Dalton v. Bob Neill Pontiac, Inc.
| Citation | 476 F. Supp. 789 |
| Decision Date | 20 August 1979 |
| Docket Number | No. C-77-151-WS,C-77-237-WS.,C-77-151-WS |
| Court | U.S. District Court — Middle District of North Carolina |
| Parties | Joan Evans DALTON v. BOB NEILL PONTIAC, INCORPORATED. Arnold Ray LOWERY and Sonja Wallace Lowery v. BOB NEILL PONTIAC, INCORPORATED. |
Herman L. Stephens, Stephens, Peed & Brown, Winston-Salem, N. C., for plaintiffs.
J. Robert Elster and W. R. Loftis, Jr., Hudson, Petree, Stockton, Stockton & Robinson, Winston-Salem, N. C., for defendant.
The parties1 have agreed that their above-entitled cases be tried by this Court, without a jury, on the pleadings, stipulated facts, and various exhibits.2 This Memorandum Opinion shall include and constitute the findings of fact and conclusions of law mandated by Rule 52(a), Federal Rules of Civil Procedure.
On August 26, 1976, plaintiff Joan Evans Dalton purchased a 1975 Pontiac Grand Safari automobile from defendant Bob Neill Pontiac, a company engaged in the retail sales of new and used cars. Dalton financed the automobile through the defendant, who thereafter transferred its interest to Forsyth Bank and Trust Company.3 The defendant gave Dalton a copy of the car invoice on the day of the purchase. Part of the invoice showed the following:
Along with the invoice, a copy of a Consumer Credit Agreement was given to plaintiff Dalton. Such Agreement, a portion of which is below,4 constituted the disclosure statement required by the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq.
The "cash price" of $5,404.00 was listed on both the invoice and the disclosure statement. This price included $4.00 for license and title fees ($2.00 for transfer of tag and $2.00 for transfer of title). These fees were not retained by defendant but were paid to the North Carolina Department of Motor Vehicles. Although the invoice indicated that these fees were part of the cash price, the disclosure statement did not. The finance charge of $284.92 imposed in this transaction did not include the license and title fees.
Dalton filed suit against Bob Neill Pontiac on March 31, 1977, claiming that the failure of individually itemizing on the disclosure statement the charges for license and title fees as part of the amount financed violated the Truth-in-Lending Act.5 She sought damages of $577.84.
On May 22, 1976, plaintiffs Arnold Ray Lowery and wife Sonja Wallace Lowery purchased a 1976 Pontiac Catalina automobile from Bob Neill Pontiac. The Lowerys financed the car through the defendant.6 They were given a copy of the car invoice, which indicated the following:
A copy of the disclosure statement was also given to them, part of which provided:
$6,201.75 was listed as the "cash price" on both the invoice and the disclosure statement. Included in this amount was $13.75 for license and title fees which was paid to the North Carolina Department of Motor Vehicles ($11.75 for issuance of tag and $2.00 for certificate of title). The invoice specified that these fees were part of the cash price, but there was no such indication on the disclosure statement. These fees were not included in the finance charge of $1,282.81.
The Lowerys bought another car from defendant, a 1977 Pontiac Grand Safari Wagon, on March 31, 1977. This purchase was financed in the same manner as their first car, through the defendant, who gave them a disclosure statement along with a car invoice. The cash price was listed on both the disclosure statement and the invoice as $7,700.00, although only the invoice indicated that this amount included $4.00 for license and title fees which was paid to the Department of Motor Vehicles. Part of the invoice is shown below:
Part of the disclosure statement is below:
The finance charge of $1,439.98 did not include the $4.00 for license and title fees.
The Lowerys filed suit against the defendant car dealer on May 19, 1977, alleging that the Truth-in-Lending Act had been violated when the charges for license and title fees were not itemized on the two disclosure statements referred to above.7 They sought damages of $2,000.00.
This Court must determine whether the defendant violated the Truth-in-Lending Act by including the license and title fees in the cash price on the disclosure statement and by failing to itemize such fees on the statement.
