and submitted the claims to the plaintiff for payment but where the plaintiff alleged that the defendants acted unlawfully in soliciting and providing the window repair services, noting that the defendants provided consideration to the customers in the form of window repairs and explaining that "[a] recipient's providing adequate consideration ‘to someone’ generally precludes an unjust enrichment claim" (quoting Griggs , 959 So. 2d at 331–32 )); 420 Julia St., L.L.C. v. Meecorp Cap. Mkts., LLC , No. 3:10-cv-790-J-37JBT, 2011 WL 13295461, at *13 (M.D. Fla. Oct. 7, 2011) (granting summary judgment on the plaintiff's unjust enrichment claim where the defendant gave consideration to a third party "because [the plaintiff] conferred no benefit on [the defendant] independent of that which [the defendant] had already bargained and paid for").
And, at least one court in this district has determined, under very similar factual circumstances, that the plaintiff's unjust enrichment claim failed because the credit card company exchanged consideration for the benefit it obtained. Travelers Cas. & Sur. Co. v. Citibank (S. Dakota), N.A. , No. 8:03-cv-2548-T-23TGW, 2005 WL 8160165, at *8 (M.D. Fla. Sept. 29, 2005), Report and Recommendation adopted by , 8:03-cv-2548-T-23TGW, 2005 WL 8160164 (Nov. 17, 2005) (stating that summary judgment on the plaintiff's unjust enrichment claim was justified where a third party embezzled money from the plaintiff—her former employer—to pay money on her credit cards issued by the defendant, explaining that "the defendant clearly did not receive something for nothing because the proceeds of the checks were credited toward the debt accumulated on two credit card accounts"). Regardless of whether Plaintiff obtained any benefit from the credit lines, Defendant clearly gave consideration in exchange for the money paid to it by Holland. Accordingly, Defendant is entitled to summary judgment on Plaintiff's unjust enrichment claim.
B. Conversion
"Conversion is defined as ‘an act of dominion wrongfully asserted over, and inconsistent with, another's possessory rights in personal property.’ " Joseph v. Chanin , 940 So. 2d 483, 486 (Fla. 4th DCA 2006) (quoting Goodwin v. Alexatos , 584 So. 2d 1007, 1011 (Fla. 5th DCA 1991) and citing Belford Trucking Co. v. Zagar , 243 So. 2d 646, 648 (Fla. 4th DCA 1970) ). Plaintiff alleges that Defendant converted the funds that Holland took from Plaintiff's bank accounts and used to pay Defendant. "Withdrawal of funds from a bank account may form the basis of an action for conversion ‘if the specific money in question can be identified.’ " Id. (quoting Allen v. Gordon , 429 So. 2d 369, 371 (Fla. 1st DCA 1983) and citing Brand v. Old Republic Nat'l Title Ins. Co. , 797 So. 2d 643, 646, n.3 (Fla. 3d DCA 2001) ). "To be a proper subject of conversion each coin or bill need not be earmarked, but there must be an obligation to keep intact or deliver the specific money in question, so that such money can be identified." Belford Trucking , 243 So. 2d at 648. Florida courts have indicated that "[m]oney is capable of identification where it is delivered at one time, by one act and in one mass, or where the deposit is special and the identical money is to be kept for the party making the deposit." Id.
Belford Trucking —which is a non-binding case from the Fourth District Court of Appeal—also included the phrase "or where wrongful possession of such property is obtained" in its list of ways money is capable of identification. 243 So. 2d at 648. However, this Court has found only one example in the over fifty years since Belford Trucking was decided where a court purportedly relied solely on this phrase to support a claim for conversion—Wolff v. Leadenhall Bank & Trust , 03-22778-CIV, 2005 WL 8165194, at *9 (S.D. Fla. Apr. 1, 2005). However, the Wolff Court did not analyze the phrase nor the conversion case law that came after Belford Trucking . Id. Further, it appears that the Wolff Court may have also considered that the money at issue there had been loaned for a specific purpose. See id. Moreover, the breadth of Florida case law, which is discussed above, indicates that mere "wrongful possession" is insufficient to support a claim of conversion of money unless the money is otherwise specific and identifiable. Indeed, in Belford Trucking itself the money was alleged to have been wrongly obtained, and the court emphasized that "[t]he requirement that the money be identified as a specific chattel does not permit as a subject of conversion an indebtedness which may be discharged by the payment of money generally." 243 So. 2d at 648.
