2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit

11-4-2008 

# In Re: S t e r t e n
P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de nt i al D ocke t N o . 07-2237

F o l low thi s a nd a dd it ion al work s at : http://d i git alc ommon s .l a w . vi l l a nova . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou ght t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sity S choo l of L a

w Di git al Reposit or y

. It h as be e n a c c ept e d for inclusion in 2008 D e c i sion s b y a n author i z e d a dmini s tr at or of V i l l a no va U nive r sity S choo l of L a

w Di git al Reposit or y

. F or mor e inform at ion, p le as e c ont a ct Be n j amin
. C a rl s on@l a

w . vi l l a no va . e du

. Re c omme nde d C it at ion

" In Re: S t e r t e n " (2008). 2008 D e cisio n s . P ape r 186. http://d i git alc ommon s .l a

w . vi l l a nova . e du/thir dc ir c uit_2008/186P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

N o. 07- 2237

I N R E : GAYL E L

. S T E RT E N, D e b t o r GAYL E L

. S T E RT E N; W I L L I A M C

. M I L L E R , E SQ

. , T rus t ee

v. OP T I ON ONE M OR T GAGE CO RP OR AT I ON; M A IN L IN E C A P IT A L , IN C .; VI LL AGE LAND TRANS F ER, I NC.

G ay l e L. St er t en, A ppel l ant

A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D

. C

. C i vi l A ct i on N o. 06- cv- 00651) D i s t r i ctJ udge: H onor abl e Ti m ot hyJ

. Savage

A r gued Sept ember22, 20082 B efor e: B A R R Y , A M B R O , and G A R T H , C i r cui tJ udges

( O pi ni on fi l ed: N ovember4, 2008 ) D avi d A

. Schol l , E s qui r e ( A r gued) Regi on a l Bank rup t c yCent e rof Sou t he a s t e r n PA 6 St

. A l bans A venue N ew t ow n Squar e, PA 19073- 0000 C ouns el forA ppel l ant D onna M

. D obl i ck, E s qui r e ( A r gued) R e e d S m ith 435 Si xt h A venue Pi t t s bur gh, PA 15219- 0000 M ark S

. M elod ia, E sq u ir e R e e d S m ith 136 M ai n St r eet , Sui t e 250 Pr i ncet on For r es t al V i l l age Pr i ncet on, N J 08540- 0000 C ouns el forA ppel l ee

OPI NI ON O F THE COURT

A M B R O , C i r cui tJ udge3 T h e T r u t h in L e n d in g A c t, 1 5 U .S .C . § 1 6 0 1 , et s eq. , im p o se s d isc lo su re re q u ire m e n ts o n c re d ito rs, e x p o sin g th e m to s uch penal t i es as m oney damages , at t or ney ’ s fee s and r eci s s i on f o r f a ilu re to d is c lo s e f

in a n c e c h a rg e s a c c u ra te ly. See § 1635( a) & ( g) ; § 1640( a)

. H ow ever , i n 1995, i n an ef fortt o pr event cr edi t or s from bei ng s ubj ectt o “extr aor di naryl i abi l i t y ” for sm a ll d isc lo su re d is c re p a n c ies , C o n g re ss a m e n d e d th e A c t to i ncl ude a “t ol er ance s for acc ur acy ” pr ovi s i on. 141 C ong. R ec. H 9 5 1 4 -01 (da il yed

. S ep t. 2 7 , 1 9 9 5 ) (st atem en t o f R ep . L ea ch ). U ndert hat pr ovi s i on, a cr edi t ori s notl i abl e forundi s cl os ed fi nance char ges i f t hos e char ges fal l w i t hi n a s peci fi ed r ange of e r r o r. 1 5 U .S .C . § 1 6 0 5 (f ). W e d e c id e w h e th e r a T ru th in L endi ng A ctdefe ndant w ho does not s peci fi cal l y defe nd on t he gr ound t h a ta n yi n a c c u r a c i e s i n i t s d i s c l o s u r e f e l l wi t h i n t he t oler ance r ang e w ai ves t he p rot ect i on t hat pr ov i si on provides. I n pr ocedur al par l ance , w e deci de w hethera t ol er ance s for acc ur acydefe ns e i s aff i r m at i ve ( r equi r i ng t hat it be pl ed s peci fi cal l y ) orgener al (t hus notr equi r i ng t hati tbe pl ed sp ec ifi ca ll y ).
W e hol d t hat t he defe ns e i s gener al , and thata def endant n e e d n o t sp e c if

ica llyra ise th e A c t’s to ler a n c e s p ro v isio n in o rd e r to a v o id liab ili tyf o r d isc lo su re e rro rs th a t f a ll w ith in its ra n g e . W e th u s a f

f irm th e ru lin g o f

th e D istric t C o u rt.
I . F act s and P roce dural H i s t ory I n February2001, G ay e L

