Brister v. All Star Chevrolet, CIV. A. 96-3447-B-MI.

• Decision Date: 27 August 1997
• Docket Number: No. CIV. A. 96-3447-B-MI.,CIV. A. 96-3447-B-MI.
• Citation: 986 F.Supp. 1003
• Parties: Floyd BRISTER, et al. v. ALL STAR CHEVROLET, INC., et al.
• Court: U.S. District Court — Eastern District of Louisiana

986 F.Supp. 1003

Floyd BRISTER, et al. v. ALL STAR CHEVROLET, INC., et al.

No. CIV. A. 96-3447-B-MI.

United States District Court, E.D. Louisiana.

August 27, 1997.

COPYRIGHT MATERIAL OMITTED

ORDER AND REASONS

BERRIGAN, District Judge.

This matter is before the Court on summary judgment motions filed by defendants Aegis Auto Finance, Inc. ("Aegis"), All Star Chevrolet, Inc. ("All Star"), and Chase Manhattan Bank U.S.A., N.A. ("Chase").¹ Having considered the record, the parties' arguments and the applicable law, the Court grants Aegis and Chase's motions, grants in part All Star's motion, and denies in part All Star's motion.

Background

Plaintiffs Floyd Brister, Lena Brister, and Miriam Smith ("plaintiffs") have brought claims against All Star arising from their automobile purchases from All Star.² They also have filed claims against Chase and Aegis, the assignees of the consumer contracts executed in connection with the automobile sales to Smith and the Bristers, respectively. Plaintiffs have alleged that in connection with their automobile purchases and related consumer credit contracts, All Star included fees in the disclosed amount financed that were in excess of the fees All Star actually paid to the State of Louisiana. Plaintiffs also allege that All Star charged them additional fees for ad valorem taxes that All Star, not the plaintiffs, was required to pay to the state. As to liability, it appears from plaintiffs' latest complaint—the second amended complaint —that they have set forth three claims: 1) Alleged violations of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq. and Federal Reserve Board Regulation Z ("Count I"); 2) "Unjust Enrichment/Restitution" ("Count II"); and 3) Alleged violations of the Louisiana Motor Vehicle Sales Finance Act ("LAFSA"), La. R.S. 6:956, et seq., due to unauthorized charges ("Count III").³ Defendants All-Star, Aegis, and Chase have each filed summary judgment motions seeking dismissal of the claims against them. Plaintiffs have filed a single consolidated opposition to the three motions.

Discussion

Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The party seeking summary judgment bears the initial burden of setting forth the basis for its motion and identifying the pleadings, depositions, answers to interrogatories, admissions of file, and affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). Once a proper motion has been made, the non-moving party may not rest upon mere allegations or denials in the pleadings, but must set forth specific facts showing the existence of a genuine issue of fact for trial. Celotex, 477 U.S. at 322-23, 106 S.Ct. at 2552-53. Factual questions and inferences are viewed in the light most favorable to the nonmovant. Rogers v. Int'l Marine Terminals, Inc., 87 F.3d 755, 758 (5th Cir.1996). Summary judgment is mandated if the nonmovant fails to make a showing sufficient to establish the existence of an element essential to its case on which it bears the burden of proof at trial. Celotex, 477 U.S. at 322, 106 S.Ct. at 2552.

I. TILA claims

The first count of plaintiffs' complaint alleges that All-Star's TILA disclosure statements violated TILA and Regulation Z. Plaintiffs allege that All Star, Aegis, and Chase are liable under TILA and Regulation Z because of overcharges for official fees improperly stated in the disclosure statements. See Second Amended Compl. at 1. Plaintiffs Bristers cite a $113.50 license fee charge listed on the disclosure statement for "Reg." and "Government Certificate of Title Fees." Plaintiffs claim that the actual license fees charged by Louisiana were less than this $113.50 charge and that All Star retained the difference. Plaintiffs also claim that Chase was aware of this alleged overcharge. Plaintiff Smith cites a $76.00 charge for "License Fee". Plaintiffs claim that this the actual fee paid to Louisiana for licensing fees was "substantially less" than $76.00 and that All Star retained the difference.⁴ Plaintiffs further allege that Aegis was aware of these alleged overcharges.

A. Alleged Inaccurate Disclosure of "Finance Charge"

Plaintiffs first theorize that All Star is liable under TILA and Regulation Z because the allegedly overstated amounts in the "Reg."/title charge of $113.50 and the license fee of $76.00 were not disclosed as a "finance charge." See Second Amended Compl. at 22. Plaintiffs allege that Chase and Aegis are liable for these undisclosed "finance charges" in their capacity as assignees.

