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WIGGINS v. AVCO FINANCIAL SERVICES

August 5, 1999

GLADYS WIGGINS, PLAINTIFF,
v.
AVCO FINANCIAL SERVICES, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Kessler, District Judge.

  MEMORANDUM OPINION

This matter comes before the Court on Plaintiff's Partial Motion for Summary Judgment [# 35] and Defendant AVCO Financial Services' ("AVCO") Cross-Motion for Summary Judgment [# 34].*fn1 Plaintiff, Gladys Wiggins, brings this action pursuant to the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., and the District of Columbia Consumer Protection Procedures Act ("DCCPPA"), D.C.Code §§ 28-3904(a), (b), (d), (e), (f), (q), (t), and (dd), seeking to rescind a home improvement loan made to her by Defendant AVCO. Upon consideration of the motions, oppositions, replies, and the entire record herein, for the reasons stated below, Plaintiff's Motion for Partial Summary Judgment is granted and Defendant's Cross Motion for Summary Judgment is granted in part and denied in part.

I. Background*fn2

Plaintiff owns and resides in a property at 3922 New Hampshire Avenue, N.W., in the District of Columbia. In September 1994, Plaintiff was contacted by an unlicensed home improvement contractor, Arctic Windows and Doors, Inc., also known as Weather-Guard Corporation ("Arctic"), with an offer to undertake home repairs. Plaintiff thereafter entered into a contract with Arctic on September 24, 1994. At the time, Plaintiff owned her home free and clear.

As a condition of the contract, Plaintiff authorized Arctic to secure financing on her behalf. On September 26, 1994, Arctic submitted a loan application to Coastal Mortgage Corporation ("Coastal"), a mortgage broker in the State of Maryland. On September 28, 1994, Coastal forwarded the loan application and a copy of Plaintiff's credit report to Defendant AVCO for approval. Plaintiff was pre-approved for a $70,000 loan on October 3, 1994.

In early October 1994, Coastal mailed a number of disclosure documents to Plaintiff, including an Estimate of Borrower's Settlement Costs, a Mortgage Brokers Agreement, and a Financing Agreement setting forth the terms of the loan. Plaintiff signed and returned these documents to Coastal on October 20, 1994.

On December 15, 1994, the parties met at the offices of Certified Title Corporation ("Certified"), a company retained by Defendant AVCO to handle all matters pertaining to the settlement and closing of the loan. At the closing, Plaintiff signed a number of documents, including a Note and Deed of Trust, granting Defendant a security interest in her home, as well as a Notice of Right to Cancel. The loan provided for 120 monthly payments of $719.49 with a balloon payment of $66,104.59 after ten years, at an annual percentage rate of approximately twelve percent. The closing documents were then forwarded to AVCO on December 20, 1994, after which Coastal disbursed two checks in the amount of $27,300 each to Plaintiff and Arctic jointly. Plaintiff endorsed both checks to Arctic the following day. Arctic never performed any of the contracted-for home improvement services.

Plaintiff defaulted on the loan in February 1995. On December 11, 1997, Plaintiff then gave notice to Defendant of her intent to rescind the loan.*fn3 This lawsuit followed.

II. Standard of Review

  A party against whom a claim . . . is asserted . . .
  may, anytime, move with or without supporting
  affidavits for a summary judgment in the party's
  favor as to all or any part thereof. . . . The
  judgment sought shall be rendered forthwith if the
  pleadings, depositions, answers to interrogatories,
  and admissions on file, together with the affidavits,
  if any, show that there is no genuine issue as to any
  material fact and that the moving party is entitled
  to judgment as a matter of law.

