                   NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                              File Name: 05a0511n.06
                                Filed: June 15, 2005

                                         Case Nos. 03-1800, 03-1929

                               UNITED STATES COURT OF APPEALS
                                    FOR THE SIXTH CIRCUIT

No. 03-1800                                )
JOHN DYKSTRA, and Consolidated             )
Plaintiffs,                                )
                                           )
       Plaintiff - Appellee,               )
                                           )
               v.                          )                            ON APPEAL FROM THE
                                           )                            UNITED STATES DISTRICT
WAYLAND FORD, INC.,                        )                            COURT FOR THE WESTERN
a Michigan Corporation,                    )                            DISTRICT OF MICHIGAN
                                           )
       Defendant - Appellant,              )
                                           )
No. 03-1929                                )
CHRISTINE DAENZER, on behalf of            )
herself and all others similarly situated, )
                                           )
       Plaintiff - Appellee,               )
                                           )
               v.                          )
                                           )
WAYLAND FORD, INC.,                        )
a Michigan Corporation,                    )
                                           )
       Defendant - Appellant.              )
                                           )
___________________________________________


BEFORE: BATCHELDER and DAUGHTREY, Circuit Judges; O’KELLEY,* District Judge.




         *
         The Honorable William C. O’Kelley, United States District Judge for the Northern District of Georgia, sitting
by designation.
       ALICE M. BATCHELDER, Circuit Judge. This is a consolidated appeal involving two

cases, which presents issues arising under the federal Truth In Lending Act (“TILA”), 15 U.S.C. §§

1638, 1640, and the Michigan Motor Vehicle Installment Sales Contract Act (“MVISCA”), M.C.L.

§ 566.302.    In Daenzer v. Wayland Ford, Inc., Defendant-Appellant Wayland Ford, Inc.

(“Wayland”) appeals the district court’s rulings granting Plaintiff-Appellee Christine Daenzer

(“Daenzer”) summary judgment on her claim for statutory damages under § 1638(b) and § 1640(a)

of TILA, summary judgment on the plaintiff class’s claim for damages under § 566.302 of

MVISCA, and an award of attorney fees and costs under § 1640(a)(3) of TILA. Wayland also asks

that if we find in its favor in Daenzer, we apply that judgment as res judicata against the other

consolidated plaintiffs in the companion case, Dykstra v. Wayland Ford, Inc. Because our decision

in Baker v. Sunny Chevrolet, Inc., 349 F.3d 862 (6th Cir. 2003), decided after the district court

entered final judgment in these cases, held that a violation of § 1638(b) alone does not warrant

statutory damages under § 1640(a), we reverse the district court’s award of statutory damages to

Daenzer. Because the absence of statutory damages removes the basis for an award of attorney fees

and costs under § 1640(a), we reverse the district court’s award of those items. Because the district

court applied its erroneous rulings on statutory damages and attorney fees/costs to the Dykstra

plaintiffs as res judicata, we reverse those decisions as well. Finally, because the district court

misinterpreted the relevant provision of MVISCA, and because under the proper interpretation of

that provision plaintiffs are left without a MVISCA claim, we reverse the district court’s judgment

granting MVISCA damages to Daenzer and the plaintiff class.

                                         BACKGROUND




                                                 2
       On January 31, 2001, Daenzer entered into a purchase agreement to buy a vehicle from

Wayland. Daenzer signed the necessary documents, including a retail installment sales contract

(“RISC”), and took possession of the vehicle that day. It is undisputed that the RISC contained all

the disclosures mandated by the federal TILA and state MVISCA. It is also undisputed that Daenzer

did not receive her own copy of her RISC on the day she signed it. Wayland disputes this fact with

respect to the Dykstra plaintiffs, however. Daenzer claims that she never received a copy of this

RISC, but her deposition testimony indicates that she did ultimately receive a copy. Daenzer claims

that on February 8, 2001, she returned to the dealership to execute a second RISC with different

terms, ostensibly because Wayland had been unable to sell the first one to a finance company.

