                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 15a0797n.06

                                       Case No. 15-5132

                           UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT

                                                                         FILED
LAUREN LLOYD,                                      )               Dec 07, 2015
                                                   )           DEBORAH S. HUNT, Clerk
       Plaintiff-Appellant,                        )
                                                   )       ON APPEAL FROM THE UNITED
v.                                                 )       STATES DISTRICT COURT FOR
                                                   )       THE EASTERN DISTRICT OF
MIDLAND FUNDING, LLC, MIDLAND                      )       TENNESSEE
CREDIT MANAGEMENT, INC., and                       )
ENCORE CAPITAL GROUP, INC.,                        )
                                                   )
       Defendants-Appellees.                       )

       BEFORE: BOGGS, SUTTON, and STRANCH, Circuit Judges.

       SUTTON, Circuit Judge. Lauren Lloyd and her creditor settled a debt. Yet no one

dismissed the then-pending collection action, prompting the state court to enter a default

judgment against her. At first, no one noticed. But then the default judgment showed up on

Lloyd’s credit report. In response, Lloyd sued her creditor, alleging that the judgment had hurt

her credit score which in turn had raised the interest rate she paid on a loan. The district court

granted the creditor summary judgment on all of Lloyd’s federal and state-law claims. We

affirm in part and reverse in part.

       In 2010, Lauren Lloyd owed $7,288.72 on her credit card, which Midland Credit

Management serviced. After the loan went into default, Midland filed an action in state court,

which set a court date for October 6, 2010. Shortly before that date, Midland and Lloyd settled
Case No. 15-5132, Lloyd v. Midland Funding, et al.


the debt for $4,000. Midland’s counsel sent a letter to Lloyd on October 5, confirming the

settlement and stating that it would “cease all legal actions” against her because payment had

been “received . . . in full.” R. 31-1 at 15.

        In one sense, Midland lived up to this obligation. It did not take any additional legal

action against Lloyd. In another sense, Midland failed to follow through on its promise, Lloyd

claims, because it never affirmatively dismissed the state court action. In the apparent absence

of any further filings from Lloyd or Midland, the state court entered a default judgment against

her on October 6, 2010. So far as the record shows, Midland was just as unaware of this

development as Lloyd. Even after the court entered judgment, Midland’s records listed the

account as settled and, when asked by a credit agency, Midland reported the account as paid.

        Lloyd learned about the default judgment when she applied for a loan and noticed the

judgment on her credit report. She contacted Midland about the problem in July 2012, and

Midland moved to set aside the judgment on August 1. The court removed the judgment on

October 5. Lloyd notified the pertinent credit agencies (Experian, Equifax, and TransUnion),

which removed the judgment from all of her credit reports within six months of the court’s

corrective action.

        Frustrated by what had happened, Lloyd filed this lawsuit in state court against Midland

(and two affiliates, Midland Funding and Encore Capital Group). She sought relief under the

Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and an assortment of state

laws. Midland removed the case to federal court based on federal question jurisdiction. See

28 U.S.C. § 1441(a). Lloyd’s complaint featured two contentions. She complained that a default

judgment was entered against her even though she had a valid settlement agreement with

Midland. And she complained that Midland reported the judgment to credit agencies. Midland



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


conceded the first point but denied the second. As for damages, Lloyd claimed that her credit

took a negative hit from the default judgment and that she had to pay a higher interest rate on a

loan and extra fees as a result. Following discovery, the district court granted Midland summary

judgment on all of Lloyd’s claims. Lloyd v. Midland Funding, LLC, No. 3:12-CV-566-TAV-

HBG, 2014 WL 3507363, at *14 (E.D. Tenn. July 14, 2014); Lloyd v. Midland Funding, LLC,

No. 3:12-CV-566-TAV-HBG, 2015 WL 106264, at *4 (E.D. Tenn. Jan. 7, 2015).                     Lloyd

appealed.

       We give fresh review to a district court’s grant of summary judgment, asking whether

Midland is entitled to judgment as a matter of law because there is “no genuine dispute as to any

material fact”—even after giving Lloyd the benefit of reasonable inferences from the record.

Fed. R. Civ. P. 56(a); see Int’l Union v. Cummins, Inc., 434 F.3d 478, 483 (6th Cir. 2006).

       Summary judgment record. We must first determine what is (and is not) part of the

summary judgment record.       Lloyd claims that the district court erred when deciding what

affidavits to include in that record. A few principles guide us. Civil Rule 56(c)(4) requires

affidavits filed to support or oppose a motion to “set out facts that would be admissible in

evidence.” Fed. R. Civ. P. 56(c)(4). Documents that fail to do so may be disregarded on

summary judgment.      See id. 56(e).   And any such affidavits “must be made on personal

knowledge.” Id. 56(c)(4).

