Wanda Baker v. SUNNY CHEVROLET, INC., a Michigan corporation d/b/a WAYLAND CHEVROLET

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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2003 FED App. 0391P (6th Cir.)
File Name: 03a0391p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
WANDA BAKER and SCOTT
ZALEWSKI, on behalf of
themselves and all others
similarly situated,
Plaintiffs-Appellants,
v.
SUNNY CHEVROLET, INC., a
Michigan corporation d/b/a
WAYLAND CHEVROLET,
Defendant-Appellee.
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No. 02-1381
Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 01-00109—Robert Holmes Bell, Chief District Judge.
Argued: September 11, 2003
Decided and Filed: November 4, 2003
Before: KENNEDY, GUY, and DAUGHTREY, Circuit
Judges.
2 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
_________________
COUNSEL
ARGUED: John E. Anding, DREW, COOPER & ANDING,
Grand Rapids, Michigan, for Appellants. Daniel S. Saylor,
GARAN, LUCOW, MILLER, PC, Detroit, Michigan, for
Appellee. ON BRIEF: John E. Anding, DREW, COOPER
& ANDING, Grand Rapids, Michigan, Phillip C. Rogers,
Grand Rapids, Michigan, for Appellants. Daniel S. Saylor,
GARAN, LUCOW, MILLER, PC, Detroit, Michigan,
Michael D. Wade, GARAN, LUCOW, MILLER, PC, Grand
Rapids, Michigan, for Appellee.
KENNEDY, J., delivered the opinion of the court. GUY,
J. (pp. 17-21), delivered a separate concurring opinion, in
which DAUGHTREY, J., joined.
_________________
OPINION
_________________
KENNEDY, Circuit Judge. This case presents an appeal
from the district court’s order granting summary judgment in
favor of Defendant-Appellee Sunny Chevrolet. Plaintiffs-
Appellants Baker and Zalewski argue that the district court
erred when it determined that even if Defendant had violated
15 U.S.C. § 1638(b)(1), Defendant was not liable for statutory
damages. We AFFIRM.
BACKGROUND
On December 28, 2000, Plaintiff Baker signed a retail
installment sales contract (“RISC”) to purchase a car and
took possession of the vehicle on that date. Although she
asked for a copy of the contract, Defendant refused the
request. On January 11, 2001, citing inability to obtain

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 3
1In a typical RISC transaction, a dealer sells a vehicle to a customer
promising a certain type of financing which it ho pes to obtain from a third
party. Problems arise, howe ver, if the dealer is unable to obtain the
expected financing.
financing under the RISC,1 Defendant requested that
Plaintiffs return to the dealership to re-execute the deal adding
the latter as a buyer. At the dealership, Defendant informed
Plaintiffs that they would each have to sign a second contract.
Once again, despite being asked for a copy of the signed
contract, Defendant refused to provide Plaintiffs with a copy
of either contract. Plaintiffs finally received a copy of the
second contract approximately three weeks later, around
January 29, 2001. Plaintiff Baker never received a copy of
the first contract that she signed. It is undisputed that
Plaintiffs were given the actual RISC document for review
prior to signing it and that the actual RISC accurately
disclosed all of the transactions’ credit terms.
Plaintiffs filed a class action lawsuit for violations of Truth
in Landing Act (“TILA”) and the underlying Regulation Z,
alleging that Defendant repeatedly failed to give the consumer
“a copy of the contract [in connection with the purchase and
finance of a motor vehicle] to keep prior to consummation of
the transaction.” First Am. Class Action Compl. J.A. at 9.
Plaintiffs, however, do not allege any actual damages, nor do
they claim that any of the disclosures that were made before
they signed the RISC were inaccurate. Plaintiffs sued only
for statutory damages under 15 U.S.C. § 1640. The district
court, per order dated February 6, 2002, denied the motion for
class certification because the Plaintiffs were not typical of
their proposed class and because the class definition was
inadequate. The district court also, per order dated March 8,
2002, granted Defendant’s motion for summary judgment and
dismissed Plaintiffs’ complaint in its entirety on the basis that
Defendant’s refusal to provide the copies of the disclosures,
while “seemingly inappropriate,” could not give rise to TILA
statutory damages. Plaintiffs appealed both orders to this
4 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
Court. Both sides, however, only briefed the issue of
statutory damages. Plaintiffs asked for reconsideration of the
class certification ruling pending a reversal of the statutory
damages ruling.
