United States v. 2020-04-14 | 18-56373 | MAXINE GILLIAM V. JOEL LEVINE | precedential | opinion |

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MAXINE GILLIAM, Trustee of the
Lou Easter Ross Revocable Trust,
Plaintiff-Appellant,
v.
JOEL LEVINE, Trustee of the Joel
Sherman Revocable Trust; DOES, 1
through 30, inclusive,
Defendants-Appellees.
No. 18-56373
D.C. No.
2:18-cv-02580-
PSG-KS
OPINION
Appeal from the United States District Court
for the Central District of California
Philip S. Gutierrez, District Judge, Presiding
Submitted February 14, 2020
*
Pasadena, California
Filed April 14, 2020
Before: Mary M. Schroeder, Marsha S. Berzon,
and Ryan D. Nelson, Circuit Judges.
Opinion by Judge Schroeder
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).

GILLIAM V. LEVINE2
SUMMARY
**
Consumer Credit
The panel reversed the district court’s dismissal of claims
under the Truth in Lending Act, the Real Estate Settlement
Procedures Act, Regulation Z, and California’s Rosenthal
Fair Debt Collection Act, which all provide certain
protections to borrowers in consumer credit transactions.
In her capacity as a trustee, plaintiff obtained a loan to
make repairs to a personal residence occupied by her niece,
the trust beneficiary. The panel held that a trust created by an
individual for tax and estate planning purposes does not lose
all state and federal consumer disclosure protections when it
seeks to finance repairs to a personal residence for the trust
beneficiary, rather than for the trustee herself. Accordingly,
the loan transaction remained a consumer credit transaction.
The panel reversed the district court’s dismissal for failure to
state a claim and remanded for further proceedings.
COUNSEL
Donald Reid, Law Office of Donald W. Reid, Fallbrook,
California, for Plaintiff-Appellant.
W. Derek May, Law Office of W. Derek May, Upland,
California, for Defendants-Appellees.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

GILLIAM V. LEVINE3
OPINION
SCHROEDER, Circuit Judge:
This case presents an issue of first impression under
federal and state regulation of consumer credit transactions.
The issue arises because the Truth-in-Lending Act (“TILA”),
Real Estate Settlement Procedures Act (“RESPA”),
Regulation Z, and California’s Rosenthal Fair Debt
Collection Practices Act all provide certain protections to
borrowers in consumer credit transactions. See 15 U.S.C.
§§ 1631–1634; 12 U.S.C. § 2603; 12 C.F.R.
§§ 226.17–226.20; Cal. Civ. Code § 1788.22. The case
concerns a loan obtained by Appellant-Borrower Maxine
Gilliam, acting in her capacity as a trustee. She obtained that
loan to make repairs to a personal residence that is occupied
by her niece, who is the trust beneficiary. The issue is
whether this loan should be considered a consumer credit
transaction. Because the Borrower did not herself intend to
live in the house, the district court held that this was not a
consumer credit transaction, and dismissed the complaint.
The district court reached this conclusion even though the
loan was for the benefit of the trust beneficiary, a member of
the Borrower’s family.
Under applicable statutes and regulations, however, a
trust created by an individual for tax and estate planning
purposes, like the one in this case, does not lose all state and
federal consumer disclosure protections when it seeks to
finance repairs to a personal residence for the trust
beneficiary, rather than for the trustee herself. The
transaction remains a consumer credit transaction. We
therefore reverse and remand.

