       RECOMMENDED FOR FULL-TEXT PUBLICATION
            Pursuant to Sixth Circuit Rule 206            2    Baker, et al. v. Sunny Chevrolet, Inc.     No. 02-1381
    ELECTRONIC CITATION: 2003 FED App. 0391P (6th Cir.)
                File Name: 03a0391p.06                                       _________________
                                                                                  COUNSEL
UNITED STATES COURT OF APPEALS
                                                          ARGUED: John E. Anding, DREW, COOPER & ANDING,
              FOR THE SIXTH CIRCUIT                       Grand Rapids, Michigan, for Appellants. Daniel S. Saylor,
                _________________                         GARAN, LUCOW, MILLER, PC, Detroit, Michigan, for
                                                          Appellee. ON BRIEF: John E. Anding, DREW, COOPER
WANDA BAKER and SCOTT            X                        & ANDING, Grand Rapids, Michigan, Phillip C. Rogers,
ZALEWSKI, on behalf of            -                       Grand Rapids, Michigan, for Appellants. Daniel S. Saylor,
                                  -                       GARAN, LUCOW, MILLER, PC, Detroit, Michigan,
themselves and all others                                 Michael D. Wade, GARAN, LUCOW, MILLER, PC, Grand
                                  -   No. 02-1381
similarly situated,               -                       Rapids, Michigan, for Appellee.
          Plaintiffs-Appellants, >
                                  ,                          KENNEDY, J., delivered the opinion of the court. GUY,
                                  -                       J. (pp. 17-21), delivered a separate concurring opinion, in
            v.                    -                       which DAUGHTREY, J., joined.
                                  -
SUNNY CHEVROLET, INC., a          -                                          _________________
Michigan corporation d/b/a        -
                                  -                                              OPINION
WAYLAND CHEVROLET,
                                  -                                          _________________
           Defendant-Appellee. -
                                 N                          KENNEDY, Circuit Judge. This case presents an appeal
       Appeal from the United States District Court       from the district court’s order granting summary judgment in
  for the Western District of Michigan at Grand Rapids.   favor of Defendant-Appellee Sunny Chevrolet. Plaintiffs-
No. 01-00109—Robert Holmes Bell, Chief District Judge.    Appellants Baker and Zalewski argue that the district court
                                                          erred when it determined that even if Defendant had violated
              Argued: September 11, 2003                  15 U.S.C. § 1638(b)(1), Defendant was not liable for statutory
                                                          damages. We AFFIRM.
        Decided and Filed: November 4, 2003                                    BACKGROUND
Before: KENNEDY, GUY, and DAUGHTREY, Circuit                On December 28, 2000, Plaintiff Baker signed a retail
                  Judges.                                 installment sales contract (“RISC”) to purchase a car and
                                                          took possession of the vehicle on that date. Although she
                                                          asked for a copy of the contract, Defendant refused the
                                                          request. On January 11, 2001, citing inability to obtain



                            1
No. 02-1381           Baker, et al. v. Sunny Chevrolet, Inc.              3    4    Baker, et al. v. Sunny Chevrolet, Inc.       No. 02-1381

financing under the RISC,1 Defendant requested that                            Court. Both sides, however, only briefed the issue of
Plaintiffs return to the dealership to re-execute the deal adding              statutory damages. Plaintiffs asked for reconsideration of the
the latter as a buyer. At the dealership, Defendant informed                   class certification ruling pending a reversal of the statutory
Plaintiffs that they would each have to sign a second contract.                damages ruling.
Once again, despite being asked for a copy of the signed
contract, Defendant refused to provide Plaintiffs with a copy                                  STANDARD OF REVIEW
of either contract. Plaintiffs finally received a copy of the
second contract approximately three weeks later, around                           We review a district court’s grant of summary judgment de
January 29, 2001. Plaintiff Baker never received a copy of                     novo. Terry Barr Sales Agency, Inc. v. All-Lock Co., 96 F.3d
the first contract that she signed. It is undisputed that                      174, 178 (6th Cir. 1996). In deciding a summary judgment
Plaintiffs were given the actual RISC document for review                      motion, this court cannot weigh the evidence, judge the
prior to signing it and that the actual RISC accurately                        credibility of witnesses, or determine the truth of the matter
disclosed all of the transactions’ credit terms.                               asserted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
                                                                               (1986). We must, however, view the evidence and draw all
   Plaintiffs filed a class action lawsuit for violations of Truth             “justifiable inferences” in the light most favorable to the non-
in Landing Act (“TILA”) and the underlying Regulation Z,                       movant. Id. Summary judgment is appropriate where “there
alleging that Defendant repeatedly failed to give the consumer                 is no genuine issue as to any material fact and...the moving
“a copy of the contract [in connection with the purchase and                   party is entitled to a judgment as a matter of law.” Fed. R.
finance of a motor vehicle] to keep prior to consummation of                   Civ. P. 56(c). “[T]he mere existence of some alleged factual
the transaction.” First Am. Class Action Compl. J.A. at 9.                     dispute between the parties will not defeat an otherwise
Plaintiffs, however, do not allege any actual damages, nor do                  properly supported motion for summary judgment...”
they claim that any of the disclosures that were made before                   Anderson, 477 U.S. at 247-48 (emphasis in original). Mixed
they signed the RISC were inaccurate. Plaintiffs sued only                     questions of law and fact are reviewed de novo. Williams v.
for statutory damages under 15 U.S.C. § 1640. The district                     Mehra, 186 F.3d 685, 689 (6th Cir. 1999) (en banc).
court, per order dated February 6, 2002, denied the motion for
class certification because the Plaintiffs were not typical of                                          ANALYSIS
their proposed class and because the class definition was
inadequate. The district court also, per order dated March 8,                    Congress enacted TILA in 1968 with the broad purpose of
2002, granted Defendant’s motion for summary judgment and                      promoting the informed use of credit by assuring meaningful
dismissed Plaintiffs’ complaint in its entirety on the basis that              disclosure of credit terms to consumers. See generally, 15
Defendant’s refusal to provide the copies of the disclosures,                  U.S.C. § 1601(a); Ford Motor Credit Co. v. Milhollin, 444
while “seemingly inappropriate,” could not give rise to TILA                   U.S. 555, 559 (1980); Begala v. Ohio Nat’l Ass’n, 163 F.3d
statutory damages. Plaintiffs appealed both orders to this                     948, 950 (6th Cir. 1999). This Court has held that the statute
                                                                               must be considered liberally in the consumer’s favor. Jones
                                                                               v. TransOhio Sav. Ass’n, 747 F.2d 1037, 1040 (6th Cir.
                                                                               1984). The sections of TILA principally involved here are 15
    1
      In a typical RISC transaction, a dealer sells a vehicle to a customer
promising a certain type of financing which it ho pes to obtain from a third
party. Problems arise, howe ver, if the dealer is unable to obtain the
expected financing.
No. 02-1381           Baker, et al. v. Sunny Chevrolet, Inc.               5   6        Baker, et al. v. Sunny Chevrolet, Inc.             No. 02-1381

