Bostwick v. Cohen, C 70-201.
| Decision Date | 24 November 1970 |
| Docket Number | No. C 70-201.,C 70-201. |
| Citation | 319 F. Supp. 875 |
| Parties | Pamela BOSTWICK, Complainant, v. Morris COHEN, dba Shangrila Pools, and Avco Financial Services, Inc., and Avco Financial Services, Inc. No. 50, and Avco Financial Services, Inc. No. 51, and Avco Financial Services, Inc. No. 52, Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
Gerald Lubitsky, Toledo, Ohio, for complainant.
B. Gary McBride, Toledo, Ohio, for Avco Financial Services, Inc.
This is a civil action pursuant to 15 U.S.C.A., Section 1640(a) of the Consumer Credit Protection Act, popularly referred to as the Truth in Lending Act, wherein plaintiff alleges that she entered into an agreement with defendant, Cohen, DBA Shangrilla Pools, for the purchase and installation of a swimming pool in the backyard of her home. The terms of the agreement are pleaded in paragraph number three of the complaint and since the finance charge would exceed the statutory maximum of $1000.00, plaintiff prays that she may recover $1000.00, plus costs and a reasonable attorney fee. Plaintiff further alleges that she executed a note and a mortgage both of which were later assigned to the defendant, Avco Financial Services, Inc.
In its separate amended answer defendant, Avco, admits that the above described agreement was made between plaintiff and defendant, Cohen, and that it was later assigned to Avco. Further answering, Avco denied that the disclosure provisions of the Consumer Credit Protection Act were violated as plaintiff alleged. As a separate defense, Avco asserted that plaintiff had exercised her right to rescind the transaction pursuant to 15 U.S.C.A., Section 1635, and that she had, therefore, waived any rights she may have had under the civil liability section.
Plaintiff then filed a motion pursuant to Civil Rule 12(f) of the Federal Rules of Civil Procedure to strike the separate defense for the stated reason that it is an insufficient defense as a matter of law. This cause is now before the court on plaintiff's motion to strike and the issue presented is whether an election to rescind a transaction pursuant to 15 U. S.C.A., Section 1635, precludes plaintiff from pursuing relief under Section 1640, the civil liability section.
Plaintiff's position seems to be that the two sections are not mutually exclusive for the reason that Congress has not stated that the consumer must elect one remedy and forego the other; rather, plaintiff states that Congress has enacted two different laws: One for damages for failure to disclose certain credit terms; the other, for rescission where a lien is obtained or retained upon the home of the debtor.
Defendant's position is that rescission has historically been an elective remedy to the exclusion of other remedies founded upon the affirmance of the transaction and that the courts should not depart from this concept without having a clear legislative expression to do so.
Having carefully considered the issue presented, this court is of the opinion that the plaintiff's motion to strike is not well taken and should be denied. The path leading to this conclusion was not, of course, completely free from obstruction. Moreover, since the Consumer Credit Protection Act is a relatively new enactment, the court did not have the benefit of well established judicial guideposts to assist it in resolving this issue.
In reaching its decision, the court started with the generally accepted proposition of law advanced by the defendant, viz., that a remedy of rescission is inconsistent with a remedy based on a theory of the affirmance of the transaction and that an election of the former constitutes an abandonment of the latter, see generally 28 C.J.S. Election of Remedies § 6; 18 O.Jur.2d, Sections 30-31. As the defendant noted, this traditional concept of electing remedies should not be deviated from unless there has been a clear expression by Congress that it intended to change the law in this respect.
In reviewing both the Act and its legislative history, the court did not discover any clear legislative expression to deviate from the aforementioned concept of electing remedies. This court, therefore, is of the opinion that it should construe the statute in the manner most favorable to the defendant, the person upon whom the new burden would devolve if the traditional concept of electing remedies were to be altered.
It is possible, of course, to view the civil liability section of the Act as being punitive in nature rather than remedial. Such a view would lead to the conclusion that the election of remedies concept has no application to this case. There are, however, certain aspects of the Act which have caused this court to reject any arguments to the effect that the civil liability section is punitive in nature.
At the outset, the court calls attention to the stated purpose of the Act, which is as follows:
It is the purpose of...
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Gerasta v. Hibernia Nat. Bank
...initial position that recission under Section 1635 precludes the monetary award provided in Section 1640,52 citing Bostwick v. Cohen, 319 F.Supp. 875 (N.D.Ohio 1970). The basis of that decision, aside from reliance on the general contract principle that rescission is inconsistent with a rem......
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Riggs v. Government Employees Financial Corp.
...Dunne, 407 F.Supp. 308, 311 (D.R.I.1976); Ratner v. Chemical Bank New York Trust Co., supra, 329 F.Supp. at 280-81; Bostwick v. Cohen, 319 F.Supp. 875, 878 (N.D.Ohio 1970). By allowing lenders to subtract Truth-in-Lending awards from amounts owed them by bankrupt borrowers, the district cou......
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Redhouse v. Quality Ford Sales, Inc.
...Savings and Loan Association, 477 F.2d 40 (4th Cir. 1973). As such its purpose is remedial and not punitive. Bostwick v. Cohen, 319 F.Supp. 875 (N.D.Ohio 1970). In this vein, although the Act should be strictly construed, it would not serve the cause of justice to enforce the Act so as to a......
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Augusta v. Marshall Motor Co.
...v. Valley National Bank of Arizona, 56 F.R.D. 448, 451 (D.Ariz.1971). Neither is this statute punitive in nature, Bostwick v. Cohen, 319 F.Supp. 875, 878 (N.D.Ohio 1970). See Redhouse v. Quality Ford Sales, Inc., 511 F.2d 230, 237 (10th Cir. The plaintiff's first claim fails to allege any v......