Palmer v. Champion Mortgage

United States Court of Appeals
For the First Circuit

No. 06-1246

AMY PALMER,

Plaintiff, Appellant,

v.

CHAMPION MORTGAGE,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Reginald C. Lindsay, U.S. District Judge]

Before

Selya, Circuit Judge,
Siler,** Senior Circuit Judge,
and Howard, Circuit Judge.

Christopher M. Lefebvre, with whom Family and Consumer Law
Center was on brief, for appellant.
W. Scott O'Connell, with whom Paul M. Lanagan and Nixon
Peabody LLP were on brief, for appellee.

September 29, 2006

*
Of the Sixth Circuit, sitting by designation.
 SELYA, Circuit Judge. This case requires us to determine

whether a consumer's professed lack of comprehension of a notice of

right to rescind alone suffices to pave the way for belated

rescission under the Truth in Lending Act (TILA), 15 U.S.C. §§

1601-1667. The district court concluded that a bald assertion of

subjective confusion did not trump the plain language of the

disputed notice and dismissed the plaintiff's amended complaint.

The court then rebuffed the plaintiff's two-pronged endeavor either

to obtain reconsideration or to restate her claim. This appeal

followed. After careful consideration, we affirm.

I. BACKGROUND

Because this appeal follows the granting of a motion to

dismiss under Fed. R. Civ. P. 12(b)(6), we rehearse the facts as

set forth in the plaintiff's amended complaint. See Chongris v.

Board of Appeals, 811 F.2d 36, 37 (1st Cir. 1987). Consistent with

the case law, however, we eschew reliance on the pleader's

rhetorical flourishes, including unsupported conclusions and

assertions. See id.; see also Centro Medico del Turabo, Inc. v.

Feliciano de Melecio, 406 F.3d 1, 5-6 (1st Cir. 2005).

In March of 2003, plaintiff-appellant Amy Palmer obtained

a debt-consolidation loan, secured by a mortgage on her residence,

from defendant-appellee Champion Mortgage. The closing took place

on March 28, 2003. The plaintiff executed, then and there, a

promissory note, a mortgage, a TILA statement, and a settlement

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sheet. She left without receiving copies of any of these

documents.

Several days later, the plaintiff received by mail copies

of the closing documents. Included among these papers was a notice

of right to cancel (the Notice) — a notification required by the

TILA. See 15 U.S.C. § 1635(a). In relevant part, the Notice

informed the plaintiff that:

You have a legal right under federal law to
cancel this transaction, without cost, within
three (3) business days from whichever of the
following events occurs last:

(1) the date of the transaction, which is
MARCH 28, 2003; or (date)
(2) the date you received your Truth-in-
Lending disclosures; or
(3) the date you received this notice of your
right to cancel.

The Notice further provided: "If you cancel by mail or telegram,

you must send the notice no later than midnight of APRIL 01, 2003

(or midnight of the third business day following the latest of the

three (3) events listed above)."

Although the plaintiff cannot remember the specific date

on which she received the documents, she alleges — and for present

purposes we accept — that they arrived in early April of 2003, but

after April 1. At any rate, nothing happened for well over a year.

Then, on or about August 6, 2004, the plaintiff notified Champion

of her intent to rescind the transaction.

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 When Champion failed to respond to the plaintiff's

importunings, she sued in federal district court. Her complaint

alleged that the inclusion of the April 1 deadline was confusing

and that, therefore, she retained the right to rescind the

transaction under 15 U.S.C. § 1635, which provides for an extended

three-year rescission period when a creditor fails to make one or

more material disclosures required under the TILA.