U.S.C. §§ 1638(a)2 and 1638(b),3 which required creditors to                   TILA. Regulation Z prescribes the form in which a creditor
make specific disclosures, and 15 U.S.C. § 1640(a),4 which                     must disclose the items pursuant to 15 U.S.C. § 1638.5
provides consumers with a cause of action for certain
violations of the act. Also of relevance on this appeal is                       The district court assumed, without so holding, that
Regulation Z, 12 C.F.R. § 226.1, et seq., a regulation                         Defendant violated § 1638(b)(1).6 It then held that statutory
promulgated by the Federal Reserve Board to implement                          damages were not available for this violation. Baker v. Sunny
                                                                               Chevrolet, Inc., No. 1:01-CV-109, slip op. at 3, 5-6 (W.D.
                                                                               Mich. March 8, 2002). The District Court further held that
                                                                               failure to provide Plaintiffs with a copy of their contracts at
                                                                               signing did not entitle Plaintiffs to statutory damages for
                                                                               violations of 15 U.S.C. §§ 1638(a)(3)-(a)(6), 1638(a)(9).7

    2                                                                          1.   Plaintiffs are not entitled to Statutory Damages for
      15 U.S.C. § 1638(a) contains substantive requirements of the                  Violations of 15 U.S.C. § 1638(b)(1)
creditor’s disclosures.

    3                                                                            Plaintiffs argue that Defendant violated the form and timing
      15 U.S.C. § 1638(b) contains the form and timing of the §1638(a)         requirements of § 1638(b)(1) of TILA, and the related
disclosures.

    4
     The section prov ides:
    Except as otherwise provid ed in this section, any creditor who                 5
                                                                                    Regulation Z provides, in relevant part, that “[t]he creditor shall
    fails to comply with any req uirement imp osed under this                  make the disclosure s required b y this subp art clearly and c onsp icuously
    part...with respect to any person is liable to such person in an           in writing, in a form that the consumer may keep.” 12 C.F.R.
    amo unt equal to the sum of–                                               § 226.17(a)(1). It further provides that creditors are required to make the
         (1) any actual damage sustained by such person as a                   mandated disclosures “before consummation of the transaction.” 12
         result of the failure;                                                C.F.R. § 226.17 (b).
         (2)(A)(I) in the case of an individual action twice the
         amount of any finance charge in connection with the                        6
         transaction...(B) in the case of a class action, such                      The section pro vides:
         amount as the court may allow, except that as to each                     Except as otherwise provided in this part, the disclosures
         member of the class no minimum recovery shall be                          required under subsection (a) of this section shall be made before
         applicable, and the total recovery und er this                            the credit is extended. Except for disclosures required under
         subparagraph in any class action or series of class                       subsection (a)(1) of this section, all disclosures required under
         actions arising out of the same failure to comply by the                  subsection (a) of this section...shall be conspicuously segregated
         same creditor shall not be more than the lesser of                        from all other terms, data, or information provided in connection
         $500,000 or 1 per centum of the net worth of the                          with a transaction, including any computations or itemization.
         creditor...                                                           15 U.S.C. § 16 38( b)(1).
    In connection with the disclosures referred to in section 1638 of               7
    this title, a creditor shall have a liability determined under                   These section require disclosure of the finance charge, 15 U.S.C.
    paragraph (2) only for failing to com ply with the requirements            § 1638(a)(3), the annual percentage rate, 15 U.S.C. § 1638(a)(4), the total
    of section 1635 of this title or of paragrap h (2) (insofar as it          of payments, 15 U.S.C. § 1638 (a)(5), the timing and amo unt of period ic
    requires a disclosure of the “amount financed”), (3), (4), (5), (6),       paymen ts, 15 U.S.C. § 16 38(a)(6), and the existence of a security interest,
    or (9) of section 16 38(a) of this title...                                15 U.S.C. § 1638(a)(9). Plaintiffs claimed that failure to provide them
15 U.S.C. § 16 40(a).                                                          with a copy of these disclosures constituted a complete failure to disclose.
No. 02-1381       Baker, et al. v. Sunny Chevrolet, Inc.     7    8      Baker, et al. v. Sunny Chevrolet, Inc.        No. 02-1381