. St er t en s ecur ed a l oan i n t he amo u n to f

$ 1 3 2 , 0 0 0 f

r o m O p t i o n One M o r t g a g e Corp o r a t i on.In addit i on t o nam i ng O pti on O ne, S t ert en’s com plai nt al so 1 n a me d M a i n Li n e a n d Vi l l a g e Lan d T r a n s f e r . Th e c l a i ms a g a in st th o se p a rties w e re se ttl e d o n th e d a yo f th e trial. 4 T he purpos e of the l oan w as t o r efi nance the sec ond m or t gage on her hom e and t o con sol i date h er m edical and credi tcard bi l l s. St er t en obt ai ned the l oan t hr ough a mort gage br oker , M ai n L i ne Ca p i t a l , wor k i n g wi t h o n e o f M a i n Li n e ’ s o wne r s , Thom as Gi r o n e . Gi r o n e was a l s o t h e Pr e s i d e n to f t h e t i t l e i n s u r a nce agenc yus ed i n t he t r ans act i on, V i l l age L and T r ans fer , I nc. T he c lo sin g f o r th e lo a n to o k p lac e a t S ter ten ’s h o m e w ith o n ly St er t en and G i r one pr es ent
. G i r one hel ped St er t en exe cut e an A dj us t ab l e Ra t e Not e i n f a v o ro f Opt i o n One a n d a mort g age gr ant i ng O pt i on O ne a l i en on herr eal pr oper t yt o s ecur e the loa n. St er t en s i gned, among ot herdocument s , a H U D -1 Set t l ement St at ement , t he mort gage, a Truth i n L endi ng D iscl osure S t at em ent, and a m and at ory N oti ce of R i gh t to C a n c e l.
N ear l yt w o y ear s l at er , St er t en s enta l et t ert o O pt i on O ne c o n ten d in g th a t th e c lo sin g o f th e lo a n h a d n o t b e e n d o n e in acc or dance w i t h t he r eq u i r ement s of the Truth i n L endi ng A ct and r eques t i ng a r eci s s i on of t he l oan. O n M ar ch 18, 2003, aft er O pt i on O ne had di s put ed herr i ghtt o r es ci nd, St er t en fi l ed a C hapt er13 bankrupt cy pet i t i on i n t he B ankrupt cyC our tfort he E as t ern D i s t r i ctof Penns y l vani a. O pt i on O ne t hen fi l ed a pr oof o f c laim . In re sp o n se , S ter ten f iled a n a d v e rsa ryp ro c e e d in g in h e r b a n k ru p tcy ca se , se e k in g r e c is sio n o f th e lo a n a lo n g w ith v a rio u s s tatu to ry p e n a lti e s. S ter ten a lleg e d tw o sp e c if ic T ru th 1U ndert h e Act ’ s i mpl e me n t i n g r e g u l a t i o n , Re g u l a t i o n Z, 2 m any “[r ] eal

- es t at e re l at ed fees ” ar e excl uded fr om t he fi nance char ge i f t hey ar e “bona fi de and r eas onabl e i n am o u n t. ” 12 C .F .R . § 2 2 6 .4 (c )(7 ). T h e B a n k ru p tcy C o u rt c o n c lu d e d th a t all b u t th e “ m a rk u p ” o f

th e a p p ra isa l f

e e s a n d th e n o tar yc h a rg e s f it w ith the e x ce p ti o n s set o u t i n § 2 2 6

. 4 (c)(7). 5 in L e n d in g A c t v io latio n s: (1 ) th a t sh e w a s n e v e r p ro v id e d w ith ei t herherT rut h i n L endi ng di s cl o su re s t at ementorherN ot i ce o f R igh t t o C an ce l fo rm ; and (2) tha t th e f inan c e c h arg es w ere no ta c c ur a t e l ydi s c l os e d. O pt i on O ne de ni e d b oth a l l e ga t i on s, m ai nt ai ni ng s peci fi cal l yw i th r es pectt o i t s di s cl os ur e of the f in a n c e c h a rg e s th a t it“ a c ted a t a ll tim e s re lev a n t h e re to in f u ll co m p li an ce w ith all ap p li ca b le l aw s an d /or ac ts. ” O p ti o n O n e’s A ns w er¶ 9.
A t r i al w as hel d, atw hi ch bot h St er t en and G i r one tes tifie d . T h e B a n k ru p tcy C o u rt f o u n d G iro n e m o re c re d ib le t han St er t en on w hether s he had r ece i ved the r equi r ed form s and rul ed i n O pt i on O ne’ s favoron thatcl ai m . W i t h r es pect t o t he adequa cy of O pt i on O ne’ s di s cl os ur e, t he part i es agr eed thatt en s peci fi c fee s and char ges l i s t ed on t he H U D

- 1 S et t l ement St at ement , t ot al i ng r oughl y$2, 000, had notbeen inc lud ed as par tof the “Fi nance C har ge” di s cl os ed i n t he T rut h i n L endi ng D i s cl os ur e St at em en t
. T he C our texami ned ea ch fe e and concl uded t hat onl y t w o of t hem— a $25 “mar k u p ” in the appr ai s al fee and $32 cha r ged for not arys ervi ces

— qual i fi ed as “f inan ce ch arg es” u n d er th e T ruth in L en d ing A ct. T h e C o u rt 2 t hen su a s

p o n te appl i ed the A ct ’ s t ol er ance s foracc ur acySt er t en’ s m ot i on r ai s ed t w o addi t i onal cl ai m s t hatar e notat 3 i s s ue i n this a ppeal

. She chal l enged ( 1) t he C our t ’ s fac tual concl us i on t hatt he r equi r ed form s w er e del i ver ed t o herat cl os i ng, and ( 2) i t s det erm i nat i on t hat t he T rut h i n L endi ng A ct di d notr equi r e the fe es bey ond t he $57 i n appr ai s al over char ge a n d n o tar yf

e e to b e in c lu d e d in th e D isc lo su re S tate m e n t.

6 pr ovi s i on, 15 U

. S. C

. § 1605( f) , concl udi ng t hat , beca us e t he $57 i n nondi s cl os e d f

i n a nce c har ges w er e w i t hi n t he t ol er ance r ange, t he di s cl os ur e w as “ac cur at e as a m at t er of l aw . ” I t thus ent er ed j udgm enti n favorof O pt i on O ne on bot h the r eci s s i on and the dam ages cl ai m s. St er t en then fi l ed a M ot i on t o A l t ero r A m end the B ankrupt cyC our t ’ s or der

. She ar gued that t he C our ts houl d not hav e app l i e d the A c t ’ s t oler ances fo r accuracyprovis i on becau se O pt i on O ne had fai l ed t o r ai s e i tas an af fi r m at i ve def

ens e and had ther efor e w ai ved i t
. O n J anuary4, 2006, t he B ankrupt cy 3 C our tgr ant ed St er t en’ s m ot i on, concl udi ng t hat § 1605( f) i s an affirm at i ve d efen se and that , becau se “O pti on O ne fa i l ed to r ai se § 1605( f) i n i t s pl eadi ngs , att r i al , orat any ot her poi nti n t h[e] p ro c e e d i n g , ” it w a iv e d th e d e f e n s e . St er t en v. O

pt i on O ne Mo r tg a g e C o r

p . (I n r e St er t en ) , B ankr

. N o. 03-14 0 1 4, 2006 B an k r. L E X IS 4 1 3 0 , at *1 0

– 1 1 (B an k r. E

. D

. P a. Jan

. 4 , 2 0 0 6 ). T h e C o u r t d e c la re d re c iss io n a n d a w a rd e d S ter ten $ 2 ,0 0 0 in s ta tu to ry d a m a g e s a lo n g w ith re a s o n a b le a tto rn e y ’s f e e s . I d. at *11.W hi l e O pt i on O ne’ s appea l w as pend ing , the B ankrupt cy 4 C o u rt h e ld a re m e d yh e a ri n g . St er t en v. O pt i on O ne Mor t

gage C o r p . (I n r e St er t en ) , 352 B

. R

. 380 ( B ankr

. E

. D

. Pa. 2006)

