Court Opinion

ID: 9764841
Source: CourtListenerOpinion
Date Created: 2023-08-29 03:41:29.910971+00
Date Added: 2024-06-11T07:30:01.909141
License: Public Domain

ORIE MELVIN, J.,
Dissenting:
¶ 1 I respectfully dissent from the majority’s interpretation of the Notice provision of the FTC Holder Rule. Unlike the majority I do not find the language of the Notice is clear. Rather, I find the language as to what constitutes a claim to be ambiguous. Thus, resort to the “FTC Statement” for explication is appropriate. I agree that recovery under the FTC Holder Rule is twofold. A consumer can (1) defend a creditor suit for payment of an obligation by raising a valid claim against a seller as a set-off and (2) maintain an affirmative action against a creditor who has received payments for a return of monies paid on account. However, the “FTC Statement” clearly explains that “[t]he latter alternative •will only be available where a seller’s breach is so substantial that a court is persuaded that rescission and restitution are justified.” 40 Fed. Reg. 53,506, 53,524 (1975). I further take issue with the majority’s acceptance of an informal staff opinion letter, which has no binding authority on the Commission, as support of its interpretation and its willingness to dismiss out of hand the clear guidance of the FTC Statement, which is promulgated as part of the regulations.
¶ 2 Accordingly, I would follow the rationale of those courts identified by the majority that prohibit affirmative recovery absent a showing of facts that warrant recission of the contract. See Majority Op. at Paragraphs 8-10; see also, Irby-Greene v. M.O.R., Inc., 79 F.Supp.2d 630, 635-36 (E.D.Va.2000) (stating:
In light of the FTC’s comments, most courts have limited the affirmative use of the clause to those cases in which ‘rescission and restitution’ are appropriate remedies, the consumer received ‘little or nothing of value,’ or there are otherwise ‘appropriate circumstances’ justifying affirmative use of the clause. In short, most courts have concluded that the primary purpose of the clause is to provide a defense to claims brought by the creditor; any affirmative use of the clause has generally been limited to the rare situation when the seller’s breach renders the transaction practically worthless to the consumer.)
To hold otherwise is to make the creditor assignee the absolute insurer or guarantor of the seller’s performance. I do not find this to be the purpose behind the FTC Holder Rule.