Daenzer also claims that Wayland failed to provide her with a copy of this alleged second RISC.

Wayland responds by pleading lack of information with respect to Daenzer, but that its policy was

to provide a copy of the RISC to the buyer upon execution in accordance with state and federal law,

an assertion supported by deposition testimony from several Wayland employees.

       On February 27, 2001, Daenzer filed a class action complaint on behalf of herself and others

similarly situated, alleging violations under TILA, MVISCA, and various other theories under

Michigan state law. Wayland moved for judgment on the pleadings, and before the district court

ruled on that motion, submitted two motions for summary judgment. Wayland argued, among other

things, that Daenzer’s TILA claim should be dismissed because statutory damages are unavailable

under § 1638(b) of TILA (and Daenzer was not claiming any actual damages), and that Daenzer’s

MVISCA claim should be dismissed because Wayland met the statute’s standard of substantial

compliance. Daenzer filed her own summary judgment motion on her TILA and MVISCA claims.




                                                3
        In the meantime, Daenzer succeeded in having two classes certified: one for her TILA

claims (the “TILA Class”), and one for her state law claims (the “State-Law Class”).

        On March 15, 2002, the district court granted in part and denied in part Wayland’s motion

for judgment on the pleadings. The court upheld Daenzer’s TILA and MVISCA claims, but

dismissed her other state law claims.1 Regarding the TILA claim, the court interpreted § 1640(a)

as providing for statutory damages for a violation of § 1638(b), even though Wayland argued that

§ 1640(a) only provided for statutory damages under certain enumerated subsections and that §

1638(b) was not one of them. The district court also interpreted the “substantially comply” language

of MVISCA § 566.302 in a manner that was unfavorable to Wayland.

        On May 7, 2002, the district court denied Wayland’s motions for summary judgment and

granted summary judgment in favor of Daenzer as to liability on the remaining TILA and MVISCA

claims, leaving the damages issue to a future proceeding. This opinion did little in the way of

application of law to undisputed fact. It relied heavily upon the law explicated in the court’s

previous 12(b)(6) opinion and seems to have taken all the facts alleged by Daenzer as true, even

though Wayland repeatedly disputed some of the important ones, such as whether it provided RISC

copies to the other TILA Class plaintiffs.

        On May 22, 2002, Daenzer moved for summary judgment on the issue of damages. She

conceded on the TILA claim that she was not seeking actual damages, and that the TILA Class was

not entitled to statutory damages under § 1640 because it had been discovered that Wayland had a

negative net worth, thus preventing statutory damages under § 1640(a)(2)(B). Therefore, on her

TILA claim Daenzer sought only costs and attorney fees, arguing that her case constituted “a

        1
       The district court also upheld Daenzer’s claim under the Michigan Consumer Protection Act (“MCPA”). The
MCPA claim is not an issue on appeal, however, so we make no further reference to it in this opinion.

                                                      4
successful action to enforce [TILA] liability” in accordance with § 1640(a)(3). In her revised

motion for summary judgment on damages, Daenzer explicitly admitted that any recovery was based

on Wayland’s failure to provide a copy of the RISC prior to consummation of the transaction. On

behalf of the State-Law Class, Daenzer sought money damages under MVISCA.

        In response to Daenzer’s motion the district court announced, sua sponte, that it would

consider decertifying the TILA Class so the members could pursue individual statutory damages.2

After allowing briefing on the issue, the court entered an order decertifying the TILA Class only as

to the issue of damages and granting Daenzer’s summary judgment motion as to damages, awarding

her costs and attorney fees under § 1640(a)(3). The court further held that its previous liability

decision is res judicata in any damages actions filed by individual class members, and that under

MVISCA, Daenzer and the State-Law Class were entitled to recover the finance charges paid or

owed under the relevant contracts.

        With the TILA Class decertified, only Daenzer’s individual TILA claim remained before the

court,3 along with the MVISCA class action for which she remained the named plaintiff. Daenzer’s

TILA statutory damages and the State-Law Class’s MVISCA damages were determined according

to the relevant statute by the simple act of identifying the amount of finance charges associated with

each transaction. The court later issued an order setting forth the specific awards of costs and

attorney fees, including attorney fees under TILA pursuant to the lodestar analysis and under

MVISCA as a percentage of the common fund of recovered damages.




