FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JAMES A. MCCOY, on behalf of 

himself and all others similarly

situated, No. 06-56278

Plaintiff-Appellant, D.C. No.  v. CV-06-00107-JVS

CHASE MANHATTAN BANK, USA, OPINION

National Association,

Defendant-Appellee. 

Appeal from the United States District Court

for the Central District of California

James V. Selna, District Judge, Presiding

Argued and Submitted

November 21, 2008—Pasadena, California

Filed March 16, 2009

Before: Richard D. Cudahy,* Harry Pregerson, and

Michael Daly Hawkins, Circuit Judges.

Opinion by Judge Hawkins;

Dissent by Judge Cudahy

*The Honorable Richard D. Cudahy, Senior United States Circuit Judge

for the Seventh Circuit, sitting by designation. 

3325
COUNSEL

Barry L. Kramer (authored briefs and presented argument),

Law Offices of Barry L. Kramer, Los Angeles, California, for

the plaintiff-appellant. 

Robert S. Stern (authored brief) and Nancy R. Thomas (presented argument), Morrison & Foerster, LLP, Los Angeles,

California, for the defendant-appellee. 

3328 MCCOY v. CHASE MANHATTAN BANK
OPINION

HAWKINS, Circuit Judge: 

This case presents the question of whether the notice

requirements of the Truth in Lending Act (“TILA”), 15

U.S.C. §§ 1601-1615 and Regulation Z, 12 C.F.R. § 226, as

interpreted by the Federal Reserve Board’s Official Staff

Commentary, apply to discretionary interest rate increases

that occur because of consumer default. We hold that Regulation Z requires a creditor to provide contemporaneous notice

of such rate increases.

FACTUAL AND PROCEDURAL BACKGROUND

James A. McCoy (“McCoy”) brought this action on behalf

of himself and others similarly situated against Chase Manhattan Bank, USA, N.A. (“Chase”), a national bank located in

Delaware. McCoy alleges that Chase increased his interest

rates retroactively to the beginning of his payment cycle after

his account was closed to new transactions as a result of a late

payment to Chase or another creditor. McCoy claims that the

rate increase violated TILA and Delaware law because Chase

gave no notice of the increase until the following periodic

statement, after it had already taken effect. The district court

dismissed McCoy’s complaint with prejudice, holding that

because Chase discloses the highest rate that could apply due

to McCoy’s default in its cardmember agreement with McCoy

(“Cardmember Agreement”), no notice was required.

JURISDICTION AND STANDARD OF REVIEW

We have appellate jurisdiction pursuant to 28 U.S.C.

§ 1291 and review dismissals for failure to state a claim de

novo. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).

MCCOY v. CHASE MANHATTAN BANK 3329
DISCUSSION

Federal TILA Claim

[1] Congress enacted TILA 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 consumer against inaccurate and unfair credit billing and credit

card practices.” 15 U.S.C. § 1601(a). Regulation Z, adopted

by the Federal Reserve Board to implement TILA, addresses

when and how notice of changes in terms must be given: 

Written notice required. Whenever any term required

to be disclosed under § 226.6 is changed or the

required minimum periodic payment is increased,

the creditor shall mail or deliver written notice of the

change to each consumer who may be affected. The

notice shall be mailed or delivered at least 15 days

prior to the effective date of the change. The 15-day

timing requirement does not apply if the change has

been agreed to by the consumer, or if a periodic rate

or other finance charge is increased because of the

consumer’s delinquency or default; the notice shall

be given, however, before the effective date of the

change. 

12 C.F.R. § 226.9(c)(1). Section 226.6 requires that a creditor

disclose inter alia “each periodic rate that may be used to

compute the finance charge.” 12 C.F.R. § 226.9(a)(2). 

The parties dispute the meaning of the phrase “any term

required to be disclosed under § 226.6.” Chase argues that the

phrase applies only to the contractual terms of Chase’s Cardmember Agreement. McCoy suggests the phrase also applies

to the list of specific “items” § 226.6(a)(2) requires be disclosed, which includes the interest rate that may be used.

3330 MCCOY v. CHASE MANHATTAN BANK
Although we find McCoy’s interpretation more natural, we

acknowledge that the text of Regulation Z is ambiguous. 

We defer to an agency interpretation of its own ambiguous

regulation provided it is not “plainly erroneous or inconsistent

with the regulation.” Auer v. Robbins, 519 U.S. 452, 461

(1997) (citing Robertson v. Methow Valley Citizens Council,

490 U.S. 332, 359 (1989)). We do not “permit the agency,

under the guise of interpreting a regulation, to create de facto

a new regulation.” Christensen v. Harris County, 529 U.S.

576, 588 (2000). 

Chase argues that the Federal Reserve Board (“FRB”)’s

Official Staff Commentary interprets Regulation Z to require

no notice in this case. We disagree. 

[2] Comment 3 is the most salient Official Staff Commentary to § 226.9(c)(1) and, when describing the amount of

notice required for different kinds of changes, provides that “a

notice of change in terms is required, but may be mailed or

delivered as late as the effective date of the change . . . [i]f

there is an increased periodic rate or any other finance charge

attributable to the consumer’s delinquency or default.”

§ 226.9(c)(1), cmt. 3. The plain-meaning of Comment 3 is to

require notice when a cardholder’s interest rates increase

because of a default, but to specify that the notice may be

contemporaneous, rather than fifteen days in advance of the

change. Under Comment 3, McCoy has stated a claim. 

Chase argues that because Comment 3 repeats language

from Regulation Z, a different portion of the Official Staff

Commentary, Comment 1, should govern instead. Comment

3’s specific reference to interest rate increases attributable to

the consumer’s delinquency or default is directly on point and

therefore governs. Even if we decided that Comment 1,

despite preceding Comment 3, could somehow be interpreted

as an exception to it, we would still hold that Comment 1 does

MCCOY v. CHASE MANHATTAN BANK 3331
not dispel Chase’s obligation to notify its account holders of

discretionary rate increases. 

[3] Comment 1 to § 226.9(c)(1) describes the circumstances in which Regulation Z requires no notice of a change

in terms: 

“Changes” initially disclosed. No notice of a change

in terms need be given if the specific change is set

forth initially, such as: Rate increases under a properly disclosed variable-rate plan, a rate increase that

occurs when an employee has been under a preferential rate agreement and terminates employment, or an

increase that occurs when the consumer has been

under an agreement to maintain a certain balance in

a savings account in order to keep a particular rate

and the account balance falls below the specified

minimum. In contrast, notice must be given if the

contract allows the creditor to increase the rate at

its discretion but does not include specific terms for

an increase (for example, when an increase may

occur under the creditor’s contract reservation right

to increase the periodic rate). 

