ÿWPC=  `Ï„Þ8È-xÁEi”9}üÐ#$‘$ôæÌ5kÒ¨Šþ°Ëánκƒ'±íUKpÑœiEÞŒþ£oaÐÄe»6w&çûV_ýDê\ÛàU Ÿ9ªÏDùËO­¶–TÃyyfÎtÉ‚Å]‚iÓÐü>.¤*/œ÷“¢¼%1\Åg(ñfzJ˜˜b3NÏ­æ Œ=UÆlR—±²æžª!“"Ýzçc¤ ÙË| v÷e•Hÿ™âQÇÉ´C=EÁC”~ˆ½ÇEHÖ¡M[f†*;ZqÐ C€IIŠ14EÛg}ïT'…q–‚ðSí´¸þ$—OÞ¬ÈnùwÌ@çd|Y®Ô[nêÏÖÝ/ßó'¬»ˆ@/Gˤ`ßãMÕ˜ŠÒ ½ -8wv ¢Û/8"7„ÌÇßgj‰È f°åà&_Jù蛸—" <¸vµ€æ´Ù?­•êÖ¸‰ÚÍeøC%sꑚ& 6Áõ«æ#ñRÉØÂÎni§;º¦Ä.˜ðe蜺hÊznj8ˆ0šNÖÊÕ!%¨lF z½ïìûò¸¤MÂO?Óf &mÒß÷oÞUÑ9 Ô` 0¶Ñ!Ê~²ƒk!SíÁÁqõÏ1@1àzAd#!xUN™ %ç 0(íw 4 - < UND N’ ” U:© ^ ã ï mñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ ñ 0D D5L B AQž Æï 0Dµ 0Dù ˜HP LaserJet 8000 DN PSØÚØÚÚØØÚ0(ÈhH  Z 6Times New Roman RegularX($¡¡tpO'3|x'Ör Z ‹6Times New Roman Regular Ý ƒb¯"ÝÝ  ÝÔ_ÔÔ€ XfàXXXÔÔ€ sX XfàÔÓ  Óò òÔ Ad ÔFILEDÔ€ XfàX sÔÐ  ÐÌOctober€26,€1999ÌÌCecil€Crowson,€Jr.ÌAppellate€Court€ClerkÔdAxÔó ó,c½¬AZ‹"Arial RegularBnZ'L ÿU‹ÿÀÀÀ(3¯$££Ý ƒ!ÝÝ  Ý\\\\)ÿÿ!dxdx dabZc[Cþÿ<<CÿÿƒLevel 1Level 2Level 3Level 4Level 5(3¯$¢¢Ý ƒ!ÝÝ  Ý($$””ò òÚ  Ú1Ú  Úó óÝ ƒ!ÝÝ  ÝÔ_ÔÑTR[° AØ'ÿ Legal3Ø' AØ'ÿ Legalÿ3Ø'TÑÓ  Óò òÔ‡ X×?XXXÔÑ8€×?XXdìdÈ8ÑÑ  Ñßv€` [@0,j:`  `€€@ÿEȱ` 8ttxP°ð  vßÔ_Ôà@ ìàIN€THE€COURT€OF€APPEALS€OF€TENNESSEEó óˆÐ ° Ðò òà@úú$ìàAT€NASHVILLEˆÐ œì Ðà  àà ` àà ¸ àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ð ˆØ ÐÌóóÌMAHMOUD€ALDURIDI,€HOLLY€J.€€à À à)Ð L œ ÐENOCH,€WILLIAM€J.€FALCONE,à À à)à  àà p àÐ 8 ˆ ÐTONYA€D.€FEURY,€CARMEL€à h àà À à)ó óÐ $ t Ðò òJOHNSON,€MELISSA€JOHNSON,ó óà À àò ò)ó óÐ  ` Ðò òSANNYU€OBARD,€NATHAN€K.€SMITH,)Ð ü L  ÐTONYA€M.€SMITH,€and€RUTH€à h àà À à)Ð è 8  ÐWILLEY,à ` àà ¸ àà  àà h àà À à)Ð Ô$  Ðà  àà ` àà ¸ àà  àà h àà À à)Ìó óà  àPlaintiffs,€à ¸ àà  àà h à€€€€ò ò€€à À à)ó óà  àDavidson€Chancery€No.€98„611„IIÐ ¬ü  Ðà  àà ` àà ¸ àò ò€€à  àà h àà À à)ó óà  àà p àÐ œì  Ðò òà  àà ` àà ¸ àà  àà h àà À à)à  àó óAppeal€No.€01A01„9901„CH„00063ò òÐ ˆØ  ÐCARMEL€JOHNSON,€MELISSAà h àà À à)€Ð xÈ ÐJOHNSON,€SANNYU€OBARD€andà À à)Ð d´ ÐRUTH€WILLEY,à ¸ àà  àà h àà À à)Ð P  Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àó óPlaintiffs/Appellants,à  àà h àà À àò ò)ó óÐ (x Ðà  àà ` àà ¸ àà  àà h àò òà À à)Ð h Ðvs.à  àà ` àà ¸ àà  àà h àà À à)à  àÐ T Ðà  àà ` àà ¸ àà  àà h àà À à)ÌCOMMUNITY€TRUST€BANK,€N.A.,à À à)Ð Ü, ÐFIFTH€THIRD€BANK,€HYUNDAIà À à)Ð È ÐMOTOR€FINANCE€COMPANY,€INC.,à À à)Ð ´ Ðand€NATIONSBANK€OF€TEXAS,€N.A.,à À à)Ð  ð Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àDefendants,à ¸ àà  àà h àà À à)Ð xÈ Ðà  àà ` àà ¸ àà  àà h àà À à)ÌHYUNDAI€MOTOR€FINANCE€à h àà À à)Ð P!  ÐCOMPANY,€INC.€and€NATIONSBANKà À à)Ð <"Œ  ÐOF€TEXAS,€N.A.,à ¸ àà  àà h àà À à)Ð (#x! Ðà  àà ` àà ¸ àà  àà h àà À à)Ìà  àDefendants/Appellees.à h àà À à)à  àà p àà È àà  àà x àà Ð àÐ %P # ÐÌÌà@IIìàó óAPPEAL€FROM€THE€CHANCERY€COURT€OF€DAVIDSON€COUNTYˆÐ Ä'#& Ðà@ÁÁìàAT€NASHVILLE,€TENNESSEEˆÌÌà@  ìàTHE€HONORABLE€CAROL€McCOY,€CHANCELLORˆÌòòÌFor€the€Plaintiffs/Appellantsóó:òòà  àà h àà À àFor€the€Defendants/AppelleesÔ#†X×?XX X×?Ž#ÔÔ‡ X×?XXX×?Ôóó:òòÐ `,°'+ ÐÌóóKenneth€J.€Mitteldorf€€€€€€€€€€€€€€€€€€€€à h à€€€€€€€€€€€€Julie€C.€Murphy€€€€€€€Ð 8.ˆ)- ÐNashville,€Tennessee€€€à  àà h àà À àNashville,€Tennessee€Ð $/t*. ÐÌò òà  àà ` àà ¸ àà  àà h àà À àAFFIRMED€IN€PART,€REVERSEDÐ ü0L,0 Ðà  àà ` àà ¸ àà  àà h àà À àIN€PART€AND€REMANDEDÌÌà  àà ` àà ¸ àà  àà h àà À àó óHOLLY€KIRBY€LILLARD,€J.Ð À3/3 Ðà  àÌÌCONCURS:ÌòòÌóóW.€FRANK€CRAWFORD,€P.J.,€W.S.Ð \8¬38 ÐÌALAN€E.€HIGHERS,€J.€€€Ô#†X×?XX X×?#ÔÐ  4:„5: ÐØØÓÓÑ8€×?XXdìXXdì8ÑÑ  Ñà@66'ìàò òOPINIONó óˆÐ ° Ðà  àThis€case€involves€consumer€installment€sales€contracts€assigned€by€the€seller€to€a€creditor.ÏThe€plaintiff€consumers€filed€suit€against€the€creditor€assignee€who€financed€their€consumerÏcontracts€to€purchase€vehicles,€seeking€rescission€or€modification€of€the€contracts€based€on€theÏwrongful€conduct€of€the€seller.€€The€trial€court€allowed€the€plaintiffs€to€recover€from€the€creditor€forÏthe€sellerððs€misconduct,€based€on€the€Federal€Trade€Commissionððs€Holder€Rule,€but€limited€theÏplaintiffsðð€recovery€to€the€amount€each€plaintiff€had€paid€to€the€creditor.€€We€affirm€in€part,€reverseÏin€part,€and€remand.€€Ìà  àMost€of€the€original€plaintiffs€in€this€lawsuit€have€settled€their€claims.€€The€remainingÏplaintiffs,€Sannyu€Obard€(ð ðObardðð)€and€Ruth€Willey€(ð ðWilleyðð),€have€not€settled€their€claims.€€InÏoutlining€the€facts,€we€will€first€give€an€overview€of€facts€common€to€all€of€the€plaintiffs,€and€thenÏdetail€the€facts€as€to€Plaintiffs€Obard€and€Willey.Ìà  àThe€Plaintiff/Appellants€each€bought€a€car€from€Hillman€Hyundai€(ð ðHillmanðð).€€Their€Ïconsumer€installment€sales€contracts€were€assigned€to€the€Defendant/Appellee,€NationsBank€ofÏTexas,€N.A.€(ð ðNationsBankðð).€€Hillman€failed€to€perform€its€duties€under€the€contracts€by€failing€toÏsatisfy€existing€liens€on€the€cars€the€Plaintiffs€traded€in.€€Hillman€subsequently€filed€bankruptcy.€€TheÏPlaintiffs€then€filed€suit,€seeking€to€rescind€or€modify€their€contracts€with€Hillmanððs€assignee,ÏNationsBank,€and€recover€amounts€paid€under€the€contracts.€€Ìà  àEach€consumer€installment€sales€contract€included€the€Federal€Trade€Commissionððs€RuleÏConcerning€Preservation€of€Consumersðð€Claims€and€Defenses€(ð ðthe€FTC€Holder€Ruleðð€or€ð ðtheÏHolder€Ruleðð),€which€provides€that:ÌÓÓà8  àAny€holder€of€this€consumer€credit€contract€is€subject€to€all€claims€and€defensesÏwhich€debtor€could€assert€against€the€seller€of€goods€or€services€obtained€pursuantÏhereto€or€with€the€proceeds€hereof.€€Recovery€hereunder€by€the€debtor€shall€notÏexceed€amounts€paid€by€the€debtor€hereunder.€€Ð Ð Ð  ÐÌ16€C.F.R.€ðð€433€(1997).€€ÓÓThe€parties€stipulated€that€the€pivotal€issue€is€the€interpretation€of€the€FTCÏHolder€Rule€under€the€facts€presented.