United States District Court, N.D. Illinois, Eastern Division
November 16, 2004.
GABRIEL RODRIGUEZ and JANETTE LOPEZ Plaintiffs,
LYNCH FORD, INC. Defendant.
The opinion of the court was delivered by: DAVID COAR, District Judge
MEMORANDUM OPINION AND ORDER
Gabriel Rodriguez and Janette Lopez brought a five count
complaint against Lynch Ford, in which they alleged violations of
the Credit Repair Organizations Act ("CROA"), 15 U.S.C. § 1679b,
the Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. § 1602 et
seq., the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681m,
the Truth In Lending Act ("TILA"), 15 U.S.C. § 1601 et seq.,
and the Illinois Consumer Fraud and Deceptive Business Practices
Act ("Consumer Fraud Act"), 815 ILCS 505/2 et seq. Before this
Court is the defendant's motion for summary judgment on all
counts of Lopez and Rodriguez's complaint, and defendant's motion
to strike those portions of plaintiffs' brief that purport to
move for summary judgment. For the reasons discussed herein,
defendant's motion for summary judgment is granted in part and
denied in part; defendant's motion to strike is denied.
I. Undisputed Facts
Sometime in October 2002, plaintiff Janette Lopez saw an
advertisement in the Chicago Sun-Times from defendant Lynch
Ford, Inc. The advertisement indicated that Lynch Ford would help consumers with bad credit repair their credit by purchasing
a car. After seeing this advertisement, Lopez call Lynch Ford and
spoke to George Soto, a sales person. Lopez told Soto that she
was looking for a car but did not have good credit. Soto asked
Lopez to come to the dealership, which she did on October 12,
While she was at the Lynch Ford dealership on the evening of
October 12, 2002, Lopez selected a 2003 Volkswagen Jetta that she
wished to purchase. Lopez gave permission for Lynch Ford to
request her credit report. At about 7:00 p.m., Lopez was told by
a Lynch Ford employee that he had just spoken with a bank, which
needed a $2,000 down payment in order to finance the car. Lopez
signed two Vehicle Purchase Orders for the Jetta, one with
hand-written price terms, and one with typed price terms. The
terms of the Vehicle Purchase Order indicated that Lopez would
make a down payment of $2,000 and then make monthly payments of
$459 for 72 months. A section entitled "Financing Terms" appears
in the middle of the Vehicle Purchase Order,*fn1 and
discloses that the sale is contingent on a condition subsequent,
namely that the dealer is able to obtain financing for the
purchaser. Lopez signed the purchase order containing this
clause. In addition, Lopez signed a notice of requirement to
provide insurance, an application for limited coverage, a sales
tax return, and an odometer disclosure statement. The agreement
to provide insurance states, "I have recently financed the purchase of a
motor vehicle." Lopez was given a temporary license plate, and
photocopies of all the documents she had signed. She was told
that she would receive the originals after Udo Wegner, Lynch
Ford's finance manager, signed off on them; Wegner was not in the
dealership that evening. Lopez then drove the Jetta off the lot.
Between October 12 and October 24, 2002, Lopez heard nothing
further about the Jetta purchase. Lopez stated that she called
Lynch Ford during that time, but no one called her back. On or
about October 24, 2002, Lopez went to Lynch Ford in person. She
spoke with Ryan Jordan, a Lynch Ford employee, who told her that
Lynch had been unable to finance the vehicle. Jordan informed
Lopez that she would need a co-signer or she would have to return
Lopez asked her uncle, plaintiff Gabriel Rodriguez, to be her
co-signer on the Jetta. On October 31, 2002, Lopez returned to
Lynch Ford with her husband and Rodriguez. Rodriguez signed a new
Vehicle Purchase Order, a Retail Installment Contract, a GAP
installment sale contract, and an OmniCare vehicle service
contract application. The Retail Installment Contract ("RIC")
contains a "Federal Truth-In-Lending Disclosure Statement" on the
upper left portion of the document. This box, which is set off
from the rest of the text on the page by a black border,
discloses an Annual Percentage Rate ("APR") of 8.39%, a Finance
Charge of $5,192.19, an amount financed of $22,399.41, a payment
total of $27,591.60, and a Total Sale Price of $28,591.60,
including a down payment of $1,000.00. Lopez paid the down
payment. The terms of the disclosure further provided that the
contract was for 60 monthly payments of $459.86, which were to
commence in December 2002. Lopez did not sign any of these forms,
although both the RIC and the GAP installment sale contract had
spaces for two purchasers to sign. Rodriguez was given a copy of
the RIC. The RIC that Rodriguez signed was assigned to Chase Manhattan
Bank, U.S.A., NA. In December 2002, Rodriguez received a Vehicle
Identification Card for the 2003 Volkswagen Jetta from the
Illinois Secretary of State by mail at his home address. The
registration was in his name only.
