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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