Opinion ID: 76614
Heading Depth: 2
Heading Rank: 2

Heading: Consummation theory of TILA liability

Text: 24 Bragg contends that the district court erred in holding that no pertinent credit agreement was consummated. He maintains that in this case, consummation occurred not when title to the automobile passed or when a bilateral contract was formed, but rather when he signed the RISCs, thereby becoming obligated on the credit agreement. 25 We agree that well-reasoned case law supports this interpretation. Recently, the Fourth Circuit held that TILA can encompass unfunded financing agreements. Nigh v. Koons Buick Pontiac GMC, Inc., 319 F.3d 119, 123 (4th Cir.2003), cert. granted, Koons Buick Pontiac GMC, Inc. v. Nigh, 540 U.S. 1148, 124 S.Ct. 1144, 157 L.Ed.2d 1041 (2004). 6 Seeking to buy a car and trade in his existing vehicle, Nigh signed a Buyer's Order reflecting the proposed purchase and a RISC setting forth the proposed financing. Id. at 122. As in Bragg's case, the dealer did not countersign either document; rather, it intended to sign only when a lender agreed to buy an assignment of the installment payments owed under the RISC. Id. The transaction's closing and the completion of Nigh's purchase were thus left within the dealership's unilateral control. Id. 26 Applying Regulation Z, the Nigh court joined others holding that consummation can encompass unfunded financing agreements. See, e.g., Cannon v. Metro Ford, Inc., 242 F.Supp.2d 1322, 1330 (S.D.Fla.2002); Johnson v. Steven Sims Subaru, Inc., 1993 WL 761231 (N.D.Ill.1993); Bryson v. Bank of New York, 584 F.Supp. 1306 (S.D.N.Y.1984); Madewell v. Marietta Dodge, Inc., 506 F.Supp. 286 (N.D.Ga.1980); Copley v. Rona Enterprises, Inc., 423 F.Supp. 979 (S.D.Ohio 1976); see also Clark v. Troy and Nichols, Inc., 864 F.2d 1261, 1265 (5th Cir.1989) (Thornberry, J., dissenting). We agree that this holding is consistent with Regulation Z's exclusive reference to the consumer's commitment. See Nigh, 319 F.3d at 124. It is also in keeping with TILA's overarching purpose of consumer protection. See id. 27 [T]he point at which the consumer ... commits himself or herself to the purchase of credit, without regard for the degree of commitment of the lender ... [is the point at which] the consumer becomes vulnerable to actual damage from the lender's inadequate or deceptive disclosures, for at this time he or she can be contractually bound to the terms of the lending contract at the option of the lender. 28 Bryson, 584 F.Supp. at 1317. 29 The district court held, however, that Bragg's obligations under the first and second RISCs never arose because they were contingent on Bill Heard's obtaining financing. It pointed out that the Purchase Contracts signed by Bragg set forth a condition precedent of financing approval. Bragg, 245 F.Supp.2d at 1238 n. 4. The Purchase Contracts provided that the Seller agrees to sell the designated vehicle provided however, the designated financial institution approves Purchaser's request for a loan ... The Purchase Contracts additionally stated, Neither party hereto shall be bound to the other until terms of credit have been approved by both parties ... Moreover, the Bailment Agreement incorporated the terms of the Purchase Contracts and stated that it was pending credit approval of buyer(s) by lending institution and completion of sales transaction. 30 Under Florida law, parties can condition formation of a contract on the occurrence of an event. See, e.g., Huskamp Motor Co. v. Hebden, 104 So.2d 96, 98 (Fla.App. 3 Dist.1958); 777 Flagler Co. v. Amerifirst Bank, 559 So.2d 1210, 1211 (Fla.App. 4 Dist.1990). There was no condition precedent set forth in the RISCs themselves. The district court held that under Florida contract law, however, the condition of financing approval contained in the Purchase Contracts and Bailment Agreement nonetheless was applicable. Under Florida law, where two or more documents are executed by the same parties, at or near the same time and concerning the same transaction or subject matter, the documents are generally construed together as a single contract. Clayton v. Howard Johnson Franchise Systems, Inc., 954 F.2d 645, 648 (11th Cir.1992); Quix Snaxx, Inc. v. Sorensen, 710 So.2d 152, 153 (Fla. 3d DCA 1998). 31 Bragg contends that the relevant Purchase Contracts and Bailment Agreement should not be considered along with the RISCs because they were not executed within the meaning of the applicable Florida case law, as they were never signed by Bill Heard. He also maintains that those agreements were ambiguous, requiring construction against the drafter, Bill Heard, and precluding its modification of the RISCs. Moreover, Bragg contends that the Bailment Agreement is void and unenforceable under Florida law because it was not first signed by Bill Heard, and because it contravenes public policy. See Fla. Stat. §§ 520.07(1)(a) and 520.07(7). 32 As an initial matter, it is far from clear whether the rule of contract law articulated in Quix Snaxx would apply to these documents. The RISCs provided simply, [b]y signing this contract, you choose to buy the vehicle under the agreements on the front and back of this contract; they did not refer explicitly to the Purchase Contract or any other document containing a condition precedent. See Quix Snaxx, 710 So.2d at 153 (Where a writing expressly refers to and sufficiently describes another document, the other document... is to be interpreted as part of the writing.). Nor did the Purchase Contracts or Bailment Agreements reference the RISCs. See id. Moreover, the RISCs contained a modification clause: This contract contains the entire agreement between you and us relating to this contract. Any change to this contract must be in writing and we must sign it. Furthermore, as noted supra, Bill Heard did not sign the Purchase Contracts or Bailment Agreement, leaving them technically unexecuted. We could find no cases extending the Quix Snaxx rule to the circumstances alleged here. 33 We need not resolve this legal question, however. In any event, even assuming the RISCs contained a condition precedent, the district court was incorrect in finding that consummation occurred only upon assignment of the loan. Under the district court's interpretation of Florida law and Regulation Z, a creditor could provide necessary TILA disclosures after the consumer signed a conditional financing agreement as long as the disclosures were made sometime before the loan was assigned. Disclosures that come after the consumer executes a RISC, however, are likely to be of little or no value to that consumer. 34 Therefore, we reject the district court's reading of Regulation Z as contrary to the central goal of TILA, which is to provide meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him. 15 U.S.C. § 1601(a). As this court has explained, [w]hile it is true that the language of a statute should be interpreted according to its ordinary, contemporary and common meaning, this plain-meaning rule should not be applied to produce a result which is actually inconsistent with the policies underlying the statute. Bailey v. USX Corp., 850 F.2d 1506, 1509 (11th Cir.1988) (emphasis added) (internal citation omitted). Given the strong remedial purpose of TILA and continual admonitions that we construe TILA and Regulation Z liberally in the consumer's favor, see, e.g. Cody, 606 F.2d at 505, we cannot accept the district court's interpretation of Regulation Z, as it would undermine the ability of prospective consumers of credit to weigh competing offers. 35 Regardless of the degree of commitment of the lender contained in the agreements' condition precedent, Bryson, 584 F.Supp. at 1317, Bragg's signature on these documents rendered him contractually obligated to the purchase of credit and thus constituted consummation for purposes of TILA disclosures. To give full effect to TILA's goal of providing meaningful and timely disclosure of important credit terms, we hold that in a financing agreement containing a condition precedent where the condition of obtaining financing is within the exclusive control of the seller and third-party lender, consummation occurs when the consumer signs the contract.