On December 31, 2002, Lopez went to Lynch Ford again to inquire
whether the car was in her name because she had not received any
information about the financing or where to send payments. She
requested copies of documents relating to the purchase of the
Jetta. Ryan Jordan gave her the original Vehicle Purchase Order,
notice of requirement to provide insurance, application for
limited coverage, and odometer disclosure statement that she
signed on October 12, 2002. Lynch Ford subsequently notified
Lopez that Chase Manhattan was the bank that financed the Jetta.
In January 2003, Lopez contacted Chase Manhattan directly because
she had not received payment information. Chase Manhattan
informed Lopez that her name was not on the contract and that, in
fact, Gabriel Rodriguez was the sole purchaser of the Jetta.
A. Summary Judgment Standard
A party seeking summary judgment has the burden of showing,
through "pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any," that
there are no genuine issues of material fact that would prevent
judgment as a matter of law. Fed.R. Civ. P. 56(c). On a motion
for summary judgment, courts "must construe all facts in the
light most favorable to the non-moving party and draw all
reasonable and justifiable inferences in favor of that party."
Allen v. Cedar Real Estate Group, LLP, 236 F.3d 374, 380
(7th Cir. 2001). "If, however, the record as a whole `could
not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.'"
Id. Once a motion for summary judgment has been filed, "the
burden shifts to the non-moving party to show through specific
evidence that a triable issue of fact remains on issues on which
the non-movant bears the burden of proof at trial." Liu v. T&H
Machine, Inc., 191 F.2d 790, 796 (7th Cir. 1999) (citing
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). The
non-movant must provide more than a "mere scintilla" of evidence
to carry its burden under the summary judgment standard. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
However, weighing evidence, making credibility determinations,
and drawing reasonable inferences are functions of a jury, not of
a judge deciding a summary judgment motion. Id. at 255.
B. Clarification of Pleading Requirements Under Federal Rule
of Civil Procedure 56 and Local Rule 56.1
The purpose of a summary judgment proceeding is to identify
those cases that be resolved without a trial. To that end, the
courts in this District have clarified the requirements of
summary judgment pleadings in Local Rule 56.1. This rule requires
parties to file statements of material facts "as to which the . . .
party contends there is no genuine issue and that entitle the . . .
party to a judgment as a matter of law." N.D. Ill. L.R.
56.1(a)(3). Local Rule 56.1 outlines the obligations of the
parties in a summary judgment proceeding. Courts in this district
have broad discretion to enforce the rule, and the Seventh
Circuit regularly upholds strict enforcement of Local Rule 56.1.
See, e.g., Midwest Imports, Ltd. v. Coval, 71 F.3d 1311,
1316 (7th Cir. 1995) (citing cases).
This Court urges parties in this case, in particular
Plaintiffs' counsel, to examine Local Rule 56.1 more closely.
Judge Castillo's detailed discussion of Rule 56.1 requirements
and procedures in Malec v. Sanford, 191 F.R.D. 581 (N.D. Ill.
2000), provides an excellent guide to proper form for statements of material facts. "There are three
separate types of statements governed by Rule 56.1: the movant's
statement, the nonmovant's response and statement of additional
facts, and the movant's response to the additional facts." Id.
at 583. Statements of material fact should consist of short
statements making specific references to materials supporting the
fact set forth in the statement. A nonmovant's statement of facts
must "cite specific evidentiary materials" that justify the
nonmovant's denial of a movant's factual allegation. A general
denial is insufficient. The statement of facts is not the place
for argumentative statements; it is also not the place for
drawing inferences or making legal arguments. Malec,
191 F.R.D. at 584.
All material facts must be supported by specific references to
the record, or, in the case of any disagreement with the opposing
party's statement of material fact, by specific references to
affidavits or other supporting materials relied upon. Plaintiffs
provided only Lopez's deposition transcript and an additional
affidavit to support their claims. This Court finds such a lack
of evidentiary support baffling. It is true that depositions can
be quite costly and that prosecuting cases such as this is an
unpredictable financial gamble. However, other evidence can be
more economically obtained. The cost of acquiring and
photocopying a credit report is unlikely to exceed forty dollars,
and indeed may even be much less, but could be worth far more
than that in preserving a party's claims beyond the summary
judgment stage. Moreover, "although the evidence of a factual
contention need not be admissible itself, it must represent
admissible evidence." Id. at 585. Hearsay "is inadmissible in
summary judgment proceedings to the same extent that it is
inadmissible in a trial, except that affidavits and depositions . . .