. T he C our tconcl uded thatStert en had a r epaym entobl i gat i on of $118, 819. 16, pay abl e i n 302 m ont hl y i ns t al l m ent s , and aw ar ded h e r $ 1 9 ,5 0 0 in a tto rn e y ’s f e e s . I d. at390. 7 Op t i o n One t h e n a p p e a l e d t o t h e Di s t r i c tCo u r t
. On 4 M ar ch 22, 2007, t he D i s t r i ct C our tr ever s ed the B ankrupt cy C our t ’ s amended j ud g m ent , hol di ng t hat“[b] eca us e the

‘ t ol er a n c e s foracc ur acy ’ pr ovi s i on i s notan af fi r m at i ve def

ens e, t he B ankrupt cyC our t ’ s or i gi nal ver di cti n favor of O pt i on O ne w as co rr ectand s houl d nothave be en di s turbed. ” St er t en v. O p tio n O n e Mo r t

g a g e C o r

p . (I n r e St er t en ) , 479 F. Supp. 2d 479, 485 ( E

. D

. Pa. 2007)

. I tt her efor e or der ed t he B ankrupt cy C o u rt ’s in itia l ju d g m e n t r e s to re d

. I d. St er t en t i m el yappea l ed.
I I . Juri s di ct i on and St andard of R evi ew T h e B an k rup tcyC o u rth ad juri sd ic tion o v er S tert en ’s ad v ersa ryp roc ee d ing u n d er 2 8 U

. S

. C

. § 1 5 7

. T h e D istri ct C o u rt had j ur i s di ct i on over t he appe al of the B ankrupt cyC our t ’ s or der under28 U

. S. C

. § 158( a)

. W e have j ur i s di ct i on overt he D i s t r i ct Co u r t ’ s r e v e r s a l o f

t h e Ba n k ru p t c yCo ur t u n d e r2 8 U. S

. C. § 1 5 8 (d).
I n r evi ew i ng an appe al t o a D i s t r i ctC our tof a ba nkrupt cy deci s i on, “w e s t and i n t he shoes of the D i s t r i ctC our tand r evi ew t he B ankrupt cyC our t ’ s deci s i on. ” I RS v . Pr a n s ky (In re8 P r ans ky ) , 318 F. 3d 536, 542 ( 3d C i r . 2003) ( ci t at i on and i nt ernal quot at i on m arks o m it te d)

. A ccor di ngl y , “[w ] e r evi ew [the B ankrupt cyC our t ’ s ] fi ndi ngs of fa ct for cl ear err or and i t s l egal con cl usi on s de novo

. ” I d. D e te r m in in g w h e th e r th e T ru th in L endi ng A ct ’ s t ol er ance s for accur acypr ovi s i on i s an a f f ir m a tiv e d e f

e n s e is a q u e s tio n o f

la w . See W

ol f v. R el i ance Standa rd L i

f e Ins. , 71 F. 3d 444, 446 ( 1s tC i r . 1995) ( expl ai ni ng t hat w hethera def

ense i s “a w ai vab l e affirm at ive de fense is a pur e ques t i on of l aw ”)

. T hus , w e r evi ew t he B ankrupt cy C our t ’ s det er m i nat i on on t hati s s ue de novo

. We r e v i e w a cour t ’ s deci s i on nott o tr ea t a defe ns e as w ai ved forabus e of d is c re tio n . C et el v. K i r w an F i n. G r oup, I nc. , 460 F. 3d 494, 506 (3d C ir

. 2 0 0 6 ).
II I. A n a ly sis
T h e T ru th in L e n d in g A c t’s to ler a n c e s p ro v isio n re a d s in pert i nen tpartas fol l ow s: ( f) T ol er ance s foracc ur acy I n connec t i on w i t h cr edi tt r ans act i ons notunder a n o p e n e n d c r e d i tp l a n t h a ta r e s e c u r e d b yr eal p ropert yora dw el l i ng, the di s cl os ur e of the fi nance char ge and otherdi s cl os ur es aff ect ed by anyfi nance char ge— ( 1) s hal l b e t r eat ed as bei ng a c c u ra te f

o r pu rp o se s o f [ a c la im9 fordama g es] i f the amount di s cl os ed as t he fi nance char ge— (A ) do es n o t vary fr om t he ac t ual fi nance char ge by m or e t h an $100; [and]

. . . . (2) s hal l be tr eat ed as bei ng a c c u ra te f

o r p u rp o se s o f

[ a c laim forr eci s s i on] i f— ( A )

. . . the amount di s cl os ed as t he fi n ance char ge does notvaryfr om t he actual fi nance char ge bym or e than an amount equal t o onehal f of one pe r centof t he t ot al amount of c re d it e x te n d e d

. . . . 1 5 U .S .C . § 1 6 0 5 (f

).
N ei t herpar t ydi s put es t hat t he $57 i n undi s cl os ed fi nanceB eca us e the t ot al l oan amount w as $132, 000, t he t ol er ance 5 r a n g e f o rS t e r t e n ’ s r e c i s s i o n c l a i m i s $ 6 6 0