12 C.F.R. § 226.9(c), cmt. 1 (emphasis added). 

The effect of Comment 1, assuming arguendo it applies,

depends on how the phrase “specific” is defined. McCoy

argues that the “specific change is set forth initially” and the

“specific terms for an increase” are included in a contract

when the contract gives consumers the information they need

in order to know what interest rate they will be charged and

under what conditions. Chase argues that any agreement that

specifies the possibility of an interest rate increase if the cardholder defaults and establishes any boundaries on the potential amount of the increase adequately “sets forth” a “specific

change.” 

3332 MCCOY v. CHASE MANHATTAN BANK
[4] McCoy’s reading of Comment 1’s use of the word “specific” is reinforced by the three examples Comment 1

includes of rate increases for which notice is not required. The

first example is “rate increases under a properly disclosed

variable-rate plan.” Id. Variable rate plans specify that the

interest rate will fluctuate in direct correspondence with an

externally determined variable rate such as, for example, the

Federal Prime rate. Providing additional notice of the interest

rate charged under a variable rate plan would be redundant

because variations in the interest rate are not discretionary,

and the method for computing the interest rate based on the

Federal Prime rate is fully specified in advance. Creditors in

that circumstance need not provide additional notice because

consumers can predict their precise interest rate according to

a formula. 

The second example in Comment 1 is “a rate increase that

occurs when an employee has been under a preferential rate

agreement and terminates employment.” Id. Again, the notice

of such a rate increase would be redundant because it “occurs” whenever the employee terminates employment. Nothing suggests the creditor possesses any discretion over

whether to increase the rates or by how much to do so once

the event triggering a higher rate occurs. 

The third example is “an increase that occurs when the consumer has been under an agreement to maintain a certain balance in a savings account in order to keep a particular rate and

the account balance falls below the specified minimum.” Id.

Again, the use of the word “occurs” rather than the phrase

“may occur” suggests that additional notice would be redundant because the increase is non-discretionary.1

 All three

1Although the dissent argues for an alternative view of these examples,

we do not believe it is reading too much into the Board’s description of

“an increase that occurs” when specified criteria are met to conclude that

the phrase refers to automatic increases. By declining to read the word

“may” into the Board’s language, we choose the more natural reading of

the examples, if not the only conceivable one. 

MCCOY v. CHASE MANHATTAN BANK 3333
examples pertain to rate increases that are spelled out in cardmember agreements and ascertainable by the consumer without additional notice. 

In contrast to these examples, the increase here occurs at

Chase’s discretion and the most pertinent “specific terms for

an increase” — the actual amount of the increase and whether

it will occur — are not disclosed in advance. The Cardmember Agreement states that Chase “may” change McCoy’s

interest rate and impose a non-preferred rate “up to” the maximum rate described in the pricing schedule. The agreement

further states that McCoy’s account “may” lose its preferred

rates if he defaults. Although the agreement defines what constitutes a “default” triggering Chase’s ability to exercise this

discretion, a default is only one of the conditions required for

an increase; it may be necessary, but apparently it is not sufficient. Chase outlines several other criteria it “may” obtain and

use to review McCoy’s account “for the purposes of determining its eligibility for Preferred rates,” including McCoy’s

consumer credit reports, his payment history and level of utilization over the life of his account, and his other relationships

with Chase and its affiliates. 

Chase does not disclose to McCoy how it may use this

information and provides McCoy with no basis for predicting

in advance what retroactive interest rate Chase will choose to

charge him if he defaults. Under the agreement, when McCoy

defaults, he will not know whether his rate will stay the same,

increase slightly, or rise to the maximum default rate until he

receives his next periodic statement listing the new rate.

Worse yet, this new rate would then apply retroactively. 

Chase argues that the terms for an increase are adequately

specified because the concept of a “default” is defined and

because consumers are aware of the maximum rate they might

pay in the “worst case scenario.” It further argues that the discretionary increase that may occur when a consumer defaults

can be reconceptualized as an automatic increase, followed by

3334 MCCOY v. CHASE MANHATTAN BANK
a discretionary reduction in rates. The district court accepted

this line of reasoning, concluding that a “decision not to

increase a rate is analytically indistinct from a decision to

lower a rate.” 

[5] This argument proves too much because it would apply

equally to Comment 1’s example of when contemporaneous

notice is required. Comment 1 specifically explains that

notice must be given “when an increase may occur under the

creditor’s contract reservation right to increase the periodic

rate.” 12 C.F.R. § 226.9(c), cmt. 1. Like a “reservation right

to increase the periodic rate,” the contract provision authorizing Chase to increase a defaulted consumer’s interest rate up

to the maximum default rate at its discretion does not give the

cardholder sufficient information to know what rate will apply

and therefore requires the creditor to provide notice. Chase’s

“contract allows the creditor to increase the rate at its discretion,” § 226.9(c), cmt. 1, and does not specify the relevant

terms, including the conditions that are necessary and sufficient for an increase to occur and the actual amount of the

increase that will occur. Chase’s agreement not to increase the

interest rate higher than a preset, double-digit maximum does

not materially distinguish its Cardmember Agreement from a

contract reservation right to increase the periodic rate. An

interpretation of Comment 1 as eliminating Regulation Z’s

notice requirement even where consumers do not have sufficient information to determine whether their interest rate will

be raised, or by how much, dilutes the meaning of the word

“specific” beyond recognition. 

[6] Chase argues that we must nevertheless interpret Regulation Z to require no notice in this case because we must

defer to a now-superceded Advance Notice of Proposed Rulemaking,2

 promulgated for public comment by the Federal

2This 2007 ANPR has been superceded by a final rule amending Regulation Z to require forty-five days’ notice for rate increases effective July

1, 2010. Truth in Lending, 74 Fed. Reg. 5244 (Jan. 29, 2009) (to be codified at 12 C.F.R. § 226.9(g)(1)). 

MCCOY v. CHASE MANHATTAN BANK 3335
Reserve in 2007, which briefly characterizes existing law in

the process of explaining a proposal to amend Regulation Z

to increase the amount of notice for interest rate increases to

forty-five days in most cases. Truth in Lending, 72 Fed. Reg.