are admissible in summary judgment proceedings to establish
the truth of what is attested or deposed." Eisenstadt v. Centel Corp., 113 F.3d 738, 742 (7th Cir. 1997) (cited
in Malec, 191 F.R.D. at 585). Thus, the sections of plaintiffs'
statement of facts in which plaintiffs assert "facts" based on
inadmissible hearsay statements are inappropriate and deemed
inadmissible. See, e.g., Pls.'s Resp. to Def.'s Stmt of Facts
The court will consider the unopposed factual contentions
contained in the movant's initial statement of facts and in the
non-movant's statement of additional facts. A movant has the duty
to respond to any facts contained in the statement of additional
facts; the "sanction for failing to reply is identical to that
imposed for failing to respond: admission of the opposing party's
factual contentions." Malec, 191 F.R.D. at 584. Here, defendant
did not respond to plaintiffs' statement of additional facts and
may not object to this court's decision to admit any as true.
C. Defendant's Motion to Strike Portions of Plaintiff's Reply
Brief Which Purport To Move For Summary Judgment
Defendant Lynch Ford moves this Court to strike the portions of
plaintiffs' response brief that purport to move for summary
judgment. Lynch Ford argues that plaintiff is time-barred from
moving for summary judgment because they failed to file a
cross-motion before the deadline for filing dispositive motions.
Def.'s Mot. to Strike at 1-2. Lynch further argues that
plaintiffs' filing should be barred because it caused surprise
and, by implication, prejudice to defendant's claims. Plaintiff
responds that summary judgment may enter in favor of the
non-moving party, with or without a cross-motion, when it is
apparent that the facts and law of the case support such a
decision. They allege that their response to defendant's motion
for summary judgment simply notes that summary judgment should not only be denied to the
defendant but rather should issue to the plaintiffs. Pls.'s Mem.
Resp. to Def.'s Mot. to Strike at 2.
In its memorandum in support of its motion to strike, defendant
cites only one case, Choudhry v. Jenkins, 559 F.2d 1085
(7th Cir. 1977), in which a Seventh Circuit panel reversed a
District Court's sua sponte summary judgment order. The Seventh
Circuit reasoned that it was improper for the District Court
judge to grant summary judgment sua sponte, as was true in that
case, because it caught all the parties by surprise. More
troubling to the appellate panel was that substantial factual
issues remained to be decided at the time the District Court
issued summary judgment. Id. at 1090-91. The Choudhry court
predicated its decision on the prejudicial effect of a court's
decision to issue summary judgment sua sponte; it did not state
a hard and fast rule against entering summary judgment against
the party who originally moved for it. See Sawyer v. United
States, 831 F.2d 755, 759 (7th Cir. 1987) (summary judgment
may be granted "for a party without a motion, when the outcome is
clear, so long as the opposing party has had an adequate
opportunity to respond").
A summary judgment motion obligates a court to examine the
facts and the law and decide the case as a whole. Dayton
Electric Manufacturing Co. v. APCOM, Inc., 782 F. Supp. 389, 395
(N.D. Ill. 1992). "When the court does just that, the [movant]
cannot claim unfair surprise." Id. The Dayton Electric court
found that it was appropriate to grant summary judgment for
plaintiffs sua sponte, and not for the defendant-movant. It
noted that the decision was issued on the same issues as were
presented in the motion, which resulted in "little chance of
procedural prejudice." Dayton Electric, 782 F. Supp. at 395. It
also noted that because defendants had made the original summary
judgment motion, they had had an incentive to develop the record
fully and had done so in their statement of material facts. The parties had
also conducted extensive discovery and had been in litigation for
"alleged discovery abuses." Id. In the case before this Court,
plaintiffs' assertion that summary judgment should not issue to
defendant but rather to them is based on the issues raised by
defendant. There is minimal risk of surprise. Moreover, defendant
had and took the opportunity to file a reply brief to
plaintiffs' response, thereby affording it the chance to address
plaintiffs' claims directly. Defendant correctly notes that there
has been little discovery in this case, but that is not itself
sufficient to strike portions of plaintiffs' brief. Rather, this
Court will address the arguments raised in all pleadings on
defendant's motion for summary judgment in turn. Finding no
procedural prejudice and no surprise to the parties, this Court
denies defendant's motion to strike.
D. Violation of the Credit Repair Organizations Act
Defendant moves this court to grant summary judgment on
plaintiffs' claim under the Credit Repair Organization Act,
15 U.S.C. § 1679 et seq., on the ground that defendant is not a
credit repair organization as defined in § 1679a(3)(A), and did
not make any misrepresentation to any creditor. Plaintiffs
respond that defendant is a credit repair organization for the
purposes of § 1679b, which applies to "any person."
