Title: Parrish v. Blazer Financial Services, Inc.
Citation: 868 So. 2d 406
Docket Number: 1010002
State: Alabama
Issuer: Alabama Supreme Court
Date: May 30, 2003

868 So. 2d 406 (2003)
A.L. PARRISH et al.
v.
BLAZER FINANCIAL SERVICES, INC., et al.
1010002.

Supreme Court of Alabama.
May 30, 2003.
*408 Jerry O. Lorant of Lorant &amp; Associates, P.C., Birmingham, for appellants.
John R. Chiles of Burr &amp; Forman, LLP, Birmingham, for appellees.
HOUSTON, Justice.[1]
This appeal involves, among other things, certain disclosure requirements of the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq. ("TILA"), as they relate to "check-in-the-mail" loan programs. A.L. Parrish appeals from the Jefferson Circuit Court's summary judgment on Parrish's TILA claims and from that court's order decertifying the class.[2] We affirm.
The procedural history of this case, initiated by Parrish in 1992, has been somewhat tortured; most of that history is not relevant here. We limit our focus to the facts necessary to resolve the narrow issues before us. Those facts, which are generally undisputed, are as follows.
Blazer Financial Services, Inc., and Great Western Financial Corporation (hereinafter referred to collectively as "Blazer") mailed loan solicitations to some of its customers in what became known as Blazer's "check-in-the-mail" ("CIM") program. Customers included on the CIM mailing list would receive from Blazer a solicitation letter; at the bottom of the letter was a detachable check. The letter, which displayed Blazer Financial's logo and address at the top, instructed the recipient to read the text printed on the *409 reverse side of the letter under the heading "Loan Agreement and Federal Disclosure Statement" ("the loan agreement").[3]
When a customer cashes the check, a Blazer representative contacts the customer to confirm the loan and notifies them of the date that the check clears Blazer's bank. Additionally, within 30 days of the date the check is cashed, Blazer mails the customer a follow-up TILA disclosure form and a payment book that specifies the starting date of the loan.
Parrish received the CIM solicitation letter and the attached check; he cashed the check, thereby becoming a debtor to Blazer. Parrish eventually defaulted on this loan. Later, Parrish sued Blazer, asserting violations of the TILA, as well as other claims that have since been dismissed.
On Parrish's motion, the trial court certified the action as a class action, naming as class members approximately 11,000 individuals who had obtained loans through Blazer's CIM program. Subsequently, Blazer filed counterclaims against many of the class members who, like Parrish, were in default on their loans.
After much procedural wrangling, the trial court granted Blazer's motion for a summary judgment as to all of Parrish's claims and granted Blazer's motion to decertify the class. This appeal followed.
Parrish raises two issues on appeal. First, Parrish argues that the trial court erred in entering a summary judgment on his claims alleging that Blazer had violated the TILA by failing to make proper disclosures and by failing to provide Parrish with a duplicate copy of the legal obligations arising out of his loan. Second, Parrish contends that the trial court erred in decertifying the class.
We review a summary judgment de novo and in accordance with the following principles:
Brewer v. Woodall, 608 So. 2d 370, 372 (Ala.1992).
However, we review a trial court's decision to decertify a class by determining whether the trial court, in reaching that decision, exceeded its discretion. *410 Lackey v. Central Bank of the South, 710 So. 2d 419, 421 (Ala.1998)
"The [TILA] has the broad purpose of promoting `the informed use of credit' by assuring `meaningful disclosure of credit terms' to consumers." Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559, 100 S. Ct. 790, 63 L. Ed. 2d 22 (1980) (quoting 15 U.S.C. § 1601). Because the TILA is a "consumer protection statute which ... is remedial in nature," its disclosure requirements are to be "construed liberally in order to best serve Congress' intent." Ellis v. General Motors Acceptance Corp., 160 F.3d 703, 707 (11th Cir. 1998). In order to carry out its intent to assure "meaningful disclosure," Congress has empowered the Board of Governors of the Federal Reserve System to
15 U.S.C. § 1604(a). The implementing regulation for the TILA is known as "Regulation Z" (12 C.F.R. § 226), and the Board's official interpretations of the TILA and Regulation Z are dispositive unless they are "demonstrably irrational."[4]Milhollin, 444 U.S.  at 565-68, 100 S. Ct. 790.
