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ROWLAND v. MAGNA MILLIKIN BANK OF DECATUR

December 4, 1992

JOHN M. ROWLAND AND CAROL S. ROWLAND, PLAINTIFFS,
v.
MAGNA MILLIKIN BANK OF DECATUR, N.A., DEFENDANT.



The opinion of the court was delivered by: McDADE, District Judge.

ORDER

Before the Court are cross motions for summary judgment filed by Plaintiffs, John and Carol Rowland; and Defendant, Magna Bank of Central Illinois. Plaintiffs' complaint is in two counts alleging violations of the Truth in Lending Act, 15 U.S.C. § 1601 et seq (TILA), on the part of Defendant. This Court has jurisdiction of this case pursuant to 15 U.S.C. § 1640(e) and 28 U.S.C. § 1331. In Count I, Plaintiffs seek rescission of a Retail Installment Contract entered into between Plaintiffs and Defendant. 15 U.S.C. § 1635. In Count II, Plaintiffs seek civil liability against Defendant for failing to comply with the provisions of the TILA. 15 U.S.C. § 1640. For the reasons stated herein, the Court GRANTS in part and DENIES in part Plaintiffs' Motion for Summary Judgment on Count I, and DENIES Plaintiffs' Motion for Summary Judgment on Count II. (# 12 & # 15). Additionally, the Court GRANTS in part and DENIES in part Defendant's Motion for Summary Judgment on Count I and GRANTS Defendant's Motion for Summary Judgment on Count II. (# 12 & # 15).

BACKGROUND

According to the deposition of John Funk, Defendant's Assistant Vice President in the Retail Lending Department, Nu View Window of Illinois, Inc. (Nu View) presents about 400 contracts a year to Defendant for the financing of window sales to Nu View customers. The total amount of home improvement business which Defendant and Nu View transact each year amounts to approximately $1,000,000.00 (one million dollars). (Funk deposition, pp. 8-9). What follows is a chronological series of events involving Plaintiffs, Defendant, and Nu View.

On December 5, 1988, Plaintiffs met with a sales representative from Nu View and agreed to buy six windows for $4,364.00 (four thousand three hundred sixty-four dollars). (J. Rowland Deposition pp. 9-10, Defendant's deposition exhibit # 1). On that date, Plaintiffs and the sales representative also partially completed a Retail Installment Contract (Plaintiffs' exhibit # 1),*fn1 and a Notice of Right of Rescission. (Plaintiffs' exhibit # 6), The Rescission Notice stated that the date of the transaction was December 5, 1988, and that Plaintiffs had until midnight of December 8, 1988, to exercise their rescission rights. Id. On December 13, 1988, Plaintiffs mortgaged their home to Defendant to secure payment of a note in the amount of $4,364.00 (four thousand three hundred sixty-four dollars). (Plaintiffs' exhibit # 7). On December 14, 1988, Defendant notified Plaintiffs that their credit was satisfactory for the amount of $4364.00 (four thousand three hundred 64 dollars) for 60 months. On January 18, 1989, Defendant dated its copy of the Retail Installment Contract. (Unmarked exhibit attached to Defendant's brief, Doc # 15; Funk Dep. p. 20, see Plaintiffs' exhibit # 5). On January 25, 1989, the Plaintiffs' mortgage of their home to Defendant was recorded. (Plaintiffs' exhibit # 7). On February 5, 1991, Plaintiffs, by letter to Defendant, rescinded the transaction and demanded release of their mortgage on their residence. (Plaintiffs' Exhibit # 2). On February 12, 1991, Defendant refused to terminate the transaction or release the mortgage. The instant action was filed on March 26, 1991, and on June 13, 1991, Defendant released the mortgage.

Of key significance to the present action are the differences between the Plaintiffs' copy of the Retail Installment Contract and the Defendant's copy of the Installment Contract. The following is a discussion of those differences.