. 1 5 U. S

. C. § 1 6 0 5 (f)(2)(A ). O p tio n O n e c o n ten d s th a t it d id r ai se th e tolerance s 6 p ro v is io n a s a n a f

f ir m a tiv e d e f

e n s e i n i t s a n s w e r. See O pt i on O n e’s B r. 2 0

. It s arg u m en t t o th a t ef fe ct i s, h o w ev er, unconvi nci ng. I t s ans w eri ncl u d ed a se ct i on l abel ed “A ffi rm at i ve D efen ses, ” w hich ass ert ed, am on g o t her defen ses, t hat“O pt i on O ne M or t gage Co rpo rat i on act ed atal l t i m es r el evanther et o i n ful l compl i ance w i t h al l appl i cabl e l aw s and act s . ” O pt i on O ne’ s A ns w er , A ffi r m at i ve D efe ns es ¶ 3. B ut s i mp l yc o n t e n d i n g t h a t , a s a g e n e r a l ma t t e r , t h e a p p l i c a b l e l a ws w er e c o mpl i e d wi t h i s n o te n o u g h t o p l e a d a t ru e a f f i r ma t i ve d e f e n s e a d e q u a te ly. 10 ch arg es f

all s w ith in the to leran ce ran g e f o r bo th S tert en ’s damages cl ai m and hercl ai m forr eci s s i on. W hatSt er t en 5 di s put es i s w hetherO pt i on O ne w as i n a pos i t i on t o t ake advant age of

t he pr ot ect i on § 1605( f) pr ovi des

. St er t en makes t w o s peci fi c ar gum ent s on t hat poi nt
. Fi r s t , s he ar gues t hatt he T ru th in L e n d in g A c t’s to ler a n c e s f o r a c c u ra c yp ro v isio n se ts outan af

fi r m at i v e def

ens e thatO pt i on O ne w ai ved bynot pl eadi ng i ti n t he i ni t i al s t ages of the l i t i gat i on. Second, s he 6 ar g u e s t h a t , e v e n i f Opt i o n One was n o t r e q u i r e d t o r a i s e t he t oler ances p rovi si on as an affi rm at i ve defen se, i t s fai l ure t o rai se t he def ens e i n anyfas hi on at anypoi nti n t he l i t i gat i on amount ed to a w aive r.F e d e ra l R u le o f C iv il P ro c e d u re 8 w a s a p p lica b le to 7 St er t en’ s bankrupt cypr ocee di ngs under B ankrupt cy R ul e 7008. Fol l ow i ng an amendm ent t hat beca m e ef fec t i ve D ece m ber 8 1 , 2 0 0 7 , th e R u le n o w s ta te s : “ In re s p o n d in g to a p le a d in g , a par t ym us taff

i r m at i vel ys t at e anyavoi dance oraff i r m at i ve 11 A . I s t he T o lerances f or A ccurac y P rovi s i on an A f f i rm at i ve D ef

ens e?
F e d e ra l R u le o f C iv il P ro c e d u re 8 (b ) a llo w s a p a rt y to 7 cont es tt he part i cul ar s of a c om pl ai nts i m pl ybyi s s ui ng a g e n e ra l d e n i a l in a re s p o n s iv e p le a d in g . See 5 C har l es A l l en W ri g h t & A rth u r R

. M ill er, Fe d era l Pra cti ce & P roc ed u re § 1 2 6 5 ( 3 d e d

. 2 0 0 4 ) , a t5 4 6

– 4 7 ( “ Wr i g h t & M i l l e r ” ) ( “ No pr es cr i bed s etof w or ds need be empl oy ed i n fr ami ng t he gene r al deni al ; anys t at ement m aki ng i t cl eart hatt he def endanti nt ends to p u t i n issue all o f th e a v erm en ts i n the o p p o sing p arty ’s p lea d in g is s u f

f icie n t.”). T h a t is w h a t O p tio n O n e d id w h e n it a ss e rte d in its a n sw e r th a t, w ith re sp e c t to its d isc lo su re s, it

“ a c ted a t all tim e s re lev a n t h e re to in f u ll co m p lian c e w it h a ll appl i cabl e l aw s and/ oract s . ” R u le 8( c) governs aff i r m at i ve defe ns es , w hich ar e gene r al l yw ai ved i f nots peci fi cal l yr ai s ed “byr espons i ve pl eadi ng orbyappr opr i at e mot i on. ” E lli o t & Fr ant z, I nc. v. I ngers ol l

- R and C o. , 4 5 7 F

. 3 d 3 1 2 , 3 2 1 (3d C ir

. 2 0 0 6 ). A t th e tim e o f th e se p ro c e e d in g s, R u le 8 (c ) sta ted in p e rtin e n t p a rt th a t “[ i]n p lea d in g to a p re c e d in g p lea d in g , a p a rty sh a ll se t fo rth af

firm ati v ely[se v era l l ist ed d ef en ses] and any other m atter const i t uti ngan avo i da nce or aff i rm ati ve defense .” 8de fe ns e , i nc l ud i ng : [19 l i s t e d d e fe ns e s ]

. ” Fe d. R. Ci v. P. 8 (c )(1 ). T h e a m e n d m e n t w a s n o t in te n d e d to a lter th e ru le s u b s ta n tiv e ly. See 5 W r i ght& M i l l er§ 1270 ( Supp. 2008) , at 110 ( expl ai ni ng t hatt he “c hanges w er e noti nt ended t o have a su b stan ti v e e ff

ec t”). W e addr es s ed the def i ning fe ature s of an a ffi r m at i ve 9 defe ns e i n N

ati on al U

nion Fir e Insurance C o. v. C i t y Sa vi ngs, F

. S. B

. of P i t t s bur gh, P a. , 28 F. 3d 376 ( 3d C i r . 1994)

. W e ci t ed B l ack’ s L aw D i ct i onary ’ s defi ni t i on of an “ aff i r m at i ve def

ens e” as “[a ] m at t eras s er t ed bydefe ndantw hi ch, as s um i ng t he c o m p la in t to b e tru e , c o n s titu t e s a d e f e n s e to it. A re sp o n se to a p la in tif f’s c laim w h ich a ttac k s th e p lain tiff ’s [ leg a l] rig h t to b ri n g a n a c tio n , a s o p p o s e d to a tta c k in g th e tru th o f [ th e ] c la im .” I d. at 39 3 (cit ing B lack ’s L aw D ict ion ary6 0 (6th ed

. 1 9 9 0 )) ( emphasi s i n or i gi nal ) ( fi r s t al t er at i on i n or i gi nal )