provisions of Regulation Z. Regulation Z provides, in                 Statutory damages are available, this final sentence says,
relevant part, that “[t]he creditor shall make the disclosures        “only for failing to comply with the requirements of
required by this subpart clearly and conspicuously in writing,        section 1635 of this title or of paragraph (2) (insofar as it
in a form that the consumer may keep.” 12 C.F.R.                      requires a disclosure of the ‘amount financed’), (3), (4),
§ 226.17(a)(1). Defendant first argues that this Court should         (5), (6), or (9) of section 1638(a) of this title, or for”
assume without deciding, as did the District Court, that a            other situations not presented by these cases. “Only,” the
violation of § 1638(b)(1) occurred. Defendant then argues             word we have italicized is conclusive against plaintiffs,
that statutory damages are not recoverable for violations of          for it confines statutory damages to a closed list. Failure
§ 1638(b)(1) because consumers aggrieved by disclosure                to emphasize the typeface of “finance charge” and
violations of § 1638 may seek statutory damages only in those         “annual percentage rate” violates § 1632(a); omission of
case involving violations of §§ 1638(a)(2)(some), (3)-(6), (9).       descriptive explanations violates § 1638(a)(8);
                                                                      appearance of extra matter in the federal box violates
   As noted above, the district court assumed for the purposes        § 1638(b)(1). None of these subsections is on the list of
of the summary judgment motion that a violation of                    violations eligible for statutory damages.
§ 1638(b)(1) took place. Plaintiffs urge us to go beyond the
district court’s opinion and find that a violation did actually     Baker v. Sunny Chevrolet Inc., No. 1:01-CV-109, slip op.
occur. This Court will typically refrain from considering         at 4 (quoting Brown, 202 F.3d, 987, 991 (7th Cir. 2000)).
issues not passed upon by the lower courts. See, e.g., Blue       The District Court also noted that a number of district courts
Cross & Blue Shield Mut. of Ohio v. Blue Cross and Blue           outside the Seventh Circuit have followed the Brown
Shield Ass’n, 110 F.3d 318, 335 (6th Cir. 1997). This             decision. Id. at 4-5.
restraint, however, is simply a matter of discretion, as the
Courts of Appeals remain free to resolve such issues if the         Plaintiffs, relying almost exclusively on Lozada v. Dale
“proper resolution is beyond doubt” or “‘where injustice          Baker Oldsmobile, Inc., 145 F. Supp.2d 878 (W.D. Mich.
might otherwise result.’” Id. (citing Singleton v. Wulff, 428     2000), argue that the Seventh Circuit and the district court
U.S. 106, 121 (1976). Defendant relies on the district court’s    misread § 1640(a) to reach their respective holdings. The
discussion in its opinion denying class certification to argue    Lozada opinion makes a very intricate argument that the
that proper resolution is not beyond doubt. Baker v. Sunny        § 1640(a) discussion of statutory damages simply does not
Chevrolet, No. 1:01-CV-109, slip op. at 5 (W.D. Mich. Feb.        apply at all to §1638(b)(1) claims. In other words, the
6, 2002) (“Because the facts have not been fully developed,       limitation on the availability of statutory damages in §1638
the Court cannot determine whether a violation has                violations applies only to “disclosures” in section § 1638 and
occurred.”) Plaintiffs do not address this argument in the        § 1638(b)(1) is not a “disclosure” but is merely a “form and
appellate brief. We decline to resolve the factual question of    timing of disclosure” requirement. Lozada, 145 F. Supp. at
whether a violation occurred and instead assume, as did the       888 (noting that “[s]uch a reading is consistent with the other
district court, that a violation did occur.                       types of violations described by the enumeration.’”). See also
                                                                  Daenzer v. Wayland Ford, Inc., 193 F. Supp.2d 1030, 1036-
  The district court, relying heavily on a Seventh Circuit        37 (W.D. Mich. Mar. 15, 2002) (discussing both Brown and
decision, found that statutory damages are not available for a    Lozada and adopting the reading in Lozada). But see
violation of § 1638(b). The Seventh Circuit found that:           Kilbourn v. Candy Ford-Mercury, 209 F.R.D. 121, 126-27
                                                                  (W.D. Mich. Mar. 11, 2002) (discussing both Brown and
No. 02-1381          Baker, et al. v. Sunny Chevrolet, Inc.              9    10   Baker, et al. v. Sunny Chevrolet, Inc.        No. 02-1381

