Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-1_06-cv-00996/USCOURTS-almd-1_06-cv-00996-3/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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IN THE UNITED STATES DISTRICT COURT FOR THE 

MIDDLE DISTRICT OF ALABAMA, SOUTHERN DIVISION

JOHN DAVID BRANNON and )

TERESA GAYLE BRANNON, )

)

Plaintiffs, )

) CIVIL ACTION NO.

v. ) 1:06cv996-MHT

) (WO)

RESIDENTIAL FINANCE )

AMERICA, LLC, )

)

Defendant. )

OPINION

Plaintiffs John David Brannon and Teresa Gayle

Brannon brought this action against defendant Residential

Finance America, LLC (RFA), asserting state-law claims

for negligence, negligence per se, negligent supervision,

and fraud as well as violations of the Truth in Lending

Act (15 U.S.C. § 1601 et seq.), the Real Estate

Settlement Practices Act (12 U.S.C § 2601 et seq.), the

Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.), and

the Equal Credit Opportunity Act (15 U.S.C. § 1691 et

seq.). 

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This case is before the court on the Brannons’

application for damages following the entry of default

judgment against RFA. The court, having taken testimony

from the Brannons and having heard arguments from their

counsel, Robert E. Kirby, Jr., finds as follows.

I. FINDINGS OF FACT

This lawsuit was filed on November 2, 2006. RFA was

timely and properly served but has filed no responsive

pleadings. RFA was provided with proper notice of the

motion for default and the evidentiary hearing on

damages. Because RFA failed to appear before this court,

the Brannons’ claims are uncontroverted and deemed proven

by default.

The Brannons’s claim for damages totals $ 127,146.17

and includes statutory damages, actual economic damages

as defined by the various federal lending statutes,

compensatory damages, and punitive damages as follows: 

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$ 6,529.17 in actual economic damages,

representing the difference between the

amount of money the Brannons were

promised as an equity “cash out” at

closing and the amount they actually

received, plus interest calculated at

the average rate the Brannons were

charged on the loan for the period of

time beginning at the closing date and

ending at the present time

$ 6,529.17

$ 2,459.16, plus interest, for

reimbursement of duplicative, unearned,

and/or excessive fees charged to the

Brannons’ loan at closing

2,459.16

$ 3.157.84, plus interest, for the

difference in the monthly payment

promised to the Brannons and the

monthly amount they were actually

charged

3,157.84

$ 10,000 in statutory damages under 15

U.S.C § 1691e(b) for violations of the

Equal Credit Opportunity Act

10,000.00

$ 4,000 in statutory damages under 15

U.S.C § 1640(a)(2)(A)(iii) for

violations of the Truth in Lending Act

4,000.00

$ 1,000 in statutory damages under 15

U.S.C § 1681n(a)(1)(A) for violations

of the Fair Credit Reporting Act,

pursuant to the Brannons’ state-law and

federal lending-statutes claims

1,000.00

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$ 25,000 per plaintiff for compensatory

damages, including mental anguish,

emotional distress, humiliation,

embarrassment, and degradation of their

credit

50,000.00

$ 25,000 per plaintiff for punitive

damages, pursuant to their state-law

claims of fraud, including promissory

fraud and intentional misrepresentation

50,000.00

TOTAL $ 127,146.17

In support of their damages claims, the Brannons

submitted the affidavit of Robert E. Kirby, Jr. with

supporting exhibits, including the HUD-1 Settlement

Statement relative to the loan at issue evidencing the

actual terms of the loan, an email and other documents

evidencing the promised terms of the loan, and

amortization schedules detailing the application of

interest to the underlying economic damage amounts where

such amounts are directly related to those damages

resulting from the change of terms. 

Each of the Brannons provided testimony in open

court. David Brannon testified that, had the loan closed

at the terms promised, his household budget would have

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been structured in such a way that his credit would not

have been impaired. As a result of the change in terms,

especially the reduced amount of “cash-out” and the

increase in payment amount, he was unable to restructure

his debt and make timely payments, resulting in harm to

his credit rating, a bankruptcy filing, and an increased

cost of all credit. David Brannon also testified that,

as the manager of a Wal-Mart store, the foreclosure

publishings caused him embarrassment and humiliation. 

Gayle Brannon testified that the loan transaction and

resulting financial difficulties caused her to file for

bankruptcy, which in turn caused problems at her job at

a bank. She suffered severe emotional distress and

required medical treatment and prescription medicines to

control her depression, anxiety, and sleeplessness. She

was compelled to sell her family home, which she was very

fond of and previously had no intention of selling.

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The court finds the uncontroverted evidence and

arguments presented by the Brannons and their counsel to

be credible and well taken. 

II. CONCLUSIONS OF LAW

At ¶ 40 of the Brannons’ complaint, they allege that

“RFA [was] negligent in the marketing, origination ...

closing and/or funding of Plaintiffs’ mortgage

application and loan.” At ¶ 42, they allege that “RFA

undertook to volunteer and provide oral and written preclosing disclosures to Plaintiffs about the terms

applicable to their specific loan” and “did so

negligently by failing to timely, accurately and

completely inform Plaintiffs of the details and costs of

the transaction.” At ¶ 43, they allege that “RFA

negligently, intentionally or recklessly misrepresented

and/or concealed the terms of Plaintiffs’ loan.” At

¶ 44, they allege that, “Although under no duty to do so

... RFA undertook to originate, process, close, fund ...

