YW. Breach of Implied Warranty under Magnuson Moss Consumer Product
Warranty Act, 15 U.S.C. § 2310
Ransom’s potential recovery against VCI is limited to the amount of her
loan—approximately $13,000. A Magnuson-Moss claim for an amount less than $50,000 may be
brought in federal court so long as some other basis of federal jurisdiction exists. In this case, in
the absence of the Odometer Act claim, there is no independent basis for federal jurisdiction.
The motion to dismiss Count V is granted.

IV. Illinois Consumer Fraud Act

The Illinois Supreme Court’s recent holding in Jackson y. South Holland Dodge, No.
89371 (January 2001) is fatal to Count I, which alleges a violation of the Illinois Consumer Fraud
Act, 815 ILCS 505/10a. In Jackson, the court clearly stated that an assignee’s compliance with
its duties under TILA is a defense to the Consumer Fraud Act. As assignee, VCI’s sole duty
under the TILA was to review the face of the assigned documents for apparent defects. See id. at
9; 15 U.S.C. § 1641. Plaintiff concedes that VCI complied with its TILA obligation. This claim
is dismissed as against VCI.

V. Breach of Express Warranty, Common Law Fraud

VCI offers no grounds upon which the remaining state law claims should be dismissed.
These claims survive. In the interest of the most efficient resolution of this matter, I will exercise

my supplemental jurisdiction over them.


Ik. Federal Odometer Act

I first address Count VI, an alleged violation of the Odometer Act, since it forms the
jurisdictional basis for the lawsuit.

Ransom would have me find that Gumee violated the Odometer Act by misrepresenting
the make and model of the vehicle it sold her. She relies upon the plain language of 49 C.F.R. §
580.5, which requires disclosure of the identity of the vehicle, including its make, model, and
body type.

Iagree that where odometer fraud is alleged, falsely identifying a car’s make and model
could constitute a violation of the Act. As plaintiff points out, odometer fraud is often
accomplished by removing vehicle identification tags from a low-mileage vehicle and welding
them on to an older vehicle. Consequently, there is a link between the requirement to provide
accurate make and model information and the purpose of the Act: to “prohibit tampering with
motor vehicle odometers” and to “provide safeguards to protect purchasers in the sale of motor
vehicles with altered or reset odometers.” 49 U.S.C. § 32701(b).

Here, however, there is no allegation of odometer fraud. Plaintiff cannot cite a single
case (and I have found none) which holds that the Act prohibits misstatements of vehicle model
unrelated to a claim of odometer tampering. Every federal court to have considered the question
has held that misrepresentations of a car’s model and body type do not constitute a violation of
the Odometer Act. See Michael v. Ferris Auto Sales, 650 F. Supp. 975 (D. Del. 1987); Leslie v.
Thompson Ford, Inc., 484 F. Supp. 954, 956 (N.D. Ga. 1979); Purser v. Bill Campbell Porsche
Audi, Inc., 431 F. Supp. 1235 (N.D. Fla. 1977). Ransom cannot maintain an action under the

Odometer Act where she makes no allegation of odometer tampering. This claim is dismissed,


nea ena

ce ean ieee

VI. Conclusion

VCT’s motion to consolidate [22-1] is granted. The consolidated motions to dismiss [7]
[22-2] are granted in part and denied in part. Counts I and V are dismissed as against defendant

VCT only. Count IV is dismissed as against both defendants,

James B. Zagel 7 id)
United States District Jydge

DATE: Ae 22, 200/_



‘Minute Order For (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge James B. Zagel Sitting Judge if Other
or Magistrate Judge . than Assigned Judge
CASE NUMBER 01 C 2137 DATE 10/22/2001
CASE JOSLYN M. RANSOM vs. ROHR-GURNEE VOLKSWAGEN, ET AL
TITLE
{in the following box (x) indicate the party fing the motion, e.g,, plaintiff, detendant, 3rd party plaintiff, and (b) stare briofly the nature

MOTION: of the motion being presented]

DOCKET ENTRY:

qd) ia] Filed motion of [ use listing in “Motion” box above.]

