Harold C. Riethman; Vicki A. Hagel v. Isobel Berry

PRECEDENTIAL
Filed April 19, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-3509
HAROLD C. RIETHMAN; VICKI A. HAGEL,
Appellants
v.
ISOBEL BERRY; DAVID CULP; BERRY AND CULP
(a/k/a BERRY AND CULP, P.C.)
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 98-cv-05031)
District Judge: Hon. Eduardo C. Robreno
Submitted Under Third Circuit LAR 34.1(a)
April 1, 2002
Before: SLOVITER, FUENTES and MICHEL,*
Circuit Judges
(Filed: April 19, 2002)
_________________________________________________________________
* Hon. Paul R. Michel, United States Court of Appeals for the Federal
Circuit, sitting by designation.
H. Graham McDonald
Alan A. Turner
Turner & McDonald
Philadelphia, PA 19103
Attorneys for Appellants
James W. Christie
Christie, Pabarue, Mortensen &
Young
Philadelphia, PA l9l03
Attorney for Appellees
OPINION OF THE COURT
SLOVITER, Circuit Judge.
The issue presented in this case is a novel one for this
court: whether the defendant lawyers are "creditors" under
the Equal Credit Opportunity Act (ECOA), 15 U.S.C.S 1691
et seq., and the Truth in Lending Act (TILA), 15 U.S.C.
S 1601 et seq., who were therefore obliged to follow the
requirements of those statutes in their dealings with their
clients, the plaintiffs in this case. The District Court
decided they were not covered by those statutes. Plaintiffs

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Harold C. Riethman and his wife Vicki A. Hagel appeal the
District Court’s order granting summary judgment and
dismissing their suit against their former attorneys, Isobel
Berry and David Culp and the law firm Berry & Culp
(collectively, Berry & Culp). The District Court had
jurisdiction under 15 U.S.C. SS 1691e(f), 1640(e) and 28
U.S.C. S 1331. This court has jurisdiction pursuant to 28
U.S.C. S 1291.
I.
Riethman and Hagel filed suit, claiming that Berry &
Culp’s fee agreement failed to comply with various
requirements of the ECOA and the TILA. The District Court
concluded the ECOA and the TILA did not apply to the
Riethman/Hagel fee agreement with Berry & Culp because
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neither the firm nor the attorneys are creditors as defined
in those statutes.
Riethman had previously retained Berry & Culp in
divorce litigation. He then retained the firm in connection
with an ensuing child custody battle with his former wife.
The initial fee agreement between Riethman and counsel
dated February 20, 1995 (the 1995 agreement) provided for
billing on a monthly basis. In 1998, the parties modified
their 1995 agreement at Riethman’s request to permit
Riethman to make smaller progress payments instead of
paying the full amount due each month (the 1998
agreement). Although Vicki Hagel, Riethman’s new wife,
had not been a party to the 1995 agreement, she signed the
1998 agreement. During the custody trial, a fee dispute
between Berry & Culp and Riethman and Hagel culminated
in Berry & Culp withdrawing as counsel. Riethman and
Hagel then initiated this suit.
II.
The issue before us is limited to the District Court’s
dismissal of the ECOA and TILA claims.1 Riethman and
Hagel primarily argue that the District Court erred as a
matter of law by failing to conclude that Berry & Culp are
"creditors." This court exercises plenary review over a
district court’s grant of summary judgment. Deane v.
Pocono Med. Ctr., 142 F.3d 138, 142 n.3 (3d Cir. 1998).
Summary judgment was appropriate if "the record, when
viewed in the light most favorable to [Riethman and Hagel],
shows that there is no genuine issue of material fact and
that [Berry & Culp were] entitled to summary judgment as
a matter of law." Id.
In enacting the ECOA, Congress found that "there is a
need to insure that the various financial institutions and
other firms engaged in the extensions of credit exercise
their responsibility to make credit available with fairness,
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1. Riethman and Hagel had also included various state claims in their
complaint. Once the federal claims were adjudicated, the District Court
declined to exercise supplemental jurisdiction over the remaining state
law claims.
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impartiality, and without discrimination on the basis of sex
or marital status." Equal Credit Opportunity Act, Pub. L.
No. 93-495, S 502, 88 Stat. 1521, 1521 (1974). The
congressional statement of purpose continues: "Economic
stabilization would be enhanced and competition among
the various financial institutions and other firms engaged
in the extension of credit would be strengthened by an
absence of discrimination on the basis of sex or marital
status, as well as by the informed use of credit which
Congress has heretofore sought to promote." Id. The Act
makes it unlawful for any creditor to discriminate against
any applicant with respect to any aspect of a credit
transaction on the basis of race, color, religion, national
origin, sex or marital status or age; because all or part of
the applicant’s income derives from any public assistance
program; or because the applicant has in good faith
exercised any right under the Consumer Credit Protection
Act. 15 U.S.C. S 1691(a).
In relevant part, the ECOA defines a "creditor" as "any
person who regularly extends, renews, or continues credit."
15 U.S.C. S 1691a(e); see also 12 C.F.R. S 202.2(l) (2001)
(Regulation B). "Credit," in turn, is defined as "the right
granted by a creditor to a debtor to defer payment of debt
or to incur debts and defer its payment or to purchase
property or services and defer payment therefor." 15 U.S.C.
S 1691a(d).
Riethman and Hagel contend that Berry & Culp were
creditors because they regularly extended credit by
providing legal services without requiring immediate
payment. The District Court evaluated this claim by
examining a random cross-section of Berry & Culp’s billing
agreements and invoices. Most of the billing agreements
considered provided for outstanding charges to be paid in
full within thirty days, with an interest charge to be
imposed on unpaid balances. Riethman and Hagel concede
that "these fee agreements, . . . were almost identical to the
[the 1995 agreement]." Br. of Appellants at 17. Of the ten
clients whose bills the District Court considered, Berry &
Culp continued to perform legal services for at least half
despite the failure of some clients to pay bills as they
became due.
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The District Court rejected the contention that Berry &
Culp were creditors because, other than Riethman and
Hagel under the 1998 agreement, none of Berry & Culp’s
defaulting clients had a "right" to defer payment. The court
observed, "it is insufficient to trigger ECOA coverage to