32948-01, 33009 (proposed June 14, 2007) (“2007 ANPR”).

Consideration of the 2007 ANPR does not lead us to

change our interpretation of the FRB’s Official Staff Commentary. Chase observes that the 2007 ANPR includes as an

example of when a “change-in-terms notice” is not required,

“some credit card account agreements [that] permit the card

issuer to increase the periodic rate if the consumer makes a

late payment,” noting that “[b]ecause the circumstances of the

increase are specified in advance in the account agreement,

the creditor currently need not provide a change-in-terms

notice; under current § 226.7(d) the new rate will appear on

the periodic statement for the cycle in which the increase

occurs.” 72 Fed. Reg. 33009. The effect of this language is

ambiguous, however, because the term “change-in-terms

notice” could, as Chase argues, refer to contemporaneous

notice required for changes in interest rates, but might instead

refer only to the fifteen days’ advance notice required for

changes in contractual terms.3

The 2007 ANPR also contains language suggesting it “is

currently the case” that notice is required even if “the creditor

specifies the penalty rate and the specific events that may trigger the penalty rate in the account-opening disclosures.” 72

Fed. Reg. 33012. The FRB reaffirmed this view in the “Supplementary Information” published by the FRB along with the

final rule amending Regulation Z. In any case, FRB chose to

3A slightly less terse, but substantively identical, provision in a 2004

ANPR suggests that the latter is more likely, stating that where the circumstances of an increase are specified in advance, “the creditor need not

provide a change-in-terms notice 15 days in advance of the increase; the

new rate will appear on the periodic statement for the cycle in which the

increase occurs.” Truth in Lending, 69 Fed. Reg. 70925-01, 70931-32

(proposed Dec. 8, 2004) (emphasis added). 

3336 MCCOY v. CHASE MANHATTAN BANK
remove the ambiguous language entirely when it issued a

Final Rule and Supplementary Information amending Regulation Z in 2009. Truth in Lending, 74 Fed. Reg. 5244, 5350-03

(Jan. 29, 2009). Both the older ANPR and the recently

approved statement of the FRB’s views clearly state it “is currently the case” under Comments 1 and 3 that contemporaneous notice of default-based rate increases is required even

where the “creditor specifies the penalty rate and the specific

events that may trigger the penalty rate in the accountopening disclosures.” Id. 

[7] Therefore, while language scattered throughout the

2007 ANPR offers some support for each view of the Official

Commentary, the ANPR does not clearly weigh in favor of

either interpretation of Regulation Z. This ambiguity is not

surprising because the primary purpose of the 2007 ANPR

(and the 2004 ANPR that preceded it) was to announce proposed amendments to Regulation Z and solicit comment, not

to offer additional staff commentary on Regulation Z’s current requirements.

As the dissent notes, although no binding authority has

addressed this question,4 several district court opinions and

one unpublished memorandum disposition in this circuit have

accepted Chase’s view. See, e.g., Evans v. Chase Bank USA,

N.A., 267 Fed. Appx. 692, 693 (9th Cir. 2008) (unpublished

disposition); Swanson v. Bank of America, 566 F. Supp. 2d

4This case is not governed by Hauk v. JP Morgan Chase Bank United

States, 552 F.3d 1114 (9th Cir. 2009), which interpreted 12 C.F.R.

§ 226.6(a) to allow a promotional interest rate to be discontinued due to

a late payment made prior to undertaking a balance transfer agreement.

The plaintiff in Hauk did not appear to allege that the interest rate increase

violated TILA because it was a discretionary interest rate increase

undertaken without contemporaneous notice. Consequently, Hauk rested

its holding on the irrelevance under TILA of a creditor’s “undisclosed

intent to act inconsistent with its disclosures,” id. at *18, and did not

address whether § 226.9, as interpreted by Comment 1 or Comment 3,

requires contemporaneous notice for such increases. 

MCCOY v. CHASE MANHATTAN BANK 3337
821 (N. D. Ill. 2008); Williams v. Wash. Mut. Bank, 2008 U.S.

Dist. LEXIS 5325 (E.D. Cal. Jan. 10, 2008); Shaner v. Chase

Bank, USA, N.A., 570 F. Supp. 2d 195, 200 (D. Mass. 2008);

Evans v. Chase Manhattan Bank USA, N.A., 2006 U.S. Dist.

LEXIS 5259 (N.D. Cal. Jan. 27, 2006). Most of these decisions cite the district court’s analysis in Evans, which held

that Chase set out the “specific terms for an increase” because

“Chase gives the reasons for its rate changes.” Evans, 2006

U.S. Dist. LEXIS 5259, at *7-8. In Evans, the district court

apparently labored under the misconception that Comment 3

precedes Comment 1 and therefore did not apply where the

conditions specified in Comment 1 are met. See id., at *6 (citing Comment 3 and then asserting that “[t]he Commentary

goes on to state, however, that ‘[n]o notice of a change in

terms need be given if the specific change is set forth initially,’ ”) (quoting Comment 1). Possibly for the same reason,

most of these courts did not even discuss Comment 3 and

none attended to the 2007 ANPR’s internal ambiguities or

considered what kind of deference, if any, is owed to an agency’s characterizations of existing law when they are incidental

to the purpose of an agency publication.5 Our own consider5The relevance of the 2007 ANPR was limited even before it was superceded because we defer to the FRB’s Official Staff Commentary, not incidental descriptions of current law contained in an ANPR. The FRB has

prescribed the Official Staff Commentary as “the vehicle by which the

staff of the [FRB] issues official staff interpretations of Regulation Z.” 12

C.F.R. Part 226, Supp. I, para. 1; see also Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 566, 568 (1980) (distinguishing the deference owed

to Board and official staff interpretations from that owed to unofficial

interpretations). Although Chase may, at a later stage of litigation, assert

a statutory “good-faith” defense under 15 U.S.C. § 1640(f) for acting in

conformity with an FRB interpretation promulgated “under such procedures as the Board may prescribe,” the defense is only available for

actions based on the Official Staff Commentary, not on such incidental

interpretations appearing in an ANPR, particularly one that was promulgated after this suit was filed and could not have been relied upon when

Chase acted. 