STANDARD OF REVIEW
We review a district court’s grant of summary judgment de
novo. Terry Barr Sales Agency, Inc. v. All-Lock Co., 96 F.3d
174, 178 (6th Cir. 1996). In deciding a summary judgment
motion, this court cannot weigh the evidence, judge the
credibility of witnesses, or determine the truth of the matter
asserted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986). We must, however, view the evidence and draw all
“justifiable inferences” in the light most favorable to the non-
movant. Id. Summary judgment is appropriate where “there
is no genuine issue as to any material fact and...the moving
party is entitled to a judgment as a matter of law.” Fed. R.
Civ. P. 56(c). “[T]he mere existence of some alleged factual
dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment...”
Anderson, 477 U.S. at 247-48 (emphasis in original). Mixed
questions of law and fact are reviewed de novo. Williams v.
Mehra, 186 F.3d 685, 689 (6th Cir. 1999) (en banc).
ANALYSIS
Congress enacted TILA in 1968 with the broad purpose of
promoting the informed use of credit by assuring meaningful
disclosure of credit terms to consumers. See generally, 15
U.S.C. § 1601(a); Ford Motor Credit Co. v. Milhollin, 444
U.S. 555, 559 (1980); Begala v. Ohio Nat’l Ass’n, 163 F.3d
948, 950 (6th Cir. 1999). This Court has held that the statute
must be considered liberally in the consumer’s favor. Jones
v. TransOhio Sav. Ass’n, 747 F.2d 1037, 1040 (6th Cir.
1984). The sections of TILA principally involved here are 15

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 5
215 U.S.C. § 1638(a) contains substantive requirements of the
creditor’s disclosures.
315 U.S.C. § 1638(b) contains the form and timing of the §1638(a)
disclosures.
4The section provides:
Except as otherwise provid ed in this section, any creditor who
fails to comply with any req uirement imp osed under this
part...with respect to any person is liable to such person in an
amo unt equal to the sum of–
(1) any actual damage sustained by such person as a
result of the failure;
(2)(A)(I) in the case of an individual action twice the
amount of any finance charge in connection with the
transaction...(B) in the case of a class action, such
amount as the court may allow, except that as to each
member of the class no minimum recovery shall be
applicable, and the total recovery und er this
subparagraph in any class action or series of class
actions arising out of the same failure to comply by the
same creditor shall not be more than the lesser of
$500,000 or 1 per centum of the net worth of the
creditor...
In connection with the disclosures referred to in section 1638 of
this title, a creditor shall have a liability determined under
paragraph (2) only for failing to comply with the requirements
of section 1635 of this title or of paragrap h (2) (insofar as it
requires a disclosure of the “amount financed”), (3), (4), (5), (6),
or (9) of section 16 38(a) of this title...
15 U.S.C. § 16 40(a).
U.S.C. §§ 1638(a)2 and 1638(b),3 which required creditors to
make specific disclosures, and 15 U.S.C. § 1640(a),4 which
provides consumers with a cause of action for certain
violations of the act. Also of relevance on this appeal is
Regulation Z, 12 C.F.R. § 226.1, et seq., a regulation
promulgated by the Federal Reserve Board to implement
6 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
5Regulation Z provides, in relevant part, that “[t]he creditor shall
make the disclosures required by this subp art clearly and consp icuously
in writing, in a form that the consumer may keep.” 12 C.F.R.
§ 226.17(a)(1). It further provides that creditors are required to make the
mandated disclosures “before consummation of the transaction.” 12
C.F.R. § 226.17 (b).
6The section pro vides:
Except as otherwise provided in this part, the disclosures
required under subsection (a) of this section shall be made before
the credit is extended. Except for disclosures required under
subsection (a)(1) of this section, all disclosures required under
subsection (a) of this section...shall be conspicuously segregated
from all other terms, data, or information provided in connection
with a transaction, including any computations or itemization.
15 U.S.C. § 16 38( b)(1).
7These section require disclosure of the finance charge, 15 U.S.C.
§ 1638(a)(3), the annual percentage rate, 15 U.S.C. § 1638(a)(4), the total
of payments, 15 U.S.C. § 1638 (a)(5), the timing and amount of period ic
payments, 15 U.S.C. § 16 38(a)(6), and the existence of a security interest,
15 U.S.C. § 1638(a)(9). Plaintiffs claimed that failure to provide them
with a copy of these disclosures constituted a complete failure to disclose.
TILA. Regulation Z prescribes the form in which a creditor
must disclose the items pursuant to 15 U.S.C. § 1638.5
The district court assumed, without so holding, that
Defendant violated § 1638(b)(1).6 It then held that statutory
damages were not available for this violation. Baker v. Sunny
Chevrolet, Inc., No. 1:01-CV-109, slip op. at 3, 5-6 (W.D.
