Dixon v. S & S Loan Service of Waycross, Inc.

• Citation: 754 F. Supp. 1567
• Decision Date: 18 October 1990
• Docket Number: No. CV 590-001.,CV 590-001.
• Parties: Beulah Rose DIXON and Raymond Dixon, Plaintiffs, v. S & S LOAN SERVICE OF WAYCROSS, INC., and Hudson Management, Inc., Defendants.
• Court: U.S. District Court — Southern District of Georgia

754 F. Supp. 1567

Beulah Rose DIXON and Raymond Dixon, Plaintiffs, v. S & S LOAN SERVICE OF WAYCROSS, INC., and Hudson Management, Inc., Defendants.

No. CV 590-001.

United States District Court, S.D. Georgia, Waycross Division.

October 18, 1990.

Gloria A. Einstein, Waycross, Ga., Sidney L. Moore, Jr., Decatur, Ga., for plaintiffs.

Mary Jane Cardwell, Neal L. Conner, Jr., Waycross, Ga., David G. Crockett, Atlanta, Ga., for defendants.

ORDER

EDENFIELD, Chief Judge.

This case concerns the Truth-in-Lending Act, 15 U.S.C. §§ 1601 et seq. (1988) ("TILA"), and the Georgia Industrial Loan Act, O.C.G.A. §§ 7-3-1 et seq. (1980) ("GILA"). The plaintiffs, Mr. and Mrs. Dixon, complain that the defendants violated TILA when defendant S & S Loan Service of Waycross ("S & S") made three loans to them in the winter of 1988-89. Before the Court is the defendant's motion for summary judgment on all counts. For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART the defendant's motion.

BACKGROUND

In December 1988, Mr. and Mrs. Dixon each entered into a separate loan agreement with S & S ("the December loans"). Almost two months later, Mr. Dixon procured a third loan from S & S ("the February loan"). The Dixons allege that S & S violated TILA and the regulations promulgated thereunder in making all three loans. In making the December loans, the defendants allegedly violated TILA and the regulations by failing to include vehicle single interest insurance premiums as an element of the finance charge. S & S allegedly violated TILA in making the February loan because it failed to include nonrecording insurance premiums as an element of the finance charge. The Dixons further allege that S & S violated GILA by requiring the Dixons to purchase "Accidental Death & Dismemberment" insurance and by charging them an "excessive, illegal, and unwarranted vehicle single interest premium." Under TILA, offenders may be assessed damages and attorney's fees, and this relief is what the Dixons seek.

S & S answered, denying the plaintiffs' allegations of wrongdoing, asserting several affirmative defenses, and counter-claiming for the unpaid balances on the three loans. The Dixons failed to reply to S & S on those counterclaims, and, accordingly, the Court entered judgment for S & S on them. Court Order, No. CV 590-001 (July 18, 1990). S & S then moved for summary judgment.

SUMMARY JUDGMENT

Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986). Thus, summary judgment is appropriate where the nonmovant "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The substantive law governing the action determines whether an element is essential. E.g., Liberty Lobby, 477 U.S. at 248, 106 S.Ct. at 2510; DeLong Equip. Co. v. Washington Mills Abrasive Co., 887 F.2d 1499, 1505 (11th Cir.1989), cert. denied, ___ U.S. ___, 110 S.Ct. 1813, 108 L.Ed.2d 943 (1990). "A party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323, 106 S.Ct. at 2552; see Brown v. Crawford, 906 F.2d 667, 670 (11th Cir.1990). It is then the nonmovant's burden to establish, by going beyond the pleadings, that there is a genuine issue as to facts material to the nonmovant's case. Earley v. Champion Int'l Corp., 907 F.2d 1077, 1080 (11th Cir.1990); Rollins v. Tech-South, Inc., 833 F.2d 1525, 1528 (11th Cir. 1987). In assessing whether the movant is entitled to summary judgment in its favor, the district court must review the evidence and all reasonable factual inferences arising from it in the light most favorable to the nonmoving party. E.g., Earley, 907 F.2d at 1080; Apcoa, Inc. v. Fidelity Nat'l Bank, 906 F.2d 610, 611 (11th Cir.1990). The evidence need not be in a form that would be admissible at trial. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553; Cottle v. Storer Communication, Inc., 849 F.2d 570, 575 (11th Cir.1988). "Where the record, taken as a whole could not lead a rational trier of fact to find for the nonmoving party, then there is no genuine issue for trial." Matsushita Elec. Indus. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); see Anderson, 477 U.S. at 252, 106 S.Ct. at 2512; Barfield v. Brierton, 883 F.2d 923, 933-34 (11th Cir.1989). The Court, however, must avoid weighing conflicting evidence, Liberty Lobby, 477 U.S. at 255, 106 S.Ct. at 2513; Brown v. Hughes, 894 F.2d 1533, 1536 (11th Cir.), cert. denied, ___ U.S. ___, 110 S.Ct. 2624, 110 L.Ed.2d 645 (1990); Tippens v. Celotex Corp., 805 F.2d 949, 953 (11th Cir.1986), or making credibility determinations. Liberty Lobby, 477 U.S. at 255, 106 S.Ct. at 2513; McKenzie v. Davenport Funeral Home, 834 F.2d 930, 934 (11th Cir.1987).