1. "Date of loan" and "due date" information
Parrish claims that the CIM program violates the TILA because, he contends, the loan agreement  the only document in the hands of the customer after the customer cashes the check attached to the solicitation letter  does not disclose the date of the loan or when the payments on the loan are due. We disagree.
With regard to most consumer-credit transactions such as the CIM program, the TILA requires the disclosure of "[t]he number, amount, and due dates or period of payments scheduled to repay the total of payments."[5] 15 U.S.C. § 1638(a)(6) (emphasis added). Additionally, Regulation Z requires disclosure of the "timing of payments scheduled to repay the obligation." 12 C.F.R. § 226.18(g).
(Capitalization original.) Parrish contends that this language is insufficient as disclosure under the TILA because it does not provide the exact date the loan commenced and the date the first and subsequent payments are due.
Blazer responds by arguing that Regulation Z, as it read at the time Parrish received the solicitation materials for the CIM program, allowed for "delayed disclosure" of the date of the loan[6] in situations *411 where the loan is commenced without direct, "face-to-face" solicitation:
12 C.F.R. § 226.17(g) (1990)(emphasis added).[7]
Blazer argues that the CIM program qualifies as a written request for a loan (given the fact that the loan is initiated by the customer's signing and cashing the check, without face-to-face communication with a representative of Blazer), and that it made delayed disclosures by 1) telephoning CIM program customers to notify them of the date their check cleared Blazer's bank, and 2) mailing letters to its customers within 30 days of the check's clearance to confirm that date. Blazer contends that it would not be possible to give a specific payment-due date in the loan agreement because Blazer cannot, given the nature of the CIM program, be certain when a customer will cash the check.
Blazer's contention that the disclosures made through its CIM program are proper under 12 C.F.R. § 226.17(g) appears to be consistent with the Federal Reserve Board's own interpretation of that regulation:
Truth in Lending, 66 Fed.Reg. 17,329, 17,333 (March 30, 2001) (to be codified at 12 C.F.R. pt. 226) (emphasis added).
Truth in Lending, 63 Fed.Reg. 14,548, 14,549-50 (March 25, 1998) (to be codified at 12 C.F.R. pt. 226) (emphasis added); see also Truth in Lending, 64 Fed.Reg. 49,722, 49,726 (Sept. 14, 1999) (to be codified at 12 C.F.R. pt. 226).
Additionally, the Board's interpretation of § 226.18(g), which, as noted above, requires the disclosure of the "timing of payments," appears to specifically address and approve of CIM loan programs such as Blazer's:
Comment 18(g)4., 12 C.F.R. pt. 226, Supp. 1, Subpart C  Closed-End Credit (emphasis added); see also Truth in Lending, 63 Fed.Reg. 16,669, 16,673 (April 6, 1998) (to be codified at 12 C.F.R. pt. 226) (discussing revisions to Comment 18(g)4.).
Even under a liberal construction of the provisions of the TILA we cannot hold that the disclosures included in Blazer's CIM program were insufficient under the TILA. Under § 226.17(g) of Regulation Z and the Board's interpretations of that regulation, Blazer's delayed disclosure of the specific date of the commencement of the loan (i.e., when the check is paid by Blazer's bank) was proper. Furthermore, the "due date" provision in the loan agreement provided:
(Capitalization original.) This provision is consistent with the Board's interpretation of 12 C.F.R. § 226.18(g) that "disclosure may refer to the occurrence of a particular event, for example, by disclosing that the beginning payment is due `30 days after the first loan disbursement.'" See Clay v. Johnson, 264 F.3d 744, 747-49 (7th Cir. 2001) (discussing Comment 18(g)4. and the elimination of the "prohibition on disclosing the beginning payment date by referring to a specified event").[8]
2. Alleged failure to provide a copy of written disclosures
Parrish also claims that Blazer violated the requirement of the TILA that disclosures "reflect[ing] the terms of the legal obligation between the parties" are to be given to Parrish "in a form that [Parrish] may keep." 12 C.F.R. § 226.17(a)(1), (c)(1). Specifically, Parrish contends that he did not receive a duplicate copy of his signed promissory note, i.e., the signed check Parrish cashed. We find this contention to be without merit.
