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Truth in Lending: 11.7.3.3 Interpreting Ambiguous Statutory Language Regarding the Cap

Consumers have argued that the statute’s language indicates that the cap does not apply to certain types of credit, and creditors have argued that the court has discretion to award an amount less than the cap for closed-end credit secured by real property, even when twice the finance charge exceeds the cap. These arguments were largely resolved by the 2004 Supreme Court case Koons Buick Pontiac GMC, Inc. v. Nigh.836

Truth in Lending: 11.7.4.1 Multiple Statutory Damages for One Transaction

When there are multiple obligors in a consumer credit transaction, there can be only one recovery of statutory damages.865 In other words, if statutory damages are $2,000, and a husband and wife are both obligated on the loan, the total amount that the obligors will receive is $2,000, not $4,000. Of course, in computing actual damages, the injury to both spouses should be considered.

Truth in Lending: 11.7.4.2 Multiple Statutory Damages for Multiple Transactions

The TILA limitation as to multiple statutory damages applies only “in connection with a single account” or “other single credit sale, consumer loan . . . or other extension of consumer credit.”874 Thus, multiple statutory damages can be awarded if a creditor and consumer enter into multiple credit transactions and there are violations in more than one of those transactions, even if these violations are all disclosure violations.

Truth in Lending: 11.7.5.1 Overview

The availability of statutory damages is set forth in the last paragraph of 15 U.S.C. § 1640. That paragraph specifically includes some provisions, specifically excludes others, and is silent as to some others, creating ambiguity. Nor does the statute squarely address the scope of liability for violating Regulation Z provisions that have no clear statutory equivalence.

Truth in Lending: 11.7.5.2.1 General

TILA’s civil liability provision, 15 U.S.C. § 1640(a)(2), begins by making statutory damages available for all part B violations, and then provides that, “in connection with” sections 1637 (open-end disclosures) and 1638 (closed-end disclosures), statutory damages only are available for certain enumerated provisions.

Truth in Lending: 11.7.5.2.4 15 U.S.C. § 1635 rescission

Any rescission violations lead to statutory damages. Section 1640(a) explicitly states that statutory damages are available for violations of “any requirement under section 1635.” Rescission also in no way limits statutory damages for violations of other provisions. Section 1635(g) provides that, where the creditor violates the right of rescission, section 1640 relief is available for part B violations other than the rescission violations, in addition to the remedy of rescission.

Truth in Lending: 11.7.6.2.1 Overview

Section 1638(b)(1) prohibits untimely or improperly segregated disclosures. (Timing requirements are also addressed in the remainder of section 1638(b), (c), and (d).) If an inaccurate disclosure (such as the finance charge or APR) leads to statutory damages, it would seem self-evident that statutory damages should be available if the disclosure is not timely made or not properly segregated.

Truth in Lending: 11.7.6.2.2 Statutory damages for untimely disclosures

The Sixth934 and Ninth Circuits935 have interpreted section 1640(a) as overriding what would seem implicit in the disclosure requirements—that to be made properly, they must be made in time to be effective. As a result, these courts find that statutory damages are not available for violations of TILA’s timing requirement.

Truth in Lending: 11.7.7 Which Open-End Disclosure Violations of 15 U.S.C. §§ 1637–1637a Lead to Statutory Damages: Paragraph-by-Paragraph Survey

Statutory damages are available for almost every violation of 15 U.S.C. § 1637, which governs open-end credit disclosures. This conclusion results from a close reading of the two sentences addressing section 1637 in the hanging (last) paragraph of section 1640(a).957 The first sentence limits statutory damages to certain identified provisions of subsections (a) and (b) of section 1637.

Truth in Lending: 11.7.8.2 Where No Direct Statutory Parallel

Under the broad view described in the preceding section, most Regulation Z requirements should be considered to be adopted under part B, making (actual and) statutory damages available. However, one commentator has argued that statutory damages should be available only for violations of Regulation Z provisions that flow directly from analogous sections of the Act.977 This view still results in statutory damages for most Regulation Z violations.

Truth in Lending: 11.7.10.3.1 TILA’s liability provisions apply to assignees that fail to provide transfer of ownership notices

TILA requires assignees to provide mortgagors with written notice when ownership of the mortgage loan is transferred.1028 The question discussed in this subsection is whether assignees are subject to liability under TILA if they fail to provide this notice. The issue comes up because section 1640(a) imposes liability upon “creditor[s],” and the general definition of “creditor” at section 1602(g) includes only the original creditor.1029

Truth in Lending: 11.7.10.3.2 Liability for violations of section 1641(g) includes actual damages, statutory damages, and attorney fees

Section 1640(a) specifically provides that liability for violations of section 1641(g) is “an amount equal to the sum of” actual damages, statutory damages, and attorney fees. Actual damages may include out-of-pocket expenses and potentially mental anguish.1036 Statutory damages liability in connection with the disclosures required by sections 1637 and 1638 is limited to a closed list of disclosures,1037 but there is no such restriction for violations of section 1641(g).

Truth in Lending: 11.10.3.4 No TILA Attorney Fees for Prevailing Creditors

TILA provides no attorney fees for prevailing creditors, even if the consumer’s action is frivolous or in bad faith.1440 There is no due process or equal protection problem when a federal statute authorizes attorney fees for one party, but not the other.1441 Nonetheless, court rules or state law may provide for creditor attorney fees, usually upon a showing that the consumer’s action was frivolous or in bad faith.1442 Without such showi