Mich. March 8, 2002). The District Court further held that
failure to provide Plaintiffs with a copy of their contracts at
signing did not entitle Plaintiffs to statutory damages for
violations of 15 U.S.C. §§ 1638(a)(3)-(a)(6), 1638(a)(9).7
1. Plaintiffs are not entitled to Statutory Damages for
Violations of 15 U.S.C. § 1638(b)(1)
Plaintiffs argue that Defendant violated the form and timing
requirements of § 1638(b)(1) of TILA, and the related

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 7
provisions of Regulation Z. Regulation Z provides, in
relevant part, that “[t]he creditor shall make the disclosures
required by this subpart clearly and conspicuously in writing,
in a form that the consumer may keep.” 12 C.F.R.
§ 226.17(a)(1). Defendant first argues that this Court should
assume without deciding, as did the District Court, that a
violation of § 1638(b)(1) occurred. Defendant then argues
that statutory damages are not recoverable for violations of
§ 1638(b)(1) because consumers aggrieved by disclosure
violations of § 1638 may seek statutory damages only in those
case involving violations of §§ 1638(a)(2)(some), (3)-(6), (9).
As noted above, the district court assumed for the purposes
of the summary judgment motion that a violation of
§ 1638(b)(1) took place. Plaintiffs urge us to go beyond the
district court’s opinion and find that a violation did actually
occur. This Court will typically refrain from considering
issues not passed upon by the lower courts. See, e.g., Blue
Cross & Blue Shield Mut. of Ohio v. Blue Cross and Blue
Shield Ass’n, 110 F.3d 318, 335 (6th Cir. 1997). This
restraint, however, is simply a matter of discretion, as the
Courts of Appeals remain free to resolve such issues if the
“proper resolution is beyond doubt” or “‘where injustice
might otherwise result.’” Id. (citing Singleton v. Wulff, 428
U.S. 106, 121 (1976). Defendant relies on the district court’s
discussion in its opinion denying class certification to argue
that proper resolution is not beyond doubt. Baker v. Sunny
Chevrolet, No. 1:01-CV-109, slip op. at 5 (W.D. Mich. Feb.
6, 2002) (“Because the facts have not been fully developed,
the Court cannot determine whether a violation has
occurred.”) Plaintiffs do not address this argument in the
appellate brief. We decline to resolve the factual question of
whether a violation occurred and instead assume, as did the
district court, that a violation did occur.
The district court, relying heavily on a Seventh Circuit
decision, found that statutory damages are not available for a
violation of § 1638(b). The Seventh Circuit found that:
8 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
Statutory damages are available, this final sentence says,
“only for failing to comply with the requirements of
section 1635 of this title or of paragraph (2) (insofar as it
requires a disclosure of the ‘amount financed’), (3), (4),
(5), (6), or (9) of section 1638(a) of this title, or for”
other situations not presented by these cases. “Only,” the
word we have italicized is conclusive against plaintiffs,
for it confines statutory damages to a closed list. Failure
to emphasize the typeface of “finance charge” and
“annual percentage rate” violates § 1632(a); omission of
descriptive explanations violates § 1638(a)(8);
appearance of extra matter in the federal box violates
§ 1638(b)(1). None of these subsections is on the list of
violations eligible for statutory damages.
Baker v. Sunny Chevrolet Inc., No. 1:01-CV-109, slip op.
at 4 (quoting Brown, 202 F.3d, 987, 991 (7th Cir. 2000)).
The District Court also noted that a number of district courts
outside the Seventh Circuit have followed the Brown
decision. Id. at 4-5.
Plaintiffs, relying almost exclusively on Lozada v. Dale
Baker Oldsmobile, Inc., 145 F. Supp.2d 878 (W.D. Mich.
2000), argue that the Seventh Circuit and the district court
misread § 1640(a) to reach their respective holdings. The
Lozada opinion makes a very intricate argument that the
§ 1640(a) discussion of statutory damages simply does not
apply at all to §1638(b)(1) claims. In other words, the
limitation on the availability of statutory damages in §1638
violations applies only to “disclosures” in section § 1638 and
§ 1638(b)(1) is not a “disclosure” but is merely a “form and
timing of disclosure” requirement. Lozada, 145 F. Supp. at
888 (noting that “[s]uch a reading is consistent with the other
types of violations described by the enumeration.’”). See also
Daenzer v. Wayland Ford, Inc., 193 F. Supp.2d 1030, 1036-
37 (W.D. Mich. Mar. 15, 2002) (discussing both Brown and
Lozada and adopting the reading in Lozada). But see
Kilbourn v. Candy Ford-Mercury, 209 F.R.D. 121, 126-27
(W.D. Mich. Mar. 11, 2002) (discussing both Brown and

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 9
8See, e.g., 15 U.S.C. § 16 37(a) (“Before opening any account under
an open end consumer credit plan, the creditor shall disclose to the person
to whom credit is extended each of the following items...”) (emphasis
added); 15 U.S.C. § 1637(b) (“The creditor of any account under an open
end consumer cred it plan sha ll transmit to the ob ligor, for each billing
cycle at the end of which there is an ou tstanding balance in that
account..., a statement setting forth each of the following items to the
extent applicable.”) (emphasis added).
