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Lea v. Buy Direct, L.L.C.

United States Court of Appeals, Fifth Circuit

June 12, 2014

ANGELA LEA; DARREL LEA, Plaintiffs -- Appellants
v.
BUY DIRECT, L.L.C., Defendant -- Appellee

Appeal from the United States District Court for the Southern District of Texas.

For Angela Lea, Darrel Lea, Plaintiffs - Appellants: Aaron D. Radbil, Miami, FL; Noah D. Radbil, Weisberg & Meyers, L.L.C., Phoenix, AZ.

For Buy Direct, L.L.C., Defendant - Appellee: Kendrick Lane Odom, Berry, Odom, Rabinowitz & Bobo, L.L.P., Fort Worth, TX.

Before JOLLY, SMITH, and SOUTHWICK, Circuit Judges.

OPINION

Page 251

LESLIE H. SOUTHWICK, Circuit Judge:

Angela Lea and Darrel Lea brought this action seeking statutory damages under the Truth in Lending Act. They claim that Buy Direct, L.L.C., doing business as Direct Buy of Houston North, failed to provide the dates that payments would be due on an installment contract for membership in Direct Buy's wholesale membership club. The district court granted summary judgment to Direct Buy. We REVERSE and REMAND for entry of judgment in favor of the Leas.

FACTUAL AND PROCEDURAL BACKGROUND

On May 16, 2012, Angela and Darrel Lea attended an " Open House" event at the Direct Buy Houston North location. Direct Buy is a wholesale membership club which offers members the opportunity to purchase home furnishings and electronics at wholesale prices through Direct Buy's vendor network. At the event, the Leas decided that they wished to join the Direct Buy membership club, at a cost of $3,995 for a three-year membership. Unable to make a required 10% down payment that day, the Leas agreed to pay $100 on May 16,

Page 252

and then $295 on June 5. The parties executed a Membership Agreement and a Retail Installment Contract, both post-dated June 5, 2012. On the form, the blanks for the " day of each month" the installment payments would be due and the " beginning" date of the Leas' payments were left blank, to be determined based upon the date the down payment was fully paid. The Leas and Direct Buy also executed a Payment Agreement, authorizing Direct Buy to charge the Leas' credit card for the $295 on June 5. At the Leas' request, this date was moved to June 8.

On June 8, Direct Buy attempted to charge the Leas' credit card for the $295, but the charge was declined. Pursuant to a provision in the Payment Agreement, on June 9, Direct Buy successfully charged the Leas' credit card for $100, leaving $195 of the down payment yet unpaid. On June 13, Direct Buy attempted to charge the Leas' card for the remaining $195, but the charge was declined. Finally, on June 21, Direct Buy successfully but erroneously charged the Leas' credit card for $295. Within the next 40 minutes, Direct Buy correctly refunded $100 to the Leas' credit card but then incorrectly refunded another $100. This meant that the Leas still had not paid the full $395 for the down payment. Also on June 21, the Leas attempted to cancel their Direct Buy membership in a telephone call to Direct Buy. On July 12, the Leas filed a chargeback request with their bank for the return of the $295 successfully charged to their credit card, citing the attempted cancellation from the June 21 telephone call. Direct Buy responded to the chargeback request from the Leas' bank with the Payment Agreement authorizing the charges and the Membership Agreement and Retail Installment Contract. Though the Leas' bank resolved the matter in Direct Buy's favor, Direct Buy canceled the Leas' membership on August 8 in accordance with the Leas' request. On October 29, the Leas sued in the United States District Court for the Southern District of Texas. On November 30, after the Leas filed a complaint with the Office of the Texas Attorney General, Direct Buy issued a check for $295 to the Leas, fully refunding all payments on their membership.

The Leas' suit alleged one cause of action: that Direct Buy had violated the Truth in Lending Act (" TILA" ) and its implementing regulations by failing to include the starting date and subsequent monthly payment due dates. See 15 U.S.C. § 1638(a)(6); 12 C.F.R. § 1026.18(g). Direct Buy moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which the district court later converted to a motion for summary judgment. The district court concluded that the contract was never " consummated" because the down payment was a condition precedent to the extension of credit, and the Leas never fully made ...


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