. H ow ever , t he i s s ue i n N

at i o n a l U

ni on w as n o t, as itis he re, w h ethe r a par t i cul ar defe ns e i s deemed aff i r m at i ve. R ather , i tw as w hether an af fi r m at i ve def

ens e count s as a “c l ai m ” or“ac t i on” for

12 F e d . R . C iv . P . 8 (c ) (e m p h a sis a d d e d ). T h e q u e stio n w e f a c e is w h e th e r th e T ru th in L e n d in g A c t’s to ler a n c e f o r e rro r is in v o k e d b ya R u le 8 (b ) ge n e ra l d e n ial, o r w h e th e r i t f a lls w ith in R u le 8(c )’s catch -all “a n y o ther m att er” p rov isi o n an d there fo re r equi r es aff

i r m at i ve pl eadi ng. R ul e 8( c) i t s el f pr ovi des l i t t l e gui dance fordet erm i ni ng w h ich d e f

e n se s, o th e r th a n th o se sp e c if ica llyse t o u t, fa ll w ith in i t s ambi t
. O urC our t has y et t o endor s e anypar t i cul arappr oach t o m aki ng t hatdet erm i nat i on. 9p u rp o s e s o f th e a p p lic a tio n o f a p a rt ic u la r j u ri s d ic tio n a l b a r. See i d. at 3 9 2

– 9 5 ( addr es s i ng w hethert he j ur i s di ct i onal barof the Fi nanci al I ns t i tut i on R eform , R ecove r y and Enfor cementA ctof 1989, 12 U

. S. C

. § 1821( d) ( 13) ( D ) , appl i es t o aff i r m at i ve d e f e n s e s ). N

at i onalU

ni on t hus does n o t d ict at e the cour s e of ouri nqui r yher e. 13 M any cour t s i n addr es s i ng t hi s i s s ue have focuse d on t he relati o n sh ip b etw ee n the d ef en se in q u esti o n an d the p lai n ti ff ’s pr im ary ca s e. T hus , fori ns t ance , t he C our tof A ppeal s fort he Fi fth C i r cui thas s t at ed that“p erti nentt o t he ana l y s i s [of w hethera def

ens e i s an af

fi r m at i ve defen s e] i s t he l ogi cal r el at i on sh ip b etw ee n the d ef en se a n d the c au se o f a cti o n asse rt ed byt he pl ai nt i ff. ” I

ngr aha m v. Un i t ed Stat es , 808 F. 2d 1075, 1079 ( 5t h C i r . 1987)

. T he I n g r a h a m C our tal s o expl ai ned that th is “ in q u ir yre q u ir e s [ a m o n g o th e r t h in g s ] a d e te rm in a tio n . . . w hethert h e m at t erati s s ue fa i r l ym aybe s ai d t o cons t i tut e a n e c e s s a ry o r e x tr in s ic e le m e n t in th e p la in tif f ’s c a u s e o f

a c tio n .” I d. T he C our tof A ppeal s for t he F i r s t C i r cui t has hel d t hatt he “test forw hethera gi ven def ens e fa l l s w i t hi n t he R ul e 8( c)

‘ r es i duary ’ cl aus e i s w hether t he def ens e s har es t he comm on char act er i s t i c of a bart o t he r i ghtof r ecove r yeven i f the gene r al compl ai ntw er e more orl es s admi t t ed t o. ” W o lf , 71 F. 3d at449 (cit ati o n an d interna l qu o tat ion m ark s o m itted).
A s a theo ret i cal m at t er, t his focu s on w hether a def ense r ai s es fac tual orl egal i s s ues ot hert han t hos e puti n pl aybyt he pl ai nt i ff’ s caus e of a ct i on ni cel yt r acks t he di s t i nct i on betw een a g en era l d e n ia l an d an af firm ati v e d ef

en se. W h en w e a re14 as ki ng w hethera part i cul ardefe ns e i s an af fi r m at i ve def

ens e, w h a t w e a re re a lly a sk in g is w h e th e r th a t d e f e n se is a d e q u a tely as s er t ed mer el ybyden y ing t he al l egat i ons m ade i n t he co mpl a i n t , o r whe t h e r mor e i s r e q u i r e d

. To a n s wert hat ques t i on, w e nee d t o det erm i ne w hethert he def ens e not es i s s ues n o t ra ise d , ev e n b yim p lica tio n , in th e c o m p lain t.
In p ra c tice , h o w e v e r, f

o c u sin g so lely o n th e re latio n sh ip betw een the def

ens e and the pl ai nt i ff’ s caus e of a ct i on is of l i m i t ed use w h er e, as her e, w hati s ati s s ue i s pr eci s el yt he n a tu re o f th a t r e la tio n s h ip

. See 5 W r i ght& M i l l er§ 1271 ( 3d ed. 20 04 ), at60 1 (noti ng t hat “this m od e of a naly si s has a cert ai n t aut ol ogi cal qual i t yt o i tbeca us e al l it su gges t s i s t hat m a tters th a t ar e n o t p a rt o f th e p lain tiff ’s s u b sta n tiv e c a se a re to be pl eaded af

fi r m at i vel y

— but , i n a s ens e, det erm i ni ng w hat m at t ers ar e partof the pl ai nt i ff’ s cas e i s t he veryt hi ng t o be as cert ai ned bydeci di ng w h ethera ce r t ai n i s s ue i s ori s notan aff i r m at i ve def

ens e”)

. O pt i on O ne’s argum enti s t hatt he t ol er ance s pr ovi s i on defi nes w hatcount s , forl egal purpos es , as an ac cur at e Truth i n L endi ng A ct d i s cl os ur e, and thus St er t en inv o k ed the p rov isi o n w h e n sh e a ll eg ed that O p ti o n O n e’s d is c lo s u re s w e re in a c c u ra te
. See O pt i on O ne’ s B r . 13 ( “[T] he d eb tor’s claim fa il s o n ce the c o u rtap p li es th e v erystatu tory s c h e m e th a t c re a te s th e c la im in th e f ir s t p la c e , notbeca us e the l enderhas i nt r oduced a nyextr i ns i c fa ct s orcount ervai li ng p rin c ip les o f law .”) (e m p h a sis in o rig in a l). S ter ten ’s a rg u m e n t, o n th e o th e r h a n d , is th a t th e to ler a n c e s p ro v isio n se ts o u t a st atutoryexcep t i on t o li abil i ty th ata def end ant m ust d e m o n s tr a te a p p lie s to t h e u n d is c lo s e d f in a n c e c h a rg e s . See15 St er t en’ s R epl yB r . 2 ( “[I ] ti s nott rue . . . t hata borr ow ercannot pr evai l i f the fi nance char ge under

