DARCEL D. FISHER HARRIS, Plaintiff-Appellant-Cross Appellee,
HARVEY SCHONBRUN, Trustee, Defendant-Appellee-Cross Appellant
Appeals from the United States District Court for the Middle District of Florida. D.C. Docket No. 3:12-cv-00488-MCR.
For Darcel D. Fisher Harris, Plaintiff-Appellant-Cross Appellee: Julianna Easter Groot, Brett A. Mearkle, Mearkle Trueblood Adam, PL, Jacksonville, FL.
For HARVEY SCHONBRUN, Trustee, Defendant - Appellee-Cross Appellant: Joseph Anthony Eustace Jr., Anthony Joseph LaSpada, PA, Tampa, FL.
Before WILLIAM PRYOR and JORDAN, Circuit Judges, and JONES,[*] District Judge.
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 Truth in Lending Act, 15 U.S.C. § 1635, when the lender instructs the borrower to sign simultaneously both the loan and a postdated waiver of the borrower's right to rescind; and (2) if it rescinds the loan, whether the district court must award the borrower statutory damages, attorney's fees, and costs. Darcel D. Fisher Harris sought to rescind a loan she entered into years earlier with Harvey Schonbrun, a trustee of a mortgage investment trust. Harris contended that, because the mortgaged property was her " principal dwelling" and Schonbrun failed to give her " clear and conspicuous" notice that she had a statutory right to rescind the loan within the three business days after the " consummation of the transaction," id. § 1635(a), her statutory right to rescind was extended to three years from the date of the loan, id. § 1635(f). The district court found that the mortgaged property was Harris's " principal dwelling" and Schonbrun failed to give Harris adequate notice of her right to rescind. Id. § 1635. The district court granted rescission, id. § 1635(a), but denied Harris's request for statutory damages, attorney's fees, and costs, id. § 1640(a). We affirm the grant of rescission; reverse the denial of statutory damages, attorney's fees, and costs; and remand for further proceedings.
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
the requirement of the Truth in Lending Act, id. § 1635, to notify Harris " clearly and conspicuously" that she had a right to rescind the loan within three business days, id. § 1635(a). Because Harris never received the required notice, she argued, her statutory right of rescission was extended to October 16, 2012, id. § 1635(f), and Schonbrun had to rescind the loan, id. § 1635(a).
After Schonbrun denied Harris's request, Harris filed a complaint in the district court on April 27, 2012. She sought rescission, id., and an award of statutory damages, attorney's fees, and costs, id. § 1640(a). Harris alleged that she did not receive clear and conspicuous notice of her right to rescind, in violation of the Act and an associated regulation, id. § 1635(a); 12 C.F.R. § 226.23(b)(1). She alleged that the notice she received was inadequate because Schonbrun instructed her to sign a postdated waiver of her right to rescind when she signed the loan documents, 15 U.S.C. § 1635(a); 12 C.F.R. § 226.23(e), and Schonbrun did not give her two copies of the notice of her right to rescind, 12 C.F.R. § 226.23(b)(1).
The parties consented to have their dispute decided in a bench trial before a magistrate judge. Fed.R.Civ.P. 73. Harris and Schonbrun presented conflicting evidence about whether Harris was entitled to the protections of the Act and whether Schonbrun violated the Act. Harris presented evidence that she lived and kept most of her personal belongings at the residential property. She testified that she received only one copy of the notice of her right to rescind, and that she signed both the loan documents and a waiver of her right to rescind on October 16, 2009. Schonbrun presented evidence that Harris lived at a different address at the time of the transaction; Harris knew about her right to rescind; and Harris signed the waiver of her right to rescind on October 21, 2009, after the statutory three-day period for rescission expired. The signed waiver form had a typewritten date of " October 21st, 2009," but Harris handwrote " 16 Oct. 09" next to her signature. The waiver stated, " I, the undersigned, am aware that today, OCTOBER 21, 2009, is after the expiration date of the Right of Rescission for the . . . transaction . . . [and] I hereby elect not to rescind this transaction."
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 ...