UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 97-31226

____________________

STEFANIE RIVIERE, ET AL.,

Plaintiffs,

STEFANIE RIVIERE; THOMAS STURDEVANT,

Plaintiffs-Appellants;

versus

BANNER CHEVROLET, INC., ET AL.,

Defendants,

BANNER CHEVROLET, INC.,

Defendant-Appellee.

_________________________________________________________________

Appeal from the United States District Court

for the Eastern District of Louisiana

_________________________________________________________________

August 6, 1999

Before JONES, DUHÉ, and BARKSDALE, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

For this appeal concerning the Truth in Lending Act, the

defendant/appellee automobile dealer from whom Appellants purchased

a vehicle having prevailed in a bench trial on the basis that the

dealer is not a “creditor ” within the meaning of the Act, that

issue and whether the transaction was a “consumer transaction” for

purposes of the Act are the primary matters at hand. We V ACATE and

REMAND for further proceedings.

I.- 2 -

In D ecember 1994, Thomas Sturdevant and his wife, Stefanie

Riviere, (Appellants) purchased a white pickup truck from Banner

Chevrolet. After that truck was damaged in September 1995,

Appellants returned it to Banner for repairs. By check, their

insurer paid approximately $2,100 to them and $242 to Banner for

the damage/repairs.

Appellants testified that, when they returned to B anner to

retrieve the truck in October 1995, it was not completely repaired.

Sturdevant then discussed with Frank Tessitore, a Banner salesman,

trading in the truck toward the purchase of a new one. A ppellants

did so on 13 October 1995, purchasing a new gold pickup.

The purchase was a credit transaction. Banner completed the

form “Retail Instalment Contra ct”, identifying Banner as the

“Vendor/Creditor” and containing a section captioned “Federal

Truth-In-Lending Disclosures”, in which, among other things, Banner

stated the “finance charge” and “amount financed ”. The contract

provid ed that Banner assigned its interest to General Motors

Acceptance Corporation (GMAC).

In conjunction with the purchase, Tessitore had the white

truck appraised and offered Sturdeva nt $10,000 on the trade-in.

Sturdevant refused. Following a second appraisal, Tessitore

offered to value it at $12,000. Sturdevant accepted; but, he

testified that he understood the appraisal to represent the value1 Appellants also presented claims against Banner’s attorneys

under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692,

based on a demand letter to Appellants from Banner’s att orneys.

These claims were dismissed following Appellants’ presentation of

evidence at trial. No appeal was taken from that dismissal.

- 3 - of the truck in its still-damaged condition. Tessitore testified

that the white truck was fully repaired; that the appraisal

represented its value in that condition.

During the sales transaction, Sturdevant was in possession of

the $2100 insuranc e check. Tessitore testified that he told

Sturdevant to give the check to the body shop manager as payment

for the work on the white truck; and that Stur devant assured him

that he would. However, Appellants kept the check.

Accordingly, the day after Appellants took possession of the

gold truck, Tessitore asked St urdevant for the insurance check.

Sturdevant refused. ( Banner subsequently obtained a s tate court

judgment against Appellants for the amount due for the repairs.)

Approximately two weeks later, Appellants refinanced the

purchase. As discussed i nfra

, they maintain that, prior to

refinancing, the n ew truck was used solely for consumer, n ot

business, purposes.

In November 1995, Appellants filed this action, claiming that

Banner had violated the Truth in Lending Act (TILA), 15 U.S.C. §

1601 et seq

. 1 Following a bench trial, the district court ruled in2 A prior panel affirmed. Appellants then sought rehearing en

banc. Amicus briefs urging the court to reconsider its decision

with regard to the creditor issue were filed by the Commercial Law

League of America, the National Association of Consumer Advocates,

the National Consumer Law Center, the American Bankers Association,

the Consumer Bankers Association, the American Financial Services

Associa tion, and the Louisiana Bankers Association. The prior

panel granted rehearing and vacated its opinion. S ee Riviere v.

Banner Chevrolet, Inc.

, 158 F.3d 335 (5th Cir. 1998), vacated

, 166

F.3d 727 (5th Cir. 1998).

- 4 - favor of Banner, on the basis that it was not a “creditor” within

the meaning of TILA. 2

II.

Factual findings are reviewed for clear error; questions of

law, de novo

. E.g.