Ìà  àThe€parties€stipulated€that€Plaintiff€Obard€purchased€a€1996€Ford€Escort€from€Hillman€onÏJuly€5,€1997.€€Hillman€assigned€the€Obard€consumer€installment€sales€contract€to€NationsBank.€€AsÏpart€of€the€transaction,€Obard€executed€a€purchase€money€security€agreement€(ð ðthe€Obard€contractðð),Ïtraded€in€a€1993€Geo€Metro€to€Hillman€worth€$7700,€and€put€down€$500€in€cash.€€The€trade„inÏvehicle€was€subject€to€a€lien€in€the€amount€of€$4800€held€by€Lockheed€Federal€Credit€UnionÐ ;d6;  Ð(ð ðLockheedðð).€€Obard€received€a€credit€for€the€Geo€Metro€which€was€traded€in;€this€was€calculatedÏby€subtracting€the€lien€from€the€total€value.€€As€part€of€the€sales€contract€for€the€Escort,€Hillman€wasÏto€pay€off€the€Lockheed€lien€on€the€trade„in,€the€Metro.€€Hillman€failed€to€pay€off€the€lien,€andÏLockheed€repossessed€the€Metro.€€Lockheed€then€sold€the€Metro€and€assessed€a€deficiency€judgmentÏagainst€Obard€for€$5046.54.€€Obard€is€not€seeking€rescission€of€her€contract,€and€thus€does€not€seekÏrecovery€of€the€installment€payments€she€made€to€NationsBank.€Ìà  àThe€parties€also€stipulated€to€the€facts€of€Plaintiff€Willeyððs€transaction.€€Willey€purchased€aÏ1996€Chevrolet€Camaro€from€Hillman€Hyundai€on€August€14,€1997.€€As€part€of€the€transaction,ÏWilley€executed€a€purchase€money€security€agreement€(ð ðthe€Willey€contractðð).€€In€the€transaction,ÏWilley€traded€in€a€1995€Hyundai€to€Hillman€and€put€down€a€$500€cash€down€payment.€€The€partiesÏstipulated€that€the€Hyundai€was€worth€$8500€at€the€time€of€trade€in.€€The€Hyundai€was€subject€to€aÏlien€in€favor€of€Bank€One€for€$7700.€€Hillman€agreed€to€satisfy€the€Bank€One€lien,€but€failed€to€doÏso.€€Ìà  àHillman€assigned€the€Willey€contract€to€NationsBank.€€Willey€paid€NationsBank€$551.78Ïafter€the€contract€was€assigned.€€Willey€subsequently€discovered€that€GMAC€held€a€prior€properlyÏperfected€security€interest€in€the€Camaro,€created€by€the€persons€who€sold€the€vehicle€to€Hillman.€ÏHillman€failed€to€satisfy€its€contractual€obligation€to€satisfy€the€prior€lien€on€the€Camaro.€ÏConsequently,€Willey€had€to€surrender€the€Camaro€to€GMAC.€€After€Hillman€filed€bankruptcy,ÏWilley€recovered€possession€of€the€Hyundai€previously€traded€in€to€Hillman.€€The€vehicle€wasÏdamaged,€however,€and€was€worth€less€than€$8500.€€The€parties€did€not€stipulate€as€to€the€value€ofÏthe€damaged€trade„in€vehicle.€€Ìà  àThe€Plaintiffs€filed€suit€against€NationsBank€on€March€2,€1998.€€Plaintiff€Obard€asserted€that,Ïunder€the€FTC€Holder€Rule,€NationsBank€was€liable€for€Hillmanððs€breach€of€contract€and€HillmanððsÏviolations€of€the€Tennessee€Consumer€Protection€Act.€€Obard€sought€the€amount€of€her€unpaid€lienÏto€Lockheed€in€the€amount€of€$5046.54,€the€$500€cash€down€payment,€interest,€charges€and€feesÏaccrued€since€the€deficiency€judgment,€and€compensation€for€negative€credit€reports€generated€byÏLockheed.€€Obard€originally€sought€to€rescind€the€contract€assigned€to€NationsBank,€but€later€choseÏnot€to€rescind€the€contract.€€Ìà  àPlaintiff€Willey€also€contended€that€NationsBank€was€liable€under€the€Holder€Rule€forÏHillmanððs€breach€of€contract€and€Hillmanððs€violations€of€the€Tennessee€Consumer€Protection€Act.€Ð (:x5: ÐWilley€originally€sought€rescission€of€the€contract,€recovery€for€the€monthly€installments€of€$551.78Ïpaid€to€NationsBank,€the€$8500€value€of€the€vehicle€she€traded€in,€and€the€$500€cash€down€payment.ÏAfter€Willey€recovered€the€trade„in€vehicle,€she€sought€only€the€diminution€in€value€of€that€vehicle.€ÏBoth€Plaintiffs€sought€reasonable€attorneyððs€fees€and€costs€pursuant€to€the€Tennessee€ConsumerÏProtection€Act,€Tenn.€Code€Ann.€ðð€47„18„109.€€Ìà  àNationsBankððs€answer€admitted€that€Hillman€assigned€the€Obard€and€Willey€contracts€to€it,Ïbut€denied€that€it€was€liable€ð ðfor€all€claims€and€defenses€which€[Plaintiffs]€could€assert€againstÏHillman.ðð€€NationsBank€raised€the€affirmative€defense€that€the€Plaintiffs€sought€relief€notÏcontemplated€by€the€Holder€Rule.€Ìà  àThe€parties€then€filed€cross€motions€for€summary€judgment,€based€on€the€stipulated€facts.€ÏThe€Plaintiffs€asserted€in€their€motion€for€summary€judgment€that€the€FTC€Holder€Rule€entitled€themÏto€recover€all€consideration€paid€on€the€contracts,€whether€in€cash€or€in€trade,€even€if€that€amountÏwas€in€excess€of€the€amount€actually€received€by€NationsBank.€€NationsBank€argued€that€its€liabilityÏwas€limited€to€the€amount€it€actually€received€from€the€Plaintiffs.€€€€Ìà  àFollowing€the€hearing€on€the€cross€motions€for€summary€judgment,€the€trial€court€found€thatÏthe€Plaintiffs€were€entitled€to€rescind€the€contracts€made€with€Hillman€and€assigned€to€NationsBank.€ÏThe€trial€court€limited€the€Plaintiffsðð€recovery€to€the€amount€they€paid€to€NationsBank€and€did€notÏpermit€them€to€recover€for€payments€to€Hillman.€€Accordingly,€the€trial€court€dismissed€ObardððsÏcomplaint€since€Obard€sought€to€recover€for€the€$5046.54€deficiency€judgment,€but€did€not€seekÏrescission€of€the€contract€or€recovery€for€amounts€paid€to€NationsBank.€€The€trial€court€concludedÏthat€the€recovery€sought€by€Willey€also€exceeded€the€recovery€permitted€by€the€Holder€Rule€sinceÏshe€sought€the€diminution€in€value€of€the€1995€Hyundai€traded€in€to€Hillman.€€The€trial€court€limitedÏWilleyððs€recovery€to€$551.78,€the€amount€€paid€to€NationsBank.€€The€trial€court€denied€the€PlaintiffsððÏrequest€for€attorneyððs€fees,€reasoning€that€attorneyððs€fees€constituted€amounts€in€excess€of€theÏamounts€paid€by€the€Plaintiffs€to€NationsBank.Ìà  àOur€review€of€this€case€is€governed€by€rule€13(d)€of€the€Tennessee€Rules€of€AppellateÏProcedure,€which€provides€that€review€of€findings€of€fact€by€the€trial€court€shall€be€òòde€novo€óóupon€the€Ð  4ð/4 ÐÌâ âÐ P8 38 Ðrecord€of€the€trial€court,€accompanied€by€a€presumption€of€correctness€of€the€findings€of€fact,€unlessÏâ âthe€evidence€preponderates€otherwise.