Lozada and adopting the reading in Brown). According to                         which disclosures under § 1638(a) must be made,
this position, § 1638(b) is not mentioned in the discussion of                  § 1638(a) disclosures may not be said to be made unless
limitation on damages and thus a full array of damages is                       and until they are made in compliance with § 1638(b)(1).
available for its violation.         The problem with this                      Section 1638(b), by saying when and how a disclosure is
interpretation, however, is that, standing alone, the “form and                 made, becomes part of the definition of what constitutes
timing” requirement has no substance, it only makes sense if                    a ‘disclosure’ under TILA.
it is combined with substantive disclosures of § 1638(a). For
example, § 1640(a) applies to disclosures referred to in                      Lozada, 145 F. Supp.2d at 889.
subsections (a) and (b) of section 1637. Each subsection of
§ 1637 contains its own “timing” requirement.8 It would                         Defendant, relying on Brown, argues that such a reading of
therefore seem that untimely disclosure of items in § 1637(a)                 TILA creates a back door theory that the alleged failure to
and (b) would be subject to § 1640(a) statutory damages. 15                   make timely written disclosures is not a disclosure at all.
U.S.C. § 1640(a). We therefore reject this reading of the                     Defendant’s reliance on Brown, however is misplaced. In
statute.                                                                      Brown, the defendant provided the plaintiff with a timely
                                                                              written disclosure. The problem in Brown was that there were
  Plaintiffs, relying once again on Lozada, make a following                  two minor errors in the actual disclosure which resulted in
second argument in the alternative:                                           violations of § 1638(a)(8) and § 1632(a), neither of which is
                                                                              an enumerated violation contained in § 1640(a). Brown, 202
  However, if a failure to deliver disclosures under                          F.3d at 990. The Brown court then rejected a back door
  § 1638(b) is considered a “disclosure [] referred to in                     theory that “information has been ‘disclosed’ in compliance
  section 1638” within the meaning § 1640, then the failure                   with § 1638 only if all of the TILA and all of Regulation Z
  to deliver disclosures in the manner provided by                            have been followed.” Id. at 991. The Brown court went on
  § 1638(b)(1) must be considered failure to disclose the                     to explain that
  required terms under § 1638(a). The requirements of
  § 1638(b)(1) may not be considered ‘disclosures’ for                          Accepting this argument would destroy the point of
  purposes of §1640 and yet not part of the disclosure                          § 1640(a). What sense would it make to omit § 1632,
  requirements of §1638(a). Moreover, no basis exists for                       § 1638(a)(1), (a)(2) (in part), (a)(7), (a)(8), (a)(10),
  considering a disclosure made if it is not made in                            (a)(11), (a)(12), and all of § 1638(b), (c), and (d) from the
  accordance with the requirements of § 1638(b)(1). Since                       candidates for statutory damages if they came in through
  § 1638(b)(1) expressly provides the form and time in                          the back door on the theory that all formal shortcomings
                                                                                infect the disclosures of the items that are on the list.

    8                                                                         Brown, 202 F.3d at 991 (emphasis added). On the facts
      See, e.g., 15 U.S.C. § 16 37(a) (“Before opening any account under      before it, the Brown court properly rejected the back door
an open end consumer credit plan, the creditor shall disclose to the person   theory. The facts of this case are clearly distinguishable,
to whom credit is extended each of the follow ing items...”) (emphasis
added); 15 U.S.C. § 1637(b) (“The creditor of any account under an open       however, since Plaintiffs did not timely receive a copy of the
end consumer cred it plan sha ll transmit to the ob ligor, for each billing   RISC. Plaintiffs therefore allege that § 1638(a)(2), (3), (4),
cycle at the end of which there is an ou tstanding balance in that            (5), (6),(9) were violated because disclosures required under
account..., a statement setting forth each of the following items to the      those subsections were not properly made.
extent applicable.”) (emphasis added).
No. 02-1381           Baker, et al. v. Sunny Chevrolet, Inc.            11     12   Baker, et al. v. Sunny Chevrolet, Inc.      No. 02-1381

