Source: https://law.justia.com/cases/federal/appellate-courts/F3/212/1356/632589/
Timestamp: 2019-08-25 22:23:38
Document Index: 569643148

Matched Legal Cases: ['§ 1638', '§ 226', '§ 1638', '§ 1638', '§ 226', '§ 226', '§ 18', '§ 1638', '§ 226', '§ 1638', '§ 226', '§ 18', '§ 1601', 'art 226', '§ 1604']

Cleopatra Jones, on Behalf of Herself and All Others Similarly Situated, Delois Pritchett, on Behalf of Herself and All Others Similarly Situated, Plaintiffs- Appellants, v. Bill Heard Chevrolet, Inc., Defendant-appellee, 212 F.3d 1356 (11th Cir. 2000) :: Justia
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Cleopatra Jones, on Behalf of Herself and All Others Similarly Situated, Delois Pritchett, on Behalf of Herself and All Others Similarly Situated, Plaintiffs- Appellants, v. Bill Heard Chevrolet, Inc., Defendant-appellee, 212 F.3d 1356 (11th Cir. 2000)
US Court of Appeals for the Eleventh Circuit - 212 F.3d 1356 (11th Cir. 2000)
Before EDMONDSON and HULL, Circuit Judges, and WOOD* , Senior Circuit Judge.
Plaintiffs-Appellants Cleopatra Jones and Delois Pritchett ("Plaintiffs") brought this action against Defendant-Appellee Bill Heard Chevrolet, Inc. ("Heard Chevrolet"), for alleged violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1638(a) (2) (B) (iii), and TILA's implementing regulation, Regulation Z, 12 C.F.R. § 226.18(c) (1) (iii). Plaintiffs appeal the district court's order granting summary judgment for Defendant Heard Chevrolet on Plaintiffs' TILA claims. After review, we reverse.
1 Cash Price (including any accessories, services, and taxes) $9795.45 2 Total Downpayment ... $ 800.00 3 Unpaid Balance of Cash Price (1 minus 2) $8995.45 4 Other Charges Including Amounts Paid to Others on Your Behalf: ...
H Other Charges (Seller must identify who will receive payment and describe purpose) to GENERAL MOTORS 12/12 for SERVICE CONTRACT $2495.00
Both Plaintiffs timely appealed the adverse judgment on their TILA claims, but only Plaintiff Jones has pursued the appeal. Although both Jones's and Pritchett's names appear on the notice of appeal and on the cover of Plaintiffs-Appellants' brief, that brief recites the facts about only Jones's purchase and discusses only Jones's claims. Plaintiffs-Appellants' brief contains no mention of Pritchett's transaction or her claim. Defendant-Appellee Heard Chevrolet's response brief points out that Pritchett's claims are thus abandoned. Plaintiffs-Appellants' reply brief does not contest that argument. At oral argument, only Jones's claims were mentioned. Therefore, we find that Pritchett's claims are abandoned. See Atkins v. Singletary, 965 F.2d 952, 955 n. 1 (11th Cir. 1992) (determining appellants have abandoned claims not addressed on appeal); Greenbriar, Ltd. v. City of Alabaster, 881 F.2d 1570, 1573 n. 6 (11th Cir. 1989) (stating issue abandoned where party did not make any arguments on the merits as to that issue in its initial or reply brief). Thus, we now consider only Jones's TILA claim.
This Court reviews the district court's grant of summary judgment de novo, applying the same standards used by the district court. See Killinger v. Samford Univ., 113 F.3d 196, 198 (11th Cir. 1997). For summary judgment purposes, the facts are viewed in the light most favorable to the nonmoving party. See Jones v. Cannon, 174 F.3d 1271, 1281 (11th Cir. 1999).
