Court Opinion

ID: 4031012
Source: CourtListenerOpinion
Date Created: 2016-09-02 17:01:02.677417+00
Date Added: 2024-06-11T14:35:29.505565
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
                             Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                    File Name: 16a0218p.06

                  UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT
                                  _________________

 SETARA TYSON,                                                    ┐
      Plaintiff-Appellee/Cross-Appellant (15-1465 & 15-1468),     │
                                                                  │
                                                                  │
        v.                                                        │
                                                                   > Nos. 15-1465/1468
                                                                  │
 STERLING RENTAL, INC., dba Car Source,                           │
    Defendant-Appellant/Cross-Appellee (15-1465 & 15-1468),       │
                                                                  │
 AL CHAMI; RAMI KAMIL,                                            │
                              Defendants-Appellees (15-1468).     │
                                                                  ┘

                        Appeal from the United States District Court
                     for the Eastern District of Michigan at Ann Arbor.
                     No. 5:13-cv-13490—Judith E. Levy, District Judge.

                                  Argued: August 4, 2016

                           Decided and Filed: September 2, 2016

                  Before: BOGGS, CLAY, and SUTTON, Circuit Judges.

                                    _________________

                                        COUNSEL

ARGUED: Ziyad Kased, KASED LAW, PLLC, Troy, Michigan, for Appellant/Cross-Appellee
in 15-1465 and 15-1468 and for Appellees in 15-1468. Deepak Gupta, GUPTA WESSLER
PLLC, Washington, D.C., for Appellee/Cross-Appellant. ON BRIEF: Ziyad Kased, KASED
LAW, PLLC, Troy, Michigan, for Appellant/Cross-Appellee in 15-1465 and 15-1468 and for
Appellees in 15-1468. Deepak Gupta, GUPTA WESSLER PLLC, Washington, D.C., Ian B.
Lyngklip, LYNGKLIP & ASSOCIATES, Southfield, Michigan, for Appellee/Cross-Appellant.

                                              1
Nos. 15-1465/1468                       Tyson v. Sterling Rental, et al.                          Page 2

                                            _________________

                                                  OPINION
                                            _________________

        CLAY, Circuit Judge. In this case arising out of the sale of an automobile, Defendants
Sterling Rental, Inc., dba Car Source (“Car Source”), Al Chami, and Rami Kamil appeal from
the district court’s order granting Plaintiff SeTara Tyson summary judgment on her claim that
Defendants violated the Equal Credit Opportunity Act (“ECOA” or “the Act”), 15 U.S.C. § 1691
et seq., by changing the terms of her credit arrangement without providing a written notice
setting forth the specific reasons.1 Plaintiff cross-appeals, arguing that the district court erred by:
(1) holding that private parties may not obtain injunctive relief under the ECOA; and (2) granting
Defendants’ motion for summary judgment as to Plaintiff’s claims for conversion on the basis
that such claims are barred by Michigan’s economic loss doctrine.

        For the reasons set forth below, we AFFIRM the district court’s grant of summary
judgment in favor of Plaintiff on her ECOA claim; we REVERSE the district court’s
determination that injunctive relief was not available to Plaintiff under the ECOA, and we
REMAND for an initial determination of whether such relief is warranted; and we REVERSE
the district court’s grant of summary judgment in favor of Defendants on Plaintiff’s statutory
conversion claims and REMAND for further proceedings on those claims.

                                              BACKGROUND

                                               Factual History

        On August 10, 2013, Plaintiff purchased a used 2006 Chevrolet Cobalt from Car Source
for $8,525.00. Plaintiff could not afford to pay that price outright, but she was able to put

        1
           The district court’s order also granted summary judgment to Plaintiff on two additional claims that she
brought under Michigan’s Motor Vehicle Sales Finance Act (“MVSFA”), Mich. Comp. Laws § 492.101 et seq., and
the Michigan Credit Reform Act (“MCRA”), Mich. Comp. Laws § 445.1851 et seq. However, Defendants’ briefing
before this Court does not identify those claims as issues presented for review; nor does Defendants’ briefing
provide any argument on those claims. Thus, any challenges to the district court’s grant of summary judgment to
Plaintiff on her MVSFA and MCRA claims are deemed forfeited. See Fed. R. App. P. 28(a) (stating that an
appellant’s brief must include “a statement of the issues presented for review” and argument on those issues);
Brindley v. McCullen, 61 F.3d 507, 509 (6th Cir. 1995) (“We consider issues not fully developed and argued to be
waived.”).
Nos. 15-1465/1468                   Tyson v. Sterling Rental, et al.                  Page 3

$1,248 towards a down payment with the help of a grant from the state of Michigan. Defendants
told Plaintiff that she had been approved for financing of the remainder of the vehicle’s purchase
price.   To aid in the preparation of a financing agreement, Plaintiff provided Car Source
salesman Rami Kamil with copies of her two most recent pay stubs, as well as a recent bank
statement. With these documents in hand, Kamil entered Plaintiff’s financial information—
including the date she began working at her job, her year-to-date earnings, and the fact that she
received paychecks every two weeks—into a computer program called “CAPS” provided to Car
Source by non-party Credit Acceptance Corporation (“CAC”). Using the data entered by Kamil,
CAPS calculated that Plaintiff’s monthly income was approximately $1,817.38.