Fed.R.Civ.P. 56(b)-(c). The party seeking summary judgment bears the initial burden of showing an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether they have met this burden, a court must consider all factual inferences in the light most favorable to the nonmoving party. McKinney v. Dole, 765 F.2d 1129, 1135 (D.C.Cir. 1985). Once the moving party makes its initial showing, however, the nonmoving party must demonstrate "specific facts showing that there is a genuine issue for trial." Celotex, 477 U.S. at 324, 106 S.Ct. 2548; McKinney, 765 F.2d at 1135. Moreover, as already noted, "[i]n determining a Motion for summary judgment, the court may assume that facts identified by the moving party in its statement of material facts are admitted, unless such a fact is controverted in the statement of genuine issues filed in opposition to the Motion." Local Rule 108(h).

III. Analysis

A. TILA Claims

Plaintiff seeks a declaratory judgment that Defendant AVCO violated TILA by requiring her to sign on the day of closing a pre-printed statement which both acknowledged receipt of notice of the right to cancel and certified her decision not to cancel.

Congress passed the Truth in Lending Act, 15 U.S.C. § 1601, et seq., as a consumer protection measure in an age of expanding consumer credit. Mourning v. Family Publications Service, Inc., 411 U.S. 356, 363, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973). TILA, by its own terms, is designed to "assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices". 15 U.S.C. § 1601.

Because the loan in the instant case was secured with Plaintiff's primary residential property, TILA provides that "the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms . . . together with a statement containing the material disclosures. . . ." 15 U.S.C. § 1635(a). The statute further provides that "[t]he creditor shall clearly and conspicuously disclose, in accordance with regulations of the Board, to any obligor in a transaction subject to this section the rights of the obligor under this section." Id. Notice of these rights must be provided to a consumer "on a separate document that identifies the transaction and . . . clearly and conspicuously discloses" information describing the transaction and the consumer's rights. 12 C.F.R. § 226.23(b)(1). If the creditor fails to comply with these requirements, the consumer's right to rescind is extended for up to three years. 12 C.F.R. § 226.23(a)(3).

Because TILA was passed, primarily, as an aid to the unsophisticated consumer, so that he or she would not be easily misled as to the total costs of financing, Thomka v. AZ Chevrolet Inc., 619 F.2d 246, 248 (3rd Cir. 1980), it is to be liberally construed in favor of borrowers. Bizier v. Globe Financial Services, 654 F.2d 1, 3 (1st Cir. 1981); see also Rodash v. AIB Mortgage Co., 16 F.3d 1142, 1145 (11th Cir. 1994) (quoting McGowan v. King Inc., 569 F.2d 845, 848 (5th Cir. 1978)). Furthermore, a single violation of TILA, whether it be substantive or technical, extends a borrower's period for rescission. Smith v. Fidelity Consumer Discount Company, 898 F.2d 896, 898 (3d Cir. 1990); Semar v. Platte Valley Federal Savings & Loan Assoc., 791 F.2d 699, 704 (9th Cir. 1986).

All courts are agreed that alleged violations of TILA are subject to an objective standard of review. Zamarippa v. Cy's Car Sales, 674 F.2d 877, 879 (11th Cir. 1982). Courts have applied such an objective standard regardless of whether the borrower is a trained attorney*fn4 or simply an individual who had a sudden need for additional funds. A number of courts have further concluded that notice under TILA need not be absolutely perfect. It need only be clear and conspicuous. Veale v. Citibank, F.S.B., 85 F.3d 577, 580 (11th Cir. 1996). So long as the intent of TILA is satisfied by the disputed notice provision, courts have generally ruled that it is the substance of the disclosure, not the form that is controlling. Joseph v. Norman's Health Club, Inc., 532 F.2d 86, 90 (8th Cir. 1976).

Central to the dispute in this case is a document giving notice of Plaintiff's right to cancel her loan, informing her of the procedure to cancel, and permitting her to certify a decision not to cancel. Pl.'s Ex. 3A; Def.'s Ex. L. The one-page document consists of three sections stating in relevant part:

NOTICE OF RIGHT TO CANCEL . . .

    You are entering into a transaction that will
  result in a mortgage on your home. You have a legal
  right under federal law to cancel this transaction,
  without cost, within THREE (3) BUSINESS DAYS from
  whichever of the following events occurs last:
  (1) The date of the transaction, which is December
  ...

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