Carter v. Atchley Ford Inc., Case No. 8:01CV151 (D. Neb. 2/20/2002)
| Decision Date | 20 February 2002 |
| Docket Number | Case No. 8:01CV151. |
| Parties | MARTHA L. CARTER, Plaintiff, v. ATCHLEY FORD, INC., and FORD MOTOR CREDIT CO., Defendants. ATCHLEY FORD, INC., Third-Party Plaintiff, v. DALE CARTER, Third-Party Defendant. |
| Court | U.S. District Court — District of Nebraska |
This matter is before the Court on the parties' cross-motions for summary judgment: Plaintiff Martha L. Carter's Motion for Summary Judgment and Request for Oral Argument (Filing No. 60); Defendant Ford Motor Credit Co.'s Motion for Summary Judgment (Filing No. 73); and Defendant Atchley Ford, Inc.'s Motion for Summary Judgment (Filing No. 77). Briefs have been received, and all parties have filed evidence in support of their positions (Filing Nos. 61 and 82; 74; and 78).
Atchley sold a 2000 Ford Focus automobile naming the Plaintiff, Martha Carter, as the buyer. Atchley accessed Martha Carter's personal credit history from a computer terminal located in Atchley's office on or about November 18, 2000, using a forged credit application. After checking Martha Carter's credit history, Atchley prepared a credit contract for Martha Carter's purchase of the automobile identifying Martha Carter as the debtor and the responsible party. Defendant Ford Motor Credit Co. ("FMCC") purchased the retail installment contract dated November 24, 2000, from Atchley. The retail installment contract identifies Martha Carter as the buyer and Atchley as the creditor.
Dale Carter, Martha Carter's son, forged Martha Carter's signature on the credit application and on the contract. Dale Carter gave these forged documents to Atchley's sales representative, Richard Jackson, and there is no evidence that Jackson knew the signatures on the documents were forgeries. The signatures on the paperwork submitted by Dale Carter to Atchley, and subsequently to FMCC, at least on cursory inspection, looked like the signature on Martha Carter's photo identification. Atchley relied on the signatures as giving the consent necessary to access Martha Carter's credit history and to purchase and finance the Ford Focus in her name.
Martha Carter had no knowledge of the transaction until approximately December 14, 2000, when she received congratulatory correspondence from FMCC on the purchase of her new car. Immediately, she contacted Atchley by going to their showroom. She also telephoned FMCC's service center in Irving, Texas. The Defendants initially believed that Martha Carter was experiencing "buyer's remorse," and they directed her to contact the police if she believed there was fraud in the transaction. Martha Carter did so, and after an Omaha Police Department investigation was concluded and the automobile was repossessed and sold at auction, FMCC closed Martha Carter's account.
Atchley confessed liability to common law rescission on or about October 9, 2001, through filing a pleading entitled "Confession of Liability to Common Law Rescission" (Filing 41). Atchley does not dispute liability for common law rescission, but Atchley contests liability and damages under the federal and state statutes that are the basis of Martha Carter's Complaint, specifically the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et. seq.; Fair Credit Reporting Act, 15 U.S.C. § 1681 et. seq.; the Computer Fraud Act, 18 U.S.C. § 1030 et. seq.; and the Nebraska Consumer Protection Act, Neb. Rev. Stat. § 15-1601 et. seq. FMCC contests liability and damages on all causes of action and legal theories alleged in the Complaint. Atchley has agreed to indemnify and hold harmless FMCC pursuant to the parties' Dealer Agreement.
Martha Carter seeks summary judgment on all claims except the state law claim under the Nebraska Consumer Protection Act. Defendants seek summary judgment on all claims and request dismissal from the case.
TRUTH IN LENDING ACT ("TILA")
TILA is a remedial act intended to protect consumers, and courts have liberally construed its provisions in favor of consumers. 15 U.S.C. § 1601(a); See Belmont v. Associates Nat'l Bank, 119 F. Supp.2d 149, 158 (2000) and cases therein, including Ellis v. General Motors Acceptance Corp., 160 F.3d 703, 707 (11th Cir. 1998); Begala v. PNC Bank, Ohio, Nat'l Ass'n, 163 F.3d 948, 950 (6th Cir. 1998), cert. denied 528 U.S. 868 (1999), and N.C. Freed Co. v. Board of Governors of Fed. Reserve System, 473 F.2d 1210, 1214 (2nd Cir 1973). TILA compels certain creditors to disclose specific terms of a credit agreement with a consumer in the manner prescribed by statute, and it governs several types of credit relationships, including open-ended credit, closed-ended credit, and mortgage transactions. TILA at 15 U.S.C. § 1601 et. seq. .
