Augusta v. Marshall Motor Co.

• Decision Date: 09 September 1977
• Docket Number: Civ. A. No. C77-430.
• Citation: 453 F. Supp. 912
• Parties: Thomas AUGUSTA, etc., Plaintiff, v. MARSHALL MOTOR CO. et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

453 F. Supp. 912

Thomas AUGUSTA, etc., Plaintiff, v. MARSHALL MOTOR CO. et al., Defendants.

Civ. A. No. C77-430.

United States District Court, N. D. Ohio, E. D.

September 9, 1977.

John E. Duda, Duda, Elk & Wohl, Cleveland, Ohio, for plaintiff.

Andrew J. McLandrich, James P. Conroy, Weston, Hurd, Fallon, Paisley & Howley, Cleveland, Ohio, for defendant Marshall Motor Co.

William D. Ginn, Michael A. Cyphert, David J. Naftzinger, Thompson, Hine & Flory, Cleveland, Ohio, for defendant Ford Motor Credit Co.

MEMORANDUM AND ORDER

KRUPANSKY, District Judge.

This is an action instituted by the plaintiff, Thomas Augusta (Augusta), pursuant to the Truth in Lending Act of 1968, 15 U.S.C. § 1601 et seq, and the Motor Vehicle Information and Cost Savings Act of 1972, 15 U.S.C. § 1901 et seq.

The Amended Complaint states two claims, the first of which is brought pursuant to the Truth in Lending Act and regulations promulgated thereunder at 12 C.F.R. § 226.1 et seq. (commonly known as Regulation Z), against defendants Marshall Motor Company (Marshall) and Ford Motor Credit Company (Ford Credit), wherein the plaintiff seeks statutory damages, costs, and reasonable attorneys' fees in accordance with 15 U.S.C. § 1640(a) on behalf of himself, and injunctive and declaratory relief on behalf of a purported class of persons similarly situated, pursuant to Rule 23(a) and (b)(2), Fed.R.Civ.P.

The plaintiff states a second claim solely on behalf of himself against defendant Marshall under the odometer information disclosure requirements of the Motor Vehicle Information and Cost Savings Act and regulations promulgated thereunder at 49 C.F.R. § 580.4, seeking statutory damages, costs, and reasonable attorneys' fees pursuant to 15 U.S.C. § 1989(a).

The matter is now before the Court on the Cross-Motions of the parties for summary judgment, pursuant to Rule 56, Fed.R. Civ.P., with respect to each claim. The two claims will therefore be considered by the Court seriatim.

The essential facts surrounding the transaction which gave rise to the instant action are not in dispute. On February 8, 1977, the plaintiff purchased from defendant Marshall a 1976 Ford Granada automobile which Marshall had initially purchased from Ford Motor Company and used as a demonstrator vehicle. The transaction between Augusta and Marshall was evidenced by an Ohio Retail Installment Contract (the contract) executed by the plaintiff and Marshall on February 8, 1977 and subsequently assigned to defendant Ford Credit according to the terms thereof. Thereafter, on February 25, 1977, Ford Credit mailed a payment coupon book to Augusta which contained separate coupons for each of the installment payments required under the contract, and which identified Ford Credit as the purchaser of the plaintiff's installment contract from Marshall. The plaintiff commenced making his installment payments to Ford Credit as called for in the coupon book, and on April 25, 1977 instituted the present action.

The plaintiff's first claim alleges that defendants Marshall, an automobile dealer, and Ford Credit violated § 226.6(d) of Regulation Z by failing to identify Ford Credit as a "creditor" under the contract within the meaning of § 226.2(m) thereof, that is

a person who in the ordinary course of business regularly extends or arranges for the extension of consumer credit, or offers to extend or arrange for the extension of such credit.

An examination of the multi-copy snap out form installment contract executed by Augusta and Marshall, several copies of which have been submitted to the Court as exhibits to the parties' Motions for summary judgment and the depositions filed herein, discloses that the name of defendant Ford Motor Credit appears at two places on the face of the contract. First, in the upper left-hand corner thereof, the title "Ford Motor Credit Company" and the emblem of the Ford Motor Company are printed above the designation "Ohio Retail Instalment Contract." Secondly, in the lower left-hand portion of the face of the contract, directly beneath a statement concerning credit life insurance eligibility and above the signature line for the seller, the following statement appears:

The foregoing contract is hereby accepted by the Seller and assigned to Ford Motor Credit Company in accordance with the terms of the Assignment set forth on the reverse side hereof.

The terms of this assignment are contained in paragraph 16 of the terms and conditions of the contract set forth in the upper left-hand corner of the reverse side of the document, and provide as follows:

ASSIGNMENT

The original Seller may assign this contract and his assignee shall acquire all of his interest in this contract and the Property and shall be entitled to all the rights and privileges of Seller hereunder. After Buyer receives notice of any such assignment, Buyer shall make all payments hereunder directly to the holder hereof and the original Seller shall not be the agent of the holder for transmission of payments or otherwise. Buyer shall not transfer or otherwise dispose of any interest in this contract or the Property.