Lozada and adopting the reading in Brown). According to
this position, § 1638(b) is not mentioned in the discussion of
limitation on damages and thus a full array of damages is
available for its violation. The problem with this
interpretation, however, is that, standing alone, the “form and
timing” requirement has no substance, it only makes sense if
it is combined with substantive disclosures of § 1638(a). For
example, § 1640(a) applies to disclosures referred to in
subsections (a) and (b) of section 1637. Each subsection of
§ 1637 contains its own “timing” requirement.8 It would
therefore seem that untimely disclosure of items in § 1637(a)
and (b) would be subject to § 1640(a) statutory damages. 15
U.S.C. § 1640(a). We therefore reject this reading of the
statute.
Plaintiffs, relying once again on Lozada, make a following
second argument in the alternative:
However, if a failure to deliver disclosures under
§ 1638(b) is considered a “disclosure [] referred to in
section 1638” within the meaning § 1640, then the failure
to deliver disclosures in the manner provided by
§ 1638(b)(1) must be considered failure to disclose the
required terms under § 1638(a). The requirements of
§ 1638(b)(1) may not be considered ‘disclosures’ for
purposes of §1640 and yet not part of the disclosure
requirements of §1638(a). Moreover, no basis exists for
considering a disclosure made if it is not made in
accordance with the requirements of § 1638(b)(1). Since
§ 1638(b)(1) expressly provides the form and time in
10 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
which disclosures under § 1638(a) must be made,
§ 1638(a) disclosures may not be said to be made unless
and until they are made in compliance with § 1638(b)(1).
Section 1638(b), by saying when and how a disclosure is
made, becomes part of the definition of what constitutes
a ‘disclosure’ under TILA.
Lozada, 145 F. Supp.2d at 889.
Defendant, relying on Brown, argues that such a reading of
TILA creates a back door theory that the alleged failure to
make timely written disclosures is not a disclosure at all.
Defendant’s reliance on Brown, however is misplaced. In
Brown, the defendant provided the plaintiff with a timely
written disclosure. The problem in Brown was that there were
two minor errors in the actual disclosure which resulted in
violations of § 1638(a)(8) and § 1632(a), neither of which is
an enumerated violation contained in § 1640(a). Brown, 202
F.3d at 990. The Brown court then rejected a back door
theory that “information has been ‘disclosed’ in compliance
with § 1638 only if all of the TILA and all of Regulation Z
have been followed.” Id. at 991. The Brown court went on
to explain that
Accepting this argument would destroy the point of
§ 1640(a). What sense would it make to omit § 1632,
§ 1638(a)(1), (a)(2) (in part), (a)(7), (a)(8), (a)(10),
(a)(11), (a)(12), and all of § 1638(b), (c), and (d) from the
candidates for statutory damages if they came in through
the back door on the theory that all formal shortcomings
infect the disclosures of the items that are on the list.
Brown, 202 F.3d at 991 (emphasis added). On the facts
before it, the Brown court properly rejected the back door
theory. The facts of this case are clearly distinguishable,
however, since Plaintiffs did not timely receive a copy of the
RISC. Plaintiffs therefore allege that § 1638(a)(2), (3), (4),
(5), (6),(9) were violated because disclosures required under
those subsections were not properly made.

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 11
9The only difference in facts was that the plaintiff in Collins never
asked for a copy of the RISC, whereas Plaintiffs in this case did. The
difference, in our op inion, ho wever, is insignificant.
10Apparently, there were two RISCs involved here. First one had a
12.5% interest rate and the plaintiff was provided with a copy of it.
Second one was supp osed to be filled out if the defendant obtained a
lower interest rate. There was a factual dispute as to whether the plaintiff
signed a blank RISC.
Defendant’s reliance on two other cases to argue against
Plaintiffs’ position is likewise misplaced. In Collins v. Ray
Skillman Olds-GMC Truck, Inc., 2001 WL 1711466 (S.D.
Ind. Dec. 3, 2001), the court rejected an argument similar to
the one advanced here by Plaintiffs.9 However, the Collins
court read Brown to reject the argument that “the alleged
failure to make timely written disclosures was not a
disclosure at all.” Collins, 2001 WL 1711466, at *3. As
explained above, we believe that this is a misreading of
Brown. In the second case, Graham v. RRR, LLC, 202 F.
