Marshall Gross v. Citi Mortgage , Inc.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
M ARSHALL GROSS ,
Plaintiff-Appellant,
v.
CITI M ORTGAGE , I NC.,
Defendant-Appellee,
and
CITIBANK , NA; EQUIFAX
I NFORMATION SERVICES LLC;
EXPERIAN I NFORMATION SOLUTIONS ,
I NC.; TRANS UNION LLC,
Defendants.
No. 20-17160
D.C. No.
2:18-cv-02103-
ROS
OPINION
Appeal from the United States District Court
for the District of Arizona
Roslyn O. Silver, District Judge, Presiding
Argued and Submitted November 17, 2021
San Francisco, California
Filed May 16, 2022

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2 GROSS V. CITI M ORTGAGE
Before: Sidney R. Thomas and M. Margaret McKeown,
Circuit Judges, and Donald W. Molloy,* District Judge.
Opinion by Judge McKeown
SUMMARY**
Fair Credit Reporting Act
The panel reversed the district court’s summary
judgment in favor of CitiMortgage, Inc., in Marshall Gross’s
action alleging that CitiMortgage violated the Fair Credit
Reporting Act (FCRA), 15 U.S.C. §§ 1681, et seq., by failing
to reasonably investigate Gross’s dispute concerning a debt
that CitiMortgage reported to national credit reporting
agencies and by providing inaccurate information to those
agencies.
CitiMortgage erroneously reported a junior mortgage as
“past due,” with accruing interest and late fees and a string
of missed payments, even though Gross’s liability on the
debt had been “abolished” under the Arizona Anti-
Deficiency Statute.
The panel held that Gross has more than satisfied his
burden to make a prima facie showing of inaccurate
reporting: he established as a matter of law that
* The Honorable Donald W. Molloy, United States District Judge
for the District of Montana, sitting by designation.
** This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.

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GROSS V. CITI M ORTGAGE 3
CitiMortgage’s reports were “patently incorrect.” The panel
explained that the question is not, as the district court put it,
whether the junior mortgage was entirely “extinguished” by
Arizona law, or whether the debt continued to exist; the point
is that, vis-à-vis Gross, no outstanding balance existed,
because the statute abolished his personal liability.
The panel held that there is a genuine factual dispute
about the reasonableness of CitiMortgage’s investigation,
and thus left it to the jury to determine the reasonableness.
Rejecting CitiMortgage’s argument that even if liability
is established, the district court should be affirmed on the
ground that there are no damages, the panel wrote that the
issue of causation is quintessentially one for the jury and not
for this court to decide on appeal.
COUNSEL
David A. Chami (argued), Price Law Group APC,
Scottsdale, Arizona; for Plaintiff-Appellant.
K. Lee Marshall (argued), Bryan Cave Leighton Paisner
LLP, San Francisco, California; Sean K. McElenney and
Gregory B. Iannelli, Bryan Cave Leighton Paisner LLP,
Phoenix, Arizona; for Defendant-Appellee.
Karen S. Bloom (argued), Senior Counsel; Steven Y.
Bressler, Assistant General Counsel; John R. Coleman,
Deputy General Counsel; Mary McLeod, General Counsel;
Consumer Financial Protection Bureau, Washington, D.C.;
for Amicus Curiae Consumer Financial Protection Bureau.