After some procedural skirmishing, not relevant here, the

plaintiff served an amended complaint. In tandem with the section

1635 claim, the amended complaint asserted that a right to rescind

the transaction also existed under the TILA's state-law

counterpart, Mass. Gen. Laws ch. 140D, § 32. Champion moved to

dismiss on the ground that the amended complaint failed to state a

cognizable claim. See Fed. R. Civ. P. 12 (b)(6). The lower court

allowed this motion, concluding that "[t]he Notice the plaintiff

received clearly and conspicuously advised her of her right to

cancel the transaction within three business days from the last to

occur of three events, one of which was the date she received the

notice of right to cancel." Thus, the court reasoned, the

plaintiff had received the full complement of disclosures

stipulated by the TILA and her belated attempt to rescind the

transaction was time-barred.2

2
Relatedly, the district court ruled that no claim inhered
under the Massachusetts statute invoked by the plaintiff, because
that statute was preempted by the TILA. Since the plaintiff does

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 Undaunted, the plaintiff moved for reconsideration, see

Fed. R. Civ. P. 59(e), or in the alternative, for leave to file a

second amended complaint, see Fed. R. Civ. P. 15(a). The district

court denied both entreaties. In refusing leave to amend, the

court emphasized that the complaint had already been amended once

and that the motion to dismiss had been pending for several months

before the court disposed of it. This timely appeal followed.

II. ANALYSIS

On appeal, the plaintiff contests the district court's

allowance of Champion's motion to dismiss, as well as the denial of

her requests for reconsideration and for leave to file a second

amended complaint.3 We discuss these claims of error sequentially.

A. The Motion to Dismiss.

We review dismissals for failure to state a claim de

novo, accepting all well-pleaded facts as true and giving the party

who has pleaded the contested claim the benefit of all reasonable

inferences. See Rogan v. Menino, 175 F.3d 75, 77 (1st Cir. 1999).

Thus, our primary task here is to determine whether, viewing the

not challenge this ruling on appeal, we make no further mention of
the state-law claim.
3
In her brief, the plaintiff directs our attention to the
incorrect termination of the case one day prior to the actual entry
of judgment, in violation of Fed. R. Civ. P. 58(a)(1). We
acknowledge that this technical bevue occurred, but in the
circumstances of this case any error was patently harmless. The
plaintiff is not, therefore, entitled to relief on this account.
See Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23,
30 (1st Cir. 2004).

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facts in the light most flattering to the plaintiff, she

articulated an actionable TILA claim.

We begin this inquiry with a synopsis of the relevant

portions of the federal statute. Congress enacted the TILA in 1968

"to assure a meaningful disclosure of credit terms" and "to protect

the consumer against inaccurate and unfair credit . . . practices."

15 U.S.C. § 1601(a). To this end, the TILA requires creditors to

disclose clearly and accurately all the material terms of a credit

transaction. See Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412

(1998).

With respect to non-purchase-money mortgages on

residential dwellings — the type of credit transaction at issue

here — the TILA confers upon the debtor a right to rescind within

three days of the transaction's consummation or three days from

delivery of the material disclosures, whichever occurs later.4 See

15 U.S.C. § 1635(a). The creditor also must clearly disclose this

rescission right to the debtor. See 12 C.F.R. § 226.23(b)(1).

Should a creditor fail to deliver any of the required material

disclosures (including notice of the right to rescind), the debtor

4
It is unsettled whether Massachusetts citizens retain a
rescission right under the TILA, given the statutory exemption
granted to Massachusetts and the concomitant Federal Reserve
regulations. See 15 U.S.C. § 1633; Belini v. Wash. Mut. Bank, 412
F.3d 17, 28 (1st Cir. 2005). Inasmuch as the plaintiff has failed
to state a valid claim for rescission under the TILA, see text
infra, it is unnecessary for us to resolve this thorny issue.

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may rescind at any time up to three years following the

consummation of the transaction. See id. § 226.23(a)(3). If a

creditor does not respond to a rescission request within twenty

days, the debtor may file suit in federal court to enforce the

rescission right. See Belini v. Wash. Mut. Bank, 412 F.3d 17, 20

(1st Cir. 2005); see also 15 U.S.C. § 1635(b).

We move now from the general to the particular. The

plaintiff in this case concedes that she received copies of all the

material disclosures mandated under the TILA but alleges that the

Notice was "defective" and "confusing." She points specifically to

the inclusion of a date-certain deadline for rescission (April 1,

2003) and complains that the designated date already had passed by

the time she received the Notice. Relying on our admonition that

"a misleading disclosure is as much a violation of TILA as a

failure to disclose at all," Barnes v. Fleet Nat'l Bank, 370 F.3d

164, 174 (1st Cir. 2004) (quoting Smith v. Chapman, 614 F.2d 968,

977 (5th Cir. 1980)), she asseverates that the confusing nature of

the Notice triggered the extended three-year rescission period.