€€òòò òSee€óóó óTenn.€R.€App.€P.€13(d);€ò òòòUnion€Carbide€Corp.€v.Ð ˆØ ÐHuddlestonóóó ó,€854€S.W.2d€87,€91€(Tenn.€1993).€€The€trial€court's€conclusions€of€law,€however,€areÐ `° Ðafforded€no€such€presumption.€€òòò òSee€Campbell€v.€Florida€Steeló óóó,€919€S.W.2d€26,€35€(Tenn.€1996).€ò òÐ 8 ˆ Ðà  àó óOn€appeal,€the€Plaintiffs€argue€that€the€trial€court€erred€in€holding€that€the€FTC€Holder€RuleÐ  ` Ðlimits€recovery€to€the€amount€the€Plaintiffs€paid€to€NationsBank,€resulting€in€the€trial€courtððsÏdismissal€of€Obardððs€complaint€and€award€of€only€$551.78€to€Willey.€€The€Plaintiffs€also€contendÏthat€the€trial€court€erred€in€denying€their€claim€for€attorneyððs€fees.€€€€€Ìà  àThe€pivotal€issue€in€this€case€centers€on€the€limits€of€the€Federal€Trade€Commissionððs€HolderÏRule.€€This€rule€cuts€off€a€creditorððs€rights€as€a€holder€in€due€course.€€òòò òSee€Ford€Motor€Credit€Co.€v.Ð H˜ ÐMorganóóó ó,€536€N.E.2d€587,€540„41€(Mass.€1989).€€Without€the€Holder€Rule,€a€creditor€to€whom€theÐ  p Ðconsumerððs€contract€had€been€assigned€could€assert€its€right€to€be€paid,€even€where€the€seller€€whoÏassigned€the€contract€committed€fraud,€or€breach€of€warranty€or€contract.€€òòò òId.€óóó óat€541.€€The€HolderÐ Ð  ÐRule€requires€that€parties€to€certain€transactions€include€the€following€notice€provision€in€theÏcontract:ÌÒ°ÒÒ°ÒÓÓNotice:€€Any€holder€of€this€consumer€credit€contract€is€subject€to€all€claims€andÏdefenses€which€debtor€could€assert€against€the€seller€of€goods€or€services€obtainedÏpursuant€hereto€or€with€the€proceeds€hereof.€€Recovery€hereunder€by€the€debtor€shallÏnot€exceed€amounts€paid€by€the€debtor€hereunder.ÌÌÒ°Ç8ÒÒ°¹8ÒÓÕ8ÓThis€language€becomes€a€part€of€the€contract.€€41€Fed.€Reg.€20022,€20023€(1976).€€The€FTC€hasÏreleased€guidelines€explaining€the€purpose€of€the€Rule:ÌÓç#ÓÒ°ÒÒ°Òà ` àIn€adopting€this€Rule€the€Commission€determined€that€it€constitutes€an€unfairÏand€deceptive€practice€.€.€.€for€a€seller€.€.€.€to€employ€procedures€which€make€theÏconsumerððs€duty€to€pay€independent€of€the€sellerððs€duty€to€fulfill€his€obligations.€€ÌÌ*€*€*€*Ìà ` àThe€Commissionððs€Rule€is€.€.€.€designed€to€prevent€the€widespread€use€ofÏcredit€terms€which€compel€consumers€to€pay€a€creditor€even€if€the€sellerððs€conductÏwould€not€entitle€the€seller€to€be€paid.€€It€is€designed€to€preserve€the€consumerððsÏlegally€sufficient€claims€and€defenses€so€that€they€may€be€asserted€to€defeat€orÏdiminish€the€right€of€a€creditor€to€be€paid,€where€a€seller€who€arranges€financing€forÏa€buyer€fails€to€keep€his€side€of€the€bargain.ÌÌÒ°ú:ÒÒ°;ÒÓä:Óò òòòId.óóó ó€€Recovery€under€the€Holder€Rule€is€twofold:Ð ´3/3 ÐÒ°ÒÒ°ÒÓÓà ` à[A]€consumer€can€(1)€defend€a€creditor€suit€for€payment€of€an€obligation€byÏraising€a€valid€claim€against€a€seller€as€a€set„off,€òòand€(2)€maintain€an€affirmativeÐ x6È16 Ðaction€óóagainst€a€creditor€who€has€received€payments€for€a€return€of€monies€paid€onÐ d7´27 Ðaccount.€€The€latter€alternative€will€only€be€available€where€a€sellerððs€breach€is€soÏsubstantial€that€a€court€is€persuaded€that€rescission€and€restitution€are€justified.Ó¬>ÓÐ <9Œ49 ÐÒ°>ÒÒ°ž>Ò40€Fed.€Reg.€53506,€53524€(1975)€(emphasis€added).Ìà  àThe€Guidelines€explain€that€the€debtor€can€recover€only€ð ða€refund€of€monies€paid€under€theÏcontract,ðð€and€that€the€consumer€ð ðwill€not€be€entitled€to€receive€from€the€creditor€an€affirmativeÏrecovery€which€exceeds€the€amounts€of€money€the€consumer€has€paid€in.ðð€€41€Fed.€Reg.€at€20023.€ÏIn€discussing€the€limitation€on€recovery,€the€FTC€guidelines€contemplate€recovery€where€rescissionÏis€not€warranted:ÌÒ°ÒÒ°ÒÓÓà ` à[I]f€a€sellerððs€conduct€gives€rise€to€damages€in€an€amount€exceeding€theÏamounts€paid€under€the€contract,€the€consumer€may€(1)€sue€to€liquidate€the€unpaidÏbalance€owed€to€the€creditor€and€to€recover€the€amounts€paid€under€the€contractÏand/or€(2)€defend€in€a€creditor€action€to€collect€the€unpaid€balance.€€The€consumerÏmay€not€assert€[against]€the€creditor€any€rights€he€might€have€against€the€seller€forÏadditional€consequential€damages€and€the€like.€€The€same€situation€would€exist€whereÏa€sellerððs€conduct€would,€as€a€matter€of€law,€entitle€a€buyer€to€rescission€andÏrestitution.€€The€consumer€.€.€.€could€initiate€proceedings€to€invalidate€the€creditÏcontract€and€receive€a€return€of€monies€paid€on€account.€€If€a€down€payment€wereÏmade€under€the€credit€contract,€the€consumer€could€recover€the€down€payment€asÏwell€as€other€payments.ÌÌÒ°ÆBÒÒ°ÔBÒÓâBÓòòò òId.€ó óóó€€Indeed,€the€Guidelines€discuss€that€ð ð[t]he€vast€majority€of€cases,€in€the€staffððs€opinion,€willÐ Ð  Ðinvolve€a€limited€right€of€set„off€against€the€unpaid€balance.€€Most€sellers€do€not€do€business€in€a€wayÏthat€creates€a€right€to€rescission€.€.€.€.ðð€€ò òòòId.ó óóó€at€20024.€€€€Ð €Ð Ѐà  àIn€this€case,€the€trial€court€found€that€the€Plaintiffs€were€entitled€to€rescind€their€contracts.Ð X ¨ ÐThus,€under€the€Holder€Rule,€they€can€maintain€an€affirmative€action€against€the€creditor€assigneeÏNationsBank.€€However,€the€trial€court€held€that€recovery€is€limited€to€the€amounts€actually€paid€byÏthe€Plaintiffs€to€NationsBank€pursuant€to€the€contracts.€€Plaintiff€Obardððs€decision€not€to€seekÏrescission€does€not€limit€her€from€obtaining€a€recovery€for€amounts€paid€under€the€contract.€€Ìà  àThis€case€turns€on€whether€the€Plaintiffs€can€recover€for€monies€paid€under€the€contracts€toÏthe€òòselleróó€rather€than€to€the€creditor€assignee€NationsBank.€€The€Holder€Rule€is€ambiguous€on€thisÐ h+¸&* Ðissue.