The most straightforward example of identifiable funds is where there is an obligation to hold specific funds in escrow. See, e.g. , Masvidal v. Ochoa , 505 So. 2d 555, 556 (Fla. 3d DCA 1987) ; see also Ultimate Motors, Inc. v. Lionheart Motorcars, LLC , No. 19-60917-CIV, 2019 WL 9786489, at *1, *3 (S.D. Fla. July 23, 2019) (denying a motion to dismiss where the claim for conversion involved the return of a deposit made with the understanding that the deposit would be returned if the sale did not take place). Courts have also found identifiable money to include money in a bank account held by joint tenants with the right of survivorship, where each joint tenant has a right to a certain, definitive portion of the money held in the specific bank account. Joseph , 940 So. 2d at 486 ; Allen , 429 So. 2d at 370–71. On the other hand, money has been determined to be not identifiable, and therefore inappropriate for a claim of conversion, where it is in a joint bank account and both parties had the right to control the funds. Rosen v. Marlin , 486 So. 2d 623, 625 (Fla. 3d DCA 1986) ; see also Fla. Desk, Inc. v. Mitchell Intern., Inc. , 817 So. 2d 1059, 1061 (Fla. 5th DCA 2002) (finding that funds were not identifiable where they "were unsegregated and were placed in a general operating account").
While the facts of the instant case are not directly analogous to any of the cases discussed above, it is closer to the latter scenario than the former. In this case, there was no specific obligation at any point to hold Plaintiff's funds—there was no escrow or trust account, the bank account at issue was not a joint tenancy account where the specific funds were reserved for certain individuals, and the funds were not taken out in one lump sum to be used or held for a specific purpose. Instead, Holland took money out of Plaintiff's general bank accounts to pay a general debt. As such, this case simply involves fungible money, which cannot be the basis of a conversion claim. Belford Trucking , 243 So. 2d at 648 ("A mere obligation to pay money may not be enforced by a conversion action").
Plaintiff's only argument to the contrary is that because there was a specifically identifiable amount of money stolen, the requirement that the money be identifiable is met. However, "[t]he fact that the amount is certain does not make an ‘identifiable fund.’ " Fla. Desk , 817 So. 2d at 1061. As explained above, the identifiable requirement is about the specific funds, not about the amount of money. See Rosen , 486 So. 2d at 625 ("A debt which may be discharged by the payment of money in general cannot form the basis of a claim for conversion."). The funds at issue here are not identifiable as contemplated under Florida law for a claim for conversion. Therefore, Defendant is entitled to summary judgment on this claim.
C. Declaratory Judgment
1. Past Harm
Plaintiff brings a claim for declaratory judgment and supplemental relief. Specifically, Plaintiff requests a declaratory judgment that the Johnson Account is invalid and that he is not responsible for the charges incurred thereon. Then, by way of supplemental relief, Plaintiff seeks, among other things, an order requiring Defendant to refund all payments made on the Johnson Account. Defendant argues that declaratory relief can only be used to clarify legal duties for the future and that "[t]o the extent [Plaintiff] seeks a refund of prior payments ... [he] does not seek the clarification of any future legal duties." (Doc. 65 at 30). As such, Defendant argues that it is entitled to summary judgment on Plaintiff's declaratory judgment claim "for, at a minimum, [Plaintiff's] request for a declaration instructing [Defendant] to refund the payments previously made." (Id. at 30–31). What Defendant is actually addressing is the issue of standing.
Although Plaintiff's claim is pleaded under the Florida Declaratory Judgment Act, the Court construes it under the federal Declaratory Judgment Act. Coccaro v. GEICO Gen. Ins. Co. , 648 F. App'x 876, 880–81 (11th Cir. 2016) (noting that the Florida Declaratory Judgment Act is procedural); Bailey v. Rocky Mt. Holdings, LLC , 889 F.3d 1259, 1264 n.6 (11th Cir. 2018) (same); Nationwide Ins. Co. of Am. v. Fla. Realty One, Inc. , No. 2:19-cv-563-FtM-38MRM, 2019 WL 5423339, at *2 n.2, 2019 U.S. Dist. LEXIS 183360, at *4 n.2 (M.D. Fla. Oct. 22, 2019) ("[F]ederal courts construe claims brought under the Florida Declaratory Judgment Act as seeking relief under the federal Declaratory Judgment Act."); Goodbys Creek, LLC v. Arch Ins. Co. , No. 3:07-cv-947-J-34HTS, 2009 WL 10671130 at *2, 2009 U.S. Dist. LEXIS 137214 at *5 (M.D. Fla. Aug. 11, 2009) (collecting cases and concluding that the federal Declaratory Judgment Act governs).