The district court found that it "need not decide whether the disclosure requirements are mandatory or permissive" and that " [t]his is because TILA provides a 'good faith' defense, which, Defendant argues, insulates it from liability in this case." We agree, however, with Plaintiff Jones's arguments that the determination of whether a TILA violation occurred is necessary before properly analyzing Heard Chevrolet's "good faith" defense. In this particular case, the application of the "good faith" defense is intertwined with a determination of whether TILA had clear mandatory disclosure requirements for payments to third parties. Therefore, we first review whether Heard Chevrolet violated TILA and Regulation Z in its inaccurate disclosure regarding the amount it paid to General Motors.3
The language of TILA's section 1638(a) (2) (B) (iii) is clear and straightforward. 15 U.S.C. § 1638(a) (2) (B) (iii). Section 1638(a) (2) (B) (iii) explicitly requires that creditors "shall disclose" in writing "each amount that is ... paid to third persons by the creditor on the consumer's behalf, together with an identification of ... the third person," as follows:
(2) (B) In conjunction with the disclosure of the amount financed, a creditor shall provide a statement of the consumer's right to obtain, upon a written request, a written itemization of the amount financed. ... Upon receiving an affirmative indication, the creditor shall provide, at the time other disclosures are required to be furnished, a written itemization of the amount financed. For the purposes of this subparagraph, "itemization of the amount financed" means a disclosure of the following items, to the extent applicable:
15 U.S.C. § 1638(a) (2) (B) (iii) (emphasis added). Similarly, section 226.18(c) (1) (iii) of Regulation Z provides that a creditor shall disclose " [a]ny amounts paid to other persons by the creditor on the consumer's behalf. The creditor shall identify those persons." 12 C.F.R. § 226.18(c) (1) (iii).4
In December 1995, several months after Plaintiff Jones purchased her vehicle, the FRB proposed an Official Staff Commentary ("Proposed Commentary") pertaining to Regulation Z, 12 C.F.R. § 226(c) (1) (iii).6 The FRB never approved the Proposed Commentary. Subsequently, the FRB did adopt the following Official Staff Commentary ("Revised Commentary") on April 4, 1996. This Revised Commentary provides that "the creditor may reflect that the creditor has retained a portion of the amount paid to others," as follows:
61 Fed.Reg. 14952, 14956 (April 4, 1996) (codified at 12 C.F.R. Pt. 226, Supp. I § 18(c) (1) (iii) (2)). On the same day, the FRB also issued supplementary information to the Revised Commentary explaining why this officially adopted Revised Commentary is more restrictive than the previous Proposed Commentary, as follows:
Heard Chevrolet argues that the Revised Commentary's use of the permissive words "may" and "could" provides creditors with the discretion to choose whether or not to disclose the amount, or even the existence, of an upcharge. We reject that contention because we agree with two other circuits' conclusions that the Revised Commentary does not abrogate or affect in any way the clear statutory requirement in TILA's section 1638(a) (2) (B) (iii) that the creditor shall disclose accurately the amount paid to third parties. See Green v. Levis Motors, Inc., 179 F.3d 286, 293-94 (5th Cir. 1999); Gibson v. Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283, 285-86 (7th Cir. 1997). As our sister circuits concluded, the Revised Commentary only clarifies that the creditor has the option of disclosing that it retained a portion of the "amount paid to others," rather than disclosing the specific amount retained. See Green, 179 F.3d at 293-94; Gibson, 112 F.3d at 285-86. The Revised Commentary does not have as an option the failure to disclose at all the fact that an amount was retained. See Green, 179 F.3d at 293-94; Gibson, 112 F.3d at 285-86.
Green v. Levis Motors, Inc., 179 F.3d 286, 294 (5th Cir. 1999). The Seventh Circuit arrived at the same conclusion in Gibson v. Bob Watson Chevrolet-Geo, Inc., stating:
Heard Chevrolet's interpretation of the Revised Commentary contradicts, and in effect would abrogate, the clear statutory language of TILA's section 1638(a) (2) (B) (iii), Regulation Z's section 226.18(c) (1) (iii), and Heard Chevrolet's clear statutory duty to disclose accurately the amount it paid to General Motors. Our conclusion is also supported by the supplementary information to the Revised Commentary which states an intent to clarify that creditors have a new option under the Revised Commentary: creditors "may reflect that they have retained a portion of the 'amount paid to others,' rather than disclosing the specific amount retained." 61 Fed.Reg. at 14954. Significantly, the supplementary information, like the Revised Commentary, does not discuss as an option the total concealment of the fact that an amount was retained. None of the FRB's commentaries states that a creditor can inaccurately disclose the amount paid to others.
After review, we find that Heard Chevrolet's disclosure-that it paid $2,495 to General Motors when it paid only $290-was inaccurate and violated both TILA and Regulation Z. See 15 U.S.C. § 1638(a) (2) (B) (iii); 12 C.F.R. § 226.18(c) (1) (iii).7
The binding precedent of this circuit requires that a defendant creditor demonstrate reliance upon FRB regulations and commentaries before it can successfully invoke TILA's "good faith" defense. See McGowan v. Credit Ctr., Inc., 546 F.2d 73, 77 (5th Cir. 1977); Jones v. Community Loan & Inv. Corp., 544 F.2d 1228, 1232 (5th Cir. 1976).8 Thus, we have held that a defendant creditor is barred from relying upon TILA's "good faith" defense where it makes a loan prior to the date of the FRB regulation used to support that defense. See McGowan, 546 F.2d at 77; Jones, 544 F.2d at 1232.9 In addition, our interpretation of the limits of the "good faith" defense is consistent with our sister circuit's interpretation of our shared binding precedent. See Green v. Levis Motors, Inc., 179 F.3d 286, 292 (5th Cir. 1999) (citing McGowan and Jones) ("Binding Fifth Circuit precedent holds that a party cannot act 'in good faith in conformity with' a regulation or interpretation that does not exist at the time of the disputed act."). Defendant Heard Chevrolet's "good faith" defense thus fails because both FRB commentaries did not exist at the time of Jones's transaction with Heard Chevrolet.10
The consumer is not automatically entitled to an itemization of the amount financed unless a written request for it is made. See § 1638(a) (2) (B); 12 C.F.R. § 226.18(c) (2). The creditor is allowed to skip this stage and simply provide the itemization of the amount financed without being asked for it. See 12 C.F.R. Pt. 226, Supp. I § 18(c) (1). This appears to be what Heard Chevrolet did. It furnished the itemization, and the itemization inaccurately disclosed the amount paid to General Motors.
