ORDER
This matter comes before the Court on defendant’s Motion to Dismiss (doc. 6). The Motion has been briefed and is ripe for disposition. 1
I. Background.
Plaintiffs, Michael and Rosemarie Brown (the “Browns”), brought a straight
Following service of process, Citi filed a Motion to Dismiss pursuant to Rule 12(b)(6), for the sole stated ground that claims under § 1641(g) are not actionable absent proof of actual damages. In defendant’s words, “Plaintiffs cannot assert a claim based on § 1641(g) without suffering actual damages and, as a result, Plaintiffs’ entire Complaint is due to be dismissed.” (Doc. 6, at 5.) Because the Complaint does not allege actual damages, and the Browns do not purport to have suffered actual damages, Citi maintains, their § 1641(g) claim is not cognizable as a matter of law, and should be dismissed with prejudice. For their part, plaintiffs insist that their § 1641(g) claim is actionable because the statutory damages they seek are available even in the absence of actual damages. This narrow, discrete legal issue is the sole battleground on which Citi’s Rule 12(b)(6) Motion is fought.
II. Analysis.
Citi’s Motion to Dismiss hinges on the text of 15 U.S.C. § 1640(a), which, inter alia, provides for civil liability for certain TILA violations. In particular, that section states that any creditor that fails to comply with § 1641 (g)’s notice requirement “is liable to such person in an amount equal to the sum of—
“(1) any actual damage sustained by such person as a result of such failure; [and]
“(2)(A)(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction, ... or (iv) in the case of an individual action relating to a credit transaction not under an open end credit plan that is secured by real property or a dwelling, not less than $400 or greater than $4,000.”
15 U.S.C. § 1640(a). On its face, the statute provides that if a creditor violates the
The thrust of Citi’s Rule 12(b)(6) Motion, as initially postured, was that actual damages are a necessary element of proof in any TILA claim alleging violation of the § 1641(g) disclosure requirement.
4
Without allegations of actual damages, Citi maintained, the Browns’ Complaint fails to state a cognizable claim as a matter of law. This stance is demonstrably incorrect. As noted
supra,
the plain statutory text creates liability for a creditor that fails to comply with § 1641(g) in the form of the
sum
of actual
and
statutory damages. The right of a TILA plaintiff to recover statutory damages, irrespective of the presence or absence of actual damages, is firmly entrenched in the case law.
See, e.g., Turner v. Beneficial Corp.,
Citi’s principal brief omitted discussion of statutory damages. In that filing, Citi neither addressed the statutory damages prong of § 1640(a), nor presented argument or authority that the Browns were ineligible for statutory damages on the strength of their Complaint as pleaded. Instead, defendant’s principal brief focused exclusively on actual damages, which the Browns were not requesting and which § 1640(a) does not require as a prerequisite for recovery. Perhaps in recognition of that fact, Citi dramatically altered its angle of attack in its reply brief. As the centerpiece of its Reply (doc. 15), Citi propounds a brand new argument that plaintiffs cannot recover statutory damages unless the alleged § 1641(g) violation involved the levying of a finance charge. Because the Browns did not allege in their pleading that “a finance charge was levied related to the alleged § 1641(g) violation,” defendant argues, the Complaint must be dismissed with prejudice. (Doc. 15, at 10.)
As a threshold matter, it is improper for a litigant to present new arguments in a reply brief, as Citi has done here. After saying nothing about finance charges or statutory damages in its principal brief, defendant devoted virtually its entire reply to that issue. New arguments presented in reply briefs are generally not considered by federal courts.
