Opinion ID: 612823
Heading Depth: 3
Heading Rank: 3

Heading: Actual Damages Resulting from Violations of the FCBA

Text: Chase admits that it violated the FCBA by failing to provide a written explanation in response to Lyon's billing dispute. See 15 U.S.C. § 1666(a). Chase further admits that because no explanation was provided, it also violated the FCBA by attempting to collect the disputed charge and reporting it as delinquent to credit agencies. See 15 U.S.C. §§ 1666(a)(3)(B), 1666a(a). Pursuant to 15 U.S.C. § 1640(a)(1), a creditor who fails to comply with any requirement imposed under the FCBA is liable for any actual damage sustained by [the plaintiff] as a result of the failure. The magistrate judge found that Lyon's loss of personal time in trying to resolve the disputed charge constitute[d] an item of special or actual damage. [5] Chase argues, however, that Lyon cannot recover actual damages because Ninth Circuit precedent requires evidence of detrimental reliance for any such recovery under § 1640(a)(1). We hold that evidence of detrimental reliance is not required to support an award of actual damages resulting from violations of 15 U.S.C. § 1666 or § 1666a. Chase mistakenly suggests  and the magistrate judge appears to have accepted  that our holding in Gold Country Lenders v. Smith ( In re Smith ), 289 F.3d 1155, 1157 (9th Cir.2002) (per curiam), applies to Lyon's claims under the FCBA. In re Smith addressed whether a plaintiff could recover actual damages under § 1640(a)(1) based on a creditor's violations of the Truth in Lending Act (TILA) under § 1638(a)(3) and (4) for failing to conspicuously disclose and define the `finance charge' and `annual percentage rate' of a credit transaction. 289 F.3d at 1156. We held that a bankruptcy claimant could not recover actual damages because she failed to present evidence of her detrimental reliance on the inadequate financing terms presented to her at the time of the loan agreement. Id. at 1157. Agreeing with the other circuits that have addressed the issue, we concluded that without evidence of detrimental reliance, the claimant could not satisfy the causation element necessary to support actual damages under § 1640(a)(1): We join with other circuits and hold that in order to receive actual damages for a TILA violation, i.e., an amount awarded to a complainant to compensate for a proven injury or loss, Black's Law Dictionary 394 (7th ed.1999) (emphasis added), a borrower must establish detrimental reliance. Without any evidence in the record to show that Smith would either have secured a better interest rate elsewhere, or foregone the loan completely, her argument must fail  she presents no proof of any detrimental reliance, i.e., any actual damage. Id. (citing Turner v. Beneficial Corp., 242 F.3d 1023, 1028 (11th Cir.2001) (en banc) (addressing class claim to actual damages based on TILA disclosure violations and holding that detrimental reliance is an element of a TILA claim for actual damages, that is a plaintiff must present evidence to establish a causal link between the financing institution's noncompliance and his damages); Perrone v. Gen. Motors Acceptance Corp., 232 F.3d 433, 436-40 (5th Cir.2000) (addressing class claim to actual damages based on TILA disclosure violation and disclosure violations under the Consumer Leasing Act, which also relies on § 1640 for civil liability); Stout v. J.D. Byrider, 228 F.3d 709, 718 (6th Cir. 2000) (affirming denial of class certification based in part on TILA disclosure violations because individual reliance on disclosures precluded certification); and Peters v. Jim Lupient Oldsmobile, Co., 220 F.3d 915, 917 (8th Cir.2000) (addressing failure to adequately disclose commission related to sale of insurance policies as required under the TILA at § 1638(a)(2)(B)(iii))). We subsequently reapplied this holding in McDonald v. Checks-N-Advance, Inc. ( In re Ferrell ), 539 F.3d 1186, 1192 (9th Cir. 2008) (per curiam), another action involving the TILA's specific disclosure requirements under § 1632(a) and § 1638(a) related to finance charges. Notably, In re Smith  as well as the out-of-circuit decisions that it follows  involves TILA violations, not violations of the FCBA. While the FCBA is technically an addition to the TILA, both statutes are part of the larger statutory scheme of the Consumer Credit Protection Act, 15 U.S.C. §§ 1601-1693r. [6] Although both statutes rely on § 1640 to delineate civil liability, they differ in ways that affect the application of § 1640. Accordingly, Chase's suggestion that all precedent related to the TILA applies with equal force to the FCBA is an oversimplification of the relevant statutes. Because [t]he purpose of the TILA is to promote the `informed use of credit' by consumers, Anderson Bros. Ford v. Valencia, 452 U.S. 205, 219, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981) (quoting 15 U.S.C. § 1601), the TILA's requirements principally focus on disclosures that creditors must make when offering credit. See 15 U.S.C. § 1601(a) (It is the purpose of this subchapter 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. § 1637(a) (enumerating [r]equired disclosures to be made by a creditor to a consumer before an open end consumer credit account can be opened, including disclosures related to billing disputes); 15 U.S.C. § 1638(a) (enumerating required disclosures to be made by a creditor for other consumer credit transactions). The FCBA, on the other hand, does not mandate disclosures to be made before credit is offered, rather it outlines procedures and limitations to be followed by creditors during a billing dispute involving an already opened consumer account. See 15 U.S.C. §§ 1666-1666j. Indeed, while a creditor must disclose some of its obligations under the FCBA before opening an open end consumer credit account, these disclosure requirements are contained within the TILA. See 15 U.S.C. § 1637(a)(7), (b)(10). Whether detrimental reliance has anything to do with causation to support an award of actual damages resulting from violations of the FCBA appears to be a question of first impression. We conclude that applying such a requirement to the FCBA violations admitted here would distort the analysis of causation and thereby contradict the purpose of § 1640(a)(1). As noted, § 1666(a)(3)(B) requires a creditor who is timely notified of a billing dispute to either make appropriate corrections in the account of the obligor or send a written explanation or clarification to the obligor. Chase did neither and then undertook collection actions prohibited by the statute if it did not meet this obligation. See 15 U.S.C. §§ 1666(a)(3)(B), 1666a(a). There is simply no relevant disclosure or conduct under these circumstances that Lyon could have relied upon. Thus, Lyon's lack of detrimental reliance is immaterial to a determination of whether Chase's violations resulted in actual damages. If Chase's argument were to be followed in cases of defiant refusal to comply with § 1666(a)(3)(B), the bank has discovered that silence is truly golden. To require evidence of detrimental reliance on an unmade explanation would necessarily bar recovery of actual damages because such evidence could never exist. Consumers cannot rely on unmade explanations, and creditors could simply avoid actual damages under the FCBA by never responding to billing disputes  the exact conduct the statute aims to prevent. Such an irrational requirement would contradict the express language of § 1640(a)(1) that a civil plaintiff can recover actual damages resulting from any violation of the FCBA. See Anderson v. United States, 803 F.2d 1520, 1523 (9th Cir.1986) (stating courts have an `obligation to so construe federal statutes so that they are consistent with each other,' quoting Get Oil Out! Inc. v. Exxon Corp., 586 F.2d 726, 729 (9th Cir. 1978)). Accordingly, we hold that evidence of detrimental reliance is not required to support an award of actual damages resulting from violations of 15 U.S.C. § 1666 or § 1666a. We reverse the magistrate judge's order denying an award of actual damages resulting from Chase's FCBA violations and remand this issue for further proceedings.