€€Although€the€Holder€Rule€limits€recovery€to€ð ðamounts€paid€by€the€debtor€hereunder,ðð€it€doesÏnot€expressly€limit€recovery€to€amounts€paid€to€the€creditor€assignee.€€The€trial€court€held€that,€underÏTennessee€law,€ð ðthe€Holder€Rule€limits€the€Plaintiffsðð€affirmative€recovery€against€the€Creditors€toÏthe€amounts€paid€by€the€Plaintiffs€òòto€the€Creditorsóó.ðð€€The€reasoning€for€this€holding€was€not€includedÐ È2.2 Ðin€the€final€order.€Ìà  àOn€appeal,€NationsBank€argues€that,€for€each€Plaintiff,€Hillman€entered€into€two€distinct€andÏseparate€transactions:€(1)€the€agreement€to€pay€off€the€lien€on€the€trade€in€vehicle,€and€€(2)€the€financeÏagreement,€subsequently€assigned€to€NationsBank.€€NationsBank€asserts€that€the€Plaintiffsðð€claimsÐ (:x5: Ðarise€from€Hillmanððs€breach€of€the€agreements€to€pay€off€the€liens€rather€than€the€purchase€contractÏassigned€to€NationsBank.€€Consequently,€NationsBank€reasons€that€the€Plaintiffsðð€claims€againstÏHillman€for€failure€to€pay€off€the€liens€cannot€be€asserted€against€NationsBank.€€In€support€of€thisÏargument,€NationsBank€cites€a€portion€of€the€FTC€guidelines€stating€thatÌÒ°ÒÒ°ÒÓÓ[i]t€is€possible€for€a€consumer€to€have€a€claim€or€defense€against€a€seller€because€ofÏa€separate€transaction.€€The€provision€required€by€the€Rule€would€not€allow€him€[theÏconsumer]€to€assert€such€a€claim€or€defense€against€the€holder.€€The€holderððsÏobligations€are€limited€to€those€arising€from€the€transaction€which€he€finances.ÌÌÒ°OÒÒ°qOÒÓOÓ41€Fed.€Reg.€at€20024.€€Thus,€NationsBank€argues€that€its€obligations€are€limited€to€the€purchaseÏcontract€that€it€furnished€and€do€not€extend€to€Hillmanððs€separate€obligation€to€pay€off€the€liens€onÏthe€vehicles€traded€in€by€the€Plaintiffs.€€Ìà  àIn€support€of€its€argument,€NationsBank€cites€ò òòòLaBarre€v.€Credit€Acceptance€Corp.óóó ó,€11€F.Ð 4„ ÐSupp.€2d€1071€(D.€Minn.€1998),€òòaffððd€in€part€for€proposition€cited€by€NationsBank;€revððd€in€part€onÐ  \ Ðother€groundsóó,€175€F.3d€640€(8th€Cir.€1999).€€In€ò òòòLaBarreó óóó€the€court€held€that€a€creditor€assignee€wasÐ ä4 Ðnot€liable€for€the€sellerððs€failure€to€satisfy€its€obligation€to€obtain€insurance€on€the€vehicle€it€sold.€ÏThe€ò òòòLaBarreó óóó€court€reasoned€that,€under€Minnesota€law,€the€assignment€of€a€consumer€credit€contractÐ ”ä Ðdoes€not€impose€obligations€on€the€assignee€unless€the€assignee€specifically€assumes€thoseÏobligations.€€òòò òSee€id.€óóó óat€1076.€€The€court€also€relied€on€Minnesota€law€which€provides€that€claimsÐ D!” Ðagainst€assignees€can€be€used€only€to€extinguish€or€diminish€an€assigneeððs€claim,€and€cannot€be€usedÏto€impose€liability€on€the€assignee€unless€the€assignee€assumes€the€assignorððs€duty.€€òòò òSee€id.óóó ó€€€€Ð ô$D # Ðà  àIn€response€to€NationsBankððs€argument€that€the€Plaintiffsðð€purchases€of€the€vehicles€fromÏHillman€consisted€of€two€separate€transactions,€the€Plaintiffs€cite€the€FTC€guidelines€quoted€above,Ïwhich€explain€that€the€Holder€Rule€was€adopted€to€prevent€sellers€from€arranging€credit€terms€thatÏseparate€the€consumerððs€duty€to€pay€from€the€sellerððs€duty€to€keep€its€promises.€€Viewing€theÏpurchase€as€two€separate€transactions,€the€Plaintiffs€assert,€would€revert€back€to€the€very€situationÏthe€Holder€Rule€was€designed€to€remedy.€€Ìà  àIn€this€case,€both€of€the€Plaintiffs€traded€in€vehicles€in€their€purchase€transactions€withÏHillman.€€In€return€for€their€trade„ins,€the€Plaintiffs€received€credits€in€the€form€of€a€down€paymentÏfor€the€net€value€of€the€vehicles€traded€in,€which€was€calculated€by€subtracting€the€outstanding€liensÏfrom€the€total€value€of€the€vehicles.€€Hillman€agreed€to€pay€off€the€liens€on€the€trade„in€vehicles,€afterÏwhich€it€could€dispose€of€the€vehicles€as€it€saw€fit.€€It€is€fair€to€assume€that€the€Plaintiffs€would€notÐ <9Œ49 Ðhave€given€up€possession€of€their€vehicles€without€Hillmanððs€promise€to€pay€off€the€liens.€ÏOtherwise,€the€Plaintiffs€would€not€have€received€full€credit€for€the€trade„in€vehicles.€€When€HillmanÏfailed€to€pay€the€lien,€the€Plaintiffs€had€already€given€up€their€assets€and€were€nevertheless€obligatedÏto€pay€the€liens,€but€received€credit€from€Hillman€only€for€the€net€value€of€the€trade„in€vehicles.€ÏHillman€benefitted€from€its€wrongdoing€by€receiving€the€full€value€of€the€trade„in€vehicles,€whileÏcrediting€the€Plaintiffs€for€only€a€portion€of€their€value.€€Because€Hillmanððs€payment€or€non„paymentÏof€the€liens€affected€the€amount€of€down€payment€credit€the€Plaintiffs€received,€it€was€an€integral€partÏof€the€overall€transaction.€€We€must€conclude€that€separating€Hillmanððs€obligation€to€pay€off€the€liensÏfrom€the€purchase€of€the€new€vehicles€would€be€contrary€to€the€spirit€of€the€Holder€Rule€and€theÏreason€for€its€adoption.€€For€this€reason,€NationsBank€cannot€avoid€liability€on€the€purchaseÏtransaction€by€arguing€that€the€Plaintiffsðð€claims€arise€from€a€separate€transaction.€€€€€€€€€€€Ìà  àSince€the€Plaintiffsðð€contracts€with€Hillman€did€not€involve€two€separate€transactions,ÏNationsBank€stands€in€the€shoes€of€Hillman,€and€the€Plaintiffs€may€raise€any€claims€or€defensesÏagainst€NationsBank€that€they€could€assert€against€Hillman.€€As€noted€above,€the€PlaintiffsððÏrecoverable€damages€are€limited€to€ð ðamounts€paid€by€the€debtorðð€under€the€consumer€credit€contract.€ÏThe€parties€dispute€the€meaning€of€this€phrase.€€€€€€€€€€€Ìà  àThe€parties€disagree€about€the€holdings€of€two€Tennessee€cases€titled€òòò òPatton€v.€McHoneóóó ó,Ð 0"€  Ðreferred€to€as€òòò òPatton€Ióóó ó,€822€S.W.2d€608€(Tenn.€App.€1991)ò ò€ó óand€òòò òPatton€IIó óóó,€No.€01A01„9207„CH„Ð $X" Ð00286,€1993€WL€82405€(Tenn.€App.,€Mar.€24,€1993).€€òòò òPatton€I€óóó óinvolved€the€purchase€of€a€used€carÐ è%8!