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4 GROSS V. CITI M ORTGAGE
OPINION
McKEOWN, Circuit Judge:
Our nation’s credit reporting system relies on accurate
reporting both by credit reporting agencies and by the
entities that provide information to those agencies about
consumers’ debts (“furnishers”). When a consumer disputes
an entry on his credit report, the furnisher must conduct a
reasonable investigation—not merely rubberstamp
information in the file. In this case, CitiMortgage, Inc.
erroneously reported that Marshall Gross owed a debt that
had been “abolished” under Arizona law. After Gross
disputed the entry, CitiMortgage continued to report late
payments on the debt and mounting interest and late fees. As
a matter of law, the reports were false. Whether
CitiMortgage’s investigation was “reasonable” is a factual
question that we leave to a jury. We reverse the district
court’s grant of summary judgment in favor of
CitiMortgage.
BACKGROUND
In January 2007, Marshall Gross bought a single-family
home in Arizona, taking out two separate mortgages to
finance the purchase. In an arrangement known as an “80-
20 loan,” the first (“senior”) mortgage covered 80% of the
home’s purchase price ($161,896), and the second (“junior”)
mortgage covered the remaining 20% ($40,474). In 2012,
Gross, experiencing financial difficulties, stopped making
payments on both mortgages. After he defaulted, the senior
lender began the foreclosure process. Gross eventually lost
his home at a trustee sale in June 2013.
Like many properties during the national subprime
mortgage crisis, Gross’s home had lost significant value.

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GROSS V. CITI M ORTGAGE 5
Although he bought the home for over $200,000 six years
earlier, it sold for only $161,400, barely enough to satisfy the
senior mortgage. The proceeds did not cover the junior
mortgage, now owned by CitiMortgage. Because Arizona
law precludes suit on a foreclosure deficiency,
CitiMortgage, which bought the junior loan from a different
bank in 2007, lost its investment entirely.
In 2017, Gross began shopping for a new home, but
initially could not get approved for a mortgage. According
to Gross, lenders denied his applications because
CitiMortgage was still reporting the junior mortgage as “past
due” on his credit report, with accruing interest and late fees,
and with a string of missed monthly payments.
After unsuccessful attempts to resolve the matter over
the phone, in February 2018, Gross submitted a written
dispute through TransUnion, a national credit reporting
agency. Using an automated platform, TransUnion sent
CitiMortgage an “Automated Consumer Dispute
Verification” with notes about Gross’s dispute. That
Verification specifically noted Gross’s claim that he had lost
his home in a foreclosure sale and no longer owed the junior
mortgage. In his report to TransUnion, Gross included a
citation to the Arizona Revised Statutes, pointing to the
provision that abolished the debt. The Automated Consumer
Dispute Verification conveyed this information, complete
with the statutory citation.
On May 3, 2018, Gross again disputed the debt with
Experian and TransUnion, writing, “I don’t owe any money
on this loan. The house was foreclosed on June 13, 2013.”
This appeal primarily concerns what happened next. In
response to the February dispute, after receiving notice from
TransUnion, CitiMortgage reported a current balance of

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6 GROSS V. CITI M ORTGAGE
$38,010 and a past due amount of over $50,000.
CitiMortgage “updated” Gross’s account to show that he was
180 days late, instead of 120 days late, on his monthly
payments. The bank also added a note to the report stating
the Gross had “disputed” the debt “under the Fair Credit
Reporting Act.”
In response to the May 2018 dispute, CitiMortgage
changed the mortgage balance to zero as of May 2018 and
marked the account as “paid, closed” with $38,010 “charged
off” as of April and May of 2018. As it turns out,
CitiMortgage had in fact “charged the debt off,” meaning
that the bank treated the debt as uncollectible and wrote it
off on the bank’s books.1
Discovery revealed how those notations came to be. At
a deposition, CitiMortgage’s Vice President and manager of
research services testified that disputes like Gross’s are
routed to a third-party contractor that employs dispute agents
based abroad. After Gross’s first dispute, agents “verified”
that there was an outstanding balance by consulting internal
“transaction history,” “case notes,” and “system notes.”
As relevant here, Gross sued CitiMortgage under the Fair
Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq.
Gross alleged that CitiMortgage and Citibank violated
FCRA by failing to reasonably investigate his dispute and by
providing inaccurate information to the three national credit
reporting agencies. The court dismissed all parties except
1 While it was potentially misleading for CitiMortgage to report a
“charge off” several years after Gross’s debt was abolished, Gross did
not dispute the charge-off date in writing. See Drew v. Equifax Info.
Servs., LLC, 690 F.3d 1100, 1106 (9th Cir. 2012) (a furnisher’s duty to
correct false information is triggered once the furnisher receives
information about a dispute from a credit reporting agency).

