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Credit Slander Restraints Eased

July 15, 1999

WEST PALM BEACH, Fla. (AP) _ A Florida appeals court made it easier Wednesday to sue for credit slander when it said the two-year statute of limitations starts anew each time an inaccurate report is released.

The ruling by the 4th District Court of Appeal_ the first of its kind in Florida _ could open the door for more lawsuits by people who discover an inaccurate mark on their credit report years after the mark was put there.

``I hope so,″ said attorney Donald Kohl, who represented Michael A. Musto, a Lake Worth truck company owner, in his slander lawsuit against Atlanta-based BellSouth Corp., and its collections agency, Oklahoma-based Recovery Specialists Inc.

Musto claimed he was denied credit on several occasions beginning in 1996 _ three years after BellSouth’s collections agent reported to a credit bureau Musto had failed to reimburse BellSouth for $680 to repair a phone line that had been pulled down by one of his trucks.

Musto disputed the bill, saying BellSouth was responsible for the damage because the line hung below county height regulations. BellSouth referred the case to a collections agent.

Musto did not discover Recovery Specialists had put a bad mark on his credit until another creditor asked for a copy of his report in January 1997 when he tried to buy an $80,000 truck, he said.

In their defense, attorneys for BellSouth and Recovery claimed Musto was barred from suing because of a two-year statute of limitations, which started to run when the initial report was made to a credit bureau in 1993.

A Palm Beach County Circuit judge agreed and issued a summary judgment in favor of BellSouth and Recovery.

However, Musto argued on appeal that each time his credit report was provided to a potential creditor it should be seen as a new publication, and therefore reset the two-year window for filing suit.

The appeals court agreed.

Michele McNichol, an attorney who represented BellSouth and Recovery, said the decision could mean almost limitless liability for companies who report payment problems or other issues to credit bureaus because years often pass between requests for someone’s credit report.

``I think it has significant implications,″ she said.

However, the judges said ``endless liability ... is simply not a concern where no mass publication or potentially endless repetition of the defamatory statement is likely to occur.″

Only a handful of inaccurate credit reports likely would be issued, the court said, and then only to those potential creditors in a position to secure such a confidential report.

McNichol said she’d not yet spoken to her clients so she did not know if they would seek a rehearing or appeal to the state Supreme Court.

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