Bates v. Provident Consumer Discount Co.

• Decision Date: 19 November 1979
• Docket Number: Civ. A. No. 79-1926.
• Citation: 493 F. Supp. 605
• Parties: Floyd P. BATES and Jane O. Bates v. PROVIDENT CONSUMER DISCOUNT COMPANY.
• Court: U.S. District Court — Eastern District of Pennsylvania

493 F. Supp. 605

Floyd P. BATES and Jane O. Bates v. PROVIDENT CONSUMER DISCOUNT COMPANY.

Civ. A. No. 79-1926.

United States District Court, E. D. Pennsylvania.

November 19, 1979.

David A. Scholl, Community Legal Services, Philadelphia, Pa., for plaintiffs.

Sheldon C. Jelin, Philadelphia, Pa., for defendant.

MEMORANDUM OPINION AND ORDER

VanARTSDALEN, District Judge.

The parties have filed cross motions for summary judgment in Civil Action 79-1926 in which plaintiffs are seeking statutory damages for alleged violations of the Truth In Lending Act, 15 U.S.C. § 1601, et seq. There is no genuine issue as to any material fact. There has been no violation of the requirements of the Truth In Lending Act by the defendant. Judgment will be entered in favor of the defendant and against the plaintiffs.

Plaintiffs, husband and wife, sought a loan from the defendant to satisfy a pre-existing judgment.¹ The documents for the loan were signed by plaintiffs on June 2, 1978. Copies of the documents were mailed by defendant to plaintiffs' attorney, David A. Scholl of Community Legal Services, with an accompanying letter requesting that defendant be advised if the documents did not meet with his approval. Plaintiffs, after consultation with their attorney, rescinded the transaction on June 5, 1978. No money had changed hands, no documents had been filed in any court; plaintiffs had paid nothing and defendant had disbursed no funds.

Defendant heard nothing further from Mr. Scholl² or anyone else concerning this transaction, until this action was filed, in forma pauperis, by David A. Scholl on May 31, 1979, which would appear to be one day prior to the action being barred by the one year limitation period.³

Plaintiffs' first claim of violation is that the note, security agreement, and disclosure statement include a $7.50 charge for "Optional Automobile Club Fee" (Exhibit A to complaint), which "plaintiffs do not recall purchasing and which they believe was improperly disclosed and improperly omitted from the Finance Charge."

15 U.S.C. § 1605(d) provides:

If any of the following items is itemized and disclosed in accordance with the regulations of the Board in connection with any transaction, then the creditor need not include that item in the computation of the finance charge with respect to that transaction:

(1) Fees and charges prescribed by law which actually are or will be paid to public officials for . . . perfecting . . . any security related to the credit transaction.

12 C.F.R. § 226.4(8)(b) provides:

If itemized and disclosed to the customer, any charges of the following types need not be included in the finance charge:

(1) Fees and charges prescribed by law which actually are or will be paid to public officials for . . . perfecting . . . any security related to the credit transaction.

An inspection of the statement reveals that the $7.50 charge was recorded opposite item 6, just above item 7 which relates to a "Mortgage Recording Fee."

In defendant's answer to the complaint, it is averred that the $7.50 charge was "erroneously placed opposite item 6 of the aforesaid note, Security Agreement and Disclosure Statement, when in fact it should have been placed opposite item # 7 entitled `Mortgage Recording Fee.'"

As to the alleged violation arising out of the charge of $7.50 inserted on the line "Optional Auto Club Fee" instead of the following line "Mortgage Recording Fee," it should be noted that in plaintiffs' petition to proceed in forma pauperis, plaintiffs aver that they do not own an automobile. It should also be noted that they signed a contract which provided for a mortgage and judgment note, and that the $7.50 charge had been written in one space above that which referred to "Mortgage Recording Fee," an obvious, inadvertent mistake, and one which in no way affected the total cost or charge to plaintiff as reflected by the agreement. At the worst, it was no more than a harmless clerical error. It is my interpretation of the statute that this does not constitute a violation of the Act.

While the statute should be liberally construed to encourage private enforcement, Mourning v. Family Publication Service, Inc., 411 U.S. 356, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973); Hannon v. Security Nat. Bank, 537 F.2d 327 (9th Cir. 1976); Ratner v. Chemical Bank New York Trust Co., 329 F.Supp. 270 (S.D.N.Y.1971),

courts should not condone or give credence to suits which attempt to subvert this Act into an instrument of harassment and oppression of the lending industry.

Sharp v. Ford Motor Credit Co., 452 F.Supp. 465, 468 (S.D.Ill.1978).

In Jennings v. Edwards, 454 F.Supp. 770 (M.D.N.C.1978), the Court stated in note 13, at 778:

Considering all of the circumstances of the present case, even if the $4 filing fee should have been itemized or included in the finance charge, such violation, being the only one that could be attributed to the Bank, would be de minimus sic and would not result in the Bank's liability.

In George v. General Finance Corp. of Louisiana, 414 F.Supp. 33, 35-36 (E.D.La. 1976), the alleged violation involved a $2.00 mortgage recording fee and a $.75 notary fee for notarizing a chattel mortgage. Although the court found no violation, it made the following significant statement which, I believe, is applicable in the present case:

While the Truth in Lending Act is to be interpreted liberally for the protection of borrowers, it is to be read in a manner calculated to protect borrowers, not as a maze containing obscure technical pitfalls for creditors. The statutory arguments advanced by the plaintiff rest on subtle interpretations of provisions that are ambiguous, at best. The amount involved in the alleged violations was $2.75. The maxim, "De minimis non curat lex," is a venerable and sensible principle of law. Congress did not intend by the Truth in Lending Act to make a federal case out of a lawful charge of $2.75 made by a money lender, fully revealed to the borrower, even if the amount were set forth on the disclosure form in a manner that did not conform precisely to the regulations. Accord: Gordon v. Backus Cadillac-Pontiac, Inc., U.S.D.C., S.D.Ga. (CCH Para. 98,689).

(Footnotes omitted).

Although I do not...