         The parties do not dispute that this estimate of Plaintiff’s monthly income was incorrect.
In fact, Plaintiff’s pay stubs indicated that her actual income was closer to $900 per month.
CAC’s designated representative, Jon Lun, later testified at deposition that based on his
knowledge of the CAPS software, it appeared that Kamil had entered Plaintiff’s information into
the program incorrectly. Lun opined that had Kamil used CAPS correctly, the information on
Plaintiff’s pay stubs would have accurately estimated her monthly income. For his part, Kamil
asserted during deposition that Plaintiff told him she was paid about $900 every two weeks; thus,
he had no reason to question CAPS’s estimate that Plaintiff’s monthly income was $1,817.38.

         Kamil thereafter used CAPS to “structure” a financing agreement by setting the price of
the vehicle, the amount of Plaintiff’s down payment, the APR, and the amount of monthly
payments. Kamil stated that he structured the agreement so that Plaintiff’s monthly payments
would stay below a certain dollar amount, calculated by CAPS, that was a set percentage of
Plaintiff’s estimated monthly income.      According to Kamil, so long as Plaintiff’s monthly
payments stayed below that specified amount, the financing agreement would be “funded” by
CAC. Kamil explained that after a financing agreement was structured by Car Source, Car
Source would assign the agreement to CAC, which would then “fund” the agreement by paying
Car Source an advance. However, in the event the terms of the financing agreement were not
acceptable to CAC, CAC would not issue an advance and would only collect monthly payments.
In that scenario, the purchaser’s monthly payments would go towards a “pool” of loans assigned
Nos. 15-1465/1468                   Tyson v. Sterling Rental, et al.                 Page 4

to CAC, and Car Source would receive profits on a “zero-advance” agreement only after CAC
had been reimbursed for the advances paid to Car Source on all the agreements in the pool.

       Kamil testified that in addition to maximizing the chance of receiving an advance on
Plaintiff’s financing agreement, he structured the agreement with the goal of keeping Plaintiff’s
monthly payments near the maximum amount allowed by CAC. Keeping the payments high, he
explained, would help to cover his credit risk. With these goals in mind, Kamil manipulated the
APR on the loan until CAPS’s calculations suggested that ideal terms had been achieved. Under
those terms, which were based on the incorrect estimate of Plaintiff’s income and her $1,248
deposit, the APR on Plaintiff’s loan was set at 24.49%.

       When the terms of Plaintiff’s financing agreement had been finalized, Kamil used the
CAPS software to generate two physical documents: a Retail Installment Contract (the “RIC”)
and a “multi-state application” for credit from CAC (the “credit application”). On the first page
of the two-page credit application, Plaintiff’s monthly income was listed as $1,817.38. The
second page of the application stated that by signing, Plaintiff was “certify[ing] that the above
information is complete and accurate.” (R. 33-1, PageID 310.) Plaintiff signed the document,
but the parties dispute whether the first page of the credit application was attached at that time.
Plaintiff also signed the RIC, which contained the material terms of the financing agreement and
listed Car Source as the “Creditor-Seller.” (R. 33-2, PageID 312.) Notably, the RIC contained a
clause automatically assigning the contract to CAC upon execution. Finally, Plaintiff signed an
“RD-108” form prepared by Car Source, which operated to register Plaintiff’s title to the vehicle
with Michigan’s Secretary of State. After the paperwork had been signed, Plaintiff received the
keys to the car and a receipt; she left the dealership in her new car that day.

       The precise circumstances surrounding what happened next are disputed by the parties. It
is undisputed, however, that Plaintiff drove her car back to Car Source on August 12, 2013—two
days after the sale—in response to a phone call from Kamil. When Plaintiff arrived at the
dealership, a Car Source employee told her that the RIC would need to be modified. It seems
that during those two intervening days, CAC informed Car Source that it would not be paying an
advance on the financing agreement due to the discrepancy in Plaintiff’s monthly income.
Plaintiff was given an invoice stating that under her new financing agreement, she would need to
Nos. 15-1465/1468                  Tyson v. Sterling Rental, et al.                   Page 5

put an additional $1,500 towards a down payment. Plaintiff declined to sign the new agreement
and ultimately left the Cobalt with Car Source.