- di s cl os ur e i s l es s t han onehal f of one per centof the fi nance char ge. T he l enderi s obl i ged t o s how ‘ s om ethi ng m or e, ’ i

. e. , t hatt he t ol er ance appl i es t o t he ch arg es a t i ssu e.”).
I ti s hel pful t o l ook i ns t ead a tw hatR ul e 8( c) i s i nt ended t o avoi d. A s w e have expl ai ned i n a di ffe r ent cont ext , “[t ] he purpos e of r equi r i n g th e defe ndantt o pl ead a vai l abl e af fi r m at i ve defe ns es i n hi s ans w eri s t o avoi d s urpr i s e and undue pr ej udi ce b yp ro v id in g th e p lain tif f w ith n o tice a n d th e o p p o rtu n ityto d e m o n s tr a te w h yth e a f f ir m a tiv e d e f

e n s e s h o u ld n o t s u c c e e d .” R obi ns on v. Johns on , 3 1 3 F .3 d 1 2 8 , 1 3 4

– 3 5 (3 d C ir. 2 0 0 2 ); s ee als o I ngr aham , 808 F. 2d at1079 ( “C entr al to requi r i ng t he p lea d in g o f

a f f irm a tiv e d e f

e n se s is th e p re v e n tio n o f u n f a ir s urpr i s e. A d ef

en d ants houl d notbe perm i t t ed t o ‘ l i e behi nd a l o g ’ a n d a mb u s h a p l a i n t i f f wi t h a n u n e x p e c t e d d e f e n s e . ” )

. As a pr act i cal m at t er , t hati s the pr operfocus of our in q u iry

— w h e th e r, g iv e n w h a t S ter ten w a s a lre a d yre q u ire d to s how , O pt i on O ne’ s fai l ur e t o r ai s e the t ol er ance i s s ue speci fi cal l ydep ri ved her of an oppo rtun i t yt o rebut that defense o rt o a l t e rh e rl i t i g a t i o n s t r a t e g y a c c o r d i n g l y. W e s ee no r eas on t o t hi nk t hat S tert en s uffe r ed any

“ u n f a ir su rp rise ” a s a c o n se q u e n c e o f O p tio n O n e ’s f

a ilu re to pl ead s peci fi cal l yt he t ol er ance s fo r a ccur acydefe ns e. T he a n a l y s i s a p l a i n t i f

f mu s tu n d e r t a k e t o s h o w any undi s cl os ed fin an ce ch arg es u n d er the T ruth in L en d ing A ct— tha tther e w ere di s cr epanc i es betw een w hatw as char ged and w hatw as16 di s cl os ed i n t he T rut h i n L endi ng D i s cl os ur e S t at ement , and that t hos e u n d i s c l o s e d f

e e s f a l l wi t h i n th e Act ’ s d e f i n i t i o n o f a “fi nance char ge”— i s t he s ame anal y s i s r equi r ed t o s how t hatt he undi s cl os ed char ges exce eded § 1605( f) ’ s r ange of err or . A s t he D istric t C o u rt a p tlyn o ted , “In h e r c o m p lain t, S ter ten a lleg e d a ll di s cl os ur e vi ol at i ons she bel i eved w er e att r i but abl e t o O pt i on O ne . . . . St er t en does not , and cannot , ar gue t hat had s he bee n aw ar e ea r l i ert hat§ 1605( f) w as i m p li ca t ed, s he w oul d have al l eged mor e subs t ant i al vi ol at i ons . . . . ” St er t en , 479 F. Supp. 2 d a t 4 8 3

. T h u s it is h a rd to se e h o w O p tio n O n e ’s f a ilu re to i nvoke the t ol er ance s pr ovis i on di s advant aged St er t en i n any w a y. S ter ten n o n e th e les s c o n ten d s th a t th e re w a s u n f a ir s urpr i s e i n hercas e, ar gui ng t hat“the ‘ t ol er ance ’ defe ns e i s not a m e c h a n ic a l p ro c e ss w h ich w o u ld b e a p p lied a n d c h u rn o u t a re s u lt in e x a c tly th e s a m e m a n n e r w h e th e r i t w e re r a i s e d b y a p a rt yd e f

e n d a n t p ri o r t o tr ia l o r n o t r a is e d u n til a f te r t ri a l.” S tert en ’s B r. 1 8

. S h e m ak es tw o sp ec ifi c arg u m en ts i n su p p o rt of thi s cl ai m , neither of w hich persuades us. Fi r s t , St er t en not es t hat , w hi l e the t ol er ance r ange w hen a cr edi t or s eeks r eci s s i on i s nor m al l yone- hal f of one per centof the to tal am o u n t of

cre d it ex tend ed , 1 5 U

. S

. C

. § 1 6 0 5 (f)(2)(A ), i ts hr i nks t o $35 w hen for ecl os ur e proc eedi ngs have been f i l ed, § 1635( i ) ( 2)

. T her efor e, sh e cont ends , t he appl i cat i on of the toleran ce d ef

en se d ep en d s o n fa cts o u tsi d e the d eb tor’s prim ary cas e— namel y , w hetherfor ecl os ur e has begun. St er t en’ s B r . 19. W h ile th is c laim is u n d e n iab lytru e , itis h a rd to se e h o w it17 p rese n ts an u n fa irsu rprise p rob lem

. W h ethe r fo rec losu re p ro c e e d in g s h a v e , in f a c t, be g u n is s o m e th in g a T ru th in L endi ng A ctpl ai nt i ff i s i n a pos i t i on t o know

. T her e i s t hus no r eas on w hy a p la i nt i ff unde rt he A ctw oul d be s urpr i s ed or bur dened byt he appl i cat i on of one r ange of t ol er ance r athert han an o ther. T h at t h e am o u n t o f error t o lerated v aries if fo rec losu re pr ocee di ngs have b egun i s not , t hen, enough t o pl ace t he p lea d in g b u rd e n o n th e d e f e n d a n t. See G om ezv. Tol edo , 446 U