GILLIAM V. LEVINE4
The facts are straightforward. In 2016, the Borrower,
Maxine Gilliam, acting in her capacity as trustee of the Lou
Ross Easter trust, obtained a loan from Appellee-Lender Joel
Levine to finance repairs to a residential property that was the
main asset of the trust. That property was the security for the
loan. This trust was created by the Borrower’s sister, Lou, for
the benefit of Lou’s daughter. After her sister died, the
Borrower became the trustee. According to her complaint,
the Borrower obtained the loan from Lender Levine to make
repairs to the property so that her niece, as the sole
beneficiary of the trust, could continue to reside there.
Under TILA, in a consumer credit transaction, the creditor
must disclose to the borrower, among other items, the amount
of payments and when each is due. 15 U.S.C. § 1602(v). The
statute provides there must be disclosure of “the number and
amount of payments, [and] the due dates or periods of
payments scheduled to repay the indebtedness.” Id. Here,
the Borrower alleges that the Lender’s loan disclosures were
materially inconsistent with the terms of the loan, leading her
to believe that the final payment date was one year later than
the payment date contained in the loan documents. Because
the due date disclosures did not accurately reflect the terms of
the loan, the Borrower filed a complaint in district court
seeking rescission of the loan under TILA. See 15 U.S.C.
§ 1635(i)(4) (relating to rescission remedy in consumer credit
transactions); 12 C.F.R. § 226.15 (same). She also sought
damages against the Lender under California’s Rosenthal Act
because the Lender allegedly used unfair means to collect a
consumer debt. She additionally sought recovery of damages
caused by the inaccurate disclosure, including accounting and
reimbursement for payments that she should not have been
obligated to make. See 15 U.S.C. § 1640 (permitting

GILLIAM V. LEVINE5
recovery of “any actual damage sustained by such person as
a result of the failure” to provide adequate disclosures).
These rescission and damage remedies are available only
in “consumer credit transactions.” 15 U.S.C. § 1635(i)(4);
12 U.S.C. § 2606(a); Cal. Civ. Code § 1788.2(e). TILA
defines such transactions carefully. For a loan to qualify as
a consumer credit transaction under the statute, a borrower
must demonstrate that the loan was extended to (1) a natural
person, and was obtained (2) “primarily for personal, family,
or household purposes.” 15 U.S.C. § 1602(i). Extensions of
credit to organizations are excluded, as are credit transactions
performed for non-consumer purposes, such as loans for a
business purpose, even when that loan is obtained by a
natural person. Id. § 1603.
Congress enacted RESPA in 1974 “to increase the supply
of information available to mortgage consumers . . . and to
eliminate abusive practices.” Schuetz v. Banc One Mortg.
Corp., 292 F.3d 1004, 1008 (9th Cir. 2002). Although the
“settlement process” targeted by RESPA was initially limited
to the negotiation and execution of mortgage contracts,
Congress subsequently expanded RESPA’s application to
encompass loan servicing as well. See Medrano v. Flagstar
Bank, FSB, 704 F.3d 661, 665 (9th Cir. 2012); Pub. L. No.
101–625, tit. IX, subtit. C, § 941, 104 Stat. 4405 (1990). Like
TILA, RESPA does not apply to “credit transactions
involving extensions of credit primarily for business,
commercial, or agricultural purposes.” 12 U.S.C.
§ 2606(a)(1).
The Rosenthal Act seeks to “prohibit debt collectors from
engaging in unfair or deceptive acts or practices in the
collection of consumer debts.” Cal. Civ. Code § 1788.1 (b).

GILLIAM V. LEVINE6
It imposes liability upon debt collectors that engage in
various unfair debt collection practices. See, e.g., id.
§ 1788.10. The Act defines consumer debt as “money,
property, or their equivalent, due or owing or alleged to be
due or owing from a natural person by reason of a consumer
credit transaction.” Id. § 1788.2(f). As in TILA, a consumer
credit transaction is defined as a loan that was extended to a
natural person for consumer purposes. See id. § 1788.2(e).
Federal regulations are important tools to implement
consumer protection statutes. The Consumer Financial
Protection Bureau (“CFPB”) has interpretive authority over
the provisions of TILA and RESPA. The CFPB issues
Regulation Z that contains interpretive regulations imposing
“even more precise” disclosure requirements than TILA
itself. See Hauk v. JP Morgan Chase Bank USA, 552 F.3d
1114, 1118 (9th Cir. 2009). Courts defer to the CFPB’s
Official Staff Commentary to Regulation Z. See Anderson
Bros. Ford v. Valencia, 452 U.S. 205, 219 (1981) (“[A]bsent
some obvious repugnance to the statute, . . . [Regulation Z]
should be accepted by the courts, as should the [Bureau’s]
interpretation of its own regulation.”). Our court has said the
Commentary is “controlling unless demonstrably irrational.”
Johnson v. Wells Fargo Home Mortg., Inc., 635 F.3d 401,
417 (9th Cir. 2011) (internal quotation marks and alteration
omitted).
The Borrower filed this action in district court in March
2018. The Lender moved to dismiss, arguing, without
statutory or regulatory authority, that a residential loan to a
trust can be considered a consumer credit transaction only
where the trustee-borrower lives at the residence. The
Borrower, relying on the Official Staff Commentary to
Regulation Z, maintained that her complaint should not be