Auer, 519 U.S. at 462, would not require any greater showing of deference. In Auer, the court deferred to an interpretation of a rule contained

3338 MCCOY v. CHASE MANHATTAN BANK
ation of the FRB’s Official Staff Commentary, unofficial

ANPRs, and the Supplementary Information accompanying

its recent amendment of Regulation Z leaves us firmly convinced of the FRB’s intent to require contemporaneous notice

when rates are raised because of a consumer’s delinquency or

default, as McCoy alleges occurred in this case.

State Law Claims 

In his second, third, and fourth causes of action, McCoy

claims that Chase’s practice of retroactively raising interest

rates after a consumer defaults is unconscionable and that he

is therefore entitled to declaratory relief, reformation, and

damages for imposing an illegal penalty. The district court

correctly noted that these causes of action are foreclosed if

Delaware law specifically authorizes the practice because,

pursuant to the National Bank Act, 12 U.S.C. § 85, Delaware

law governs what interest Chase may charge and the methodology used to determine that interest rate. 

[8] We reverse the dismissal of these claims, however,

because the Delaware Banking Act authorizes rates of interest

that “vary in accordance with a schedule or formula.” 5 Del.

C. § 944. As the district court noted, a permissible schedule

or formula may include a provision for a change in the “rates

in an agency’s legal brief that was directed specifically to the “matter in

question.” Id. at 462; see also Anderson Bros. Ford v. Valencia, 452 U.S.

205, 213, 217 (1981) (characterizing a proposed ruling merely as “persuasive authority” not “wholly without significance,” even though it was

directly on the matter in question). 

Here, the 2007 ANPR’s tersely worded “interpretations” of existing law

are incidental to the purpose of the agency action, are stated in conclusory

fashion, are themselves ambiguous, and have now been superceded.

Therefore, unlike in Auer, we do have “reason to suspect that the interpretation does not reflect the agency’s fair and considered judgment on the

matter in question.” Auer, 519 U.S. at 462. Consequently, we interpret the

FRB’s Official Staff Commentary directly. 

MCCOY v. CHASE MANHATTAN BANK 3339
of interest applicable to all or any part of outstanding unpaid

indebtedness . . . contingent upon the happening of any event

or circumstance specified in the plan,” including a default. Id.

Section 944 therefore would clearly authorize a “schedule or

formula” that specified a higher interest rate that would automatically apply in the event of default. However, the language

of § 944 does not appear to authorize rate increases that are

discretionary and vary according to criteria in addition to the

consumer’s default where those criteria are not specified in a

schedule or formula contained in the agreement. 

Absent binding Delaware court decisions construing the

terms “schedule,” “formula,” or “contingent upon” in § 944,

our task is to “predict how the highest state court would

decide the issue using intermediate appellate court decisions,

decisions from other jurisdictions, statutes, treatises, and

restatements as guidance.” Arizona Elec. Power Coop., Inc. v.

Berkeley, 59 F.3d 988, 991 (9th Cir. 1995) (quoting In re

Kirkland, 915 F.2d 1236, 1239 (9th Cir. 1990)). In this case,

however, only federal district courts have construed § 944 and

not one has adequately addressed the importance of the discretionary nature of the increases or whether such increases

are really “in accordance with a schedule or formula.” See,

e.g., Swanson v. Bank of Am., N.A., 566 F. Supp. 2d 821, 829

(N.D. Ill. 2008) (“By describing the events which cause the

rate increase to occur, Defendant has complied with Section

944.”); Evans v. Chase Manhattan Bank USA, N.A., 2006

U.S. Dist. LEXIS 5259, at *12 (N.D. Cal. Jan. 27, 2006) (concluding an agreement complied with § 944 because it

described “what events will cause default rates to go into

effect”). 

[9] These interpretations of § 944 neglect to consider fully

whether rate increases truly are “contingent upon” a default

and in “accordance with a schedule or formula” where they

are discretionary and can result in a range of interest rates

depending on undisclosed criteria beyond the occurrence of a

default. A close analysis of the Cardmember Agreement

3340 MCCOY v. CHASE MANHATTAN BANK
reveals that it does not describe the specific events that “will

cause default rates to go into effect,” Evans, 2006 U.S. Dist.

LEXIS 5259, at *12 (emphasis added), but only those that

may do so. It also fails to disclose how much Chase will actually increase rates should it choose to do so. As a result, we

hold that the rate increases McCoy faced under the Cardmember Agreement were not authorized by § 944 because no

“schedule or formula” contained in the agreement revealed

whether the increases would occur or how large they would

actually be. 

[10] Having held that the contract provision authorizing

discretionary interest rate increases is not authorized by § 944,

we conclude that McCoy has made out a colorable claim that

the provision may also be “unconscionable” under Delaware

law and he should “be afforded a reasonable opportunity to

present evidence as to its commercial setting, purpose and

effect to aid the court in making its determination.” 6 Del. C.

§ 2-302; see also Evans, 2006 U.S. Dist. LEXIS 5259, at *12

(noting that absent authorization under § 944, “Plaintiffs’

unconscionability contention may have had some weight”). 

Any increased interest charge stemming from a default that

occurs retroactively functions as “damages paid in the event

of a breach,” not compensation for the increased risk of noncollection, because McCoy would still owe that retroactively

imposed additional charge even if he paid Chase his entire

balance the moment after he defaulted. For these reasons, we

reverse the dismissal of McCoy’s second, third, and fourth

causes of action. 

[11] McCoy’s fifth cause of action alleges Chase committed consumer fraud by failing to provide notice of an increase

in interest. Delaware’s consumer fraud statute, 6 Del. C.

§ 2513(a), prohibits:

The act, use or employment by any person of any

deception, fraud, false pretense, false promise, misMCCOY v. CHASE MANHATTAN BANK 3341
representation, or the concealment, suppression, or

omission of any material fact with intent that others

rely upon such concealment, suppression or omission, in connection with the sale, lease or advertisement of any merchandise, whether or not any person

has in fact been misled, deceived or damaged

thereby, is an unlawful practice. 

This allegation fails to state a claim for consumer fraud under

§ 2513(a) because Chase openly and expressly notifies cardholders of the actions it reserves the right to take in the event

of a default. Although Chase may have failed to fulfill its

obligations under federal and Delaware law, McCoy has not

alleged facts to support a finding that it concealed or misrepresented the possibility that it might raise rates without notice

when a consumer defaulted. We affirm the dismissal of

McCoy’s fifth claim for relief.

