Presently before the Court are cross-motions for summary judgment arising out of a claim for violations of the disclosure requirements of the Truth-in-Lending Act (TLA or the Act), 15 U.S.C. § 1601, and Regulation Z, 12 C.F.R. § 226. Jurisdiction of the case is premised upon the Act's specific jurisdictional grant section, 15 U.S.C. § 1640, and 28 U.S.C. § 1337. Upon review of the pleadings, the stipulation of agreed upon facts, the responses to discovery, and all matters of record, the Court finds that there is no genuine issue of material fact. The only issue for decision is whether defendant Mid-Penn Consumer Discount Company's (Mid-Penn) disclosure statement of January 23, 1979, contained any material violation of TLA or Regulation Z so that plaintiff Marion Bookhart had the right to rescind the transaction. For the reasons set forth below, plaintiff's motion will be granted and defendant's motion will be denied.
The parties have entered into a stipulation as to the following facts. On January 23, 1979, defendant Mid-Penn extended credit to plaintiff Marion Bookhart and her husband, Leroy Bookhart. This loan refinanced an earlier loan which had been granted by Mid-Penn on May 26, 1977 (and which had been used to finance home improvement work performed by Main Line Builders), and provided additional funds to finance new home improvement work by JSS Main Line Builders. Jules Clearfield, a broker, referred this loan, as well as the earlier loan of May 26, 1977, to Mid-Penn on behalf of Main Line Builders. He called in the application and conveyed to Mid-Penn the normal credit information required by lending institutions. Mid-Penn was contacted in both these transactions by Mr. Clearfield and not by the Bookharts. On both occasions an employee of Mid-Penn went to plaintiff's home to have the credit documents executed. On both occasions plaintiff and her husband were given copies of the federal disclosure statement and notice of right of rescission form. No other legal documents were given the Bookharts nor were any required under any applicable laws. On March 19, 1981, plaintiff, by her counsel, wrote Mid-Penn to notify it that she was rescinding the transaction of January 23, 1979. Mid-Penn received a copy of plaintiff's rescission letter. Mid-Penn did not respond to the rescission letter within ten days nor take any of the actions required under the rescission provisions of Truth-in-Lending.
In addition, a review of the record indicates that certain other key facts are not in dispute. In conjunction with the 1977 loan, defendant took a security interest in plaintiff's home for $2,808.00, the full amount of the 1977 loan. In conjunction with the 1979 loan, defendant took an additional security interest in plaintiff's home for $5,760.00, the full amount of the 1979 loan. Thus, after the 1979 loan was executed, defendant held security interests totaling $8,568.00. Plaintiff's indebtedness at this stage, however, was only $5,760.00, as the 1979 loan included a refinancing of the unpaid principal on the 1977 loan. This figure may be broken down as follows:
Unpaid principal amount of the 1977
New cash disbursements 1,759.40
Other charges, mostly for insurance 464.46
Amount Financed in 1979 $3,412.20
Finance charge of 22.9% on $3,412.20 2,347.80
Total amount loaned in 1979 $5,760.00