8th Cir. Finds that Car Dealer May Have Violated TILA’s “Presentation” Requirement; But Says Allegedly Improper Fee Did Not Throw Off TILA Disclosures Because Fee Was Not Included in the Amount Financed

In Yancy v. America’s Preowned Selection, LLC, 2016 WL 4150927, at *2 (8th Cir. 2016), the Court of Appeals for the Eighth Circuit reversed a district court’s summary judgment in favor of a car dealer because the Plaintiff had created a factual question regarding whether the dealer violated TILA’s presentation requirement.

Appellants argue that the district court erred by interpreting their 15 U.S.C. § 1638(a) claim as a 15 U.S.C. § 1638(b) claim. We agree. This distinction between subsections (a) and (b) is important because “[a] violation of subsection 1638(b)(1) does not trigger a grant of statutory damages.” Wojcik v. Courtesy Auto Sales, Inc., No. 8:01CV506, 2002 WL 31663298, at *5 (D. Neb. 2002); 15 U.S.C. § 1640(a)(4). In the amended complaint, Appellants cite 15 U.S.C. § 1638(b)(1), which discusses the form and timing of disclosures, and state, “The TILA demands that a creditor provide the disclosures required under TILA to the consumer before credit is extended, and in a written form that the consumer can keep.” The Appellants then allege that Appellee “violated the disclosure requirements of 15 U.S.C. § 1638(a) by failing to provide a disclosure statement … in a written form the consumer could keep, prior to the extension of credit.” The district court interpreted this claim as a violation of § 1638(b)(1), not § 1638(a), stating that “[e]ven assuming that defendant failed to give plaintiffs a copy of the disclosures in a form they could keep, a violation of § 1638(b)(1) does not trigger a grant of statutory damages.”  Appellants argue that although they mentioned timing, which would be a § 1638(b)(1) argument, the root of their claim is that Appellee did not give Appellants a copy of the TILA disclosures to keep at all, which is a § 1638(a) argument. Based solely on the amended complaint, it is possible to see how the district court construed it as a § 1638(b)(1) argument. However, both parties in their separate motions for summary judgment, briefed and argued the issue of whether Appellants received the disclosures at all, a § 1638(a) issue. Thus, the district court erred in interpreting this claim as a 15 U.S.C. § 1638(b) claim. Evaluating the evidence as it applies to § 1638(a), we find that there is a genuine issue of material fact that precludes a grant of summary judgment. Stephanie Glover, Appellee’s office manager, stated in an affidavit that after going over the Conditional Sales Security Agreement and Federal Truth in Lending Disclosure Statement, Appellants signed or initialed the document and were given copies. Appellee also stated that these documents, which evidence the transfer of ownership of the vehicle, “are given to all car buyers at every sales transaction in the ordinary course of business.” Conversely, Appellants argue that they never received a copy of the Truth in Lending Disclosure Statement at the time of the sale. They say they are “sure of this because [they] kept all of the documents that [Appellee] provided [them] with, and the Truth in Lending Disclosure statement was not among them.” Given the contradictory testimony and lack of evidence in support of Appellee’s motion for summary judgment, and viewing the evidence in the light most favorable to the nonmoving party, Anderson, 477 U.S. at 255, we reverse the district court’s grant of summary judgment in favor of Appellee on this claim and remand for further proceedings consistent with this opinion.

The Court of Appeals affirmed the district court’s ruling in favor of the car dealer as to another alleged TILA violation based on the charging of a purported improper fee.

Appellants also argue that the district court erred by finding that Appellee had properly disclosed the “total of payments” in the TILA disclosure statement it provided to Appellants. We disagree. As discussed above, the Conditional Sales Security Agreement and Federal Truth in Lending Disclosure Statement showed that Appellants paid $7,000 in cash, financed $10,000 through Appellee, and paid $75 for official fees. Although the payment schedule included the $75 for official fees as part of the payment to be made on February 12, 2014, the “total of payments” did not take into account the $75 fee and lists $17,000 as the amount, which is the source of this alleged TILA violation.  The TILA was enacted “to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601(a). “Its limited office is to protect consumers from being misled about the cost of credit.” Gibson v. Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283, 285 (7th Cir. 1997). Here, there is no indication that Appellants were misled about the loan, or the separate $75 fee they paid, for that matter. The Conditional Sales Security Agreement and Federal Truth in Lending Disclosure Statement clearly stated that Appellants were required to pay a separate fee of $75, which they paid on February 12, 2014, along with the remaining balance of the down payment. Moreover, to fall within the confines of the TILA, the forfeited disclosure must relate to “the amount of credit that is being extended on the loan at issue.” Scott v. Forest Lake Chrysler-Plymouth-Dodge, No. 3-96-671, 1997 WL 34642654, at *4 (D. Minn. 1997). “Credit is the amount financed – the loan.” Id. Appellants are “complain[ing] about [a] figure[ ] that had no impact on the amount [they] financed.” Id. Thus, we affirm the district court’s grant of summary judgment in favor of Appellee on this claim.