Supp. 2d 483, 485, 489 (E.D. Va. May 15, 2002), the court
also rejected a similar argument advanced by a plaintiff who
was allegedly asked to sign a blank retail installment sale
contract.10 There are several problems with relying on
Graham. First, there was a factual dispute about whether the
plaintiff signed a blank RISC. Id. at 489 n. 3. Second, the
court actually dismissed the entire argument as “untimely
raised.” Id. at 489. After dismissing the case, the court
engaged in a completely unnecessary dicta about the merits of
the plaintiff’s argument with a single reference to § 1638(a)
and without any discussion of other courts’ decisions. We
therefore find its holding entirely unpersuasive.
As the foregoing discussion illustrates, we are therefore left
with two readings of the statute, both of which find support in
the relevant caselaw and neither of which appears to be
clearly correct on its face. The two arguments can best be
summarized as follows.
12 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
First, § 1638(b) form and timing disclosures should be read
to apply to each subsection of § 1638(a) individually (i.e.
§ 1638(a)(3) is violated whenever a disclosure is not made
prior to consummation of the sale and whenever it is not
made in writing in a form that a consumer may keep). It
should not be read as an independent disclosure violation.
This interpretation is supported by the language and structure
of Regulation Z. 12 C.F.R. § 226.17, which is the first
section under “Subpart C–Closed-End Credit,” provides that
“[t]he creditor shall make the disclosures required by this
subpart clearly and conspicuously in writing, in a form that
the consumer may keep.” 12 C.F.R. § 226.17(a)(1) (emphasis
added). Section 1638, titled “Transactions other than under
an open end credit plan,” is a section dealing with “closed-end
credit” transactions, such as the one in this case. 12 C.F.R.
§ 226.2(a)(10) (defining “closed-end credit”). Requirements
of § 1638(a) are explained in 12 C.F.R. § 226.18, which
appears within the same Subpart C as does the general
disclosure requirements of § 12 C.F.R. 226.17(a) and (b).
The regulation therefore appears to demand that every
“closed-end credit” disclosure be provided in this manner.
See, e.g., Polk v. Crown Auto, Inc., 221 F.3d 691, 692 (4th
Cir. 2000) (per curiam) (“However, on balance we believe
that the plain meaning of the regulation must be understood
to be that written disclosure in the form specified in subpart
(a) must be provided to the consumer at the time specified in
subpart (b). That is, Crown Auto was required to make the
disclosures to Polk in writing, in the form that he could keep,
before consummation of the transaction.”) (emphasis in the
original). Finally, § 1368(b)(1) does not contain a “writing in
a form the consumer may keep” requirement. There is, thus,
no reason to conclude that the violation of 12 C.F.R. § 226.17
is a § 1368(b) violation and not a § 1368(a) violation.
Second, § 1638(b) is a separate requirement that relates
only tangentially to the underlying substantive disclosure
requirements of § 1638(a). Under this theory, a § 1638(b)
violation is not one of the enumerated violations that warrant
a statutory damages award. This theory thus creates two

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 13
11At oral argume nt, Plaintiffs’ counsel conceded that Plaintiffs were
not going to shop the Defendant’s offer around but instead intended to
complete the purchase.
12As explained below, § 1640(b ) provides that the violations that are
corrected within 60 days by the lender are not subject to statutory
damages, assuming certain conditions are met. 15 U.S.C. § 16 40(b). This
provision leads us to conclude that Congress was more concerned with the
accuracy of the disclosures (by imposing both actual and statutory
damages) then with the timing of the disclosures (by imposing only actual
damages). Were we to read these two subsections in the manner urged by
Plaintiffs, we would have to assume that Congress simultaneously thought
that the timing of the disclosures was (1) important enough to warrant
statutory damages under § 1640(a) and (2) unimpo rtant eno ugh to excuse
a delay in performance by as much as sixty days in the absence of actual
damages under § 1640(b). Such a contradictory reading goes against the
basic canons of statutory construction. See, e.g., U.S. v. Branson, 21 F.3d
113, 116 (6th Cir. 1994) (noting that statutes should not be read in a
manner that renders them meaningless, that they must be read as a whole
and construed to give each word operative effect, and that they should be
interpreted to avoid untenable distinctions and unreaso nable results
whenever possible) (citations omitted).
types of violations: (a) complete non-disclosure of
enumerated items in § 1368(a), which is punishable by
statutory damages; and (b) disclosure of the enumerated items
in § 1368(a) but NOT in the manner required by the
Regulation and § 1368(b)(1), which is not subject to the
statutory damages. This theory still recognizes that the proper
manner of making § 1638(a) disclosures is in writing, in the
form that the consumer may keep. It also, however,
recognizes that in a situation like the case at bar, where
Plaintiffs were clearly not prejudiced by the untimely delivery
of the RISC,11 the failure to deliver the written disclosures in
the form that the consumer may keep is actionable only if the
consumer can show actual damages.