. S. 6 3 5 , 6 4 0

– 4 1 ( 1 9 8 0 ) ( e x p l a i n i n g t h a tp l a c i n g t h e p l eadi ng bur den on the def

endant i s appr opr i at e w her e a de fens e hi nges on “fa ct s pecul i ar l yw i t hi n t he know l edge a nd contr ol of the d ef en d an t”).
Secon d , St er t en ar gues t hat , had s he “know n t hat

‘ t ol er ance ’ of the fi nance char ges w as ati s s ue, s he mayhave w el l un dert aken t o p rove or argue t hat these ch arges w ere in s titu tio n a l r a th e rt h a n a t t r i b u t a b l e t o m e r e m a t h e m a t i c a l e r ro r.” S ter ten ’s B r. 2 0 (e m p h a sis in o rig in a l). B u t th e re is n o th in g to s ug g est t hatappl y i ng t he t ol er ance s pr ovi s i on tur ns on t he m ot i ves of the cr edi t or . T he s ol e s uppor tSt er t en pr ov ide s for t hat p rop o si t i on i s one r efe r ence i n cas e l aw t o a s t at ementby t hen- Se n a t o rPa u l Sa rb a n e s o f f e r e d i n s u p p o r to f

a d d i n g t he to le ra n c e s p ro v is io n to th e A c t. I d. ( ci t i ng I

nge v. R ock Fi n. C or p. , 2 8 1 F .3 d 6 1 3 , 6 2 2 (6 th C ir . 2 0 0 2 ))

. I nge quot es Senat or S a rb e n e s a s s a y in g th a t “ [ t]h is i n c re a se d to ler a n c e f o r erro rs is in ten d e d to p ro tec t len d e rs f ro m . . . sm a ll e rro rs o f

ju d g m e n t .

. . . I ti s obvi ous l ynoti nt ended t o gi ve l ender s t he r i ghtt o pad fee s up t o the t ol er ance l i m i t
. . . . ” 281 F. 3d at622 ( quot i ng 141 C ong. R ec. S 14567 ( dai l y ed. Sept

. 28, 1995) ( s t at ementof18 Senat orSarbanes ) )

. B utt her e i s not hi ng i n the actual t extof § 1605( f) t o i n d icate t hatcour t s have a ut hor i t yt o condi t i on appl i cat i on of the pr ovi s i on on t he r eas on fora part i cul ar di s cl os ur e err or . O n t he contr ary , t he pr ovi s i on cl ear l ys t at es th a t “ th e d is c lo s u re o f

th e f in a n c e c h a rg e . . . sh a llbe tr eat ed as bei n g acc ur at e forpurpos es of thi s s ubchapt eri f the amount di s cl os ed as t he f

i nance char ge— [fa l l s w i t hi n t he s peci fi ed t ol er ance s ]

. ” 15 U

. S. C

. § 1605( f) ( emphasi s add ed)

. T hus , as O pt i on O ne ’ s mot i ve s do no ta pp e a rr e l e va ntt o the a nal y si s, St er t en w as not pr ej udi ced byl os i ng t he oppor tuni t yt o br i ng t hos e mot i ves i nt o ques t i on. G iv e n , th e n , w h a t is n e e d e d to e sta b lish a T ru th in L en d ing A ct d iscl o su re violati o n , w e c an n o t saythat the f ail u re to p lea d th e to ler a n c e iss u e sp e c if ica llyth re a ten s a T ru th in L en d ing A ct plaintiff w ith u n fa irsu rprise. W e there fo re concl ude that§ 1605( f) i s notan af fi r m at i ve def

ens e. S ter ten a rg u e s th a t th is c o n c lu sio n is in c o n sis ten t w ith I nge , w hi ch i s t he ca s e t he B ankrupt cy C our t pr i m ar i l yr el i ed on i n concl udi n g t hat§ 1605( f) does amount t o an af fi r m at i ve d e f e n s e . See Ster t en , 2006 B ankr

. L E X I S 4130, at *6–10. B ut Inge deal t w i t h a s epar at e m at t er . I t conce r ned w het h er a p la in tif f m us tal l ege i n hi s orhercompl ai ntt hat“the di ffe r ence betw een D efe ndant ’ s i ni t i al l y di s cl os ed fi nance char ge and the actual fi nance char ge exce ed ed” the t ol er ance r ange orel s e be s u b je c t to d is m is s a l f

o r f a ilu re to s ta te a c la im

. I nge , 281 F. 3d at616. T he I

nge C our ts i ded w i t h t he pl ai nt i ff, hol di ng t hatt he T rut h i n L endi ng A ctdoes notr equi r e thata compl ai nt19 s peci fi cal l y cont end t hatt he cl ai m ed di s cl os ur e err or s exce eded th e § 1 6 0 5 (f

) t h re s h o ld in o rd e r t o s ta te a re c o g n iz e d c la im

. I d. at62 1. W e do no t dis pu t e t hat con cl usi on here. W e on l ystres s t hatt her e i s not hi ng i ncons i s t entaboutholding , as t he I nge C our tdi d, t hat§ 1605( f) “does noti m pos e an i ndepende nt pl eadi ng hur dl e for[Truth i n L endi ng A ct ] pl ai nt i ffs , ” i d. , and concl udi ng, as w e do her e, t hat§ 1605( f) i s n o tan af fi r m at i ve defe ns e thatm us tbe pl ed s peci fi cal l ybya defen d an t. U nder not i ce pl eadi ng s t andar ds , i t i s s uffi ci ent for a pl ai nt i ff t o pl ead an erro r i n the d is clos ed fin an ce ch arg es to b ri n g the s tatu tory d e f in itio n o f e rr o r i n to p la y . See B e ll A tl. C o rp . v . T w o m b ly , __ U

. S. __, 127 S. C t
. 1955, 1964 ( 2007) ( des cr i bi ng the n o t i ce p lead ing stan d ard ). F o r th at sam e re aso n , it is s u f f icien t fo r a d e f e n d a n t to d e n yth a t itm a d e a n y d isc lo su re e rro rs in o rd e r to in v o k e § 1 6 0 5 (f

