Almanzar v. Santander Bank, N.A.

Background

Juan Almanzar applied at Santander Bank for what he understood to be a loan. The record showed that a credit-card application was also submitted on his behalf, and Santander denied both applications that day. The loan denial cited insufficient credit experience, which Almanzar did not challenge. The credit-card denial letter stated that Almanzar had one or more charge-offs, bankruptcies, repossessions, or judgments.

Almanzar obtained his Experian credit report and saw none of those events. The report showed a child-support enforcement account with a “B0009” payment-history code. Santander’s automated system treated the “9” in that code as corresponding to its internal code for “One or more Chargeoff, Bankruptcy, Judgement or Repossession.” Santander then automatically generated the denial letter.

Almanzar sued Santander under the Equal Credit Opportunity Act, a federal law requiring creditors to give applicants the specific and principal reason for adverse credit decisions. He sought partial summary judgment on Santander’s liability and asked the court to certify a class of similarly situated applicants. Santander sought summary judgment in its favor.

Rulings on the Motions

The court denied Almanzar’s motion to strike evidence as moot because it did not rely on the challenged records in deciding the motions. The court said Almanzar could object to the evidence’s admissibility if Santander offered it at trial.

The court denied Santander’s motion for summary judgment. Santander argued that Almanzar lacked constitutional standing because he suffered no legally recognized injury. The court held that the evidence created a genuine dispute about whether the denial letter caused Almanzar concrete emotional distress. Almanzar testified that the letter made him anxious, panicked, worried about his credit, and unable to sleep because he relied on good credit in case of emergencies. The court concluded that a jury could find this injury sufficient for standing, even though Almanzar’s testimony about whether he understood that he had applied for a credit card was inconsistent.

The court granted Almanzar’s motion for partial summary judgment on Santander’s liability under the Equal Credit Opportunity Act. The Act requires an adverse-action notice to state the specific reasons for the decision. Its implementing regulation also requires the notice to identify the principal reasons and accurately describe the factors the creditor actually considered or scored.

The court found that Santander’s notice did not meet those requirements. Experian’s materials showed that the “9” code could correspond to several different payment-history codes, including codes for bankruptcy, charge-off, collection activity, and other events. The code did not indicate a judgment under the circumstances presented, and the record did not establish that Santander had denied Almanzar’s application because of the separate family-court judgment mentioned by Santander. Santander’s notice therefore gave an inaccurate interpretation instead of identifying the code, the child-support-account payment history, or another actual basis for the denial.

The court rejected Santander’s arguments that it acted in good-faith conformity with regulatory sample forms or that its error was an inadvertent mechanical or clerical mistake. The court reasoned that Santander had programmed its system to interpret the code in the way stated in the notice. It concluded that the bank was required to tell Almanzar the actual basis for the denial, even though the law did not require extensive detail.

Injunctive Relief and Class Certification

The court ruled that Almanzar lacked standing to seek injunctive relief. His alleged injuries from the denial letter had already occurred, and he presented no evidence showing that those harms were likely to happen again. The requested injunction would have required Santander to send compliant adverse-action notices to members of the proposed class.

The court denied class certification. It identified several independent problems. First, the proposed class was likely to include people who lacked constitutional standing. Second, Almanzar’s testimony showed that he had not reviewed the complaint with his lawyers, did not understand several allegations, and did not understand the basic premise of the lawsuit, which called his ability to protect the class’s interests into question. Third, he did not propose a method for measuring actual damages across the class. His proposed approach sought only statutory punitive damages, but the court held that a jury could not properly set punitive damages without evaluating actual damages and the harm to each class member. The court also found that liability itself could require individualized determinations about what appeared on each person’s credit report and why Santander acted.

The court also rejected certification under the rule allowing classwide injunctive or declaratory relief because Almanzar lacked standing to seek an injunction. Finally, it declined to certify an issue class because Almanzar offered only a one-sentence request and did not identify an appropriate issue for certification.

Disposition

The court denied Almanzar’s motion to strike as moot, denied Santander’s motion for summary judgment, granted Almanzar’s motion for partial summary judgment, and denied Almanzar’s motion to certify the class. The court deferred the question of what damages, including any punitive damages, were owed to Almanzar until trial. The opinion noted that Almanzar had not presented evidence at that stage showing Santander acted in bad faith.