We now expressly adopt this second interpretation because
it is the only way to reconcile the imposition of damages
under § 1640(a) with the excuse of certain violations under
§1640(b).12
14 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
2. Section 1640(b) forecloses Plaintiffs’ recover of any
damages in this case.
The problem of resolving this complicated question of
statutory construction is aided by the provisions in § 1640(b).
Neither party briefed this issue on this appeal or before the
district court. Nevertheless, our independent review of the
statute leads us to the conclusion that the plain meaning of 15
U.S.C. § 1640(b) bars any recovery for Plaintiffs. In re Allied
Supermarkets, Inc., 951 F.2d 718, 725-26 (6th Cir. 1991)
(recognizing that although in general appellate courts do not
review questions raised for the first time on appeal, it is
appropriate to do so when the question is a legal one). See
also Washington Gas Light Co. v. Virginia Elec. & Power
Co., 438 F.2d 248, 250 (4th Cir. 1971) (“if deemed necessary
to reach the correct result, an appellate court may sua sponte
consider points not presented to the district court and not even
raised on appeal by either party.”) (citing U.S. v. Continental
Can Co., 378 U.S. 441, 457, 470 (1964)).
Section 1640 is a general “civil liability” section in the
TILA. In subsection (a) it provides for either actual and/or
statutory damages for various TILA violations. Subsections
(b) and (c) provide for (1) correction of errors, 15 U.S.C.
§ 1640(b), and (2) the treatment of unintentional violations
and bona fide errors, 15 U.S.C. § 1640(c). More specifically,
section 1640(b) provides:
A creditor...has no liability under this section ...for any
failure to comply with any requirement imposed under
this part..., if within sixty days after discovering an error,
...and prior to the institution of an action under this
section or the receipt of written notice of the error from
the obligor, the creditor...notifies the person concerned of
the error and makes whatever adjustments in the
appropriate account are necessary to assure that the
person will not be required to pay an amount in excess of
the charge actually disclosed, or the dollar equivalent of

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 15
the annual percentage rate actually disclosed, whichever
is lower.
15 U.S.C. § 1640(b). The applicability of this section is a
matter of first impression in this Circuit and there appears to
be very sparse discussion of it in the general caselaw. The
Third Circuit has considered the argument that § 1640(b)
applies solely to mathematical, not informational errors, such
as failure to provide disclosures. Thomka v. A.Z. Chevrolet,
Inc., 619 F.2d 246, 251-52 (3rd Cir. 1980). The court went
on to explain that
Notice in a case such as this would be ineffectual, since
there are no lower mathematical figures on which the
remedial cost would be calculated. It is therefore
possible that providing exemption under Section 1640(b)
in case like this would provide an incentive for lenders to
delay sending disclosure forms until after the agreement
is reached.
Id. at 252. The Third Circuit, however, expressly chose not
to resolve this question because the facts of its case indicated
that the defendant never actually notified the plaintiff that
there was a disclosure error. Id. See also Molenbeek v. West
Auto Michigan Auto & Truck Outlet, Inc., 2001 WL 1602654,
at *4 (W.D. Mich. 2001) (expressing doubt that 1640(b)
applies to non-written, non-calculation errors but nevertheless
concluding simply that the defense does not apply because the
defendant did not notify the plaintiff as the statute requires).
In making its observations, the Third Circuit relied heavily on
the legislative history as summarized in Ratner v. Chemical
Bank, 329 F. Supp. 270, 281-82 and n. 17 (S.D.N.Y. 1971)
(deciding the case dealing with a § 1640(c) defense only).
Thomka and Ratner courts observed that “[t]he original draft
of the Act permitted no errors, but in response to fears that
simple clerical mistakes in mathematical calculations of the
lease financial charge and annual percentage rate would create
unavoidable liability...the affirmative defenses of Section
1640(c), as well as Section 1640(b) were added.” Thomka,
16 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
619 F.2d at 250-51. See also Ratner, 329 F. Supp. at 280-81
and n. 17. The problem with this interpretation of the
legislative history of § 1640(b) is that §1640(c) explicitly
deals with “clerical, calculation, computer malfunction and
programming, and printing errors.” 15 U.S.C. § 1640(c).