Champion readily concedes, as it must, that the Notice

included an April 1 deadline for rescission. But it hastens to add

that the Notice twice indicated in plain language that, in the

alternative, the debtor had three business days after receipt of

the Notice within which to rescind. To strengthen its argument,

Champion observes that the Notice is identical in all material

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respects to the model form authored by the Federal Reserve Board,

and that other courts have found such adherence to be an

impenetrable shield against TILA-based attacks. See, e.g., Gibson

v. Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283, 286 (7th Cir.

1997); Murphy v. Empire of Am., 583 F. Supp. 1563, 1566 (W.D.N.Y.

1984); see also In re Porter, 961 F.2d 1066, 1076 (3d Cir. 1992)

(explaining that "use of an appropriate model form necessarily

complies with the [TILA]" (emphasis omitted)). Based on the

Notice's plain language and its adherence to the model form,

Champion urges us to disregard the plaintiff's subjective state of

mind and join the district court in holding the Notice adequate as

a matter of law.

We find Champion's argument compelling. Although we are

required to view the well-pleaded facts in the light most favorable

to the plaintiff, we need not "swallow [her] invective hook, line,

and sinker." Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir. 1996).

As part and parcel of this approach, we must refrain from crediting

her "bald assertions, unsupportable conclusions, and 'opprobrious

epithets.'" Chongris, 811 F.2d at 37 (quoting Snowden v. Hughes,

321 U.S. 1, 10 (1944)); accord Aulson, 83 F.3d at 3. This

methodology is particularly appropriate in the TILA context where

we, like other courts, have focused the lens of our inquiry on the

text of the disclosures themselves rather than on plaintiffs'

descriptions of their subjective understandings. See, e.g.,

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Barnes, 370 F.3d at 172-74 (examining the language of disputed

disclosures in the face of plaintiff's claim that they were

misleading); Zamarippa v. Cy's Car Sales, Inc., 674 F.2d 877, 879

(11th Cir. 1982) (noting that "it is unnecessary to inquire as to

the subjective deception or misunderstanding of particular

consumers" in determining whether a disclosure violates the TILA);

Bustamante v. First Fed. Sav. & Loan Ass'n, 619 F.2d 360, 364 (5th

Cir. 1980) (applying objective standard in evaluating TILA claim).

This emphasis on objective reasonableness, rather than

subjective understanding, is also appropriate in light of the sound

tenet that courts must evaluate the adequacy of TILA disclosures

from the vantage point of a hypothetical average consumer — a

consumer who is neither particularly sophisticated nor particularly

dense. See Smith v. Cash Store Mgmt., Inc., 195 F.3d 325, 327-28

(7th Cir. 1999) (explaining that TILA disclosures should be viewed

from the perspective of an ordinary consumer, not a federal judge);

see also Edmondson v. Allen-Russell Ford, Inc., 577 F.2d 291, 296

(5th Cir. 1978) ("We must assess the adequacy of disclosure . . .

by the audience for which disclosure was intended."). Thus, we

turn to the question of whether the average consumer, looking at

the Notice objectively, would find it confusing. We conclude that

she would not.

The Notice itself is annexed to the amended complaint

and, therefore, is deemed fair game on a motion to dismiss. See

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Centro Medico del Turabo, 406 F.3d at 5; Rodi v. S. New Engl. Sch.

of Law, 389 F.3d 5, 12 (1st Cir. 2004); In re Colonial Mortg.

Bankers Corp., 324 F.3d 12, 15 (1st Cir. 2003). It clearly and

conspicuously indicates that the debtor can rescind "within three

(3) business days from whichever of [three enumerated] events

occurs last." Although the Notice does state in part that

rescission has to occur "no later than midnight of APRIL 01, 2003,"

the plaintiff wrests this statement from its contextual moorings.