       Plaintiff paints a more troubling picture of that day’s events. She asserts that she returned
to Car Source on August 12, 2013, after Kamil called and told her that her car required a new
GPS unit, and that without the unit her car might shut off without warning. She was also
informed that Car Source had a new contract for her to sign, under which she would make lower
monthly payments. Plaintiff testified that she traveled to the dealership and parked outside; she
entered the showroom and gave her keys to a Car Source employee. At that point, she was asked
to produce her copy of the RIC. When Plaintiff responded that she had not brought her copy, the
employee began “yelling and swearing” at her. Plaintiff states that a porter then retrieved the
personal belongings in the Cobalt and “dumped them” at her feet. According to Plaintiff, she
was told that if she wanted her car back, she would have to make an additional payment of
$1,500.

       Importantly, it is undisputed that Plaintiff was never provided with written notice
explaining why the terms of her credit arrangement had been or needed to be changed. In fact,
Kamil testified at deposition that Car Source never “issue[s] adverse action notices” informing
customers that “they’ve been denied credit and telling them why.”

                                       Procedural History

       Plaintiff filed suit against Defendants in federal district court on August 14, 2013—two
days after leaving her car with Car Source. Her complaint alleged that she was entitled to
damages and injunctive relief for, inter alia: (1) Car Source’s failure to provide an adverse action
notice as required under the ECOA, 15 U.S.C. § 1691(d); and (2) Defendants’ conversion of the
vehicle under Michigan common law and Mich. Comp. Laws § 600.2919a. After the completion
of discovery, the parties filed cross-motions for summary judgment. The district court granted
Plaintiff’s motion as to her claims brought under the ECOA, holding that undisputed evidence in
the record established Car Source’s status as a “creditor” subject to the ECOA’s adverse action
notice requirement, and that Car Source admitted that it never issues such notices. However, the
district court denied Plaintiff’s request for an injunction, holding that as a matter of law,
Nos. 15-1465/1468                   Tyson v. Sterling Rental, et al.                   Page 6

equitable relief is not available to private parties under the ECOA. The court also partially
granted Defendants’ motion and dismissed Plaintiff’s claims for conversion, holding that such
claims were barred by Michigan’s “economic loss doctrine.” The court denied the parties’
motions for reconsideration.

       The parties thereafter agreed to resolve all remaining claims by stipulation, and the
district court entered an order to that effect. The parties timely appealed.

                                          DISCUSSION

I.     Standard of review

       We review a district court’s grant of summary judgment de novo. Little v. BP Expl.
& Oil Co., 265 F.3d 357, 361 (6th Cir. 2001). A district court “shall grant summary judgment if
the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A dispute of material fact is
genuine so long as “the evidence is such that a reasonable jury could return a verdict for the non-
moving party.”     Ford v. Gen. Motors Corp., 305 F.3d 545, 551 (6th Cir. 2002) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “The district court, and this Court in
its review of the district court, must view the facts and any inferences reasonably drawn from
them in the light most favorable to the party against whom judgment was entered.” Kalamazoo
Acquisitions, L.L.C. v. Westfield Ins. Co., Inc., 395 F.3d 338, 342 (6th Cir. 2005) (citing
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).

II.    Plaintiff’s claims under the ECOA

       Originally enacted in 1974, the ECOA prohibits creditors from discouraging or
discriminating against any credit applicant “with respect to any aspect of a credit transaction . . .
on the basis of race, color, religion, national origin, sex or marital status, or age.” 15 U.S.C.
§ 1691(a); see also RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC, 754 F.3d
380, 383 (6th Cir. 2014) (“Congress enacted [the] ECOA in 1974 to eradicate credit
discrimination waged against women, especially married women whom creditors traditionally
refused to consider for individual credit.” (internal quotation marks omitted)). In 1976, Congress
Nos. 15-1465/1468                  Tyson v. Sterling Rental, et al.                     Page 7

amended the ECOA to include a provision requiring creditors to provide applicants with written
notice of the specific reasons why an adverse action was taken in regards to their credit. See
15 U.S.C. § 1691(d)(2)–(3); see also Treadway v. Gateway Chevrolet Oldsmobile Inc., 362 F.3d
971, 975 (7th Cir. 2004). The Senate report accompanying the 1976 amendment indicates that in
addition to further discouraging discriminatory practices, the notice requirement is intended to
provide consumers with a “valuable educational benefit” and to allow for the correction of
possible errors “[i]n those cases where the creditor may have acted on misinformation or
inadequate information.” S. Rep. No. 94-589, at 4 (1976).

       Notwithstanding these purposes, our analysis of the ECOA’s notice requirement must
begin with the statutory text. Lewis v. United States, 445 U.S. 55, 60 (1980). Under 15 U.S.C.
§ 1691(d)(2) and (3):

       (2) Each applicant [for credit] against whom adverse action is taken shall be
       entitled to a statement of reasons for such action from the creditor. A creditor
       satisfies this obligation by—

               (A) providing statements of reasons in writing as a matter of
               course to applicants against whom adverse action is taken; or

               (B) giving written notification of adverse action which discloses (i)
               the applicant’s right to a statement of reasons within thirty days
               after receipt by the creditor of a request made within sixty days
               after such notification, and (ii) the identity of the person or office
               from which such statement may be obtained. Such statement may
               be given orally if the written notification advises the applicant of
               his right to have the statement of reasons confirmed in writing on
               written request.