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show that a debtor failed to pay a debt or that a creditor
voluntarily chose to delay collection and continue[d] to
perform work on behalf of the debtor. The key element
. . . is whether, under the agreement between the debtor
and the creditor, the debtor has a right to defer payment of
existing debt or to incur future debt and defer payment at
its sole discretion." Riethman v. Berry, 113 F. Supp. 2d
765, 768 (E.D. Pa. 2000).
We agree with the District Court. The hallmark of"credit"
under the ECOA is the right of one party to make deferred
payment. The courts have consistently so held. See, e.g.,
Shaumyan v. Sidetex Co., 900 F.2d 16, 18 (2d Cir. 1990)
("[I]t is apparent that the ECOA extends only to instances
in which the right to defer payment of an obligation is
granted. Absent a right to defer payment for a monetary
debt, property or services, the ECOA is inapplicable.");
Williams v. AT&T Wireless Servs., Inc., 5 F. Supp. 2d 1142,
1145 (W.D. Wash. 1998); Butler v. Capitol Fed. Sav., 904 F.
Supp. 1230, 1234 (D. Kan. 1995); Dunn v. American
Express Co., 529 F. Supp. 633, 634 (D. Colo. 1982); cf.,
Brian S. Prestes, Comment, Application of the Equal Credit
Opportunity Act to Housing Leases, 67 U. Chi. L. Rev. 865,
879 & n.89 (2000) (discussing cases).
Riethman and Hagel appear to contend that Berry &
Culp’s failure to enforce their right to prompt payment gave
their clients a unilateral right to defer payments. This
position is inconsistent with ordinary principles of contract
interpretation. Although courts use course of performance
and course of dealing in interpreting contract terms,
"express terms are given greater weight than course of
performance[ and] course of dealing." Restatement (Second)
of Contracts S 203(b) (1981).
Even if Berry & Culp failed to strictly enforce their rights
against tardy clients, the express terms of their fee
agreements plainly manifest their right to prompt and full
payments. Contrary to Riethman and Hagel’s suggestion,
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the fact that counsel permitted their clients to pay by check
or credit card, or provided legal services prior to receiving
a retainer, does not alone bring them within the ECOA.
Riethman and Hagel have not identified any language in
the legislative history of the ECOA that suggests that
Congress was thinking about payment of legal fees when it
enacted the ECOA. We do not suggest that lawyers are ipso
facto exempt from the statute. We note, however, the
breadth of the argument that Riethman and Hagel make in
their brief:
It is hard to imagine a lawyer with a litigation-
oriented practice who performs work for a client on an
hourly basis and who does not regularly extend credit
to clients in the form of post-service billing. It is the
nature of litigation that the court systems require that