GILLIAM V. LEVINE7
dismissed because the Commentary provides that loans to
trusts like hers should be treated as consumer credit
transactions. See 12 C.F.R. pt. 1026, Supp. 1, § 1026.3
Comment 3(a)-10 (explaining that “[c]redit extended for
consumer purposes to certain trusts is considered to be credit
extended to a natural person rather than credit extended to an
organization”).
The district court agreed with the Lender’s position that
the loan was not a consumer credit transaction because the
trust property securing the loan was not the Borrower’s
primary residence, even though it was the residence of her
niece. The district court dismissed the complaint. On appeal,
the Lender tries to defend that result, and asserts that, as a
general rule, a trust does not qualify as a natural person under
TILA, and cannot be party to a consumer credit transaction,
subject only to a limited exception where the loan is to
finance the residence of the trustee.
The CFPB’s Official Staff Commentary to Regulation Z,
however, provides a general consumer credit rule that differs
from the one the Lender posits and the district court accepted.
The Commentary’s guidance is that “[c]redit extended for
consumer purposes to certain trusts is considered to be credit
extended to a natural person rather than credit extended to an
organization.” 12 C.F.R. pt.1026, Supp. 1, § 1026.3
Comment 3(a)-10. These “certain trusts” include trusts that
were created for tax or estate planning purposes. Id. For
consumers who place assets in a trust, the regulation thus
effectuates TILA’s definition of consumer credit transactions:
those that are “primarily for personal, family, or household
purposes.” 15 U.S.C. § 1602(i). The trust in this case is for
the benefit of the trustee’s niece. Under the Commentary, a
loan for “personal, family, or household purposes” of the

GILLIAM V. LEVINE8
beneficiary of this type of trust is a consumer credit
transaction.
Further undermining the Lender’s position is the
Commentary’s explanation that it is the substance of the
transaction that matters. The Commentary explains that,
“[r]egardless of the capacity . . . in which the loan documents
are executed,” trusts should be considered natural persons
under TILA, so long as the transaction was obtained for a
consumer purpose, because, “in substance (if not form)
consumer credit is being extended.” 12 C.F.R. pt. 1026,
Supp. 1, § 1026.3 Comment 3(a)-10.i. The Lender’s position,
by contrast, draws an artificial distinction between a loan
obtained for the benefit of the trustee alone, and a loan
obtained for the benefit of trust beneficiaries.
The Lender does not meaningfully address this
Commentary to Regulation Z. Instead, here, as in the district
court, he seeks to draw a general rule from the facts of a few
cases that when a trust borrows funds to finance repairs to a
residence, the collateral for the loan must be the primary
domicile of the trustee. Three federal district court cases
have been cited to support that view. See Amonette v.
Indymac Bank, 515 F. Supp. 2d 1176 (D. Haw. 2007); Shirley
v. Wachovia Mortg. FSB, No. 10-3870 SC, 2011 WL 855943
(N.D. Cal. Mar. 9, 2011); Galindo v. Financo Fin., Inc., No.
07-03991 WHA, 2008 WL 4452344 (N.D. Cal. Oct. 3, 2008).
None of those cases, however, support the Lender’s
position. None stand for the general proposition that a trust
cannot be party to a consumer credit transaction under TILA
unless the trustee resides at the property. None suggest that
borrowing for a familial, personal, or household purpose of
the trust beneficiary makes a loan commercial in nature.