[12] McCoy’s sixth and seventh causes of action allege

claims for breach of contract and tortious breach of the

implied covenant of good faith and fair dealing. The Cardmember Agreement states that Chase would “notify [McCoy]

of any change if required by applicable law.” Given the

requirements under TILA and Delaware law discussed above,

while McCoy clearly has stated a claim that Chase breached

this explicit contractual provision,6 he cannot state an implied

duty of good faith claim because “where the subject at issue

is expressly covered by the contract, or where the contract is

intentionally silent as to that subject, the implied duty to perform in good faith does not come into play.” Dave Greytak

Enters., Inc. v. Mazda Motors of Am., Inc., 622 A.2d 14, 23

6Chase’s citation to the pre-existing legal duty doctrine is inapposite

because a contractual promise to comply with preexisting federal legal

obligation is enforceable, Island Ins. Co. v. Hawaiian Foliage & Landscape, Inc., 288 F.3d 1161, 1167 (9th Cir. 2002), provided the contract is

supported by independent consideration, Rossdeutscher v. Viacom, Inc.,

768 A.2d 8, 21 (Del. 2001).

3342 MCCOY v. CHASE MANHATTAN BANK
(Del. Ch. 1992). Consequently, we reverse the dismissal of

the sixth cause of action and affirm the dismissal of the seventh. 

CONCLUSION

Under Regulation Z as interpreted by its Official Staff

Commentary, McCoy has stated a TILA claim if Chase failed

to give him notice of an interest rate increase “because of the

consumer’s delinquency or default” or if his contract with

Chase “allows the creditor to increase the rate at its discretion

but does not include the specific terms for an increase.” 12

C.F.R. § 226.9(c)(1); Id., cmt. 3; Id., cmt. 1. Having concluded that McCoy has stated a claim under either standard,

we reverse and remand to the district court. We affirm the dismissal of McCoy’s fifth and seventh causes of action, but

reverse the dismissal of McCoy’s other state law claims. 

AFFIRMED IN PART AND REVERSED IN PART.

Costs on appeal to Appellant. 

CUDAHY, Circuit Judge, dissenting: 

Before addressing the myriad arguments made by the

majority, I think it would be helpful to put matters in context

— view the “big picture.” The claims made by Mr. McCoy

have been raised in many other forums, usually by the same

attorneys who represent him here. See Evans v. Chase Bank

USA, N.A., 267 Fed. Appx. 692 (9th Cir. Feb. 22, 2008);

Swanson v. Bank of Am., 566 F. Supp. 2d 821 (N.D. Ill.

2008); Williams v. Wash. Mut. Bank, 2008 WL 115097 (E.D.

Cal. Jan. 11, 2008); Augustine v. FIA Card Servs., N.A., 485

F. Supp. 2d 1172 (E.D. Cal. 2007); Penner v. Chase Bank

USA, N.A., 2006 WL 2192435 (W.D. Wash. Aug. 1, 2006);

Evans v. Chase Manhattan Bank USA, N.A., 2006 WL 213740

(N.D. Cal. Jan. 27, 2006). In all of those cases the result was

MCCOY v. CHASE MANHATTAN BANK 3343
the opposite of the one reached here. In one case the court did

at first indicate that it was inclined to rule in favor of the

plaintiffs but reversed course when it was made aware of the

Advance Notice of Proposed Rulemaking (ANPR) issued by

the expert agency, the Federal Reserve Board (FRB or the

Board), which quite clearly showed that the Board disagreed

with their interpretation. Shaner v. Chase Bank USA, N.A.,

570 F. Supp. 2d 195, 199-200 (D. Mass. 2008) (citing 69 Fed.

Reg. 70925-01, 70931-32 (Dec. 8, 2004)). The majority concedes, as it must given the unanimity of results on the other

side, that the regulation is ambiguous. But the majority then

departs from those holdings, and from established Supreme

Court precedent, by refusing to defer to the Board’s interpretation in the face of that ambiguity, and by suggesting, somewhat misleadingly, that the Board’s interpretation is less than

clear. 

The provision of Regulation Z at issue here provides that

“Whenever any term required to be disclosed under § 226.6

is changed or the required minimum periodic payment is

increased, the creditor shall mail or deliver written notice of

the change to each consumer who may be affected.” 12 C.F.R.

§ 226.9(c)(1) (emphasis added). This refers back to Section

226.6(a)(2), which says, “[t]he creditor shall disclose to the

consumer . . . each of the following items, to the extent applicable: . . . each periodic rate that may be used to compute the

finance charge . . . and the corresponding annual percentage

rate.” 12 C.F.R. § 226.6(a)(2) (emphasis added). So the question becomes the following: did Section 226.9(c)(1) require

Chase to provide contemporaneous notice to McCoy of an

increase in his interest rate due to his default when that

increase was an implementation of the existing terms of his

agreement with Chase?1 The majority says that although the

1The relevant portions of McCoy’s Cardmember Agreement were the

following: 

CHANGE IN TERMS NOTICE

3344 MCCOY v. CHASE MANHATTAN BANK
regulation is ambiguous, the FRB’s Official Staff Commentary to § 226.9(c)(1) makes the answer a clear “yes.” The

We are making certain changes to the terms of your Account as described

below. . . . 

The following are changes to the existing terms of your Account. 

• Preferred Customer Pricing Eligibility . . . . The section will be

revised to read as follows: 

Preferred Customer Pricing Eligibility . . . . Your Account will

be reviewed every month on your Statement Closing Date to

determine its continued eligibility for the Preferred or NonPreferred rates. On each monthly review, we may change your

interest rate and impose a Non-Preferred rate up to the maximum

Non-Preferred rate described in the Pricing Schedule for each

occurrence when you do not meet the conditions described below

to be eligible for Preferred [rates]. Any changes in pricing as a

result of the monthly reviews for Preferred or Non-Preferred rates

will apply to existing as well as new balances and will be effective with the billing cycle ending on the review date. 

To keep Preferred rates, the following conditions must be met

as of the review date: 

*you have made at least the required minimum payments

when due on your Account and on all other loans or accounts

with us and your other creditors; and 

*the credit limit on your Account has not been exceeded; and

*any payment on your Account has not been returned

unpaid. 

If you do not meet all of these conditions . . . your Account

may lose its Preferred rates. . . . 

