District Court (Ill.) Says Car Dealer’s Disclosure of Interest Rate on RISC Was Not Illusory or Violate TILA Simply Because Dealer Could Not Secure Financing

In Rojas v. X Motorsport, Inc., 2017 WL 2404953, at *3–4 (N.D.Ill., 2017), Judge Feinerman granted a summary judgment to a car dealer against whom a TILA claim was filed.

The parties agree that the RISC disclosed all the information that TILA demands, but Rojas contends that the disclosures were illusory—not “meaningful,” as TILA demands— because the parties’ contract was “conditioned” on X Motorsport’s assignment of the RISC to a third party financer. Doc. 41 at 10-11. According to Rojas, because the RISC would be void if it were not assigned, X Motorsport’s disclosures did not meaningfully reflect the credit that was actually available to him. Id. at 11. Rojas contends that TILA forbids this sort of “bait and switch.” Ibid.  Rojas’s argument has a fatal flaw: the Seventh Circuit rejected it in Janikowski. The plaintiff in Janikowski went to purchase a car and signed a “Vehicle Purchase Order” and a “Retail Installment Contract” that disclosed a 5.9% interest rate. 210 F.3d at 766. The dealership could not, however, guarantee that it would be able to find a lender willing to finance the purchase at that rate, and the purchase order stated that “[i]f financing cannot be obtained within 5 business days … according to the proposals in the retail installment contract …, either Seller or Purchaser may cancel the Agreement.” Ibid. The plaintiff drove the car home, only to learn the next day that the dealership had not secured financing at the 5.9% rate. Ibid. She returned and signed a new set of contracts, this time agreeing to an 11.9% rate. Id. at 766-67.  The plaintiff later sued, contending that the dealership’s disclosure of the 5.9% rate was false, and thus a TILA violation, because it was conditioned on the dealer finding a lender willing to finance the purchase. Id. at 767. The Seventh Circuit disagreed, explaining: “Th[e] disclosure [of the 5.9% rate] reflected the terms of [the plaintiff’s] legal obligations, as required by [TILA and its implementing regulations]. She was not legally obligated to purchase the [car] at any rate other than 5.9%. The next day, after [the plaintiff] learned that she had been denied financing at 5.9%, the [original] contract was canceled. She then entered into a new contract, which disclosed an 11.9% APR. Therefore, even though [the plaintiff] did not eventually obtain financing at 5.9%, [the defendant] did not violate TILA because it accurately disclosed her legal obligations under the two contracts.”  Ibid. (citation omitted) (emphasis added). In other words, the Seventh Circuit concluded, TILA requires only “truthful disclosures of a consumer’s legal obligations,” id. at 769, and the presence in the contract of a condition subsequent that might later nullify those obligations does not make those disclosures untrue or improper under TILA.  As in Janikowski, X Motorsport truthfully informed Rojas of his legal obligations under the contract, notwithstanding the fact (as the court assumes for present purposes) that X Motorsport later failed to find a third party financer willing to be assigned the RISC on the terms to which X Motorsport and Rojas had agreed. The SBO disclosed the third party financing condition to Rojas, explaining that “this Agreement is binding when the [RISC] is signed, but will not remain binding if a third party finance source does not agree to purchase the [RISC].” Doc. 15 at ¶ 11; Doc. 52 at ¶ 11. It also truthfully disclosed the financial terms that would obligate him if the financing condition were met. Even assuming that X Motorsport’s failure to assign the RISC was the exclusive reason for the contract’s cancellation—rather than the mechanical problems Rojas experienced and his desire for a refund—those disclosures make this case indistinguishable from Janikowski, in which the first contract disclosing the lower rate was canceled because of the dealership’s failure to secure financing. Both there and here, the terms of the deal and the possibility that it might be voided were disclosed. . . Rojas cites out-of-circuit cases that arguably support his position, see Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d 1060 (11th Cir. 2004); Salvagne v. Fairfield Ford, Inc., 794 F. Supp. 2d 827 (S.D. Ohio 2010); Patton v. Jeff Wyler Eastgate, Inc., 608 F. Supp. 2d 907 (S.D. Ohio 2007), and at the motion hearing, he mounted a spirited argument that Janikowski was wrongly decided and the product of “groupthink.” From a district court’s perspective, all that need be said is that Janikowski is binding and that it squarely forecloses Rojas’s claim. See Williams v. Amazon.com, Inc., 312 F.R.D. 497, 500 (N.D. Ill. 2015) (“[T]his court is obligated to follow Seventh Circuit precedent….”). If Rojas would like a court to change Seventh Circuit law, he will have to pursue that course on appeal.  Because the court grants X Motorsport’s summary judgment motion, it follows that Rojas’s cross-motion for partial summary judgment fails. And because X Motorsport can prevail even if the evidence it moved to strike is considered, the motion to strike is denied as moot.