§23.19 Loss of Credit Under TCPA
The Case: Discover Bank v. Morgan, 363 S.W.3d 479 (Tenn. 2012).
The Basic Facts: Morgan brought counterclaim against discover asserting, among other claims, a violation of the Tennessee Consumer Protection Act and seeking damages for loss of credit. Court noted that “[w]hether an ‘ascertainable loss’ includes a loss of available credit [was] an issue of first impression before this Court.” 363 S.W.3d at 495.
The Bottom Line:
“Once an ascertainable loss has been established, the TCPA allows consumers to recover ‘actual damages,’ Tenn. Code. Ann. § 47-18-109(a)(1), but does not define that term. This Court has recently reaffirmed the distinction between the existence and amount of damages. Hannan v. Alltel Publ’g Co., 270 S.W.3d 1, 10 (Tenn. 2008). ‘The existence of damages cannot be uncertain, speculative, or remote.’ Id. (citing Overstreet v. Shoney’s, Inc., 4 S.W.3d 694, 703 (Tenn. Ct. App. 1999) (damages in tort); Cummins v. Brodie, 667 S.W.2d 759, 765 (Tenn. Ct. App. 1983) (damages for breach of contract)); see also BancorpSouth Bank, Inc. v. Hatchel, 223 S.W.3d 223, 230 (Tenn. Ct. App. 2006). ‘The amount of damages may be uncertain, however, if the plaintiff lays a sufficient foundation to allow the trier of fact to make a fair and reasonable assessment of damages.’ Hannan, 270 S.W.3d at 10 (citations omitted); …The burden of proving damages rests on the party seeking them. Hatchel, 223 S.W.3d at 229. In short, a plaintiff may recover damages when she offers ‘proof of damages within a reasonable degree of certainty.’ Id. at 230 (quoting Redbud Coop. Corp. v. Clayton, 700 S.W.2d 551, 561 (Tenn. Ct. App. 1985)).” Id. at 496.
“The Court of Appeals has implicitly recognized a right to recover damages for loss of available credit in certain circumstances, although none of the plaintiffs in these cases prevailed on appeal. See, e.g., Filson v. Wells Fargo Home Mortg., Inc., No. M2007-01842-COA-R3-CV, 2008 WL 3914899 (Tenn. Ct. App. Aug. 25, 2008) (breach of contract); Crowe v. First Am. Nat’l Bank, No. W2001-00800-COA-R3-CV, 2001 WL 1683710 (Tenn. Ct. App. Dec. 10, 2001) (conversion); Rey v. Hestle, No. 01A01-9110-CV-00399, 1992 WL 102231 (Tenn. Ct. App. May 15, 1992) (legal malpractice).” Id. at 497.
“Similarly, other state and federal courts have impliedly acknowledged a cause of action for loss of available credit, from which we discern three criteria necessary for recovery. First, a plaintiff must have suffered a demonstrable loss of credit. …Second, the defendant must have proximately caused the loss of credit. …Third, the loss of credit must have caused actual harm to the aggrieved party, such as lost profits or added costs. For example, Pennsylvania has long recognized that some further injury must be shown to recover damages for loss of credit. See Johnson v. Four States Enters., Inc., 355 F.Supp. 1312, 1318 (E.D.Pa.1972) (under state law, ‘loss of credit, standing alone, is not proof of damage, unless the loss of credit connects itself with some tangible pecuniary loss of which the loss of credit was the cause.’ (citing Eckel v. Murphey, 15 Pa. 488, 495 (1850))). The Supreme Court of Texas appears to have gone a step further in holding that ‘a plaintiff does not suffer actual damage merely from the inability to obtain a loan.’ St. Paul Surplus Lines Ins. Co. v. Dal–Worth Tank Co., 974 S.W.2d 51, 53 (Tex.1998) (per curiam). In short, courts generally require plaintiffs to show something more than mere loss of credit.” Id. at 497-98 (internal citations omitted).
“In particular, plaintiffs fail to recover when they proffer little or no evidence that the loss of credit caused by the defendant led to a subsequent, concrete injury. Plaintiffs may recover for loss of credit when they can demonstrate how the credit they lost would have resulted in specific profits or savings.” Id. at 498 (internal citations omitted).
"Under Tennessee Code Annotated section 47-18-109(a), actual damages are recoverable for the loss of available consumer credit due to the actions of a defendant, if they can be proven with particularity.” Id. at 500.