Cirone-Shadow v. Union Nissan of Waukegan
| Decision Date | 05 February 1997 |
| Docket Number | No. 94 C 6723.,94 C 6723. |
| Citation | 955 F.Supp. 938 |
| Parties | Mary C. CIRONE-SHADOW, on behalf of herself and all others similarly situated, Plaintiff, v. UNION NISSAN OF WAUKEGAN, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Cathleen M. Combs, Daniel A. Edelman, Tara Leigh Goodwin, Michelle Ann Weinberg, Edelman & Combs, Chicago, IL, James Eric Vander Arend, Gessler, Hughes & Socol, Ltd., Chicago, IL, O. Randolph Bragg, Chicago, IL, for plaintiff.
Michael Thomas McCormick, Gary Feiereisel, Terrence Franklin Guolee, Frank Kasbohm, Fraterrigo, Beranek, Feiereisel & Kasbohm, Chicago, IL, for defendant.
This case is before the court on the plaintiffs' and defendant's cross-motions for summary judgment under Fed.R.Civ.P. 56 and the defendant's motion to strike. For the reasons set forth below, the defendant's motion for summary judgment is granted in part and denied in part, the plaintiffs' motion for summary judgment is denied, and the defendant's motion to strike is denied without prejudice.
The named plaintiff, Mary Cirone-Shadow ("Plaintiff") has filed this two-count class action complaint against the defendant, Union Nissan of Waukegan ("Defendant" or "Union Nissan"). Plaintiff is a citizen of Wisconsin. Defendant is a corporation with its principal place of business in Illinois. Jurisdiction is based on 28 U.S.C. §§ 1331, 1337, 1367. Plaintiff alleges that Defendant misrepresented amounts paid to third parties for service contracts in connection with the sale of automobiles. Count I alleges violation of the Federal Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. Count II alleges violation of the Illinois Consumer Fraud Act ("ICFA"), 815 ILCS 505/1 et seq. The facts pertinent to these claims are set forth below.
In February 1994 the plaintiff purchased a used 1989 Mercury Tracer from Union, an automobile dealership, for personal or household purposes. In connection with this transaction, Plaintiff and Union signed a motor vehicle "Retail Installment Contract" which also served as the disclosure statement required under TILA. As part of her purchase transaction, the plaintiff purchased an extended warranty or service contract, for which she was charged $800.00. In the Retail Installment Contract, Union Nissan represented that $800.00 was being disbursed to Autoright, the administrator of the extended warranty. Union Nissan disclosed its alleged disbursement to Autoright in the Retail Installment Contract under the section "Itemization of Amount Financed" as follows:
Amounts Paid to Others for You
Pay-off of Prior Loan $ N/A
To ________________________
Insurance Companies $ 226.02
Public Officials $ 10.00
(License, Title & Taxes)
To: Autoright $ 800.00
To: Doc Fee $ 41.20
To: N/A $ N/A
Complaint, Exhibit A
In fact, Defendant did not pay Autoright the full $800 that Plaintiff paid under the contract. Rather, Defendant paid Autoright $385, retaining $415 for itself. In addition to claiming that the amount disclosed was inaccurate, the plaintiff further alleges that Union Nissan's manner of disclosing the amount allegedly disbursed to Autoright is misleading and deceptive. It is Plaintiff's claim that the $800.00 is simply a price that Union Nissan unilaterally determines for the warranty or contract and is therefore negotiable. The plaintiff alleges that by listing the $800.00 Autoright extended warranty disbursement among non-negotiable items such as taxes and license, title, and filing fees, Union Nissan deceptively portrayed the extended warranty disbursement as a non-negotiable item.
On April 19, 1995, this court granted Plaintiff's motion for class certification. The class consists of all individuals who satisfy four criteria: (1) consumers who purchased a service contract or extended warranty from Union Nissan; (2) whose transaction was financed by a retail installment contract; (3) whose transaction was documented as a consumer transaction; and (4) whose retail installment contract contains the form of representation alleged in the complaint to have been misleading.
The parties have filed these cross-motions for summary judgment on both the TILA and ICFA claims.