15 U.S.C. § 1679b (1998).
Defendant does not fall into the definition of a "credit repair
organization" under § 1679a. To do so, plaintiff would have to
show that defendant 1) used any instrumentality of interstate
commerce or the mails, in order to 2) sell, provide, or perform
(or represent that it could do so); 3) in return for valuable
consideration; 4) services or advice about services designed to
improve a consumer's credit record, credit history, or credit
rating. 15 U.S.C. § 1679a(3)(A). Here, Lopez alleges that Lynch
Ford placed an advertisement in the Chicago Sun-Times, stating
that it could help consumers improve their credit through a car purchase. Lopez
did not save the advertisement and plaintiffs' counsel has not
produced it. Lopez also has not alleged that Lynch Ford received
additional consideration for providing Lopez with such services.
See Parker v. 1-800 Bar None, 2002 WL 2155530 (N.D. Ill. Feb.
12, 2002) (citing Sannes v. Jeff Wyler Chevrolet, Inc., 1999 WL
33313134, at *3 (S.D. OH Mar. 31, 1999)).*fn2 Thus,
plaintiff has not met the requirements for showing defendant is a
credit repair organization under section 1679a.
Lynch Ford's argument is one that has been used by other,
similar, defendants in this District. See, e.g., Parker,
2002 WL 2155530 (N.D. Ill. Feb. 12, 2002); Bigalke v. Creditrust
Corp., 162 F. Supp. 2d 996 (N.D. Ill. 2001); Vance v. Nat'l
Benefit Ass'n, 1999 U.S. Dist. LEXIS 13846 (N.D. Ill. Aug. 26,
1999). Defendant relies on Parker for its proposition that
because it does not satisfy the definition in § 1679a, it is not
a credit repair organization for any purpose under the Act.
However, Lynch Ford would have been wise to continue reading to
or, at least, grudgingly acknowledge the next page of the
opinion, where Judge Manning clearly states that, under facts
very similar to those of the instant case, plaintiff "can
nevertheless state a claim . . . under section 1679b of the
CROA." Parker, 2002 WL 215530, at *5. Several other courts in
this district have adopted a similar view, noting that section
1679b applies to "any person" and therefore reaches more broadly
than section 1679a; it is not necessary to fit within the
definition of "credit repair organization" set forth in 1679a to
be limited by the prohibitions of 1679b. See Bigalke v.
Creditrust Corp., 162 F. Supp. 2d 996, 999 (N.D. Ill. 2001)
("section 1679b(a) applies to "person[s]" which is a broader definition than that of a
credit repair organization"); Vance v. Nat'l Benefit Ass'n,
1999 U.S. Dist. LEXIS 13846 (N.D. Ill. Aug. 26, 1999) ("Other
[CROA] prohibitions [namely section 1679b] apply to any
To state a claim under section 1679b(a), plaintiff must show
that defendant "make[s] any statement, or counsel or advise any
consumer to make any statement, which is untrue or misleading (or
which, upon the exercise of reasonable care, should be known by
the credit repair organization, officer, employee, agent, or
other person to be untrue or misleading) with respect to any
consumer's credit worthiness, credit standing, or credit capacity
to any consumer reporting agency" or credit-granting institution.
15 U.S.C. § 1679b(a)(1)(A), (B). Nor may defendant make any
statement "the intended effect of which is to alter the
consumer's identification to prevent the display of consumer's
credit record, history, or rating for the purpose of concealing
adverse information that is accurate. . . ."
15 U.S.C. § 1679b(a)(2).
Plaintiff alleges that Lynch Ford arranged a straw purchase.
She alleges they did this by telling her that contemporary bank
practice is to create a co-signer agreement by combining a
Vehicle Purchase Order form signed by one purchaser (Lopez) with
a Vehicle Purchase Order and Retail Installment Contract signed
by the second purchaser (Rodriguez). She further alleges that
Lynch Ford created a Vehicle Purchase Order dated October 31,
2002, purportedly signed only by her, which she neither saw nor
signed on that date. Lopez Dep. at 49-50. Moreover, Lopez alleges
that Lynch Ford continued to deceive her by telling her in
December 2002 that the car purchase was in her name, when that
was not true. Lopez Dep. at 58. Finally, Lopez asserts that Lynch
Ford violated § 1679b(a)(1) by misrepresenting who made the
$1,000 down payment when it failed to disclose that it was she
who paid rather than Rodriguez. Defendant argues that it did not make any misrepresentation to any credit-extending
institution. Rather, defendant alleges that it truthfully told
Lopez it could not obtain financing for her and gave her a
choice: return the Jetta or "find someone else with sufficient
credit to purchase the car." Def.'s Mem. at 7. Lynch Ford claims
that it then "accurately told Chase Manhattan Bank that plaintiff
Rodriguez was the purchaser of the car." Id. at 8.
