03-377 Koons Buick Pontiac GMC, Inc. v. Nigh

Listen to this article

Both the conventional meaning of “subparagraph” and standard interpretive guides point to the same conclusion: The $1,000 cap applies to recoveries under clause (i). Congress ordinarily adheres to a hierarchical scheme in subdividing statutory sections. Under that scheme, the word “subparagraph” is used to refer to a subdivision preceded by a capital letter and the word “clause” to a subdivision preceded by a lower case Roman numeral. Congress followed this scheme in drafting TILA. For example, §1640(a)(2)(B), which covers statutory damages in TILA class actions, states: “[T]he total recovery under this subparagraph … shall not be more than the lesser of $500,000 or 1 per centum of the net worth of the creditor … .” (Emphasis added.) Had Congress meant to repeal the longstanding $100/$1,000 limitation on §1640(a)(2)(A)(i), thereby confining the $100/$1,000 limitation solely to clause (ii), Congress likely would have stated in clause (ii): “liability under this clause.” The statutory history resolves any ambiguity whether the $100/$1,000 brackets apply to recoveries under clause (i). Before 1995, clauses (i) and (ii) set statutory damages for the entire realm of TILA-regulated consumer credit transactions. Closed-end mortgages were encompassed by clause (i). The addition of clause (iii) makes closed-end mortgages subject to a higher floor and ceiling, but clause (iii) contains no other measure of damages. Clause (i)’s specification of statutory damages of twice the finance charge continues to apply to loans secured by real property as it does to loans secured by personal property. Clause (iii) removes closed-end mortgages from clause (i)’s governance only to the extent that clause (iii) prescribes higher brackets. There is scant indication that Congress meant to alter the meaning of clause (i) when it added clause (iii). Cf. Church of Scientology of Cal. v. IRS, 484 U.S. 9, 17-18. The history demonstrates that, by adding clause (iii), Congress sought to provide increased recovery when a TILA violation occurs in the context of a loan secured by real property. It would be passing strange to read the statute to cap recovery in connection with a closed-end, real-property-secured loan at an amount substantially lower than the recovery available when a violation occurs in the context of a personal-property-secured loan or an open-end, real-property-secured loan. The text does not dictate this result; the statutory history suggests otherwise; and there is scant indication Congress meant to change the well-established meaning of clause (i).

319 F.3d 119, reversed and remanded.

Local effect:

The decision is consistent with the Seventh Circuit’s decision in Strange v. Monogram Credit Card Bank of Ga., 129 F.3d 943 (7th Cir.1997).

Ginsburg, J.; Stevens, J., concurring; Kennedy, J., concurring; Thomas, J., concurring; Scalia, J., dissenting.