Summary judgment is appropriate if the pleadings, answers to interrogatories, admissions, affidavits and other material show "that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(b). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The party seeking summary judgment carries the initial burden of showing that no such issue of material fact exists. Pursuant to Rule 56(b), when a properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue as to any material fact and that the moving party is not entitled to judgment as a matter of law. Anderson, 477 U.S. at 250, 106 S.Ct. at 2511.
In making our determination, we are to draw inferences from the record in the light most favorable to the non-moving party. We are not required, however, to draw every conceivable inference, but rather, only those that are reasonable. De Valk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir.1987); Bartman v. Allis-Chalmers Corp., 799 F.2d 311, 313 (7th Cir.1986), cert. denied, 479 U.S. 1092, 107 S.Ct. 1304, 94 L.Ed.2d 160 (1987). The nonmovant may not rest upon mere allegations in the pleadings or upon conclusory statements in affidavits; rather he must go beyond the pleadings and support his contentions with proper documentary evidence. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Howland v. Kilquist, 833 F.2d 639, 642 (7th Cir.1987).
The plain language of Rule 56(c) mandates the entry of summary judgment against a party who fails 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, 477 U.S. at 322, 106 S.Ct. at 2552. "In such a situation there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial". Id. at 323, 106 S.Ct. at 2552.
Applying these principles, we examine the parties' motions.
We must decide two motions here. First, the parties have filed cross-motions for summary judgment on each of the plaintiffs' two claims: the Truth in Lending Act claim and the Illinois Consumer Fraud Act claim. We consider the two claims separately. Second, Union Nissan has filed a motion to strike. In the last part of the opinion, we rule on the latter motion.
Defendant first argues that Plaintiff's complaint does not fall within the purview of TILA. Specifically, Defendant argues that TILA applies only to material disclosures relating to the cost of credit. Defendant cites to a number of provisions of TILA relating to its scope and purpose.
Under 15 U.S.C. § 1640, a creditor who violates any TILA requirement is entitled to actual damages and other relief. 15 U.S.C. § 1638, which governs the use of closed end credit plans (including financing for the sale of automobiles), provides that, upon request, a creditor shall provide an "itemization of the amount financed," including "each amount that is or will be paid to third persons by the creditor on the consumer's behalf, together with an identification of or reference to the third person." 15 U.S.C. § 1638(a)(2)(B)(iii). Regulation Z, which was implemented pursuant to TILA, also provides that creditors shall disclose the "amount financed," and "a separate itemization of the amount financed," which includes "[a]ny amounts paid to other persons by the creditor on the consumer's behalf." 12 C.F.R. § 226.18(b), (c)(1)(iii).
Union Nissan provided the plaintiffs with the "itemization of amount financed." This itemization did include a section entitled "amounts paid to others for you." At least one of these amounts was apparently incorrect. It is thus clear that Union Nissan violated Regulation Z. Union Nissan argues that Congress only intended to allow relief for material disclosures, and that this is not a material disclosures, and that this is not a material disclosure under TILA. Its implicit argument is that the Federal Reserve Board ("the FRB") exceeded its authority in issuing the portions of Regulation Z that require disclosure of amounts paid to others. See 12 C.F.R. § 226.18(c)(1)(iii). However, it does not make this argument explicitly, forcefully, or persuasively. TILA provides that the FRB shall prescribe regulations to carry out the purposes of TILA. See 15 U.S.C. § 1604(a). It does not explicitly limit this authority. The conduct alleged to have occurred constitutes a violation of the FRB's regulations. The FRB appears to consider this type of conduct to be "material." We recognize the FRB's discretion in this area, and the vitality of its mandates. Therefore, we reject the defendant's "materiality" argument.
Union Nissan next argues that recent FRB commentary sanctions the conduct complained of here. Specifically, Union Nissan relies on the official FRB Commentary effective April 1, 1996, which states as follows:
Charges added to amounts paid to others.
A sum is sometimes added to the amount of a fee charged to a consumer for a service provided by a third party (such as for an extended warranty or a service...
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