Clement v. American Honda Finance Corp.

• Decision Date: 30 March 2001
• Docket Number: No. Civ.A. 3:95CV660(SRU).,Civ.A. 3:95CV660(SRU).
• Citation: 145 F.Supp.2d 206
• Court: U.S. District Court — District of Connecticut
• Parties: Jean E. CLEMENT v. AMERICAN HONDA FINANCE CORP.

145 F.Supp.2d 206

Jean E. CLEMENT v. AMERICAN HONDA FINANCE CORP.

No. Civ.A. 3:95CV660(SRU).

United States District Court, D. Connecticut.

March 30, 2001.

COPYRIGHT MATERIAL OMITTED

Joanne S. Faulkner, Law Offices of Joanne Faulkner, New Haven, CT, Daniel A. Edelman, Michelle A. Weinberg, Cathleen M. Combs, Edelman, Combs & Latturner, Chicago, IL, for Plaintiff.

Mark B. Seiger, Janet Marie Helmke, Edwards & Angell, Hartford, CT, for Defendant.

RULING ON PLAINTIFF'S AND DEFENDANT'S CROSS-MOTIONS FOR SUMMARY JUDGMENT

UNDERHILL, District Judge.

Jean Clement sued American Honda Finance Corp. ("AHFC") for failure of an AHFC automobile lease to comply with several disclosure requirements of the Truth-In-Lending Act, as amended by the Consumer Leasing Act. See 15 U.S.C. §§ 1640 and 1667d. Clement moved for summary judgment (doc. # 84) and AHFC cross-moved for summary judgment (doc. # 88). Because the AHFC lease failed to disclose the early termination penalties in a "clear and conspicuous manner" and failed to disclose adequately the available express warranties, summary judgment is granted in favor of Clement.

I. Standard of Review

Summary judgment is appropriate when the evidence demonstrates that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When ruling on a summary judgment motion, the court must construe the facts in a light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505, Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); see also Turner v. General Motors Acceptance Corp., 180 F.3d 451, 453-54 (2d Cir. 1999).

"[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, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden of demonstrating the absence of a genuine issue of material fact, Rule 56(e) requires that the nonmoving party do more than reference its own pleadings. Id. at 325, 106 S.Ct. 2548. When a motion for summary judgment is properly supported by documentary and testimonial evidence, the nonmoving party may not rest upon the mere allegations or denials of the pleadings, but rather must present sufficient probative evidence to establish a genuine issue of material fact. Id. at 327, 106 S.Ct. 2548 (1986); Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir.1995). To present a genuine issue of material fact, there must be contradictory evidence "such that a reasonable jury could return a verdict for the non-moving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.

Ordinarily, whether disclosures under the Truth-In-Lending Act ("TILA") are inaccurate, misleading, or confusing is a question of fact for the factfinder. Griggs v. Provident Consumer Discount Co., 503 F.Supp. 246, 250 (E.D.Pa.1980) (citing Barber v. Kimbrell's, Inc., 577 F.2d 216 (4th Cir.1978)). Where, however, "the confusing, misleading, and inaccurate character of the disputed disclosure is so clear that it cannot reasonably be disputed, summary judgment for the plaintiff is appropriate." Id.; see also Lundquist v. Security Pacific Automotive Financial Services Corp., 993 F.2d 11 (2d Cir.1993) (summary judgment granted for automobile lessee because termination provisions of lease violated disclosure requirements of CLA); Applebaum v. Nissan Motor Acceptance Corp., 226 F.3d 214 (3rd Cir.2000) (same).

II. Consumer Leasing Act ("CLA")

Congress enacted the CLA as an amendment to the TILA and extended the TILA's "credit disclosure requirements to consumer leases." Turner, 180 F.3d at 454. The CLA, like the rest of the TILA, "is a disclosure rather than regulatory statute." Id.

Its primary purpose is to "assure a meaningful disclosure of the terms of leases ... so as to enable the lessee to compare more readily the various lease terms available to him." 15 U.S.C. § 1601(b). Because lease financing had become recognized as an alternative to credit financing and installment sales contracts, Congress also intended CLA disclosure requirements to "enable comparison of lease terms with credit terms where appropriate." Id. The CLA thus requires lessors of personal property subject to its provisions to make specified disclosures when a lease is entered into. See 15 U.S.C. § 1667a (consumer lease disclosures).

Id.