Attached to Plaintiffs' Complaint as Plaintiffs' Exhibit # 1 is the original buyer's copy of the Retail Installment Contract. This copy was the one which Plaintiffs' kept in their possession. Most notably, Plaintiffs' copy of the contract is almost completely illegible. For instance, in the box marked "TRUTH IN LENDING DISCLOSURES," (federal box) it is impossible to accurately determine the finance charge and the total of payments, and the total sale price is too blurred to attempt to make an accurate reading. The contract states that payments are due "45 days after installation," but no specific date is given. Additionally, the contract is not dated and bears only the signature of John Rowland.

Another copy of the contract which was submitted by Defendant but not marked as an exhibit (this copy of the contract is the same as Plaintiffs' # 5) contains some significant differences from Plaintiffs' copy of the contract. This copy of the contract is completely legible. Furthermore, the contract bears not only the signature of John Rowland, but also the signatures of Carol Rowland and Tamela Huff, the Office Manager of Nu View, Inc. Additionally, the contract bears the date "1-18-89" in the upper right hand corner. Most importantly, the federal box clearly shows the finance charge, total of payments, and total sale price. Moreover, the federal box not only states that payments are due "45 days after installation," but also gives the date 3-4-89." Several other differences exist between the two contracts but need not be discussed here.

ANALYSIS

"A motion for summary judgment is not an appropriate occasion for weighing the evidence; rather, the inquiry is limited to determining if there is a genuine issue for trial." Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir. 1990); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). This Court must "view the record and all inferences drawn from it in the light most favorable to the party opposing the motion." Holland v. Jefferson National Life Ins. Co., 883 F.2d 1307, 1312 (7th Cir. 1989). When faced with a motion for summary judgment, the non-moving party may not rest on its pleadings. Rather, it is necessary for the non-moving party to demonstrate, through specific evidence, that there remains a genuine issue of triable fact. See, Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir. 1991).

Initially, the Court notes that TILA "must be liberally construed in favor of the consumer." Davis v. Werne, 673 F.2d 866, 869 (5th Cir. 1982). Furthermore, "TILA requirements are enforced by imposing a sort of strict liability in favor of consumers who have secured financing through transactions not in compliance with the terms of the Act. `It is strict liability in the sense that absolute compliance is required and even technical violations will form the basis for liability.'" Shepeard v. Quality Siding & Window Factory, Inc., 730 F. Supp. 1295, 1299 (D.Del. 1990) (citations omitted). In Smith v. No. 2. Galesburg Crown Finance Corp., 615 F.2d 407 (7th Cir. 1980), the Seventh Circuit provided the Court with clear guidelines for evaluating complaints of violations of the Act. Smith stated:

    It is not sufficient to attempt to comply with
  the spirit of TILA in order to avoid liability.
  Rather, strict compliance with the required
  disclosures and terminology is required. Many
  violations of TILA involve technical violations
  without egregious conduct of any kind on the part
  of the creditor. However, congress did not intend
  that the creditors should escape liability for
  merely technical violations. Thus, while it may be
  true, in some sense . . . that the terminological
  violations here are inconsequential, the fact
  remains that they are violations. Any misgivings
  which creditors may have about the technical
  nature of the requirements should be addressed to
  Congress or to the Federal Reserve Board, not to
  the courts. . . . We will therefore require strict
  adherence to the required terminology under the
  statute and regulations, and we will not
  countenance deviations from those requirements,
  however minor they may be in some abstract sense.
  Id. at 416-417. (citations omitted).

In the case at bar, Plaintiffs seek to rescind the transaction into which they entered. A right of rescission exists "[i]n a credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling. . . ." 12 C.F.R. § 226.23(a). A security interest was retained in the case at bar, giving Plaintiffs a right to rescind.

In its Motion for Summary Judgment, Defendant argues that Count I is time-barred because Plaintiffs failed to exercise their right to rescind within the applicable statute of limitations. ...


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