UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION
August 6, 1998
ELIZABETH GREISZ, Plaintiff,
HOUSEHOLD BANK (ILLINOIS) and GOLDEN SEAL HEATING & AIR CONDITIONING, INC., Defendants.
The opinion of the court was delivered by: NORGLE
OPINION and ORDER
CHARLES R. NORGLE, SR., District Judge:
Before the court is Defendant Household Bank's ("Household") Motion for Reconsideration (Doc. No. 74). For the following reasons, Household's motion is granted.
The facts and further procedural background of this case are recited in the court's Opinion and Order of March 25, 1998. See Greisz v. Household Bank (Illinois), 8 F. Supp. 2d 1031, 1998 U.S. Dist. LEXIS 3787, 1998 WL 139516 (N.D. Ill. 1998) ("Opinion"). A brief summary follows.
In 1995, Plaintiff Elizabeth Greisz ("Greisz") obtained a Household credit card to pay for the installation of heating and air conditioning equipment on her rental property. After a billing dispute, Greisz filed a multi-count complaint against Golden Seal Heating and Air Conditioning, Inc. ("Golden Seal") and Household. In relevant part, the complaint alleged that Household failed to comply with the disclosure requirements of the Truth-In-Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., in its "Cardholder Agreement" and "Monthly Billing Statement." Household moved for summary judgment on all counts except Count I.
On March 25, 1998, the court granted in part and denied in part Household's motion for summary judgment. Specifically, the court entered summary judgment in favor of Household on Counts II, III(a), III(b), III(c), V(a), VI(a), and part of Count III(d).
However, the court found a genuine issue of material fact with respect to certain allegations within Count III(d). See Greisz, 1998 WL 139516, at *6. Citing Allen v. Beneficial Fin. Co. of Gary, 531 F.2d 797, 801 (7th Cir. 1976), the court held that there was a genuine issue as to whether Household complied with TILA's "meaningful sequence" requirement in disclosing that a consumer is not required to pay disputed amounts. See id. ; see generally 12 C.F.R. § 226.13(d)(1) (discussing a consumer's right to withhold disputed amounts).
On April 7, 1998, Household filed the instant motion to reconsider, arguing that the court's reliance on the meaningful sequence requirement was erroneous. According to Household, "the meaningful sequence requirement was deleted from Regulation Z in 1981, and is no longer a part of the general disclosure requirements applicable to open-credit transactions." (Def.'s Motion at 1-2.) Household further argues that because Allen expressly applied the meaningful sequence requirement, it is no longer good law. Finally, Household argues that because its disclosures mirror those in Regulation Z's model form, they should be deemed in compliance with TILA's clear and conspicuous standard. See 15 U.S.C. § 1604(b).
There is no "Motion for Reconsideration" codified in the Federal Rules of Civil Procedure. There are, however, Rules 59(e) ("Motion to Alter or Amend Judgment") and 60(b) ("Relief From Judgment or Order" based upon "Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, Etc."). Though Household neglects to explicitly cite any rule as the basis for its motion, the fact that it challenges the merits of the court's decision means that it must fall under either Rule 59(e) or Rule 60(b). See United States v. Deutsch, 981 F.2d 299, 300 (7th Cir. 1992).
"The only grounds for a Rule 59(e) motion ... are newly discovered evidence, an intervening change in the controlling law, and manifest error of law." Cosgrove v. Bartolotta, 150 F.3d 729, 1998 U.S. App. LEXIS 16778, 1998 WL 407709, at *2 (7th Cir. 1998). Rule 59(e) "is not appropriately used to advance arguments or theories that could and should have been made before the district court rendered a judgment [citation], or to present evidence that was available earlier." LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th Cir. 1995) (citations omitted). "The rule essentially enables a district court to correct its own errors, sparing the parties and the appellate courts the burden of unnecessary appellate proceedings." Russell v. Delco Remy Div. of Gen. Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995). Whether to grant or deny a Rule 59(e) motion "is entrusted to the sound judgment of the district court." Matter of Prince, 85 F.3d 314, 324 (7th Cir. 1996).
