FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In the Matter of: BOBBY FERRELL, 

Jr.,

Debtor, No. 06-17243

BAP No.

KATHLEEN A. MCDONALD,  NV-05-01420-

Appellant, MaMoS

v. OPINION

CHECKS-N-ADVANCE, INC.,

Appellee. 

Appeal from the Ninth Circuit

Bankruptcy Appellate Panel

Marlar, Montali, and Smith, Bankruptcy Judges, Presiding

Argued and Submitted

July 18, 2008—San Francisco, California

Filed August 22, 2008

Before: Jerome Farris, Carlos T. Bea, and

Eugene E. Siler, Jr.,* Circuit Judges.

Per Curiam Opinion

*The Honorable Eugene E. Siler, Jr., Senior United States Circuit Judge

for the Sixth Circuit, sitting by designation. 

11377
COUNSEL

Christopher P. Burke, Esq., Las Vegas, Nevada, for plaintiffappellant Kathleen McDonald, Chapter 13 Trustee for the

Bankruptcy Estate of Bobby Ferrel, Jr. 

Jean Constantine-Davis, Nina F. Simon, Deborah Zuckerman,

AARP Foundation Litigation, Washington, D.C.; Stuart Rossman, National Consumer Law Center, Boston, Massachusetts;

Dan L. Wulz, Clark County Legal Services Program, Inc., Las

Vegas, Nevada, for amici curiae National Consumer Law

Center, AARP, and Clark County Legal Services Program,

Inc. in support of appellant. 

OPINION

PER CURIAM: 

Chapter 13 bankruptcy trustee Kathleen McDonald appeals

the bankruptcy appellate panel’s denial of her request for

actual damages, statutory damages, attorneys’ fees, and costs

under the Truth in Lending Act, 15 U.S.C. § 1601 et seq., and

for attorneys’ fees and costs under Nevada law. This appeal

raises an issue of first impression for this circuit: whether statutory damages are available for violations of 15 U.S.C.

11380 IN THE MATTER OF: FERRELL
§§ 1632(a) and 1638(b)(1). We hold that they are not. We

also reject the Trustee’s claim for actual damages and for

attorneys’ fees and costs.1

BACKGROUND

On June 27, 2002, Bobby Ferrel, Jr. obtained a “pay-day

loan”2 from Checks-N-Advance, Inc.3 An unsigned promissory note from Checks-N-Advance specified that Ferrel4

received $300 as a pay-day advance. Ferrel was obligated to

repay the $300 and a $45 financing fee by July 4, 2002. The

stated annual percentage rate of interest was 782.143%. The

“finance charge,” “annual percentage rate,” “amount

financed,” and “total of payments” appeared in the same font

and size on the promissory note. McDonald claims that Ferrel

did not receive disclosures required by the Truth in Lending

Act before consummating the transaction. 

Ferrel filed for Chapter 13 bankruptcy on February 7, 2003.

Kathleen McDonald was appointed as trustee. The Trustee,

not the unpaid creditor, filed a creditor’s proof of claim on

behalf of Check-N-Advance for the unpaid loan. She then initiated an adversary proceeding by filing a complaint requesting that the bankruptcy court disallow the claim. In the

1We grant the National Law Center, the AARP, and the Clark County

Legal Services Program’s motion for leave to file an amicus brief pursuant

to Fed. R. App. P.29 (a). 

2A pay-day loan is a small-sum, short-term, single-payment loan

secured by a check the borrower gives to the payday lender in the amount

of the cash advance plus interest. If the borrower fails timely to repay, the

lender can negotiate the check or the borrower can extend the due date by

paying a fee. See Jenkins v. First Am. Cash Advance of Georgia, LLC, 400

F.3d 868, 871 (11th Cir. 2005). 

3Although the trustee filed suit against multiple defendants, we refer

only to Checks-N-Advance as the defendant/appellee. 

4Although the debtor is referred to as “Ferrell” in the decision of the

Bankruptcy Appellate Panel, the complaint spells his last name as “Ferrel.” 