, Bridges v. City of Bossier , 92 F.3d 329, 332

(5th Cir. 1996), cert. denied

, 519 U.S. 1093 (1997). Appellants

mai ntain that Banner is a TILA “creditor”; that the sale of the

gold truck was a consumer transaction; and that Banner violated

TILA. (For purposes of this opinion, we need not describe the two

claimed violations.)

A.

Enacted to ensure the “informed use of cr edit results

[through] an awareness of the cost thereof by consumers”, TILA

attempts to achieve this goal by mandating “a meaningful disclosure

of credit terms”. 15 U.S.C. § 1601(a). S ee also Fairley v. TuranFoley Imports, Inc.

, 65 F.3d 475, 479 (5th Cir. 1995) (“purpose of- 5 -

TILA is to protect the consumer from inaccurate and unfair credit

practices”).

In the light of TILA’s purpose and the fact that, among other

functions related to being a traditional creditor, Banner completed

the form retail installment contra ct, including the TILA

disclosures and identifying itself as the “Vendor/Creditor”, it

should follow that Banner is the TILA “creditor”. But, of course,

we must look to TILA to make that determination. Along this line,

Appellants contend that the district court, in holding that Banner

was not a TILA “creditor”, erred in its interpretation of TILA and

the applicable reg ulation and by rejecting the official Federal

Reserve Board (FRB) commentary. We agree.

Prior to the enactment of the Truth in Lending Simplification

and Reform Act, Pub. L. No. 96-221, 94 Stat. 132, 168 (1980)

(TILSRA), the TILA definition of “creditor” distinguished between

“creditors” and “credit arrangers”, defining a “ creditor” as one

“who regularly extend[s], or arrange[s] for the extension of,

credit”. 15 U.S.C. § 1602(f)(1980) (subsequently amended by

TILSRA); see also 12 C.F.R. § 226.2(s)(1980) (pre-TILSRA regulatory

definition of “creditor”). Applying this former definition, the

Supreme Court held that an automobile dealer was a TILA “credit

arranger” because it merely arranged for credit with a finance

company which, in turn, became the immediate assignee of the- 6 -

underlying contract. S ee Ford Motor Credit Co. v. Cenance

, 452

U.S. 155, 157-58 (1981)(per curiam). The Court acknowledged that

both the dealer and the finance company fit within the pre-TILSRA

definition of “creditor” , with the finance company’s role in the

transaction similar to that of a traditional creditor. Id.

In response to Cenance

, Congress enacted TILSRA (effective in

1982) and amended the definition of “creditor”. As a result, TILA

presently defines a “creditor” as

a person who both (1) regularly extends,

whether in connection with loans, sales of

property or services or otherwise, consumer

c redit which is payable by agreement in more

than four installments or for which the

payment of a financ e charge is or may be

req uired, and (2) is the person to whom the

debt arising from the consumer credit

transaction is initially payable on the face

of the evidence of indebtedness or, if there

is no such evidence of indebtedness, by

agreement.

15 U.S.C. § 1602(f). The legislative history of TILSRA reflects

that Congress sought to simplify the definition of “creditor”. S ee

S. Rep. No. 96-73, 1979 WL 10376 at *15 (1979) (TILSRA simplified

definition of “creditor” to “eliminate confusion under the current

act as to the responsibilities of assignees and ‘arrangers of

credit’”).

When it enacted TILA, Congress “delegated expansive authority

to the Federal Reserve Board to elaborate and expand the legal- 7 -

framework governing commerce in credit”. Fairley , 65 F.3d at 479

(quoting Ford Motor Credit Co. v. Milhollin , 444 U.S. 555, 559-60

(1980)). To implement TILA, the FRB promulgated “Regulation Z”,

located at 12 C.F.R. § 2 26. See i d. Regulation Z defines a

“creditor” as “[a] person (A) who regularly extends consumer credit

..., and (B) to whom the obligation is initially payable, either on

the face of the note or contract, or by agreement when there is no

note or contract”. 12 C.F.R. § 226.2(a)(17)(i). Regulation Z also

contains an official FRB staff interpretation regarding the

distinction between “creditors” and “assignees”:

If an obligation is in itially payable to one

person, that person is the credi tor e ven if

the obligation by its terms is simultaneously

assigned to another person . For example:

*An auto dealer and a bank have a bu siness

relationship in which the bank supplies the

dealer with credit sale contracts that are

initially made payable to the dealer and

provide for immediate assignment of the

obligation to the ban k. The dealer and

purchaser execute the contract only after the

bank approves the creditworthiness of the

purchaser. Because the obligation is

initial ly payable on its face to the dealer,

the dealer is the only creditor in the

transaction.