We may obtain consumer reports from credit bureaus on you

at any time in the future. We may use the reports and their contents, as well as information about your Account including its

payment history and level of utilization over the life of your

Account, and your other relationships with us and our affiliates

to review your Account including for the purposes of determining

its eligibility for Preferred rates and of establishing the NonPreferred rate that may apply to your Account. 

Appellant’s Excerpts of Record, Tab 14, at Chase 00026. 

MCCOY v. CHASE MANHATTAN BANK 3345
majority feels no need to give any deference to the Board’s

views expressed in its ANPRs, which lead to the opposite

conclusion and which are reinforced by every other court that

has considered the question. See supra. 

The Supreme Court has instructed us to give respect and

deference to the Board when interpreting the Truth in Lending

Act, 15 U.S.C. § 1601 et seq. (“TILA”). Ford Motor Credit

Co. v. Milhollin, 444 U.S. 555, 565-69 (1980) (“Unless

demonstrably irrational, Federal Reserve Board staff opinions

construing the Act or Regulation should be dispositive. . . .”);

see also Anderson Bros. Ford v. Valencia, 452 U.S. 205, 212-

13, 217 (1981). I would find that the Supreme Court requires

deference to Board interpretations found in ANPRs. This

required deference, of course, reflects universally applicable

Supreme Court jurisprudence in keying statutory and regulatory interpretation on deference to the views of the responsible executive agencies. See, e.g., Chevron U.S.A. Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837, 842-

45 (1984). 

On December 19, 2008, as the majority notes, the Board

issued a final rule amending Section 226.9 to require 45 days’

notice for rate increases because of defaults, irrespective of

whether the possibility of those increases was disclosed in a

cardmember agreement. This new rule becomes effective in

2010. Truth in Lending, 74 Fed. Reg. 5244-01 (Jan. 29, 2009)

(to be codified at 12 C.F.R. pt. 226). It comes after at least

two ANPRs, 69 Fed. Reg. 70925-01, 70931-32 (Dec. 8,

2004); 72 Fed. Reg. 32948-01, 33009 (June 14, 2007), both

of which recognized that requiring additional notice in these

circumstances is a change from what is currently required.

The 2007 ANPR explains:

Advance notice is not required in all cases. For

example, if an interest rate or other finance charge

increases due to a consumer’s default or delinquency, notice is required, but need not be given in

3346 MCCOY v. CHASE MANHATTAN BANK
advance. See current § 226.9(c)(1); comment

9(c)(1)-3. Furthermore, no change-in-terms notice is

required if the specific change is set forth initially by

the creditor in the account-opening disclosures. See

current comment 9(c)-1. For example, some account

agreements permit the card issuer to increase the

periodic rate if the consumer makes a late payment.

Because the circumstances of the increase are specified in advance in the account agreement, the creditor currently need not provide a change-in-terms

notice; under current § 226.7(d) the new rate will

appear on the periodic statement for the cycle in

which the increase occurs. 

72 Fed. Reg. 33009 (emphasis added).2

The majority says that the relevance of the Board’s statements is limited and we need not defer to them because they

are not official comments, but merely “incidental descriptions

of current law contained in an ANPR.” Despite the majority’s

assertion to the contrary, its position conflicts starkly with that

of the Supreme Court, which in Anderson Bros. Ford gave

significant weight to a nearly identical publication. See id.,

452 U.S. at 212-13, 217 (calling a proposed official staff

interpretation “persuasive authority” and concluding that “we

cannot agree that the staff’s views expressed in the proposed

2The distinction between “change-in-terms” notice and “advance

notice” suggested by McCoy in his reply and by the majority is a weak

attempt to escape the direct and explicit statements by the Board that contradict their position. Additionally, I disagree with the majority’s interpretation of the Board’s statement in its December 2008 “Supplementary

Information” regarding what is “currently the case” as recognizing that

contemporaneous notice is currently required by existing law. A nearverbatim statement appeared in the 2007 ANPR. 72 Fed. Reg. 33012.

Elsewhere in that ANPR, as has already been discussed, the Board explicitly rejected the majority’s view that Official Staff Commentary requires

contemporaneous notice in a case like this one. I would not interpret a repetition of any portion of the 2007 ANPR as a sudden change of the

Board’s opinion. 

MCCOY v. CHASE MANHATTAN BANK 3347
ruling are wholly without significance”). In Anderson Bros.

Ford, the Board published for comment an Official Staff

Interpretation that was directly contrary to the view taken by

three out of four courts of appeals. The Board said that while

a “technical reading” of Regulation Z might support the three

courts of appeals, it was the Board’s opinion that the disclosure was not the type of thing “meant to be” required by Regulation Z (and was therefore not in fact required). Id. at 212-

13. The Court said that the Board’s interpretation did not conclusively establish the meaning of the words used in TILA,

but that “absent some obvious repugnance to the statute, the

Board’s regulation implementing this legislation should be

accepted by the courts, as should the Board’s interpretation of

its own regulation.” Id. at 219. The Court strongly implied

that this was so even if the text of the provision at issue suggested a contrary result, saying, 

Unaided by an administrative construction of the

TILA and Regulation Z, a court could easily conclude, based on the language of the statute and of

Regulation Z, that the interest in unearned insurance

premiums acquired by the creditor in this case

should be characterized as a “security interest” that

must be disclosed. But, in light of the proposed official staff interpretation of Regulation Z [and the legislative history of TILA and related statutes], it is

evident that the Board [disagrees].

Id. at 222 (emphasis added). The Court noted that it “has frequently relied on the principle that ‘a thing may be within the

letter of the statute and yet not within the statute, because not

within its spirit, nor within the intention of its makers.’ ” Id.

at 222 n.20.3

3Cf. Milhollin, 444 U.S. at 560 (“At the threshold . . . interpretation of

TILA and Regulation Z demands an examination of their express language; absent a clear expression, it becomes necessary to consider the

implicit character of the statutory scheme. For the reasons following, we

conclude that the issue [here] is not governed by clear expression in the

statute or regulation, and that it is appropriate to defer to the Federal

Reserve Board and staff in determining what resolution of that issue is

implied by the truth-in-lending enactments.”). 

