law-loss-of-credit-reputation-claim  

LOSS OF CREDIT REPUTATION DAMAGES

To recover damages for a loss of credit reputation, a plaintiff must show “that a loan was actually denied or
a higher interest rate was charged.”  Tex. Mut. Ins. Co. v. Ruttiger, 265 S.W.3d 651, 672 (Tex. App.—
Houston [1st Dist.] 2008) (quoting EMC Mortg. Corp. v. Jones, 252 S.W.3d 857, 872 (Tex. App.—Dallas
2008, no pet.) rev’d on other grounds, 53 Tex. Sup. Ct. J. 1642, 2011 WL 3796353 (Aug. 26. 2011); see
also St. Paul Surplus Lines Ins. Co. v. Dal-Worth Tank Co., 974 S.W.2d 51, 53 (Tex. 1998) (no evidence of
damages due to loss of credit reputation “until a loan is actually denied or a higher interest rate
charged”).  Here, Pourmemar’s only evidence is a statement in his affidavit that “my credit score went
down.”  This is no evidence of actual damages due to loss of credit reputation.  See Tex. Mut. Ins. Co., 265
S.W.3d at 672 (no evidence of loss of credit reputation where plaintiff introduced copy of his negative
credit rating and financial records showing decline in earnings after injury).

CASELAW EXCERPT ON LOSS OF CREDIT

D.        Insufficiency of Evidence of Damages to Credit Reputation

The jury awarded Morris $75,000 for loss of credit reputation, comprised of $25,000 for past damages and
$50,000 for future damages.  In its third issue, Texas Mutual contends that the evidence supporting these
damages is legally insufficient.
Texas Mutual Ins.Co. v. Morris (Tex.App.- Houston [14th Dist.] Jun. 4, 2009)
(Opinion on rehearing by Frost) (bad-faith claim in
worker's comp case) (loss of credit reputation
requirements for proof)

Texas allows awards for damage to credit reputation.  In St. Paul Surplus Lines Insurance Co. v. Dal-Worth
Tank Co., the Supreme Court of Texas explained, A[t]o prove that credit rating is harmed is to prove
nominal damages; not until a loan is actually denied or a higher interest rate charged is there proof of
actual damages."  974 S.W.2d 51, 53 (Tex. 1998).  But even more importantly, the high court added this
language in explaining the precise proof necessary to show actual damage:  “There must be a showing
that such inability resulted in injury and proof of the amount of injury."  Id. (emphasis added).  Thus, in Dal-
Worth Tank, the court held that no evidence of damage to credit reputation existed because there was no
evidence of a real injury and no evidence of any specific increase in the claimant's cost of doing business.  
Id.  For example, before its credit reputation was allegedly damaged, Dal-Worth Tank had a large line of
credit that was greatly diminished, but Dal-Worth Tank introduced no evidence that the decline injured it in
any way because it did not need to use the line of credit.  Id.  Likewise, in Castañeda, the plaintiff testified
that she “had applied for credit cards and was turned down."  Castañeda, 988 S.W.2d at 199.  The
Supreme Court of Texas concluded that this evidence was legally insufficient,[34] reiterating that “there
must be a showing that the inability to obtain a loan resulted in injury and proof of the amount of that
injury.'"  Id. (quoting Dal-Worth Tank Co., 974 S.W.2d at 53).  

Loss to credit reputation is a form of economic, or financial, damage.  For this reason, it makes sense to
require more precision in the proof of damage.  That, it seems, is the reasoning behind Dal-Worth Tank
Co. and Castañeda.  We understand both of those decisions to instruct that a claimant cannot recover for
damage to credit reputation unless he shows that he suffered identifiable, measurable damages.  
Castañeda, 988 S.W.2d at 199; Dal-Worth Tank Co., 974 S.W.2d at 54.  Testing Morris's proof against
this standard, we cannot affirm the award.

Like the plaintiffs in Dal-Worth Tank Co. and Castañeda, Morris failed to prove any amount of injury.  
Morris testified that he prided himself on having a sterling credit reputation.  After Texas Mutual's actions,
his credit rating “definitely went down" and he was unable to finance a new washing machine because of
his poor credit rating.  He also testified that he was unable to secure a mortgage on his home, which had
to be financed solely in his wife's name.  At no point, however, did Morris, or anyone else, such as an
expert, define the injury Morris sustained when he could not take out a loan on a washing machine.  In
addition, neither Morris, nor any witness in his behalf, put a dollar amount on the injury he claimed to have
sustained because of his inability to obtain the washing-machine loan or to have his name on his home
mortgage.  In short, Morris proved no identifiable, measurable damages.  See Tex. Mut. Ins. Co. v.
Ruttiger, 265 S.W.3d 651, 672B73 (Tex. App.-Houston [1st Dist.] 2008,  pet. filed).  For these reasons, we
hold that the evidence is legally insufficient to support an award for damage to credit reputation.  

We sustain Texas Mutual's third issue and modify that portion of the judgment to omit the damages for
credit reputation and to award actual damages in the amount of $50,000, representing the jury's award of
mental-anguish damages only.  

As a consequence of reducing the award of actual damages, we also modify that portion of the judgment
awarding additional damages consistent with section 541.152, which permits the trier of fact, upon a
finding that the defendant acted knowingly, to award an amount not to exceed three times the amount of
actual damages.  See Tex. Ins. Code Ann. § 541.152 (Vernon 2009).  Therefore, as discussed more fully
below, we also modify that portion of the judgment to award additional damages of $100,000, two times the
actual damages after reduction on appeal.

As a further consequence of these modifications, because we are reducing the damages awarded, we also
reverse the award of attorney's fees and remand for a new trial on that issue.[35]  The reduction in the
actual and additional damages awarded results in a total award of $150,000, less than twenty-five percent
of the jury's total award.  Therefore, we reverse that portion of the judgment awarding attorney's fees and
remand that issue for a new trial.  

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