Opinion
CV 01-1446-BR.
October 7, 2004
N. ROBERT STOLL, STEVEN D. LARSON, DAVID F. REES, Stoll Stoll Berne Lokting Schlachter, P.C., Portland, OR, CHARLES A. RINGO, Beaverton, OR, Attorneys for Plaintiffs.
BARNES H. ELLIS, STEPHEN A. REDSHAW, Stoel Rives, LLP, Portland, OR, Attorneys for Defendant.
OPINION AND ORDER
This matter comes before the Court on Defendant Farmers Insurance Company of Oregon's (FICO) Motion for Summary Judgment (#146) against Plaintiffs Carol Porto and Grant Wenzlick. For the following reasons, the Court DENIES FICO's Motion for Summary Judgment.
On March 17, 2004, the Court granted FICO's Motion for Summary Judgment against Plaintiff Douglas Ashby.
BACKGROUND
Porto and Wenzlick allege FICO violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, et seq., when FICO used information in consumer credit reports to increase the insurance premiums it charged on renewal of personal lines insurance policies issued to Porto and Wenzlick. Porto and Wenzlick also allege the increase in their respective insurance premiums constituted adverse actions for which FICO failed to give adequate notice as required under § 1681m(a)(1). Porto and Wenzlick seek statutory damages, punitive damages, and attorneys' fees.
Porto purchased and renewed automobile and homeowner insurance policies from FICO. Wenzlick purchased and renewed renter insurance policies from FICO.
STANDARDS
Fed.R.Civ.P. 56(c) authorizes summary judgment if no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. The moving party must show the absence of an issue of material fact. Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002). In response to a properly supported motion for summary judgment, the nonmoving party must go beyond the pleadings and show there is a genuine issue of material fact for trial. Id.
An issue of fact is genuine "`if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Villiarmo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). The court must draw all reasonable inferences in favor of the nonmoving party. Id. A mere disagreement about a material issue of fact, however, does not preclude summary judgment. Jackson v. Bank of Haw., 902 F.2d 1385, 1389 (9th Cir. 1990). When the nonmoving party's claims are factually implausible, that party must come forward with more persuasive evidence than otherwise would be required. Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1147 (9th Cir. 1998) (citation omitted).
The substantive law governing a claim or a defense determines whether a fact is material. Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). If the resolution of a factual dispute would not affect the outcome of the claim, the court may grant summary judgment. Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001).
FACTUAL BACKGROUND
1. FICO's Use of Consumer Credit Reports in Underwriting Personal Lines Insurance Policies.
a. Automobile Insurance Policies.
Effective March 1, 2000, FICO implemented the Farmers' Automobile Risk Assessment (FARA) program in which FICO uses consumer credit report information, inter alia, to set premiums for automobile insurance policies issued in Oregon. Each insured is assigned a letter score based on the individual's credit report. The premium charged for the automobile insurance increases as the letter score increases from "A" upwards.
b. Homeowner/Renter Insurance.
Effective March 16, 2001, FICO implemented the Farmers' Property Risk Assessment program (FPRA) in which FICO uses consumer credit report information, inter alia, to set premiums for homeowner and renter insurance policies issued in Oregon. Under the FPRA program, as in the FARA program, the premium charged for homeowner and renter insurance increases as the letter score increases from "A" upwards. 2. Porto's Insurance Policies.
FCRA claims are subject to a two-year statute of limitations. On February 26, 2003, Porto and Wenzlick filed a Second Amended Complaint for the purpose of joining FICO as a Defendant. On January 5, 2004, the Court held the Second Amended Complaint did not relate back to the date the original Complaint was filed. Accordingly, Porto and Wenzlick may only assert FCRA claims based on their respective insurance policies renewed after February 26, 2001.