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GROSS V. CITI M ORTGAGE 7
CitiMortgage, which is the only defendant in this appeal.
Later, on cross-motions for summary judgment, the district
court ruled for CitiMortgage, determining that its reports to
the credit reporting agencies were accurate as a matter of
law, and that CitiMortgage had reasonably investigated
Gross’s disputes. We review that decision de novo. U.S.
Sec. & Exch. Comm’n v. Hui Feng, 935 F.3d 721, 728
(9th Cir. 2019).
ANALYSIS
I. LAWSUITS AGAINST “FURNISHERS ” UNDER FCRA
Congress enacted FCRA to ensure accurate reporting
about the “credit worthiness, credit standing, credit capacity,
character, and general reputation of consumers.” 15 U.S.C.
§ 1681(a)(2). Under FCRA, a consumer may request a copy
of his credit report from TransUnion, Equifax, and Experian,
the country’s “Big Three” credit reporting agencies.
TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2201 (2021);
15 U.S.C. § 1681g(a). If the consumer finds something
amiss on the credit report, one option is to file a dispute with
the credit reporting agency, which in turn notifies the entities
that “furnished” information about the consumer’s debt.
15 U.S.C. § 1681i(a). CitiMortgage supplied information
about Gross’s debts to the national credit reporting agencies,
making it a “furnisher” under FCRA and its implementing
regulations. Id.; 12 C.F.R. § 1022.41(c) (defining
“furnisher”).
FCRA regulates how furnishers must respond to a notice
of dispute from a credit reporting agency. Among other
things, the furnisher must correct or delete inaccurate
information after conducting an “investigation with respect
to the disputed information.” 15 U.S.C. § 1681s-2(b). That
“investigation” must be at least “reasonable” and “non-

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8 GROSS V. CITI M ORTGAGE
cursory.” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d
1147, 1157 (9th Cir. 2009). A consumer may sue a furnisher
and recover damages if the furnisher willfully or negligently
violated FCRA. 15 U.S.C. §§ 1681n, 1681o; see Syed v. M-
I, LLC, 853 F.3d 492, 503 (9th Cir. 2017).
In this respect, a furnisher’s duties resemble those of a
credit reporting agency, which can also be liable for failing
to “follow reasonable procedures to assure maximum
possible accuracy” of information on a credit report.
15 U.S.C. § 1681e(b); see also 15 U.S.C. §§ 1681n, 1681o.
In such lawsuits, before a court considers the reasonableness
of the agency’s procedures, the consumer must make a
“prima facie showing” of inaccuracy in the agency’s
reporting. Shaw v. Experian Info. Sols., Inc., 891 F.3d 749,
756 (9th Cir. 2018) (quoting Carvalho v. Equifax Info.
Servs., LLC, 629 F.3d 876, 890 (9th Cir. 2010)). This order
of proof makes sense: if there is no inaccuracy, then the
reasonableness of the investigation is not in play. On the flip
side, if there is an inaccuracy, to succeed, the plaintiff must
establish that the investigation was unreasonable. We join
those circuits that have extended this logic to FCRA lawsuits
against furnishers. See, e.g., Felts v. Wells Fargo Bank,
N.A., 893 F.3d 1305, 1313 (11th Cir. 2018) (a FCRA
plaintiff must “demonstrat[e] that had the furnisher
conducted a reasonable investigation, . . . the furnisher
would have discovered that the information it reported was
inaccurate or incomplete. . . .”); Chiang v. Verizon New
Eng. Inc., 595 F.3d 26, 37 (1st Cir. 2010) (holding that, in
suits against furnishers and agencies alike, a plaintiff must
“demonstrate some causal relationship between the . . .
allegedly unreasonable reinvestigation and the failure to
discover inaccuracies in his account.”). Just as in a lawsuit
against a credit reporting agency, to prevail on a FCRA