TILA achieves its remedial goals by a system of strict liability in favor of the consumers when mandated disclosures have not been made. 15 U.S.C. § 1640(a). A creditor who fails to comply with TILA in any respect is liable to the consumer under the statute regardless of the nature of the violation or the creditor's intent. Thomka v. A.Z. Chevrolet Inc., 619 F.2d 246, 249-50 (3d Cir. 1980). "[O]nce the court finds a violation, no matter how technical, it has no discretion with respect to liability." Grant v. Imperial Motors, 539 F.2d 506, 510 (5th Cir. 1976).
Smith v. Fidelity Consumer Discount Co., 898 F.2d 896, 898 (3rd Cir. 1990) (emphasis added).
This case involves a closed-ended credit transaction that is governed by 15 U.S.C. § 1638. That section requires that a creditor in a consumer credit transaction, other than an open-end credit plan, must disclose information relating to each of fourteen items listed in section 1638 to the consumer, if the items apply to the transaction.1 See also 12 C.F.R. § 226. The Act also states that absent statutory direction to the contrary, "the disclosures required under subsection (a) of this section shall be made before the credit is extended." 15 U.S.C. § 1638(b). Congress gave authority to the Federal Reserve Board to promulgate regulations to carry out TILA, which it has done, and which are collectively known as "Regulation Z." 15 U.S.C. § 1604; 12 C.F.R. § 226.1 to 226.33 and accompanying Appendices.
The section of Regulation Z that controls closed-end credit agreements states:
[A] creditor shall make the disclosures required by this subpart clearly and conspicuously in writing, in a form that the consumer may keep. The disclosures shall be grouped together, shall be segregated from everything else, and shall not contain any information not directly related to the disclosures required under § 226.18. . . .
12 C.F.R. § 226.17(a), footnotes omitted. Regulation Z requires that "[t]he creditor shall make disclosures before consummation of the transaction." 12 C.F.R. § 226.17(b). "`Consummation' means the time that a consumer becomes contractually obligated on a credit transaction." Id. at § 226.2(a)(13).
Martha Carter contends that the Defendants violated TILA and Regulation Z because they did not provide her with the written disclosures required by the Act before extending credit and concluding the sale of the Ford Focus. The accuracy of the disclosures that Atchley made to Dale Carter are not in dispute, nor is the fact that Dale Carter deceived Atchley into believing that Martha Carter had actually received the disclosures. Rather, Martha Carter contends that whether Atchley intended to make the required disclosures is immaterial because strict compliance with the written disclosure provisions of the Act is required, citing Leathers v. Peoria Toyota-Volvo, 824 F. Supp. 155, 157 (C.D. Ill, 1993).
Atchley contends that TILA is wholly inapplicable to this case because a transaction between Martha Carter and Atchley was never consummated. Atchley agrees that "[c]onsummation of the transaction" is the act that triggers the disclosure requirement under the Act, see 12 C.F.R. § 226.17(b). However, Atchley argues that because Dale Carter forged Martha Carter's signature, Martha Carter was never contractually obligated to Atchley, and consequently, there was no "transaction" to be governed by TILA. Atchley concludes that "[t]his consumer protection statute was not designed to protect the thief." Atchley's Brief in Support of Motion for Summary Judgment at 7.
The Court agrees that TILA was not enacted for the protection of thieves. Rather, TILA was enacted for the protection of consumers, and Martha Carter is one type of consumer for whom TILA's protections were designed. See 12 C.F.R. § 226.1. At least one other court has analyzed whether a consumer who is not an obligor is entitled to the protections of the Act. In Belmont v. Associates Nat. Bank (Delaware), 119 F. Supp.2d 149 (E.D.N.Y. 2000), the court considered whether a credit card company had violated TILA by erroneously billing a debtor's father for credit charges, even though the father had removed his name from the son's credit account several years earlier. The creditor argued that if the plaintiff was not obligated on the account as the plaintiff claimed, then the plaintiff should not be entitled to the protections accorded to "obligor[s]" under TILA. Id. at 163-164, 15 U.S.C. § 1666-1666a. The court rejected the defendant's argument stating:
Given the remedial nature of TILA, Congress's intent to protect consumers, and the courts' mandate that TILA be liberally construed, . . . the term "obligor[s]" must necessarily be construed to include those whom the creditor claims are obligors, as well as individuals who are in fact obligors in the contract law sense. Otherwise, there would be a lacuna in the statute, and an important area in the statute's remedial scheme would be left unprotected. A consumer who believes that he is not obligated under a credit account, and promptly notifies the creditor of the mistake through a proper notice of billing error, deserves the broad protections that Congress intended under the Act.
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