$ Ðby€the€plaintiffs.€€The€contract€included€the€Holder€Rule.€€ò òòòPatton€Ió óóó,€822€S.W.2d€at€618.€€After€theÐ À'#& Ðsale,€the€plaintiffs€discovered€that€the€car€had€been€damaged€prior€to€purchase.€€The€plaintiffs€suedÏthe€seller.€€The€plaintiffs€also€sued€the€creditor€who€financed€the€transaction€and€to€whom€theÏcontract€was€assigned.€€ò òòòId.ó óóó€at€613.€€The€trial€court€dismissed€the€plaintiffsðð€claims€against€the€sellerÐ H-˜(, Ðand€the€creditor,€and€awarded€the€creditor€a€deficiency€judgment€against€the€plaintiff€buyers.€€ò òòòId.ó óóó€atÐ  /p*. Ð611.€€The€plaintiff€buyers€appealed.€€The€appellate€court€held€that€the€seller€had€breached€its€impliedÏwarranty€of€merchantability.€€ò òòòId.ó óóó€at€617.€€The€Court€of€Appeals€noted€that€the€plaintiffs€could€assertÐ Ð2 .2 Ðthe€same€claims€and€defenses€against€the€creditorððs€claim€for€payment€as€they€could€have€assertedÏagainst€the€seller.€€ò òòòId.ó óóó€at€618.€€However,€while€the€creditor€had€all€of€the€sellerððs€rights€and€liabilities,Ð €6Ð16 Ðâ âthe€Court€noted€that€the€plaintiffs€did€not€have€ð ðan€open„ended€right€to€obtain€affirmative€reliefððÐ X8¨38 Ðagainst€the€creditor.€€€ò òòòId.ó óóó€€The€Court€in€ò òòòPatton€Ióóó ó€allowed€the€plaintiffs€to€recover€payments€made€toÐ ° Ðthe€creditor.€€ò òòòId.ó óóó€at€619.€€Ð ˆØ Ðâ âà  àIn€its€analysis,€the€Court€in€ò òòòPatton€Ió óóó€alluded€to€the€Holder€Rule,€noting€that€inclusion€of€theÐ `° ÐHolder€Rule€in€the€retail€installment€sales€contract€made€a€particular€provision€of€the€UniformÏCommercial€Code€(U.C.C.)€inapplicable€and€rendered€the€contract€non„negotiable.€€ò òòòId.€ó óóóat€618.€Ð  ` ÐHowever,€while€the€Court€mentioned€the€Holder€Rule,€its€analysis€focused€on€a€U.C.C.€provision:ÌÓÓà8  àTenn.€Code€Ann.€ðð€47„9„318(1)€is€intended€only€to€permit€an€account€debtor€to€assertÏagainst€an€assignee€the€same€defensive€claims€it€could€assert€against€the€assignor.€€ItÏdoes€not€empower€an€account€debtor€to€recover€from€the€assignee€because€of€theÏassignorððs€non„performance.Ð Ð Ð  ÐÌÓÓò òòòId.ó óóó€(citations€omitted).€€ò òòòPatton€Ió óóó€did€not€discuss€either€the€impact€of€the€Holder€Rule€on€this€analysis,Ð \¬ Ðor€whether€a€consumer€could€recover€for€payments€made€to€the€seller,€rather€than€the€creditor,€underÏthe€retail€installment€sales€contract.€€òòò òPatton€Ió óóó€merely€permitted€recovery€for€amounts€paid€on€theÐ  \ Ðcontract€to€the€creditor.€€òòò òId.ó óóó€at€619.€€The€cause€was€remanded€to€the€trial€court€to€determine€theÐ ä4 Ðamount€of€the€plaintiff€consumersðð€judgment€against€the€seller€and€the€creditor.€€ò òòòId.óóó óÐ ¼  Ðà  àThe€second€appeal,€òòò òPatton€IIóóó ó,€involved€the€appellate€courtððs€review€of€the€trial€courtððsÐ ”ä Ðdecision€on€remand.€€òòò òPatton€IIó óóó,€1993€WL€82405.€€On€remand,€the€trial€court€granted€the€plaintiffÐ l¼ Ðconsumers€an€award€of€attorneyððs€fees€against€both€the€seller€and€the€creditor.€€In€òòò òPatton€IIóóó ó,€theÐ D!” Ðappellate€court€reversed€the€award€of€attorneyððs€fees€against€the€creditor,€stating:ÌÒ°ÒÒ°ÒÓÓ€€€€€à ` àThe€trial€court's€decision€[to€award€attorneyððs€fees]€in€the€instant€case€placesÐ ô$D # Ðan€affirmative€weapon€in€the€hands€of€the€consumer€against€the€assignee,€when€theÏonly€"weapon"€contemplated€by€the€Act,€the€regulations,€the€FTC€Rules,€and€theÏUCC€are€non-payment€through€rescission€and€refund€of€the€amount€paid.Ìà ` àWe€think€the€Chancellor€improperly€held€that€[the€creditor]€was€responsibleÏfor€the€wrongs€of€[the€seller].€€UCC€9-318(1)€is€intended€solely€as€a€shield€limitingÏthe€account€debtor's€potential€liability€in€a€suit€brought€by€the€assignee;€€it€cannot€beÏused€as€a€sword€to€permit€an€account€debtor€to€obtain€affirmative€recovery€from€theÏassignee€based€on€assignor's€non-performance.€€€Ó¶oÓÌÒ°¨oÒÒ°šoÒò òòòId.ó óóó,€at€*5.€€Thus,€while€the€òòò òPatton€óóó ócases€limit€the€consumersðð€rights€to€recovery€to€payments€madeÐ ,.|)- Ðby€them€under€the€contract,€neither€ò òòòPatton€Ióóó ó€norò òòò€Patton€IIó óóó€discusses€recovery€for€payments€or€valueÐ 0T+/ Ðgiven€to€the€òòselleróó€as€opposed€to€the€òòcreditoróó.€€We€must€look€outside€Tennessee€for€the€interpretationÐ Ü1,-1 Ðof€the€Holder€Rule€on€this€point.€€€€€€Ìà  àOn€this€issue,€the€Plaintiffs€cite€òòò òMaberry€v.€Saidóóó ó,€911€F.€Supp.€1393€(D.€Kan.€1995).€€InÐ Œ5Ü05 Ðòòò òMaberryóóó ó,€the€plaintiff€consumer€purchased€a€vehicle€after€the€seller€told€him€that€the€vehicle€had€lowÐ d7´27 Ðmileage.€€As€a€part€of€the€transaction,€the€consumer€signed€a€security€agreement€which€included€aÐ <9Œ49 Ðpromissory€note.€€ò òòòSee€id.€óóó óat€1397.€€The€consumer€traded€in€a€vehicle€as€a€down€payment€on€the€sale.€Ð ° ÐThe€seller€then€assigned€the€note€to€the€creditor.€€òòò òSee€id.€óóó óat€1398.€€The€consumer€later€discovered€thatÐ ˆØ Ðthe€seller€had€misrepresented€the€mileage€of€the€vehicle.€€The€plaintiff€consumer€filed€suit,€seeking,Ïamong€other€remedies,€a€recovery€from€the€creditor€assignee€of€the€net€value€of€the€car€he€traded€toÏthe€seller.€€The€creditor€assignee€argued€that€it€was€not€liable€for€the€value€of€the€trade„in€since€it€wasÏreceived€by€the€seller€rather€than€the€creditor.€€The€ò òòòMaberryó óóó€court€held€that€the€plaintiff€consumerÐ è 8  ÐÒ°ÒÒ°ÒÓÓdoes€not€lose€rights€by€virtue€of€the€assignment€of€the€note€.€.€.€.€€If€[the€seller]€heldÏthe€loan,€the€trade€in€would€be€considered€payment€ððhereunder.ðð€€[The€plaintiffÏconsumer]€can€assert€any€claim€or€defense€against€[the€creditor€assignee]€that€heÏcould€against€[the€seller].€€Therefore,€the€FTC€holder€rule€authorizes€[the€plaintiffÏconsumer]€to€recover€the€trade€in€value€from€[the€creditor€assignee],€which,€in€turnÏcould€consider€what€its€rights€might€be€against€[the€seller].