3348 MCCOY v. CHASE MANHATTAN BANK
An ANPR does not meaningfully differ from a “proposed

official staff interpretation” for purposes of the deference we

ought to accord it. The Supreme Court’s decision in Milhollin,

444 U.S. 555, also supports this view. Although, as the majority points out, Milhollin distinguishes between “official” and

“unofficial” staff interpretations in specifying which of the

FRB’s views may be relied on for a good-faith defense under

15 U.S.C. § 1640(f), Milhollin’s description of what makes an

official interpretation “official” would apply equally to an

ANPR: “[o]fficial interpretations are published in the Federal

Register, and opportunity for public comment may be requested.” Milhollin, 444 U.S. at 567 n.10. The same is true of

ANPRs. See 72 Fed. Reg. 32948 (“The proposed revisions

take into consideration comments from the public on an initial

advance notice of proposed rulemaking (ANPR) published in

December 2004 on a variety of issues relating to the format

and content of open-end credit disclosures and the substantive

protections provided under the regulation.”). Moreover, the

Court in Milhollin did not restrict itself to consideration of

“official interpretations.” It also considered FRB Public Information Letters and CCH Consumer Credit Guides in divining

the agency’s views on the matter in question. See Milhollin,

444 U.S. at 563 & n.8. Nothing in Milhollin suggests that similar deference would not be appropriate here. To the contrary,

Milhollin emphasized that the “traditional acquiescence in

administrative expertise is particularly apt under TILA,

because the Federal Reserve Board has played a pivotal role

in ‘setting [the statutory] machinery in motion.’ ” 444 U.S. at

566 (quoting Norwegian Nitrogen Products Co. v. United

States, 288 U.S. 294, 315 (1933)). In short, Milhollin encourages more deference, not less, to the Board’s stated views. 

The majority also marshals Auer v. Robbins, 519 U.S. 452

(1997) in support of its argument that ANPRs deserve no deference, but Auer, too, cuts the other way. Auer accords “controlling” deference to an agency interpretation found in a legal

brief. 519 U.S. at 461, 462. Briefs drafted in litigation necessarily carry less weight than proposed rules subject to notice

MCCOY v. CHASE MANHATTAN BANK 3349
and comment, yet the Auer Court deferred because there was

“no reason to suspect that the interpretation does not reflect

the agency’s fair and considered judgment on the matter in

question.” Id. at 462. See also Bowles v. Seminole Rock &

Sand Co., 325 U.S. 410, 417-18 (1945) (“Any doubts concerning this interpretation of [the regulation] are removed by

reference to the administrative construction of [the rule],”

including in bulletins issued with the regulation, the Administrator’s First Quarterly Report to Congress, and the Administrator’s statement that this position had uniformly been taken

“in countless explanations and interpretations” given to those

affected by the regulation.). 

It follows that, even if we somehow owe less deference to

statements of the Board contained in an ANPR than we would

to an official comment, that does not mean we owe no deference at all, or less than controlling deference in the present

case. See United States Freightways Corp. v. C.I.R., 270 F.3d

1137, 1141 (7th Cir. 2001) (“[D]eference to agency positions

is not an all-or-nothing proposition; more informal agency

statements and positions receive a more flexible respect

. . .”). As a practical matter, the Board has made its opinion

regarding the correct interpretation of its own regulation more

than clear, and for the various reasons explained by the

Supreme Court on many occasions, see, e.g., Milhollin, 444

U.S. at 565-69, we owe that opinion deference. Therefore, it

is abundantly clear that the Supreme Court would not countenance disregard for the Board’s opinion regarding the correct

interpretation of Regulation Z, even if that opinion appears in

an ANPR rather than Official Staff Commentary. 

The majority, however, provides its own analysis based on

its own interpretation of the FRB’s Official Staff Commentary

regarding Regulation Z, brushing aside the Board’s views

found in ANPRs. The potentially relevant comments are

Comment 1 to Section 226.9(c) and Comment 3 to Section

226.9(c)(1):

3350 MCCOY v. CHASE MANHATTAN BANK
9(c) Change in Terms

1. Changes initially disclosed. No notice of a change

in terms need be given if the specific change is set

forth initially, such as: Rate increases under a properly disclosed variable-rate plan, a rate increase that

occurs when an employee has been under a preferential rate agreement and terminates employment, or an

increase that occurs when the consumer has been

under an agreement to maintain a certain balance in

a savings account in order to keep a particular rate

and the account balance falls below the specified

minimum. In contrast, notice must be given if the

contract allows the creditor to increase the rate at its

discretion but does not include specific terms for an

increase (for example, when an increase may occur

under the creditor’s contract reservation right to

increase the periodic rate). . . .

. . .

9(c)(1) Written Notice Required

3. Timing-advance notice not required. Advance

notice of 15 days is not necessary — that is, a notice

of change in terms is required, but it may be mailed

or delivered as late as the effective date of the

change — in two circumstances:

• If there is an increased periodic rate or any other

finance charge attributable to the consumer’s

delinquency or default . . . . 

12 C.F.R. § 226.9(c), cmt. 1; 12 C.F.R. § 226.9(c)(1), cmt. 3.

The majority concludes that “Comment 3’s specific reference to interest rate increases attributable to the consumer’s

delinquency or default is directly on point and therefore govMCCOY v. CHASE MANHATTAN BANK 3351
erns.” But these two comments are not a case of the specific

versus the general or of one being an exception to the other.

Instead, they are independent and each governs a distinct

issue: Comment 1, whether a change-in-terms notice is

required, and Comment 3, in cases where a change-in-terms

notice is required, whether it must be issued 15 days in

advance or not. Comment 3 does not purport to govern the

question whether notice is required. Neither does it specifically govern default situations.4

 Instead, it is entitled “Timing,” and it specifically governs timing issues. In contrast, as

the majority generally recognizes, “Comment 1 . . . describes

the circumstances in which Regulation Z requires no notice of

a change in terms.” Accord Swanson, 566 F. Supp. 2d at 827

(“Comment 3 applies only to the timing of a notice of ‘change

of terms.’ As discussed above, Defendants’ practice at issue

here does not involve a ‘change of terms’ as contemplated by

Section 226.9(c)(1).”).5 The majority does not recognize this

distinction and therefore fails to account for the fact that,

because Comment 3 assumes situations where notice is

required and controls only timing, it does not address the

question at issue here.

