DARCEL D. FISHER HARRIS, Plaintiff-Appellant-Cross Appellee, versus HARVEY SCHONBRUN, Trustee, Defendant-Appellee-Cross Appellant.
No. 13-15505
United States Court of Appeals, Eleventh Circuit
December 10, 2014
D.C. Docket No. 3:12-cv-00488-MCR
[PUBLISH]
Appeals from the United States District Court for the Middle District of Florida
WILLIAM PRYOR, Circuit Judge:
This appeal requires us to decide two questions: (1) whether a lender can satisfy a statutory obligation to give a borrower clear and conspicuous notice of a right to rescind a loan, see
I. BACKGROUND
On October 16, 2009, Schonbrun and Harris entered into a loan agreement, secured by a mortgage for Harris‘s residential property. In 2011, after Harris defaulted on the loan and Schonbrun sued Harris to foreclose on the property, Harris notified Schonbrun that she wanted to rescind the loan transaction. Harris alleged that Schonbrun had failed to comply with
After Schonbrun denied Harris‘s request, Harris filed a complaint in the district court on April 27, 2012. She sought rescission,
The parties consented to have their dispute decided in a bench trial before a magistrate judge.
The magistrate judge ruled in Harris‘s favor and ordered rescission of the loan, but the magistrate judge denied Harris‘s request for statutory damages, attorney‘s fees, and costs. The magistrate judge determined that Schonbrun did not “materially violate” the Act and Harris was not actually harmed by Schonbrun‘s violation. The magistrate judge decided that rescission was a sufficient remedy and that an award of statutory damages, attorney‘s fees, and costs was not “equitable and just to the parties.”
II. STANDARDS OF REVIEW
Two standards of review govern this appeal. First, “[w]e review for clear error factual findings made by a district court,” Morrissette-Brown v. Mobile Infirmary Med. Ctr., 506 F.3d 1317, 1319 (11th Cir. 2007), and we review de novo the application of law to those facts, Lykes Bros., Inc. v. U.S. Army Corps of Eng‘rs, 64 F.3d 630, 634 (11th Cir. 1995). A factual finding is clearly erroneous only if we are “left with the definite and firm conviction that a mistake has been committed.” Id. (internal quotation marks and citation omitted). Second, we review de novo “a district court‘s rulings on the interpretation and application of a statute.” Williams v. Homestake Mortg. Co., 968 F.2d 1137, 1139 (11th Cir. 1992) (internal quotation marks and alteration omitted). We also
III. DISCUSSION
The parties present three issues. First, Schonbrun argues that the findings of fact by the district court are clearly erroneous. Second, Schonbrun asks us to reverse the grant of rescission on the ground that Harris received clear and conspicuous notice of her right to rescind. Third, Harris contends that the district court lacked the discretion to deny her an award of statutory damages, attorney‘s fees, and costs. We address each argument in turn.
A. The Record Fairly Supports the Findings of Fact.
Schonbrun argues that the district court clearly erred in its findings of fact. Schonbrun argues that Harris was not entitled to the protections of the Act because the property that secured the loan was not Harris‘s “principal dwelling” at the time of the transaction,
The district court was entitled to find that the mortgaged property was Harris‘s principal dwelling and that she signed both the loan and the waiver at the same time, as she testified. We defer to the “credibility choices” made by the district court and its decision to credit Harris‘s testimony. Hiram Walker & Sons, Inc. v. Kirk Line, 30 F.3d 1370, 1374 (11th Cir. 1994). The record “as a whole” supports the findings of fact, id. (internal quotation marks and citation omitted), and we are not left with a “definite and firm conviction that a mistake has been committed,” Lykes Bros., Inc., 64 F.3d at 634 (internal quotation marks and citation omitted).
B. Harris Was Entitled to Rescission Because Schonbrun Failed to Give Harris Clear and Conspicuous Notice of Her Right to Rescind.
The Truth in Lending Act requires a lender to give a borrower clear and conspicuous notice of the borrower‘s right to rescind a loan transaction.