To the extent Defendant argues that the declaratory judgment claim involves the Holland Account, it does not. (Doc. 32 at 5–6).
"In order to demonstrate that there is a case or controversy that satisfies Article III's standing requirement when a plaintiff is seeking declaratory relief—as opposed to seeking damages for past harm—the plaintiff must allege facts from which it appears that there is a substantial likelihood that he will suffer injury in the future." A&M Gerber Chiropractic LLC v. Geico Gen. Ins. Co. , 925 F.3d 1205, 1210–11 (11th Cir. 2019).
With regard to the request for, among other things, a refund of payments, seeking such supplemental relief does not impact the standing analysis for the declaratory judgment claim. Under certain circumstances "[a] declaratory judgment can ... be used as a predicate to further relief, including an injunction," Powell v. McCormack , 395 U.S. 486, 499, 89 S.Ct. 1944, 23 L.Ed.2d 491 (1969), or monetary damages, Mack v. USAA Cas. Ins. Co. , 994 F.3d 1353, 1358 (11th Cir. 2021). 28 U.S.C. § 2202 ("Further necessary or proper relief based on a declaratory judgment or decree may be granted, after reasonable notice and hearing, against any adverse party whose rights have been determined by such judgment."). "[T]he possibility of supplemental relief does not" automatically "convert declaratory judgment claims into an effort to remedy past injuries." Mack , 994 F.3d at 1358. Instead, supplemental relief is a separate additional step conducted after the declaratory judgment is issued. Id. ("A court may decide whether [a plaintiff] is eligible for supplemental monetary relief only after issuing a declaratory judgment in his favor."); 28 U.S.C. § 2202 (explaining that supplemental relief may only be granted "after reasonable notice and hearing").
So, the Court will begin by looking to the requested declaratory relief and determining whether there is an actual case or controversy. Here, Defendant is continuing to hold Plaintiff responsible for the balance remaining on the Johnson Account. The declaratory judgment sought by Plaintiff is that he is not responsible for the Johnson Account. Thus, to the extent that Defendant is continuing to hold Plaintiff responsible for the remaining balance and continuing to report that balance as delinquent to CRAs, there is an ongoing case and controversy. The Court will first address Defendant's summary judgment arguments as to that requested declaratory relief, and then the Court will examine whether Plaintiff has standing to pursue any remaining declaratory relief.
2. Plaintiff's Liability for the Johnson Account
Defendant argues that it is entitled to summary judgment on Plaintiff's declaratory judgment claim because Plaintiff is responsible for the Johnson Account due to Plaintiff "cloth[ing] Holland with apparent authority to use and pay for the [Johnson] Account for a number of years." (Doc. 65 at 31).
As an initial matter, Plaintiff relies on Florida agency law, while Defendant cites federal case law applying "background principles of agency law"—relying on the Restatement (Second) of Agency—in nearly identical cases brought under the Truth in Lending Act. Ultimately, this Court need not decide which law controls because the relevant principles at issue here are the same whether under Florida law or general "background principles," including the Restatement. Specifically, both require a representation, act, or omission by the principal; reasonable reliance by the third party; and a change in the position of the third party due to the reliance. See Marchisio v. Carrington Mortg. Servs., LLC , 919 F.3d 1288, 1312 (11th Cir. 2019) ("Plaintiffs must prove three elements [under Florida law] to establish an apparent agency: (1) a representation by the purported principal; (2) a reliance on that representation by a third party; and (3) a change in position by the third party in reliance on the representation." (quoting Mobil Oil Corp. v. Bransford , 648 So. 2d 119, 121 (Fla. 1995) )); Benson v. Seestrom , 409 So. 2d 172, 173 (Fla. 2d DCA 1982) ("Apparent authority must be the result of acts or omissions by the principal in order to subject the principal to liability for the agent's actions."); Jackson Hewitt, Inc. v. Kaman , 100 So. 3d 19, 32 (Fla. 2d DCA 2011) ("In addition, the third party's reliance on the purported agent's apparent authority must be reasonable." (collecting cases)); Restatement (Second) of Agency § 27 ("[Generally,] apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him."); Minskoff v. Am. Exp. Travel Related Servs. Co., Inc. , 98 F.3d 703, 708 (2d Cir. 1996) ("[A] principal may be estopped from denying apparent authority if (1) the principal's intentional or negligent acts, including acts of omission, created an appearance of authority in the agent, (2) on which a third party reasonably and in good faith relied, and (3) such reliance resulted in a detrimental change in position on the part of the third party." (citing, inter alia , Restatement (Second) of Agency § 8B )).
