Sosa v. Fite

• Decision Date: 04 August 1972
• Docket Number: No. 72-1797 Summary Calendar.,72-1797 Summary Calendar.
• Citation: 465 F.2d 1227
• Parties: Genoveva R. SOSA et al., Plaintiffs-Appellants, v. David FITE et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

465 F.2d 1227 (1972)

Genoveva R. SOSA et al., Plaintiffs-Appellants, v. David FITE et al., Defendants-Appellees.

No. 72-1797 Summary Calendar.^*

United States Court of Appeals, Fifth Circuit.

August 4, 1972.

J. L. Covington, Brownsville, Tex., for plaintiffs-appellants.

Ralph L. Alexander, Edinburg, Tex., for Tropical.

Curtis Bonner, Harlingen, Tex., for Cabco. Inc.

Before BELL, DYER and CLARK, Circuit Judges.

CLARK, Circuit Judge:

Genoveva R. Sosa brought this action to rescind a consumer credit transaction in which she had transferred a security interest in her principal residence. She alleged that defendant had failed to make certain disclosures required by Title I of the Federal Consumer Credit Protection Act (Truth-in-Lending), 15 U.S.C.A. § 1601 et seq., and contended that § 1635¹ guaranteed her the right to rescind the transaction. The district court first concluded, citing § 1633² that inasmuch as the State of Texas has disclosure requirements similar to those provided for in the Act, and provided adequate enforcement thereof, Sosa's transaction was exempted from coverage under the Act; it further concluded that, in any event, the federal court was without jurisdiction under the provisions of § 1640³ and consequently could not entertain the claim. Being unable to agree with either of these conclusions, we reverse.

The Act does not leave it to the judiciary to determine whether any given state's transactions are exempted from the federal disclosure requirements. Under § 1633, such an exemption can be granted only by the Federal Reserve Board and then only after proper application has been made to and reviewed by that agency. See 12 C.F.R. § 226.12. No such action has been taken regarding any class of transactions in the State of Texas.

A more difficult issue, and one we need not reach, is that of whether the Act itself affords the federal court the authority to grant rescission. Though language in several recent cases⁴ indicates that § 1640, the only explicit jurisdictional grant within the Act, empowers the court to vindicate at least all rights protected in the credit transaction portion of the Act, § 1635-44, we decline to follow these indications. Nor do we agree with the lower court that Sosa's jurisdictional claim must necessarily be grounded under the Act, if at all. Though it is true that general jurisdictional statutes do not confer jurisdiction where an applicable regulatory statute otherwise precludes it, Schilling v. Rogers, 363 U.S. 666, 80 S.Ct. 1288, 4 L.Ed.2d 1478 (1960); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194 (1950); United Electrical Contractors Association v. Ordman, 258 F.Supp. 758 (S.D.N.Y.1965), there is nothing in § 1640(e) which indicates either that it was designed to bar access to other jurisdictional grants or to be the exclusive entree to federal judicial relief.

We therefore consider Sosa's invocation of jurisdiction under 28 U.S.C. A. § 1337, and find it to be well-taken. That section provides that the district courts shall have original jurisdiction of any civil action arising under any Act of Congress regulating commerce. This Act plainly qualifies as a jurisdictional base. It, like Title II of the same Act, was the result of an exercise of Congressional power under the Commerce Clause, see Perez v. United States, 402 U.S. 146, 91 S.Ct. 1357, 28 L.Ed.2d 686 (1971), and was designed to enhance economic stabilization and strengthen competition among institutions and firms engaged in the extension of consumer credit. 15 U.S.C.A. § 1601. Further, there can be no question that the "arising under" tests are met. Sosa's claim is a direct assertion of a federal statutory right, and a construction of the statute and its accompanying regulations will have a direct bearing on recovery. Gomez v. Florida State Employment Service, 417 F.2d 569 (5th Cir. 1969).

Our decision in no wise passes on the merits of Sosa's claim, her motion for summary judgment, or the motions and contentions of certain would be intervenors. We hold only that the court below had jurisdiction to hear Sosa's complaint, and we remand the case for further proceedings.⁵

Reversed and remanded.

* Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of N. Y., 431 F.2d 409, Part I (5th Cir. 1970).

1 § 1635. Right of rescission as to certain transactions—Disclosure of obligor's right to rescind

(a) Except as otherwise provided in this section, in the case of any consumer credit transaction in which a security interest is retained or acquired in any real property which is used or is expected to be used as the residence of the person to whom credit is extended, 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 disclosures required under this section and all other material disclosures required under this part, whichever is later by notifying the creditor, in accordance with regulations of the Board of his intention to do so. The creditor shall clearly and...