        2
         Under § 1640 the defendant’s negative net worth limits only recovery by a class, not an individual plaintiff.
        3
         Twenty-eight members of the former TILA Class filed their own actions for damages. Those actions were
consolidated into the Dykstra case that is also before us on appeal.

                                                         5
        After the district court decertified the TILA Class so that its members could seek individual

statutory damages, twenty-eight plaintiffs (the “Dykstra plaintiffs”) filed their own actions against

Wayland, noting that the decertification “did not affect the earlier liability determination which is

res judicata on any further proceeding between these parties.” The Dykstra plaintiffs eventually

obtained judgment in their favor in all but one of the cases.4 The district court also awarded the

Dykstra plaintiffs costs and attorney fees pursuant to TILA § 1640(a)(3).

        The district court executed a Final Judgment dated June 19, 2003, from which Wayland

timely appealed.

                                                ANALYSIS

I.      Standard of Review

        We review de novo a district court’s ruling on a motion for summary judgment. Terry Barr

Sales Agency, Inc. v. All-Lock Co., 96 F.3d 174, 178 (6th Cir. 1996). We also review mixed

questions of law and fact de novo. Williams v. Mehra, 186 F.3d 685, 689 (6th Cir. 1999) (en banc).

Finally, we apply de novo review to issues of statutory construction as well. Jordan v. Michigan

Conference of Teamsters Welfare Fund, 207 F.3d 854, 858 (6th Cir. 2000).

II.     TILA Statutory Damages

        The district court granted summary judgment in Daenzer’s favor on her TILA claim, holding

that she had established a violation of § 1638(b)’s form and timing requirements, which entitled her

to statutory damages under § 1640(a). Five months after final judgment in the district court, we

issued our decision in Baker v. Sunny Chevrolet, Inc., 349 F.3d 862 (6th Cir. 2003), which held that

a violation of § 1638(b) alone does not warrant statutory damages under § 1640(a). Id. at 871.

        4
           One of these cases, Holts v. Wayland Ford, Inc., No. 1:02-CV-863, was dismissed with prejudice by the
parties’ stipulation.

                                                       6
Wayland argues that we should apply Baker to overturn the district court’s decision in Daenzer. We

agree.

         Under the TILA statutory regime, § 1638(a) specifies the substantive requirements of

creditors’ disclosures, § 1638(b) specifies the form and timing of such disclosures, and § 1640(a)

creates a cause of action for certain violations of TILA. Section 1640(a) sets out the various damages

remedies, and then states the following:

         In connection with the disclosures referred to in section 1638 of this title, a creditor
         shall have a liability determined [regarding individual statutory damages] only for
         failing to comply with the requirements of section 1635 of this title or of paragraph
         (2) (insofar as it requires a disclosure of the “amount financed”), (3), (4), (5), (6), or
         (9) of section 1638(a) of this title.

15 U.S.C. § 1640(a). Baker held that this language does not provide a statutory damages remedy

for a violation of § 1638(b).

         Baker clearly requires that we reverse the district court’s decision awarding summary

judgment to Daenzer, which is based solely on its finding that Wayland violated § 1638(b)’s form

and timing of disclosure requirements by failing to give Daenzer a copy of her RISC at signing. In

light of Baker, Daenzer now tries to argue that the district court found a violation of § 1638(a) as

well as § 1638(b). This argument is clearly meritless. Even in the district court, Daenzer never

argued that Wayland had directly violated § 1638(a),5 and the district court’s written opinions clearly

indicate that the liability ruling for Daenzer was based entirely on a § 1638(b) violation meriting

statutory damages under § 1640(a). Since the basis for that ruling is now clearly erroneous in light




         5
           Daenzer’s only claim that Wayland had violated § 1638(a) was through a “backdoor theory,” which basically
contended that any violation of § 1638(b) automatically constitutes a violation of § 1638(a) as well. The Baker court
explicitly rejected this argument.