The reverse side of the check attached to the solicitation letter sent to Parrish provides lines for a signature and a date, a sentence cautioning the customer to "thoroughly read the contract before you sign it," and the following information:
"In consideration of monies received as a loan, the undersigned jointly and severally promise(s) to pay to Creditor the Total of payments in monthly installments as shown above and further agree(s) to terms and conditions set forth in the accompanying Loan Agreement and Disclosure Statement (`Agreement'), the provisions of which Agreement are incorporated herein.
"NOTICE TO CONSUMER: BY SIGNING AND DEPOSITING (OR CASHING) THIS, YOU HAVE AGREED TO REPAY MONIES AS STATED. DO NOT SIGN THIS BEFORE YOU READ IT AND THE AGREEMENT, OR IF EITHER CONTAINS ANY BLANK SPACES.
(Capitalization original.)
Directly above the check, however, this very language (minus the signature line and date line and the cautionary sentence) is repeated below the words "BORROWER'S COPY OF NOTE." Therefore, Parrish's argument is actually reduced to the claim that the TILA requires Blazer to provide Parrish with a copy of the note with Parrish's signature. However, neither § 226.17(a)(1) nor § 226.17(c)(1) requires Blazer to provide Parrish with a duplicate copy of the signed note; rather, those provisions require Blazer only to provide Parrish with a copy of the terms of the legal obligation between them, which, as shown above, Blazer has done.[9]
Based on the above, we hold that Parrish has not presented substantial evidence tending to show that Blazer violated the TILA. Because there is no genuine issue of material fact, and because Blazer is entitled to a judgment as a matter of law, summary judgment was appropriate.
Parrish also argues that the trial court erred in decertifying the class. As stated above, the issue is whether the trial court exceeded its discretion in decertifying the class. We hold that the trial court did not exceed its discretion.
The class, of which Parrish was the named representative, was certified under Rule 23(b)(3), Ala. R. Civ. P.,[10] and purported *415 to include approximately 11,000 members who had participated in the CIM program. In granting Blazer's motion to decertify, the trial court explained its rationale as follows:
Class certification under Rule 23(b)(3) is not appropriate when class treatment of an action is not "superior to other available methods for the fair and efficient adjudication of the controversy." Rule 23(b)(3), Ala. R. Civ. P.; see Compass Bank v. Snow, 823 So. 2d 667 (Ala.2001). In this respect, we note that Parrish's argument that the class should not have been decertified must be premised on Parrish's argument that the summary judgment as to Parrish's TILA claim was not appropriate, because if it were not so premised Parrish would be acting, as the trial court noted, to the severe detriment of the remaining class members. While we also find the trial court's other reasons for decertification persuasive, we hold that, because the summary judgment was appropriate, class treatment was not superior to individual litigation by the class members; therefore the trial court did not exceed its discretion in decertifying the class.
For the reasons stated above, the trial court's judgment is affirmed.
AFFIRMED.
MOORE, C.J., and WOODALL, J., concur.
JOHNSTONE, J., concurs in part, concurs in the rationale in part, and concurs in the judgment.
LYONS, J., concurs in the rationale in part and concurs in the judgment.
JOHNSTONE, Justice (concurring in part, concurring in the rationale in part, and concurring in the judgment).
I concur fully in the rationale and judgment affirming the summary judgment. But for one exception, I also concur in the rationale and judgment affirming the decertification of the class. The exception is that I do not agree with the main opinion insofar as it finds persuasive that part of the rationale of the trial court, quoted in the main opinion, to the effect that the defendants' counterclaims against some defaulting class members "would create the result that individual proof of claims would predominate over class claims and destroy the manageability of the class."