       Lloyd argues that the district court improperly refused to consider a declaration she

submitted in opposition to Midland’s motion for summary judgment. The declaration includes a

printed copy of her online credit report from 2012, which lists the default judgment. The district

court refused to consider the document (and Lloyd’s discussion of it in her affidavit) on the

ground that Lloyd failed to “lay any foundation for the admissibility” of the credit report. 2014



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


WL 3507363, at *6. Because Lloyd never explained the credit report in her declaration and

failed to clearly identify the report in her deposition testimony, we agree that Lloyd did not

satisfy her burden.

       Lloyd also argues that the district court improperly relied on three affidavits from

Midland’s authorized representative, John Moreno, in ruling on the summary judgment motion.

Midland designated Moreno to testify on its behalf under Civil Rule 30(b)(6). In Lloyd’s view,

Moreno’s affidavits amounted to inadmissible hearsay and were not based on personal

knowledge. We disagree.

       In the first place, there is no hearsay problem.        Although Moreno’s affidavits by

themselves might not be admissible at trial, he based those affidavits on “records kept in the

regular course of [Midland’s] business.” R. 8-2 at 2. Those records would be admissible under

the business records exception to the hearsay rule. See Fed. R. Evid. 803(6). Because evidence

at the summary judgment stage does not have to be in “a form that would be admissible at trial,”

Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986); see Shazor v. Prof’l Transit Mgmt., Ltd.,

744 F.3d 948, 960 (6th Cir. 2014), the district court permissibly considered the affidavits.

       In the second place, Moreno had the requisite personal knowledge required by Civil Rule

56(c)(4). The personal knowledge requirement works differently in this setting, where a human

being (Moreno) speaks for a corporation (Midland). See Fed. R. Civ. P. 30(b)(6). It is not easy

to take a deposition of a corporation or for that matter obtain an affidavit from one. In one sense,

indeed, it is not even possible to do so, as inanimate objects are not known for their facility with

language. That means, whenever a corporation is involved in litigation, “the information sought

must be obtained from natural persons who can speak for the corporation.” 8A Charles Alan

Wright et al., Federal Practice and Procedure § 2103 (3d ed. 2015). And that means “[t]here is



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


no obligation to select a person with personal knowledge of the events in question,” so long as

the corporation “proffer[s] a person who can answer regarding information known or reasonably

available to the organization.” Id. (emphasis added) (quotation omitted); see Brazos River Auth.

v. GE Ionics, Inc., 469 F.3d 416, 433 (5th Cir. 2006) (explaining that a Rule 30(b)(6) witness

“does not give his personal opinions, but presents the corporation’s ‘position’ on the topic”);

PPM Fin., Inc. v. Norandal USA, Inc., 392 F.3d 889, 895 (7th Cir. 2004) (holding that a Rule

30(b)(6) witness “was free to testify to matters outside his personal knowledge as long as they

were within the corporate rubric”). In this instance, Moreno presented facts known to Midland

based on his review of the company’s records.         That does not run afoul of the personal

knowledge requirement in Civil Rule 56(c)(4). No error occurred.

       Fair Credit Reporting Act. In challenging the district court’s rejection of this claim,

Lloyd argues that Midland failed to comply with its duty to investigate, invoking a section of the

Act that imposes a “[d]ut[y on] furnishers of information upon notice of [a] dispute” to “conduct

an investigation.” 15 U.S.C. § 1681s-2(b). The problem is, this duty applies only to information

furnishers, and Midland is not a furnisher of relevant information. It thus never had any such

duty. The same goes for its affiliates.

       Consistent with this assessment and with the uncontested record, Midland never reported

a judgment against Lloyd to a credit agency. As a matter of practice, Midland does not report

information on judgments to credit agencies. Even when Midland responded to an inquiry from

a credit agency about the status of Lloyd’s account a few months after the judgment was entered,

Midland said that Lloyd’s account “was satisfied and paid in full.” R. 8-2 at 2.

       That leaves Lloyd to object that Midland indeed reported the judgment to a credit agency.

In the course of discovery, however, she never identified any evidence to support the point and



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


ultimately had to acknowledge that she does not know who reported the judgment. A “bare

allegation[]” in a complaint will not suffice to rebut a motion to dismiss under Rule 12(b)(6)—

and it makes even less headway against a motion for summary judgment under Rule 56.

