United States Court of Appeals,
Eleventh Circuit.
No. 95-4831.
CONSOLIDATED BANK, N.A., HIALEAH, FLORIDA n.k.a. Nationsbank of Florida, N.A.,
Petitioner,
v.
UNITED STATES DEPARTMENT of the TREASURY, OFFICE of the COMPTROLLER of
the CURRENCY, Respondent.
Aug. 7, 1997.
On Petition for Review of a Decision and Order of the Comptroller of the Currency.
Before BARKETT, Circuit Judge, DYER, Senior Circuit Judge, and HARRIS*, Senior District
Judge.
HARRIS, Senior District Judge:
The petitioner, Consolidated Bank, N.A., Hialeah, Florida, n/k/a NationsBank of Florida
("Consolidated"), appeals a decision of the Comptroller of the Currency ruling that, for the purposes
of calculating an adjustment under the Truth In Lending Act, 15 U.S.C. § 1607(e)(3)(i), the phrase
"immediately preceding examination" signifies the immediately preceding examination in which
compliance with the Truth In Lending Act ("TILA") was reviewed, rather than the temporally most
recent examination of any type. We reject the Comptroller's interpretation of the statutory phrase,
and reverse the Comptroller's decision.
I. Background
On March 9, 1994, the Office of the Comptroller of the Currency ("OCC") filed a Notice of
Charges against Consolidated under the authority of TILA, as amended by the Truth in Lending
Simplification and Reform Act of 1980, 15 U.S.C. § 1607(e)(4)(A), and pursuant to the procedures
provided by the Federal Deposit Insurance Act, as amended, 12 U.S.C. § 1818 (1987). Consolidated
was charged with violations of TILA and its implementing regulation, Regulation Z, 12 C.F.R. §
226. The charged violations included failure to include mortgage insurance premiums as finance
*
Honorable Stanley S. Harris, Senior U.S. District Judge for the District of Columbia, sitting
by designation.
charges on residential mortgage loans, 12 C.F.R. § 226.18(d), and to disclose an accurate annual
percentage rate on residential mortgage loans, 12 C.F.R. § 226.22(a). OCC requested that the
administrative law judge ("ALJ") issue a final cease and desist order against Consolidated and an
order requiring Consolidated to pay an adjustment totaling approximately $456,000.
Consolidated admitted the violations charged in the Notice, but challenged the OCC's
adjustment calculation. Consolidated paid the undisputed portion of the adjustment, but refused to
pay the disputed amount which was stipulated to be $143,517.21. Both parties filed motions for
summary disposition on the sole remaining issue before the ALJ, i.e., the legal interpretation of the
statutory phrase "immediately preceding examination," 15 U.S.C. 1607(e)(3)(i), for the purpose of
the adjustment calculation. Consolidated argued that the phrase refers to the immediately preceding
examination, of any type, conducted of Consolidated by the OCC. The OCC contended that the
phrase refers to the immediately preceding TILA compliance examination.
Three OCC examinations of Consolidated are of potential significance to the adjustment
calculation. In 1991, the OCC conducted an examination of Consolidated for compliance with TILA
and Regulation Z. No adjustment was ordered by the OCC as a result of that examination. In 1992,
an examination was conducted addressing safety and soundness issues. No examination relating to
TILA, Regulation Z, or consumer compliance was conducted at that time. In 1993, the OCC again
examined the bank for TILA and Regulation Z compliance and reported that Consolidated had made
inaccurate disclosures in violation of 12 C.F.R. §§ 226.18(d) and 226.22(a). As a result of that
examination, the OCC sought an adjustment pursuant to 15 U.S.C. § 1607(e)(3)(i) and filed the
March 9, 1994, Notice of Charges against Consolidated. Consolidated claimed in its motion for
summary disposition that the relevant time period for the adjustment calculation was from the 1992
safety and soundness examination to the 1993 TILA examination; the OCC argued that the
appropriate period was from the 1991 TILA examination to the 1993 TILA examination.
The ALJ concluded that Consolidated's motion should be granted and that the OCC's should
be denied. On review, the Comptroller of the Currency rejected the ALJ's Recommended Decision
and held that the phrase "immediately preceding examination" refers to the immediately preceding
TILA compliance examination, rather than the last examination of any kind conducted by the OCC.
