FOR IMMEDIATE RELEASE - 10/24/2018 Contact: Rex E. Russo, attorney
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quote freely, but give credit. Email: Rex@FloridaPropertyLitigation.com
TILA TERRIBLE JUDGMENT - or - TOO RIGGED TO FAIL
“DEFRAUDED BY LENDER – PAY BANK $40,000!”
Bennett v. GTE Federal C. U., No. 3D17-0001 (Fla. 3d DCA Sept. 6, 2017) (review denied)
Looking back, it was like drawing a very bad Monopoly card, but in the real game of life, while watching The Bullwinkle Show. Homeowners defrauded by forgery were ordered to pay $20,000 to the person who was possibly, if not likely, responsible for the forged document. Judgment for another $20,000 was imposed against the homeowners’ attorney.
John and Nancy Bennett, the homeowners, were defrauded by a forged federally required Truth-in-Lending (TILA) disclosure document that led mortgagee GTE Federal Credit Union to bill them over $100 more per month. The Bennetts, having noted the error, retained counsel and demanded correction. Full rectification was defined in the demand as: a correction of the monthly billed amount, a return of the over-payments, and a payment of $500 in attorney fees — all to be completed within 60 days. Although the Bennetts were immediately entitled to TILA’s statutory damages and rescission, they did not seek those remedies at that time, preferring a quick and sensible resolution.
Since no correction was made within the demanded sixty days, nor within 100 days, the Bennetts sued GTE, LF Loans (a mortgage broker), and LF Loans’ principal Jamal Wilson. GTE, LF Loans, and Wilson, united in defense, asserted that the Bennetts, who brought suit for rescission, recoupment of their over-payments, statutory damages, and attorney's fees — all of which are outlined under TILA — were not damaged.
The united defendants asserted that the Bennetts were not damaged because Wilson, in response to the Bennetts’ demand for correction, stated that there “would be” a correction of the monthly billed amount by the next billing cycle and a return of the over-payments. However, GTE did not make the correction by the next billing cycle, nor the two after that, and, no defendant paid or ever agreed to pay the Bennetts’ $500 attorney’s fees incurred in calling out the forgery. Just after suit had been filed, the Bennetts received notice that the amount was corrected just prior. However, Defendants had already not only failed upon Wilson’s promise for correction by the next billing cycle, they also failed the requirements under TILA for correction, and they failed to meet the demands of the Bennetts for correction. Without submitting any sworn statement by anyone on their behalf, the Defendants proceeded on a motion for summary judgment – which the trial court granted.
On appeal, the Bennetts cited federal cases that led to rescission favorable to other homeowners who additionally received statutory damages, costs, and attorney’s fees. Those federal cases remind us that TILA must be strictly construed in favor of homeowners. Without mention of those cases, the Third District Courts of Appeals affirmed stating that “[t]he Bennetts (other than attorney fees) received everything they had asked for.” In support, the Third District cited to a case that essentially stands for the proposition that if you make an agreement, the benefits you receive under the agreement are all that you are entitled to receive. What agreement?
REMISS YET ELOQUENT
A careful and studied review of the appellate court’s opinion alone reveals that the united defendants did not comply with the Bennetts’ demands; did not comply with corrective measures afforded under TILA; and did not even comply with Wilson’s own statement of what he said "would be done" — which fell far short of accepting the terms demanded by the Bennetts. At the time they proceeded to file their action, the Bennetts had received nothing they had asked for. Returning the benefit of the forgery, only after getting caught and sued, was not a contrition by defendants.
The Bennetts were damaged by incurring attorney fees to get back to the position they were suppose to be in under the mortgage contract. The Bennetts were also damaged by having to pay court costs to get back to that position. TILA’s statutory damages were also awardable to the Bennetts at that point. Most importantly, the Bennetts were entitled to TILA rescission at that point (essentially resulting in an interest free loan for which the balance was then due) — as a matter of right — regardless of damages — as stated in the cited federal cases.
Even after getting caught committing a forgery of a TILA required disclosure document — or, at least getting caught relying upon the forged document — and then failing to make a timely correction — the defendants went unpunished despite TILA’s strictness. That sounds more like the defendants got everything they wanted — an opportunity to commit forgery or at least rely upon a forgery — with no risk. Perhaps defendants had benefitted from such forgeries hundreds of times and it was the first time they were caught. Adding interesting commentary to the opinion, Judge Luck writing for the Third District quoted from Sophocles’ Antigone, a tragic play about how power corrupts men.
The Third District also added a gratuitous (non-briefed issue) to their opinion stating that the rescission claim was, moreover, precluded by section 1635(e)(2) of TILA because the “Bennetts’ . . . mortgage was a refinance of their existing mortgage, secured by an interest in the same residential home.” On motion for rehearing, the Bennetts’ pointed out, with supporting reference to the record, that the transaction was not a “refinancing” of their home with the same lender. Only a refinancing of the same property, with the same lender, places the transaction under the preclusion of TILA’s 1635(e)(2). Even when 1635(e)(2) does apply, it does not preclude the right to TILA’s statutory damages and attorney fees, both of which were ignored in the Third District’s opinion. Bennetts’ motion for rehearing was denied.
TILA was intended to encourage attorneys to undertake the very kind of action pursued by the Bennetts. Such actions keep lending institutions in check. Congress recognized that the alternative would be the creation of an expensive layer of bureaucracy to oversee proper lending practices for every loan. In fact, at oral argument, Defendants’ counsel conceded that it was a TILA violation to have conflicting disclosure documents, but he argued — without any supporting case law — that such violations were too technical to be actionable. Judge Ivon Fernandez, one of the panel judges on appeal, then stated that “a hyper-technical interpretation of the statute would create an industry of litigation based on technicalities.”
In their brief, the Bennetts cited to case law stating that “hyper-technicality reigns in TILA cases” because TILA is supposed to be strictly construed in favor of the homeowner. Consequently, a “litigation industry” enforcing TILA’s strict mandates already exists in the form of consumer attorneys throughout the nation. Furthermore, a forged document that increases the monthly payments by more than $100 per month is not a hyper-technical violation, nor is it a common technical violation. It is something much worse.
(View referenced documents at: RexAppeals.com --> under Conference-Room/Documents-on-the-Table)
Author - Rex Russo
Over 35 years experience with Appeals, Real Estate Litigation, and Bankruptcy Actions and Adversary Defense.