Further, and most importantly here, both Florida law and general principles of agency law permit a finding of apparent authority based on the principal's negligence—including negligent omissions. Minskoff , 98 F.3d at 709 ("We therefore agree with the district court to the extent that it decided that the negligent acts or omissions of [the principal] may create apparent authority."); Jacksonville Am. Pub. Co. v. Jacksonville Paper Co. , 143 Fla. 835, 197 So. 672, 679 (1940) ("If a corporation ... or its directors, either intentionally or negligently , clothe a particular officer or agent with an apparent authority to act for it in a particular business or transaction, and persons deal with him in good faith, it will be bound to the same extent precisely as if such apparent authority were read." (emphasis added)).
Here, it is clear that the use of and payments on the Johnson Account were done with apparent authority. Plaintiff's negligence in failing to review his credit report or a single bank statement for any of his bank accounts over the course of three years, while knowing that his employee—who had minimal supervision —had access to his bank account information, his checkbooks, and his personal identifying information, constitutes a sufficient omission to satisfy the first element of apparent agency. Minskoff , 98 F.3d at 709–10 ("A cardholder's failure to examine credit card statements that would reveal fraudulent use of the card constitutes a negligent omission that creates apparent authority for [the] charges ...."); Azur v. Chase Bank, USA, Nat'l Ass'n , 601 F.3d 212, 221–22 (3d Cir. 2010) (determining that the plaintiff's negligent omissions created the representation of apparent authority and explaining that "[a]lthough [the plaintiff] may not have been aware that [his employee] was using the Chase credit card, or even that the Chase credit card account existed, [the plaintiff] knew that he had a Dollar Bank checking account, and he did not review his Dollar Bank statements or exercise any other oversight over ... his employee.... Had [the plaintiff] occasionally reviewed his statements, [the plaintiff] would have likely noticed that checks had been written to Chase.").
Because there is an issue of fact as to what type of criminal background check was run on Holland and whether Plaintiff was negligent in failing to find out about Holland's criminal history, the Court does not consider that fact in its analysis.
Additionally, Defendant made a change—it extended credit—in reliance on this representation. As to the issue of whether that reliance was reasonable, from Defendant's standpoint, it received regular payments for three years, totaling nearly two hundred thousand dollars, without protest from Plaintiff. It was reasonable for Defendant to rely on those regular payments to then issue credit and pay for charges. DBI Architects, P.C. v. Am. Express Travel-Related Servs. Co. , 388 F.3d 886, 894 (D.C. Cir. 2004) ("Where, as here, the cardholder repeatedly paid thousands of dollars in fraudulent charges for almost a year after monthly billing statements identifying the fraudulent user and itemizing the fraudulent charges were sent to its corporate address, no reasonable juror could disagree that at some point the cardholder led the card issuer reasonably to believe that the fraudulent user had authority to use its card."); Minskoff , 98 F.3d at 710 (finding that the credit card company reasonably relied on the regular payments occurring for a year and a half from the plaintiff's bank account when credit card statements and bank statements showing the payments had been sent to the plaintiff's corporate address, but the plaintiff failed to review the statements and failed to object to the payments, noting "[t]hese omissions on the part of [the plaintiff] created apparent authority for [the employee's] continuing use of the cards, especially because it enabled [the employee] to pay all of the [credit card] statements with forged checks, thereby fortifying [the defendant's] continuing impression that nothing was amiss with the [credit card accounts]"); Azur , 601 F.3d at 222 (explaining that "[b]ecause [the defendant] reasonably believed that a prudent business person would oversee his employees in such a manner," i.e., by at least "occasionally review[ing] his statements," "[the defendant] reasonably relied on the continuous payment of the fraudulent charges").
However, there is one possible small exception to Holland's apparent authority. As Plaintiff points out, the relevant case law indicates that "the acquisition of a credit card through fraud or theft cannot be said to occur under the apparent authority of the cardholder." Minskoff , 98 F.3d at 709. As such, at least one court has held that "[the credit card company] is liable for [the employee's] fraudulent purchases ... from the time the credit card was issued until [the plaintiff] received the first statement ... containing [the employee's] fraudulent charges plus a reasonable time to examine that statement. After that time, [the plaintiff is] liable for the remaining fraudulent charges." Id. (quotation omitted). Defendant does not address this issue, and it is not clear whether Plaintiff should be held responsible for the charges and payments made from the time the Johnson Account was opened until the time that the Plaintiff received his first bank statement showing payments on the fraudulent account and a reasonable time thereafter to review. Accordingly, Defendant is entitled to summary judgment on Plaintiff's declaratory judgment claim insofar as it relates to Plaintiff's responsibility for the charges on the Johnson Account after the issuance of the first bank statement reflecting payment to that account and a reasonable time thereafter to review it—Plaintiff is responsible for the account after that time.