ANALYSIS

A. TILA Generally

Congress's purpose in passing TILA was "to assure a 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) (1988). TILA is a remedial statute, and, hence, is liberally construed in favor of borrowers. E.g., Smith v. Fidelity Consumer Discount Co., 898 F.2d 896, 898 (3d Cir.1990). The remedial objectives of TILA are achieved by imposing "a system of strict liability in favor of consumers when mandated disclosures have not been made." Id. Thus, "liability will flow from even minute deviations from the requirements of the statute" and the regulations promulgated under it. Shroder v. Suburban Coastal Corp., 729 F.2d 1371, 1380 (11th Cir.1984); Smith 898 F.2d at 898.

To implement TILA, Congress "delegated expansive authority to the Federal Reserve Board to elaborate and expand the legal framework governing commerce in credit." Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 560, 100 S.Ct. 790, 794, 63 L.Ed.2d 22 (1980). The Board exercised its authority by promulgating regulations; namely, Regulation Z, 12 C.F.R. § 226 (1990). See Milhollin, 444 U.S. at 555, 100 S.Ct. at 790. Regulation Z has the force of law: "Absent some obvious repugnance to the statute, Regulation Z should be accepted by the courts." Anderson Bros. Ford v. Valencia, 452 U.S. 205, 219, 101 S.Ct. 2266, 2274, 68 L.Ed.2d 783 (1981). With this framework in mind, the Court proceeds to address the contentions of the parties.

B. TILA and Vehicle Single Interest Insurance

S & S has moved for summary judgment on the Dixons' claim that S & S "failed to include in the finance charge an additional $526 charged to each plaintiff as single interest automobile coverage, when such coverage was not sold in accordance with the requirements of Regulation Z." Complaint at 3.¹ Single interest insurance is a type of property insurance. Everyday auto insurance is also a type of property insurance. The difference between everyday auto insurance and vendor's single interest insurance on a vehicle offered as collateral is who is protected, and for how much. Common auto insurance protects the driver's interest in the auto for the value of the car. Single interest insurance connected with a secured loan is different: It "protects only the creditor's interest, defined as the unpaid balance of the loan at the time of the occurrence of the insured risk." Hernandez v. United Fire Ins. Co, 79 F.R.D. 419, 423 n. 1 (N.D.Ill.1978); see Cordova & Simonpietri Ins. Agency v. Chase Manhattan Bank, N.A., 649 F.2d 36, 37 (1st Cir.1981). Regulation Z and the Official Staff Interpretations of the regulation make clear that single interest is covered by this regulation. 12 C.F.R. § 226.4(d)(2)(i) n. 5; Official Staff Interpretation, 12 C.F.R. Part 226, Supp. 1 at 285.

To help assure meaningful disclosure of credit terms, section 1605 of TILA ordinarily requires lenders to include single interest premiums in the disclosed finance charge. 15 U.S.C. § 1605(c). Lenders may exclude these premiums only if: (1) the single interest coverage may be obtained from a person of the consumer's choice; (2) that fact is disclosed to the borrower; (3) the cost of such insurance, if obtained from the creditor, is disclosed; (4) the insurer waives all rights of subrogation against the consumer; and (5) that (1)-(4) be disclosed by a "clear and specific statement." The Official Staff Interpretations clarify that, pursuant to requirement (1), "the creditor must allow the consumer to choose the insurer and disclose that fact." Official Staff Interpretations, 12 C.F.R. Part 226, Supp. I at 285 (1990).

S & S claims that it met the requirements needed to exclude these premiums from the finance charge, and requests summary judgment on this claim. S & S obtained the Dixons' signatures on a loan agreement form that provides:

INSURANCE: We require credit life insurance, credit accident and health insurance, and property insurance covering the collateral for this loan. You may furnish this required insurance through anyone you choose, or you may provide it through an existing policy. If you pay off your loan early, you will have the option either to cancel or to retain your insurance coverage.

This statement complies with the requirements set forth in section 1605(c) and Regulation Z.

The Dixons claim that, despite the disclosure in the loan...