United States District Court, N.D. Illinois, Eastern Division
In re TEISHA DAVIS, Debtor.
THE PAYDAY LOAN STORE OF ILLINOIS, INC., Defendant-Appellee. TEISHA DAVIS, Plaintiff-Appellant, Bankruptcy No. 13 B 20959 Adversary Proceeding No. 13 B. 1108
MEMORANDUM OPINION AND ORDER
JAMES F. HOLDERMAN, District Judge.
Pending before the court is debtor/plaintiff/appellant Teisha Davis' ("Ms. Davis") appeal under 28 U.S.C. § 158(a)(1) of the Bankruptcy Court's November 26, 2013 order in case number 13 B 1108. Bankruptcy Court Judge Timothy A. Barnes orally dismissed Ms. Davis' adversary complaint against defendant/appellee Payday Loan Store of Illinois, Inc. ("PLS"). Judge Barnes held that Ms. Davis failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the Bankruptcy Court's November 26, 2013 order is affirmed. (Dkt. No. 1, Ex. 3, Record of Appeal, at 63-65, "ROA.")
Six weeks before filing for bankruptcy, Ms. Davis obtained a loan from PLS. (Dkt. No. 3, "Davis Br.", at 2.) She agreed to repay her loan in 24 bi-weekly installments and received a disclosure statement as required under the Truth in Lending Act, 15 U.S.C. § 1601, et seq. ("TILA"). (Dkt. No. 4, "PLS Br.", at 1.) One day before Ms. Davis obtained a discharge in bankruptcy, she filed an adversary complaint against PLS. (Davis Br. at 2) Ms. Davis alleged that she was entitled to damages, because PLS violated TILA by failing to disclose the number of payments her loan required. ( Id. )
The TILA disclosure statement, provided to Ms. Davis, first listed various loan terms not at issue here, such as the annual interest percentage rate and the amount financed. (ROA at 9.) Below these terms, the disclosure form then stated "Your payment schedule will be", and then a payment list was set forth, which identified every payment the loan required, its due date, and the amount due. ( Id. ) Nowhere, in the disclosure statement, did PLS explicitly state the actual, raw number of payments Ms. Davis was required to make. ( Id. ) To put it another way, nowhere did PLS say "You will be required to make 24 payments." ( Id. ) However, because the disclosure form listed every required payment, Ms. Davis could infer this figure through simple arithmetic. ( Id. ) She could count the payments listed from April 12, 2013 to February 28, 2014 to understand that the loan required 24 payments. ( Id. )
The sole issue of law presented by this appeal is whether PLS's disclosure violated the portion of TILA and its accompanying regulation set out at 15 U.S.C.§ 1638(a)(6) and 12 C.F.R § 1026.18(g). The former statutory language requires:
"For each consumer credit transaction other than under an open end credit plan, the creditor shall disclose each of the following items, to the extent applicable... The number, amount, and due dates or period of payments scheduled to repay the total of payments."
15 U.S.C. § 1638(a)(6) (emphasis added).
The latter regulation rephrases this requirement as follows:
"For each transaction, the creditor shall disclose the following information as applicable... (g) Payment schedule. Other than for a transaction that is subject to paragraph (s) [an inapplicable mortgage provision], the number, amounts, and timing of payments scheduled to repay the obligation."
12 C.F.R § 1026.18(g) (second emphasis added).
Ms. Davis argues that "the number, amount and due dates or period of payments" language expresses "three distinct" disclosure requirements. (Davis Br. at 3.) According to Ms. Davis, PLS's "disclosure stated the amount and due dates of the payments, but not the number of payments." ( Id. ) Under Ms. Davis' interpretation of § 1638(a)(6), "[l]isting the amounts and due dates of payments is not the same thing as stating the number of payments." (Davis Br. at 3.) Because the Seventh Circuit requires strict compliance with TILA and its regulations, Ms. Davis argues PLS's disclosure violated the statute. ( Id. (citing Hamm v. Ameriquest Mortg. Co., 506 F.3d 525, 529 (7th Cir. 2007).)
PLS argues that it did satisfy the number of payments required disclosure, by listing every payment Ms. Davis was required to make. (PLS Br. at 2.) Judge Barnes agreed with PLS and stated orally in his ruling granting PLS's Motion to Dismiss, "[h]aving disclosed the actual payments, when they're due, and the amount due, [PLS] ...