GILLIAM V. LEVINE9
None hold that the Official Staff Commentary to Regulation
Z is irrational or contrary to law. See Johnson, 635 F.3d at
417.
Only in Amonette did the issue of whether a trust could be
party to a consumer credit transaction arise. In that case, the
underlying facts involved a loan to a trust secured by the
house in which the trustee lived. 515 F. Supp. 2d at 1178.
The court held that the loan to the trust was a consumer credit
transaction. Id. The court correctly observed that the trustee
was a consumer because the loan was secured by the trustee’s
home. Id. at 1186. The court did not purport to limit
consumer credit transactions involving trusts to the particular
situation in that case. Instead, its holding rested on the
conclusion that the loan was obtained for a personal,
consumer purpose. Id. at 1185. The decision in Amonette
correctly anticipated the most recent Commentary to
Regulation Z, which expressly provides that loans to trusts,
set up by individuals for tax and estate planning purposes,
should be considered consumer credit transactions. See
12 C.F.R. pt. 1026, Supp. 1, § 1026.3 Comment 3(a)-10.
Amonette involved such a situation.
The second case, Shirley, involved a trustee who lived at
the trust property, but the issue in that case was not whether
the loan was a consumer credit transaction. 2011 WL
855943, at *4. Instead, the issue was who was entitled to
receive TILA disclosures. Id. The court held that TILA
disclosures need not be provided to the beneficiaries of the
trust, in addition to the trustee. Id. (“The Court finds that
Wachovia’s disclosure obligations extended to the trustee . . .
and not to the trust’s beneficiaries or settlors.”).

GILLIAM V. LEVINE10
Galindo did not involve a trust at all. That case involved
a loan to an individual person, who refinanced a four-plex to
purchase another property in which she did not reside and
which she intended to rent to others. 2008 WL 4452344,
at *1. The district court in Galindo held that the transaction
at issue was not a consumer credit transaction, because the
complaint failed to allege that the loan was obtained for a
consumer, as opposed to a commercial, purpose. Id. at *4.
In this case, the Borrower has alleged a personal, consumer
purpose—that the loans were obtained to support a member
of her family.
None of these cases support the Lender’s theory that a
trustee’s loan for a purely personal purpose, here for the
home of the beneficiary, is not a consumer credit transaction.
All are consistent with the Borrower’s position that such a
loan is a consumer credit transaction. All are also consistent
with TILA’s purpose, which our court effectuates by
“constru[ing] the Act’s provisions liberally in favor of the
consumer.” Hauk, 552 F.3d at 1118 (internal quotation marks
omitted). The Commentary to Regulation Z assists our
interpretation and provides a sensible rule that “credit
extended for a consumer purpose to certain trusts is
considered to be credit extended to a natural person, rather
than credit extended to an organization.” 12 C.F.R. pt. 1026,
Supp. 1, § 1026.3 Comment 3(a)-10.
In this case, at the pleading stage, we conclude that the
Borrower has sufficiently alleged this loan was obtained for
a consumer purpose. As detailed in her complaint, the
Borrower obtained this loan for a personal, household, or
familial purpose—to enable her niece, the trust beneficiary,
to continue to live in the trust property. That the Borrower
obtained this loan so the trust beneficiary could continue to

GILLIAM V. LEVINE11
reside at the trust property supports, rather than undermines,
the conclusion that the loan was taken out for a consumer
purpose, because consumer purposes include personal,
household, and familial purposes under TILA. See 15 U.S.C.
§ 1602(i) (including transactions that are “primarily for
personal, family, or household purposes”).
The definitions of consumer credit transaction under
TILA and the Rosenthal Act are identical. See id.; Cal. Civ.
Code § 1788.2(e) (same). And RESPA’s definition of
protected transactions requires only that the transaction be for
a consumer purpose. See 12 U.S.C. § 2606(a). We therefore
conclude that trusts like the one in this case can be considered
natural persons under the Rosenthal Act, and that the
transaction here is to be regarded as a consumer credit
transaction under all three statutes.
The district court erred in construing the statutes in this
case too narrowly. The complaint should not have been
dismissed. A consumer, by placing assets in a trust for
personal estate planning purposes, does not lose all protection
for the trust beneficiary under these federal and state
consumer protection laws. We therefore reverse and remand
for further proceedings.
REVERSED and REMANDED.