United States Court of Appeals,
Eleventh Circuit.
No. 96-6159
Non-Argument Calendar.
Suzan L. SMITH, on behalf of herself and all others similarly
situated, Plaintiff-Appellant,
v.
HIGHLAND BANK, Molton Allen & Williams, Defendants-Appellees.
March 27, 1997.
Appeal from the United States District Court for the Northern
District of Alabama. (No. CV95-B-480-S), Sharon Lovelace
Blackburn, District Judge.
Before ANDERSON and BLACK, Circuit Judges, and KRAVITCH, Senior
Circuit Judge.
PER CURIAM:
Suzan Smith and members of the plaintiff class allege that
Highland Bank ("Highland"), as creditor, and Molton Allen &
Williams ("MAW"), as Highland's assignee, violated the Truth In
Lending Act ("TILA") in handling their mortgages. The district
court granted summary judgment to Highland and MAW. We affirm.
Under TILA, a debtor may rescind a mortgage "until midnight
of the third business day following the consummation of the
transaction or the delivery of the information and rescission forms
..., whichever is later...." 15 U.S.C. § 1635(a). Further, a
debtor must receive notice of her right to rescind "on a separate
document that identifies the transaction and ... clearly and
conspicuously disclose[s]" information describing the transaction
and the debtor's rights. 12 C.F.R. § 226.23(b)(1). If a creditor
neglects to comply with these requirements, it may face civil
liability under TILA, 15 U.S.C. § 1640(a), and the debtor's right
to rescind is extended for up to three years after the transaction
is complete. 12 C.F.R. § 226.23(a)(3). Smith claims that she and
the plaintiff class received statutorily deficient notice and are
therefore entitled to damages and the right to rescind for a
three-year period. She alleges that Highland violated TILA by
including, with her mortgage papers, a form entitled "Notice of
Right to Cancel," a copy of which is included as an appendix to
this opinion. The crux of Smith's objection is that the form of
the Notice deprived her of a meaningful opportunity to rescind.
The Notice not only contains an "Acknowledgment of Receipt"
that the debtor must sign to confirm that Highland complied with
TILA, but it also includes a "Certificate of Confirmation" that the
debtor is to sign after the expiration of the three-day rescission
period to indicate that she has not exercised her rescission
rights. Below the Certificate of Confirmation appears the
following: "NOTE: All parties who execute Acknowledgment of
Receipt must execute Certificate of Confirmation." Smith argues
that this statement, taken together with the placement of the
Certificate of Confirmation on the same page as the Acknowledgment
of Receipt, would lead the average consumer to believe that she had
to sign the Certificate of Confirmation when she received the
Notice. According to Smith, the form forces the debtor to waive
her rescission rights upon receipt of the Notice.
In Rodash v. AIB Mortgage Co., 16 F.3d 1142 (11th Cir.1994),
a creditor provided notice of the right to rescind, but required
the debtor to sign beneath a single paragraph that both
acknowledged the receipt of the notice and simultaneously waived
the right to rescind. We held that the notice violated TILA
because it forced an immediate waiver of rights, when TILA's
implementing regulations only permit the consumer to waive the
three-day rescission period "if the consumer determines that the
extension of credit is needed to meet a bona fide personal
financial emergency," in the form of a written statement describing
the emergency. Id. at 1145-46; 12 C.F.R. § 226.23(e)(1). Based
on the totality of the circumstances, we found that the lender
violated TILA's requirement of "clear and conspicuous" disclosure
of the right to rescind because: (1) the proffer of the notice
together with the waiver implied that waiver was possible within
the three-day period, although it is not; (2) forcing the borrower
to sign a waiver on the date of the transaction would make her
believe that the waiver was effective on that date; (3) including
the waiver in the same paragraph with the receipt of notice would
deceive the borrower as to the nature of what she was signing; and
(4) proffering the waiver along with the mortgage papers would lead
a consumer to believe that she had to sign the waiver in order to
consummate the mortgage transaction. 16 F.3d at 1146. Despite
these findings, however, we emphasized that judging a lender's
compliance with the notice provision is not mechanical; rather, a
court "must scrutinize the circumstances of the transaction." Id.