  Defendant’s reliance on two other cases to argue against                        First, § 1638(b) form and timing disclosures should be read
Plaintiffs’ position is likewise misplaced. In Collins v. Ray                  to apply to each subsection of § 1638(a) individually (i.e.
Skillman Olds-GMC Truck, Inc., 2001 WL 1711466 (S.D.                           § 1638(a)(3) is violated whenever a disclosure is not made
Ind. Dec. 3, 2001), the court rejected an argument similar to                  prior to consummation of the sale and whenever it is not
the one advanced here by Plaintiffs.9 However, the Collins                     made in writing in a form that a consumer may keep). It
court read Brown to reject the argument that “the alleged                      should not be read as an independent disclosure violation.
failure to make timely written disclosures was not a                           This interpretation is supported by the language and structure
disclosure at all.” Collins, 2001 WL 1711466, at *3. As                        of Regulation Z. 12 C.F.R. § 226.17, which is the first
explained above, we believe that this is a misreading of                       section under “Subpart C–Closed-End Credit,” provides that
Brown. In the second case, Graham v. RRR, LLC, 202 F.                          “[t]he creditor shall make the disclosures required by this
Supp. 2d 483, 485, 489 (E.D. Va. May 15, 2002), the court                      subpart clearly and conspicuously in writing, in a form that
also rejected a similar argument advanced by a plaintiff who                   the consumer may keep.” 12 C.F.R. § 226.17(a)(1) (emphasis
was allegedly asked to sign a blank retail installment sale                    added). Section 1638, titled “Transactions other than under
contract.10 There are several problems with relying on                         an open end credit plan,” is a section dealing with “closed-end
Graham. First, there was a factual dispute about whether the                   credit” transactions, such as the one in this case. 12 C.F.R.
plaintiff signed a blank RISC. Id. at 489 n. 3. Second, the                    § 226.2(a)(10) (defining “closed-end credit”). Requirements
court actually dismissed the entire argument as “untimely                      of § 1638(a) are explained in 12 C.F.R. § 226.18, which
raised.” Id. at 489. After dismissing the case, the court                      appears within the same Subpart C as does the general
engaged in a completely unnecessary dicta about the merits of                  disclosure requirements of § 12 C.F.R. 226.17(a) and (b).
the plaintiff’s argument with a single reference to § 1638(a)                  The regulation therefore appears to demand that every
and without any discussion of other courts’ decisions. We                      “closed-end credit” disclosure be provided in this manner.
therefore find its holding entirely unpersuasive.                              See, e.g., Polk v. Crown Auto, Inc., 221 F.3d 691, 692 (4th
                                                                               Cir. 2000) (per curiam) (“However, on balance we believe
  As the foregoing discussion illustrates, we are therefore left               that the plain meaning of the regulation must be understood
with two readings of the statute, both of which find support in                to be that written disclosure in the form specified in subpart
the relevant caselaw and neither of which appears to be                        (a) must be provided to the consumer at the time specified in
clearly correct on its face. The two arguments can best be                     subpart (b). That is, Crown Auto was required to make the
summarized as follows.                                                         disclosures to Polk in writing, in the form that he could keep,
                                                                               before consummation of the transaction.”) (emphasis in the
                                                                               original). Finally, § 1368(b)(1) does not contain a “writing in
                                                                               a form the consumer may keep” requirement. There is, thus,
    9                                                                          no reason to conclude that the violation of 12 C.F.R. § 226.17
      The only difference in facts was that the plaintiff in Collins never
asked for a copy of the RISC, whereas Plaintiffs in this case did. The         is a § 1368(b) violation and not a § 1368(a) violation.
difference, in our op inion, ho wever, is insignificant.
                                                                                 Second, § 1638(b) is a separate requirement that relates
    10
       Apparently, there were two RISCs involved here. First one had a         only tangentially to the underlying substantive disclosure
12.5% interest rate and the plaintiff was provided with a copy of it.          requirements of § 1638(a). Under this theory, a § 1638(b)
Second one was supp osed to be filled out if the defendant obtained a          violation is not one of the enumerated violations that warrant
lower interest rate. There was a factual dispute as to whether the plaintiff
signed a blank RISC.                                                           a statutory damages award. This theory thus creates two
No. 02-1381          Baker, et al. v. Sunny Chevrolet, Inc.            13     14      Baker, et al. v. Sunny Chevrolet, Inc.         No. 02-1381

types of violations: (a) complete non-disclosure of                           2.     Section 1640(b) forecloses Plaintiffs’ recover of any
enumerated items in § 1368(a), which is punishable by                                damages in this case.
statutory damages; and (b) disclosure of the enumerated items
in § 1368(a) but NOT in the manner required by the                               The problem of resolving this complicated question of
Regulation and § 1368(b)(1), which is not subject to the                      statutory construction is aided by the provisions in § 1640(b).
statutory damages. This theory still recognizes that the proper               Neither party briefed this issue on this appeal or before the
manner of making § 1638(a) disclosures is in writing, in the                  district court. Nevertheless, our independent review of the
form that the consumer may keep. It also, however,                            statute leads us to the conclusion that the plain meaning of 15
recognizes that in a situation like the case at bar, where                    U.S.C. § 1640(b) bars any recovery for Plaintiffs. In re Allied
Plaintiffs were clearly not prejudiced by the untimely delivery               Supermarkets, Inc., 951 F.2d 718, 725-26 (6th Cir. 1991)
of the RISC,11 the failure to deliver the written disclosures in              (recognizing that although in general appellate courts do not
the form that the consumer may keep is actionable only if the                 review questions raised for the first time on appeal, it is
consumer can show actual damages.                                             appropriate to do so when the question is a legal one). See
                                                                              also Washington Gas Light Co. v. Virginia Elec. & Power
   We now expressly adopt this second interpretation because                  Co., 438 F.2d 248, 250 (4th Cir. 1971) (“if deemed necessary
it is the only way to reconcile the imposition of damages                     to reach the correct result, an appellate court may sua sponte
under § 1640(a) with the excuse of certain violations under                   consider points not presented to the district court and not even
§1640(b).12                                                                   raised on appeal by either party.”) (citing U.S. v. Continental
                                                                              Can Co., 378 U.S. 441, 457, 470 (1964)).