FICO's Memorandum and Reply in Support of Motion for Summary Judgment asserts FICO is entitled to summary judgment as to the renewal of Porto's automobile insurance policies in May and November 2001 and homeowner's policy in November 2000. Porto does not address the above policies in her Memorandum in Opposition to FICO's Motion for Summary Judgment. The Court, therefore, concludes Porto concedes she does not have FCRA claims based on FICO's renewal of those policies.
a. Automobile Insurance Policy: On May 27, 2002, FICO charged Porto a bi-annual premium of $278.80 to renew her automobile insurance policy. The preceding bi-annual premium for Porto's policy was $274.50. FICO gave Porto a letter score of "G" under the FARA program for both the earlier and the renewed policies. If Porto had received a score of "A," she would have received FICO's best possible premium rate, which is calculated at .64% of the base premium rate for the nature of the coverage provided under Porto's policy. Porto's premium, however, was set at .75% of the base premium rate because her credit report letter score was "G."
The increase in Porto's premium was attributable to increases in the base premium rate that FICO charged all of its automobile insurance policyholders. Accordingly, although Porto's increased premium was not directly based on information contained in her consumer credit report, the amount of her premium increased proportionately more than the amount of the premium charged for policyholders who were given the best possible premium rate based on a score of "A" on their consumer credit reports.
b. Homeowner Insurance Policy. On November 7, 2001, FICO originally charged Porto an annual premium of $872.05 to renew her homeowner insurance policy. The preceding annual premium for Porto's policy was $770.67. The amount of the premium on renewal was based in part on Porto's consumer credit score of "J," which FICO established in September 2000. In April 2002, Porto's consumer credit report score improved to "F." FICO, therefore, reduced Porto's premium by $90.44. FICO subsequently reduced Porto's premium by an additional $59.53 as a discount because she purchased both automobile and homeowner insurance policies from FICO. 3. Wenzlick's Renter Insurance Policy.
On January 26, 2002, FICO increased the amount of the annual premium it charged Wenzlick for renter insurance by $18.04. The increase was based in part on Wenzlick's score of "J" on his consumer credit report.
4. FCRA Notice Sent to Porto and Wenzlick.
FICO sent the following notice to Porto when she renewed her automobile insurance policy in May 2002 and her homeowner insurance policy in November 2001. FICO sent the same notice to Wenzlick when he renewed his renter insurance policy in January 2002:
FAIR CREDIT REPORTING ACT NOTIFICATION
To underwrite your policy, various consumer reports were used. These reports provide information to assist with risk evaluation and risk placement. Your premiums were also determined, in part, from the information contained in these reports. A consumer report was furnished by the consumer reporting agency listed below at our request for insurance underwriting purposes.
The notice further provides specific information on how insureds may obtain copies of their consumer report and may request changes to correct, to amend, or to delete disputed information. When FICO renewed the insurance policies of both Porto and Wenzlick, FICO provided a separate written notice that indicated the exact amount of the renewal premiums in addition to providing the above FCRA notice.
DISCUSSION
The Court does not repeat the FCRA provisions applicable to the issues raised in this matter because these provisions have been set out in detail in the Court's Opinions and Orders issued on February 20, 2003; May 20, 2003; and July 14, 2003.
FICO asserts (1) FICO did not take any adverse action against Porto; (2) if FICO did take adverse action against Porto, it was not based on information in a consumer credit report; and (3) Porto and Wenzlick received Notices of Adverse Action that complied with FCRA.
1. Porto's Insurance Policies: Adverse Action.
a. Automobile Insurance Policy.
FICO asserts the increase in the premium charged to Porto on renewal of her automobile insurance policy in May 2002 was not based on information contained in a consumer credit report. FICO maintains the premium was based on an increase in the base premium rate (the most expensive premium rate) for Bodily Injury-Property Damage, Personal Injury Protection, Collision, and Towing coverages. FICO asserts, therefore, Porto did not suffer an adverse action in connection with the renewal of her automobile insurance policy within the meaning of FCRA. See § 1681a(k)(1)(B)(i).
The increase in the base premium rate charged by FICO was $6.40. As noted, Porto's score relative to her automobile insurance policy was "G." Based on that score, FICO set Porto's premium at .73% of the adjusted base premium rate. Accordingly, FICO asserts the increase in Porto's premium would have been even greater if FICO had not used Porto's consumer credit report score. FICO's automobile insurance policyholders who scored "A" on their consumer credit reports, however, were charged premiums based on .64% of the base premium rate. Accordingly, the increase in the premium charged to those policyholders was less than the increase in the premium charged to Porto.