Although "Rule 60(b), to some degree, provides overlapping relief," Russell, 51 F.3d at 749, it is considered "an extraordinary remedy that is to be granted only in exceptional circumstances." Provident Savings Bank v. Popovich, 71 F.3d 696, 698 (7th Cir. 1995). Rule 60(b) "enables a court to grant relief from a judgment under the particular circumstances listed in the text of the rule." Russell, 51 F.3d at 749; see also Fed. R. Civ. P. 60(b). Thus, "Rule 60(b) motions must be shaped to the specific grounds for modification  listed in Rule 60(b) - they cannot be general pleas for relief." Deutsch, 981 F.2d at 301-02. The Seventh Circuit will not disturb a district court's ruling on a 60(b) motion unless the decision is "not just clearly incorrect, but downright unreasonable." Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., Inc., 131 F.3d 625, 628 (7th Cir. 1997). But cf. United States v. Indoor Cultivation Equip., 55 F.3d 1311, 1317 (7th Cir. 1995) (stating that district courts have "less leeway" when exercising their discretion to deny motions brought under Rule 60(b)(4)).
"The key factor in determining whether a 'substantive motion' is cognizable under Rule 59 or Rule 60 is its timing." Britton v. Swift Trans. Co., Inc., 127 F.3d 616, 618 (7th Cir. 1997) (citations omitted.). That is, the court will review a motion under Rule 59(e) if the litigant files it "no later than 10 days after entry of the judgment." Fed. R. Civ. P. 59(e). The ten day time limit is computed in accordance with Rule 6(a), meaning that "intermediate Saturdays, Sundays, and legal holidays shall be excluded in the computation." Fed. R. Civ. P. 6(a). If the litigant files his motion beyond the ten day time limit, the court reviews the motion pursuant to Rule 60(b). See Britton, 127 F.3d at 618; Deutsch, 981 F.2d at 301. A primary consequence of determining the applicable rule is the tolling of the time allowed for appeal. Latham v. Dominick's Finer Foods, 149 F.3d 673, 1998 U.S. App. LEXIS 16120, 1998 WL 388922, at *1 (7th Cir. 1998). "A motion pursuant to Rule 59(e) tolls the time for appeal under Rule 4(a)(4) of the Federal Rules of Appellate Procedure; a Rule 60(b) motion does not." Mares v. Busby, 34 F.3d 533, 535 (7th Cir. 1994); see also Russell, 51 F.3d at 749 (stating that courts should not consider a Rule 60(b) motion if doing so would "circumvent the ordinary time limitation for filing a notice of appeal.").
Here, the clerk entered judgment on Household's motion for summary judgment on March 26, 1998, and Household later filed its motion to reconsider on April 7, 1998, within the ten day limit under Rule 6(a). Therefore, the court will review Household's motion to reconsider under Rule 59(e).
As noted above, the court's decision to deny in part Household's motion for summary judgement was based upon the Seventh Circuit's opinion in Allen. In Allen, the Seventh Circuit held that certain disclosures made by a lender failed to comply with TILA's meaningful sequence requirement. See Allen, 531 F.2d at 804. The Allen court, however, relied upon a version of Regulation Z which Congress has since repealed. The general disclosure requirement of the former version of Regulation Z provided:
Disclosures; general rule. The disclosures required to be given by this part shall be made clearly, conspicuously, in meaningful sequence, in accordance with further requirements of this section . . . .
12 C.F.R. § 226.6(a) (1968) (emphasis added).
In 1981, five years after Allen, Congress revised Regulation Z, including the general disclosure standard. See Act of March 31, 1980, Pub. L. No. 96-221, 1980 U.S. Code Congr. & Ad. News (94 Stat.) 132, 168 (1980). Since 1981, the general disclosure standard under Regulation Z no longer includes the meaningful sequence language; it instead reads:
The creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, in a form that the consumer may keep.