    11                                                                          Section 1640 is a general “civil liability” section in the
      At oral argume nt, Plaintiffs’ counsel conceded that Plaintiffs were
not going to shop the Defendant’s offer around but instead intended to
                                                                              TILA. In subsection (a) it provides for either actual and/or
complete the purchase.                                                        statutory damages for various TILA violations. Subsections
                                                                              (b) and (c) provide for (1) correction of errors, 15 U.S.C.
    12                                                                        § 1640(b), and (2) the treatment of unintentional violations
       As explained below, § 1640(b ) provides that the violations that are
corrected within 60 days by the lender are not subject to statutory           and bona fide errors, 15 U.S.C. § 1640(c). More specifically,
dama ges, assuming certain conditions are met. 15 U.S.C. § 16 40(b). This     section 1640(b) provides:
provision leads us to conclude that Congress was more concerned with the
accuracy of the disclosures (by imposing both actual and statutory                 A creditor...has no liability under this section ...for any
dama ges) then with the timing of the disclosures (by imposing only actual
damages). Were we to read these two subsections in the manner urged by             failure to comply with any requirement imposed under
Plaintiffs, we would have to assume that Congress simultaneously thought           this part..., if within sixty days after discovering an error,
that the timing of the disclosures was (1) important enough to warrant             ...and prior to the institution of an action under this
statutory damages under § 1640(a) and (2) unimpo rtant eno ugh to excuse           section or the receipt of written notice of the error from
a delay in performance by as much as sixty days in the absence of actual           the obligor, the creditor...notifies the person concerned of
damages under § 1640(b). Such a contradictory reading goes against the
basic canons of statutory construction. See, e.g., U.S. v. Branson, 21 F.3d
                                                                                   the error and makes whatever adjustments in the
113, 116 (6th Cir. 1994) (noting that statutes should not be read in a             appropriate account are necessary to assure that the
manner that renders them mea ningless, that they must be read as a whole           person will not be required to pay an amount in excess of
and construed to give each word operative effect, and that they should be          the charge actually disclosed, or the dollar equivalent of
interpreted to avoid untenable distinctions a nd unreaso nable results
whenever possible) (citations omitted).
No. 02-1381       Baker, et al. v. Sunny Chevrolet, Inc.     15    16   Baker, et al. v. Sunny Chevrolet, Inc.       No. 02-1381

  the annual percentage rate actually disclosed, whichever         619 F.2d at 250-51. See also Ratner, 329 F. Supp. at 280-81
  is lower.                                                        and n. 17. The problem with this interpretation of the
                                                                   legislative history of § 1640(b) is that §1640(c) explicitly
15 U.S.C. § 1640(b). The applicability of this section is a        deals with “clerical, calculation, computer malfunction and
matter of first impression in this Circuit and there appears to    programming, and printing errors.” 15 U.S.C. § 1640(c).
be very sparse discussion of it in the general caselaw. The        Therefore the Third Circuit’s and the Southern District of
Third Circuit has considered the argument that § 1640(b)           New York’s reading of the legislative history would render
applies solely to mathematical, not informational errors, such     § 1640(b) meaningless. See, e.g., TRW, Inc. v. Andrews, 122
as failure to provide disclosures. Thomka v. A.Z. Chevrolet,       S.Ct. 441, 449 (2001) (“it is a cardinal principle of statutory
Inc., 619 F.2d 246, 251-52 (3rd Cir. 1980). The court went         construction that the statute ought, upon the whole, be so
on to explain that                                                 construed that, if it can be prevented, no clause, sentence, or
                                                                   word shall be superfluous, void or insignificant.”) (citations
  Notice in a case such as this would be ineffectual, since        omitted); Bronson, 21 F.3d 116. Furthermore, this reading is
  there are no lower mathematical figures on which the             contradictory to the plain meaning of § 1640(b) since that
  remedial cost would be calculated. It is therefore               subsection appears to give creditors a sixty-day window to
  possible that providing exemption under Section 1640(b)          correct any errors made as long as certain requirements are
  in case like this would provide an incentive for lenders to      made. Although, as the Third Circuit noted, this may not
  delay sending disclosure forms until after the agreement         make great policy, Congress clearly illustrated its ability to
  is reached.                                                      limit the types of errors covered when it enacted § 1640(c).
                                                                   We must respect its decision.
Id. at 252. The Third Circuit, however, expressly chose not
to resolve this question because the facts of its case indicated     In this case, Defendant provided Plaintiffs with the copy of
that the defendant never actually notified the plaintiff that      the RISC two weeks after the signing date, which was clearly
there was a disclosure error. Id. See also Molenbeek v. West       within 60 days. Furthermore, there is no evidence in the
Auto Michigan Auto & Truck Outlet, Inc., 2001 WL 1602654,          record that Defendant received any written notice from
at *4 (W.D. Mich. 2001) (expressing doubt that 1640(b)             Plaintiffs prior to the mailing of the RISC. Finally, Plaintiffs
applies to non-written, non-calculation errors but nevertheless    will not be required to pay an amount in excess of the charge
concluding simply that the defense does not apply because the      actually disclosed since she was provided with a copy of the
defendant did not notify the plaintiff as the statute requires).   very document she signed.
In making its observations, the Third Circuit relied heavily on
the legislative history as summarized in Ratner v. Chemical                              CONCLUSION
Bank, 329 F. Supp. 270, 281-82 and n. 17 (S.D.N.Y. 1971)
(deciding the case dealing with a § 1640(c) defense only).           In sum, we conclude that Defendant’s failure to timely
Thomka and Ratner courts observed that “[t]he original draft       provide Plaintiffs with a copy of RISC does not entitle
of the Act permitted no errors, but in response to fears that      Plaintiffs to any statutory damages on the alternative grounds
simple clerical mistakes in mathematical calculations of the       (1) that § 1638(b)(1) violation is not subject to statutory
lease financial charge and annual percentage rate would create     damages and (2) that Defendant complied with § 1640(b)
unavoidable liability...the affirmative defenses of Section        provisions for the correction of errors.
1640(c), as well as Section 1640(b) were added.” Thomka,
No. 02-1381        Baker, et al. v. Sunny Chevrolet, Inc.     17    18       Baker, et al. v. Sunny Chevrolet, Inc.       No. 02-1381