Schonbrun argues that the district court erroneously ruled that Harris was entitled to rescission. Schonbrun contends that his noncompliance with the requirements of the Act was immaterial. He contends that, because only material noncompliance violates the Act and Harris subjectively knew about her right to rescind the transaction, Harris‘s right to rescind was not
Schonbrun‘s argument fails. To be sure, the Act “does not require perfect notice; rather it requires a clear and conspicuous notice of [the right to rescind].” Veale, 85 F.3d at 580. And a technical violation of the Act, if immaterial, will not extend a borrower‘s deadline of the right to rescind. Smith v. Highland Bank, 108 F.3d 1325, 1327 n.4 (11th Cir. 1997); Bustamonte v. First Fed. Sav. & Loan Ass‘n of San Antonio, 619 F.2d 360, 363 (5th Cir. 1980). But Schonbrun failed to comply with two requirements of the Act and a related regulation: Schonbrun instructed Harris to sign simultaneously the loan documents and a postdated waiver of her right to rescind the transaction,
This appeal is distinguishable from Smith v. Highland Bank, 108 F.3d 1325, where we decided that the borrower received clear and conspicuous notice even though the lender gave the borrower a waiver form on the date of the loan transaction. Id. at 1327. That waiver “d[id] not mislead the [borrower about her right to rescind]” because it “indicate[d] that the [borrower] [was] not to sign the [waiver] until more than three business days ha[d] elapsed.” Id. Unlike the borrower in Smith, Harris was instructed to—and did—sign the waiver before the three-day period for rescission had expired. Id. at 1326–27.
Whether Harris was actually deceived or harmed by Schonbrun‘s noncompliance with the Act is irrelevant. We employ an objective standard to determine whether a borrower received clear and conspicuous notice and “‘it is unnecessary to inquire as to the subjective deception or misunderstanding of particular [borrowers].‘” Rodash, 16 F.3d at 1145 (quoting Zamarippa v. Cy‘s Car Sales, 674 F.2d 877, 879 (11th Cir. 1982)). Because Schonbrun did not give Harris clear and conspicuous notice of her right to rescind the transaction, Harris‘s right to rescind was extended to three years from the date of the transaction.
C. The District Court Lacked the Discretion to Deny Harris‘s Request for Statutory Damages, Attorney‘s Fees, and Costs.
The district court ruled that Harris was entitled to rescission of the loan transaction, but refused to award her statutory damages, attorney‘s fees, and costs. The district court determined that Schonbrun‘s noncompliance with the Act was “immaterial” and the monetary awards were mandatory only under a “hypertechnical reading”
The decision not to award damages, attorney‘s fees, and costs is inconsistent with the text of the Act and is based on an incorrect reading of our precedents. An award of statutory damages, attorney‘s fees, and costs is mandatory after rescission of a loan transaction. The plain text of the Act provides that any lender who fails to comply with ”
Smith did not overrule our earlier decisions that statutory damages, attorney‘s fees, and costs are mandatory. 108 F.3d 1325. Although we stated in Smith that Congress did not intend for us to apply a “hypertechnical reading of any part of [the Act],” we made this statement to explain that Congress did not intend to punish lenders for immaterial mistakes. Id. at 1327, 1327 n.4. Smith did not address the automatic award of statutory damages, attorney‘s fees, and costs. Likewise, our holding in Williams does not give courts free rein to vary the textual commands of the Act. We held in Williams that “a court may impose conditions [on rescission] . . . that would be equitable and just . . . in view of all surrounding circumstances.” Williams, 968 F.2d at 1142. We explained that the goal of the conditions should be to return the parties to the positions they occupied before the transaction. Id. But we made these determinations while interpreting
The district court lacked the discretion to deny Harris statutory damages, attorney‘s fees, and costs, and we remand for a determination of the amounts owed her. When making that determination, the reasonableness of attorney‘s fees and costs is not limited by the dollar value of the underlying loan agreement. See Varner v. Century Fin. Co., Inc., 738 F.2d 1143, 1148 n.7 (11th Cir. 1984).
We AFFIRM that part of the judgment granting rescission to Harris. We REVERSE that part of the judgment denying Harris statutory damages, attorney‘s fees, and costs and REMAND for the district court to determine the amount of statutory damages, reasonable attorney‘s fees, and costs to award Harris.