Tower v. Moss

• Decision Date: 15 September 1980
• Docket Number: No. 78-3659,78-3659
• Citation: 625 F.2d 1161
• Parties: Ella TOWER et al., Plaintiffs, v. Paralee MOSS, Plaintiff-Intervenor-Appellant, v. HOME CONSTRUCTION COMPANY OF MOBILE, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1161

625 F.2d 1161

Ella TOWER et al., Plaintiffs, v. Paralee MOSS, Plaintiff-Intervenor-Appellant, v. HOME CONSTRUCTION COMPANY OF MOBILE, INC., Defendant-Appellee.

No. 78-3659.

United States Court of Appeals Fifth Circuit.

Sept. 15, 1980.

H. Diana Hicks, New Orleans, La., for plaintiff-intervenor-appellant.

Richard L. Thiry, Mobile, Ala., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Alabama.

Before TUTTLE, RANDALL and TATE, Circuit Judges.

TATE, Circuit Judge:

The plaintiff, Paralee Moss, instituted this action under the Federal Truth in Lending Act, 15 U.S.C. § 1601 et seq., the Federal Reserve Board Regulations, 12 C.F.R. § 226.1 et seq. (Regulation Z), the Alabama Consumer Finance Act, Ala.Code, § 5-19-1 et seq., and the common law. The district court granted summary judgment in favor of the defendant as to the federal claims on the ground that this particular credit transaction was exempt from the Truth in Lending Act disclosure requirements because in its view the transaction was for "business or commercial purposes" (15 U.S.C. § 1603(1)). Tower v. Home Construction Co. of Mobile, Inc., 458 F.Supp. 112 (S.D.Ala.1978). Additionally, in its discretion the district court simultaneously dismissed the pendent state law claims. Id. at 117. We hold that the purpose of this credit transaction was "primarily for personal, family, household, or agricultural purposes" (15 U.S.C. § 1602(h)), and therefore this credit transaction falls within the ambit of the Truth in Lending Act. Accordingly, we reverse and remand for further proceedings not inconsistent with this opinion. ¹

History of the Litigation

This suit originated as a class action alleging that the defendant violated the Truth in Lending Act, the Alabama Consumer Finance Act, and the common law of Alabama. On May 20, 1977, the district court certified the plaintiff class. The plaintiff, Paralee Moss, was one of 145 members of the class.

An agreement of settlement was entered in the case and approved by the district court on June 20, 1977. By the terms of the agreement, each class member could choose (1) to opt out of the class or (2) to recover damages from the defendant by a fifteen percent reduction in the amount owed to the defendant or (3) to rescind the mortgage and note and receive from the defendant of all state and federal statutory monetary penalties and common law damages, less the fair value of the goods and services previously delivered by the defendant.

The plaintiff chose the above delineated "rescission alternative", but the defendant challenged the plaintiff's individual claim. On August 18, 1978, the district court entered an order confirming settlement of the individual claims of 143 members of the class: 103 class members received 15% reductions and 40 class members rescinded and received damages. Only the individual claims of two class members, Ms. Moss and Winnie Harris, remained in dispute after August 18, 1978.

The defendant thereafter filed a motion for summary judgment as to Ms. Moss' individual claim, alleging that her claim was not a consumer credit transaction and was therefore exempt from Truth in Lending Act coverage.

On September 29, 1978, the district court rendered its decision granting the defendant's motion for summary judgment as to the plaintiff's Truth in Lending Act claims and striking the plaintiff's pendent state claims. The district court on that same day entered a separate judgment against the plaintiff. The plaintiff filed a notice of appeal from this judgment on October 26, 1978.

Through inadvertence, however, counsel for the plaintiff did not request Federal Rule of Civil Procedure 54(b) certification from the district court before lodging this appeal. Supplemental Brief of Appellant at 4.

On April 30, 1979, the district court noted that the only remaining individual claim (that of Winnie Harris) had been settled, and ordered that this case in its entirety be dismissed from its active docket. Second Supplemental Record on Appeal at 3. The district court on July 9, 1979 entered an order approving the terms of the parties' settlement of Harris' claim. Id. at 4-5.

This court at oral argument sua sponte questioned its jurisdiction to entertain this appeal in light of the plaintiff's failure to secure Rule 54(b) certification from the district court.

After appellate oral argument, the plaintiff applied to the district court for Rule 54(b) certification nunc pro tunc. On May 30, 1980, the district court issued the nunc pro tunc certification of its September 29, 1978 judgment as requested. Id. at 6-7.

