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June 1, 1993


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."

A. The Facts

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 contract.

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).

B. Truth In Lending Act

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:

  ยง 1638. Transactions other than open end ...

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