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The Consumer Credit Cost Disclosure Act (CCCDA), M.G.L. c. 140D, makes express provisions for termination of a consumer's right to rescind, as well as for waiver of the right to rescind. An unconditional right to rescind may be exercised by midnight of the third business day following either the consummation of the transaction, or the delivery of the required information and rescission forms together with a statement containing all required material disclosures. M.G.L. c. 140D § 10(a). However, if the creditor does not meet its obligations under CCCDA, then the right to rescind can extend to four years. M.G.L. c. 140D § 10(f).

According to the statute and regulations, the extended right to rescind may only be terminated in one of three ways: (1) the expiration of four years after consummation of the transaction; (2) the sale of the property; or (3) the transfer of all of the consumer's interest in the property. M.G.L. c. 140D § 10(f); 209 CMR 32.15(a)(3). Finally, the consumer may, in a written and signed statement, waive or modify the right to rescind if the extension of credit is needed to meet a bona fide personal financial emergency. 209 C.M.R. 32.15(e).

If the consumer does not expressly waive the right to rescind and if that right does not terminate in any of the three stated ways, the right to rescind is not extinguished. The language

of the statute and regulations is plain; the principle of statutory construction, "expressio unius est exclusio alterius," clearly applies. In other words, statutory expression of one thing is an implied exclusion of other things omitted from the statute. Middlesex County v. City of Newton, 434 N.E.2d 1297, 13 Mass. App. 538 (1982), review denied, 440 N.E.2d 1176, 386 Mass. 1104.

When Congress enacted the federal Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq., after which the CCCDA was modeled, they set out the express conditions under which rescission rights would terminate. Congress, and the Massachusetts legislature, did not choose to make payment or refinancing of a loan one of those conditions by which that right would be

extinguished, despite the contrary holding in King v. State of California, 784 F.2d 910 (9th Cir.

1986).

Aggressive's reliance on King is, at best, tenuous. In King, the plaintiff was attempting to reverse dismissal of her case, with prejudice, by the District Court. She had failed to appear for a hearing on the motion to dismiss, and failed timely to apply for a continuance or to submit papers in opposition to the motion -- even after already having received one extension of time to

respond. While the Court of Appeals reviewed the case on the merits, Id. at 912, it did so with the knowledge of Plaintiff's procedural failings and without the benefit of opposition papers to inform its decision. The Court dismissed the issue of recision of one of Plaintiff's loans that had been refinanced simply, without any further analysis, by stating that there was nothing left to rescind. Id. at 913.

In its haste to dispense with the recision issue, the Court in King ignored a fundamental precept of statutory construction. That is, that language of a statute may not be enlarged or limited by construction unless its object and plain meaning so require. Johnson's Case, 64 N.E.

2d 94, 318 Mass. 741 (1946). It is a function of the court to construe a statute as written, and an event or contingency for which no provision is made does not justify judicial legislation.

Prudential Ins. Co. of America v. City of Boston, 340 N.E.2d 858, 369 Mass. 542 (1976). The statute and regulation governing the termination of the extended right of recision are clear on

their face, and do not include the repayment or refinancing of the loan in question among the enumerated ways for termination of that right.

Other courts that have examined the issue of rescindability more closely than the court in King have reached different conclusions. A series of bankruptcy cases illustrate the irrelevance of refinancings to the ability of a consumer to rescind a secured loan on account of truth in lending violations by the creditor. See In re Tucker, 74 B.R. 923 (Bankr. E.D. Pa. 1987) (court said that debtor seeking to rescind only the final loan in a series of refinancings, also was entitled to rescind earlier refinanced loans) (emphasis added); Abele v. Mid-Penn Consumer Discount, 77 B.R. 460 (E.D. Pa. 1987), aff'd mem., 845 F.2d 1009 (3rd Cir. 1988) (debtor's right to rescind loan transactions was not extinguished on payment of earlier loans); In re Milbourne, 108 B.R.

522 (Bankr. E.D. Pa. 1989) (four out of a series of seven loan transactions, including refinancings, were properly rescindable); In re Steinbrecher, 110 B.R. 155 (Bankr. E.D. Pa.

1990) (loans two through four, which included refinancings, were not exempt transactions for purposes of rescission). In a non-bankruptcy case, Mayfield v. Vanguard Sav. & Loan Ass'n, 710 F. Supp. 143 (E.D. Pa. 1989), the consumer plaintiff was permitted to rescind her two loans from the defendant - the second being a refinancing of the first.

The holdings of In re Tucker, Abele, In re Milbourne, In re Steinbrecher, and Mayfield make good sense on policy grounds as well. Absent such holdings, there would be nothing to prevent a lender from covering up errors or deliberate fraud and avoiding liability by engaging in quick refinancing schemes. There is no reason that Aggressive or any other lender should benefit from obtaining repayment by refinancing, especially where as here, it participated in arranging the refinancing.

Disclosure requirements are intended "to protect the consumer against inaccurate and unfair credit billing and ... practices." 15 U.S.C. 1601(a). For this reason, courts have construed TILA (and its state counterparts by analogy) as a remedial statute, interpreting it liberally for the consumer. Riggs v. Government Employees Financial Corp., 623 F.2d 68, 70-71 (9th Cir. 1980).

Finding an implied termination of remedies based upon refinancing would frustrate the purposes behind the Act.

CONCLUSION

For all the foregoing reasons, the motion of Aggressive Mortgage Co. to dismiss the amended complaint should be denied. In the alternative, the plaintiffs should be given an opportunity to amend the complaint either before or after completing discovery.

Dated:

Counsel for the Plaintiffs