                                                         7
of Baker, we must reverse the district court’s decision granting summary judgment to Daenzer on

the issue of TILA statutory damages.

III.   TILA Attorney Fees and Costs

       The district court awarded Daenzer attorney fees and costs under TILA § 1640(a)(3) because

it determined that she had maintained a “successful action to enforce the foregoing [TILA] liability.”

For purposes of determining the right to attorney fees and costs, the relevant portions of § 1640(a)

state as follows:

       (a) Except as otherwise provided in this section, any creditor who fails to comply
        with any requirement imposed under this part . . . is liable to such person in an
        amount equal to the sum of–

               (1) any actual damage sustained . . . ;

               (2) [statutory damages]; and

               (3) in the case of any successful action to enforce the foregoing liability or
               in any action in which a person is determined to have a right of rescission
               under section 1635 of this title, the costs of the action, together with a
               reasonable attorney’s fee as determined by the court.

§ 1640(a) (emphasis added). Wayland argues that “the forgoing liability” refers only to actual and

statutory damages under § 1640(a)(1) and (2), and that since Daenzer is not entitled to damages

under either of those provisions, she is also not entitled to an award of attorney fees and costs.

Daenzer argues for a broad interpretation of the word “liability” in § 1640(a)(3) that would

encompass any judgment declaring a violation of TILA, regardless of whether that violation

warranted actual or statutory damages. Daenzer reasons that under such a broad reading, she is

entitled to her award of costs and attorney fees because she has obtained a judgment that Wayland

violated § 1638(b).




                                                  8
        Although we are concerned about the lack of incentives to enforce TILA violations that are

not subject to actual or statutory damages, we are convinced that § 1640(a)(3) provides for attorney

fees and costs in only three instances: when actual damages are established under § 1640(a)(1);

when statutory damages are established under § 1640(a)(2); and when a § 1635 right of rescission

operates under § 1640(a)(3). Daenzer’s argument that “liability” refers to the entire TILA is simply

not supported by the statute’s language and structure. Section 1640 is titled “Civil liability,” thereby

strongly implying that use of the term “liability” therein applies within the parameters of § 1640

rather than to the entire TILA statute (including all the provisions not referring to liability). In that

context, use of the phrase “the foregoing liability” in § 1640(a)(3) seems naturally to refer to the

actual and statutory damages set forth in § 1640(a)(1) and (2) rather than every preceding provision

of the entire TILA statute. Finally, Daenzer’s suggested construction would render superfluous the

portion of § 1640(a)(3) specifically providing costs and attorney fees for establishing a right to

rescission under § 1635. See Broadcast Music, Inc. v. Roger Miller Music, Inc., 396 F.3d 762, 769

(6th Cir. 2005) (“Courts are to make every effort to interpret provisions so that other provisions in

the statute are not rendered inconsistent, superfluous, or meaningless.”). For these reasons, the §

1638(b) violation established by Daenzer does not fall within the reach of § 1640(a)(3), and we

reverse the district court’s decision awarding her costs and attorney fees under TILA.

IV.     Res Judicata Application to Dykstra Plaintiffs

        Once the TILA Class was decertified, twenty-eight plaintiffs filed actions pursuing

individual TILA statutory damages against Wayland. These actions were consolidated into the

Dykstra case. After the district court made its TILA rulings regarding statutory damages and

attorney fees/costs in Daezner, it applied these rulings as res judicata to the Dykstra plaintiffs.


                                                   9
Because the district court’s rulings in Daenzer regarding statutory damages and attorney fees/costs

are erroneous, Wayland argues, we must not only reverse them, but apply our holdings as res

judicata to the Dykstra plaintiffs. We agree.

       In Erbia v. Chrysler Plastics Prods. Corp., 891 F.2d 1212, 1215 (6th Cir. 1989), we stated

with regard to res judicata:

       When a judgment has been subjected to appellate review, the appellate court’s
       disposition of the judgment generally provides the key to its continued force as
       res judicata and collateral estoppel. A judgment that has been vacated, reversed,
       or set aside on appeal is thereby deprived of all conclusive effect, both as res
       judicata and as collateral estoppel.