(2) Oo Brief in support of motion due

(3) Oo Answer brief to motion due - Reply to answer brief due. -

(4) oa Ruling/Hearing on _ set for at

(5) oO Status hearing[held/continued to] [set for/re-set for] on set for __ at

(6) Oo Pretrial conference[held/continued to] [set for/re-set for] on setfor at .

(7) im Trial[set for/re-set for] on at

(8) QO (Bench/Jury trial] [Hearing] held/continued to at

(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) OGeneral Rule21 0 FRCP41(a)(1) 0 FRCP41(a)(2).

(10) «x (Other docket entry] Motion (22-1) to consolidate is granted. Motion (7-1 and 22-1) to dismiss
is granted/denied in part. Counts I and V are dismissed against defendant VCI only. Count IV is
dismissed against both defendants.

al @f [For further detail see order attached to the original minute order.]

No notices required, advised in open court. Document
‘ . Number
No notices required. number of notices
Notices mailed by judge’s staff.
Notified counsel by telephone
Y¥ | Docketing to mail notices. q
Mail AO 450 form.
Copy to judge/magistrate judge. NG
courtroom CLOST 22 Pil G2 ate mailed notice
DW deputy’s
initials
Date/time received in
central Clerk’s Office naling deputy intial



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
JOSLYN M. RANSOM, 2, Gs,
we «3
Plaintiff, 2 7 Sp
i)
v. No. 01 C2137 },

Judge James B. Zagel
ROHR-GURNEE VOLKSWAGEN, INC.,
doing business as GURNEE

VOLKSWAGEN, and VW CREDIT, INC.,

Defendants.

MEMORANDUM OPINION AND ORDER

Gurnee Volkswage n (“Gurnee”) is accused of duping one of its customers into accepting
a less expensive car than the one she ordered and paid for. Joslyn Ransom thought she was
buying a 1997 VW Jetta GLS. All of the papers she signed in connection with the purchase of
her car (installment contract, Odometer Disclosure Statement, and purchase order) identified her
car as a GLS model. In fact, the car that Gurnee gave her was an inferior Jetta GT, a model that
sells for about $1000 less than the GLS.

In a six-count complaint, Ransom has filed suit against Gurnee and VW Credit, Inc.
(“VCT”), the assignee of Ransom’s retail installment contract. Plaintiff's federal claims, brought
under the Truth in Lending Act (“TILA”), the Magnuson-Moss Act (“Magnuson-Moss Act”), and
the federal Odometer Act (“Odometer Act”), are all based upon the alleged misrepresentation of
the model of the purchased vehicle. There are also state law fraud claims.

Before me is VCI’s motion to dismiss Ransom’s Complaint. On a motion to dismiss for
failure to state a claim, I accept the well-pleaded allegations of the complaint as true, construe

ambiguities in favor of the plaintiff, and will dismiss only if plaintiff can prove no set of facts to

J]


support her claims. Fed. R. Civ. P. 12(b)(6); Kelley v. Crosfield Catalysts, 135 F.3d 1202, 1205
(7th Cir. 1998); Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

I. Preservation of Claims Language

The claims against VCI are premised, in part, upon the preservation of claims language
which, according to regulations promulgated under the Federal Trade Commission Act, 16 CER
§ 433.2, must appear in every consumer credit contract:

“ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND

DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS AND

SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY

HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR

HEREUNDER.”

The effect of this clause is to confirm the right of buyers to withhold payment — it
removes the assignee’s status as a holder in due course. While, as a general rule, assignees are
subject to the same claims and defenses that a buyer can assert against a seller, certain limitations
apply. In its Amended Complaint, plaintiff concedes that it cannot assert a TILA claim against
VCI because assignees are not liable under TILA for misrepresentations made by automobile
sellers unless they are apparent on the face of the disclosure statement signed. See 15 U.S. c §

1641 (a); Taylor v. Quality Hyundai, 150 F.3d 689 (7" Cir. 1998). The TILA claim i is out, as

against defendant VCI. The Odometer Act, Magnuson-Moss, and state law claims remain to be

discussed.