The opinion of the court was delivered by: McDADE, District Judge.
Before the Court is Plaintiffs' Motion for Summary Judgment.
Because the Defendant has failed to respond pursuant to Local
Rule 2.9(B), the Court has reviewed the merits of Plaintiffs'
motion without benefit of a response and concludes that summary
judgment must be granted as a matter of law.*fn1
This action was filed pursuant to the Truth In Lending Act,
15 U.S.C. § 1601 et seq. ("TILA"), specifically § 1638(a)(9) and
the regulations promulgated thereto.*fn2 Plaintiffs allege that
they are entitled to judgment as a matter of law in the amount of
$1,000 plus attorney's fees and costs, because Defendant did not
properly disclose "the fact that it has or will acquire a
[security] interest" in the car Plaintiffs purchased "as part of
[a] credit transaction."
On or about September 30, 1991, Plaintiffs, David W. and Gail
E. Leathers, purchased a used car from Defendant, Peoria Toyota
Volvo, borrowing $4,533.84 from Defendant to finance the
purchase. According to Plaintiffs, "Defendant, on a form prepared
by it, delivered to Plaintiffs a "Retail Installment Contract"
which included both the Security Agreement ["Agreement"] and a
Truth In Lending Disclosure Statement." Plaintiffs signed the
The contract contains a group of disclosures in what is
commonly referred to as the "Federal Box," entitled "Truth In
Lending Disclosures." The annual percentage rate, the finance
charge, the amount financed, the total [number] of payments, and
the payment schedule is set out clearly and conspicuously at the
top of the box. The Agreement is set out at the bottom of the box
in extremely small print and without any distinguishing features
by which to call attention to it. The Agreement provides three
alternatives with empty boxes where a check mark is inserted
designating the type of security promised. In this case, the
Agreement states that Plaintiffs, as purchasers, agreed to give a
security interest in a "right of set-off against any moneys,
credits or other property . . . in the possession of the Holder."
At the bottom of the contract, outside the Federal Box, is a
paragraph which reads as follows:
Security Interest: Seller shall have a security
interest under the Uniform Commercial Code in the
Property (described above) and in the proceeds
thereof, to secure the payment in cash of the Total
of Payments and all other amounts due or to become
due hereunder. Holder is granted a right of set-off
or lien on any deposit or sums now or hereafter owed
by Holder to Buyer(s).
Initially, the Court notes that TILA "must be liberally
construed in favor of the consumer." Davis v. Werne,
673 F.2d 866, 869 (5th Cir. 1982). Furthermore, "TILA requirements are
enforced by imposing a sort of strict liability in favor of
consumers who have secured financing through transactions not in
compliance with the terms of the Act. `It is strict liability in
the sense that absolute compliance is required and even technical
violations will form the basis for liability.'" Shepeard v.
Quality Siding & Window Factory, Inc., 730 F. Supp. 1295, 1299
(D.Del. 1990) (citations omitted). In Smith v. No. 2. Galesburg
Crown Finance Corp., 615 F.2d 407 (7th Cir. 1980), the Seventh
Circuit provided the Court with clear guidelines for evaluating
complaints regarding violations of the Act. Smith stated:
It is not sufficient to attempt to comply with the
spirit of TILA in order to avoid liability. Rather,
strict compliance with the required disclosures and
terminology is required. Many violations of TILA
involve technical violations without egregious
conduct of any kind on the part of the creditor.
However, Congress did not intend that the creditors
should escape liability for merely technical
violations. Thus, while it may be true, in some sense
. . . that the terminological violations here are
inconsequential, the fact remains that they are
violations. Any misgivings which creditors may have
about the technical nature of the requirements should
be addressed to Congress or to the Federal Reserve
Board, not to the courts. . . . We will therefore
require strict adherence to the required terminology
under the statute and regulations, and we will not
countenance deviations from those requirements,
however minor they may be in some abstract sense.
Id. at 416-417. (citations omitted).
In "closed-end" consumer credit transactions, the Truth In
Lending Act requires a seller/creditor to make certain
disclosures to protect the consumer. A list of the required
disclosures is provided at 15 U.S.C. § 1638(a)(1)-(13). Included
in this list is the requirement that in purchase money
transactions a creditor must disclose any security interest taken
in the property purchased. Section 1638(a)(9) provides:
§ 1638. Transactions other than open end ...