12 C.F.R. pt. 226, supp. I, subpt. A, cmt. 2(a)(17)(i)(2) (emphasis

added).

The distr ict court concluded that Banner was n ot a TILA

“creditor” for two reasons: it was not an extender of credit- 8 -

because, although its credit department investigates credit

histories and prepares forms, it is ultimately GMAC or other

entities to which Banner subsequently assigns a loan that actually

make the loan and thereby extend the credit; and, according to the

district court, the obligation was not initially payable to Banner.

Accordingly, the court also found that Regulation Z was not

applicable to Banner. S ee 12 C.F.R. § 226.2(a )(17)(i) (defining

creditor as one “to whom the obligation is initially payable”). In

so deciding, the district court rejected t he FRB staff

interpretation of “creditor”.

In Green v. Levis Motors, Inc. , 1999 WL 414224, *1 (5th Cir.

1999), an automobile dealer executed a retail installment contract,

which included TILA disclosures, and assigned the contract to

Hancock Bank. (It is not clear whether the assignment was

s imultaneous.) The purchasers sued the dealer and Hancock.

Without addressing th e applicability of TILA to the dealer, our

court treated it as a TILA “cr e ditor” and held that it had

committed TILA violations. I d. at *7-8. Hancock was treated as an

assignee. Id. at *8.

In Green , our court did not explicitly address the issue

before us. But, its disposition could only be reached by treating3 Regarding a similarly structured trans a ction, several other

district courts h ave found that an automobile dealer, such as

Banner, was a “creditor” under TILA. S ee Baldwin v. Laurel For d

Lincoln-Mercury, Inc. , 32 F. Supp. 2d 894, 904 (S.D. Miss. 1998);

Kinzel v. Southview Chevrolet Co.

, 892 F. Supp. 1211, 1216 (D.

Minn. 1995); Frazee v. Seaview Toyota Pontiac, Inc. , 695 F. Supp.

1406, 1408 (D. Conn. 1988). But see A ugustine v. Ray Brandt

Nissan, Inc.

, 1993 WL 557680, *1 (1993) (automobile dealer not a

“creditor” because it was not the entity that actually provided the

funds).

- 9 - the automobi le dealer as a TILA “creditor”. 3 S ee also Ellis v.

General Motors Acceptance Corp.

, 160 F.3d 703, 705-0 8 (11th Cir.

1998) (treating GMAC as assignee, e ven though contract was

simultaneously assigned to it by automobile dealer ); T aylor v.

Quality Hyundai, Inc.

, 150 F.3d 689 (7th Cir. 1998), cert. denied

,

119 S. Ct. 1032 (1999) (treating automobile dealer as “credi tor”

and financing companies as assignees).

In this regard, the district court erred by rejecting the FRB

staff commentary. In Milhollin

, 444 U.S. at 565-66, the Supreme

Court stated that, “[u]nless demonstrably irrational, Federal

Reserve Board staff opinions construing [TILA or Regulation Z]

should be dispositive”. The staff interpretation is not

demonstrably irrational. See Kinzel v. Southview Chevrolet Co.

,

892 F. Supp. 1211, 1216 (D. Minn. 1995) (staff interpretation of

“creditor” is rational, “as it simply restates the congressional

intent to eliminate an ambiguity in the statute prior to October,

1982").- 10 -

As noted supra and by the district court, Banner ide ntified

itself in the form retail installment contract as the

“Vendor/Creditor”. In the light of this, viewing the contract as

a whole, and applying the FRB staff interpretation, the obligation

was initially payable to Banner, even though it was assigned to

GMAC. S ee 12 C.F.R. § 226, supp. I, subpt. A, cmt. 2(a)(17)(i)(2)

(even where obligation is simultaneously assi g ned to another,

automobile dealer is “creditor” if obligation is “initially payable

on its face” to automobile dealer). The staff interpretation also

make s it clear that, although Banner simultaneously assigned the

loan to GMAC, it still “extended credit” as a “creditor” under

TILA. Id

.

B.