The Comptroller ordered Consolidated to pay the disputed amount of the adjustment to the affected
customers.
II. Discussion
The sole issue on review is the proper interpretation of the phrase "immediately preceding
examination" found in 15 U.S.C. § 1607(e)(3)(i). 15 U.S.C. § 1607(e) provides the guidelines by
which the adjustment of finance charges resulting from disclosure errors by creditors is determined.
Section 1607(e)(3)(i) states in part that no adjustment shall be required
with respect to creditors that are subject to examination by the agencies referred to
in paragraphs (1) through (3) of subsection (a) of this section, except in connection with
violations arising from practices identified in the current examination and only in connection
with transactions that are consummated after the date of the immediately preceding
examination....
The parties dispute the interpretation of "immediately preceding examination." Consolidated
contends that the plain language of the phrase means the most recent examination—of any
type—prior to the current examination, and that this plain language meaning controls. Respondent
asserts that the phrase is ambiguous and that we must, therefore, defer to the reasonable
interpretation of the phrase by the enforcing agency.1 The OCC interprets the phrase to mean only
the immediately preceding TILA compliance examination.
Our initial step must be to determine whether Congress has spoken directly to the precise
question at issue. NationsBank of N.C., N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251, 257,
115 S.Ct. 810, 813, 130 L.Ed.2d 740(1995); Chevron U.S.A. Inc. v. National Resources Defense
Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). The precise
question is how the appropriate enforcement agency calculates and imposes an adjustment for a
creditor's error in disclosing a financial charge or annual percentage rate. Section 1607(e)(which
is titled: Adjustment of finance charges; procedures applicable; coverage criteria, etc.) carefully
1
The Board of Governors of the Federal Reserve System ("Board") filed an amicus brief in
support of the OCC. Since the Board's brief largely tracks that of respondent, we intend to
address the Board's arguments, as well as those of respondent, when we refer to the OCC's
arguments throughout this opinion.
details the procedures by which such adjustments should be calculated, the circumstances under
which they should be imposed, and the scope of coverage. Section 1607(e)(3)(i) specifically limits
a creditor's potential liability by restricting the time period on which an adjustment may be based
to the period between the current examination in which errors are discovered and the "immediately
preceding examination." We thus find that section 1607(e)(3)(i) does address the precise issue at
hand by carefully explaining how an adjustment is to be calculated.
"[T]he starting point for interpreting a statute is the language of the statute itself."
Consumer Prod. Safety Comm'n v. GTE Sylvania, 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64
L.Ed.2d 766 (1980). As a basic rule of statutory interpretation, we read the statute using the normal
meanings of its words. Gonzalez v. McNary, 980 F.2d 1418, 1420 (11th Cir.1993); Davis Bros.,
Inc. v. Donovan, 700 F.2d 1368, 1370 (11th Cir.1983). " "Courts must assume that Congress
intended the ordinary meaning of the words it used, and absent a clearly expressed legislative intent
to the contrary, that language is generally dispositive.' " Gonzalez, 980 F.2d at 1420 (internal
citation omitted). We are required to look beyond the plain language of the statute only when the
language of the statute is unclear or ambiguous, when Congress clearly has expressed an intent
contrary to that suggested by the plain language, or when absurd results would ensue from adopting
the plain language interpretation. See Alacare Home Health Servs., Inc. v. Sullivan, 891 F.2d 850,
856 (11th Cir.1990); Hudgins v. City of Ashburn, 890 F.2d 396, 405 (11th Cir.1989); Blue Cross
and Blue Shield of Ala. v. Weitz, 913 F.2d 1544, 1548 (11th Cir.1990).
We agree with the Eighth Circuit's conclusion in an analogous case that the phrase
"immediately preceding examination" is "unambiguous and means exactly what it says." First Nat'l
Bank of Council Bluffs, Iowa v. Office of the Comptroller of the Currency, 956 F.2d 1456, 1463 (8th
Cir.1992). In the absence of a statutory definition of a term, we look to the common usage of words
for their meaning. "Examination" is defined as "[t]he act of examining or the state of being
examined" or "[f]ormal interrogation." Am. Heritage Dict. 472 (2d college ed.1982). To examine
means "[t]o inspect in detail," "[t]o observe or analyze carefully," "[t]o test the state or condition of,"
or "to interrogate or question formally." Id. Thus, the common definition of this term includes no
generically limiting language. Unless modified, the term examination refers to any sort of detailed
or careful inspection, observation, interrogation, or questioning.