Therefore the Third Circuit’s and the Southern District of
New York’s reading of the legislative history would render
§ 1640(b) meaningless. See, e.g., TRW, Inc. v. Andrews, 122
S.Ct. 441, 449 (2001) (“it is a cardinal principle of statutory
construction that the statute ought, upon the whole, be so
construed that, if it can be prevented, no clause, sentence, or
word shall be superfluous, void or insignificant.”) (citations
omitted); Bronson, 21 F.3d 116. Furthermore, this reading is
contradictory to the plain meaning of § 1640(b) since that
subsection appears to give creditors a sixty-day window to
correct any errors made as long as certain requirements are
made. Although, as the Third Circuit noted, this may not
make great policy, Congress clearly illustrated its ability to
limit the types of errors covered when it enacted § 1640(c).
We must respect its decision.
In this case, Defendant provided Plaintiffs with the copy of
the RISC two weeks after the signing date, which was clearly
within 60 days. Furthermore, there is no evidence in the
record that Defendant received any written notice from
Plaintiffs prior to the mailing of the RISC. Finally, Plaintiffs
will not be required to pay an amount in excess of the charge
actually disclosed since she was provided with a copy of the
very document she signed.
CONCLUSION
In sum, we conclude that Defendant’s failure to timely
provide Plaintiffs with a copy of RISC does not entitle
Plaintiffs to any statutory damages on the alternative grounds
(1) that § 1638(b)(1) violation is not subject to statutory
damages and (2) that Defendant complied with § 1640(b)
provisions for the correction of errors.

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 17
__________________
CONCURRENCE
__________________
RALPH B. GUY, JR., Circuit Judge, concurring. I concur
in the result and write separately to further clarify the reasons
for affirming the decision to grant summary judgment to
Sunny Chevrolet in this action for statutory damages under
the Truth In Lending Act (TILA), 15 U.S.C. § 1640(a)(2).
Like the district judge, I would assume, arguendo, a violation
of the form and timing requirements of 15 U.S.C. § 1638(b),
and its implementing regulation, Regulation Z, 12 C.F.R.
§ 226.17, both because resolution of the issue is unnecessary
to this appeal and because the Federal Reserve Board has
revised its Official Commentary to Regulation Z in an attempt
to clarify the issue. See 12 C.F.R. Part 226, Supp. I, p. 434
(2003) (“17(b) Time of Disclosures”). I also agree that
statutory damages are not available under § 1640(a)(2) for the
violations alleged in this case for the reasons discussed below.
I would not, however, reach the novel question of whether
defendant could rely on § 1640(b) to escape damages for
failure to comply with TILA’s form and timing requirements
because the issue was not developed either in the district court
or on appeal.
The TILA was enacted with the “broad purpose of
promoting ‘the informed use of credit’ by assuring
‘meaningful disclosure of credit terms’ to consumers.” Ford
Motor Credit Co. v. Milhollin, 444 U.S. 555, 559 (1980)
(quoting 15 U.S.C. § 1601); see also Begala v. PNC Bank,
Ohio Nat’l Ass’n, 163 F.3d 948, 950 (6th Cir. 1998). When
called upon to interpret a statute, we must review “‘the
particular statutory language at issue, as well as the language
and design of the statute as a whole.’” Walker v. Bain, 257
F.3d 660, 666-67 (6th Cir. 2001) (citation omitted), cert.
denied, 535 U.S. 1095 (2002). We may not rely on the literal
language when it would “lead to absurd results or an
18 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
1Disclosures required for “closed ended” credit transactions
include: (1) the identity of the creditor; (2) the “amount financed”;
(3) the “finance charge”; (4) the “annual percentage rate”; (5) the
“total payments”; (6) the number, amount, and due dates or period
of payments; (7) the total sale price; (8) descriptive explanations
of specified terms; and (9) where credit is secured, a statement that
the security interest has been taken. 15 U.S.C. § 1638(a)(1)-(9).
Further disclosures are required in certain circumstances by
§ 1638(a)(10)-(14). In addition to these “substantive” disclosures,
the form and timing requirements of § 1638(b)(1) state that the
disclosures “shall be made before the credit is extended.”
interpretation which is inconsistent with the intent of
Congress.” Id. at 667.
TILA governs disclosures required for “closed ended”
transactions (like automobile loans), dictating the substantive
disclosures that must be made in 15 U.S.C. § 1638(a), the
applicable form and timing requirements in 15 U.S.C.
§ 1638(b)(1), and the damages available for violations of
those provisions in 15 U.S.C. § 1640(a).1 The critical
portions of § 1640(a) state as follows:
Except as otherwise provided in this section, any
creditor who fails to comply with any requirement
imposed under this part, including any requirement under
section 1635 of this title, or part D or E of this subchapter
with respect to any person is liable to such person in an
amount equal to the sum of–
(1) any actual damage sustained by such person as a
result of the failure;
(2)(A) (i) in the case of an individual action twice the
amount of any finance charge in connection with the
transaction [in statutory damages], . . . .
. . . .