                    __________________                              interpretation which is inconsistent with the intent of
                                                                    Congress.” Id. at 667.
                     CONCURRENCE
                    __________________                                 TILA governs disclosures required for “closed ended”
                                                                    transactions (like automobile loans), dictating the substantive
   RALPH B. GUY, JR., Circuit Judge, concurring. I concur           disclosures that must be made in 15 U.S.C. § 1638(a), the
in the result and write separately to further clarify the reasons   applicable form and timing requirements in 15 U.S.C.
for affirming the decision to grant summary judgment to             § 1638(b)(1), and the damages available for violations of
Sunny Chevrolet in this action for statutory damages under          those provisions in 15 U.S.C. § 1640(a).1 The critical
the Truth In Lending Act (TILA), 15 U.S.C. § 1640(a)(2).            portions of § 1640(a) state as follows:
Like the district judge, I would assume, arguendo, a violation
of the form and timing requirements of 15 U.S.C. § 1638(b),             Except as otherwise provided in this section, any
and its implementing regulation, Regulation Z, 12 C.F.R.              creditor who fails to comply with any requirement
§ 226.17, both because resolution of the issue is unnecessary         imposed under this part, including any requirement under
to this appeal and because the Federal Reserve Board has              section 1635 of this title, or part D or E of this subchapter
revised its Official Commentary to Regulation Z in an attempt         with respect to any person is liable to such person in an
to clarify the issue. See 12 C.F.R. Part 226, Supp. I, p. 434         amount equal to the sum of–
(2003) (“17(b) Time of Disclosures”). I also agree that
statutory damages are not available under § 1640(a)(2) for the          (1) any actual damage sustained by such person as a
violations alleged in this case for the reasons discussed below.      result of the failure;
I would not, however, reach the novel question of whether
defendant could rely on § 1640(b) to escape damages for                  (2)(A) (i) in the case of an individual action twice the
failure to comply with TILA’s form and timing requirements            amount of any finance charge in connection with the
because the issue was not developed either in the district court      transaction [in statutory damages], . . . .
or on appeal.                                                            ....
  The TILA was enacted with the “broad purpose of
promoting ‘the informed use of credit’ by assuring
‘meaningful disclosure of credit terms’ to consumers.” Ford
                                                                         1
Motor Credit Co. v. Milhollin, 444 U.S. 555, 559 (1980)                   Disclosures required for “closed ended” credit transactions
(quoting 15 U.S.C. § 1601); see also Begala v. PNC Bank,            include: (1) the identity of the creditor; (2) the “amount financed”;
Ohio Nat’l Ass’n, 163 F.3d 948, 950 (6th Cir. 1998). When           (3) the “finance charge”; (4) the “annual percentage rate”; (5) the
called upon to interpret a statute, we must review “‘the            “total payments”; (6) the number, amount, and due dates or period
particular statutory language at issue, as well as the language     of payments; (7) the total sale price; (8) descriptive explanations
and design of the statute as a whole.’” Walker v. Bain, 257         of specified terms; and (9) where credit is secured, a statement that
F.3d 660, 666-67 (6th Cir. 2001) (citation omitted), cert.          the security interest has been taken. 15 U.S.C. § 1638(a)(1)-(9).
denied, 535 U.S. 1095 (2002). We may not rely on the literal        Further disclosures are required in certain circumstances by
                                                                    § 1638(a)(10)-(14). In addition to these “substantive” disclosures,
language when it would “lead to absurd results or an                the form and timing requirements of § 1638(b)(1) state that the
                                                                    disclosures “shall be made before the credit is extended.”
No. 02-1381         Baker, et al. v. Sunny Chevrolet, Inc.          19    20   Baker, et al. v. Sunny Chevrolet, Inc.       No. 02-1381