       (3) A statement of reasons meets the requirements of this section only if it
       contains the specific reasons for the adverse action taken.

“Adverse action” is thereafter defined in § 1691(d)(6) as “a denial or revocation of credit, a
change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially
the amount or on substantially the terms requested.”
Nos. 15-1465/1468                         Tyson v. Sterling Rental, et al.                              Page 8

         In this case, the parties do not dispute that Plaintiff fits the definition of an applicant2
who suffered an adverse action3 such that she was entitled to notice under § 1691(d). It is also
undisputed that Car Source provided no such notice in this case—indeed, Kamil testified that Car
Source never issues ECOA notices.                 Rather, the parties primarily dispute whether, in this
instance, Car Source acted as a “creditor” under the Act and was therefore required to provide
notice. And, as an ancillary matter, Plaintiff argues that the district court erred by holding that
she could not obtain injunctive relief under the ECOA as a matter of law. We address these
issues in turn.

A.       Car Source is a “creditor” for the purposes of the ECOA’s notice requirement

         The subsection of the ECOA defining “creditor” can be divided into three clauses, which
state that for the purposes of the Act, a creditor is:

         [1] any person who regularly extends, renews, or continues credit;

         [2] any person who regularly arranges for the extension, renewal, or continuation
         of credit; or

         [3] any assignee of an original creditor who participates in the decision to extend,
         renew, or continue credit.

         2
            Defendants’ briefing argues at length that a genuine dispute exists with regard to whether Plaintiff “lied”
when she signed the credit application stating that her monthly income was $1,817.38. But this dispute, assuming it
exists, is relevant only insofar as it is material to Plaintiff’s claim under the ECOA’s notice requirement. See Fed.
R. Civ. P. 56(a); Anderson, 477 U.S. at 248 (defining the facts “material” to summary judgment analysis as those
“that might affect the outcome of the suit under the governing law”). To the extent Defendants argue the alleged
dispute is material because lying on her credit application would disqualify Plaintiff from entitlement to notice, this
argument finds no support in the text of the ECOA or its implementing regulations. See, e.g., 15 U.S.C. § 1691a(b)
(defining an “applicant” entitled to protection under the Act without reference to the truth of the information
supporting her application for credit); 12 C.F.R. § 1002.2(e) (same); 12 C.F.R. § 1002.2(f) (defining an
“application” triggering the Act’s protections without reference to the truth of the information contained therein).
Defendants’ reliance on Lewis v. ACB Business Services, Inc., 135 F.3d 389 (6th Cir. 1998), in support of their
argument is likewise unavailing: that case’s pronouncements concerning “frivolous or nuisance disputes” and
creditors’ discretion have nothing to do with the effect of an allegedly untruthful credit application on the
applicability of the ECOA. See id. at 406. We therefore conclude that this alleged dispute is immaterial.
         3
           Under Defendants’ version of the facts, upon Plaintiff’s return to Car Source in response to Kamil’s phone
call, Plaintiff was told that her three options were: (1) maintain the current terms of her existing financing agreement
and be sued for “lying” on her credit application; (2) exchange the Chevrolet Cobalt for a less expensive vehicle; or
(3) keep the Chevrolet Cobalt and put an additional $1,500 towards a down payment. Kamil testified that he was
not willing to allow Plaintiff to maintain the terms of the existing financing agreement without any adverse
consequences. Defendants do not appear to dispute that presenting Plaintiff with these options constituted an
“adverse action” under the Act.
Nos. 15-1465/1468                  Tyson v. Sterling Rental, et al.                  Page 9

15 U.S.C. § 1691a(e). Although the statutory language of the ECOA presents these clauses as a
single, cohesive definition for “creditor,” the clauses are treated differently by the regulations
promulgated under the Act by the Consumer Financial Protection Bureau (“CFPB”).                See
15 U.S.C. § 1691b(a) (granting the CFPB authority to promulgate regulations “to carry out the
[ECOA’s] purposes”). Those regulations are collectively known as Regulation B. 12 C.F.R.
§ 1002.1(a).

       Importantly, Regulation B distinguishes clause [2] by stating that persons qualifying as
“creditors” under that clause—that is, those who merely arrange for credit by referring applicants
to lenders—are considered “creditors” solely for the purposes of the ECOA’s prohibitions on
discrimination and discouragement. See 12 C.F.R. § 1002.2(l). Under Regulation B, in other
words, “creditors” who act as mere middle-men between applicants and lenders have no
affirmative obligation to provide applicants with notice stating the reasons for any adverse
action. Id.; see also Treadway, 362 F.3d at 978–80. As a result, Regulation B limits the class of
creditors who are required to provide such notices to “person[s] who, in the ordinary course of
business, regularly participate[] in a credit decision, including setting the terms of the credit;”
also included are “a creditor’s assignee, transferee, or subrogee who so participates.” 12 C.F.R.
§ 1002.2(l); see also 12 C.F.R. Pt. 1002, Supp. I, cmt. 2(l)-2 (March 2003) (explaining that
creditors “who do not participate in credit decisions” are subject only to the Act’s discrimination
and discouragement provisions).