See, e.g., Herring v. Secretary, Dep’t of Corrections,
Even if the statutory damages issue were considered on the merits, defendant’s position that statutory damages are unavailable under TILA in the absence of related finance charges is unavailing for no fewer than five reasons. First, it conflicts with binding precedent. In interpreting a previous iteration of § 1640, the Supreme Court held as follows: “We are also unable to accept respondent’s argument that [§ 1640] does not allow imposition of a civil penalty in cases where no finance charge is involved but where a regulation requiring disclosure has been violated.... [W]e cannot conclude that Congress intended those who failed to comply with regulations to be subject to no penalty or to criminal penalties alone. As the District Court concluded,
imposition of the minimum sanction is proper in cases such as this, where the finance charge is nonexistent or undetermined.” Mourning v. Family Publications Service, Inc.,
Second, careful reading of the statutory language itself undermines defendant’s position. Recall that the relevant provision
Third, defendant’s position that statutory damages are never available for TILA violations that do not involve imposition of a finance charge is irreconcilable with the remedial purposes of that statute. The Eleventh Circuit has emphasized “the strong remedial purpose of TILA” and has heeded “continual admonitions that we
Fourth, defendant candidly admits that a natural implication of its position is that statutory damages are
never
available for § 1641(g) violations. After all, § 1641(g) imposes a notice requirement on a new owner or assignee of a mortgage loan to apprise the borrower of such a transfer in writing. It is difficult to imagine a circumstance where a finance charge would be “levied related to the alleged § 1641(g) violation,” which is the legal standard advocated by Citi for statutory damages. (Doc. 15, at 10.) Thus, according to defendant, “[a] violation of § 1641(g) will never involve the imposition of a finance charge and, thus, the statutory penalty under § 1640(a)(1)(A)© is unavailable.”
(Id.
at 7-8.) This absolutist stance does not withstand scrutiny of the text of the statute. Had Congress wished to render statutory damages categorically unavailable for the entire class of § 1641(g) claims, surely it would have listed that section among the other disclosure provisions recited in the “carve-out” paragraph at the end of § 1640(a), which curtails access to statutory damages for certain disclosure violations. But § 1641(g) is not enumerated in that carve-out paragraph. Instead, § 1641(g) is specifically listed in the first paragraph of § 1640(a) as a section whose requirements expose violators to liability in an amount equal to the sum of actual damages plus statutory damages.
See
15 U.S.C. § 1640(a) (“any creditor who fails to comply with any requirement imposed under ... subsection (f) or (g) of section 1641 of this title ... with respect to any person is liable to such person in an amount equal to the sum of’ actual and statutory damages). In order to embrace Citi’s position that Congress intended to prohibit statutory damages in cases involving § 1641(g) violations, one would likewise have to accept that Congress eschewed a very direct, simple method of making its intentions clear and somehow
Fifth, at a more fundamental level, defendant’s argument is problematic because it, without explanation or elaboration, equates the phrase “any finance charge in connection with the transaction” in the statutory damages clause of § 1640(a)(2)(A) with “a finance charge ... levied related to the alleged § 1641(g) violation.” It is not immediately obvious why a finance charge “in connection with the transaction” for statutory damages purposes would have to be a finance charge “related to the alleged § 1641(g) violation” in order to be compensable as statutory damages under § 1640(a)(2)(A). As plaintiffs point out, there were finance charges imposed in the underlying mortgage transaction. Which “transaction” is the relevant one for statutory damages purposes? Although its position is evidently that the mortgage transfer is the applicable transaction and that previous finance charges do not “count” for § 1640(a)(2)(A) purposes, Citi does not explain its logic. The Court will not develop this argument for movant.
See, e.g., Harris v. Hancock Bank,
To counter the foregoing arguments, Citi relies on a trio of unpublished district court decisions that it contends supports its position. 10 However, the Court finds none of these authorities persuasive and declines to follow them. In particular, the three opinions shed precious little light on the issue presented because they do not offer meaningful reasoning or discussion to justify their determinations that § 1641(g) violations are not actionable in the absence of actual damages or finance charges. Certainly, nothing in those unpublished district court opinions would cast doubt on the rationale set forth supra for allowing the Browns to proceed with their claim for statutory damages under TILA.