ÌÌÒ°yÒÒ°yÒÓ*yÓòòò òId.€óóó óat€1403.€€Accordingly,€the€court€in€ò òòòMaberryó óóó€allowed€the€plaintiff€consumer€to€recover€from€theÐ 4„ Ðcreditor€assignee€the€value€of€the€trade„in€received€by€the€seller.€€€€Ìà  àThe€Plaintiffs€also€cite€òòò òResolution€Trust€Corp.€v.€Cookóóó ó,€840€S.W.2d€42,€49€(Tex.€App.Ð ä4 Ð1992).€€In€òòò òResolution€Trustóóó ó,€the€plaintiffs€obtained€financing€for€some€home€improvements.€€TheÐ ¼  Ðfinance€contract,€which€included€the€Holder€Rule,€was€transferred€from€the€original€note€holder€andÏeventually€ended€up€in€the€possession€of€the€Resolution€Trust€Company,€a€receiver.€€òòò òSee€id.€óóó óat€45.€Ð l¼ ÐThe€plaintiffs€later€sued€the€contractor€and€the€creditor,€alleging€that€the€home€improvement€workÏwas€not€completed.€€òòò òSee€id.óóó ó€at€44.ò ò€€ó óA€money€judgment€was€granted€against€Resolution€Trust.€€OnÐ #l! Ðappeal,€Resolution€Trust€argued€that€it€did€not€receive€any€funds€from€the€consumers€and€thus€wasÏnot€liable€for€a€refund€of€payments€made€to€previous€holders€of€the€finance€contract.€€òòò òSee€id.óóó óat€49.€Ð Ô&$"% ÐThe€appellate€court€found€that,€under€the€Holder€Rule,ÌÒ°ÒÒ°ÒÓÓit€is€of€no€moment€that€the€entities€held€liable€for€the€amounts€paid€by€the€[plaintiffs]Ïnever€received€any€payments€from€them,€for€the€clear€and€unambiguous€language€ofÏthe€contractual€provision€notifies€all€potential€holders€that€if€they€accept€anÏassignment€of€the€contract,€they€will€become€subject€to€any€claims€or€defenses€theÏdebtor€can€assert€against€the€seller.ÌÌÒ°:€ÒÒ°,€ÒÓH€Óòòò òId.€óóó óat€49.€€Thus,€the€court€in€ò òòòResolution€Trustóóó ó€held€that€the€assignee€of€the€finance€contract€couldÐ  0\+/ Ðbe€held€liable€for€payments€he€did€not€receive€„„€those€made€to€previous€holders€of€the€financeÏcontract.€€à ` àÐ ¼3 /3 Ðà  àNationsBank€argues€that€the€Holder€Rule€should€be€interpreted€to€limit€the€liability€of€theÏcreditor€assignee€to€payments€it€received,€not€payments€the€consumer€made€to€the€seller€assignee.€ÏIn€its€brief,€it€cites€several€cases.€€òòò òSee€Eachen€v.€Scott€Housing€Sys.,€Inc.óóó ó,€630€F.€Supp.€162€(M.D.Ð D9”49 ÐAla.€1986);ò òòò€Home€Sav.€Assoc.€v.€Guerraóóó ó,€733€S.W.2d€134€(Tex.€1987);€òòò òOxford€Fin.€Cos.,€Inc.óóó ó€ò òòòv.Ð ° ÐVelezóóó ó,€807€S.W.2d€460€(Tex.€App.€1991);€€òòò òBriercroft€Serv.€Corp.€v.€De€Los€Santosóóó ó,€776€S.W.2d€198Ð ˆØ Ð(Tex.€App.€1988).€€While€all€of€the€cases€cited€by€NationsBank€hold€that€a€consumer€cannot€recoverÏmore€than€the€amounts€paid€under€the€contract,€none€involves€a€factual€situation€in€which€theÏplaintiff€consumer€seeks€to€recover€from€the€creditor€assignee€payments€made€to€the€seller€of€theÏgoods.€€Thus,€these€cases€do€not€address€the€key€issue€in€this€appeal.Ì€à  àIn€the€event€of€seller€misconduct€in€which€full€recovery€cannot€be€had€from€the€seller,€the€riskÐ À  Ðof€loss€must€fall€to€one€of€two€innocent€parties,€the€consumer€or€the€creditor€assignee.€€The€HolderÏRule€addresses€the€allocation€of€this€risk€of€loss.€€òòò òSee€óóó ó40€Fed.€Reg.€at€53522€(stating€that€ð ð[o]urÐ pÀ Ðprimary€concern€.€.€.€has€been€the€distribution€or€allocation€of€costs€occasioned€by€seller€misconductÏin€credit€sales€transactionsðð).€€The€FTC€Guidelines€indicate€an€intent€that€the€creditor,€rather€than€theÏconsumer,€bear€the€risk€of€seller€misconduct:€€ð ðSellers€and€creditors€will€be€responsible€for€sellerÏmisconduct.ðð€€ò òòòId.ó ó€óóat€53524.€€€òòò òSee€also€Simpson€v.€Anthony€Auto€Sales,€Inc.óóó ó,€32€F.€Supp.€2d€405,Ð Ð  Ð409€(W.D.€La.€1998)€(concluding€that€ð ð[t]he€FTC€Holder€Rule€was€.€.€.€designed€to€reallocate€the€costÏof€seller€misconduct€to€the€creditor,€who€is€in€a€better€position€to€absorb€the€loss€or€recover€the€costÏfrom€the€guilty€party„„the€sellerðð);€òòò òMaberryóóó ó,€911€F.€Supp.€at€1402€(determining€that€ð ð[t]he€FTCÐ X ¨ Ðholder€rule€reallocates€the€cost€of€seller€misconduct€from€the€consumer€to€the€creditorðð);òòò òGuerraóóó ó,€733Ð 0"€  ÐS.W.2d€at€135€(finding€that€the€ð ðFTC€rule€was€therefore€designed€to€reallocate€the€cost€of€sellerÏmisconduct€to€the€creditorðð).ò òòò€óóó ó€€€€Ð à%0!$ Ðà  àThe€risk€of€this€loss€is€allocated€to€the€creditor€rather€than€the€consumer€because€the€creditorÏis€usually€in€a€better€position€to€bear€the€risk:ÌÒ°ÒÒ°ÒÓÓà ` à[B]ased€on€[a]€simple€public€policy€determination:€as€between€an€innocentÏconsumer€and€a€third€party€financer,€the€latter€is€generally€in€a€vastly€superiorÏposition€(1)€to€return€the€cost€to€the€seller,€where€it€properly€belongs,€(2)€to€exert€anÏinfluence€over€the€behavior€of€the€seller€in€the€first€place,€and€(3)€to€the€extent€the€Ï.€.€.€[financer]€cannot€return€the€cost€(as€in€the€case€of€fly„by„night€dealers),€to€Ð  /h*. Ðððinternalizeðð€the€cost€by€spreading€it€among€all€consumers€as€an€increase€in€the€priceÏof€credit.ÌÌÒ°\ÒÒ°jÒÓxÓòòò òHardeman€v.€Wheels,€Inc.óóó ó,€565€N.E.2d€849,€852€(Ohio€App.€1988)€(quoting€2€Fonseca,€Handling€Ð tÄ ÐConsumer€Credit€Cases€(3€Ed.€1987)€703,€Section€24:1).€€Knowing€that€it€bears€the€cost€of€sellerÏmisconduct,€the€creditor€ð ðwill€simply€not€accept€the€risks€generated€by€the€truly€unscrupulousÏmerchant.€€The€market€will€be€policed€in€this€fashion€and€all€parties€will€benefit€accordingly.ðð€ÏMichael€M.€Greenfield€&€Nina€L.€Ross,€òòLimits€on€a€Consumerððs€Ability€to€Assert€Claims€andÐ Ô$  ÐDefenses€Under€the€FTCððs€Holder€in€Due€Course€Ruleóó,€46€Bus.€Law.€1135,€1137€n.11€(1991).€€€€Ð ¬ü  Ðà  àThe€Holder€Rule€states€only€that€ð ð[r]ecovery€hereunder€by€the€debtor€shall€not€exceedÏamounts€paid€by€the€debtor€hereunder.