       Viewing the record evidence in the light most favorable to Car Source, see Kalamazoo
Acquisitions, L.L.C., 395 F.3d at 342, we agree with the district court that Car Source is a
“creditor” subject to the ECOA’s notice requirement. There is no dispute that Car Source is, at
the very least, a “person who regularly arranges for the extension, renewal, or continuation of
credit,” such that it qualifies as a “creditor” under the statutory definition of that term.
See 15 U.S.C. § 1691a(e). The deposition testimony of Rami Kamil likewise establishes that Car
Source is a “creditor” required to provide notice under Regulation B’s definition of that term
because Car Source “regularly participates in [the] credit decision” by “setting the terms of the
credit.” 12 C.F.R. § 1002.2(l). Indeed, Kamil agreed that Car Source “structure[s]” customers’
financing agreements by determining “how much to charge them . . . [a]nd how much interest . . .
Nos. 15-1465/1468                  Tyson v. Sterling Rental, et al.                  Page 10

[a]nd how big the payments are.” (R. 44-2, Kamil Dep., PageID 670–71, 687) Jon Lun similarly
agreed that when Car Source is preparing a financing deal that will ultimately be assigned to
CAC, “the terms of the deal are totally up to” Car Source. (R. 41-10, Lun Dep., PageID 512–
13.)

       Defendants’ primary argument on appeal is that Car Source served as a mere middle-man
between Plaintiff and CAC, and that CAC was the true “creditor” with responsibility for
providing Plaintiff with notice of any adverse action. We find this argument unavailing. Both
Kamil and Lun testified that CAC’s only role in the transaction was to determine whether it
would pay Car Source an “advance” on Plaintiff’s financing agreement, the terms of which were
set by Car Source. The consequences of CAC’s determination regarding an advance fell entirely
on Car Source—under any circumstance, CAC would collect payments under the terms set by
Car Source, and Plaintiff would be none the wiser. When CAC informed Car Source that no
advance would be issued on Plaintiff’s financing deal, it was Car Source’s sole decision to react
by presenting Plaintiff with an ultimatum that effectively changed the terms of her existing credit
arrangement. See 15 U.S.C. § 1691(d)(6). When coupled with its regular participation in credit
decisions, Car Source’s unilateral decision to take that adverse action triggered an obligation to
provide Plaintiff with a written statement of its specific reasons for doing so.           See id.
§ 1691(d)(2).

       Notably, this conclusion comports with the Seventh Circuit’s reasoning in Treadway,
upon which the district court in this case relied. See 362 F.3d at 978–81. In Treadway, the
defendant car dealership argued that it was not a “creditor” subject to the ECOA’s notice
requirement because it merely declined to forward the plaintiff’s credit application to any lenders
after determining she was not creditworthy. Id. at 974. After analyzing Regulation B and its
accompanying comments, the court in Treadway concluded, as we do above, that the regulation
typically operates to exempt middle-man “creditors” from the ECOA’s notice requirements. Id.
at 979–80 (citing 12 C.F.R. Pt. 1002, Supp. I, cmt. 2(l)-2, and 68 Fed. Reg. 13155 (March 18,
2003)). Nevertheless, the court determined that under certain circumstances, creditors purporting
to be mere middle-men may still be required to provide notice of an adverse action. Id. (“[T]here
is a continuum of participation in a credit decision . . . . At some point along the continuum, a
Nos. 15-1465/1468                   Tyson v. Sterling Rental, et al.                     Page 11

party becomes a creditor for purposes of the notification requirements of the Act.” (internal
quotation marks omitted)).      After noting several ways in which the defendant dealership
regularly “participated” in credit decisions, the court emphasized that the dealership essentially
denied the plaintiff’s credit application—i.e., took the adverse action—by declining to refer the
application to any potential lenders. Id. at 980–81. On those bases, the court held that the
dealership was subject to the ECOA’s notice requirement. Id. at 981.

       Although the facts of this case are distinguishable from those of Treadway, we agree with
Treadway insofar as it held that any “creditor”—middle-men included—that regularly
participates in credit decisions and takes an adverse action with regard to a credit application
bears the burden of providing notice under the ECOA. As discussed above, there is no question
that Car Source fits that bill because Car Source, not CAC, makes the credit decisions and its
ultimatum “change[d] . . . the terms of [Plaintiff’s] existing credit arrangement.” 15 U.S.C.
§ 1691(d)(6). Thus, regardless of whether Car Source is a middle-man creditor subject to
Treadway’s “continuum” analysis, we would hold that Car Source is subject to the ECOA’s
notice requirement.

