FILED

May 21, 1999

Cecil Crowson, Jr.

Appellate C ourt

Clerk

 IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

MIKE HARVEY, on behalf of himself ) C/A NO. 03A01-9807-CV-00235

and all others similarly situated, ) 

) ROANE CIRCUIT

Plaintiff-Appellant, )

) RUSSELL SIMM ONS, JR., 

v. ) JUDGE

)

FORD MOTOR CREDIT COMPANY, ) AFFIRMED

) AND

Defendant-Appellee. ) REMANDED

GORDON BALL, Knoxville, for Plaintiff-Appe llant.

STEVEN D. LIPSEY, STONE & HINDS, P.C., Knoxville, and THOMAS M.

BYRNE and DANIEL H. SCHLUETER, SUTHERLAND, ASBILL & BRENNAN,

LLP, Atlanta, for Defendant-Appellee.

PAUL G. SUMMERS, Tennessee Attorney General and Reporter, and

TIMOTHY C. PHILLIPS, Assistant Attorney General, Nashville, Amicus Curiae for

the State of Tennessee.

O P I N I O N

Franks, J.

Appellant filed his complaint designated a class action, alleging that

Ford Motor Credit Company (“Ford Credit”) engaged in a scheme with Ford dealers

to mislead consumers and conceal the practice of dealer reserve. The complaint

initially alleged two causes of action based on Ford Credit’s violation of the

Tennessee Consumer Protection Act (“TCPA”) and unjust enrichment. The Trial
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Court conditionally certified the requested class of consumers, but subsequently set

aside that order. 

Appe llant purchased a used van at a Ford dea ler in Harriman in 1996. 

The dea ler arranged financing for the vehicle through appellee, Ford Motor Credit

Company, and according to the complaint, appellant wa s unawa re that the intere st rate

he rece ived inc luded not only Ford Credit’s regular rate, but an additional percentage. 

A portion of the additional interest rate is generally payable to the dealer by Ford

Credit. This prac tice is commonly known as “de aler reserve”. 

Appellant subsequently amended his Complaint to include a third cause

of action for civil conspiracy. Responding to Ford Credit’s Motion to Dismiss, the

Trial Court dismissed the Amended Complaint, holding (1) that the Amended

Complaint failed to comply with Tenn.R.Civ.P. 9.02; (2) that reliance was a required

element under the T.C.P.A. which had not been plead; (3) that the unjust enrichment

claim was invalid since the basis of the parties’ relationship was a written contract; (4)

that the conspiracy claim could not stand because appellant had not alleged any

unlawful or tortious act. Appellant has appealed the dismissal of the T.C.P.A. and

conspiracy claims, but has not appealed the dismissal of the unjust enrichment claim.

 Under T.R.C.P. §12.02(6), we are required to construe the complaint

liberally in f avor of the plaintiff, taking all allegations as true. Sullivant v. Americana

Homes, Inc., 605 S.W.2d 246 (Tenn.App. 1980). A complaint should not be

dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff

can prove no set of facts in support of the claim that would entitle him or her to relief.

Id.

The appellee argues that T.C.P.A. is not applicable in this case. The

appellee contends that its conduct is permitted by the federal Truth in Lending Act

(“T.I.L.A.”), and that the T.C.P.A., by its own terms, does not apply. The T.C.P.A.
3

does not apply to “[a]cts or transactions required or specifically authorized under the

laws administered by, or rules and regulations promulgated by, any regulatory bodies

or offic ers acting unde r the authority of this state or of the United States.” T.C.A. §

47-18-111(a)(1).

Appellee insists that since the disclosure portions of the appellant’s sales

contract are governed by the T.I.L.A., failure to disclose “dealer reserve” is not

actionable. This argument fails for two reasons. First, courts have generally

construed the preemptive scope of the T.I.L.A narrowly. The T.I.L.A.’s own

preemptive provisions are narrowly worded and were intended “ to extend only to

specific state disclosure requirements, in the interest of preserving uniform methods of

disclosure.” Heastie v. Community Bank, 690 F.Supp. 716, 720 (N.D. Ill., 1988); See

also 17 Am.Jur.2d Consumer Protection § 259 (1990). Second, the appellant does not

contend that the appellee failed to comply with the T.I.L.A. Rather, he alleges that the

appellee engaged in a scheme to mislead consumers concerning the true nature of their

financing. In Heastie, the Court considered language under the Illinois Consumer

Fraud Act identical to the T.C.P.A.’s exclusionary provision and concluded that

compliance with the T.I.L.A. “should not be a complete defense to allegations of

fraudulent schemes.” Id. at 721. This result is consistent with a privately reported

decision of this Court, holding that a dealer’s failure to disclose “dealer reserve” was

actionable when the dealer engaged in a patte rn of deceptive conduct. See Adkinson v.

