Before Wagner, Chief Judge, Terry, Associate Judge, and Gallagher,
The opinion of the court was delivered by: Terry, Associate Judge
Appeal from the Superior Court of the District of Columbia
(Hon. Colleen Kollar-Kotelly, Trial Judge)
Carrie Mae Taylor and Earl Taylor filed suit in the Superior Court against First Government Mortgage and Investors Corporation ("First Government"), its vice president, Gregg Lilienfield, and Capital City Mortgage Company ("Capital City"). The case concerns certain actions taken by the defendants in connection with the Taylors' application for a home equity loan. From an adverse judgment the Taylors appeal; *fn1 we affirm.
The Taylors brought this suit to set aside a note and deed of trust executed on July 25, 1990. Their complaint alleged that the defendants had committed various violations of the District of Columbia Interest Rate Ceiling Amendment Act, D.C. Code §§ 28-3301 et seq. (1996), and the federal Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq. (1994). The Taylors also sought damages for these violations and for intentional infliction of emotional distress. They later added a claim alleging fraud by Capital City and First Government. In its answer to the complaint, Capital City included a counterclaim seeking enforcement of the note and deed of trust. The Taylors answered Capital City's counterclaim and asserted as an affirmative defense that there had been no "meeting of the minds" as to the terms of the note and deed of trust.
Following a three-week trial, *fn2 the jury returned its verdict. Using a special verdict form provided by the court, the jury found that Lilienfield and First Government had advertised or offered services without the intent to provide them as advertised or offered. For that violation the Taylors were awarded $49,247.50, of which $36,000.50 was designated as punitive damages. The jury also found, however, that the Taylors had not proven their claim of fraud against Capital City and First Government. In addition, the jury expressly found, in its answer to question No. 25 on the verdict form, that there had been no "meeting of the minds" between the Taylors and Capital City on the material terms of the note. *fn3
Ruling on post-trial motions, the trial court granted judgment notwithstanding the verdict for Lilienfield and First Government. The Taylors maintained that they had established a TILA violation which survived the jury's finding that no contract ever existed between the parties because there had been no meeting of the minds. The court ruled, however, that TILA was inapplicable because the obligation of the consumer on a credit transaction is a prerequisite to activating TILA's disclosure requirements. The court further ruled that even if TILA had been applicable, the Taylors had failed to present evidence to support a finding that the defendants had violated TILA by providing an improper disclosure statement. In an effort to restore the status quo ante, the trial court fashioned a new note (see note 13, infra), but declined to award any accrued interest or costs since the date on which Capital City advanced the principal amount of the loan to the Taylors. *fn4
Although there were many issues litigated at trial, the only assignments of error presented on appeal by the Taylors are those involving the TILA claims and the trial court's entry of judgment n.o.v. for Lilienfield and First Government. *fn5
TILA subjects lenders such as Capital City to liability for failing to make material disclosures to borrowers during certain credit transactions. *fn6 The jury found that two of the fees charged by Mid-Atlantic Title, Inc., and included in the "amount financed" box on the loan documents were not legitimate and reasonable. *fn7 Read in light of the court's instructions, that finding meant (as the trial court later said in its order) that those fees "should not have been included in the amount financed but instead included in the finance charge on the Federal Truth in Lending Disclosure Statement." Capital City moved for judgment n.o.v. based on these findings, arguing that TILA does not prohibit fees which are not legitimate and reasonable, but inaccurate disclosures of fees which are charged to the borrower. Capital City also maintained that because the jury found there had been no meeting of the minds with respect to the loan, the transaction was not subject to TILA at all. The trial court agreed, and so do we.
Liability for failing to make material disclosures under TILA attaches at the moment the transaction between lender and borrower is "consummated." 15 U.S.C. § 1631; *fn8 12 C.F.R. § 226.17 (b) (1991). "Consummation" is defined for TILA purposes as "the time that a consumer becomes contractually obligated on a credit transaction." 12 C.F.R. § 226.2 (a)(13) (1991). Because the existence and timing of a contractual obligation is determined by state law, consummation under TILA is a state law question. 12 C.F.R. § 226, Supp. I, ¶ 2 (a)(13) (1991); see generally Murphy v. Empire of America, FSA, 746 F.2d 931, 934 (2d Cir. 1984); Bourgeois v. Haynes Construction Co., 728 F.2d 719, 720 (5th Cir. 1984).
In the District of Columbia, no contract arises (and any apparent contract is void) if the minds of the parties do not meet honestly and fairly without mistake or mutual misunderstanding upon all issues involved. E.g., Hollywood Credit Clothing Co. v. Gibson, 188 A.2d 348, 349 (D.C. 1963). In the instant case, the jury found that there had been no such meeting of the minds. From that finding it necessarily follows, as the trial court recognized, that neither the Taylors nor Capital City became obligated under the putative agreement. ...