12 C.F.R. § 226.5(a)(1) (1997). The Federal Reserve Board Commentary on that section provides further explanation:
The clear and conspicuous standard requires that disclosures be in a reasonably understandable form. It does not require that disclosures be segregated from other material or located in any particular place on the disclosure statement . . . .
12 C.F.R. § 226, Supp. I, com. 5(a)(1); see also 12 C.F.R. § 226, Supp. I, com. 5a(a)(2)(1) (stating that creditors are not required to place disclosures "in any particular location"). Based on these provisions, the court agrees with Household that the "meaningful sequence" standard is no longer expressly applicable under TILA.
The court notes in passing, however, that remnants of the meaningful sequence standard remain within TILA. See 15 U.S.C. § 1604(b) (stating that certain modifications of the model form (deletions and rearrangements) are allowed except where they "affect the substance, clarity, or meaningful sequence of the disclosure.").
In any event, the court must still determine whether Household's disclosure regarding the right to withhold payment of disputed amounts is clear and conspicuous from the perspective of "an ordinary consumer." See Cemail v. Viking Dodge, 982 F. Supp. 1296, 1302 (N.D. Ill. 1997). Greisz steadfastly maintains that the language in the "Minimum Monthly Payment" section of the Cardholder Agreement obscures the clear and conspicuous disclosure of a consumer's right to withhold payments of disputed amounts. A quick recap of the disclosures at issue is therefore necessary.
In the "Minimum Monthly Payment" section of the Cardholder Agreement, the first sentence states that "all payments, except disputed payments, must be mailed or delivered to us at the Payment Processing Center address shown on your monthly billing statement." The next sentence states that "disputed payments including those which indicate that the payment constitutes 'payment in full' of the amount owed must be mailed or delivered to the Customer Service address shown on your monthly statement." A further sentence then states "you agree to pay us at least the Minimum Monthly Payment reflected on your statement."
In another section, however, the Cardholder Agreement states under the caption "YOUR BILLING RIGHTS - KEEP THIS NOTICE FOR FUTURE USE": "You do not have to pay any amount in question while we are investigating, but you are still obligated to pay the parts of your bill not in question."
In its earlier Opinion, the court stated that because of their separate locations within the Cardholder Agreement, "these statements may cause a consumer to scratch his head as to whether he is required to pay the disputed amounts." Greisz, 1998 WL 139516, at *6.
The court compared the statements with similar language that courts found confusing in three cases under the Fair Debt Collection Practices Act ("FDCPA"): 1) Bartlett v. Heibl, 128 F.3d 497, 500-01 (7th Cir. 1997); 2) Chauncey v. JDR Recovery Corp., 118 F.3d 516, 518-19 (7th Cir. 1997); and 3) Avila v. Rubin, 84 F.3d 222, 225-26 (7th Cir. 1996).
Household argues that so long as it supplied the model form language, "YOUR BILLING RIGHTS - KEEP THIS NOTICE FOR FUTURE USE": "You do not have to pay any amount in question while we are investigating, but you are still obligated to pay the parts of your bill not in question," it satisfies the clear and conspicuous standard under TILA. See 12 C.F.R. § 226, Appendix G-4; see also 15 U.S.C. § 1640(b) and 12 C.F.R. § 226.13(d)(1). Household contends that the language that it provided within the "Minimum Monthly Payment" section is therefore immaterial to the court's inquiry. In light of the repeal of the meaningful sequence requirement, the court agrees. "A disclosure that complies with the model form is not actionable." See Gibson v. Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283, 286 (7th Cir. 1997) (citing 15 U.S.C. §§ 1604(b), 1640(f); 12 C.F.R. § 226, Supp. I Introduction para. 1). Nevertheless, the court will still address whether the language located in the "Minimum Monthly Payment" section somehow overshadows the model disclosure informing consumers that they are not required to pay disputed amounts.