Appellate Jurisdiction

This court has authority to entertain "appeals from all final decisions of the district courts of the United States." 28 U.S.C. § 1291. Rule 54(b) provides that in actions involving multiple claims for relief or multiple parties, an order that disposes of one or more but fewer than all of the claims for relief asserted, or completely determines the rights and liabilities of one or more but fewer than all of the parties, does not end the action in the district court and is subject to revision at any time unless the district court has (1) expressly determined that there is no just reason for delay and (2) expressly directed entry of judgment. In the absence of a certification by the district court that meets these two requirements, a partial disposition of a multi-claim or multi-party action is ordinarily not a final appealable order. See generally 10 C. Wright & A. Miller, Federal Practice and Procedure §§ 2653-2660 (1973).

In this case, the plaintiff's counsel did not request Rule 54(b) certification from the district court of its September 29, 1978 order dismissing the plaintiff's complaint while another individual plaintiff's (Winnie Harris's) claim remained to be considered by the district court.

Usually if a Rule 54(b) certification has not been obtained at the time an appeal is filed, the appellate court will dismiss the appeal without prejudice as interlocutory. However, there are some exceptions to the Rule 54(b) certification requirement, all of which are ably and comprehensively discussed in the seminal case of Huckeby v. Frozen Food Express, 555 F.2d 542 (5th Cir. 1977). We find that the exception formulated in Jetco Electronic Industries, Inc. v. Gardiner, 473 F.2d 1228 (5th Cir. 1973), is applicable here, and consequently this court has jurisdiction to consider this appeal.

In Jetco two plaintiffs brought suit against Engineer Testing Laboratories, Gardiner, and Gardiner Electronics Company. The district court dismissed the plaintiffs' claims against one of the defendants, Engineer Testing Laboratories. This order was not a final judgment since it did not adjudicate the plaintiffs' rights against Gardiner or Gardiner Electronics Company; no Rule 54(b) certification was entered. Several months later, the district court entered an agreed judgment disposing of the plaintiffs' suit against the other two defendants that was not a final judgment since it did not determine plaintiffs' rights against Engineers Testing Laboratories; again, no Rule 54(b) certification had been issued. The plaintiffs appealed from each order separately at the time each was entered. This court held that since the two orders, when considered together, "terminated this litigation just as effectively as would have been the case had the district judge gone through the motions of entering a single order formally reciting the substance of the earlier two orders" the first order was appealable under the practical approach to finality previously enunciated by the Supreme Court. Id. at 1231. See Gillespie v. United States Steel Corp., 379 U.S. 148, 152, 85 S.Ct. 308, 311, 13 L.Ed.2d 199 (1964); Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1226, 93 L.Ed. 1528 (1949).

In this case the district court's orders of September 29, 1978 and April 30, 1979 when considered together effectively terminated this litigation. Therefore, under the Jetco rationale this court has jurisdiction to review the order dismissing Moss's complaint. ²

Truth in Lending Act

The purpose of the Truth in Lending Act ³ is to enhance economic stabilization and competition among financial institutions by requiring the meaningful disclosure of credit terms to consumers. See U.S.Code Cong. and Admin.News, 90th Congress, Second Session, p. 1962-63. The Act does not regulate the credit industry, nor does it impose ceilings on credit charges. The statute contains an express statement of this legislative purpose:

The Congress finds that economic stabilization would be enhanced and the competition among the various financial institutions and other firms engaged in the extension of consumer credit would be strengthened by the informed use of credit. The informed use of credit results from an awareness of the cost thereof by consumers. It is the purpose of this subchapter to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit.

15 U.S.C. § 1601.

The Truth in Lending Act provides not only for enforcement by the Federal Trade Commission and other federal agencies, but it also establishes a civil cause of action by a consumer against a creditor who fails to make the required disclosures. 15 U.S.C. § 1640(a). This private cause of action may be brought in either federal or state court. 15 U.S.C. § 1640(e). However, the Truth in Lending Act does not apply to all credit transactions; the Act does not cover "(c)redit transactions involving extensions of credit for business or commercial purposes . . .." 15 U.S.C. § 1603(1). See also 12 C.F.R. § 226.3(a).

Rather, the disclosure requirements of the Act only apply to consumer credit transactions those "in which the party to whom credit is offered or extended is a natural...