Philibotte v. Nisource Corporate Services Co.
793 F.3d 159
1st Cir.2015Background
- In Jan. 2011 Philibotte's home water heater failed; Columbia Gas (a NiSource entity) advised she "lease" a Ruud heater for $204 (12 monthly payments of $17) and presented a lease she signed without TILA disclosures.
- The lease had a 12-month minimum term, a buyout option at declining prices (minimum $75), and did not clearly require return of the heater at termination; Philibotte continued payments through Feb. 2014 and then exercised the purchase option.
- Philibotte sued in Mar. 2014 asserting (1) federal TILA violations, (2) Massachusetts RISSA violations, (3) Massachusetts CCCDA violations, plus unjust enrichment and Mass. Gen. Laws ch. 93A claims, seeking class relief, damages, and rescission.
- The district court dismissed, applying the Massachusetts Supreme Judicial Court’s Silva standard (that certain leases are not "retail installment sales") to preclude the claims and alternatively concluding the federal TILA claim was time‑barred.
- On appeal the First Circuit affirmed on alternate grounds: it held the federal TILA claim was barred by the one‑year statute of limitations and, exercising supplemental jurisdiction, affirmed dismissal of the state claims because the lease did not meet the statutory definition of a credit/retail installment sale.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal TILA claim is timely / subject to equitable tolling | Philibotte argued Nisource fraudulently concealed the true nature of a credit sale so equitable tolling applies | Nisource argued the one‑year statutory period ran from consummation (Jan. 2012) and no tolling applies | TILA claim is time‑barred; equitable tolling denied because lease contents put plaintiff on inquiry notice |
| Whether the lease is a "retail installment sale" under RISSA | Philibotte contended the transaction was a disguised retail installment sale subject to RISSA disclosures | Nisource relied on Silva precedent and statutory text to show the lease did not meet RISSA's prongs | Lease fails RISSA: original term did not require payments substantially equivalent to the item's value; Silva controls |
| Whether the lease is a "credit sale" under the CCCDA | Philibotte argued CCCDA covers disguised credit sales even if called leases | Nisource argued the CCCDA definition requires payments substantially equivalent to aggregate value and this lease falls short | Lease does not meet CCCDA definition; claim dismissed (court resolves by applying statutory text rather than extending Silva) |
| Whether unjust enrichment and ch. 93A claims survive | Philibotte asserted fraud/illegal mischaracterization supports these claims | Nisource argued existing express contract and failure to show statutory violations defeat these claims | Dismissed: express contract bars unjust enrichment absent other fraud; 93A fails because statutory claims fail |
Key Cases Cited
- Silva v. Rent-A-Center, Inc., 912 N.E.2d 945 (Mass. 2009) (SJC construing when leases qualify as retail installment sales under RISSA)
- Belini v. Wash. Mut. Bank, F.A., 412 F.3d 17 (1st Cir. 2005) (discussing Massachusetts' TILA exemption and application of state law)
- McKenna v. Wells Fargo Bank, N.A., 693 F.3d 207 (1st Cir. 2012) (one‑year TILA limitations rule and application where state exemption applies)
- Salois v. Dime Sav. Bank of N.Y., FSB, 128 F.3d 20 (1st Cir. 1997) (standard for equitable tolling and inquiry notice in TILA context)