ðð€€This€language€does€not€limit€the€amounts€recoverable€to€theÏamount€paid€by€the€debtor€òòto€the€creditor€assigneeóó.€€The€FTC€Guidelines€do€not€indicate€such€anÐ 4„ Ðintent;€indeed,€the€Guidelines€underscore€that€the€creditor€rather€than€the€consumer€should€bear€theÏrisk€of€seller€misconduct.€€Moreover,€the€Holder€Rule€is€a€remedial€measure€adopted€for€theÏprotection€of€consumers,€41€Fed.€Reg.€at€20023,€and€thus€should€be€interpreted€broadly€to€effectuateÏthis€intent.€€Caselaw€and€commentators€addressing€the€Holder€Rule€emphasize€that€creditors€are€inÏa€better€position€than€consumers€to€protect€themselves€against€unscrupulous€sellers€and€to€bear€theÏcost€of€seller€misconduct.€€Ìà  àFor€these€reasons,€we€conclude€that€the€Holder€Rule€does€not€limit€the€consumerððs€recoveryÏto€amounts€paid€to€the€creditor€assignee.€€The€consumer€may€recover€from€the€creditor€assignee€forÏpayments€made€under€the€contract,€regardless€of€whether€the€payments€were€made€to€the€seller€orÏto€the€creditor€assignee.€€The€decision€of€the€trial€court€is€reversed€on€this€issue.€€However,€theÏlanguage€of€the€Holder€Rule€clearly€limits€recovery€under€the€provision€to€ð ðamounts€paid€by€theÏdebtor€hereunder.ðð€€Therefore,€the€consumer€may€not€recover€from€the€creditor€assignee€under€theÏHolder€Rule€for€damages€in€excess€of€amounts€the€consumer€paid€under€the€contract.Ìà  àIn€this€case,€Plaintiff€Obard€seeks€recovery€for€the€deficiency€judgment€assessed€against€herÏbecause€of€Hillmanððs€failure€to€pay€off€the€lien,€claiming€the€amount€as€a€payment€made€under€theÏcontract.€€The€effect€of€Hillmanððs€failure€to€pay€off€the€lien€was€that€Obard€gave€Hillman€a€vehicleÏworth€$7700€and€received€a€credit€as€a€down€payment€for€$2900.€€Therefore,€Obard€was€out€$4800,Ïthe€amount€of€the€lien.€€This€was€value€given€to€Hillman€pursuant€to€the€contract€for€which€ObardÏreceived€nothing€in€return.€Obard€may€recover€this€amount€from€NationsBank€under€the€Holder€Rule.€Ð <9Œ49 ÐObard€seeks€another€$246.54€in€costs€assessed€against€her€in€the€deficiency€judgment.€€Obard€didÏnot€pay€these€costs€under€a€provision€of€the€contract,€but€instead€was€assessed€the€costs€because€ofÏHillmanððs€failure€to€pay€off€the€lien.€€Obard€cannot€recover€this€amount€since€it€was€not€a€paymentÏmade€under€the€contract.€€€ð ðA€rule€of€unlimited€liability€would€place€the€creditor€in€the€position€ofÏan€absolute€insurer€or€guarantor€of€the€sellerððs€performance.€€We€do€not€construe€this€to€be€theÏpurpose€of€the€FTC€rule.ðð€€òòò òGuerraóóó ó,€733€S.W.2d€at€136.€€In€addition,€Obard€paid€$500€in€cash€as€partÐ è 8  Ðof€the€down€payment€on€the€vehicle€she€purchased.€€Ordinarily,€Obard€would€be€entitled€to€recoverÏthis€amount€from€NationsBank€as€an€amount€paid€under€the€contract.€€However,€because€ObardÏchose€not€to€rescind€the€contract,€she€cannot€recover€the€$500€cash€downpayment€on€the€contract.€ÏObard€further€seeks€compensation€for€damage€to€her€credit€report€because€of€the€deficiencyÏjudgment.€€These€damages,€however,€are€not€payments€made€under€the€contract,€and€Obard,Ïtherefore,€cannot€recover€them€under€the€Holder€Rule.€€In€sum,€Plaintiff€Obardððs€recovery€is€limitedÏto€$4800,€the€amount€of€the€lien.€ò òÐ Ð  Ѐ€€ó ó€€ò òà  àó óWilley€seeks€recovery€for€the€diminution€in€value€of€the€vehicle€which€was€traded€in€toÐ ¨ø ÐHillman€and€later€recovered€in€a€damaged€condition.€€At€trade„in,€the€vehicle€was€worth€$8500,€andÏwas€subject€to€a€lien€in€the€amount€of€$7700.€€Although€the€value€of€the€damaged€trade„in€vehicleÏwas€not€stipulated,€the€parties€do€not€dispute€that€it€was€worth€less€than€$8500€after€Willey€recoveredÏit.€€The€trial€court€did€not€determine€the€dollar€amount€of€the€vehicleððs€diminished€value.€€Ìà  àThe€effect€of€Hillmanððs€failure€to€pay€off€the€lien,€and€Willeyððs€subsequent€retrieval€of€theÏvehicle€in€a€damaged€condition,€was€that€Willey€did€not€recover€the€full€value€of€her€payments€underÏthe€contract.€€Willey€gave€Hillman€a€vehicle€worth€$8500€and€received€a€down€payment€credit€ofÏ$800.€€Hillman€failed€to€pay€off€the€lien€on€the€trade„in€vehicle,€as€it€had€agreed.€€Although€WilleyÏwas€later€able€to€retrieve€the€car€from€Hillmanððs€bankruptcy€estate,€it€was€in€a€damaged€condition,Ïand€worth€less€than€it€was€at€the€time€she€traded€it€in.€€The€value€of€the€trade„in€was€value€given€to€ÏHillman,€and€constitutes€amounts€paid€under€the€contract.€€Under€the€Holder€Rule,€Willey€mayÏrecover€from€NationsBank€the€diminution€in€value€of€the€trade„in€vehicle.€€Willey€also€paid€$500€inÏcash€to€Hillman€as€a€down€payment.€€Willey€is€entitled€to€recover€this€amount€from€NationsBank€asÏan€amount€paid€under€the€contract.€€Willey€also€seeks€recovery€for€payments€of€$551.78€toÏNationsBank.€€Willeyððs€right€to€recover€the€payments€made€to€NationsBank€was€not€disputed.€€Thus,ÏWilley€can€recover€$551.78€from€NationsBank€for€payments€made€directly€to€NationsBank.€€In€sum,Ð 0:€5: Ðunder€the€Holder€Rule,€Willey€may€recover€from€NationsBank€the€$500€down€payment€made€toÏHillman,€payments€to€NationsBank€in€the€amount€of€$551.78,€and€the€diminution€in€value€of€theÏtrade„in€vehicle.€€Accordingly,€we€remand€this€case€back€to€the€trial€court€to€determine€theÏdiminution€in€value€of€the€trade„in€vehicle€and€to€calculate€the€total€recovery.€Ìà  àThe€Plaintiffs€also€assert€that€the€trial€court€erred€in€denying€their€request€for€attorneyððs€fees.€ÏThe€Plaintiffs€maintain€that€Hillman€violated€the€Tennessee€Consumer€Protection€Act,€under€whichÏreasonable€attorneyððs€fees€and€costs€may€be€awarded.€€The€Plaintiffs€argue€that€they€should€beÏpermitted€to€assert€against€NationsBank€any€claims€that€they€could€assert€against€Hillman,€and€thusÏthat€they€are€entitled€to€recover€from€NationsBank€for€their€attorneyððs€fees.