On May 1, 2017, the U.S. Court of Appeals for the Eleventh Circuit denied a rehearing en banc request filed by a dissenting member of the Court, finding that the panel had properly dismissed the case for lack of standing due to the complaint’s failure to allege a concrete injury, as required under Spokeo, Inc. v. Robins (“Spokeo”).
The facts in Nicklaw v. CitiMortgage, Inc. were straightforward. The borrower satisfied his mortgage in July 2012, but his lender failed to record the satisfaction until more than 90 days had passed. The borrower filed a lawsuit against the lender two years later alleging violations of a New York law requiring satisfactions to be recorded within 30 days of the satisfaction of a mortgage. The law provided a $1,500 penalty for a recordation delay of 90 days or more. The complaint, however, failed to allege the borrower himself suffered any harm from this delay, and instead alleged only speculative harms to the residential property market in general, including that: (1) banks frequently fail to timely file mortgage satisfactions, creating the possibility that a large loss by a title company may disrupt the entire system for transferring residential property in New York; and (2) failure to timely file a mortgage satisfaction can frustrate homeowners requiring marketable title to sell their property. The Court, relying on Spokeo, reiterated that “Article III standing requires a concrete injury even in the context of a statutory violation,” and concluded that the complaint’s bare allegations of a statutory violation, that had since been remedied, were not sufficient to satisfy Article III’s concreteness requirement.
The panel, in considering the rehearing request, addressed what it considered to be the “error” in their colleague’s dissent, which posited that the New York law provided the borrower with a right to truthful information that was violated by the lender’s untimely recording of the satisfaction. The panel stated that the New York law did not, in fact, confer such a right and instead, conferred “a right to truthful information on other individuals – that is, the statutes provide a [borrower] a cause of action when the satisfaction of his mortgage is not recorded for others to see.” The panel, in this regard, found the New York law to be similar to the statute at issue in Spokeo, the FCRA, which requires that credit reporting agencies “‘follow reasonable procedures to assure maximum possible accuracy of consumer reports.’” The panel explained that “[u]nlike a statute that confers a right to truthful information . . . a violation of [FCRA] alone might not ‘cause harm or present any material risk of harm.’”
Applying this reasoning, the Court determined that because its initial opinion adhered to the concrete injury requirement under Article III, as explained in Spokeo, and because the complaint failed to allege the borrower suffered, or may suffer, a concrete injury, that the initial panel opinion dismissing the case due to lack of standing was correct. As a result, the Court declined to rehear the case en banc.
The Eleventh Circuit’s May 1, 2017 opinion can be viewed here: http://media.ca11.uscourts.gov/opinions/pub/files/201514216.reh.pdf.