See Mitchell v. Toledo Hosp., 964 F.2d 577, 582 (6th Cir. 1992).

       Fair Debt Collection Practices Act. In challenging the district court’s disposition of her

claims under this Act, Lloyd argues that Midland is a debt collector covered by the Act and that

it made “false, deceptive, or misleading representation[s]” to her and used “unfair or

unconscionable means to collect or attempt to collect a[] debt.” 15 U.S.C. §§ 1692e, 1692f.

These claims also face a problem but one of a different sort. Claims under the Act must be

brought “within one year from the date on which the violation occurs.” Id. § 1692k(d). Lloyd

claims that Midland violated the Act when the court entered the default judgment. Yet the

default judgment was entered on October 6, 2010, and Lloyd did not file this lawsuit until

September 27, 2012. That was almost two years after the default judgment was entered and

nearly one year late.

       Lloyd responds that the discovery rule should preserve her claim—that the one-year

statute of limitations did not begin to run until she knew or had reason to know of the violation.

She adds that she did not learn about the default judgment until February 2012, and that she filed

the lawsuit within a year of discovering her claim. This argument faces two hurdles: It assumes

that the Act’s statute of limitations includes a discovery rule and that she would satisfy it if it did.

We have never decided whether this statute of limitations includes a discovery rule, and we need

not resolve the point today.

       Even if the Fair Debt Collection Practices Act contains a discovery rule, Lloyd had

“reason to know” that a default judgment had been entered against her more than a year before



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


she filed this complaint. See Sevier v. Turner, 742 F.2d 262, 273 (6th Cir. 1984). The discovery

rule requires “reasonable diligence” by the individual, id., and Lloyd did not exercise it here.

Midland served her with the complaint to recover on the credit card debt. She knew that the

lawsuit was still pending and that a court date had been set when she spoke to Midland about

settling the suit. And she had reason to know whether Midland ever moved to dismiss the action

because she had been served with pleadings before and because Tennessee law usually requires a

moving party to serve a notice of “every written motion” on the other party. Tenn. R. Civ. P.

5.01. She never received any such service. And she of course never checked the court’s public

docket to see if the action had been dismissed. Although “[w]e might toll a statute of limitations

if a plaintiff diligently searches publicly available information but fails to discover a hidden

defect,” we will not do so when a plaintiff fails to discover the claim because of such a “lack of

diligence.” Ruth v. Unifund CCR Partners, 604 F.3d 908, 913 (6th Cir. 2010). We thus agree

with the district court that, even if the discovery rule applied, Lloyd did not exercise the requisite

reasonable diligence to benefit from it.

       Lloyd protests on the ground that Midland committed to “cease all legal actions” against

her following the settlement. R. 31-1 at 15. But if Lloyd took that to mean Midland assumed

responsibility to dismiss the action, she should have expected to see a served dismissal motion.

When that did not happen, she was free to check with the court (or to look at the docket) to see if

the action had been dismissed. When Lloyd failed to receive any notice from Midland or the

court about her case—with the relevant rules making clear that she would get something if

Midland followed through—“reasonable diligence” required her to investigate. That would have

revealed the default judgment, allowing her to correct the error or file a lawsuit within the

limitations period.



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


       State-law claims. Lloyd filed three pertinent state-law claims—abuse of process, fraud,

and breach of contract—and the district court rightly granted summary judgment to Midland on

two of them. The district court properly held that Lloyd’s state-law claim for abuse of process is

time barred under Tennessee’s applicable one-year statute of limitations.             See 2014 WL

3507363, at *12; see Blalock v. Preston Law Grp., P.C., No. M2011-00351-COA-R3-CV, 2012

WL 4503187, at *7 (Tenn. Ct. App. Sept. 28, 2012) (holding that, under Tenn. Code Ann. § 28-

3-104, a one-year statute of limitations applies to abuse-of-process claims). Lloyd again urges us

to apply the discovery rule. But because Tennessee’s requirements mirror the federal ones,

Lloyd does no better in this setting. See Warwick v. Warwick, No. E2011-01969-COA-R3-CV,

2012 WL 5960850, at *16–17 (Tenn. Ct. App. Nov. 29, 2012). “[T]he discovery rule,” the

Tennessee Supreme Court has explained, “tolls the running of the statute of limitations until the

plaintiff knows, or in the exercise of reasonable care and diligence, should know that an injury

has been sustained.” Pero’s Steak & Spaghetti House v. Lee, 90 S.W.3d 614, 621 (Tenn. 2002).