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GROSS V. CITI M ORTGAGE 9
claim against a furnisher, a consumer must make a prima
facie showing that the furnisher’s report was inaccurate.
II. CITI M ORTGAGE’ S R EPORTS WERE I NACCURATE
UNDER THE ARIZONA A NTI -DEFICIENCY STATUTE
The key to this case rests on the Arizona Anti-Deficiency
Statute, which abolished Gross’s liability for the debt that
CitiMortgage reported. Enacted in 1971, this statute
provides that after a trustee sale, if a mortgage deficiency
remains, “no action may be maintained to recover any
difference between the amount obtained by sale and the
amount of the indebtedness . . . .” Ariz. Rev. Stat. § 33-
814(G). As a practical matter, the Anti-Deficiency Statute
protects certain Arizona homeowners from the “financial
disaster of losing their homes to foreclosure,” and then being
personally liable for outstanding mortgage deficiencies.
Baker v. Gardner, 770 P.2d 766, 769 (Ariz. 1988).
The Arizona Supreme Court first analyzed the Anti-
Deficiency Statute in Baker v. Gardner, where the court
rejected a lender’s attempt to sue homeowners who had
defaulted on their mortgages. The court held that the lender
could only recover from the proceeds of the trustee sale and
could not sue the lenders personally. Id. at 769, 772. The
court rejected the argument that the Anti-Deficiency Statute
was merely a “procedural” device governing the lender’s
remedy in a lawsuit. Id. at 770. According to the court, the
Anti-Deficiency Statute “abolish[ed] the personal liability”
of qualified Arizona homeowners for mortgage deficiencies,
not just the lender’s procedural remedies. Id. at 772.
With Gross’s liability “abolished,” he was no longer
obligated to repay the debt. See Black’s Law Dictionary
(11th ed. 2019) (defining “debt” as “[l]iability on a claim”);
(defining “liable” as “[r]esponsible or answerable in law;

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10 GROSS V. CITI M ORTGAGE
legally obligated”). Gross no longer owed a balance, so his
payments were not late, and the loan should not have been
accruing interest or late fees. It was “patently incorrect” for
CitiMortgage to report otherwise. Gorman, 584 F.3d
at 1163.
Although we recognize the difference between
bankruptcy provisions and the Arizona Anti-Deficiency
Statute, practically speaking, the situation was no different
than a discharge under bankruptcy law, which extinguishes
“the personal liability of the debtor.” 11 U.S.C. § 524(a)(1).
“[T]hat discharge means that the debt (even if
unenforceable) will not remain on a credit report potentially
affecting an individual’s ability to borrow money, buy a
home, and perhaps secure employment.” Midland Funding,
LLC v. Johnson, 137 S. Ct. 1407, 1414 (2017); see Losch v.
Nationstar Mortg. LLC, 995 F.3d 937, 944–45 (11th Cir.
2021) (holding that, after the debt was discharged by
bankruptcy, it was factually inaccurate to report a balance
owed and that the borrower was past due on the debt).
The question is not, as the district court put it, whether
the junior mortgage was entirely “extinguished” by Arizona
law, or whether the debt continued to exist. The point is that,
vis-à-vis Gross, no outstanding balance existed, because the
statute abolished his personal liability. CitiMortgage did not
merely report that Gross’s debt existed; it reported late
payments, accruing interest, and an outstanding balance.
Those reports were inaccurate.
Gross has more than satisfied his burden to make a prima
facie showing of inaccurate reporting: he established as a
matter of law that CitiMortgage’s reports were “patently
incorrect.” See Gorman, 584 F.3d at 1163 (defining
inaccuracy under FCRA as information that is “patently
incorrect” or materially misleading).

