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1.5.2.3 Statutory Construction Principles: Liberal Construction and Strict Liability

The Act is designed to protect borrowers who are not on an equal footing with creditors either in bargaining power or with respect to knowledge of credit terms.179 An additional goal is “to deter generally illegalities which are only rarely uncovered and punished.”180 The Act’s relevant substance is truth.181

The Act is remedial and must be “liberally construed in favor of borrowers.”182 This rule of liberal construction applies not just to the Act’s substantive provisions but also to its scope, e.g., the question whether a transaction is for a consumer purpose.183

Except where Congress has explicitly relieved lenders of liability for noncompliance, TILA is a strict liability statute.184 Although some courts have misconstrued the legislative history as indicating an intent to retreat from strict compliance,185 the Simplification Act and the 1995 amendments actually strengthen the support for a strict compliance standard. Since the Simplification amendments reduced the technical burdens of disclosure on creditors, they were presumably all that Congress considered necessary to remedy any inequities in favor of consumers arising from litigation under TILA as originally enacted. This point is strengthened by the 1995 amendments, which created immunity only for certain specific, narrow areas of noncompliance.

The narrow substance of the 1995 changes and the sweeping expansions of consumer rights added to TILA by Congress in that same year and several times since then, only underline the primary role of the statute as a consumer remediation law. Both the Simplification amendments and the 1995 amendments providing tolerances and retroactive immunity reduce technical burdens on creditors. Courts should continue to accord consumers the full remedies available under the Act for violations found, even if they might seem technical.186 This issue is discussed in detail at §§ 10.4.4.7 and 12.5.1, infra.

Footnotes

  • 179 {177} Thomka v. A.Z. Chevrolet, Inc., 619 F.2d 246 (3d Cir. 1980) (TILA was passed to aid the unsophisticated consumer); Wiggins v. Avco Fin. Servs., 62 F. Supp. 2d 90 (D.D.C. 1999) (same).

  • 180 {178} Fairley v. Turan-Foley Imports, Inc., 65 F.3d 475, 480 (5th Cir. 1995) (quoting from Williams v. Pub. Fin. Corp., 598 F.2d 349, 356 (5th Cir. 1979)).

  • 181 {179} Adams v. Plaza Fin. Co., 168 F.3d 932 (7th Cir. 1999). See also Rossman v. Fleet Bank, 280 F.3d 384 (3d Cir. 2002) (TILA bars not just literal falsities but also misleading statements).

