Maxine Gilliam v. Joel Levine
955 F.3d 1117
9th Cir.2020Background
- In 2016 Maxine Gilliam, as trustee of the Lou Ross Easter trust (created by her sister Lou), obtained a loan from Joel Levine to finance repairs to the trust's principal residential asset; the property served as the home of Gilliam’s niece, the sole trust beneficiary, and secured the loan.
- Gilliam alleges Levine’s TILA disclosures misstated the payment schedule (leading her to believe the final payment was one year later than the loan documents) and sought rescission under TILA and damages under TILA, RESPA, and California’s Rosenthal Act.
- The district court dismissed, holding the loan was not a “consumer credit transaction” because the trustee (Gilliam) did not live at the secured property; the lender argued trusts qualify only when the trustee occupies the residence.
- TILA, RESPA, and the Rosenthal Act protect loans made to natural persons for personal/family/household purposes; CFPB Regulation Z Official Staff Commentary provides that certain trusts (e.g., estate/tax planning trusts) are treated as natural persons when credit is extended for consumer purposes.
- The Ninth Circuit held at the pleading stage that a trust created for estate/tax planning does not forfeit consumer protections where the loan finances a beneficiary's residence; substance over form controls and the Regulation Z commentary is persuasive.
- The Ninth Circuit reversed the dismissal and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a loan to a trust to repair a residence occupied by the trust beneficiary is a "consumer credit transaction" under TILA/RESPA/Rosenthal | Gilliam: Yes — Regulation Z Commentary treats certain estate/tax planning trusts as "natural persons" when credit is for personal/family/household purposes benefiting a beneficiary. | Levine: No — a trust cannot qualify as a natural person for consumer-credit protections unless the trustee occupies the property; otherwise transaction is non‑consumer/commercial. | Reversed: Ninth Circuit holds such loans can be consumer credit transactions when obtained for consumer (personal/family/household) purposes; Regulation Z Commentary controls and substance governs. |
Key Cases Cited
- Schuetz v. Banc One Mortg. Corp., 292 F.3d 1004 (9th Cir. 2002) (describing RESPA’s consumer‑information purpose)
- Hauk v. JP Morgan Chase Bank USA, 552 F.3d 1114 (9th Cir. 2009) (construing TILA and related rules in favor of consumer protection)
- Anderson Bros. Ford v. Valencia, 452 U.S. 205 (1981) (courts defer to agency interpretation of its own regulation absent clear repugnance)
- Johnson v. Wells Fargo Home Mortg., Inc., 635 F.3d 401 (9th Cir. 2011) (Official Staff Commentary is controlling unless irrational)
- Medrano v. Flagstar Bank, FSB, 704 F.3d 661 (9th Cir. 2012) (discussing RESPA’s extension to loan servicing)
- Amonette v. Indymac Bank, 515 F. Supp. 2d 1176 (D. Haw. 2007) (loan to trust secured by trustee’s home held to be consumer credit; consistent with Regulation Z Commentary)