Hamm v. Ameriquest Mortg. Co.
| Decision Date | 17 October 2007 |
| Docket Number | No. 05-3984.,No. 06-3086.,05-3984.,06-3086. |
| Citation | 506 F.3d 525 |
| Parties | Sarah HAMM, Plaintiff-Appellant, v. AMERIQUEST MORTGAGE COMPANY, Ameriquest Mortgage Securities, Inc., and AMC Mortgage Services, Inc., Defendants-Appellees. Shirley Jones, Plaintiff-Appellee, v. Ameriquest Mortgage Company, Ameriquest Mortgage Securities, Inc., and AMC Mortgage Services, Inc., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Al Hofeld, Jr. (argued), Edelman, Combs & Latturner, Chicago, IL, for Plaintiff-Appellant.
Jonathan N. Ledsky (argued), Craig A. Varga, Varga, Berger, Ledsky, Hayes & Casey, Chicago, IL, for Defendants-Appellees/Defendants-Appellants.
Before FLAUM, MANION, and WOOD, Circuit Judges.
Plaintiffs Sarah Hamm and Shirley Jones sued defendants Ameriquest Mortgage Company ("Ameriquest"), Ameriquest Mortgage Securities, Inc., and AMC Mortgage Services, Inc., in separate actions brought under the Truth In Lending Act ("TILA"), 15 U.S.C. § 1640. Each of them claimed that Ameriquest, the original lender, violated TILA by failing to state explicitly the payment period in the borrowers' TILA Disclosure Statements. In addition, each asserted that Ameriquest's inclusion of a one-week rescission right notice alongside the TILA-mandated three-day rescission right notice violated TILA because it could cause borrowers unknowingly to give up their TILA rescission rights. As remedies, they claimed both damages and the right to rescind their mortgages.
The two suits, though identical from a legal standpoint, wound up before different district court judges; those judges reached opposite results. In the Hamm action, the district court granted summary judgment to the defendants on both claims; Hamm appeals based only on the theory of liability relating to the payment period. In the Jones action, the district court granted summary judgment to Jones based on Ameriquest's failure properly to state the payment period; it denied both Jones's and Ameriquest's summary judgment motions on the argument relating to the notice of a right to rescind, concluding that material issues of fact remained on that claim.
On the surface, it would appear that the Jones action is not yet resolved in the district court. However, we have held that,
once [a district court has] entered a judgment giving the plaintiff all the relief that it was seeking, the plaintiff's remaining ground merged in the judgment, which ended the case in the district court and therefore was appealable without the aid of Rule 54(b), even though, should such a judgment be reversed on appeal, the lawsuit would not be over, because the plaintiff had an alternative theory of liability.
Ind. Harbor Belt R.R. Co. v. Am. Cyanamid Co., 916 F.2d 1174, 1183 (7th Cir. 1990). In short, a plaintiff can win only once, and so it does not matter how many other theories are left on the table if the claim itself has been resolved. The judgment of the district court, which is what we review, is final in Jones's case and thus ripe for appeal. Before this court, the defendants have addressed both theories of liability, while Jones argues that her allegation of defective notice of the right to rescind provides an alternative basis for affirming the district court's grant of summary judgment in her favor.
We conclude that the district court in the Jones action reached the correct result on the payment period theory of liability. That is enough to require reversal in Hamm's case and affirmance in Jones's case. We do not reach the issue concerning the notice of the right to rescind.
The facts in these two cases are not in dispute, and so we review them here only briefly. On January 19, 2002, Hamm entered into a loan transaction secured by a mortgage with Ameriquest. On March 13, 2002, Jones did the same thing. At closing, Hamm and Jones each signed a form entitled "Disclosure Statement" that listed a specific date as the due date for the first payment and another specific date for the final payment.
Neither Disclosure Statement ever says, in so many words, that payments will be made over a 360-month period of time. Instead, the relevant part of the forms looked like this (using Hamm's as the example):
PAYMENTS ARE
NUMBER OF AMOUNT OF DUE
PAYMENTS PAYMENTS BEGINNING
359 $541.92 03/01/2002
1 $536.01 02/01/2032
Elsewhere on the form it indicates the "Total of Payments," which in Hamm's case was $195,085.29 and in Jones's case was $172,766.38. At no place on either Disclosure Statement does the number "360" appear, nor is there any reference to "360 months," nor an indication that payments are to be made monthly. On the other hand, it does not take much calculation to realize that the time between the first entry in the third column and the last entry is just shy of thirty years, or 360 months. Both Hamm and Jones signed other documents that said things like "loan payments are required monthly" or that at least used the term "monthly" when referring generally to the required payments.