The transactions involved in these cases were consumer credit sales, see 15 U.S.C. § 1602(g) & (h); 12 C.F.R. § 226.2(p) & (t), and they were not under an open end credit plan. See 15 U.S.C. § 1602(i); 12 C.F.R. § 226.2(x). The Truth-in-Lending Act provides in part that in such a sale:
The defendant did disclose a cash price on the Consumer Credit Agreements which constituted the disclosure statements. The defendant apparently believed that it was natural to include license and title fees as part of the total cash price. See copies of invoices supra. Such inclusion is not unreasonable from a business and practical stand-point. However, Regulation Z defines "cash price" as:
Section 226.4 of Regulation Z is entitled "Determination of finance charge." Subsection (a) lists eight "types of charges" to be included in the finance charge. Subsection (b) lists four types of charges which need not be included in the finance charge if itemized. In this group are "license, certificate of title, and registration fees imposed by law." 12 C.F.R. § 226.4(b)(4). These latter fees are precisely the kind involved in the present cases. A literal reading of § 226.2(n) compels the conclusion that such license and title fees may not be included in the cash price for purposes of the Truth-in-Lending Act, because such fees are "charges of the types described in § 226.4."
It has been argued that the reference to § 226.2(n) means only such charges that are "true" finance charges, i. e., "charges, payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit . . ." 15 U.S.C. § 1605(a) (emphasis added). Since the statutorily-required license and title fees would have been imposed regardless of whether plaintiffs paid in cash or on credit, the fees were not imposed as an incident to the extension of credit. According to the argument, because such fees do not meet the general definition of "finance charge," the reference in § 226.2(n) to the exclusion of § 226.4 charges is inapplicable, and the fees can therefore be included in the cash price. The Court cannot accept such an argument.
Congress did not intend to confine finance charges to charges for credit. The definition of finance charge in the Act is prefaced by the phrase "except as otherwise provided in this section . . . ." 15 U.S.C. § 1605(a). In the same section on "Determination of finance charge," it is provided that:
The obvious converse of § 1605 is that if the item is not itemized and disclosed, then the creditor needs to include that item in the computation of the finance charge. Therefore, Congress has approved the rather incongruous method of including in the finance charge charges which are not for credit.
It is clear from Regulation Z, § 226.4(b) that license and title fees are to be itemized and disclosed. As mentioned above, the regulation states that 12 C.F.R. § 226.4(b). As with § 1605(d), the obvious converse is if license and title fees are not itemized and disclosed, then they need to be included in the finance charge.
The necessity of itemizing license and title fees is further strengthened by the requirement of 15 U.S.C. § 1638(a)(4) to disclose "all other charges, individually itemized, which are included in the amount of the credit extended but which are not part of the finance charge." See also 12 C.F.R. § 226.8(c)(4). Because license and title fees cannot be included in cash price, see discussion supra, and if they are not included in the finance charge but are included in the amount of the credit extended (amount financed), then they must be individually itemized.
A number of cases have held or stated that license and title fees must be itemized and disclosed and that they are not to be included in the cash price.8 Meyers v. Clearview Dodge Sales, Inc., 539 F.2d 511, 517-19 (5th Cir. 1976), aff'g 384 F.Supp. 722, 725 (E.D.La.1974); Childs v. Ford Motor Credit Co., 470 F.Supp. 708, 712 (N.D. Ala.1979); Smith v. Lewis Ford, Inc., 456 F.Supp. 1138, 1142-44 (W.D.Tenn.1978) (good discussion); Souife v. First National Bank of...
To continue reading
Request your trial
-
In re Celona
...Inc., 607 F.2d 85, 86 (5th Cir.1979); Campbell v. General Finance Co., 523 F.Supp. 989, 992 (W.D.Va.1981); Dalton v. Bob Neill Pontiac, Inc., 476 F.Supp. 789, 794 (M.C.N.C.1979); and Campbell v. Liberty Financial Planning, Inc., 422 F.Supp. 1386, 1388-89 A fair reading of 15 U.S.C. § 1605(e......
-
Dixey v. Idaho First Nat. Bank
...of the injustice which can result upon an inflexible application of the provisions of the Act. Judge Ward, in Dalton v. Bob Neill Pontiac, Inc., 476 F.Supp. 789 (M.D.N.C.1979) surveys some of the criticisms levelled at TILA. One court has observed that "`the obvious intent of Congress was t......
-
Luczak v. General Motors Acceptance Corp.
...an opportunity to present their equitable defenses. Although there does not appear to be much room to maneuver, Dalton v. Bob Neill Pontiac, 476 F.Supp. 789 (M.D.N. C.1979), defendants should have an opportunity to be heard on this issue. Consequently, I find only that defendants did violat......
-
Shipman v. North Carolina Private Protective Services Bd.
...a legitimate purpose of state government and be rationally related to the achievement of that purpose. E.g., Dalton v. Bob Neill Pontiac, Inc., 476 F.Supp. 789 (M.D.N.C.1979), aff'd., 628 F.2d 1348 (4th Cir.1980); Hartford Acc. and Indem. Co. v. Ingram, 290 N.C. 457, 226 S.E.2d 498 The purp......