€€The€Plaintiffs€also€argueÏthat€the€limitation€in€the€Holder€Rule€to€recovery€for€ð ðamounts€paid€by€the€debtor€hereunderðð€doesÏnot€apply€to€bar€recovery€for€attorneyððs€fees,€despite€the€fact€that€the€attorneyððs€fees€exceed€theÏamount€the€Plaintiffs€paid€under€the€contract.€€òòò òSee€Guerraóóó ó,€733€S.W.2d€at€137€(allowing€consumersÐ øH Ðto€recover€attorneyððs€fees€in€excess€of€the€amount€they€paid€under€the€contract).ò òòò€ó óóó€In€support€of€theirÐ Ð  Ðargument,€the€Plaintiffs€cite€a€consumer€law€commentator:ÌÒ°ÒÒ°ÒÓÓà ` àThe€creditorððs€liability€for€the€consumerððs€attorney€fees€should€not€be€cappedÏby€the€creditorððs€maximum€liability€for€seller„related€claims.€€The€purpose€of€attorneyÏfees€are€to€encourage€settlement,€make€it€economically€feasible€for€consumers€toÏbring€small€claims,€and€to€discourage€sellers€and€creditors€from€using€their€superiorÏlegal€resources€to€wear€down€the€consumer.€€All€of€these€purposes€would€be€thwartedÏif€attorneyððs€fees€were€lumped€in€with€the€recovery€on€the€merits€and€capped€at€theÏamount€of€the€creditorððs€maximum€liability.Ìà ` àIn€addition,€the€attorney€fees€are€not€being€awarded€because€of€the€sellerððsÏconduct,€but€because€of€the€creditorððs€conduct.€€It€is€the€creditor€who€is€refusing€toÏsettle€the€claim€and€who€insists€on€litigating€the€issues.€€ÌÌÒ°:¬ÒÒ°H¬ÒÓV¬ÓNational€Consumer€Law€Center,€òòUnfair€and€Deceptive€Acts€and€Practicesóó,€ðð€6.6.3.4€(4th€ed.€1997).€Ð ¤(ô#' Ðà  àNationsBank€argues€that€the€FTC€Holder€Rule€limits€recovery€of€attorneyððs€fees€to€amountsÏpaid€under€the€contract.€€The€FTC€Holder€Rule€limits€a€plaintiffððs€recovery€to€the€amounts€paid€underÏthe€contract,€but€does€not€limit€a€plaintiffððs€recovery€against€a€creditor€based€on€independent€stateÏlaw€grounds.€€ð ðThe€words€ððrecovery€hereunderðð€which€appear€in€the€text€of€the€Notice€referÏspecifically€to€a€recovery€under€the€Notice.€€If€a€larger€affirmative€recovery€is€available€against€aÏcreditor€as€a€matter€of€state€law,€the€consumer€would€retain€this€right.ðð€€41€Fed.€Reg.€at€20023;€òòò òseeÐ ´3/3 Ðalso€Guerraóóó ó,€733€S.W.2d€at€136.€€Thus,€a€plaintiffððs€statutory€or€common€law€claim€against€theÐ Œ5Ü05 Ðcreditor€for€attorneyððs€fees€is€not€subject€to€the€limitation€of€the€FTC€Holder€Rule.€Recovery€underÏthe€Holder€Rule,€however,€is€limited€to€amounts€paid€by€the€consumer€under€the€contract.€€RecoveryÐ <9Œ49 Ðfor€amounts€in€excess€of€this,€such€as€a€claim€for€attorneyððs€fees€not€paid€under€the€contract,€mustÏbe€based€on€an€independent€statutory€or€common€law€ground.€€Therefore,€where€the€plaintiffððs€claimÏfor€attorneyððs€fees€is€based€on€the€sellerððs€misconduct,€recovery€under€the€Holder€Rule€is€limited€toÏthe€amounts€paid€under€the€contract.€€òòò òSee€Riggs€v.€Anthony€Auto€Sales,€Inc.ó óóó,€32€F.€Supp.€2d€411,Ð 8 ˆ Ð417€(W.D.€La.€1998);òòò ò€Simpson,€óóó ó32€F.€Supp.€2d€at€410€(both€cases€holding€that€ð ða€creditorððsÐ  ` Ðderivative€liability€for€seller€misconduct€under€the€FTC€rule€is€limited€to€the€amount€paid€by€theÏconsumer€under€the€credit€contractðð).Ìà  àIn€this€case,€both€Plaintiffs€premise€their€claim€against€NationsBank€for€attorneyððs€fees€onÏNationsBankððs€status€as€a€holder€of€the€credit€contracts€and€Hillmanððs€alleged€violations€of€theÏTennessee€Consumer€Protection€Act.€€Thus,€the€claim€for€attorneyððs€fees€against€NationsBank€isÏbased€in€part€on€the€Holder€Rule,€and€not€entirely€on€an€independent€statutory€or€common€lawÏground.€€Accordingly,€Plaintiffs€Obard€and€Willey€cannot€recover€attorneyððs€fees€from€NationsBank.€ÏThe€trial€courtððs€denial€of€attorneyððs€fees€to€the€Plaintiffs€is€affirmed.€€€€€€€€€Ìà  àIn€sum,€under€the€FTC€Holder€Rule,€the€Plaintiffs€may€recover€the€full€amount€paid€underÏtheir€contracts,€regardless€of€whether€the€value€was€given€to€the€seller,€Hillman,€or€to€the€creditorÏassignee,€NationsBank.€€Their€recovery€cannot€exceed€the€amounts€paid€under€the€contract.€€PlaintiffÏObardððs€recovery€is€limited€to€the€amount€of€the€unpaid€lien,€or€$4800,€which€was€value€given€toÏHillman€under€the€contract.€€Obard€is€not€entitled€to€recover€the€$246.54€in€costs€assessed€againstÏher€in€the€deficiency€judgment€because€of€Hillmanððs€failure€to€pay€off€the€lien,€as€this€money€wasÏnot€paid€under€the€contract.€€Plaintiff€Willeyððs€recovery€is€limited€to€the€$500€cash€down€payment,Ïthe€$551.78€in€installment€payments€to€NationsBank,€and€the€diminution€in€value€of€the€vehicle€sheÏtraded€in.€€The€cause€is€remanded€to€the€trial€court€to€determine€the€diminution€in€value€of€the€trade„¼in€vehicle€and€Willeyððs€total€recovery.€€The€Plaintiffsðð€claim€for€attorneyððs€fees€against€NationsBankÏis€based€in€part€on€the€Holder€Rule.€€In€this€case,€the€attorneyððs€fees€are€not€an€amount€ð ðpaid€by€theÏdebtor€hereunderðð€and€thus€are€not€recoverable€under€the€Holder€Rule.€€The€trial€courtððs€denial€ofÏthe€Plaintiffsðð€claim€for€attorneyððs€fees€is€affirmed.Ìà  àThe€decision€of€the€trial€court€is€affirmed€in€part,€reversed€in€part,€and€remanded€for€furtherÏproceedings€consistent€with€this€Opinion.€€Costs€are€assessed€equally€against€the€Appellee€and€theÏAppellants,€for€which€execution€may€issue€if€necessary.€€ÌÐ (:x5: ÐÓÓÔ‡ X×?XXX×?Ôà  àà ` àà ¸ àà  àà h àòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ð ° Ðà  àà ` àà ¸ àà  àà h àò òóóHOLLY€KIRBY€LILLARD,€J.Ð œì Ðó óà  àò òÌCONCUR:ÌÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€Ð 8 ˆ ÐóóW.€FRANK€CRAWFORD,€P.€J.,€W.S.Ð $ t ÐÌÌòò€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€€óóÐ è 8  ÐALAN€E.€HIGHERS,€J.ó óÐ Ô$  ÐÔ#†X×?XX X×?“¿#Ô