IN THE MATTER OF: FERRELL 11381
complaint, McDonald claimed the loan agreement: (1) failed

to provide TILA-required disclosures prior to consummation

of the transaction in violation of 15 U.S.C. § 1638(b);

(2) failed “properly and conspicuously” to disclose the

finance charge and the annual percentage rate in violation of

15 U.S.C. § 1632(a) and its implementing regulations; and

(3) violated Nevada state consumer loan law, NRS

§ 604.164.3, which requires the same disclosures as TILA.

McDonald sought damages and attorneys’ fees and costs

under TILA, as well as attorneys’ fees and costs under

Nevada law. 

Checks-N-Advance did not respond to the Trustee’s complaint. The bankruptcy court found Check-N-Advance violated the Truth in Lending Act and entered default judgment

in favor of the Trustee by granting the objection to the proof

of claim. Taking the factual allegations in the complaint as

true, the bankruptcy court denied relief, however, on the

Trustee’s Truth in Lending Act claims. The court held that

Checks-N-Advance violated 15 U.S.C. §§ 1632(a),

1638(b)(1), and Regulation Z (12 C.F.R. § 226.17(a)(2), (b)).5

However, relying on Brown v. Payday Check Advance, Inc.,

202 F.3d 987 (7th Cir. 2000), it denied the Trustee’s request

for statutory damages for violations of §§ 1632(a) and

1638(b)(1)6 and Regulation Z. The court further found that the

Trustee failed to demonstrate actual damages. It also rejected

the Trustee’s state law claims. 

The Trustee appealed to the bankruptcy appellate panel,

which affirmed the bankruptcy court in a reasoned decision.

McDonald v. Check-N-Advance (In re Ferrell), 358 B.R. 777

(B.A.P. 9th Cir. 2006). The BAP based its decision on a close

5

12 C.F.R. § 226.17(a)(2) implements the requirements listed in 15

U.S.C. § 1632(a) and 12 C.F.R. § 226.17(b) implements the requirements

found in 15 U.S.C. § 1638(b)(1). 

6Unless otherwise specified, our citation to statutes refers to Title 15 of

the United States Code. 

11382 IN THE MATTER OF: FERRELL
analysis of the text and legislative history of the Truth in

Lending Act, and rejected the Trustee’s request for statutory

damages. Id. at 784-87. It acknowledged and followed both

Brown and Baker v. Sunny Chevrolet, Inc., 349 F.3d 862 (6th

Cir. 2003). Id. at 785. The BAP also dismissed the Trustee’s

claim for actual damages, for failure to prove Ferrel relied to

his detriment on the faulty loan agreement citing In re Smith,

289 F.3d 1155 (9th Cir. 2002) (per curiam). Id. at 790. The

BAP rejected the Trustee’s claim for attorneys’ fees and costs

pursuant to Nevada law. Id. at 792-93. It concluded that the

Trustee did not meet the requirements for relief under Nevada

law, and that the Trustee procedurally defaulted under Fed. R.

Civ. P. 54(c). Id. by failing to plead the Nevada statute under

which she sought attorneys’ fees. The Trustee timely

appealed. 

DISCUSSION

I. Standard of Review 

We review independently “the bankruptcy court’s rulings

on appeal from the BAP.” Miller v. Cardinale (In re Deville),

361 F.3d 539, 547 (9th Cir. 2004). We review the bankruptcy

court’s conclusions of law de novo, and its findings of fact for

clear error. Hanf v. Summers (In re Summers), 332 F.3d 1240,

1242 (9th Cir. 2003). 

II. Statutory Scheme 

[1] Congress enacted the Truth in Lending Act in 1968 to

strengthen the “informed use of credit” by requiring meaningful disclosure of credit terms to consumers. 15 U.S.C.

§ 1601(a). The purpose of the Act is to:

assure a meaningful disclosure of credit terms so that

the consumer will be able to compare more readily

the various credit terms available to him and avoid

the uninformed use of credit, and to protect the conIN THE MATTER OF: FERRELL 11383
sumer against inaccurate and unfair credit billing and

credit card practices. 

Id. “In order to effectuate this purpose” we construe the Act’s

provisions liberally in favor of the consumer. Jackson v.

Grant, 890 F.2d 118, 120 (9th Cir. 1989). “To insure that the

consumer is protected . . . [the TILA and accompanying regulations must] be absolutely complied with and strictly

enforced.” Id. (alteration in original) (internal quotation and

citation omitted). 