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 19
2See, e.g., Kilbourn v. Candy Ford-M ercury, Inc., 209 F.R.D. 121,
124-25 (W .D. M ich. 20 02); Nigh v. Koons Buick Pontiac GMC, Inc., 143
F. Supp.2d 535, 548-49 (E.D . Va. 2 001 ); Molenbeek v. W. Mich. Auto &
Truck Outlet, Inc., No. 1:00-CV-286, 2001 WL 1602654, at *5-6 (W.D.
Mich. M ar. 15, 2001).
. . . In connection with the disclosures referred to in
section 1638 of this title, a creditor shall have a
liability determined under paragraph (2) only for
failing to comply with the requirements of . . .
paragraph (2) . . . , (3), (4), (5), (6), or (9) of section
1638(a) of this title, or for failing to comply with
disclosure requirements under State law for any term
which the Board has determined to be substantially the
same in meaning under section 1610(a)(2) of this title as
any of the terms referred to in any of those paragraphs of
section 1638(a) of this title.
Id. (emphasis added).
The majority of decisions addressing the issue presented in
this case have adopted the interpretation articulated by the
Seventh Circuit in Brown v. Payday Check Advance, Inc., 202
F.3d 987 (7th Cir.), cert. denied, 531 U.S. 820 (2000), which
reasons that the use of the term “only” in the final sentence
confines statutory damages for any violations of § 1638
(including violations of § 1638(b)(1)), to the closed list of
enumerated subsections.2 Plaintiffs urge this court to reject
Brown and adopt a contrary interpretation articulated in
Lozada v. Dale Baker Oldsmobile, Inc., 145 F. Supp.2d 878
(W.D. Mich. 2001). See also Daenzer v. Wayland Ford, Inc.,
193 F. Supp.2d 1030, 1036-37 (W.D. Mich. 2002).
The district court in Lozada reasoned that the first sentence
of § 1640(a) represented a broad statement that statutory
damages are available for violations of “any requirement
imposed” by TILA, “[e]xcept as otherwise provided.” 145 F.
Supp.2d at 886 (quoting § 1640(a)). As for the list of
subsections in the final sentence quoted above, the court
20 Baker, et al. v. Sunny Chevrolet, Inc. No. 02-1381
found the list was “not a positive and exclusive enumeration
of provisions for which statutory damages are provided,” but
rather, a “reverse description of exceptions.” Id. As a result,
the district court concluded that violators of § 1638(b) would
remain subject to statutory damages because § 1638(b) is not
enumerated for exception from the general rule.
While the structure of § 1640(a) makes the Lozada
interpretation plausible, the language and design of these
provisions convince me that the Seventh Circuit and a
majority of district courts addressing the issue are correct in
concluding that statutory damages are not available for
violation of § 1638(b)(1). The limitation of the final sentence
of § 1640(a) quoted above explicitly applies “in connection
with the disclosures referred to in § 1638” — not just
§ 1638(a) — it also further states that statutory damages are
available only for the failure to comply with the enumerated
subsections of § 1638(a). This interpretation is also
consistent with the legislative history concerning the addition
of the final sentence, which indicates that the amendments
were intended to limit a creditor’s liability for statutory
penalties on “closed ended” transactions to disclosures of “the
amount financed, the finance charge, the total of payments,
the annual percentage rate, the number, amount and due dates
of payments, any security interest taken, and, where
applicable, the consumer’s right to recission.” Kilbourn, 209
F.R.D. at 127 n.4 (quoting S. Rep. No. 96-73, at 7 (1979)
(reprinted in 1980 U.S.C.C.A.N. 280, 285)). Not
coincidentally, these specified disclosures correspond directly
to the sections enumerated in § 1640(a).
As an alternative theory, plaintiffs contend that statutory
damages are available because the failure to comply with the
form and timing requirements of § 1638(b)(1) constitutes a
complete failure to make any of the substantive disclosures
required by § 1638(a) — including those for which statutory
damages are expressly available. This argument fails to
persuade as it would turn the stated congressional intent on its
head. As the Brown court aptly reasoned:

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No. 02-1381 Baker, et al. v. Sunny Chevrolet, Inc. 21
[A]ccepting this argument would destroy the point of
§ 1640(a). What sense would it make to omit § 1632,
§ 1638(a)(1), (a)(2) (in part), (a)(7), (a)(8), (a)(10),
(a)(11), (a)(12), and all of § 1638(b), (c), and (d) from the
candidates for statutory damages if they came in through
the back door on the theory that all formal shortcomings
infect the disclosures of the items that are on the list?
Congress included some and excluded others; plaintiffs
want us to turn this into universal inclusion, which would
rewrite rather than interpret § 1640(a).
202 F.3d at 991. See also Kilbourn, 209 F.R.D. at 127-28.

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