This claim faces the same threshold "comparable cash transaction" exception issue that plaintiffs' counsel has faced before here in the Middle District of Louisiana, the previous cases being before Judge Polozola. E.g., White v. Diamond Motors, Inc., 962 F.Supp. 867 (M.D.La.1997); Green v. Levis Motors, Inc., C.A. 96-508 (M.D.La.1997); Turner v. II Diamond Motors, Inc., C.A. 96-336 (M.D.La.1997).

TILA and Regulation Z utilize a definition of "finance charge" which excludes charges payable in a "comparable cash transaction." 15 U.S.C. § 1605(a); 12 C.F.R. § 226.4(a). Under the same basic facts as this matter, Judge Polozola found that a license fee scenario comparable to those in this situation was not a "finance charge". White, 962 F.Supp. at 870-72. Adopting the reasoning set forth in White, the Court finds that the fee at issue is not a "finance charge" under TILA or Regulation Z.⁵ Plaintiffs' TILA and Regulation Z finance charge claim is dependent upon the fee being defined as a "finance charge". Id. Since it is not a "finance charge", All-Star is entitled to judgment as a matter of law regarding this claim.

Because there is no primary liability, Aegis and Chase are also entitled to summary judgment regarding their secondary liability as assignees. White, 962 F.Supp. at 871-72 (without primary liability, assignee "off the hook as well").

B. Alleged inaccurate disclosures of "Reg." or "License fee."

(1) All-Star's liability

Plaintiffs secondly theorize that All Star is liable for "false representation that the $113.50 and $76.00 charges had been paid to the state of Louisiana for official fees and `license fees,' respectively, when this was not the case, violating 15 U.S.C. § 1638 and 12 C.F.R. § 226.18."⁶ Second Amended Compl. at 22.

In response to the Bristers' claim, All Star has submitted an affidavit from Dennis Carlin, III, its manager of information systems, stating that the totality of the $133.00 in fees charged to the Bristers, including the $95.00 "Reg." fee, constituted fees "paid to others." All Star's Memo., Exh. 1, paragraph 11. The plaintiffs have failed to provide any evidence to dispute Carlin's representation that the Bristers' fees, including the "Reg."/title fees, were all paid to Louisiana. Plaintiffs have failed to show that All Star retained an upcharge in the Bristers' case. Summary judgment is appropriate in favor of All Star regarding the Bristers' disclosure claim.

In Smith's case, All Star does not dispute that it retained part of the $56.00 charged to Smith for license fee. As All Star properly notes, the analysis next turns to whether this "overcharge" should have been disclosed.

Judge Polozola faced this same issue in Green. Following Judge Posner's opinion in Gibson v. Bob Watson Chevrolet-Geo, Inc., 112 F.3d 283 (7th Cir.1997), Judge Polozola found that creditors providing a TILA itemization must disclose if they are retaining an upcharge. This Court adopts the reasoning set forth in Gibson and Green, and considers that dealers providing itemizations must accurately disclose amounts paid to third parties. Gibson, 112 F.3d at 285-86; Green, C.A. 96-508.

All Star contends that Gibson conflicts with Charles v. Krauss Co., Ltd., 572 F.2d 544 (1978), in which the Fifth Circuit held that a creditor may not be held liable for TILA violations committed in good faith conformity with any Board rule, regulation, or interpretation. All Star argues that it acted in conformity with the Federal Reserve Board Official Staff Commentary to Regulation Z. This commentary addresses the situation in which the creditor retains a portion of the fee charged to a customer for a service provided by a third party. The commentary states that "the creditor in such cases may reflect that the creditor has retained a portion of the amount paid to others." In response to this argument, the Court again adopts the Gibson finding that "the only sensible reading of the commentary is as authorizing the dealer to disclose only the fact that he is retaining a portion of the charge, rather than the exact amount of the retention." Gibson, 112 F.3d at 286.

All Star next argues that even if it has failed to properly disclose upcharges, that plaintiffs cannot claim any damages because they have failed to show detrimental reliance. There is considerable persuasive authority to support this proposition. E.g., Cirone-Shadow v. Union Nissan, 955 F.Supp. 938 (N.D.Ill.1997); Wiley v. Earl's Pawn and Jewelry, Inc., 950 F.Supp. 1108 (S.D.Ala.1997); Adiel v. Chase Federal Savings and Loan Assoc., 630 F.Supp. 131 (S.D.Fla.1986); aff'd, 810 F.2d 1051 (11th Cir.1987); but see Russell v. Fidelity Consumer Discount Co. (In re Russell), 72 B.R. 855 (Bankr.E.D. Penn.1987). While this Court is inclined to follow the caselaw supporting a detrimental reliance requirement, Smith's affidavit stating that she would not have paid the upcharge of $56.00 had it been properly disclosed creates genuine issue of fact regarding reliance which precludes summary judgment. Thus, summary judgment is inappropriate regarding Smith's TILA inaccurate...