As Consolidated notes, the only language used to modify the term examination in the
disputed phrase is temporal, not categorical. "Preceding," which directly modifies examination,
means "com[ing] before in time." Id. at 974. "Immediately," which directly modifies "preceding,"
means "[w]ithout intermediary; directly" or "[w]ithout delay". Id. at 643. Thus, according to
common usage, the phrase at issue means the examination—of any sort—which occurred directly
before the current examination. Respondent's interpretation would require us in effect to insert the
words "TILA compliance" between Congress' chosen modifiers "immediately preceding" and the
general term "examination" and to ignore the manifestly temporal nature of the existing statutory
language.
There is absolutely no indication in the text that Congress intended any but the common
meanings of these terms to apply. Had Congress wished unique or specialized meanings to attach
to any of these terms, it readily could have taken the obvious and usual step either of including a
specialized meaning in the definitions section of the statute or by using clear modifying language
in the text of the statute.
The OCC suggests that its preferred Congressional intent may be inferred from the context
of the phrase. It notes that "identical words used in different parts of the same act are intended to
have the same meaning." Department of Revenue of Or. v. ACF Indus., Inc., 510 U.S. 332, 333, 114
S.Ct. 843, 845, 127 L.Ed.2d 165 (1994). The OCC's argument that identical terms must be
interpreted the same way is unpersuasive because the term at issue—"examination"—is not used
identically throughout. For instance, the OCC supports its contextual argument by contending that
a TILA examination clearly is being referred to in the following instances:
with respect to creditors that are subject to examination by the agencies referred to
in paragraphs (1) through (3) of subsection (a) of this section, except in connection with
violations arising from practices identified in the current examination and only in connection
with transactions that are consummated after the date of the immediately preceding
examination, except that where practices giving rise to violations identified in earlier
examinations have not been corrected, adjustments for those violations shall be required in
connection with transactions consummated after the date of the examination in which such
practices were first identified. [§ 1607(e)(3)(i)(emphasis added).]
with respect to creditors that are not subject to examination by such agencies, except
in connection with transactions that are that are consummated after May 10, 1978. [§
1607(e)(3)(ii)(emphasis added).]
A creditor shall not be subject to an order to make an adjustment, if within sixty days
after discovering a disclosure error, whether pursuant to a final written examination report
or through the creditor's own procedures, the creditor notifies the person concerned of the
error and adjusts the account so as to assure that such person will not be required to pay a
finance charge in excess of the finance charge actually disclosed or the dollar equivalent of
the annual percentage rate actually disclosed, whichever is lower. [§ 1607(e)(6)(emphasis
added).]
The OCC asserts that "examination" clearly refers to a TILA examination in every one of
the above instances except, possibly, in the disputed phrase. However, we disagree. The OCC
argues that the term examination must be read to mean TILA examination in the following two
phrases from section 1607(i) and (ii): "with respect to creditors that are subject to examination by
the agencies referred to in paragraphs (1) through (3) of subsection (a) of this section" and "with
respect to creditors that are not subject to examination by such agencies." As noted above, the term
examination itself is broad. The only modification of the term in the two cited phrases pertains to
who performs the examination, rather than to what kind of examination is performed. As is noted
by the OCC, many of these agencies perform more than one kind of examination, and the OCC
provides no valid reason to assume that those other types of examinations are excluded.
