Gibson v. Ltd, Inc., 04-2110.

Citation434 F.3d 275
Decision Date11 January 2006
Docket NumberNo. 04-2131.,No. 04-2110.,04-2110.,04-2131.
PartiesTimothy GIBSON, Plaintiff-Appellee, v. LTD, INCORPORATED, Defendant-Appellant. Timothy Gibson, Plaintiff-Appellant, v. LTD, Incorporated, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

ARGUED: Yama Anthony Shansab, WALTON & ADAMS, P.C., Reston, Virginia, for Appellant/Cross-Appellee LTD, Incorporated. Alexander Hugo Blankingship, III, Blankingship & Associates, P.C., Alexandria, Virginia, for Appellee/Cross-Appellant Timothy Gibson. ON BRIEF: Robert V.W. Adams, III, Walton &amp Adams, P.C., Reston, Virginia, for Appellant/Cross-Appellee LTD, Incorporated. Thomas B. Christiano, Blankingship & Associates, P.C., Alexandria, Virginia, for Appellee/Cross-Appellant Timothy Gibson.

Before NIEMEYER and LUTTIG, Circuit Judges, and Robert J. CONRAD, Jr., United States District Judge for the Western District of North Carolina, sitting by designation.

Affirmed in part, reversed in part, vacated in part, and remanded in part by published opinion. Judge Niemeyer wrote the opinion, in which Judge Luttig and Judge Conrad joined.

OPINION

NIEMEYER, Circuit Judge.

In order to obtain financing for the purchases of a 2002 Dodge truck and a 2003 Dodge truck from Lustine Toyota/Dodge, Inc., in Woodbridge, Virginia, Timothy Gibson executed a total of five retail installment sales contracts — two in connection with the 2002 purchase and three in connection with the 2003 purchase. After Gibson wrecked his 2002 truck and returned the 2003 truck upon Lustine's demand when Lustine learned that Gibson was no longer employed, Gibson commenced this action challenging the legality of disclosures made in the retail installment sales contracts. He alleged violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., and related Virginia law.

The district court held that disclosures in the first 2002 contract and the first 2003 contract constituted violations of TILA and awarded Gibson statutory damages, as well as $53,627.50 for statutorily authorized attorneys fees. The court rejected Gibson's claim that Lustine improperly disclosed a charge for the inclusion of "GAP insurance"1 as part of the amount financed in the second 2003 contract.

For the reasons that follow, we affirm the district court's findings that two contracts violated TILA and reverse its rejection of Gibson's claim that the GAP insurance cost was improperly disclosed as part of the amount financed on the second 2003 contract. We also vacate the district court's award of attorneys fees to permit the court to reassess its award in light of Gibson's additional meritorious claim.

I

Timothy Gibson, a young welder from Texas who did not complete high school and who had little credit history, came to Virginia in 2002 with his older brother to work for a contractor in Dumfries, Virginia. After having had to hitch rides with his brother and to take taxicabs for transportation, Gibson decided to purchase a truck from Lustine Toyota/Dodge ("Lustine") on October 31, 2002. After selecting a new 2002 Dodge Dakota truck, a Lustine employee who sells aftermarket products asked Gibson whether he was interested in purchasing undercoating, paint sealant, fabric protector, floor mats, or other after-market products. According to Gibson, he told the sales representative that he did not want any such products — a fact that Lustine has not disputed. The sales representative nonetheless saved in her file an "After Sale Invoice," not signed by Gibson, showing a $499 charge for undercoating and paint sealant. Later that day, Gibson signed a buyer's order for the truck and a retail installment sales contract to finance it that committed him to pay $21,201.39, after applying his down payment. This sum included a $499 charge for "AFTER MRKT," but no such charge was disclosed on the retail installment sales contract. The charge was included in the gross amount financed.

In his buyer's order, Gibson agreed to permit Lustine to follow its practice of selling his retail installment sales contract to a third party. Moreover, the buyer's order provided:

If Purchaser is financing this transaction, it is conditioned upon approval of Purchaser's proposed retail installment sale contract as submitted to or through the Dealer. If that proposed retail installment sale contract is not approved under the terms agreed to with the Dealer, Purchaser may cancel this invoice....2

In a financing addendum to the retail installment sales contract, Gibson also agreed that he was accepting delivery of the truck that day "pending approval by a financing source" and that if Lustine did not receive approval from a financing source, Lustine could rescind the transaction. Lustine remained bound, however, until it gave notice that it was rescinding the contract by its failure to sell the loan. As to Gibson, the retail installment sales contract provided that he remained bound after he signed the contract and that he could "only cancel it if the seller agree[d] or for legal cause." Gibson took delivery of the truck on October 31, 2002, the same day he entered the dealership and signed the retail installment sales contract.

