Opinion ID: 453583
Heading Depth: 2
Heading Rank: 2

Heading: Alleged MVSFA Violation

Text: 11 The Georgia MVSFA limits the finance charge that may be imposed on a motor vehicle installment sales contract entered into in Georgia. See O.C.G.A. Sec. 10-1-33(a). Section 10-1-33(b) provides that the finance charge is to be computed on the unpaid balance of the purchase price, and requires that the unpaid balance be determined 12 in accordance with Section 226.8(c) of Regulation Z promulgated by the Board of Governors of the Federal Reserve System pursuant to Title I (Truth in Lending Act) and Title V (General Provisions) of the Consumer Credit Protection Act (Public Law 90-321, 82 Stat. 146 et seq.), as the same existed upon its becoming effective on July 1, 1969. 13 O.C.G.A. Sec. 10-1-33(b); see Ford Motor Co. v. Spann, 153 Ga.App. 535, 265 S.E.2d 863, 865 (1980). Section 226.8(c) 2 of Regulation Z does not specifically refer to a document preparation fee, but it does provide that the unpaid balance of the purchase price shall consist of the unpaid balance of cash price, plus [a]ll other charges, individually itemized, which are included in the amount financed but which are not part of the finance charge. 12 C.F.R. Sec. 226.8(c)(4) (1970); Spann 265 S.E.2d at 865. 14 Appellant Chrysler Credit contends that the specific components of a document preparation fee do not need to be individually itemized to be included in the unpaid balance of the loan as an other charge under Regulation Z and the MVSFA, citing to Fifth and Eleventh Circuit TILA cases interpreting section 226.8(c)(4) of Regulation Z. Appellee Ferris replies that, regardless of the federal courts' construction of the TILA, the Georgia courts have interpreted the MVSFA to require individual itemization of the components in the present situation, citing to Ford Motor Co. v. Spann, 153 Ga.App. 535, 265 S.E.2d 863 (1980). 15 In TILA cases, binding precedents establish that, pursuant to section 226.8(c)(4), a document preparation fee (or other similar charge) which is not a part of the finance charge may be included in the unpaid balance in a finance contract if separately disclosed as an other charge; and that further itemization of the specific components of the documentary fee is unnecessary. Wallace v. Brownell Pontiac-GMC Co., 703 F.2d 525, 528 (11th Cir.1983); Knighten v. Century Dodge, Inc., 607 F.2d 1096, 1097 (5th Cir.1979); Layfield v. Bill Heard Chevrolet Co., 607 F.2d 1097, 1099 (5th Cir.1979); cert. denied, 446 U.S. 939, 100 S.Ct. 2161, 64 L.Ed.2d 793 (1980). Meyers v. Clearview Dodge Sales, Inc., 539 F.2d 511, 519 (5th Cir.1976), cert. denied sub nom., Chrysler Credit Corp. v. Meyers, 431 U.S. 929, 97 S.Ct. 2633, 53 L.Ed.2d 245 (1977). 16 In Spann, 265 S.E.2d 863, the consumer purchaser's copy of an automobile finance contract contained a $25 charge, included in the amount financed, which was not identified at all. In fact, the charge was a documentary fee, which included license, title, and inspection fees and compensation for certain paperwork involved in obtaining these items. The Georgia Court of Appeals held that the seller violated the MVSFA in that the $25 was included in the unpaid balance without revealing to [the purchaser] what it was for. Id. at 865. In so holding, the court cited Meyers, 539 F.2d 511, with approval. Id. 17 The bankruptcy and district courts incorrectly interpreted the Spann case as requiring individual itemization of each specific component of a documentary fee. In our view, the Georgia court's interpretation of the MVSFA in Spann is entirely consistent with our interpretation of the TILA in Meyers, Knighten, Layfield, and Wallace: a TILA or MVSFA violation occurs if the document preparation fee is added to the unpaid balance of the purchase price without any identification or explanation of the fee; but there is no violation under section 226.8(c)(4) if the charge is identified in the contract as a document preparation fee. 3 18 In the present case, the doc. preparation fee, explicitly identified as such and added to the unpaid balance of the purchase price as an other charge, was not a finance charge, since it was charged to all consumer purchasers (both cash and credit). 4 Therefore, the automobile finance contract complied with section 226.8(c) of Regulation Z of the TILA, and thus with the Georgia MVSFA. 19 The decision of the district court granting judgment to the debtor Ferris in the amount of $2185.89 is REVERSED.