We agree that the other underlined uses of the term "examination" have the narrower
meaning asserted by the OCC. The immediately surrounding modifying language indicates the type
of examination to which Congress is referring. In these instances, Congress makes clear the
intended type of examination by directly linking the term examination to violations, practices, or
disclosure errors giving rise to an adjustment under the TILA. However, Congress did not modify
"immediately preceding examination" by any reference to violations found in that examination, or
more explicitly, to a particular type of examination. Instead, Congress used only temporal
modifying language. Congress' clear ability to modify the term "examination" to indicate the type
thereof in the other instances noted by the OCC, and the fact that it did not do so in the disputed
phrase, indicates that it had no intention to so limit the term. Brown v. Gardner, 513 U.S. 115, 120,
115 S.Ct. 552, 556, 130 L.Ed.2d 462 (1994) (" "[W]here Congress includes particular language in
one section of a statute but omits it in another section of the same Act, it is generally presumed that
Congress acts intentionally and purposely in the disparate inclusion or exclusion.' ")(quoting
Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 300, 78 L.Ed.2d 17 (1983)). Thus, the
statutory language provides no evidence of contrary Congressional intent which would cause us to
reject the ordinary meaning of the phrase "immediately preceding examination."
Having reached such a conclusion, we nonetheless consider the OCC's argument that the
statute's legislative history provides evidence of such a contrary legislative intent. Aaron v. SEC,
446 U.S. 680, 697, 100 S.Ct. 1945, 1956, 64 L.Ed.2d 611 (1980) ("[I]t would take a very clear
expression in the legislative history of congressional intent to the contrary to justify the conclusion
that the statute does not mean what it so plainly seems to say.").
In support of its proposition, the OCC relies on Senator Garn's introduction of section
1607(e)(3)(i) as an amendment to the TILA Simplification and Reform Act. That introduction
indicated that the provision was based upon a proposed interagency enforcement policy statement
on Regulation Z issued by the Federal Financial Institutions Examination Council (FFIEC). 125
Cong. Rec. S29913-14 (1979). The OCC concedes that the proposed policy statement referred to
by Senator Garn does not define the phrase "immediately preceding examination."2 It contends,
2
The Federal Reserve Board notes that the proposed policy statement was an attempt to deal
with TILA application and enforcement problems which had arisen from restitution guidelines
adopted by the agencies in 1979. The problematic guidelines required reimbursement for all
overcharges after October 1974, unlimited by any other time-based restriction or by linkage to an
institution's history of compliance with the TILA. The proposed policy statement suggested
limiting liability by requiring that the restitution period, in most instances, cover only the time
between the "current examination" in which violations were discovered and the "immediately
preceding examination." In support of this proposition, the FFIEC stated that "the agencies
believe[d] that the Guidelines would operate more effectively if their retroactive application
were
tailored more precisely to the past performance of the institutions." 44 Fed.Reg. 60403. The
Federal Reserve Board argues that this interest in linking performance to liability necessitates
our importation of the phrase "TILA compliance" into the phrase "immediately proceeding
examination." We disagree. In light of the comprehensive examination practices—in which
several different types of examination might be performed simultaneously—in place at the time
of this policy statement and of the enactment of the statutory language at issue, there is no reason
to assume that Congress considered a TILA examination to be a separate and independent entity
from other examinations conducted by the agencies. See infra pp. 13-14. The phrase
"immediately preceding examination" often would have included TILA review in effect because
of the existing examination procedures—thus furthering the asserted goal of tailoring liability to
performance. Furthermore, the statutory phrase "immediately preceding examination" leaves the
however, that the final policy statement's treatment of the phrase "current examination" is a
sufficient base from which to infer Congressional intent as to the meaning of the phrase
"immediately preceding examination."3 The OCC argues that because the final version of this policy
statement defines "current examination" as the " "most recent examination ... in which compliance
with Regulation Z [the implementing regulation for the TILA] was reviewed,' " 45 Fed.Reg. 48712
(1980), and because Senator Garn referred to the proposed policy statement in his introduction of
the statutory provision, Congress expressed an intent contrary to that indicated by the plain language
of the statute. The OCC urges that we reject the plain meaning of the statutory language in favor
of its interpretation. We agree with the Eighth Circuit that "this attenuated and conjectural analysis,
involving the different phrase "current examination,' is a far cry from the "clearly expressed
legislative intention', Consumer Prods. Safety Comm'n, 447 U.S. at 108, 100 S.Ct. at 2056, that is
required before a court may depart from the clear and unambiguous statutory language." Council
Bluffs, 956 F.2d at 1464.
