Court Opinion

ID: 9495151
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:55:39.048555+00
Date Added: 2024-06-11T17:56:50.626694
License: Public Domain

DISSENTING IN PART, CONCURRING IN PART
EDGAR, Chief District Judge,
dissenting in part, concurring in part.
Because I do not think that the language of the Truth in Lending Act (“TILA”) necessarily warrants the inclusion of an over-limit fee in the finance charge, I dissent from Part III of the majority opinion.
15 U.S.C. § 1605(a) generally defines a finance charge as follows:
Except as otherwise provided in this section, the amount of the finance charge in connection with any consumer credit transaction shall be determined as the sum of all charges, payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit.
The statute then specifies some examples of types of charges that must be included as a part of the finance charge disclosed to consumers. Regulation Z, promulgated by the Federal Reserve Board to implement the TILA, fleshes out in considerable detail what is, and what is not, to be included within the finance charge. As the majority points out, Regulation Z clearly excludes from the definition of finance charge “[cjharges for actual unanticipated late payment, for exceeding a credit limit, or for delinquency, default, or a similar occurrence.” 12 C.F.R. § 226.4(c)(2) (emphasis supplied).
The majority concludes, contrary to the Federal Reserve Board, that an over-limit fee “falls squarely within the statutory definition of a finance charge .... There is no ambiguity.” I respectfully disagree. Over-limit fees are nowhere mentioned in § 1605(a). The majority nonetheless finds that, in accordance with the general statutory definition of finance charge, the defendant has charged a fee “incident to the extension of credit.” The majority’s rationale is that an over-limit fee is “imposed incident to the extension of credit” because after the plaintiff reached her credit limit, she in effect requested more credit by *535exceeding the limit; and by permitting her to exceed the limit and charging her a fee, the defendants imposed the fee “incident to the extension of credit.” In other words the defendants knew that the plaintiff was making charges over her limit, before allowing her to do so.
There are two problems with this rationale. First, the plaintiff does not allege in her complaint that defendants had foreknowledge of the plaintiffs over-limit charges. The majority’s factual conclusion appears to be based on contentions in plaintiffs brief. Since this case was decided on a motion to dismiss under Fed. R.Civ.P. 12(b)(6), we are limited to reviewing the facts as they appear in the complaint. Mays v. Buckeye Rural Elec. Coop., Inc., 277 F.3d 873, 877 (6th Cir.2002); Rose v. Hartford Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir.2000). Second, the plaintiffs assertion in her brief that a credit card issuer “gets to make the decision as to whether or not [an over-limit] charge will be permitted to go through” may not, in all cases, be accurate. From our personal experience we know that many merchants check credit cards on-line before accepting customer charges. However, this may not be true in all cases; and, of course, the TILA and Regulation Z apply to all consumer credit transactions, not just those of the plaintiff.
We are admonished by the Supreme Court that:
When a court reviews an agency’s construction of the statute which it administers, ... [and where a] court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction of the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.
Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The Supreme Court has also specifically said that in interpreting the TILA, the Federal Reserve Board’s opinions construing the Act should be dispositive unless “demonstrably irrational.” Ford Motor Credit Company v. Milhollin, 444 U.S. 555, 565, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980). This circuit has held that “in TILA actions, we defer to the regulations interpreting the Act.” Begala v. PNC Bank, Ohio, National Ass’n, 163 F.3d 948, 950 (6th Cir.1998).
The majority’s interpretation of § 1605(a) might well be a reasonable one; but so is that of the Federal Reserve Board. Certainly it cannot be said that the Federal Reserve’s exclusion of over-limit charges from the finance charge in Regulation Z is demonstrably irrational. The Federal Reserve merely filled in a blank left by Congress in the TILA, and analogized over-limit charges to unanticipated late payments and charges for delinquency or default. These other charges are clearly not a part of the finance charge because they are, as the district court concluded, post extension of credit occurrences. The same can be reasonably said about over-limit fees.
Since the district court granted judgment to Household and MBNA on a Rule 12(b)(6) motion to dismiss, those parties found it unnecessary to bring to the attention of the district court additional facts about the handling of credit cards. The existence of these facts was made evident by briefs filed by the Federal Reserve Board and other amici in support of a petition for rehearing, which the majority has denied. Since neither the district *536court nor this court has had the opportunity to consider important facts bearing on the ways in which credit is extended, it is all the more inappropriate for the majority in this particular case to reach its conclusion that Regulation Z is not a permissible interpretation of the TILA.
The majority’s conclusion in this case effectively amends Regulation Z in this circuit. The national uniformity established by the Federal Reserve Board for consumer credit is thereby breached.11 do not think that there is a sufficient basis for this result. Of course, because the defendants relied on Regulation Z in good faith, I concur in the majority’s conclusion in Part IV of its opinion that the defendants are entitled to immunity from civil liability under 15 U.S.C. § 1640(f).
I would affirm the decision of the district court in its entirety.

. In its footnote 5, the majority says that it's holding is “limited to those 'instances in which the creditor knowingly permits the credit card holder to exceed his or her credit limit." Presumably this means that credit card issuers must only disclose an over-limit fee when they have been made aware that an over-limit charge is pending approval, and they then permit the charge to go through. Thus some card issuers may be required to disclose under some circumstances, while others may not. This merely adds to lack of uniformity and confusion.