) a s w e ll.
I ti s t rue thatt he I

nge C our tw enton t o s ugges tt hat

“ C o n g re ss ’ re m e d ial p u rp o se f o r [ th e T ru th in L e n d in g A c t] is bes teff ectuat ed byc ons t rui ng t he § 1605( f) t ol er ance s pr ovi s i on as a pot ent i al aff

i r m at i ve def

ens e, r athert han as an ess ent i al el ement of a fi nance char ge di s cl os ur e cl ai m . ” 281 F. 3d at621. B u t th a t d i c t um i s n o tr e q u i r e d b y I nge ’ s hol di ng, and, fort he r eas ons s etfor t h above, w e choos e nott o adoptt hats ugges t i on her e. I n s um , beca us e t he T rut h i n L endi ng A ct ’ s t ol er ance s for a c c u r a c y d e f

e n s e i s n o t a f

f i r m a t i v e , b u tc a n b e p u ti n p l a y b y a g e n e ra l d e n ial, O p tio n O n e d id n o t f o rf e it th e c h a n c e to b e n e f

it from the pr ovi s i on byfai l i ng t o r ai s e the t ol er ance i s s ue20 sp e c if ica llyin a n sw e r to S ter ten ’s c o m p lain t. B. D i d O pt i on O ne W ai ve t he Pro t e c t i on o f § 1 60 5( f ) by not R ai s i ng I t at A ny Poi nt i n t he Li t i ga t i on? St er t en ar gues t hateven i f O pt i on O ne w er e notr equi r ed to ra is e th e to ler a n c e iss u e a t th e p lea d in g sta g e , it s “ c o m p lete fai l ur e . . . t o r ai s e th e issue o f t he ‘ t ol er ance ’ defe ns e i n any w ay , s hape, orfor m t o t he [B ankrupt cyC our t ] m us tgener al l ybe v iew ed as a w aive r of

that d ef en se.” S tert en ’s B r. 2 1

. M o re sp ec ifi ca ll y , S tert en m aintains th at th e B an k rup tcyC o u rt ’s “r ai s i ng of the ‘ t ol er ance ’ defe ns e i ssu e sua s pont e depr i ved [St ert en] of the abi l i t yt o ar gue thatt he ‘ tole r ance ’ s houl d not app l y du e t o the pres ence of forecl osure proceed i ng s or becau se t he s peci fi c over char ges w er e . . . not t he s ubj ectof an i nnocent m i s cal cul at i on. ” I

d. at22–23.
T hi s ar gum entfai l s fort he s ame r eas o n the pr evi ous ar g um entdi d— St er t en ca nnotes t abl i s h t hats he s uffe r ed any pr ej udi ce a s a r es ul tof O p ti o n O ne’ s fai l ur e t o r ai s e the i s s ue. C f. C et el , 460 F. 3d at506 ( hol di ng t hat , even i n t he ca s e of a n aff i r m at i ve def

ens e, t her e i s no w ai veri f ther e i s “no pr ej udi ce” )

. Fi rst , in herM ot i on t o A l t erorA m end the B ankrupt cyC our t ’ s i ni t i al or der , St er t en conc eded that for ecl os ur e pr ocee di ngs had notbeen f i l ed i n hercas e, not i ng in ste a d th a t “ if at an yti m e [ O p ti o n O n e] at t em pt s t o com m ence a for ecl os ur e ac t i on agai ns tt he D eb tor, t he ‘ t ol er ance ’ w i l l be red u ce d to $ 3 5

. ” S tert en ’s M o t. to A lte r o r A m en d C o u rt ’s O r der¶ 7 ( emphasi s added ). C l ear l y , St er t en coul d nothave21 been pr ej udi ced bybei ng depr i ved of a n oppor tuni t y t o pr es ent an ar gum ent

— t hat her cas e fa l l s undert he l ow ert ol er ance r ange th a t a p p lies a f

ter f o re c lo su re p ro c e e d in g s b e g in

— th a t th e f a c ts m a d e u n a v a ilab le to h e r. S e c o n d , a s d isc u ss e d a b o v e , the T ru th i n L endi ng A ct ’ s var i ous s cena r i os fort ol er at i ng m i nor inac cu rac ies d o n o t hing e o n the re aso n s b eh ind the d iscl o su re err or s . Y etagai n, St er t en s uffe r ed no pr ej udi ce bybei ng deni ed t he oppor tuni t yt o m ake a n ar gum entnot r el evantt o w hethers he prevai l s. W e do notdi s put e t hatt he mostprudentcour s e for O p tio n O n e w a s to a rg u e

— in its a n sw e r o r o th e rw ise

— th a t, i f i tm ade a nydi s cl os ur e err or s , t hos e err or s fel l w i t hi n t he tolera n ce ran g e ra ther tha n rely ing o n the B an k rup tcyC o u rt ’s su a sp o n te appl i cat i on of § 1605( f)

. St i l l , O pt i on O ne’ s gener al deni al t hati tcomm i t t ed any di s cl os ur e vi ol at i ons w as s uffi ci ent t o pr es erve the t ol er ance i s s ue. G i ven that deni al , and gi ven the abs ence of anyr eal pr ej udi ce s uffe r ed bySt er t en, t he B ank rupt cyC ou rt ’s su a sp o n te appl i cat i on of § 1605( f) w as not im p rop er. I V . C oncl usi on O pt i on O ne di d notfor fei t the defe ns e af for ded byt he T rut h i n L endi ng A ct ’ s t ol er ance s for acc ur acy pr ovi s i o n by fai l i ng t o r ai s e i ts peci fi cal l ybefor e the B ankrupt cyC our t
. T he defe ns e w as gener al

. T hati tw as di r ect l yr ai s ed su a sp o n te by t he B ankrupt cyC our ti s t h u s per m i t t ed. T hatC our t ’ s i ni t i al jud g m en t w as th ere fo re corr ect

— O pt i on O ne’ s d iscl o su res w ere22 “ac cur at e as a m at t er of l aw ” bec aus e the amountof undi s cl os ed fin an ce ch arg es w a s w ith in the statu torym arg in o f e rror. A ccor di ngl y , w e af

fi r m t he D i s t r i ctC our t ’ s or der di r ect i ng t he B ankrupt cyC our tt o r es t or e i t s init i al j udgm enti n favorof O pt i on O ne.