[2] Section 1638(a) sets forth the disclosures that creditors

must make in closed-end consumer credit transactions,7

including pay-day loans. See 15 U.S.C. § 1638(a). Among

other items, creditors must disclose the annual percentage rate

of interest and finance charge. 15 U.S.C. §§ 1638(a)(3), (4).

Section 1638(b)(1) requires creditors to make these disclosures “before the credit is extended.” Section 1632(a) imposes

an extra obligation on creditors to disclose “[t]he terms

‘annual percentage rate’ and ‘finance charge’ . . . more conspicuously than other terms, data, or information provided in

connection with a transaction.” Congress added this requirement to the Act in 1980. It previously was a requirement only

in Regulation Z. See S. Rep. No. 96-73, at 14 (1979),

reprinted in 1980 U.S.C.C.A.N. 280, 292. 

[3] The Truth in Lending Act provides a cause of action for

consumers to obtain actual or statutory damages for a creditor’s failure to comply with certain requirements of the Act.

15 U.S.C. § 1640(a).8 The Act broadly states that “any credi7Section 1638 governs transactions other than open ended transactions.

See 15 U.S.C. § 1638. An open ended transaction is “a plan under which

the creditor reasonably contemplates repeated transactions.” 15 U.S.C.

§ 1602(i). Because the pay-day loan is a one-time transaction, it is not an

“open ended” transaction. 

8Section 1640(a) states in relevant part: 

Except as otherwise provided in this section, any creditor who

fails to comply with any requirement imposed under this part

11384 IN THE MATTER OF: FERRELL
tor who fails to comply with any requirement imposed under

[part B] . . . or part D or E . . . is liable to” any consumer

doing business with the creditor. 15 U.S.C. § 1640(a) (emphasis added). A consumer may recover “any actual damage sustained . . . as a result of the failure.” Id. § 1640(a)(1). A

consumer may also obtain statutory damages totaling “twice

the amount of any finance charge in connection with the

transaction” from a creditor who fails to comply with certain

provisions of the Act. Id. § 1640(a)(2)(A)(i).9 However, there

are exceptions to the recovery of statutory damages. The

scope of these exceptions presents an issue of first impression.

To resolve this question, we address only whether violations

of §§ 1632(a) or 1638(b)(1)10 warrant statutory damages under

§ 1640(a)(2). We hold that they do not. 

[§§ 1631-1649] . . . with respect to any person is liable to such

person in an amount equal to the sum of— 

(1) any actual damage sustained by such person as a result of

the failure; 

(2)(A) (i) in the case of an individual action twice the amount of

any finance charge in connection with the transaction . . . 

. . . 

In connection with the disclosures referred to in section 1638 of

this title, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 1635 of this title or of paragraph (2) (insofar as it requires

a disclosure of the “amount financed”), (3), (4), (5), (6), or (9) of

section 1638(a) of this title, or for failing to comply with disclosure requirements under State law for any term which the Board

has determined to be substantially the same in meaning under

section 1610(a)(2) of this title as any of the terms referred to in

any of those paragraphs of section 1638(a) of this title. 

15 U.S.C. § 1640(a) (emphases added). 

9We address only this provision, recognizing that there are other penalty

provisions in § 1640(a)(2)(A), none of which apply here. 

10This presents a question of statutory interpretation. Our first step is to

determine whether the statutory language has a plain and unambiguous

meaning. Robinson v. Shell Oil, 519 U.S. 337, 340 (1997). If the statutory

language is unambiguous and the statutory scheme is “coherent and consistent,” “[o]ur inquiry must cease.” Id. (citation omitted). 

IN THE MATTER OF: FERRELL 11385
III. The Trustee is not Entitled to Statutory Damages for

Violations of 15 U.S.C. § 1638(b)(1) 

The Trustee contends that she may recover statutory damages for Checks-N-Advance’s failure to comply with the disclosure timing rule of § 1638(b)(1). Relying on Lozada v.

Dale Baker Oldsmobile, Inc., 145 F. Supp. 2d 878 (W.D.