As we have just explained, Lloyd failed to exercise reasonable care and diligence when she

failed to ensure that the state court had dismissed the collection case against her. So it is here.

       Lloyd’s fraud and breach-of-contract claims—and the district court’s analysis of them—

are more complicated. As the district court correctly noted, both of these claims stem from

Lloyd’s allegation that Midland violated the settlement agreement by obtaining a default

judgment against her. 2014 WL 3507363, at *11. The district court also correctly recognized

that, in order to succeed, Lloyd would have to prove that Midland’s fraud or breach of contract

caused damages. Id. But then the district court misstepped. It held that, because the alleged

damages “are directly related to [Midland’s] alleged reporting of [Lloyd’s] default judgment,”

the Fair Credit Reporting Act preempted both claims. Id.



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


          Giving Lloyd the benefit of all reasonable inferences, we do not think that her purported

damages were “directly related” to Midland’s alleged judgment reporting. Lloyd’s breach-of-

contract claim relied on the fact that Midland obtained the default judgment, not that it reported

the judgment to others. Lloyd’s fraud theory also primarily relied on the fact that Midland

obtained the default judgment.

          Lloyd could establish either fraud or breach of contract without proving that Midland

reported the judgment. Assume for a moment that someone other than Midland reported the

judgment to the credit agencies (as apparently was the case here), that the judgment ended up on

Lloyd’s credit report, and that, because the judgment was on her credit report, Lloyd suffered

quantifiable damages. Midland’s alleged fraud or breach of contract would be a cause of Lloyd’s

damages, and Midland could still be held liable. It is not the case that any damages would be

related only “to the duties and responsibilities of furnishers of information to a consumer

reporting agency.” See 2014 WL 3507363, at *11. Because the two claims do not rely on the

proposition that Midland was a furnisher of information related to the judgment, they are not

preempted by the Fair Credit Reporting Act’s preemption provisions.                See 15 U.S.C.

§ 1681t(b)(1)(F) (preempting state-law claims “relating to the responsibilities of persons who

furnish information to consumer reporting agencies” (emphasis added)). And because the claims

are not covered by the other preemption provisions, they are not preempted on other grounds

either.    See id. § 1681h(e) (also preempting state-law claims for “defamation, invasion of

privacy, [and] negligence”).

          Because these claims are not preempted, we must consider them on the merits. The fraud

claim fails anyway because Lloyd did not show that Midland acted fraudulently. The theory of

this claim is that Midland committed fraud when it purported to settle with her and then allowed



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


a default judgment to be entered against her. A claim for fraud under Tennessee law must

establish (among other things) that the defendant’s “representation of a present or past fact . . .

was false when it was made” and that “the defendant either knew that the representation was

false or did not believe it to be true or . . . made the representation recklessly without knowing

whether it was true or false.” Hodge v. Craig, 382 S.W.3d 325, 343 (Tenn. 2012); see Thompson

v. Bank of Am., N.A., 773 F.3d 741, 751 (6th Cir. 2014). Nothing in the record shows that

Midland knowingly made a false statement when it said that it would “cease all legal actions”

against Lloyd. R. 31-1 at 15. The record at most shows an accident or negligence. After the

settlement, Midland treated the account as paid in full until Lloyd brought the mistake to its

attention. At that point, Midland corrected the mistake. No fraud occurred on this record.

       The breach-of-contract claim is a different story. To establish a breach of contract under

Tennessee law, as elsewhere, Lloyd must show a contract, breach, and damages caused by the

breach. Life Care Ctrs. of Am., Inc. v. Charles Town Assocs. Ltd. P’ship, LPIMC, 79 F.3d 496,

514 (6th Cir. 1996). A reasonable jury could find all three elements. It could find that Midland

entered a contract with Lloyd (by agreeing with her to settle the lawsuit). It could find that

Midland breached the contract (by failing to cease all legal action against Lloyd when it did not

dismiss the action). And it could find that Midland caused at least two types of damages

(by requiring Lloyd to pay $239.40 for a credit monitoring service because of the judgment and

to spend $12.00 for certified mail to communicate with Midland about the judgment). See

2014 WL 3507363, at *13. As to damages, by the way, that is not all. On remand, Lloyd should

be given the opportunity to produce other cognizable (and admissible) evidence of damages

caused by the breach: that she had to pay a higher interest rate on a loan and was denied a loan

because of the judgment’s impact on her credit score.



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Case No. 15-5132, Lloyd v. Midland Funding, et al.


       For these reasons, we reverse the district court’s grant of summary judgment to Midland

on Lloyd’s breach-of-contract claim and affirm on all other counts.




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