United States District Court, Northern District of Illinois, E.D
August 17, 1982
JEFFREY M. PAULL, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
CHRYSLER CREDIT CORPORATION AND FIRESIDE CHRYSLER-PLYMOUTH, INC., DEFENDANTS.
The opinion of the court was delivered by: Aspen, District Judge:
MEMORANDUM OPINION AND ORDER
Plaintiff Jeffrey M. Paull ("Paull") brought this action on
behalf of himself and others similarly situated alleging that
defendants Fireside Chrysler-Plymouth, Inc. ("Fireside") and
Chrysler Credit Corporation ("Chrysler") violated the Truth in
Lending Act ("TILA"), 15 U.S.C. § 1631 and 1638, and Regulation
Z promulgated thereunder,*fn1 by failing to properly disclose
certain items in a retail installment contract Paull signed in
connection with his purchase of a 1981 Mazda RX-7 from Fireside.
This matter is presently before the Court on the motions of
Fireside and Chrysler for summary judgment in their favor under
The material facts in this case are not in dispute. Paull
purchased the Mazda from Fireside under a "Retail Installment
Contract" dated October 21, 1980. See Plaintiff's Exhibit "A".
This document also served as the disclosure statement required
under TILA. The evidence in the record discloses that Paull
offered his used car, a Fiat appraised at $8,600, in trade on the
Mazda, but that Fireside agreed to give Paull a trade-in
allowance of $10,850 which was $2,250 more than the Fiat was
worth. Paull owned the Fiat subject to a loan with a balance due
of $9,004.87, however, so that, at least on paper, his net
trade-in was $1,845.13 (trade-in allowance minus balance owed).
To offset the resultant $2,250
"gain" to Paull, Fireside raised the price on the Mazda by
$2,250. Therefore, although the Mazda carried a sticker price of
$10,869, after Fireside's adjustment, Paull agreed to purchase
the Mazda for over $13,000. In addition to his trade-in, Paull
made a downpayment, in the amount of $590, of which $290 was paid
in cash with the balance paid six days later, pursuant to a
personal note executed by Paull.
The complaint alleges that the numerical amounts listed in the
spaces on the disclosure statement labelled "cash price," "cash
downpayment" and "trade-in" are not the "actual true amounts" of
the transaction. Paull bases his claim for relief on Regulation
Z, §§ 226.8(c)(1) and (2), which provides in relevant part:
In the case of a credit sale . . . the following
items . . . shall be disclosed:
(1) The cash price of the property or service
purchased, using the term "cash price."
(2) The amount of the downpayment itemized, as
applicable, as downpayment in money, using the term
"cash downpayment," downpayment in property, using
the term "trade-in" and the sum, using the term
"total downpayment." Regulation Z § 226.8(c).
The disclosure form given to Paull discloses amounts for each
required term. But the amount listed as "cash price" and
"trade-in" reflect only the final bargain and do not separately
disclose the $2,250 adjustments or any other aspect of the
negotiations. The amount listed as "cash downpayment" does not
separately disclose that Paull deferred a portion of his
downpayment. The above facts being undisputed, the Court must
consider whether the disclosures made satisfy the TILA.
The broad purpose of the Truth in Lending Act is to promote the
informed use of credit by assuring "meaningful disclosure of
credit terms" to consumers. 15 U.S.C. § 1601. To implement this
purpose, Congress delegated expansive authority to the Federal
Reserve Board, 15 U.S.C. § 1604, which promulgated specific
disclosure requirements governing credit transactions under the
TILA. See Regulation Z, 12 C.F.R. Part 226 (1979). Credit
disclosures which fall short of the clearly expressed
requirements of Regulation Z constitute violations of the TILA.
Mourning v. Family Publications Service, Inc., 411 U.S. 356, 93
S.Ct. 1652, 36 L.Ed.2d 318 (1973). Conversely, creditors who
comply with a "rule, regulation, or interpretation" of the
Federal Reserve Board are entitled to a good faith defense to
TILA claims. 15 U.S.C. § 1640(f). When the Act and Regulation Z
are silent, TILA claims are weighed against the primary
requirement of "meaningful disclosure." Ford Motor Credit Co. v.
Milhollin, 444 U.S. 555, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980). The
Supreme Court has explained that judges must "temper judicial
creativity in the face of legislative or regulatory silence."
Milhollin, supra at 565, 100 S.Ct. at 796. Moreover, the Court in
Milhollin emphasized that:
the concept of "meaningful disclosure" that animates
TILA . . . cannot be applied in the abstract.
Meaningful disclosure does not mean more disclosure.
Rather, it describes a balance between "competing
considerations of complete disclosure . . . and the
need to avoid . . . [informational overload]."
444 U.S. at 568, 100 S.Ct. at 798. (Emphasis in original),
(Citations omitted). Accord, Ford Motor Credit Co. v. Cenance,
452 U.S. 155
, 101 S.Ct. 2239, 68 L.Ed.2d 744 (1981) (per curiam).
Thus, under the TILA, creditors may be liable to their credit
customers for disclosures that do not meet the express statutory
or regulatory requirements, or for disclosures which do not
further the TILA's main concern with meaningful disclosure. Yet,
courts should be cognizant that "meaningful" disclosure does not
necessarily mean "more" disclosure, particularly when the credit
customer would not benefit materially from additional disclosure
requirements. Under this standard, we address defendants' motions
as to each of Paull's claims.