The statement is followed immediately by a parenthetical reading

"(or midnight of the third business day following the latest of the

three (3) events listed above)." We fail to see how any reasonably

alert person — that is, the average consumer — reading the Notice

would be drawn to the April 1 deadline without also grasping the

twice-repeated alternative deadlines.

This facial transparency is bolstered by the fact that

the language of the Notice closely tracks the language of the model

form. This is, at the very least, prima facie evidence of the

adequacy of the disclosure.5 See 12 C.F.R. § 226 Supp. I, Intro.

para. 1 ("Good faith compliance with [the Federal Reserve Board's]

5
There is some statutory support for the proposition that
adherence to a model form bars a TILA non-disclosure claim
entirely. See 15 U.S.C. §§ 1604(b), 1635(h), 1640(f). There is
also some case law to that effect. See, e.g., Bob Watson
Chevrolet-Geo, 112 F.3d at 286; Murphy, 583 F. Supp. at 1566. The
case at hand does not require that we go that far, and so we leave
for another day the question of whether such adherence invariably
brings a creditor within a safe harbor.

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commentary affords protection from liability under [the TILA].").

Accordingly, we agree with the district court that the Notice was

crystal clear and, thus, did not trigger an extended rescission

right under the TILA.

If more were needed — and we doubt that it is — we note

that accepting the plaintiff's argument might contravene the goals

of the TILA. Holding all parties to the plain language of

disclosures aids the due enforcement of the statutory requirements

by ensuring that any consumer subject to a misleading disclosure

may bring suit against the creditor. See Chapman, 614 F.2d at 971

(observing that "consumers who are aware of the true terms of a

contract are more able to see that these terms are not clearly and

conspicuously disclosed"). The flip side of the coin, of course,

is that any creditor who uses plain and legally sufficient language

ought to be held harmless. In other words, courts ought not to

invent ambiguities that do not in fact exist.

The plaintiff attempts to circumvent this relatively

straightforward analysis by citing a raft of cases in which notices

of rescission rights were found wanting. In each of those cases,

however, the notice was either given prior to the closing and

phrased so that the rescission deadline expired before the loan

closed, see, e.g., Jackson v. Grant, 890 F.2d 118, 122 (9th Cir.

1989); Basnight v. Diamond Developers, Inc., 146 F. Supp. 2d 754,

758 (M.D.N.C. 2001); In re Vickers, 275 B.R. 401, 404-05 (Bankr.

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M.D. Fla. 2001), or stated only a single fixed rescission deadline

that had elapsed prior to delivery of the notice, see, e.g., In re

Bell, 309 B.R. 139, 157 (Bankr. E.D. Pa. 2004), or stated no

rescission deadline whatsoever, see, e.g., Semar v. Platte Valley

Fed. Sav. & Loan Ass'n., 791 F.2d 699, 702 (9th Cir. 1986);

Reynolds v. D & N Bank, 792 F. Supp. 1035, 1038 (E.D. Mich. 1992);

Johnson v. Thomas, 794 N.E.2d 919, 931 (Ill. App. Ct. 2003). The

Notice here does not suffer from any of these infirmities.

That ends this aspect of the matter. Because we find the

Notice clear and adequate, and because the plaintiff otherwise

concedes receiving all the required disclosures, her right of

rescission under the TILA had long expired by the time she

commenced this action. Accordingly, the district court did not err

in dismissing the action on the ground that the plaintiff's TILA

claim was time-barred.

B. The Motion for Reconsideration.

We need not linger long over the plaintiff's objection to

the denial of her motion for reconsideration. The granting of a

motion for reconsideration is "an extraordinary remedy which should

be used sparingly." 11 Charles Alan Wright et al., Federal

Practice and Procedure § 2810.1 (2d ed. 1995). Unless the court

has misapprehended some material fact or point of law, such a

motion is normally not a promising vehicle for revisiting a party's

case and rearguing theories previously advanced and rejected. See

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In re Sun Pipe Line Co., 831 F.2d 22, 24-25 (1st Cir. 1987). To

obtain relief, the movant must demonstrate either that newly

discovered evidence (not previously available) has come to light or

that the rendering court committed a manifest error of law. See

Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 7 n.2 (1st Cir.