Household argues that the language within the "Minimum Monthly Payment" section merely provides a separate address for disputed payments to be sent if the consumer chooses to make the payments under protest. (In some instances, it may wise for the consumer to pay disputed amounts because if the dispute is eventually found to be entirely without merit, the creditor may assess finance charges for the time the amount was in dispute). According to Household, requiring the separate address is a practical way to segregate disputed payments because disputed payments require "special handling" until an investigation is completed. In support thereof, Household cites the Federal Reserve Board Commentary allowing creditors "to add to the required disclosures such items as contractual provisions, explanations of contract terms, state disclosures, and translations." 12 C.F.R. § 226, Supp. I, com. 5(a)(1)(1). Based on this provision and the legitimate reasons Household provides, the court finds that the language within the "Minimum Monthly Payment" section passes muster under TILA.
The court also finds that an ordinary consumer would be able to discern that the language within the "Minimum Monthly Payment" section merely notifies the consumer that there is a separate mailing address for the voluntary payment of disputed amounts. The mere fact that a superior statement could have been provided is not dispositive. See Scofield v. Telecable of Overland Park, Inc., 973 F.2d 874, 880-81 (10th Cir. 1992) ("[A] disclosure does not fail to be 'clear and conspicuous' or meaningful simply because a superior or more detailed statement could have been provided; the question is whether the disclosure offered is sufficiently clear for purposes of the statute."). Indeed, TILA "is not a general prohibition of fraud in consumer transactions or even in consumer credit transactions. Its limited office is to protect consumers from being misled about the cost of credit." Gibson, 112 F.3d at 285. Consumers should not misuse TILA "as an instrument of harassment and oppression against the lending industry." Rochon v. Citicorp Mortgage, Inc., 1996 U.S. Dist. LEXIS 4353, 94 C 3326, 1996 WL 167056, at *2 (N.D. Ill. Apr. 5, 1996) (citation omitted). These statements suggest that TILA imputes some degree of diligence to the ordinary consumer. Accordingly, the ordinary consumer has a minimal obligation to read the Cardholder Agreement in its entirety, including the section captioned: "YOUR BILLING RIGHTS - KEEP THIS NOTICE FOR FUTURE USE." Upon reading this section, the ordinary consumer would understand that he or she is not required to pay disputed amounts. Because Household's Cardholder Statement includes this disclosure, it does not violate TILA.
One final note is necessary. In its prior Opinion, the court compared Household's disclosures to statements found confusing in three FDCPA cases such as Bartlett, Chauncey, and Avila. Though those cases provided comparative authority under the "meaningful sequence" standard, the court now finds them distinguishable. See, e.g., Mace v. Van Ru Credit Corp., 109 F.3d 338, 343-44 (7th Cir. 1997) (discussing some distinctions between TILA and the FDCPA). First, unlike TILA, the FDCPA does not provide model forms as a safe harbor provision. But cf. Bartlett, 128 F.3d at 501-02 (providing an ideal "form letter" to guide collection agencies in their compliance with the FDCPA). Second, and perhaps most importantly, the three FDCPA cases found confusion from the perspective of "an unsophisticated consumer" rather than "an ordinary consumer," the perspective under TILA. While the ordinary consumer standard is not to be equated with "the perspective of Federal Reserve Board member, federal judge, or English professor," Cemail, 982 F. Supp. at 1302, it is still considered higher than the unsophisticated consumer standard, which the Seventh Circuit characterized as "low, close to the bottom of the sophistication meter." Avila, 84 F.3d at 226.
For the foregoing reasons, Household's motion for reconsideration is granted. The court grants Household's motion for summary judgment with respect to the allegations within PP 15 and 16 of Count III(d).
IT IS SO ORDERED.
CHARLES RONALD NORGLE, SR., Judge
United States District Court