Lynch Ford's assertion that it accurately disclosed plaintiff
Rodriguez's identity to Chase Manhattan Bank is correct. The
dispute is whether this disclosure in any way prevented the
display of the adverse information in the consumer's credit
record. Lopez maintains that Lynch Ford told her that Rodriguez
was serving merely as her co-signer, and that financing for the
Jetta would be secured in her name alone or in addition to
Rodriguez. Moreover, Lopez alleges Lynch Ford created a
fraudulent Purchase Order designed to persuade her that she and
Rodriguez had entered a co-signer agreement, when in fact
Rodriguez was the sole purchaser. Instead of a co-signer
agreement, Lynch Ford submitted only the paperwork signed by
Rodriguez alone to the credit institution. In so doing, Lopez
argues, Lynch Ford falsely represented to Chase Manhattan Bank
that Rodriguez was the sole purchaser, which functioned to alter
the identification of the consumer in the transaction. This Court
finds that Lopez has raised a dispute about a material fact under
the CROA. Therefore, summary judgment on claim I is denied.
E. Violation of the Equal Credit Opportunity Act
Lynch Ford moves for summary judgment on plaintiffs' Equal
Credit Opportunity Act ("ECOA") claim, 15 U.S.C. § 1691 et seq.
Lynch Ford admits that it is a "creditor" as defined by the ECOA,
but alleges that it did not take adverse action against Lopez,
specifically that it did not unilaterally decide not to submit
Lopez's credit application to any lender. Lynch Ford states, however, that it "only has the documents provided by Lopez. . . .
Lynch does not have the records that demonstrate the Lopez was
denied by any bank. However, it is Lynch's standard practice to
submit its customer's credit applications to banks and finance
companies for review." Def.'s Mem. at 8. Lopez responds that
summary judgment should not issue for defendant but rather should
be entered for plaintiff. Lopez argues that Lynch Ford took
adverse action against her by refusing to submit her individual
credit application to any lender, and instead requiring her to
apply with a co-signer.
The Seventh Circuit has found that a unilateral decision not to
submit a credit application on behalf of a prospective automobile
purchaser to any lender is an "adverse action" under the ECOA.
See Treadway v. Gateway Chevrolet Oldsmobile Inc.,
362 F.3d 971 (7th Cir. 2004). Lopez seeks to defeat summary judgment
by arguing that Lynch Ford did not submit her application to any
lender. As support for this contention, plaintiff offers Lopez's
affidavit that she had requested a copy of her credit report from
the Trans Union credit bureau, and that the report showed no
credit inquiries connected to the purchase of the Jetta during
this time period. Plaintiff did not submit the credit report
itself, however, and as such, her statement is barred as double
hearsay. This Court refers parties to its earlier discussion of
the requirements of Local Rule 56.1. Without further evidentiary
support, plaintiff's effort to overcome defendant's motion for
summary judgment fails for want of raising an issue of disputed
material fact. Summary judgment is granted for the defendant on
Plaintiff's ECOA claim.
F. Violation of the Fair Credit Reporting Act
Defendant moves this Court to grant summary judgment in its
favor on plaintiff Lopez's Fair Credit Reporting Act ("FCRA")
claim. Lynch Ford asserts that it did not take any adverse action against Lopez. In response, Lopez alleges that Lynch Ford
did take an adverse action against her when it denied her credit
in her own name to purchase the Jetta, thereby triggering the
notice requirement of 15 U.S.C. § 1681m.
This Court will analyze this claim under § 1681m(a), which is
the only subsection the facts support. Neither party states which
subsection its briefing addresses, which this Court finds
irregular and an inefficient use of all parties' resources.
Section 1681m states that "[i]f any person takes any adverse
action with respect to any consumer that is based in whole or in
part on any information contained in a consumer report, the
person shall" notify the consumer of the adverse action, orally,
in writing, or by electronic media; and shall provide the
consumer with contact information for the consumer reporting
agency that furnished the report on which the person relied.
15 U.S.C. § 1681m(a)(1), (2). In this case, Lynch Ford told Lopez
that Lynch Ford had been unable to finance her purchase of the
Jetta and that, if she wished to keep the car, she would have to
provide a co-signer. Under the definition of "adverse action" set
forth in § 1681, Lynch Ford's obligations to notify Lopez under §
1681m were triggered when it denied credit to Lopez.
It is unclear to this Court that Lynch Ford, rather than a
lender such as a bank, denied credit to Lopez, but in keeping
with the standard of review on summary judgment, this Court will
view all facts in the light most favorable to the plaintiff.