In Mark v. Valley Insurance Company, CV 01-1575-BR, this Court found "the common and ordinary meaning of § 1681a(k)(1)(B)(i) is that an insurer takes an adverse action when it `makes greater,' i.e., `increases,' the price previously demanded of the insured for insurance." See Opin. and Order at 22 (issued July 17, 3003).
The Court concludes that this record would support a finding that no genuine issue of fact exists as to whether (1) Porto's premium was increased on renewal of her automobile insurance policy, (2) some portion of the increase was based on Porto's score on a consumer credit report, and (3) the increase in the premium was an adverse action because it was higher than the best possible premium rate available to those policyholders who received a better score than Porto based on information in their consumer credit reports. Thus, although Porto does not move for summary judgment, the record would support a finding that Porto suffered an adverse action in connection with the renewal of her automobile insurance policy in May 2002. FICO, therefore, is not entitled to summary judgment on the opposite premises.
b. Homeowner Insurance Policy.
FICO asserts the increase in the original premium charged to Porto on renewal of her homeowner insurance policy in November 2001 was not an adverse action because the amount of the premium was erroneous and FICO later corrected the error. In November 2001, however, FICO relied on information in Porto's consumer credit report to set the original renewal premium charged to Porto. Again, the record would support a finding that FICO, therefore, took an adverse action against Porto, which in turn triggered a duty at that time to give a FCRA notice of the adverse action taken against Porto under § 1681m(a). See Carroll v. Exxon Co., U.S.A., 434 F. Supp 557, 559 (E.D. La. 1977) ("The language of 15 U.S.C. § 1681m(a) clearly requires such disclosure contemporaneously upon notification of [an adverse action].").
Accordingly, because the record would support a finding that Porto suffered an adverse action in connection with the renewal of her homeowner insurance policy in November 2001, FICO has not established it is entitled to summary judgment.
2. Wenzlick's Renter Insurance Policy: Adverse Action.
FICO does not dispute Wenzlick suffered an adverse action based on information in a consumer credit report when FICO increased the premium it charged on renewal of Wenlick's renter insurance policy in January 2002.
3. FCRA Notice Sent to Porto and Wenzlick.
FICO asserts the FCRA Notices it sent to Porto and Wenzlick when they renewed their respective insurance policies met the requirements of § 1681m(a)(1-3) because (1) the FCRA Notice provided, "Your premiums were also determined, in part, from the information contained in [consumer] reports" and (2) a separate Renewal Notice reflected the amount of the premium charged. From those two documents, FICO deduces Porto and Wenzlick "knew that their premium had increased and knew that the premium was based, at least in part, on information contained in their consumer reports."
The Court disagrees with FICO that the FCRA Notices sent to Porto and Wenzlick were adequate under § 1681m(a)(1-3). This Court previously held the following FCRA Notice was inadequate because of the manner in which it described the adverse action taken by the insurer:
Thank you for choosing Allied for your insurance needs. The premium for your policy will be adjusted as a result of information we have received from a consumer report.Razilov v. Nationwide Mut. Ins. Co., CV-01-1446 (Opin. and Order issued March 3, 2004). The Court stated, "the Notice, however, does not give any indication that an adverse action was taken against Razilov. At a minimum, the Notice should have reflected Razilov's premium was increased. [The] . . . Notice does not even meet that minimum standard." Id. at 11.
The Razilov FCRA Notice at least indicates an adjustment was made in the premium because of information in a consumer credit report. Here the FCRA Notice requires the insured to inspect two separate documents and then to deduce that something negative in a consumer credit report caused the insurer to increase the premium charged on renewal.
Accordingly, FICO did not establish that the FCRA Notices it sent to Porto and Wenzlick on renewal of their respective insurance policies complied with the provisions of § 1681m(a), and FICO, therefore, is not entitled to summary judgment against the FCRA claims of Porto and Wenzlick.
CONCLUSION
For these reasons, the Court DENIES Defendant Farmers Insurance Company of Oregon's Motion for Summary Judgment (#146) against Plaintiffs Carol Porto and Grant Wenzlick.
IT IS SO ORDERED.