     . . . In connection with the disclosures referred to in              found the list was “not a positive and exclusive enumeration
  section 1638 of this title, a creditor shall have a                     of provisions for which statutory damages are provided,” but
  liability determined under paragraph (2) only for                       rather, a “reverse description of exceptions.” Id. As a result,
  failing to comply with the requirements of . . .                        the district court concluded that violators of § 1638(b) would
  paragraph (2) . . . , (3), (4), (5), (6), or (9) of section             remain subject to statutory damages because § 1638(b) is not
  1638(a) of this title, or for failing to comply with                    enumerated for exception from the general rule.
  disclosure requirements under State law for any term
  which the Board has determined to be substantially the                    While the structure of § 1640(a) makes the Lozada
  same in meaning under section 1610(a)(2) of this title as               interpretation plausible, the language and design of these
  any of the terms referred to in any of those paragraphs of              provisions convince me that the Seventh Circuit and a
  section 1638(a) of this title.                                          majority of district courts addressing the issue are correct in
                                                                          concluding that statutory damages are not available for
Id. (emphasis added).                                                     violation of § 1638(b)(1). The limitation of the final sentence
                                                                          of § 1640(a) quoted above explicitly applies “in connection
   The majority of decisions addressing the issue presented in            with the disclosures referred to in § 1638” — not just
this case have adopted the interpretation articulated by the              § 1638(a) — it also further states that statutory damages are
Seventh Circuit in Brown v. Payday Check Advance, Inc., 202               available only for the failure to comply with the enumerated
F.3d 987 (7th Cir.), cert. denied, 531 U.S. 820 (2000), which             subsections of § 1638(a). This interpretation is also
reasons that the use of the term “only” in the final sentence             consistent with the legislative history concerning the addition
confines statutory damages for any violations of § 1638                   of the final sentence, which indicates that the amendments
(including violations of § 1638(b)(1)), to the closed list of             were intended to limit a creditor’s liability for statutory
enumerated subsections.2 Plaintiffs urge this court to reject             penalties on “closed ended” transactions to disclosures of “the
Brown and adopt a contrary interpretation articulated in                  amount financed, the finance charge, the total of payments,
Lozada v. Dale Baker Oldsmobile, Inc., 145 F. Supp.2d 878                 the annual percentage rate, the number, amount and due dates
(W.D. Mich. 2001). See also Daenzer v. Wayland Ford, Inc.,                of payments, any security interest taken, and, where
193 F. Supp.2d 1030, 1036-37 (W.D. Mich. 2002).                           applicable, the consumer’s right to recission.” Kilbourn, 209
                                                                          F.R.D. at 127 n.4 (quoting S. Rep. No. 96-73, at 7 (1979)
  The district court in Lozada reasoned that the first sentence           (reprinted in 1980 U.S.C.C.A.N. 280, 285)).                 Not
of § 1640(a) represented a broad statement that statutory                 coincidentally, these specified disclosures correspond directly
damages are available for violations of “any requirement                  to the sections enumerated in § 1640(a).
imposed” by TILA, “[e]xcept as otherwise provided.” 145 F.
Supp.2d at 886 (quoting § 1640(a)). As for the list of                      As an alternative theory, plaintiffs contend that statutory
subsections in the final sentence quoted above, the court                 damages are available because the failure to comply with the
                                                                          form and timing requirements of § 1638(b)(1) constitutes a
                                                                          complete failure to make any of the substantive disclosures
    2
     See, e.g., Kilbourn v. Candy Ford-M ercury, Inc., 209 F.R.D. 121,    required by § 1638(a) — including those for which statutory
124-25 (W .D. M ich. 20 02); Nigh v. Koons Buick Pontiac GMC, Inc., 143   damages are expressly available. This argument fails to
F. Supp.2d 535, 548-49 (E.D . Va. 2 001 ); Molenbeek v. W. Mich. Auto &   persuade as it would turn the stated congressional intent on its
Truck Outlet, Inc., No. 1:00-CV-286, 2001 WL 1602654, at *5-6 (W.D.
Mich. M ar. 15, 2001).
                                                                          head. As the Brown court aptly reasoned:
No. 02-1381       Baker, et al. v. Sunny Chevrolet, Inc.      21

  [A]ccepting this argument would destroy the point of
  § 1640(a). What sense would it make to omit § 1632,
  § 1638(a)(1), (a)(2) (in part), (a)(7), (a)(8), (a)(10),
  (a)(11), (a)(12), and all of § 1638(b), (c), and (d) from the
  candidates for statutory damages if they came in through
  the back door on the theory that all formal shortcomings
  infect the disclosures of the items that are on the list?
  Congress included some and excluded others; plaintiffs
  want us to turn this into universal inclusion, which would
  rewrite rather than interpret § 1640(a).
202 F.3d at 991. See also Kilbourn, 209 F.R.D. at 127-28.