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an attorney perform tasks on the court’s schedule, not
on a schedule designed to fit a client’s budget or cash
flow. And when an attorney finds a receivable building
[sic], nonetheless the attorney is required by the court
rules and the Rules of Professional Conduct to continue
with the required work until either new counsel enters
his appearance, or a Motion to Withdraw is granted. Pa.
R. Civ. P. 1012(b). A lawyer’s duty to the Court requires
no less. The point of this analysis is that an hourly
paid litigation lawyer is a lawyer who regularly extends
credit, whether by choice or not. If this circumstance
means that such a lawyer is necessarily subject to the
ECOA, and therefore cannot require a client to obtain
a co-signer on a fee agreement without first
determining the client is not creditworthy, and further
can not require a co-signer in such an instance to be
the client’s spouse, this was the decision of Congress
and the Federal Reserve Board (through the
promulgation of Regulation B) and cannot be ignored
by a court.
Br. of Appellants at 23.
The Court of Appeals for the Second Circuit rejected a
comparably broad argument in Shaumyan v. Sidetex Co.,
900 F.2d 16 (2d Cir. 1990). In that case the plaintiffs
contended that the ECOA applied to a home improvement
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contract that called for progress payments. They had
argued that a service contract is a "credit transaction"
subject to the ECOA unless payment for services rendered
is simultaneous with the performance of the services. Id. at
18-19. The court pointed out that imposing a requirement
of simultaneous performance would transform into credit
transactions "countless transactions in which
compensation for services is not instantaneous . . .. Such
indiscriminate application of the ECOA is not appropriate."
Id. at 19. Similarly, in addition to attorneys’ fees, Riethman
and Hagel’s interpretation of the ECOA would embrace
doctors’ fees, dentists’ fees, accountants’ fees,
psychologists’ fees and virtually all other professional fees.
In view of the statutory purpose underlying the ECOA, it
seems implausible that Congress intended to cover not only
banks and other such financial institutions but also all
professions.
The Federal Reserve Board’s Regulation B defines
"extending credit" and "extension of credit" as, inter alia,
"the continuance of existing credit without any special
effort to collect at or after maturity." 12 C.F.R. S 202.2(q).
Riethman and Hagel suggest that this regulation
demonstrates that Berry & Culp’s leniency toward enforcing
their contractual rights subjects them to the ECOA. But
this provision of Regulation B presupposes an already
existing credit relationship between the parties. Unless the
fee agreements themselves are credit transactions, the
failure of Berry & Culp to collect after "maturity" cannot be

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an extension of credit. Because the fee agreements do not
themselves extend credit, failure to enforce them was not
the continuance of existing credit. Even assuming plaintiffs’
1998 agreement did extend credit, it is clear that their 1995
agreement did not. Nor did the agreements of the other
clients reviewed by the District Court. Therefore, defendant
law firm cannot be equated with one "who regularly
extends, renews, or continues credit." 15 U.S.C.S 1691a(e)
(emphasis added).
Finally, Riethman and Hagel point to In re Brazil, 21 B.R.
333, 334 (Bankr. N.D. Ohio 1982), in which a bankruptcy
court held that a local gas company was "a creditor [under
the ECOA] as it regularly provides gas to its customers,
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prior to being paid therefore." The quoted phrase is the
extent of the court’s analysis of the term "creditor."2 We
decline Riethman and Hagel’s invitation to follow that
decision and conclude that the District Court did not err
when it held that Berry & Culp were not creditors under
the ECOA.
III.
The other statute on which Riethman and Hagel base
their claim, the Truth in Lending Act (TILA), is designed to
strengthen the national economy by enhancing the
informed use of credit. It requires creditors to accurately
and meaningfully disclose all credit terms. 15 U.S.C.
S 1601(a). Under the TILA, a "creditor" is, in relevant part,
a person or entity which regularly extends consumer credit.
15 U.S.C. S 1602(f). Similarly to the ECOA, the TILA defines
"credit" as "the right granted by a creditor to a debtor to
defer payment of debt or to incur debt and defer its
payment." 15 U.S.C. S1602(e). In addition, the Federal
Reserve’s TILA regulation, 12 C.F.R. S 226.2(a)(17) n.3,
specifically defines the TILA statutory term "regularly" as
extending credit within the last twelve months "more than
25 times." Riethman and Hagel concede that the"ECOA
applies to a broader category of cases than [the TILA]." Br.
of Appellant at 15 n.11. As discussed above, Berry & Culp
did not grant clients the right to defer payment. It follows
that the TILA is inapplicable.
IV.
For the reasons set forth, we will affirm the judgment of
the District Court.
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2. In Brazil, the utility had suggested that the debtor’s husband would
have to move out of the family’s home for her to continue to receive gas.
The court augmented its application of the ECOA by observing that the
gas company’s "position with respect to debtor’s application is against
public policy and against good social and religious morals." Id. at 335.
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A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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