Lustine was unable to find a third-party finance company to purchase Gibson's retail installment sales contract because of Gibson's low credit rating. Accordingly, Lustine had Gibson return to the dealership on November 11, 2002, to restructure the deal and execute a new retail installment sales contract that reduced the amount financed to $17,114.17. This was accomplished by deleting the $499 "AFTER MRKT" charge, deleting a $500 GAP insurance charge, and increasing Gibson's down payment. As restructured, this second retail installment sales contract was sold to Triad Financial Corporation.

In early 2003, Gibson crashed his truck into a pole, totaling it. On February 5, 2003, he returned to Lustine to purchase a replacement truck. He chose a new 2003 Dodge Dakota truck and again signed a buyer's order as well as a retail installment sales contract to finance $22,889.36, after applying his down payment. This amount included a $500 charge for GAP insurance and an overcharge in the amount of $12.39 resulting from Lustine's miscalculation of the dealer's business license tax. The inclusion of the GAP charge on the buyer's order and on the retail installment sales contract was authorized by an addendum that Gibson signed, agreeing to purchase the GAP insurance. Gibson took delivery of the 2003 truck that day.

Again, Lustine was unable to sell this 2003 retail installment sales contract to a finance company. One finance company, however, agreed to purchase the loan if it were restructured to provide for an amount financed no greater than $21,900. Accordingly, Gibson returned to the dealership on February 12, 2003, and signed a second retail installment sales contract that provided for financing the amount of $21,248.70. Under this restructured arrangement, Gibson increased his down payment and thereby decreased the amount financed. This second 2003 contract again included a $500 charge for GAP insurance, even though Gibson did not again sign an addendum to authorize the charge as he had a week earlier for the first 2003 contract.

A couple of days after Gibson signed the second 2003 retail installment sales contract — on February 14, 2003 — Lustine was advised that Gibson still owed Triad Financial money on the loan for his 2002 truck because the insurance payout on the totaled vehicle was less than the amount of the outstanding loan. Because Gibson did not have GAP insurance, Lustine proposed to cover Gibson's deficiency by absorbing part of it and passing on the remainder to Gibson as an increase in the price of the 2003 truck. Gibson returned to the dealership on February 18 to sign a third retail installment sales contract agreeing to this arrangement.

After Gibson signed the February 18 retail installment sales contract, Lustine learned that Gibson had quit his job on February 6, 2003, the day after he signed his credit application for financing the 2003 truck. Because of Gibson's unemployment, Lustine told Gibson that he had to return the vehicle, and Gibson did so.

After returning the 2003 truck, Gibson commenced this action against Lustine, alleging multiple violations of TILA, a violation of the Virginia Consumer Protection Act, and common law fraud. On cross motions for summary judgment, the district court ruled in favor of Lustine in all of Gibson's claims except two: The court ruled in

Gibson's favor finding (1) that the $499 charge for "AFTER MRKT" on the first retail installment sales contract was improperly included in the amount financed inasmuch as it was "undisputed" that Gibson did not order, nor did he receive, aftermarket products and (2) that the first 2003 retail installment sales contract included an overcharge of $12.39 for the dealer's business license tax. In making these findings, the district court rejected Lustine's principal argument that, because neither of the retail installment sales contracts on which violations were found had been purchased by third-party finance companies and no monies were ever loaned on them, the contracts were not "consummated" as required by federal law. The court relied on our decision in Nigh v. Koons Buick Pontiac GMC, Inc., 319 F.3d 119 (4th Cir.2003), rev'd in part 543 U.S. 50, 125 S.Ct. 460, 160 L.Ed.2d 389 (2004), to reject Lustine's argument. The parties agreed that Nigh dictated an award of $63,847.94, twice the sum of the two finance charges related to Gibson's successful claims.3 And because Gibson was a successful plaintiff under the TILA, Gibson submitted a claim for attorneys fees in the amount of $82,957.50, pursuant to 15 U.S.C. § 1640(a)(3). The district court awarded Gibson $53,627.50.

From the district court's judgment, Lustine appeals, challenging the court's conclusion that the relevant retail...

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