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GROSS V. CITI M ORTGAGE 11
III. REASONABLENESS OF I NVESTIGATION
Establishing an inaccuracy is not enough, however;
Gross must also show that the inaccuracy was the product of
an unreasonable investigation by CitiMortgage. Unless
“only one conclusion about the conduct’s reasonableness is
possible,” the question is normally inappropriate for
resolution at the summary judgment stage. Gorman,
584 F.3d at 1157 (quoting In re Software Toolworks Inc.,
50 F.3d 615, 622 (9th Cir. 1994)). Here, as is ordinarily the
case, this question is best left to the factfinder.
Although FCRA requires both agencies and furnishers to
conduct “reasonable” investigations, a furnisher’s
investigatory obligations will often be more extensive and
more thorough. Credit reporting agencies are third parties
that “lack[] any direct relationship with the consumer,” so
they must rely on the representations of the furnishers who
usually own the debt. Gorman, 584 F.3d at 1156–57; see
Carvalho, 629 F.3d at 891 (agencies “simply collect and
report information furnished by others.”). Furnishers, on the
other hand, “stand[] in a far better position to make a
thorough investigation of a disputed debt. . .” Gorman,
584 F.3d at 1156. This means that FCRA will sometimes
require furnishers to investigate, and even to highlight or
resolve, questions of legal significance. As the Consumer
Financial Protection Bureau emphasized in its amicus brief,
FCRA does not categorically exempt legal issues from the
investigations that furnishers must conduct. The distinction
between “legal” and “factual” issues is ambiguous,
potentially unworkable, and could invite furnishers to
“evade their investigation obligation by construing the
relevant dispute as a ‘legal’ one.”
Federal regulations require furnishers to “establish and
implement reasonable written policies” to ensure the

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12 GROSS V. CITI M ORTGAGE
accuracy of their reports. 12 C.F.R. § 1022.42(a). The
reasonableness of a furnisher’s policies depends on the
“nature, size, complexity, and scope of each furnisher’s
activities.” Id. Courts have also identified several factors
that inform the reasonableness analysis, including: the
furnisher’s relationship to the debt and to the consumer; the
level of detail in the credit reporting agency’s notice of
dispute; and the feasibility of implementing investigatory
procedures, including training staff. See, e.g., Gorman,
584 F.3d at 1157; Felts, 893 F.3d at 1312; Maiteki v. Marten
Transport Ltd., 828 F.3d 1272, 1275 (10th Cir. 2016);
Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 432 (4th Cir.
2004).
With these factors at play, there is a genuine factual
dispute about the reasonableness of CitiMortgage’s
investigation. We thus leave it to the jury to determine the
reasonableness.
IV. ACTUAL DAMAGES
If Gross persuades the jury that CitiMortgage was
negligent, the remaining question is whether he is entitled to
“actual damages.” 15 U.S.C. § 1681o(a). Such damages
could include recovery for the “emotional distress and
humiliation” allegedly caused by CitiMortgage’s reports and
Gross’s resulting financial difficulties. Guimond v. Trans
Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995).
CitiMortgage argues that even if liability were established,
the district court should be affirmed on the alternate ground
that there are no damages. That reasoning is based on
CitiMortgage’s claim that Gross’s financial issues were
caused by entries made by others on his credit report, and
not by CitiMortgage. This causation issue is quintessentially
one for the jury and not for us to decide on appeal. See Lies

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GROSS V. CITI M ORTGAGE 13
v. Farrell Lines, Inc., 641 F.2d 765, 770 (9th Cir. 1981)
(“Causation is generally a question of fact for the jury . . .”).2
REVERSED AND REMANDED.
2 In the same vein, we reject CitiMortgage’s argument that Gross did
not allege “concrete harm” sufficient to satisfy Article III, although we
emphasize that the extent of the harm is a question for the jury.
TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) (individuals whose
allegedly misleading credit reports were distributed to third parties had
standing to sue).

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