Therefore, because Lynch Ford was involved in the credit-granting
process, this Court will treat it as a user of a credit report
for the purposes of § 1681m. It is undisputed that Lynch Ford
notified Lopez on or around October 24, 2002, that she had been
denied financing in her own name. Def.'s Facts ¶ 24; Pls.'s Facts
¶ 93. However, it would be inappropriate to grant summary
judgment simply because one of three required elements has been met. As to the other two requirements
under § 1681m(a), both parties are silent. Without any evidence
on whether Lynch Ford provided the contact information of the
consumer reporting agency involved, and informed Lopez of her
right to obtain a free copy of her credit report and dispute any
inaccuracies contained therein, this Court cannot grant summary
Even assuming that another section of 1681m applied to this
case, and this Court notes again that it must engage in unwelcome
and inappropriate legal speculation on this point because of the
parties' failure to plead with specificity, summary judgment
would still be unavailable. Section 1681m(b), which addresses
adverse action taken based on information provided by a third
party other than a consumer reporting agency, such as a bank or
other lender, arguably might apply to these facts. However, the §
1681m(b) notice requirement also includes a requirement that the
consumer make a "written request for the reasons for such adverse
action . . . within sixty days after learning of such adverse
action." 15 U.S.C. § 1681m(b). Again, the parties are silent on
whether Lopez made such a request. Thus, summary judgment would
be improper. Summary judgment therefore is denied on plaintiffs'
G. Violation of the Truth in Lending Act
Lopez and Rodriguez allege that Lynch Ford violated TILA,
15 U.S.C. § 1638(b)(1), and Regulation Z, 12 C.F.R. § 226.17(a)(1)
and (b), by not providing either of them with Truth in Lending
disclosures in a form they could keep before consummation of the
transaction. Specifically, they allege that the October 31, 2002
Retail Installment Contract prepared by Lynch Ford improperly
includes the costs of GAP and OmniCare insurance in the "amount
financed" disclosure.*fn3 Further, plaintiffs allege that the Vehicle
Purchase Order Lopez signed on October 12, 2002 contained only
some of the material disclosures required by TILA, but did not
disclose the amount financed, the finance charge or the annual
percentage rate for the transaction. Plaintiffs argue that Lopez
is entitled to summary judgment on her TILA claim and that
Rodriguez raises sufficient factual issues to prevent summary
judgment from issuing for defendant.
Lynch Ford asserts that because Lopez's Purchase Order was not
a contract, Lopez does not have standing to assert a TILA claim.
Lynch Ford contends that including GAP insurance in the
disclosure section of the Retail Installment Contract does not
violate TILA because TILA is a disclosure statute, not a statute
regulating whether GAP insurance is required.*fn4 Lynch Ford
also alleges that it did deliver a copy of the disclosures to
plaintiffs in a form they could keep prior to consummation.
1. Dispute Regarding Delivery of Written Disclosures In A Form
That Parties May Retain Prior to Consummation
Under TILA and Regulation Z, creditors are required to make
specific disclosures when extending credit to a consumer. These
disclosures must be made "clearly and conspicuously in writing,
in a form that the consumer may keep." 12 C.F.R. § 226.17(a)(1).
In addition, these disclosures must be made "before consummation
of the transaction." 12 C.F.R. § 226.17(b). Lynch Ford asserts that because it entered a Retail Installment
Contract agreement with Rodriguez only, Lopez does not have
standing to raise a TILA claim. Lopez, by contrast, states that
the Vehicle Purchase Order she signed on October 12, 2002, bound
her to the credit transaction, and that she therefore was
entitled to full TILA disclosures at that time. The cases
plaintiff cites to support this assertion are inapposite,
however, but rather support the position that TILA disclosures
must be made at the time the RIC is consummated. See, e.g.,
Crowe v. Joliet Dodge, No. 00 C 8131, 2001 U.S. Dist. LEXIS
10066 (N.D. Ill., Jul. 18, 2001); Holley v. Gurnee Volkswagen
and Oldsmobile, Inc., No. 00 C 5316, 2001 U.S. Dist. LEXIS 7274
(N.D. Ill., Jan. 8, 2001). Plaintiff Lopez's argument, by
implication, seeks to shift the TILA analysis from the moment of
consummation of the RIC to the moment of consummation of the VPO.
By its very terms, however, the VPO contemplates that the parties
will enter into a future RIC agreement and that in the interim,
the dealer will attempt to obtain financing for the transaction.
Lopez's argument, if adopted, would require disclosure of
financing terms before financing has been obtained. Lynch Ford
asserts that this is impossible.
With regard to plaintiff Rodriguez, this Court notes that
plaintiffs again have not provided sufficient evidence to meet
their burden on the TILA violation claim. A dealer complies with
TILA even when he or she gives the consumer the RIC as little as
one second before consummation, so long as there is no evidence
that the consumer was prevented from keeping a copy of the
TILA-conforming contract before signing it. See Polk v. Crown
Auto, Inc., 221 F.3d 691 (4th Cir. 2000); Marshall v. Webb
Chevrolet, Inc., No. 01 C 3619, 2002 U.S. Dist. LEXIS 10250, at
*14 (N.D. Ill. June 7, 2002); Diaz v. Joe Rizza Ford, Inc., No.