The majority says that even if Comment 1 applies, Chase

did not satisfy its requirements and Comment 1 does not

excuse Chase from providing contemporaneous notice of discretionary rate increases to account holders. The majority

interprets Comment 1’s use of the word “specific” (“No

4

In fact, the third example of Comment 1 is arguably a default situation:

when the consumer has been under an agreement to maintain a certain balance in a savings account in order to keep a particular rate and the account

balance falls below the specified minimum. 

5There are no doubt many instances where, unlike here, a creditor

changes a consumer’s interest rate upon his default and is required to provide a change-in-terms notice. There, Comment 3 would apply to determine the timing of the requisite change-in-terms notice. Here, however,

we need not consider the issue of proper timing under Comment 3 because

Chase is exempted from the requirement of additional notice by Comment

1. 

3352 MCCOY v. CHASE MANHATTAN BANK
notice of a change in terms need be given if the specific

change is set forth initially . . . . [N]otice must be given if the

contract allows the creditor to increase the rate at its discretion but does not include specific terms for an increase . . . ,”

12 C.F.R. § 226.9(c), cmt. 1 (emphasis added)) to cover only

circumstances in which the creditor has disclosed the exact

change and the precise terms, so that additional notice would

be redundant. I cannot interpret the comment so narrowly. It

is certainly more than reasonable to find that Chase has satisfied it here.

In the Cardmember Agreement, Chase disclosed the three

conditions that McCoy had to comply with in order to remain

eligible for his Preferred rate. Violation of these conditions

was necessary (even if not sufficient) for Chase to take away

McCoy’s Preferred rate. The Agreement disclosed the maximum interest rate that could apply: the maximum NonPreferred rate described in the Pricing Schedule. It also disclosed the time at which the new rate would become effective:

it would “apply to existing as well as new balances and

[would] be effective with the billing cycle ending on the

review date.” Finally, Chase disclosed that it might take certain steps to investigate McCoy’s compliance with the

required conditions, including obtaining credit reports on him

from consumer credit bureaus. Semantic contortions aside, I

believe that these statements set forth a specific change and

disclosed the specific terms for that change. Accord Swanson,

566 F. Supp. 2d at 825.6 Chase’s disclosure thus fulfills the

obvious purposes of Comment 1. 

6The fact that Chase did not disclose the precise factors it might use to

determine not to exercise its discretion to impose the maximum increase

should not offend Comment 1. The Board has indicated that contemporaneous notice is not required when a creditor decides to reduce interest

rates. See 12 C.F.R. § 226.9(c)(2). A creditor’s decision to decline to

impose the maximum increase has the same effect on a consumer as deciding to reduce interest rates, and a similar rationale would apply to justify

the position that the creditor need not disclose in advance the exact cirMCCOY v. CHASE MANHATTAN BANK 3353
The majority buttresses its conclusion to the contrary by

reference to Comment 1’s examples, saying that “[a]ll three

examples pertain to rate increases that are spelled out in cardmember agreements and ascertainable by the consumer without additional notice.” In contrast, it says, “the increase here

occurs at Chase’s discretion and the most pertinent ‘specific

terms for an increase’ — the actual amount of the increase

and whether it will occur — are not disclosed in advance.” 

At the outset, the majority is wrong in assuming that the

three examples do not involve any discretion on the creditor’s

part regarding whether to apply an increase and if so, how

much of one. For instance, when analyzing the third example,

the majority reads much into the Board’s use of the phrase

“an increase that occurs” instead of one that “may occur,”

concluding that the Board thereby meant that the increase

would be automatic and non-discretionary. The Board does

not specify in any of the examples that the increase must be

of a definite amount that is ascertainable by the consumer

without additional notice. This might be a valid assumption

with regard to the first example (the variable-rate plan), but

such ascertainability is not an essential element of the second

and third examples. Neither states one way or the other

whether they involve a precise and automatic increase. 

Further, I am not persuaded, as the majority is, that the

Board had in mind a standard of complete redundancy when

specifying examples of situations where additional notice

would not be required. To the contrary, the Board specifically

recognized that there may be situations in which the creditor

cumstances in which it would decide not to impose the maximum increase.

The majority says this argument proves too much because it would apply

equally to an example in which Comment 1 specifically requires notice

(“when an increase may occur under the creditor’s contract reservation

right to increase the periodic rate”). I disagree that this argument would

apply equally to that example because in that example, there does not

appear to be a specified maximum rate. 

3354 MCCOY v. CHASE MANHATTAN BANK
retains some discretion (as long as “specific [‘]terms[’] for an

increase” are disclosed, 12 C.F.R. § 226.9(c), cmt. 1) and

additional notice is not required.7 If discretion is sometimes

permissible, then precise rates certainly may not always be

ascertainable by the consumer before the fact.

As a final matter, I would just note that the interpretation

of Regulation Z shared by Chase and the Board seems to me

to be consistent with the purpose of TILA. See Anderson

Brothers, 452 U.S. at 219-20 (“The purpose of the TILA is to

promote the ‘informed use of credit’ by consumers.”) (quoting 15 U.S.C. § 1601), 222 (“The Board’s position is supported by the legislative history of both the TILA and the

1980 Act, and we hold that it is a permissible interpretation

of the term ‘security interest’ as used in the TILA.”); 15

U.S.C. § 1604 (“The Board shall prescribe regulations to

carry out the purposes of this subchapter.”). McCoy had all

the information he needed in order to enjoy the informed use

of his credit. He knew the conditions in which Chase could

increase his interest rate and those conditions were under his

control. He also knew the highest possible interest rate that

could apply in the event of his default. I find it difficult to

believe that McCoy, or any other cardmember, would have

been better off had he known the precise formula that Chase

uses to determine whether or how much to raise his interest

rate. It seems extremely doubtful that in deciding whether to

pay his bills on time, McCoy might have attempted to use that

formula to determine what his chances were of keeping the

same interest rate. Unlimited discretion to increase consumers’ interest rates is something that TILA was intended to protect them against. I do not believe that discretion to decline to

increase a consumer’s rate all the way up to the permissible

maximum, such as Chase had in this case, poses a similar

danger. There is nothing irrational or oppressive in allowing

a creditor a degree of discretion in dispensing mercy.

7For example, as here, where there is a warning of the range and potential extent of an increase. 

MCCOY v. CHASE MANHATTAN BANK 3355
Because I would find that McCoy has not stated a claim for

a violation of TILA, I would not reach his state law claims.

For all of these reasons, I respectfully dissent. 

3356 MCCOY v. CHASE MANHATTAN BANK