In a final attempt to overcome the strong presumption that Congress meant what its plain
statutory language indicates, the OCC contends that the plain language interpretation of the
provision produces absurd consequences and could not, therefore, reflect the intent of Congress.
However, we find that any absurdity results not from the plain language interpretation of the statute,
but rather flows from the OCC's overly narrow perspective of the provision's application and the
changing background against which it has been applied. The OCC argues that reading "immediately
preceding examination" to refer to any type of examination performed by the OCC would disrupt
the enforcement of the statute and lead to its unequal application.
The OCC notes that in addition to TILA examinations, it performs safety and soundness,
decision of how to tailor liability within the discretion of the agencies which determine when and
if to conduct TILA examinations. The plain language of the phrase simply introduces a temporal
limitation on liability, the effect of which is entirely dependent upon the agencies' exercise of
their discretion to determine what type of examinations they wish to conduct and when.
3
We note that this final policy statement was not issued until after the enactment of the
statutory language at issue. We also note that the proposed policy statement states only that a "
"current examination' would be defined as an examination conducted subsequent to January 4,
1979, which was the effective date of the Guidelines." 44 Fed.Reg. 60404 (1979).
Community Reinvestment Act, trust, Bank Secrecy Act, fair lending, and electronic data processing
examinations. If "immediately preceding examination" is interpreted to mean any type of
examination, then instead of liability always being measured from TILA examination to TILA
examination, TILA liability could be measured, for example, from a safety and soundness
examination to a TILA examination. The OCC contends that such a result is absurd because it
would arbitrarily cut off TILA liability and permit large banks which undergo frequent non-TILA
examinations to escape potentially significant TILA liability.
The OCC focuses narrowly on its own examination procedures in advancing its argument
that Congress could not have intended the plain language meaning of the disputed phrase because
such a reading would cause absurd results. However, as the OCC acknowledges, multiple agencies
are responsible for enforcing the TILA and have their own independent and different examination
procedures. The OCC provides no reason to think that Congress specifically or primarily
contemplated or focused on the examination methods of the OCC in drafting the TILA.
Furthermore, the OCC's examination procedures were evolving as late as 1991, eleven years
after the phrase at issue was adopted. For instance, the OCC moved from a calender-driven
"snapshot" approach, in which comprehensive examinations were given, to more specialized
examinations six years after the disputed phrase was enacted. To argue that Congress could not have
intended the plain language of the statute to apply because such an interpretation would create
absurd results when applied against the background of administrative examination procedures that
were implemented largely after the enactment of the disputed language is unpersuasive. Even if
absurd results now were to result from the plain language interpretation of the provision as a
consequence of evolving administrative practices, it is Congress' role to enact legislation to
accommodate such changes, rather than our role to solve what the OCC sees as a statutory
deficiency through judicial review.
We also disagree with the OCC's argument that the passage of time creates an arbitrary cutoff
event for TILA liability which produces absurd results. First, Congress demonstrated its concern
that a creditor not face limitless liability in terms of time by setting a one-year filing deadline from
the date of the occurrence of the violation for civil suits. See 15 U.S.C. § 1640(e). Second, as noted
above, calender-driven, comprehensive examinations were being conducted by the OCC at the time
the language at issue was adopted. If Congress considered existing agency practices at all in
determining how to limit liability, time-based liability limits would have made sense considering
the contemporaneous OCC calender-based examination procedures. Finally, as the ALJ noted,
numerous agencies have enforcement powers under the TILA, and they follow different examination
procedures and schedules. Accordingly, interpreting the disputed phrase as respondent urges, it
would be possible that an institution which is examined by an agency that performs TILA
examinations every year would face a maximum of a year of TILA liability, while an organization
that is examined by an agency which performs TILA examinations every seven years would face
a potential seven years of liability. Such a result surely would be no more logical than that produced
by the plain language interpretation of the phrase at issue here. Accordingly, we cannot conclude
that the plain language interpretation of the disputed phrase produces absurd results.
III. Conclusion
Thus, we hold that the plain language interpretation of the phrase "immediately preceding
examination"—the most recent examination by the examining agency of any type prior to the current
examination—controls. Therefore, we VACATE the decision of the Comptroller and REMAND
the case to the agency for action consistent with this opinion.