00 C 7082, 2001 U.S. Dist. LEXIS 18198 (N.D. Ill. Nov. 2, 2001).
Here, a copy of the RIC signed by Rodriguez was produced as an attachment to defendant's motion for summary
judgment. Rodriguez received a copy of the RIC from Lynch Ford.
Pls.'s Resp. to Def.'s Stmt of Facts at ¶ 48. Despite her
understanding that this was a co-signer agreement, Lopez did not
receive a copy of the RIC. Lopez Aff. at ¶¶ 1, 3. Because there
is a disputed issue of material fact about whether this was meant
to be a co-signer deal, as Lopez and Rodriguez claim they were
led to believe, summary judgment is inappropriate.
2. GAP Insurance Disclosure Requirements Under TILA
Guaranteed Auto Protection insurance, commonly known as GAP
insurance, is a form of debt cancellation coverage. It acts to
cancel any outstanding loan deficiency if a consumer's property
insurance is insufficient to pay off the loan on an automobile
that is stolen or destroyed. The Agreement Addendum signed by
Gabriel Rodriguez on October 31, 2002, includes a paragraph at
the bottom of the page that reads, "Borrower/lessee further
understands that this Addendum is not required in order to obtain
financing or to purchase the vehicle. You acknowledge that your
participation in this GAP Program is voluntary and not a
condition of the installment sale contract/loan/lease." GAP
Installment Sale Addendum, Oct. 31, 2002. Rodriguez signed this
Addendum at the time he signed the Retail Installment Contract.
The $495 fee for GAP insurance was not included in the "finance
charges" assessed on the Jetta; instead, it was included in the
amount financed and was subject to interest charges. Rodriguez
Retail Installment Contract, Oct. 31, 2002.
TILA requires creditors to disclose any finance charges that a
consumer will pay in a credit purchase. Rivera v. Grossinger
Autoplex, Inc., 274 F.3d 1118, 1121 (7th Cir. 2001).
"Finance charges" can include debt cancellation coverage, such as
GAP insurance. Under Regulation Z, which was cited by the Seventh Circuit in
Rivera, debt cancellation fees may be excluded from a finance
charge in a car purchase if three requirements are met: A) the
debt cancellation coverage is not required by the creditor and
this fact is disclosed in writing; B) the fee or premium for the
initial term of coverage is disclosed; and C) the consumer signs
or initial an affirmative written request for coverage after
being given the previous two disclosures.
12 C.F.R. § 226.4(d)(3)(i); Rivera, 274 F.3d at 1121. Under TILA, all
disclosures made under these requirements must also be clear and
conspicuous. 12 C.F.R. § 226.17(a)(1).
We examine the sufficiency of TILA-mandated disclosures "from
the standpoint of an ordinary consumer." Smith v. Cash Store
Management, Inc., 195 F.3d 325, 327-28 (7th Cir. 1999).
Lynch Ford argues that the plain language of the disclosure
paragraph on the GAP Addendum meets this requirement. It
discloses that enrollment in the GAP program is voluntary and
that it is not required to purchase the vehicle. However, unlike
the disclosure at issue in Rivera, the Lynch Ford GAP agreement
disclosure does not use capital letters or bold face type to draw
attention to its terms. In fact, the disclosure is printed at the
bottom and in the smallest type on that page. In addition, the
GAP agreement conflicts with the RIC. The Retail Installment
Contract lists the insurer as "Resource," whereas the Addendum
identifies the insurer as "The Evergreen Organization, Inc."
Lopez and Rodriguez also assert that they purchased GAP
insurance because Lynch Ford employees told them orally that it
was required by Illinois law, despite any voluntariness
disclosure printed on the page. Lynch Ford argues that the
written disclosure is sufficient under TILA to overcome this
argument. Defendants, however, cite no authority to support the
proposition that "a disclaimer in a separate contract overrides,
as a matter of law, a contrary oral representation in this context." Brugger v. Elmhurst KIA, No.
01 C 1860, 2001 WL 845472, at * 2 (N.D. Ill. July 24, 2001).
Moreover, Rodriguez testified in his deposition, at which he
required a Spanish language translator, that he did not
understand well what the Lynch Ford employees were saying to him
and his niece about the forms he was asked to sign. Rodriguez
Dep. at 17. Given these facts, this Court finds that Lynch Ford
has not established that it met the Regulation Z requirements to
exclude GAP insurance from the finance charge. Therefore, summary
judgment is inappropriate on Rodriguez's TILA claim regarding the
GAP insurance addendum.