  • 182 {180} See, e.g., Cappuccio v. Prime Capital Funding L.L.C., 649 F.3d 180 (3d Cir. 2011); Rubio v. Capital One Bank, 613 F.3d 1195, 1202 (9th Cir. 2010); Hauk v. JP Morgan Chase Bank USA, 552 F.3d 1114 (9th Cir. 2009); Rand Corp. v. Moua, 559 F.3d 842 (8th Cir. 2009); Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d 1060 (11th Cir. 2004); Carmichael v. Nissan Motor Acceptance Corp., 291 F.3d 1278 (11th Cir. 2002) (Consumer Leasing Act, like TILA, must be liberally construed); Inge v. Rock Fin. Corp., 281 F.3d 613 (6th Cir. 2002); Rossman v. Fleet Bank, 280 F.3d 384 (3d Cir. 2002); Butler v. Sterling, Inc., 2000 U.S. App. LEXIS 6419 (6th Cir. Mar. 31, 2000); Weeden v. Auto Workers Credit Union, 1999 WL 191430 (6th Cir. Mar. 19, 1999); Ramadan v. Chase Manhattan Corp., 156 F.3d 499 (3d Cir. 1998); Ellis v. GMAC, 160 F.3d 703, 707 (11th Cir. 1998); Fairley v. Turan-Foley Imports, Inc., 65 F.3d 475 (5th Cir. 1995); Rodash v. AIB Mortgage Co., 16 F.3d 1142 (11th Cir. 1994); Semar v. Platte Valley Fed. Sav. & Loan Ass’n, 791 F.2d 699 (9th Cir. 1986); King v. California, 784 F.2d 910 (9th Cir. 1986); Jones v. TransOhio Sav. Ass’n, 747 F.2d 1037 (6th Cir. 1984); Bizier v. Globe Fin. Servs., Inc., 654 F.2d 1, 3 (1st Cir. 1981); Rockwell v. Chase Bank, 2011 WL 2292353, at *4 (W.D. Wash. June 7, 2011); Salvagne v. Fairfield Ford, Inc., 794 F. Supp. 2d 826 (N.D. Ohio 2010); Kitts v. Winterfox, L.L.C. (In re Kitts), 442 B.R. 818 (D. Utah 2010); Pownall v. PNC Bank, 2010 WL 3515661, at *4 (N.D. Ohio Aug. 31, 2010); Rush v. Am. Home Mortgage, 2009 WL 4728971 (D. Md. Dec. 3, 2009); Greene v. Benefit Mortgage Corp., 2009 WL 56056 (E.D. Mich. Jan. 8, 2009); Phleger v. Countrywide Home Loans, 2009 WL 225416 (N.D. Cal. Jan. 29, 2009); Macheda v. Household Fin. Realty Corp., 631 F. Supp. 2d 181 (N.D.N.Y. 2008); Raney v. First Nat’l Bank of Nebraska, 2006 WL 2588105 (E.D. Ky. Sept. 8, 2006); Haynes v. Homeq Serv. Corp., 2006 WL 2167375 (M.D. Tenn. Aug. 1, 2006); Egipciaco Ruiz v. R & G Mortgage Corp., 2005 WL 3830967 (D. P.R. Sept. 21, 2005); Murry v. America’s Mortgage Banc, Inc., 2004 WL 5010145 (N.D. Ill. July 6, 2004); Bank One v. 1 (In re Bumpers), 2003 WL 22119929 (N.D. Ill. Sept. 11, 2003); Kurz v. Chase Manhattan Bank, 273 F. Supp. 2d 474 (S.D.N.Y. 2003); Moore v. Mortgagestar, Inc., 2002 U.S. Dist. LEXIS 27457 (S.D. W. Va. Dec. 18, 2002); Hanlin v. Ohio Builders & Remodelers, Inc., 212 F. Supp. 2d 752, 760 (S.D. Ohio 2002); Fabricant v. Sears, Roebuck, 2002 WL 34477592 (S.D. Fla. Mar. 6, 2002); Daenzer v. Wayland Ford, Inc., 193 F. Supp. 2d 1030 (W.D. Mich. 2002); Arrington v. Colleen, Inc., 2001 WL 34117735, at *4 (D. Md. Mar. 29, 2001); Belmont v. Assocs. Nat’l Bank, 119 F. Supp. 2d 149 (E.D.N.Y. 2000); Williams v. Empire Funding Corp., 109 F. Supp. 2d 352 (E.D. Pa. 2000); Layell v. Home Loan & Inv. Bank, 244 B.R. 345 (E.D. Va. 1999); Weil v. Long Island Sav. Bank, 77 F. Supp. 2d 313 (E.D.N.Y. 1999); Wiggins v. Avco Fin. Servs., 62 F. Supp. 2d 90 (D.D.C. 1999); Turner v. E-Z Check Cashing, 35 F. Supp. 2d 1042 (M.D. Tenn. 1999); Williams v. Gelt Fin. Corp., 237 B.R. 590 (E.D. Pa. 1999); Affatato v. Beneficial Corp., 1998 WL 472494 (E.D.N.Y. Aug. 7, 1998); Yazzie v. Ray Vicker’s Special Cars, Inc., 12 F. Supp. 2d 1230 (D.N.M. 1998); Rowland v. Magna Milliken Bank, 812 F. Supp. 875 (C.D. Ill. 1992); In re Wright, 133 B.R. 704 (E.D. Pa. 1991); Nichols v. Mid-Penn Consumer Discount Co., 1989 WL 46682 (E.D. Pa. Apr. 28, 1989); Fortune v. Am. Window & Siding Sys., Inc. (In re Fortune), 2010 WL 4053107, at *5 (Bankr. D. Kan. Oct. 13, 2010); Madel v. GMAC Mortgage Corp., 2004 WL 4055247 (Bankr. E.D. Wis. Nov. 8, 2004) (Case No. 03-32367); Williams v. BankOne (In re Williams), 291 B.R. 636, 643 (Bankr. E.D. Pa. 2003); Mourer v. Equicredit Corp. (In re Mourer), 287 B.R. 889 (Bankr. W.D. Mich. 2003), aff’d in part, rev’d in part on other grounds, 309 B.R. 502 (W.D. Mich. 2004); In re Derienzo, 254 B.R. 334 (Bankr. M.D. Pa. 2000); Wolfe v. IMC Mortgage Co., Case No. 99-12837PM (Bankr. D. Md. May 19, 2000), available at www.nclc.org/unreported; In re Hatfield, 117 B.R. 387 (Bankr. C.D. Ill. 1990) (TILA is to be liberally construed in favor of consumer and strictly enforced to protect consumer; adequacy of disclosures is to be based on understanding of common lay consumer, not the creditor); In re Steinbrecher, 110 B.R. 155, 161 (Bankr. E.D. Pa. 1990); Pac. Shore Funding v. Lozo, 42 Cal. Rptr. 3d 283 (Cal. Ct. App. 2006); Johnson v. Thomas, 794 N.E.2d 919, 926 (Ill. App. Ct. 2003); Thomas v. Leja, 468 N.W.2d 58 (Mich. Ct. App. 1991); Kocsis v. Pierce, 480 N.W.2d 598 (Mich. Ct. App. 1991); Jenkins v. Eastover Bank for Sav., 606 So. 2d 105 (Miss. 1992); Summit Trust Co. v. Chichester, 559 A.2d 12 (N.J. Super. Ct. App. Div. 1989); Equity Plus Consumer Fin. & Mortgage v. Howes, 861 P.2d 214 (N.M. 1993); Wash. Mut. Bank v. Marrelli, 2008 WL 4172458 (N.Y. Sup. Ct. Sept. 3, 2008). See also Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir. 2002) (“Because the FDCPA, like the Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., is a remedial statute, it should be construed liberally in favor of the consumer”); Edwards v. Your Credit, Inc., 148 F.3d 427 (5th Cir. 1998) (construing TILA in light of its remedial purposes); Murphy v. Household Fin. Corp., 560 F.2d 206 (6th Cir. 1977) (TILA is remedial, not penal).

  • 183 {181} Westbank v. Maurer, 658 N.E.2d 1381 (Ill. App. Ct. 1995).

  • 184 {182} See § 12.5.1, infra (citing cases and discussing technical violations as a defense to TILA claims generally).

    “Strict liability” has been defined as “Liability that does not depend on actual negligence or intent to harm, but that is based on the breach of an absolute duty to make something safe.” Black’s Law Dictionary (9th ed. 2009).

  • 185 {183} See, e.g., Melfi v. WMC Mortgage Corp., 568 F.3d 309 (1st Cir. 2009). See generally §§ 10.4.4.7 (discussing Melfi), 12.5.1, infra (discussing technical violations generally).

  • 186 {184} See §§ 10.4.4.7, 12.5.1, infra.