As a second basis for TILA not bei ng applicable, Banner

maintains, as it did in district court, that the sale of the gold

truck was a business, not a consumer, transaction. TILA exempts

“transactions involving extensions of credit primarily for

business, commercial, or agricultural purposes”. 15 U.S.C. §

1603(1); see also Poe v. First National Bank of DeKalb County

, 597

F.2d 895, 896 (5th Cir. 1979). Further, TILA states that it covers

“consume r” credit transactions, defined as those “in which the

party to whom credit is offe red or extended is a natural person,

and the money, property, or services which are the subject of the- 11 -

transaction are primarily for personal, fa mily, or household

purposes”. 15 U.S.C. § 1602(h).

Therefore, “[w]e must examine the transaction as a whole and

the purpose for which the credit was extended in order to determine

whether th is transaction was primarily consumer or commercial in

nature”. Tower v. Moss , 625 F.2d 1161, 1165 (5th Cir. 1980). At

trial, Banner maintained that Sturdevant intended to use the gold

truck for his construction business. In support, it introduced

Sturdevant’s 1995 business tax return, which claimed a deduction

for 100% of the use of the white truck and for 70% of the use of

the gold truck. Further, Tessitore testified that Sturdevant

removed his tool box (as noted, he worked in construction) and mat

(used to protect the truck bed) from the white truck and placed

them in the gold truck; and that, in his experience, the mat is

used to protect vehicles used for work.

Banner asserts that, in the light of this, it follows that

Sturdevant purchased the gold truck for his business. But,

Sturdevant testified that he never used it for his business in

1995.

And, when questioned regarding the 1995 tax return, he claimed

that his tax preparer took the deduction without his knowledge. He

a lso testified that he did not use the gold truck for busine s s

during the two week interval between its purchase and its- 12 -

refinancing. Riviere testified that, during those two weeks, she

used the truck for transportation to her place of work. Further,

all documents executed in connection with the sale of the gold

truck indicate that it was a consumer transaction. F inally, the

title and loan documents were draf ted in Riviere’s name.

(Sturdevant testified that her name was used because of his poor

credit.)

Obviously, the evidence is conflicting. That the documents

relevant to this transaction label it as “cons umer” is not

dispositive. The few cases that address this issue look to the

substance of the transaction and the borro wer’s purpose in

obtain ing the loan, rather than the form alone. S ee Tower

, 625

F.2d at 1166-67 (although loan money used to repair house

subsequently lea sed to third party, loan primarily personal in

nature because evidence established that b o rrower intended to

reside in house during retirement and lessee functioned primarily

as caretaker); Henson v. Columbus Bank and Trust Co.

, 651 F.2d 320,

326-27 (5th Cir. 1981) (loan not personal investment loan where

borrower invested in company of which he was holder of one-fifth

stock, director, guarantor of debts, corporate secretary, and legal

counsel); Poe

, 597 F.2d at 896 (loan primarily for business even

though stock holder and wife were required to co-sign and pledge

their family home as security); Bloom v. I.C. System, Inc.

, 972- 13 -

F.2d 1067, 1069 (9th Cir. 1992) (loan not primarily personal in

nature where borrower used money to invest in company of which he

was president).

In short, resolution of this i ssue involves a factual

determination of Appellants’ purpose in purchasing the gold truck,

which hinges on Sturdevant’s credibility. Although the district

court discussed the evidence regarding this issue, it did not make

factual findings regarding the purpose for the purchase. Of

course, we may, in our discretion, resolve this issue for the first

time on appeal. S ee Green

, 1999 WL 414224 at *6 (citing Singleton

v. Wulff , 428 U.S. 106, 120-21 (1976)).

But, cutting against our doing so is, inter alia

, the district

court’s noting that, had it proceeded to the merits of th e TILA

claims, it would have credited Tessitore’s testimony that the

repairs to the white truck constituted a separate transaction from

the sale of the gold truck. I n so doing, the court rejected

Sturdevant’s version. Because the court apparently found at least

one portion of Sturdevant’s testimony to lack credibility, we are

reluctant to decide the consumer transaction issue, which, as

noted, turns primarily on his credibility.

The better course is to remand to the district court for

findings of fact. Obviously, should it find a consumer

transaction, it should then rule on the claimed TILA violations.- 14 - III.

For the foregoing reasons, the judgment is VACAT ED and this

case is REMANDED for further proceedings consistent with this

opinion.

VACATED and REMANDED