III. Conclusion.
For all of the foregoing reasons, the Court concludes that defendant has not met its burden of demonstrating entitle
Notes
. Also pending is plaintiffs’ Motion for Leave to File Sur-Reply (doc. 18), which plaintiffs offered for the limited purpose of responding to a new argument in defendant’s Reply (doc. 15). That Motion is granted, and the SurReply appended to the Motion will be considered for that limited puipose. Following the close of briefing, defendant sent a letter to the undersigned which appears to be a supplement to defendant’s Reply. It is not proper to refashion a memorandum of law as correspondence to the judge because doing so (i) violates the Local Rules, (ii) circumvents court-ordered briefing schedules, (iii) gives the movant a third incremental bite at the briefing apple without leave of court, and (iv) effectively moves the parties’ briefing into a forum outside the confines of the official court file.
See
Local Rule 5.1(d) ("Requests for court action may not be submitted in the form of a letter.”). In this District Court, the rule is (and has long been) that legal memoranda must conform to briefing schedules and Local Rules, and must be filed with the Clerk
. The Complaint makes reference to "the class described below.” (Doc. 2, ¶ 9.) That reference is erroneous, inasmuch as no such class allegations or definition appear in the Complaint, which has been brought solely by the Browns on their own behalf.
.
See also Christ v. Beneficial Corp.,
. For example, Citi wrote that “Plaintiffs' Complaint is devoid of any mention of actual damages that they may have suffered.... As a result, Plaintiffs' entire Complaint is due to be dismissed, with prejudice.” (Doc. 6, at 2.) Elsewhere, defendant asserted that “Plaintiffs' entire Complaint is due to be dismissed because they have not alleged — and cannot allege — that they suffered actual damages.... ” (Id. at 4.) Defendant left no doubt that the sole basis for its Rule 12(b)(6) Motion was that "Plaintiffs' Complaint contains absolutely no reference to any actual damages suffered as a result of the alleged violation of § 1641(g).” (Id. at 7.)
.See also Purtle v. Eldridge Auto Sales, Inc.,
. The undersigned has outlined the purposes and virtues of this convention as follows: "In order to avoid a scenario in which endless sur-reply briefs are filed, or the Court is forced to perform a litigant's research for it on a key legal issue because that party has not had an opportunity to be heard, or a movant is incentivized to save his best arguments for his reply brief so as to secure a tactical advantage based on the nonmovant’s lack of oppor
. A number of courts in other jurisdictions have likewise concluded that minimum statutory damages are available for TILA disclosure violations even in the absence of finance charges.
See, e.g., Murphy v. Household Finance Corp.,
. Elsewhere in its reply brief, defendant offers a variation of this statement, again in bold, underlined type, as follows: "Plaintiffs have submitted not a single case finding that a borrower may proceed with a § 1641(g) claim absent an allegation of actual damages or the levying of a finance charge.” (Doc. 15, at 6 (emphasis omitted).)
. Another way to think about it is as follows: Citi concedes that where a doubled finance charge is less than the minimum, then that minimum penalty applies.
See
doc. 15, at 9 (reciting example in which "double-the-finance-charge liability was $54.27, entitling the plaintiff to the $100 minimum”). Under defendant's reading, a plaintiff who incurred a $0.01 finance charge would be eligible for the $400 minimum statutory damages under subsection (a)(2)(A)(iv), but a plaintiff who incurred a $0.00 finance charge would be ineligible for statutory damages. Nothing in the text of § 1640(a)(2)(A), much less common sense, would support such an arbitrary distinction. Rather, the statutory language supports a conclusion that, just like the one-penny example, a plaintiff who had incurred a finance charge of $0 would be entitled to statutory damages of double that amount, subject to a $400 floor. The Court therefore declines defendant’s implicit invitation to rewrite § 1640(a)(2)(A) by adding a clause to state that the minimum statutory damage amounts prescribed therein are inapplicable unless a positive value finance charge is actually levied against the plaintiff in connection with the underlying violation. Judicial revision of statutes is impermissible, even if done under the guise of judicial interpretation.
See, e.g., Nguyen v. United States,
. Those decisions are
Turner v. America-HomeKey Inc.,
.
See, e.g., Coventry First, LLC v. McCarty,