Gross v. CitiMortgage, Inc. (9th Cir.)

The following is a case update written by the Hon. Meredith Jury (U.S. Bankruptcy Judge, C.D. CA., Ret.), analyzing a recent decision of interest:


In a recently published opinion, the Ninth Circuit Court of Appeals (the Court) reversed a district court’s summary judgment in favor of CitiMortgage, Inc. in a Fair Credit Reporting Act (FCRA) case, concluding that the plaintiff had stated a prima facie case for inaccurate reporting such that the reasonableness of its investigation was at issue and could not be determined on summary judgment. Gross v CitiMortgage, Inc. 2022 W.L. 1532369 (9th Cir. May 16, 2022).

To view the opinion, click here.


Plaintiff Marshal Gross bought a house in Arizona in 2007 with an 80/20 loan, the 80% loan as the first mortgage and the 20% as the second/junior mortgage. CitiMortgage acquired the junior mortgage. In 2012, Gross stopped making payments on both loans and the first mortgage foreclosed in June 2013. The proceeds from the trustee’s sale barely paid the first mortgage and Citimortgage received nothing. Arizona law precludes suit on a foreclosure deficiency, whether the deficiency is to the foreclosing mortgage or to a junior mortgage, such as the one held by CitiMortgage.

In 2017 Gross tried to get a loan to purchase a new home, but lenders denied his applications because CitiMortgage was reporting the junior mortgage as past due with accruing interest and late fees. He submitted a February 2018 written dispute and later a May 2018 written dispute through TransUnion, a national credit reporting agency. TransUnion sent CitiMortgage an “Automated Consumer Dispute Verification” about the dispute, reflecting that Gross claimed his home was lost in foreclosure and he no longer owed on the loan under Arizona law, citing the statute. After the February dispute, CitiMortgage continued to report the junior mortgage as past due, updating the account to show an even greater delinquency. Discovery later showed that CitiMortgage had routed the dispute to a third-party contractor which “verified” there was an outstanding balance. After the May dispute, CitiMortgage finally marked the account as “paid, closed.”

Gross sued CitiMortgage under the FCRA, alleging that it failed to reasonably investigate his dispute and provided inaccurate information to the credit reporting agencies. The district court granted summary judgment to Citimortgage, determining that its reports were accurate as a matter of law and that it had reasonably investigated the dispute. Gross appealed to the Court, which reversed.


Under the FCRA, CitiMortgage was a “furnisher,” as an entity which supplied information to the national credit reporting agencies. A furnisher must respond to a notice of dispute from an agency by correcting inaccurate information after conducting an investigation, which must be reasonable, not cursory. 15 U.S.C. § 1681s-2(b). When a consumer sues for a failure to accurately investigate and report, he must make a prima facie showing of inaccuracy before the reasonableness of the investigation comes into play. The inquiry here, as established by other circuit courts and adopted by the Court, is whether the FCRA plaintiff has demonstrated that had the furnisher conducted a reasonable investigation the furnisher would have discovered that the information it reported was inaccurate.

The Court found that the key to the case rested on the Arizona Anti-Deficiency Statute which abolished Gross’s liability on the junior mortgage. The district court had granted summary judgment for CitiMortgage because the debt was not entirely extinguished, but rather continued to exist. The Court rejected that reasoning, because the statute unequivocally extinguished Gross’s personal liability. Therefore, the reporting was inaccurate and Gross met his burden of making a prima facie case.

Whether the investigation utilized by CitiMortgage was reasonable could not be established by summary judgment, but was best left to a fact-finder such as a jury. Therefore, the district court erred in granting judgment for CitiMortgage. The matter was remanded for trial.


As an initial comment, I would note that not-surprisingly CitiMortgage had led off its defense by claiming that Gross lacked Article III standing to pursue his FCRA claim because he had not alleged a sufficient concrete harm. The Court rejected that claim in a footnote because under TransUnion LLC v Ramirez, 141 S. Ct. 2190 (2021) a concrete harm is shown when a misleading credit report is distributed to third parties, as occurred here. Moving on to the merits, it is refreshing to read a published case decided in favor of a consumer. I think the district court was dancing on the head of a pin by ruling that the debt was not extinguished so the reporting was not inaccurate. That was a stretch, when the statute made it clear that Gross owed nothing and CitiMortgage was reporting a balance due including interest and late charges. It is hard to believe a greater showing for a prima facie case for inaccurate reporting could be made. The Court got it right.

This review was written by the Hon. Meredith Jury (U.S. Bankruptcy Judge, C.D. CA., Ret.), a member of the ad hoc group. Thomson Reuters holds the copyright to these materials and has permitted the Insolvency Law Committee to reprint them. This material may not be further transmitted without the consent of Thomson Reuters.

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