DECEMBER 2004

Damage Limits Affirmed in Truth in Lending Case

On November 30, the Supreme Court ruled 8 to 1 to reverse the judgment of the U.S. Court of Appeals for the Fourth Circuit (Richmond, VA) in the case of Koons Buick Pontiac GMC, Inc. v. Bradley Nigh. As reported in the February 2004 issue of Spotlight, the Fourth Circuit had upheld a jury award to Nigh in the amount ($24,192.80) of twice the finance charges that Nigh would have paid under a disputed auto contract with the Koons car dealership.

At issue was whether a 1995 Congressional amendment to a subparagraph of the 1968 federal Truth in Lending Act (TILA) removed the $1,000 cap on damages awarded for violations of TILA. Justice Ruth Bader Ginsburg, author of the Supreme Court's opinion wrote, "A divided panel of the United States Court of Appeals for the Fourth Circuit held that the 1995 amendment not only raised the statutory damages recoverable for TILA violations involving real-property-secured loans, it also removed the $1,000 cap on recoveries involving loans secured by personal property. We reverse that determination and hold that the 1995 amendment left unaltered the $100/$1,000 limits prescribed from the start for TILA violations involving personal-property loans. The purpose of the 1995 amendment is not in doubt: Congress meant to raise the minimum and maximum recoveries for closed-end loans secured by real property. There is scant indication that Congress simultaneously sought to remove the $1,000 cap on loans secured by personal property."

Justice John Paul Stevens concurred and wrote "[the Court] has demonstrated that a busy Congress is fully capable of enacting a scrivener's error into law." Justice Antonin Scalia dissented and invoked a Court decision from earlier this year in which it held that "If Congress enacted into law something different from what it intended, then it should amend the statute to conform it to its intent. It is beyond our province to rescue Congress from its drafting errors, and to provide for what we might think is the preferred result."