Mich. 2001), overruled by Baker v. Sunny Chevrolet, 349

F.3d 862 (6th Cir. 2003), the Trustee argues that § 1638(b)(1)

is not covered by § 1640(a)’s exceptions to statutory damages.

We decline to follow Lozada. 

[4] The exceptions to § 1640(a)’s statutory damages are

broader than the Trustee contends. The Act states that: 

In connection with the disclosures referred to in section 1638 of this title, a creditor shall . . . [be liable

for statutory damages] only for failing to comply

with the requirements . . . of paragraph (2) (insofar

as it requires a disclosure of the “amount financed”),

(3), (4), (5), (6), or (9) of section 1638(a) of this title

. . . . 

15 U.S.C. § 1640(a) (emphasis added). The language “[i]n

connection with the disclosures referred to in section 1638”

encompasses more than just the disclosure rules of 1638. The

use of the word “only” then limits recovery for violations of

any of these disclosures to a closed list of violations of

§ 1638(a)(2) (only regarding the “amount financed”), (3), (4),

(5), (6), or (9).11 This accords with Congress’s desire to “nar11We note that this closed list also includes § 1635 which gives the obligor a right of rescission where a credit transaction is secured by his principal dwelling, 15 U.S.C. § 1635(a), and “disclosure requirements under

State law for any term which the Board has determined to be substantially

the same in meaning under section 1610(a)(2) of this title as any of the

terms referred to in any of those paragraphs of section 1638(a) of this

title.” 15 U.S.C. § 1640(a). These requirements are irrelevant to the Trustee’s appeal. 

11386 IN THE MATTER OF: FERRELL
row a creditor’s civil liability for statutory penalties to only

those disclosure[s] which are of central importance in understanding a credit transaction’s costs or terms.” S. Rep. No. 96-

73, at 7 (1979), reprinted in 1980 U.S.C.C.A.N. 280, 285.12

Reading the rule more broadly would not accord with Congress’s intent to “eliminate litigation which is based on violations of a purely technical nature.” Id.

[5] Under the plain language of § 1640(a), violations of the

disclosure timing rules of § 1638(b)(1) are exempted from

statutory damages. First, the rule of § 1638(b)(1) is part of

and functions “[i]n connection with the disclosures referred to

in section 1638.” 15 U.S.C. § 1640(a); see Baker, 349 F.3d at

873 (Guy, J., concurring) (“The limitation of the final sentence of § 1640(a) . . . explicitly applies ‘in connection with

the disclosures referred to in § 1638’—not just § 1638(a).”).

Second, § 1638(b)(1) is not found in the closed list of

§ 1638(a) disclosure rules enumerated in § 1640(a) for which

statutory damages are available. We hold that a consumer

may not recover statutory damages under § 1640(a) for violations of § 1638(b)(1) and its corresponding regulations, 12

C.F.R. § 226.17(b). As the Trustee has not enforced any liability under § 1640(a)(2), she is not entitled to attorneys’ fees

and costs pursuant to § 1640(a)(3). 

IV. The Trustee is not Entitled to Statutory Damages for

Violations of 15 U.S.C. § 1632(a) 

The Trustee asserts that she is entitled to statutory damages

for Checks-N-Advance’s violation of the “more conspicuous”

disclosure rule of § 1632(a). Again relying on Lozada, she

12In amending the Act, Congress stated that it intended this effect: “In

a ‘closed end’ transaction, such as . . . [a pay-day loan], the creditor’s civil

liability for statutory penalties would be limited to disclosure of the

amount financed, the finance charge, the total of payments, the annual percentage rate, the number, amount, and due dates of payments, any security

interest taken, and where applicable, the consumer’s right to rescission.”

S. Rep. No. 96-73, at 7 (1979), reprinted in 1980 U.S.C.C.A.N. 280, 285.

IN THE MATTER OF: FERRELL 11387
asserts that because § 1632(a) is not expressly mentioned in

the final sentences of § 1640(a), it remains a basis for statutory damages. We reject the argument. 

[6] Section 1632(a)’s requirement that “[t]he terms ‘annual

percentage rate’ and ‘finance charge’ shall be disclosed more

conspicuously than other terms” functions “[i]n connection

with the disclosures referred to in section 1638” and has no

force without § 1638(a)’s disclosure obligations. 15 U.S.C.

