TD Bank, N.A. v. Tania Pulliam, et al.

The Holder Rule, 16 C.F.R. § 433.1 et seq., requires that all consumer credit contracts used to purchase or lease goods or services “in or affecting commerce” include a provision that makes any holder of the credit contract “subject to all claims and defenses which the debtor could assert against the seller” of the purchased goods or services. 16 C.F.R. § 433.2(a) (capitalization omitted). The provision makes the bank or other entity who finances a consumer transaction—or any subsequent assignee of the financing agreement— responsible for any seller misconduct in connection with the financed sale. The mandated provision further states, however, that “recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder.” Id. (capitalization omitted). The question presented is as follows: Whether, and in what circumstances, the Holder Rule’s limit on “recovery” by the debtor, 16 C.F.R. § 433.2(a), applies to, and thus caps, an attorney’s fee award in a Holder Rule suit, asserting claims against a creditor based on seller misconduct.