       Defendants’ remaining arguments are similarly unpersuasive. Defendants contend, for
example, that Car Source’s status as a “creditor” is somehow affected by its use of CAC’s
copyrighted CAPS software and template contracts when preparing Plaintiff’s financing
agreement.      This argument finds no support in either common sense, or the statutory or
regulatory definitions of “creditor.” See 15 U.S.C. § 1691a(e); 12 C.F.R. § 1002.2(l). The
ECOA would be a paper tiger if creditors could insulate themselves from liability simply by
using a third party’s copyrighted forms or software when preparing a credit application. Nor do
Defendants provide any authority to support their argument that their obligation to provide notice
was affected by Plaintiff’s actions (e.g., allegedly abandoning her car on Car Source’s lot) after
Defendants took the adverse action. Finally, we note that the arguments made by Defendants for
the first time in their reply brief—most of which range from legally irrelevant to potentially
frivolous—are waived. Sanborn v. Parker, 629 F.3d 554, 579 (6th Cir. 2010) (observing that
this Circuit has “consistently held . . . that arguments made to us for the first time in a reply brief
are waived”).
Nos. 15-1465/1468                   Tyson v. Sterling Rental, et al.                   Page 12

        Based on the above, we conclude that the district court did not err by granting Plaintiff’s
motion for summary judgment on her claim under the ECOA.

        B.      Injunctive relief is available to private parties under the ECOA

        Although the district court granted Plaintiff’s motion for summary judgment on her
ECOA claim, the court denied Plaintiff’s request for injunctive relief on that claim after
concluding that such relief is not available to private parties under the ECOA. In support of this
conclusion, the court cited 12 C.F.R. § 1002.16(b)(4), which states:

        On referral, or whenever the Attorney General has reason to believe that one or
        more creditors have engaged in a pattern or practice in violation of the [ECOA] or
        this part, the Attorney General may bring a civil action for such relief as may be
        appropriate, including actual and punitive damages and injunctive relief.

As Plaintiff notes, however, this regulatory provision does not have the effect of limiting the
availability of injunctive relief to the Attorney General.        More importantly, the statutory
provision governing the types of relief available to private parties under the ECOA explicitly
states that “[u]pon application by an aggrieved applicant, the appropriate United States district
court or any other court of competent jurisdiction may grant such equitable and declaratory relief
as is necessary to enforce the requirements imposed under [the Act].” 15 U.S.C. § 1691e(c)
(emphasis added). As the emphasized language suggests, the ECOA provides applicants for
credit—i.e., private parties—with the right to seek equitable relief.

        Although we review the denial of equitable relief under a deferential abuse of discretion
standard, Anchor v. O’Toole, 94 F.3d 1014, 1025 (6th Cir. 1996), we have held that “[a]n abuse
of discretion occurs when the district court . . . improperly applies the law.” Balsley v. LFP, Inc.,
691 F.3d 747, 761 (6th Cir. 2012) (internal quotation marks omitted). Because the district court
denied injunctive relief based on an incorrect understanding of the controlling law, remand is
necessary so that the court may exercise its discretion and evaluate the appropriateness of such
relief in the first instance.

III.    Plaintiff’s conversion claims
Nos. 15-1465/1468                 Tyson v. Sterling Rental, et al.                  Page 13

       Plaintiff’s complaint alleges that Defendants’ “repossession” of her vehicle after the sale
constituted conversion at common law and a violation of Michigan’s statutory conversion law,
Mich. Comp. Laws § 600.2919a. Under Michigan common law, conversion is defined as “any
distinct act of dominion wrongfully exerted over another’s personal property.” Trail Clinic, P.C.
v. Bloch, 319 N.W.2d 638, 640 (Mich. Ct. App. 1982). Michigan’s statutory conversion law, on
the other hand, states:

       (1) A person damaged as a result of . . . the following may recover 3 times the
       amount of actual damages sustained, plus costs and reasonable attorney fees:

               (a) Another person’s stealing or embezzling property or converting
               property to the other person’s own use.

       ...

       (2) The remedy provided by this section is in addition to any other right or
       remedy the person may have at law or otherwise.

Mich. Comp. Laws § 600.2919a. As recently explained by the Michigan Supreme Court in
Aroma Wines & Equipment, Inc. v. Columbian Distribution Services, Inc., 871 N.W.2d 136,
145–46 (Mich. 2015), § 600.2919a creates a cause of action wholly separate from the traditional
tort of conversion—and although the statute comes with the added benefit of treble damages and
a fee-shifting provision, it requires the plaintiff to prove that the defendant converted the
property to his or her “own use.” Id. at 146–48.