§ 1640(a); see Brown, 202 F.3d at 991 (“The moreconspicuous-disclosure obligation of § 1632(a) works ‘[i]n

connection with the disclosures referred to in section

1638.’ ”). A violation of § 1632(a) cannot form the basis for

statutory damages, as it does not fall within the closed list of

§ 1638(a) subsections, violations of which can support an

award of statutory damages. See Brown, 202 F.3d at 991. 

[7] We are aware that Congress specifically added the

“more conspicuous” rule to the Act in the 1980 amendments.

See S. Rep. No. 96-73, at 14 (1979), reprinted in 1980

U.S.C.C.A.N. 280, 292. The codification of this regulation

does not alter our analysis of the § 1640(a)’s exceptions to

statutory damages. The “more conspicuous” rule functions

integrally with § 1638(a). Congress did not designate

§ 1632(a) as a basis for statutory damages in its closed list of

requirements that do. See S. Rep. No. 96-73, at 7 (1979),

reprinted in 1980 U.S.C.C.A.N. 280, 285 (listing the basis for

statutory damages). 

[8] We hold that a consumer may not recover statutory

damages for violations of § 1632(a) and its corresponding

regulations, 12 C.F.R. § 226.17(a)(2). As the Trustee has not

enforced any liability under § 1640(a)(2), she is not entitled

to attorneys’ fees and costs pursuant to § 1640(a)(3). 

V. The Trustee is not Entitled to Actual Damages

The Trustee asserts that she is entitled to actual damages

under § 1640(a)(1), and requests that we overturn our decision

11388 IN THE MATTER OF: FERRELL
in Smith v. Gold Country Lenders (In re Smith), 289 F.3d

1155 (9th Cir. 2000). No valid basis has been cited on which

to overrule Smith. 

[9] In Smith, we held that “in order to receive actual damages for a TILA violation . . . a borrower must establish detrimental reliance.” 289 F.3d at 1157. The consumer must show

that she “would either have secured a better interest rate elsewhere, or foregone the loan completely.” Id. The Trustee recognizes that she has not demonstrated detrimental reliance.

She has not persuaded us of a different rule than that

announced in Smith. We affirm the BAP. 

VI. The Trustee is not Entitled to Attorneys’ Fees and

Costs under Nevada Law

The Trustee asserts that she is entitled to attorneys’ fees

and costs under Nevada’s consumer fraud act. She claims that

Checks-N-Advance’s failure to abide by the Truth in Lending

Act constitutes a “deceptive trade practice” under Nev. Rev.

Stat. § 598.0923(3) and that this qualifies her to receive fees

and costs pursuant to Nev. Rev. Stat. § 41.600(3)(b). We

reject the argument. 

To recover attorneys’ fees and costs on default judgment,

the plaintiff must “specify the judgment and the statute, rule,

or other grounds [so] entitling” her. Fed. R. Civ. P.

54(d)(2)(B)(ii); see id. 54(c) (“A default judgment must not

differ in kind from, or exceed in amount, what is demanded

in the pleadings.”); Fed. R. Bankr. P. 7054(a) (following Fed.

R. Civ. P. 54). 

[10] The Trustee failed to plead with specificity the statute

under which she now claims to be entitled to costs and fees.

The complaint requested attorneys’ fees and costs under Nev.

Rev. Stat. § 604.164. On appeal, the Trustee now insists on

fees and costs under Nev. Rev. Stat. § 41.600. To enter fees

and costs in the Trustee’s favor would violate Rule 54(c) by

IN THE MATTER OF: FERRELL 11389
imposing a default judgment on grounds that differ from what

was “demanded in the pleadings.” Fed. R. Civ. P. 54(c). The

complaint’s request for “such other relief as the court deems

appropriate” cannot save the Trustee’s claim. This prayer for

relief lacks the requisite specificity to put defendants on

notice that the Trustee sought attorneys’ fees and costs on the

default judgment pursuant to Nev. Rev. Stat. § 41.600. See

Fed. R. Civ. P. 54(d)(2)(B). 

AFFIRMED. 

11390 IN THE MATTER OF: FERRELL