"The TILA¹ and the regulations promulgated under it require a creditor to disclose relevant credit information to a consumer in comprehensible language and form. The required disclosures are intended to provide, especially to the inexperienced and uninformed consumer, a way to avoid `the possibility of deception, misinformation, or at least an obliviousness to the true costs' of a credit transaction." Griggs, 503 F.Supp. at 249 (quoting Thomka v. A.Z. Chevrolet, Inc., 619 F.2d 246, 248 (3rd Cir.1980) and citing Allen v. Beneficial Finance Co., 531 F.2d 797 (7th Cir.), cert. denied, 429 U.S. 885, 97 S.Ct. 237, 50 L.Ed.2d 166 (1976)). See also Burton v. Public Finance Corp. of Akron # 3, 657 F.2d 842, 843 (6th Cir.1981) ("Finance companies can write simple sentences and use simple words to inform consumers of the terms of loan agreements. However, when a loan agreement is drafted to obscure the relevant terms of the agreement, rather than to explain the terms in clear and meaningful language, the agreement violates the TILA."); Smith v. Chapman, 614 F.2d 968, 975 (5th Cir.1980) (use of "meaningless" terms in delinquency charge clause violates TILA).

"The requirements of the TILA are highly technical but full compliance is required. (citation omitted). Even minor violations of the Act can not be ignored." Griggs, 503 F.Supp. at 250 (citing Thomka, 619 F.2d at 248). Moreover, the "TILA is a remedial act intended to protect consumers ... and, as such, its provisions are to be construed liberally in favor of consumers." Belmont v. Associates National Bank, 119 F.Supp.2d 149, 159 (E.D.N.Y. 2000) (citing 15 U.S.C. § 1601(a); 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, 120 S.Ct. 166, 145 L.Ed.2d 141 (1999); N.C. Freed Co. v. Board of Governors of Fed. Reserve Sys., 473 F.2d 1210, 1214 (2d Cir.1973)). "TILA achieves its remedial goals by a system of strict liability in favor of the consumers when mandated disclosures have not been made." Smith v. Fidelity Consumer Discount Co., 898 F.2d 896, 898 (3d Cir.1990). The court need find "only a single violation of the statutory requirements to hold [a] defendant liable under the TILA." Griggs, 503 F.Supp. at 248 (citing 15 U.S.C. § 1640; Thomka, 619 F.2d 246).

III. Analysis

A. Consumer Lease

AHFC challenges whether the CLA applies to the lease at issue because Clement has not sufficiently shown that she leased the vehicle at issue "primarily for personal, family, or household purposes." See Turner, 180 F.3d at 454 n. 2 ("The CLA applies to all leases for the use of `personal property' having a term `exceeding four months' that have a `total contractual obligation not exceeding $25,000.' 15 U.S.C. § 1667(1)."). AHFC agrees that Clement alleges that the lease was a personal lease and that Clement's initial affidavit indicates that Clement initialed the box on the lease that indicates the lease was "primarily for personal, family or household purposes." Defendant's Memorandum of Law in Opposition to Plaintiff's Motion for Summary Judgment and in Support of Defendant's Cross-Motion for Summary Judgment ("Def.Mem.") at 5. In addition, Clement has submitted a second affidavit stating that the leased car was used solely for personal transportation and that a business-related tax deduction was never taken for the lease of the vehicle, see Clement Affidavit at ¶¶ 2-3, Exhibit A, attached to Plaintiff's Reply Memorandum of Law in Support of Her Motion for Summary Judgment ("Pl. Reply Mem."), and a copy of the lease that shows she initialed the box in the lease that indicates the lease was a consumer lease used "primarily for personal, family or household purposes." Exh. B, attached to Pl. Reply Mem.

Contrary to AHFC's assertion, Clement has adduced sufficient evidence to show that the lease at issue was primarily for consumer purposes. AHFC has not met its burden to show there is an absence of a genuine issue of material fact and has produced no contradictory evidence to create a genuine issue of material fact.

AHFC argues that "it would be premature for the Court to rule on Plaintiff's motion for Summary Judgment until AHFC has been afforded the opportunity to take discovery with respect to the nature of the primary use that Plaintiff intended to make of the leased vehicle" because Clement has failed to respond to AHFC's interrogatories. Def.Mem. at 6-7. Discovery in this case has been closed since October 13, 1995. See Amended Order on Pretrial Deadlines dated June 9, 1995. In the absence of any motion to compel Clement to answer the interrogatories or any attempt by AHFC to address Clement's alleged failure to answer the interrogatories, AHFC's argument fails. See also Ruling dated December 1, 1999. Accordingly, the court resolves the question of the applicability of the CLA to the lease at issue in favor of Clement.²

B. Required Disclosures Under the CLA

Clement claims that AHFC has violated the CLA by failing to comply with...