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PAULL v. CHRYSLER CREDIT CORP.

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,
v.
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 Fed.R.Civ.P. 56.*fn2

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.

"Cash Price"

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 disclosed.

"Cash Downpayment"

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 disclosed.

"Trade-in"

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 ordered.*fn8


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