The opinion of the court was delivered by: JAMES H. ALESIA
Plaintiffs filed a four-count Complaint against Defendant Lefta, Inc. d/b/a Premier Jeep Eagle ("Premier"). This court previously certified Counts I and II of the Complaint as a class action in a Memorandum Opinion and Order dated June 5, 1995 (888 F. Supp. 891, 1995 U.S. Dist. LEXIS 7807, 1995 WL 337421). Defendant has filed a motion to dismiss Counts I and II of the Complaint for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6).
Count I of the Complaint alleges that defendant violated the Federal Truth In Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq. and failed to comply with Federal Reserve Board Regulation Z, 12 C.F.R. § 226. Count II, a supplemental claim, alleges that defendant violated the Illinois Consumer Fraud and Deceptive Business Practices Act ("Consumer Fraud Act"), 815 ILCS 505/1 et seq.
Each class member purchased a car from defendant and financed the transaction through a motor vehicle installment sales contract. As part of their motor vehicle purchases, each class member purchased an extended warranty or service contract. Defendant's itemization of the amounts financed for class representative Shields' installment sales contract serves as an example:
ITEMIZATION OF AMOUNT FINANCED
Cash Price $ 6,437.80
Less Cash Down Payment $ 1,000.00
Less Trade-In $ 500.00
Amounts Paid on Your Account
Unpaid Balance of Cash Price $ 4,937.80
Amounts Paid to Others for You
Unpaid balance Due on Trade-In $ N/A
Public Officials $ 61.00
(License, Title & Taxes)
To CHRYSLER SERVICE CONTRACT $ 1,520.00
To DOC. FEE $ 40.00
In Count I, the TILA count, plaintiffs allege that defendant inadequately disclosed the costs included in the installment sales contracts. There are two TILA violations alleged. First, plaintiffs allege that defendant listed the entire amount charged to plaintiffs for a purchased service contract under the category of "amounts paid to others." This listing was despite the fact that not all of the money was going to others. Some of the money went into the pocket of the dealership. Of course there is nothing wrong with money going into the pocket of a car dealership on a car purchase, but plaintiffs allege misrepresentation as to the amount going into the pocket of the dealership versus being paid out to others. Plaintiffs' second TILA allegation is that defendant placed the service contract prices amid costs itemized as "License, Title & Taxes." Plaintiffs allege that this practice caused the service contract prices to appear non-negotiable, thereby allowing defendant to overcharge plaintiffs.
For purposes of defendant Premier's motion to dismiss, the Complaint is construed in the light most favorable to plaintiffs and its allegations are taken as true. See Bontkowski v. First Nat'l Bank of Cicero, 998 F.2d 459, 461 (7th Cir.), cert. denied, 126 L. Ed. 2d 567, 114 S. Ct. 602 (1993). On a motion to dismiss, both Rule 12 and Rule 8 are consulted. See Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 433 (7th Cir. 1993). Rule 8 sets forth the requirements for pleading a claim in federal court, stating that a complaint need only include "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a). Counts I and II are discussed in order.
TILA aims to provide for meaningful disclosure of credit terms so that consumers may compare available credit terms, to avoid the uninformed use of credit, and to protect consumers against inaccurate and unfair credit billing. See 15 U.S.C. § 1601(a). To implement TILA, Congress "delegated expansive authority to the Federal Reserve Board to elaborate and expand the legal framework governing commerce in credit." Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559-60, 100 S. Ct. 790, 794, 63 L. Ed. 2d 22 (1980). The Federal Reserve Board in turn issued regulations commonly referred to as Regulation Z. See 12 C.F.R. § 226.
Plaintiffs' Count I is based primarily upon Regulation Z, Section 226.18, which states in pertinent part:
For each transaction, the creditor shall disclose the following information as applicable: ...
(c) Itemization of amount financed. (1) A separate written itemization of the amount financed, including: ... (iii) Any amounts paid to other persons by the creditor on the consumer's ...