Although Smith urges us to follow Rodash, the instant case is
distinguishable in several material respects. First, even though
the Certificate of Confirmation appears on the same page as the
Acknowledgment of Receipt, it is in a distinct paragraph and,
importantly, must be separately signed.1 Second, although the form
was proffered on the date of the mortgage transaction, it does not
mislead the consumer as to whether she may rescind during the
three-day period following the transaction. It indicates that the
consumer is not to sign the Certificate of Confirmation until more
than three business days have elapsed, and the Certificate of
Confirmation subsection of the form is dated several days after the
Acknowledgment of Receipt. Third, Highland's form provided Smith
with much more detailed information about how to cancel the
mortgage transaction than the form at issue in Rodash, thereby
counteracting any confusion that the form otherwise might cause.2
Finally, although Smith creatively illustrates how one could be
misled by the "Note" below the Certificate of Confirmation, it is
clear that the intent of the "Note" is to ensure that all of the
signatories to the Acknowledgment of Receipt concur in the decision
not to rescind.3
Even apart from these differences, we believe that extending
the Rodash rationale to the instant case is unwise, as both
Congress and a recent panel of this court have indicated. Just
1
We do not read in Rodash, as Smith does, a per se ban on
forms which contain both an acknowledgment of receipt and a
waiver of rescission rights.
2
In the district court's words, because the notice, in
boldfaced type, told Smith of her right to cancel, Smith's right
was "both conspicuous and apparent on the face of the document."
Smith v. Highland Bank, 915 F.Supp. 281, 292 (N.D.Ala.1996).
3
In fact, the "Note" appears to be Highland's attempt to
comply with TILA's regulations, which require: "[w]hen more than
one consumer in a transaction has the right to rescind, the
exercise of the right by one consumer shall be effective as to
all consumers." 12 C.F.R. § 226.23(a)(4).
over a year after our decision in Rodash, Congress enacted
amendments to TILA, declaring a temporary moratorium on courts'
certification of class action suits based on certain kinds of
alleged deficiencies in the form of notice. 15 U.S.C. § 1640(i).
Neither party alleges that this provision applies to the case at
bar, but we agree with Highland and MAW that Congress's apparent
disapproval of TILA claims arising out of notice forms counsels
restraint here.4 Additionally, we note that, sinceRodash, we have
been unwilling to impose liability on lenders for unartfully-drawn
forms and have refused to extend Rodash beyond its facts. In Veale
v. Citibank, F.S.B., 85 F.3d 577, 580 (11th Cir.1996), petition for
cert. filed, No. 96-7348 (U.S. Jan.6, 1997), we characterized
Rodash as standing for the proposition that "TILA does not require
perfect notice; rather it requires a clear and conspicuous notice
of rescission rights."
Therefore, because we are convinced that Rodash represented
egregious facts distinguishable from this case and because we
conclude that a further extension of Rodash is unwarranted, we
4
Congress enacted the moratorium in response to a portion of
the Rodash decision not at issue in this case—how certain fees
are classified under TILA. Congress was concerned that the Rodash
court allowed plaintiffs to rescind a mortgage as a result of
minor TILA violations. Nevertheless, the debates surrounding the
moratorium's adoption indicate that Congress would not have us
adopt a hypertechnical reading of any part of TILA. See, e.g.,
141 Cong. Rec. H9513, H9514 (daily ed. Sept. 27, 1995)
(statement of Rep. Leach) ("The problem is that an honest mistake
of no consequence to any of the parties involved has become the
subject of shark instincts of the plaintiff's bar."); 141 Cong.
Rec. S5614, S5614 (daily ed. Apr. 24, 1995) (statement of Sen.
Mack) ("These laws encourage cookie-cutter lending in order to
avoid mistakes. Consumers are then hurt by higher rates and less
lending.")
AFFIRM the district court's order granting summary judgment.5
CA (97) 1193,SIZE-40 PICAS,TYPE-PDI
5
Because we find that Highland had no TILA liability, we do
not need to discuss MAW's liability as assignee.