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a mortgage loan for Plaintiffs” and “did so negligently

or recklessly.” At ¶ 50, they allege that RFA’s “acts of

negligence were committed under circumstances of insult

and contumely.” The Brannons also provide support for

their claim of economic and compensatory damages in

¶¶ 45-49, 51, and 53 of their complaint. The Brannons

properly alleged that RFA’s wrongful conduct proximately

or directly caused the damages sought. 

As a result of the above allegations, the Brannons

claim economic compensatory damages in the amounts of

$ 6,529.17 (representing the difference between the

amount of money they were promised as an equity “cash

out” at closing and the amount they actually received),

$ 2,459.16 (for reimbursement of duplicative, excessive,

or unearned fees), and $ 3,157.84 (for reimbursement of

the payment differential between what was promised and

what was actually charged), plus interest on all those

amounts calculated at the average rate the Brannons were

charged on the loan for the period of time beginning at

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the closing date and ending at the present time. The

court finds that the Brannons’ claims are supported by

the uncontroverted allegations within their complaint,

the evidence presented at the evidentiary hearing,

Alabama law, and the federal lending statutes relied upon

by the Brannons. See Segars v. Reaves, 567 So.2d 249,

250 (Ala. 1990) (“The party claiming damages has the

burden of establishing by competent evidence the

existence of damages and the amount of those damages.”).

The court also concludes that the Brannons’ claims for

$ 25,000 each for compensatory damages, based upon the

mental anguish, severe emotional distress, embarrassment

and humiliation they have suffered, are so supported.

See Skipper v. S. Cent. Bell Tel. Co., 334 So.2d 863, 866

(Ala. 1976) (“Embarrassment and humiliation are actual

injuries.”); 15 U.S.C. § 1640(a)(1) (providing for

compensation for “any actual damage sustained by [a]

person” resulting from failure to comply); 15 U.S.C

§ 1691e(a) (same).

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The Brannons also seek punitive damages in the amount

of $ 25,000 each for their state-law claims, alleging

that RFA engaged in willful, wanton, intentional and

fraudulent conduct which directly or proximately caused

them damage. Compl. (Doc. No. 1), at ¶¶ 18-19, 22, 25-

31, 33, 35-37, 51, 53, 55-60. The court finds that their

reliance upon RFA’s written and verbal misrepresentations

was both reasonable and justified. See Potter v. First

Real Estate Company, Inc., 844 So. 2d 540, 552-553 (Ala.

2002) (“In order to recover for misrepresentation, the

plaintiffs’ reliance must ... have been reasonable under

the circumstances.”). The Brannons’ claims for punitive

damages pursuant to their state-law claims are supported

by their pleadings, evidence presented at the evidentiary

hearing, and Alabama Law. See Parker v. Johnson-Smith

Realty, Inc., 465 So.2d 415, 418-19 (Ala. 1984) (punitive

damages available for fraudulent misrepresentation). 

The Brannons further claim punitive damages in the

maximum statutory amount of $ 10,000 pursuant to the

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Equal Credit Opportunity Act, 15 U.S.C. § 1691e(b). The

uncontroverted allegations of their complaint support the

court’s finding that RFA violated 15 U.S.C § 1691(d)(6)

by willfully failing to provide the Brannons with the

required Adverse Action Notice when the terms of the loan

were unilaterally changed from the terms found in

previous pre-closing disclosures.

The Brannons are entitled to their claimed statutory

damages in the amount of $ 4,000 pursuant to 15 U.S.C

§§ 1640(a)(2)(A)(iii) and 1635(g). This amount includes

$ 2,000 for their uncontroverted allegation that RFA

failed to provide the required number of properly

completed Right to Cancel forms at closing in violation

of 15 U.S.C § 1635(a), as defined and interpreted in 12

C.F.R. §§ 226.2(a)(11), 226.23(a)(3), and 226.23(b)(1).

It also includes statutory damages in the amount of

$ 2,000 for RFA’s failure to timely rescind the loan upon

demand in violation of 15 U.S.C § 1635(b). 

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The Brannons are also entitled to their claimed

statutory damages in the amount of $ 1,000 pursuant to

the Fair Credit Reporting Act, 15 U.S.C. § 1681n(1)(A),

for RFA’s violation of § 1681m(a) by willfully failing to

provide the Brannons with the required Adverse Action

Notice when the terms of the loan were unilaterally

changed from the terms found in previous pre-closing

disclosures. 

Finally, the Brannon’s attorney, Robert E. Kirby,

Jr., seeks an award of attorney fees in the amount of

$ 9,250.00 and reimbursement of out-of-pocket expenses in

the amount of $ 1,132.78, for a total of $ 10,382.78.

The court finds that attorney fees and expenses are

recoverable under each of the Brannons’ claims under the

federal lending statutes. 15 U.S.C. §§ 1640(a)(3),

1681n(a)(3), 1692k(a)(3). Counsel seeks a fee in the

amount of $ 250.00 per hour for 37 hours expended in the

preparation of the Brannons’ case. This court has

considered Kirby’s affidavits and his oral argument

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before the court at the evidentiary hearing. The court

finds that counsel’s experience in and knowledge of this

area of law, together with his expended efforts, justify

such an award. The court also finds that the out-ofpocket expenses incurred by counsel are reasonable.

***

In conclusion, the court finds that the Brannons are

entitled to $ 127,146.17 in damages and $ 10,382.78 for

attorney’s fees and expenses from RFA. An appropriate

judgment will be entered. 

DONE, this the 19th day of February, 2008.

 /s/ Myron H. Thompson 

UNITED STATES DISTRICT JUDGE

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