Paull's claim that the defendants did not disclose the "actual
true amount" of cash price, is most readily construed as a
contract dispute. The Retail Installment Contract signed by Paull
lists "cash price" as $13,145.87. Paull suggests that two other
different amounts represent the actual bargained-for price. But
the TILA is not intended as a vehicle for pursuing contract
claims. Moreover, if Paull is only challenging the terms of the
bargain, his contrary assertions are barred by the parol evidence
rule.*fn3 See, e.g., Anthony v. Community Loan & Investment Corp.,
559 F.2d 1363, 1369 (5th Cir. 1977); Meadows v. Charlie Wood,
Inc., 448 F. Supp. 717, 720 (M.D.Ga. 1978).
Paull nakedly asserts, however, that his claim regarding "cash
price" is based on the TILA, not contract law. In fact, the term
"cash price" has a technical meaning for purposes of the TILA.*fn4
Under Regulation Z, certain charges are properly included in
"cash price," but finance charges are not. See, e.g., Joseph v.
Norman's Health Club, Inc., 386 F. Supp. 780 (E.D.Mo. 1975). In
the present case, however, Paull has neither alleged nor produced
any evidence that the defendants included finance charges or
hidden costs of credit within the amount disclosed as "cash
price." Thus, the Court finds no basis in the record to draw any
reasonable inferences that the defendants violated the express
statutory or regulatory requirements for the disclosure of the
term "cash price."
The Court also concludes that the record is incapable of
supporting an inference that the defendants deprived Paull of
meaningful disclosure. Although the party opposing a motion for
summary judgment is entitled to all reasonable inferences that
can be made in its favor from the evidence in the record, United
States v. Diebold, 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8
L.Ed.2d 176 (1962); Moutoux v. Gulling Auto Electric,
295 F.2d 573, 576 (7th Cir. 1961), when the moving party has clearly
established facts that defeat the opposing party's claim, the
opposing party may have a duty to go forward with controverting
facts. Patterson v. General Motors Corp., 631 F.2d 476, 483 (7th
Cir. 1980). In this case, Fireside has explained that it adjusted
cash price and trade-in allowance upward $2,250 during the
bargaining process preceding Paull's acceptance of the purchase
contract. Paull does not dispute Fireside's explanation.*fn5 More
importantly, Paull has produced no facts tending to show how
requiring more disclosure would meaningfully benefit him.
Accordingly, the Court finds that "cash price" was properly
The issue is whether the TILA requires separate disclosure of
the deferred portion of Paull's downpayment. The Federal Reserve
Board has indicated that a
deferred downpayment may be "treated" as part of the downpayment
(and termed a "pick up payment") if it is not subject to a
finance charge, is payable not later than the due date of the
second regular payment and is not greater than twice the amount
of the regular installment payment. Regulation Z § 226.504. See
also Revised Regulation Z § 226.2(a)(18). At the time of Paull's
purchase, it was uncertain whether or not the Board meant that
deferred downpayments which could be "treated" as part of the
downpayment should be separately disclosed. But the Board's
official commentary to Revised Regulation Z*fn6 states that deferred
downpayments which meet the definition of a pick-up payment are
subtracted [from cash price] in arriving at the
amount financed . . . [and] . . . may, but need not,
be reflected in the payment schedule. . . . 46 F.R.
50294 (Oct. 9, 1981).
Paull's deferred downpayment is indeed within the definition of
a pick-up payment. Regulation Z § 226.504. The Board's commentary
makes it clear that separate disclosure is optional.
Conceivably, in an exceptional case, the Board might consider
separate disclosure necessary to provide meaningful disclosure.
Yet Paull has introduced no facts, nor raised any issues to
persuade the Court that the separate disclosure he demands would
meaningfully benefit him or other consumers. Instead he relies
solely on Gilbert v. Wood Acceptance Co., 486 F.2d 627 (7th Cir.
1973), in which the Seventh Circuit held that despite the lack of
a statutory or regulatory requirement, a creditor's failure to
separately disclose a deferred downpayment violated the TILA
because the retail installment contract did not disclose in full
the terms of the transaction. Id. at 631. Factually, Gilbert is
directly on point with the instant case. Subsequent to Gilbert,
however, the Supreme Court explained in Milhollin and Cenance,
supra, that disclosure need not list every term of a transaction
in order to be meaningful under the TILA. Rather, meaningful
disclosure represents a balance between complete disclosure and
informational overload. Cenance, 452 U.S. at 159, 101 S.Ct. at
2241; Milhollin, 444 U.S. at 568, 100 S.Ct. at 798. There is no
indication in the instant record that separate disclosure of the
deferred downpayment would meaningfully benefit the consumer.
Accordingly, in light of Supreme Court pronouncements subsequent
to Gilbert, we hold that "cash downpayment" was properly
Paull contends that "trade-in" was improperly disclosed for two
reasons. First, the disclosure form only listed an amount
corresponding to net trade-in rather than trade-in allowance.
Second, Fireside boosted trade-in by the $2,250 amount.
The Court finds, however, that neither of the reasons urged by
Paull make out a TILA violation. First disclosure of net trade-in
where the consumer has debts outstanding on his trade-in property
is consistent with the arithmetic structure of Regulation Z §
226.8(c). This section calls for disclosure of total downpayment,
including trade-in, as the amount available to reduce cash price
to arrive at unpaid balance. See also Revised Regulation Z §
226.2(a)(18). Only the net trade-in is available to reduce cash
price, hence, disclosure of net trade-in is proper. Second,
nothing in the present record indicates that defendants violated
the TILA by adjusting trade-in allowance and cash price upward by
$2,250. As with "cash price," Paull's assertions here may be
barred by the parol evidence rule. From the standpoint of the
TILA, however, the Court has found no statutory or regulatory
provision that clearly requires more disclosure here, nor has
Paull in any way shown that more disclosure would meaningfully
benefit him or other consumers.
For the reasons above, the Court grants summary judgment for
the defendants as to each of plaintiff's claims.*fn7 It is so