Contrary to Plaintiff's argument, Minskoff does not stand for the proposition that Plaintiff cannot be held responsible for subsequent charges—Minskoff held the exact opposite. 98 F.3d at 710 (affirming the district court's summary judgment in favor of the credit card company for subsequent charges, and explaining "[i]n our view, once a cardholder receives a statement that reasonably puts him on notice that one or more fraudulent charges have been made, he cannot thereafter claim lack of knowledge").
3. Remaining Declaratory Relief
At this point, the Court must re-visit Defendant's standing argument. As noted above, "[i]n order to demonstrate that there is a case or controversy that satisfies Article III's standing requirement when a plaintiff is seeking declaratory relief—as opposed to seeking damages for past harm—the plaintiff must allege facts from which it appears that there is a substantial likelihood that he will suffer injury in the future." A&M Gerber Chiropractic LLC , 925 F.3d at 1210–11. The limited remaining declaratory relief involves only whether Plaintiff is entitled to a refund of payments already made to Defendant—those made before Plaintiff had an opportunity to examine his bank statements. There is no indication on the record that Plaintiff will suffer any future injury related to this relief. Thus, the Court must dismiss the remaining portion of Plaintiff's declaratory judgement claim for lack of standing.
D. FCRA
Next, Plaintiff asserts a claim under the FCRA, 15 U.S.C. § 1681s-2(b). "Under § 1681s-2(b), after a furnisher receives notification from a CRA that a customer disputes the information it furnished, the furnisher must conduct an investigation, review all relevant information provided by the CRA, and report its results to the CRA." Hunt v. JPMorgan Chase Bank, Nat'l Ass'n , 770 F. App'x 452, 457 (11th Cir. 2019). However, "a plaintiff asserting a claim against a furnisher for failure to conduct a reasonable investigation cannot prevail on the claim without demonstrating that had the furnisher conducted a reasonable investigation, the result would have been different; i.e. , that the furnisher would have discovered that the information it reported was inaccurate or incomplete ...." Felts v. Wells Fargo Bank, N.A. , 893 F.3d 1305, 1313 (11th Cir. 2018) (emphasis in original). "Absent that showing, a plaintiff's claim against a furnisher necessarily fails, as the plaintiff would be unable to demonstrate any injury from the allegedly deficient investigation." Id.
Here, the allegedly inaccurate information that Defendant reported to the CRAs was that Plaintiff is responsible for the remaining balance on the Johnson Account, which is delinquent. As discussed above, Plaintiff is responsible for the Johnson Account after the initial charges and a reasonable time for Plaintiff to review his first bank statement reflecting payments to the Johnson Account. The balance that Defendant reported to the CRAs resulted from the charges made at the end of the three years that this account was open—well after the time within which Plaintiff should have discovered the account. Therefore, the information Defendant reported to the CRAs was accurate, and Plaintiff's FCRA claim fails.
IV. CONCLUSION
In accordance with the foregoing, it is ORDERED and ADJUDGED as follows:
1. Defendant's Motion for Summary Judgment (Doc. 65) is GRANTED .
a. Defendant is entitled to summary judgment on Plaintiff's unjust enrichment claim, conversion claim, and Fair Credit Reporting Act claim.
b. Defendant is also entitled to summary judgment on Plaintiff's declaratory judgment claim insofar as it seeks a declaration that Plaintiff is responsible for the Johnson Account beginning a reasonable time after receiving the first bank statement showing payments on the account and including the remaining balance on the Johnson Account.
c. The remainder of Plaintiff's declaratory judgment claim is DISMISSED for lack of standing.
2. The Clerk is directed to enter judgment in favor of Defendant and against Plaintiff, providing that Plaintiff shall take nothing on his claims.
3. At the Final Pretrial Conference set for February 1, 2022, the parties should be prepared to discuss whether and how to move forward on Defendant's third-party claims.
4. The Parties Joint Motion for Clarification (Doc. 117) is DENIED as moot .
5. Defendant's Motion to Dismiss (Doc. 37) is DENIED as moot .
DONE and ORDERED in Orlando, Florida on January 31, 2022.