       Below, the district court held that all of Plaintiff’s conversion claims were barred under
Michigan’s “economic loss doctrine.”      That common-law doctrine’s “basic premise is that
economic losses that relate to commercial transactions are not recoverable in tort.” Quest
Diagnostics, Inc. v. MCI WorldCom, Inc., 656 N.W.2d 858, 861 (Mich. Ct. App. 2002). The
district court reasoned that because Plaintiff’s claims concern conversion of a vehicle acquired
via a contract of sale, she is barred under the economic loss doctrine from seeking damages
“under a corresponding tort action.” (R. 43, PageID 586.) Plaintiff’s arguments on appeal focus
exclusively on Michigan’s statutory conversion law. She argues, for example, that the language
of § 600.2919a(2) reflects the Michigan Legislature’s express intent that a cause of action for
statutory conversion should remain available “in addition to any other right or remedy the person
Nos. 15-1465/1468                      Tyson v. Sterling Rental, et al.                        Page 14

may have,” including those that sound in contract law. She also notes that Michigan adheres to
the general maxim that statutes override conflicting common law rules. See, e.g., Pulver v.
Dundee Cement Co., 515 N.W.2d 728, 732 n.8 (Mich. 1994) (“Obviously, if there is a conflict
between the common law and a statutory provision, the common law must yield.”).4
Defendants’ briefing provides no argument defending the district court’s ruling on Plaintiff’s
conversion claims.

        We ultimately agree with Plaintiff that the district court erred in applying the economic
loss doctrine to bar her statutory conversion claims. However, we base our conclusion on the
fact that the doctrine does not apply under the circumstances of this case.

        The origins and purposes of Michigan’s economic loss doctrine have been expounded
upon at length. See, e.g., Detroit Edison Co. v. NABCO, Inc., 35 F.3d 236, 239–41 (6th Cir.
1994); Quest Diagnostics, 656 N.W.2d at 861–63; Neibarger v. Universal Coops., Inc., 486
N.W.2d 612, 615–18 (Mich. 1992).             For our purposes, it is sufficient to note two of the
doctrine’s central tenets. First, the doctrine is premised on the idea that barring tort claims
arising from a commercial transaction is appropriate where the risks giving rise to those claims
were anticipatable and subject to the contractual bargaining process. Quest Diagnostics, 656
N.W.2d at 864 (“In order for the economic loss doctrine to bar recovery in tort, there must be a
transaction that provides an avenue by which the parties are afforded the opportunity to negotiate
to protect their respective interests.”); see also Neibarger, 486 N.W.2d at 615 (“Contract
principles . . . are generally more appropriate for determining claims for consequential damage
that the parties have, or could have, addressed in their agreement.”); Llewellyn-Jones v. Metro
Prop. Grp., LLC, 22 F. Supp. 3d 760, 778 (E.D. Mich. 2014) (“The doctrine is animated by the
idea that tort remedies should not bail out parties who could have anticipated losses caused by
failed performance and negotiated an appropriate response.”).

        Thus, the doctrine is classically used to bar recovery for product liability claims arising
from a purchased good’s failure to live up to the buyer’s expectations:

        4
          As Tyson’s counsel acknowledged at oral argument, Tyson is appealing only the statutory conversion
claims, not the common law conversion claim. Tyson thus forfeits the common law conversion argument on appeal.
See United States v. Huntington Nat’l Bank, 574 F.3d 329, 331 (6th Cir. 2009).
Nos. 15-1465/1468                  Tyson v. Sterling Rental, et al.                   Page 15

       Rational economic actors bargaining at arms length, in deciding both the extent of
       the seller’s liabilities and the purchase price, should consider the possibility that
       the product will not perform properly . . . . As a result, the buyer or the seller or
       both will then spread the cost of this contingency out, as a cost of doing business,
       in the form of higher prices.

Detroit Edison Co., 35 F.3d at 240; see also Metro. Alloys Corp. v. Considar Metal Mktg., Inc.,
No. 06-12667, 2007 WL 2874005, at *5 & n.6 (E.D. Mich. Sept. 25, 2007) (collecting cases and
opining that “the applicability of [Michigan’s] economic loss doctrine[] appears to be limited to
efforts to recover ‘for economic loss caused by a defective product’” (emphasis omitted)
(quoting Neibarger, 486 N.W.2d at 618)). Conversely, Michigan courts have declined to apply
the doctrine to bar claims for fraud in the inducement because such fraud cannot reasonably be
anticipated and accounted for in the bargaining process. See Huron Tool & Eng’g Co. v.
Precision Consulting Servs., Inc., 532 N.W.2d 541, 545 (Mich. Ct. App. 1995) (noting that fraud
in the inducement undermines “the ability of one party to negotiate fair terms and make an
informed decision”).