Harpeth Ford-Mercury, Inc., 1991 WL 17177 (Tenn.App.). Thus, appellee’s claims

of compliance with the T.I.L.A. are not dispositive.

The Trial Court determined that “[a]s to any averment of fraud, the

complaint must be dismissed for the plaintiff’s [appellant’s] failure to state with

particularity as required by Rule 9.02 of the Tennessee Rules of Civil Procedure.” 

Rule 9.02 requires that the circumstances constituting fraud must be plead with
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particularity. The parties dispute whether this requirement applies to claims under the

T.C.P.A. This Court has applied Rule 9.02 to claims under the T.C.P.A. Humphries v.

West End Terrace, Inc., 795 S.W.2d 128 (Tenn.App. 1990). Other jurisdictions have

also required that claims under state consumer protection acts be plead with

specificity. See e.g., Connick v. Suzuki Motor Co., 675 N.E.2d 584 (Ill. 1996). Thus,

the Amended Complaint must be scrutinized in light of these requirements. Despite

Rule 9.02's particularity requirements, we must determine the sufficiency of the claims

in light of Tenn.R.Civ.P. 8.01's liberal pleading standards. Dobbs v. Guenther, 846

S.W.2d 270 (Tenn.App. 1992). 

The Amended Complaint essentially alleges that the appellee and

various Ford dealers violated the T.C.P.A. by misleading consumers and

misrepresenting to them the practice of “dealer reserve.” Although the Amended

Complaint alleges misrepresentations by the Ford dealer, it lists two principal actions

by the appellee that could link it to the dealer’s conduct or otherwise violate the

T.C.P.A. First, the Amended Complaint sta tes that the appellee has “quoted its

financing rates in the national media and press.” According to the Amended

Complaint, the effect of this advertising is to indicate to consumers that these rates

“are fixed and not variable and that each Ford Motor Company . . . dealer will make

available to consumers precisely those rates which Ford Motor Credit quotes.” 

Nowhere in the Amended Complaint, however, does the appellant allege that he ever

saw or heard any of these advertisements. Regardless of whether reliance is a

required element under the T.C.P.A., plaintiffs must at least allege that they were

exposed to the offensive conduct. Thus, the Amended Complaint fails to state a cause

of action for this alleged violation.

The Amended Complaint also states that the appellee “through its dealer

manuals and other policies and procedures, instructs its dealers to inform custome rs
5

that the quoted Ford Motor Credit rates are fixed and non-negotiable .” This claim

also fails to allege any actionable conduc t by the appellee . Although not entirely

clear, the phra se “quoted Ford Motor Credit rates” presumably refers to the same retail

rates allegedly quoted by the appellee in its advertisements. Although the term could

arguably me an the final rate quoted to the customer by the dealer, that meaning would

be inconsistent with language in the section of the Amended Complaint describing the

appelle e’s advertising. 

Whether the appellee’s rates are negotiable does not affect the practice

of “dealer reserve.” According to the Amended Complaint, once the appellee quotes

the fixed ra te, the dealer adds any additional percentage. Thus, there is nothing unfair

or deceptive about the appellee “fixing” its quoted rates. In fact, if the appellee

instructs dealers to inform customers that the appellee’s rates are fixed and nonnegotiable, this instruction would better inform customers about the practice of dealer

reserve. Customers would realize that the final rate quoted by the dealer was higher

than the appellee’s rate. Although the Amended Complaint alleges that the dealers do

not tell customers about the disparity in financing, it does not recite any actions that

could render the appellee liable for this a lleged misrepresentation or nondisclosure. 

Thus, the allegation fails to state a claim under the T.C.P.A.

The remainder of the conduc t recited in the Amended Complaint with

appropriate specificity refers to actions allegedly taken by the Ford dealer. The dealer

is not a party in this case and the Amended Complaint does not contend that the

appellee should be liable for the de aler’s individual conduc t. Thus, the complaint fails

to state a claim against the appellee for T.C.P.A. violations. It therefore fails to allege

a conspiracy to violate the T.C.P.A. 

We hold that the Trial Court correctly dismissed the Amended

Complaint, but we pretermit the issue of whether reliance is a required element under
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the T.C.P.A. because we conclude the complaint does not otherwise state a cause of

action. Accordingly, we affirm the judgment of the Trial Court and remand with cost

of the appeal assessed to the appe llant.

__________________________

Herschel P. Franks, J.

CONCUR:

___________________________

Houston M. Goddard, P.J.

___________________________

William H. Inman, Sr.J.