Our reversal of the district court’s rulings granting statutory damages and attorney fees/costs to

Daenzer under TILA deprives the district court’s judgment of its conclusive effect. Therefore, we

reverse the res judicata application of the district court’s erroneous rulings on statutory damages and

attorney fees/costs to the Dykstra plaintiffs.

V.     MVISCA Claim

       The district court interpreted the “substantially comply” language of MVISCA § 566.302

in a manner favorable to Daenzer, and it granted summary judgment to Daenzer and the State-Law

Class on the MVISCA claim. Wayland argues on appeal that the district court erroneously

interpreted the “substantially comply” language, and that under a proper interpretation Daenzer and

the State-Law Class have no valid MVISCA claim. We agree.

       MVISCA § 566.302 establishes substantive disclosure requirements for credit transactions

similar to those in the TILA. Like the TILA, the first paragraph of § 566.302 requires that the

“written instrument [evidencing the credit transaction] shall contain” several specific disclosures.

It also requires that a copy of the written instrument “shall be delivered to [the retail buyer] by the


                                                  10
retail seller at the time of its execution.” The primary focus of this appeal is the fourth paragraph

of § 566.302–the remedy portion of the statute–which states the following:

        Under a written instrument evidencing a retail installment sale which does not
        substantially comply with the requirements of this section, the seller shall not be
        entitled to recover, collect or retain that part of the obligation which represents the
        finance charge and the buyer shall not be liable therefor.

        The district court held, and Daenzer argues in this appeal, that the phrase “substantially

comply” modifies “retail installment sale,” and that a retail installment sale in which Daenzer did

not receive a copy of her RISC at the time of signing–a fact admitted by Wayland–did not

substantially comply with the requirements of § 566.302.

        Wayland argues, on the other hand, that “substantially comply” modifies the broader phrase

“written instrument evidencing a retail installment sale,” so that the focus of the remedy provision

would be upon the substantive disclosures in the RISC (the “written instrument”) rather than the

entire “retail installment sale,” which would arguably include the timing of the disclosure. A focus

on the content of the written instrument would benefit Wayland because Daenzer does not argue that

her RISC was incomplete.

        No Michigan state appellate court has interpreted this provision, which leaves to us the task

of doing so in the first instance.

        We agree with Wayland that the district court erred when it interpreted “substantially

comply” as modifying the entire “retail installment sale” rather than the narrower “written

instrument evidencing a retail installment sale.” The remedy provision of § 566.302 requires the

“written instrument evidencing a retail installment sale” to “substantially comply with the

requirements of this section.” (emphasis added). “This section” is 566.302, which deals with the

written instrument (the RISC) specifically, not the broader retail installment sale. This fact is clear

                                                  11
not only from the content of § 566.302, but from its title, which reads, “Contract, contents; delivery

of copy of contract and insurance policy to buyer.” Given the language and structure of § 566.302,

it is the “written instrument evidencing a retail installment sale” that must “substantially comply”

with the requirements of § 566.302, not the broader “retail installment sale.”

          Since Daenzer’s MVISCA claim is based entirely on the delivery of her RISC–she does not

claim that its substantive contents were deficient–our interpreting “substantially comply” to apply

to the contents of the “written instrument,” rather than the broader “retail installment sale” process,

leaves her and the State-Law Class without a claim under MVISCA. Therefore, we reverse the

district court’s grant of summary judgment to Daenzer and the State-Law Class on the MVISCA

claim, and we grant summary judgment to Wayland on that claim.

                                          CONCLUSION

          For the foregoing reasons, we REVERSE the district court’s summary judgment orders

granting plaintiffs statutory damages and attorney fees/costs under TILA and damages under

MVISCA, and we GRANT summary judgment to Wayland on plaintiffs’ TILA and MVISCA

claims.




                                                  12