H. Violations of the Illinois Consumer Fraud and Uniform
Deceptive Trade Practices Acts
Plaintiffs assert that Lynch Ford engaged in a series of
deceptive business practices that support a claim under the
Illinois Consumer Fraud and Deceptive Business Practices Act
("Consumer Fraud Act"). 815 ILCS 505/2 et seq. Specifically,
plaintiffs alleges that defendants engaged in bait and switch
advertising tactics; violated the Illinois Administrative Rules
on Motor Vehicle Advertising; arranged a straw purchase of the
Jetta; incorrectly told plaintiffs that GAP insurance was
required by law; created false documents to convince Lopez that
she was part of the purchase contract for the car; lied to
plaintiffs about bank procedures for co-signer agreements; and
committed an unfair trade practice known as "spot delivery."
Pls.'s Compl. at ¶¶ 74-82. Defendant alleges that it did not
engage in deceptive business practices. These assertions divide
into two general issues: Lynch Ford's alleged misrepresentations
in advertising; and Lynch Ford's alleged improper "spot delivery"
tactics. For ease of comprehension, each issue will be addressed
separately. To establish a violation of the Consumer Fraud Act, plaintiff
must show: 1) that the defendant engaged in a deceptive act or
practice; 2) that the defendant intended that plaintiff rely on
that deception; 3) that the deception occurred in the course of
conduct involving commerce or trade; and 4) that the act
proximately caused damage. Rayburn v. Car Credit Center Corp.,
No. 00 C 3361, 2000 WL 1508238, at *3 (N.D. Ill. Oct. 10, 2000);
see Williams v. Thomas Pontiac, No. 99 C 882, 1999 WL 787488,
at *2 (N.D. Ill. Sep. 24, 1999).
1. Lynch Ford's Alleged Bait-and-Switch and Advertising
Lopez and Rodriguez assert that Lynch Ford placed an
advertisement in the Chicago Sun-Times that offered to help
consumers with poor credit improve their credit through the
purchase of a car. Plaintiffs state in their complaint that such
advertisements "create a likelihood of confusion or
misunderstanding by consumers" and represent a deceptive trade
practice. Lynch Ford asserts that because plaintiffs provided no
further allegations or evidence, summary judgment should issue
for defendant. This Court finds that plaintiffs have not met
their summary judgment burden on these elements of their
claim.*fn5 Plaintiffs did not provide a copy of the
advertisement in question nor did they provide any other
supporting evidence as to its existence or content. Lopez
admitted she cannot remember the text of the advertisement, only
that it mentioned improving credit. This is insufficient to
defeat a motion for summary judgment.
2. Lynch Ford's Alleged Spot Delivery Practices
Plaintiffs allege that Lynch Ford engaged in a practice known
as "spot delivery." Lynch Ford argues that plaintiffs
misunderstand the meaning of "spot delivery." Instead, defendants argue, Lynch Ford exercised its rights under the Vehicle Purchase
Order to cancel the sale of a vehicle when financing is not
Plaintiffs' argue that Lynch Ford engaged in spot delivery when
it allowed Lopez to take possession of the Jetta, believing that
the retail installment sale was final and that financing had been
obtained for her on the terms discussed. The Seventh Circuit
defines "spot delivery" as when a dealer enters a sales contract
with a consumer at a low interest rate; gives the consumer
possession of the new car and accepts the consumer's trade-in (if
any); and then, some time later, notifies the consumer that their
financing has fallen through and that they must enter a new, less
favorable, financing agreement. Consumers agree to do so because
they have become emotionally attached to the new car and because
they no longer have the trade-in. See Janikowski v. Lynch
Ford, Inc., 210 F.3d 765, 768 (7th Cir. 2000). The terms of
the Vehicle Purchase Order state that the sale is not final until
financing can be arranged. Lopez Purchase Order, Oct. 12, 2002.
Lynch Ford reserves the right to cancel the purchase order if it
cannot obtain financing within fifteen days. The parties do not
dispute that Lynch Ford informed Lopez within that fifteen day
time period that it had been unable to obtain financing for her.
Lopez, however, asserts that Lynch Ford told her that she had
been financed and that she took possession of the Jetta on
October 12, with the belief that the terms of the purchase order
had been accepted by a lender. Lopez Dep. at 20. Lopez has
provided sufficient evidence to establish that there is a
disputed issue of material fact on this claim. For these reasons,
defendant's motion for summary judgment on plaintiffs' Illinois
Consumer Fraud Act claim is denied. Conclusion
For the foregoing reasons, defendant's motion to strike
portions of plaintiffs' brief is denied. Defendant's motion for
summary judgment is granted in part and denied in part.
Specifically, summary judgment is granted to defendant on
plaintiffs' claim II, and denied on Claims I, III, IV, and V.