2005). The standard of appellate review is correspondingly

deferential: we will not overturn the district court's denial of a

motion for reconsideration absent an abuse of discretion. See

Iverson v. City of Boston, 452 F.3d 94, 104 (1st Cir. 2006); In re

Sun Pipe Line, 831 F.2d at 25.

Here, the plaintiff's motion for reconsideration did no

more than reiterate the arguments she earlier had advanced,

claiming somewhat counterintuitively that the district court had

"overlooked" her allegation that the Notice was confusing. Since

the court had not overlooked that allegation but, rather, had found

it wanting, the motion was denied. We discern no hint of error.

C. The Request for Leave to Amend.

As a last-ditch measure, the plaintiff contests the

district court's refusal to allow her to file a second amended

complaint. We review this ruling for abuse of discretion. James

v. Watt, 716 F.2d 71, 77-78 (1st Cir. 1983). In conducting that

review, we "will defer to the district court's hands-on judgment so

long as the record evinces an adequate reason for the denial."

Aponte-Torres v. Univ. of P.R., 445 F.3d 50, 58 (1st Cir. 2006).

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 In this instance, there is a temporal wrinkle: the

plaintiff requested further leave to amend only after the district

court dismissed her first amended complaint. If made subsequent to

the entry of judgment, such requests, whatever their merit, cannot

be allowed unless and until the judgment is vacated under, say,

Fed. R. Civ. P. 60. See 6 Federal Practice and Procedure, supra,

§ 1489 (2d ed. 1990). Here, no such vacation occurred.

We need not probe this point too deeply. The record

below is tenebrous as to timing, see supra note 2, and it is

arguable that the plaintiff's request to amend antedated the formal

entry of judgment. But even if we assume for argument's sake that

the vacation-of-judgment barrier does not pertain, that assumption

would not salvage the plaintiff's cause. In that event, the

district court would have had to evaluate the plaintiff's request

under the liberal standard of Fed. R. Civ. P. 15(a). Even so, we

nevertheless would uphold the district court's rejection of the

request to amend.

Our analysis is as follows. Amendments may be permitted

pre-judgment, even after a dismissal for failure to state a claim,

and leave to amend is "freely given when justice so requires."

Fed. R. Civ. P. 15(a). That is not to say, however, that a

district court lacks authority to deny a request to amend. In

appropriate circumstances — undue delay, bad faith, futility, and

the absence of due diligence on the movant's part are paradigmatic

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examples — leave to amend may be denied. See Foman v. Davis, 371

U.S. 178, 182 (1962). In short, a request to amend — especially a

belated request — requires the court to examine the totality of the

circumstances and to exercise its informed discretion in

constructing a balance of pertinent considerations. See Quaker

State Oil Ref. Corp. v. Garrity Oil Co., 884 F.2d 1510, 1517 (1st

Cir. 1989).

On this occasion, the plaintiff made her request for

leave to amend more than fifteen months after commencing her action

and more than nine months after initially amending her complaint.

Her proposed second amendment sought to assert a new theory based

on the timing of Champion's disbursement of the loan proceeds.

This is not an instance in which newly discovered evidence, not

previously available, suddenly came to light; the plaintiff was

aware of the factual predicate on which her new theory rested

before she brought suit. Considering the totality of the

circumstances, we conclude that the district court had sufficient

reason to reject the plaintiff's belated attempt to amend her

complaint yet again. Consequently, we find no abuse of the

district court's wide discretion.

III. CONCLUSION

We need go no further. For the reasons elucidated above,

we hold that, as a matter of law, the notice of right to cancel

provided by Champion complied with the applicable TILA

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requirements. The plaintiff's statutory right to rescind therefore

expired three days after she received the Notice, and the district

court did not err in dismissing her TILA claim as time-barred. By

like token, the district court did not abuse its discretion either

in denying the plaintiff's motion for reconsideration or in

refusing to grant her leave to file a second amended complaint.

Affirmed.

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