We are able to reach this issue-whether Defendant Heard Chevrolet's representation about the amount paid to General Motors violated TILA and Regulation Z-because it was fully briefed in the district court, concerns only a pure question of law as the parties do not dispute the relevant facts, and "its resolution is beyond any doubt." See Singleton v. Wulff, 428 U.S. 106, 121, 96 S. Ct. 2868, 49 L. Ed. 2d 826 (1976) ("The matter of what questions may be taken up and resolved for the first time on appeal is one left primarily to the discretion of the courts of appeals, to be exercised on the facts of individual cases.... [Federal appellate courts are] justified in resolving an issue not passed on below, as where the proper resolution is beyond any doubt."); Macklin v. Singletary, 24 F.3d 1307, 1312 (11th Cir. 1994) (finding appellate court may consider an issue not ruled upon by the district court where it involved a pure question of law); see also Green v. Levis Motors, Inc., 179 F.3d 286, 293 (5th Cir. 1999) ("The issue [whether disclosure is required by TILA] is one of pure law ... [and] the proper resolution of this question is ... beyond any doubt." (quotations omitted)).
Congress enacted the TILA to promote the "informed use of credit" through a "meaningful disclosure of credit terms" to customers. 15 U.S.C. § 1601. Congress delegated authority to the Federal Reserve Board ("FRB") to promulgate regulations implementing TILA and to issue official staff interpretations of those regulations. The implementing regulations are commonly referred to as Regulation Z, 12 C.F.R. Part 226. See 15 U.S.C. § 1604(a); Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559-60, 100 S. Ct. 790, 63 L. Ed. 2d 22 (1980).
When Plaintiff Jones executed her RIC in February 1995, the relevant regulatory provisions were section 226.18(c) (iii) of Regulation Z and 12 C.F.R. Pt. 226, App. H-3 ("Model Form H-3"). Model Form H-3 provides for several ways to itemize the "amount financed" including a subsection entitled "Amount paid to others on your behalf," as follows:
At the time of Jones's transaction in February 1995, the only two federal court decisions on this issue had denied defendant dealerships' Rule 12(b) (6) motions to dismiss, finding that the dealerships' allegedly disclosing inaccurately the amount paid to a third party for an extended service or warranty contract stated a cause of action for a TILA violation. See Shields v. Lefta, 888 F. Supp. 894, 896 (N.D. Ill. 1995) ("Some of the money went into the pocket of the dealership. Of course there is nothing wrong with money going into the pocket of a car dealership on a car purchase, but plaintiffs allege misrepresentation as to the amount going into the pocket of the dealership versus being paid out to others."); Cirone-Shadow v. Union-Nissan, Inc., No. 94-C-6723 (N.D. Ill. Feb. 3, 1995) (noting dealership paid to Autoright only a small portion of the $800 itemized as paid to Autoright for an extended warranty or service contract).
Likewise, we reject Heard Chevrolet's contention that Plaintiff's TILA claim fails because Plaintiff cannot demonstrate reliance on its misrepresentations. See Charles v. Krauss Co., Ltd., 572 F.2d 544, 546 (5th Cir. 1978) (" [T]he basis of [TILA] liability is rather failure to disclose information required to be disclosed; there is no requirement that the plaintiff himself be deceived in order to sue in the public interest." (quotations omitted)).
The district court has not yet ruled on the class certification motion. Certain dates are potentially relevant to the "commonality" and "typicality" requirements for class certification. See Fed. R. Civ. P. 23(a) (1)-(2). Plaintiff Jones executed her RIC prior to the promulgation of the FRB's Proposed Commentary and Revised Commentary and may possibly differ in this respect from those members of the putative class who executed their RICs after the FRB issued its commentaries. Additionally, in the class certification motion, Plaintiff Jones defines the relevant class: "For purposes of Count II, the TILA claim, the class includes anyone whose retail installment contract is dated within one year prior to the filing of this action." However, Plaintiff Jones's action was filed on April 23, 1996, and thus her RIC, dated February 27, 1995, is not within one year of that filing date. These observations are made so that the district court and the parties may address them when the class certification motion is considered.