*417 LYONS, Justice (concurring in the rationale in part and concurring in the judgment).
I concur in the main opinion's rationale for affirming the summary judgment entered in favor of Blazer on Parish's claims under the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq. I concur in the result as to its affirmance of the trial court's order decertifying the class action.
The trial court's order decertifying the class discusses considerations related to the class prerequisites of manageability, typicality, and superiority. The trial court's order then recites concerns over the fairness of allowing a summary judgment to be entered against the entire class. The trial court expressed concern over the result applicable to individual members of the class whose claims would be extinguished by the entry of a summary judgment, and yet whose claims, "because of unique circumstances or the choice of different legal theories by their counsel, could be litigated successfully." I reject this basis for decertification unless the trial court can conclude that the named plaintiffs and their counsel are incapable of representing the class adequately. In other words, absent a showing of inadequacy of representation, a class should not be decertified simply to avoid an adjudication on the merits adverse to the entire class.
I therefore concur only in the result as to that portion of the main opinion holding that, "because the summary judgment was appropriate, class treatment was not superior to individual litigation by the class members." I concur in the result (a) because I do not find that the trial court exceeded its discretion in decertifying the class on grounds unrelated to the entry of the summary judgment against the named plaintiffs and (b) because Blazer, by contending on appeal that the trial court did not err in decertifying the class, cannot assert error as to that aspect of the trial court's order justifying decertification on grounds related to the entry of a summary judgment against the named plaintiffs.
[1]  This case was originally assigned to a different Justice; it was reassigned to Justice Houston on March 19, 2003.
[2]  The trial court had initially certified this action as a class action and named Parrish as the class representative.
[3]  Since this action was filed in 1992, Blazer has changed the language of its "Loan Agreement and Federal Disclosure Statement"; however, when we refer to the "loan agreement" we are referring to the loan agreement received by Parrish that provides the basis for this action.
[4]  This appeal does not challenge the rationality of any of the Board's interpretations of the TILA or of Regulation Z.
[5]  Transactions under an "open-end credit plan" are exempted from this rule. 15 U.S.C. § 1638(a).
[6]  The current version of Regulation Z also allows for delayed disclosure; the differences between the current version and its predecessor are minor. The current version reads, in pertinent part, as follows:

"If a creditor receives a purchase order or a request for an extension of credit by mail, telephone, or facsimile machine without face-to-face or direct telephone solicitation, the creditor may delay the disclosures until the due date of the first payment, if the following information for representative amounts or ranges of credit is made available...."
12 C.F.R. § 226.17(g)(emphasis added).
[7]  Parrish does not contend that he was not provided the information required by 12 C.F.R. § 226.17(g)(1)-(5).
[8]  We find the following cases cited by Parrish in support of his argument factually distinguishable and therefore unpersuasive: Shepeard v. Quality Siding &amp; Window Factory, Inc., 730 F. Supp. 1295, 1300-02 (D.Del.1990) (finding a TILA violation where no paymentdue dates were given in a lien contract and where no effort was made to invoke the "delayed disclosure" provisions of § 226.17(g)); In re Black, 411 F. Supp. 749, 750-51 (S.D.Ohio 1975) (involving documents that gave no indication what part of the month payments would begin to be due and involving a lender who did not use "delayed disclosure"); In re Dangler, 75 B.R. 931, 934 (Bankr.E.D.Pa.1987) (finding a TILA violation where payments were to be made monthly, but there was no disclosure as to what month payments would begin).
[9]  In fact, the Board has interpreted § 226.17(a)(1) as allowing TILA disclosures to be placed on "a separate sheet of paper" from the credit contract. Comment 17(a)(1)2., 12 C.F.R. pt. 226, Supp. 1, Subpart C  Closed-End Credit.
[10]  Rule 23(b), Ala. R. Civ. P., provides:

"An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
"....
"(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action."
Rule 23(a), Ala. R. Civ. P., provides:
"One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class."