The purchaser is referred to these additional terms and conditions appearing on the reverse side of the contract by paragraph 15 of the details of the transaction, which is printed above the signature line for the buyer on the lower right-hand portion of the face of the instrument.

Section 226.6(d) of Regulation Z, upon which the plaintiff relies, provides as follows:

(d) Multiple creditors or lessors; joint disclosure. If there is more than one creditor or lessor in a transaction, each creditor or lessor shall be clearly identified and shall be responsible for making only those disclosures required by this Part which are within his knowledge and the purview of his relationship with the customer or lessee. If two or more creditors or lessors make a joint disclosure, each creditor or lessor shall be clearly identified. The disclosures required under paragraphs (b) and (c) of § 226.8 shall be made by the seller if he extends or arranges for the extension of credit. Otherwise disclosures shall be made as required under paragraphs (b) and (d) of § 226.8 or paragraph (b) of § 226.15.

Regulation Z fails, however, to specify the manner or form by which such a creditor is to be "clearly identified." The Federal Reserve Board, which promulgated Regulation Z, has stated in an official staff interpretation, for example, that the disclosure of a creditor's identity "does not constitute required `terminology'" within the meaning of the regulation, see § 226.6(a) thereof. FRB Official Staff Interpretation No. FC-0001, 41 Fed.Reg. 41,907, 5 CCH Consumer Credit Guide ¶ 31,449 (issued August 31, 1976, effective September 22, 1976). See Grey v. European Health Spas, Inc., 428 F.Supp. 841 (D.Conn.1977).

The plaintiff's contention must therefore be examined in the context of the stated purpose of the federal truth in lending legislation, which is

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 to avoid the uninformed use of credit.

Pub.L. 90-321, Title I, § 102 (May 29, 1968), 82 Stat. 146, codified at 15 U.S.C. § 1601. The Court of Appeals for the Third Circuit has described the Congressional intent expressed in the Truth in Lending Act in the following language:

The Truth in Lending Act provides for full disclosure of credit terms rather than regulation of the terms or conditions under which credit may be extended. H.R. Rep. No. 1040, 90th Cong., 2d Sess. (1968). Enacted because of the divergent, and often fraudulent, practices by which credit customers were apprised of the terms of the credit extended to them, the Act's avowed purpose is to assure credit customers a meaningful disclosure of credit terms, thus enabling these consumers to compare more readily the various available credit terms and thereby to avoid the uninformed use of credit. 15 U.S.C. § 1601 (1970); see Mourning v. Family Publications Serv., Inc., 411 U.S. 356, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973); Philbeck v. Timmers Chevrolet Inc., 499 F.2d 971 (5th Cir. 1974). The Act is a remedial statute that should be construed liberally to ensure achievement of these goals. N. C. Freed Co. v. Board of Governors of Fed. Reserve Sys., 473 F.2d 1210, 1214 (2d Cir.), cert. denied, 414 U.S. 827, 94 S.Ct. 48, 38 L.Ed.2d 61 (1973) footnote omitted.

Johnson v. McCrackin-Sturman Ford, Inc., 527 F.2d 257, 262 (3rd Cir. 1975). See Wachtel v. West, 476 F.2d 1062 (6th Cir.), cert. denied, 414 U.S. 874, 94 S.Ct. 161, 38 L.Ed.2d 114 (1973). It was not intended, however, that this legislation "set traps by which windfalls could be reaped by fanciful lawyers," Andrucci v. Gimbel Bros., Inc., 365 F.Supp. 1240, 1243 (W.D.Pa.1973), aff'd mem., 505 F.2d 729 (3rd Cir. 1974), nor should the statute and regulations "be allowed to be used as means of oppression or harassment or unjust enrichment," Shields v. Valley National Bank of Arizona, 56 F.R.D. 448, 451 (D.Ariz.1971). Neither is this statute punitive in nature, Bostwick v. Cohen, 319 F.Supp. 875, 878 (N.D.Ohio 1970). See Redhouse v. Quality Ford Sales, Inc., 511 F.2d 230, 237 (10th Cir. 1975).

The plaintiff's first claim fails to allege any violation of the specific disclosure requirements of Regulation Z concerning the financial aspects of the transaction, or that the plaintiff was misled by either of the defendants as to the terms of his credit agreement, or that he did not understand these aspects of the contract. In fact, the plaintiff commenced and has continued the timely payment of his installment obligations to Ford Credit (deposition of Thomas Augusta, filed August 5, 1977, at 17-19).

The plaintiff's sole assertion as to this claim, then, is that defendant Ford Credit was insufficiently identified as a "creditor" of this transaction, as opposed to an assignee. Because the regulations...