In two rare pieces of good news for the mortgage lending industry lately, two recent Circuit Court of Appeals decisions refused to expand the remedies available under the Truth in Lending Act (TILA). First, the Seventh Circuit in Andrews v. Chevy Chase Bank became the latest Federal Court of Appeals to hold that TILA does not allow for the rescission of mortgages on a class basis. Given the recent economic volatility, this decision is a victory for the entire mortgage lending industry, where allowing thousands of class members to rescind their mortgages at one time would deliver a fatal blow to lenders. Reversing the district court, the Seventh Circuit held that “the personal character of [rescission] makes it procedurally and substantively unsuited to deployment in a class action.” The court acknowledged that TILA does not explicitly prohibit rescission on a class-wide basis but reasoned that, because class actions are specifically mentioned in TILA’s statutory damages provision and not its rescission provision, this absence supports the conclusion that rescission is “a purely individual remedy that may not be pursued on behalf of a class.” Although lower courts in other jurisdictions have held otherwise, the Seventh Circuit joined the First and Fifth Circuits to establish unanimity among the Circuit Courts of Appeal that have addressed the issue.
One month after the Andrews decision, the Eleventh Circuit in Christ v. Beneficial Corporation held that private injunctive relief is not an available remedy under TILA. In Christ, Plaintiffs waived statutory damages, conceded that they could not establish actual damages, and sought injunctive relief only. After the district court awarded injunctive relief and 22 million in restitution and disgorgement, the Eleventh Circuit vacated, holding that injunctive relief is not an available remedy under TILA. Noting that TILA neither provides for nor prohibits injunctive relief, the Court held that “where Congress has provided a comprehensive statutory scheme of remedies, as it did here … . we do not read TILA to confer upon private litigants an implied right to an injunction or other equitable relief such as restitution or disgorgement.”