       The second relevant tenet of the doctrine is a necessary corollary to the first: tort claims
are barred under the doctrine only where the duty alleged to have been violated by the defendant
is implicated by the relevant contract. See Neibarger, 486 N.W.2d at 615–16 (observing that the
economic loss doctrine originates from the desire to reconcile overlapping duties arising from
contractual relationships and tort law); Sherman v. Sea Ray Boats, Inc., 649 N.W.2d 783, 788
(Mich. Ct. App. 2002) (citing Rinaldo’s Constr. Corp. v. Mich. Bell Tel. Co., 559 N.W.2d 647,
658 (Mich. 1997), for the proposition that Michigan’s economic loss doctrine evolved out of the
state’s more general common law rule prohibiting recovery in tort for violation of a duty
imposed by a contract). We have explained that under Michigan law, “[n]ot all tort claims . . .
are barred by the existence of a contract. Rather, Michigan courts must inquire whether the legal
duty allegedly violated by a defendant arises separately and distinctly from a defendant’s
contractual obligations.” DBI Invs., LLC v. Blavin, 617 F. App’x 374, 381 (6th Cir. 2015)
(internal brackets and quotation marks omitted); see also Hart v. Ludwig, 79 N.W.2d 895, 898
(Mich. 1956) (“[I]f a relation exists which would give rise to a legal duty without enforcing the
contract promise itself, the tort action will lie, otherwise not.” (quoting W. Prosser, Handbook of
the Law of Torts, § 33 at 205 (1st ed. 1941))).
Nos. 15-1465/1468                          Tyson v. Sterling Rental, et al.                             Page 16

         Together, these tenets indicate that the economic loss doctrine was inappropriately
applied in this case. Defendants do not dispute that execution of the RD-108 and the RIC
resulted in transfer of title to the vehicle to Plaintiff and assignment of Car Source’s lien on the
vehicle to CAC; nor do they dispute that delivery of the vehicle to Plaintiff terminated Car
Source’s possessory interest. Because Defendants’ contractual duties regarding title, possession,
and delivery had effectively terminated by the time Plaintiff returned to Car Source on August
12, 2013, it cannot be said that her conversion claims are based on Defendants’ violation of a
duty arising under the contract of sale. Moreover, post-delivery repossession by a non-lien-
holding seller is not the sort of risk typically anticipated by buyers in the ordinary course of
bargaining for a commercial transaction.                 Thus, Plaintiff could not reasonably have been
expected to bargain against the possibility that Defendants would repossess the vehicle without
any legal authority, which is what occurred under Plaintiff’s version of disputed facts.5

         In coming to the contrary conclusion, the district court relied on the allegation in
Plaintiff’s complaint that Defendants’ “actions in taking possession of the vehicle [were]
wil[l]ful or intentional, and in derogation of [t]he contract of sale.” (R. 32, PageID 282–283
(emphasis added).) The court held that this allegation conclusively established that “plaintiff’s
conversion claims are simply a restatement of the duties defendants owed her under the
contract.” (R. 48, PageID 766.) Notwithstanding the fact that Plaintiff’s complaint clearly
differentiates between her conversion claims and her claims based on Defendants’ contractual
duties, the district court erred by treating this conclusory allegation as a settled matter of fact for
the purposes of summary judgment. See, e.g., Gooden v. Memphis Police Dep’t, 67 F. App’x
893, 895 (6th Cir. 2003) (“Conclusory allegations, speculation, and unsubstantiated assertions
are not evidence . . . .”). As discussed above, the facts borne out in discovery establish that by
the time Plaintiff returned to Car Source, Defendants’ duties regarding possession of the vehicle

         5
          Notably, dealerships in Car Source’s position sometimes require buyers to sign so-called “spot delivery”
or “conditional delivery” agreements to protect against the possibility that the buyers’ applications for credit will not
be approved for financing. See, e.g., Givens v. Van Devere, Inc., No. 5:11CV666, 2012 WL 4092738, at *1–2 (N.D.
Ohio Sept. 17, 2012) (describing a “conditional delivery agreement” signed by the plaintiff car buyer which
contained a provision stating: “if either I or the Dealership is unable to obtain third party financing approval or
assignment of the contract/lease, . . . I and/or the Dealership may cancel the purchase/lease contract and I must
immediately return the vehicle to the Dealership”). Without commenting upon the enforceability or propriety of
such agreements under Michigan or federal law, we note that no such conditional delivery agreement appears in the
record for this case. Thus, in any event, delivery of the vehicle to Plaintiff appears to have rendered the sale final.
Nos. 15-1465/1468                    Tyson v. Sterling Rental, et al.              Page 17

no longer emanated from the contract of sale; rather, at that point in time, Defendants’ duty to
refrain from wrongfully exerting dominion over Plaintiff’s vehicle emanated from the policies
underlying the tort of conversion.

       Based on the above, we conclude that the district court erred by granting Defendants’
motion for summary judgment as to Plaintiff’s claims for statutory conversion.

                                          CONCLUSION

       For the reasons stated above, we AFFIRM the district court’s grant of summary
judgment in favor of Plaintiff on her ECOA claim; we REVERSE the district court’s
determination that injunctive relief was not available to Plaintiff under the ECOA, and we
REMAND for an initial determination of whether such relief is warranted; and we REVERSE
the district court’s grant of summary judgment in favor of Defendants on Plaintiff’s statutory
conversion claims and REMAND for further proceedings on those claims.