At their loan closings, Hamm and Jones also each received copies of a "Notice to Cancel" form and a "One Week Cancellation" form. The "Notice to Cancel" form states that TILA allows three days for a borrower to cancel a loan. The "One Week Cancellation" form informs the borrower that Ameriquest gives her a right to cancel for a full week. After the transactions were complete, Ameriquest Mortgage Company sold the mortgages to defendant Ameriquest Mortgage Securities; they are both serviced by defendant AMC Mortgage Services.
In the Jones action, the district court entered judgment against only defendant Ameriquest Mortgage Securities, Inc., after concluding that Jones filed her suit after the statutory deadline for relief other than rescission. It dismissed the case as moot against the other two defendants. It also ordered Ameriquest to pay Jones's attorneys' fees and other costs. In the Hamm case, as we noted earlier, the district court entered judgment for Ameriquest.
We begin with the plaintiffs' complaint that the Disclosure Statements did not explicitly state the payment period of their loans, as required by TILA. We review a decision to grant summary judgment de novo. Conn. Indem. Co. v. DER Travel Serv., Inc., 328 F.3d 347, 349 (7th Cir. 2003). In conducting our review, we look to the language of the statute, the implementing regulation ("Regulation Z," promulgated by Federal Reserve Board ("FRB")), and the relevant FRB Staff Commentary. TILA was written to serve more than each individual borrower's needs. Congress passed it to improve information in credit transactions and thus enhance the efficiency of credit markets, relying on "meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available" to achieve this goal. 15 U.S.C. § 1601(a).
Courts pay particular heed to the FRB Staff Commentary to TILA's regulations when evaluating an alleged TILA violation. The Supreme Court has held that "deference is especially appropriate in the process of interpreting the Truth in Lending Act and Regulation Z[and] ... [u]nless demonstrably irrational, Federal Reserve Board staff opinions construing the Act or Regulation should be dispositive." Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 565, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980). In keeping with Milhollin, this court has deferred to the views of the FRB, as expressed in the Commentary, when we are called upon to interpret TILA. Our treatment of the commentary interpreting 15 U.S.C. § 1638(a)(6), the portion of TILA at issue in this case, is no exception. Clay v. Johnson, 264 F.3d 744, 748 (7th Cir.2001).
TILA imposes an explicit requirement that a lender include "[t]he number, amount, and due dates or period of payments scheduled to repay the total of payments," in its Disclosure Statement to the borrower. 15 U.S.C. § 1638(a)(6) (emphasis added); see also 12 C.F.R. § 226.18(g)(1). The relevant section of the FRB commentary states that:
To meet this requirement creditors may list all of the payment due dates. They also have the option of specifying the "period of payments" scheduled to repay the obligation. As a general rule, creditors that choose this option must disclose the payment intervals or frequency, such as "monthly" or "bi-weekly," and the calendar date the beginning payment is due. For example, a creditor may disclose that payments are due "monthly beginning on July 1, 1988." This information, when combined with the number of payments, is necessary to define the repayment period and enable a consumer to determine all of the payment due dates.
Supp. I, para. 18(g)(4)(I); 63 Fed.Reg. 16673. An "Exception" section immediately follows and allows some flexibility in the narrow situation where the first date of the lending period is unknown at the time the loan is issued. Supp. I, para. 18(g)(ii). This rule and exception are all that the commentary has to say about § 226.18(g)'s requirement to disclose the payment period. The FRB's interpretation does not strike us as so irrational that we would be required to disregard it. We conclude, therefore, that TILA requires a lender to state clearly on the Disclosure Statement either the due dates or period of payments scheduled. The question is whether TILA is satisfied if the form provides only enough information from which the consumer might infer either the due dates or the payment period.
TILA's purpose is achieved by promoting uniformity in credit documents. Atypical terms and forms can confuse borrowers, leading them to agree to credit products that they might have rejected had they understood them properly. For that reason, TILA requires that many items of information be disclosed in specified ways. If a lender does not disclose one such piece of information in the specified way, leaving the...
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