Flowers v. Ford Motor Credit Co.

• Decision Date: 27 February 1997
• Docket Number: Civil Action No. 94-A-1648-N.
• Citation: Flowers v. Ford Motor Credit Co., 959 F.Supp. 1467 (M.D. Ala. 1997)
• Parties: Linda S. FLOWERS, Plaintiff, v. FORD MOTOR CREDIT COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Alabama

Page 1467

959 F.Supp. 1467

Linda S. FLOWERS, Plaintiff, v. FORD MOTOR CREDIT COMPANY, Defendant.

Civil Action No. 94-A-1648-N.

United States District Court, M.D. Alabama, Northern Division.

February 27, 1997.

C. Know McLaney, III, Angela L. Kimbrough, McLaney & Associates, Montgomery, AL, James O. Latturner, Cathleen M. Combs, Daniel A. Edelman, Edelman & Combs, Chicago, IL, for Linda S. Flowers.

Thomas M. Byrne, Ann G. Fort, Sutherland, Asbill & Brennan, Atlanta, GA, William L. Howell, David Allen McDonald, William L. Howell, P.A., Mobile, AL, Ford Motor Credit Co.

ORDER

There being no objections filed to the Recommendation of the Magistrate Judge filed herein on February 11, 1997, said Recommendation is hereby adopted, and it is the

ORDER, JUDGMENT and DECREE of the court that Ford Motor Credit Company's Renewed Motion for Summary Judgment filed on September 3, 1996 be GRANTED and that this cause be DISMISSED with prejudice.

RECOMMENDATION OF THE MAGISTRATE JUDGE

CARROLL, United States Magistrate Judge.

I. INTRODUCTION AND PROCEDURAL HISTORY

On December 28, 1994, the plaintiff, Linda Flowers, filed this action complaining about the decision of Troy Ford to charge a fee for document preparation and processing. Later, a first amended complaint was filed adding claims based on the dealers sale of the plaintiff's financing contract to Ford Motor Credit Corporation (FMCC) at a rate lower than the finance rate negotiated with the customer. The plaintiff contended that both of these practices violated the Truth in Lending Act (TILA) and Regulation Z, which implements TILA, and/or the Alabama Mini-Code. FMCC filed a motion for summary judgment directed to those claims. Before the summary judgment motion could be decided, the plaintiff filed a motion for leave to file a second amended complaint and then a revised second amended complaint. The motion for leave to amend was granted on July 11, 1996. In the revised second amended complaint, the plaintiff abandoned her original legal theories and embarked on a new legal course. The revised second amended complaint focuses on the financing of the plaintiff's automobile and argues that FMCC's failure to disclose to the plaintiff that there was a difference between the rate at which FMCC bought the plaintiff's financing contract from the dealer and the finance rate which the dealer offered the plaintiff creates a variety of courses of action. Count I of the revised second amended complaint is a RICO count, count II is a fraud count, count III is a claim that FMCC induced Ford dealers to breach their fiduciary duty to the plaintiff, and count IV is claim that FMCC induced the Ford dealers to breach their contract with the plaintiff. The plaintiff seeks to represent a nationwide class of all similarly situated consumers. The case is now pending before the court on a motion for summary judgment filed by FMCC. The plaintiff has been provided an opportunity to respond and has done so.

II. SUMMARY JUDGMENT STANDARD

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." This standard can be met by the movant, in a case in which the ultimate burden of persuasion at trial rests on the nonmovant, either by submitting affirmative evidence negating an essential element of the nonmovant's claim, or by demonstrating that the nonmovant's evidence itself is insufficient to establish an essential element of his or her claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

The burden then shifts to the nonmovant to make a showing sufficient to establish the existence of an essential element to his claims, and on which he bears the burden of proof at trial. Id. To satisfy this burden, the nonmovant cannot rest on the pleadings, but must, by affidavit or other means, set forth specific facts showing that there is a genuine issue for trial. Fed.R.Civ.P. 56(e).

The court's function in deciding a motion for summary judgment is to determine whether there exist genuine, material issues of fact to be tried; and if not, whether the movant is entitled to judgment as a matter of law. See Dominick v. Dixie Nat'l Life Ins. Co., 809 F.2d 1559 (11th Cir.1987). It is substantive law that identifies those facts which are material on motions for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 258, 106 S.Ct. 2505, 2515, 91 L.Ed.2d 202 (1986); see also DeLong Equip. Co. v. Washington Mills Abrasive Co., 887 F.2d 1499 (11th Cir.1989), cert. denied, 494 U.S. 1081, 110 S.Ct. 1813, 108 L.Ed.2d 943 (1990).

When the court considers a motion for summary judgment, it must refrain from deciding any material factual issues. All the evidence and the inferences drawn from the underlying facts must be viewed in the light most favorable to the nonmovant. Earley v. Champion Int'l Corp., 907 F.2d 1077, 1080 (11th Cir.1990); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). The movant bears "the exacting burden of demonstrating that there is no dispute as to any material fact in the case." Warrior Tombigbee Transp. Co. v. M/V Nan Fung, 695 F.2d 1294, 1296 (11th Cir.1983); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970).

With these rules and principles of law in mind, the court will determine whether summary judgment is appropriate or whether there exist genuine issues of material fact that should properly proceed to trial for resolution.

III. FACTS

On February 4, 1994, the plaintiff purchased a 1993 Ford Tempo from Troy Ford. The first person with whom she dealt was a salesman named Jimmy King. The plaintiff was originally interested in buying a used Beretta. At King's insistence, she also looked at the Tempo which she ultimately bought. King allowed the plaintiff to drive the Tempo to work to see how she liked it. When she returned to Troy Ford with the car, she told King that she would have to have her husband look at the car. King told her that the paperwork had already been completed on the car and sent her to see Wesley Senn who was the person at Troy Ford who handled all of the installment contracts and financing matters. The plaintiff had previously filled out an application for the financing of her purchase. Her application for financing was then sent to FMCC by computer link. FMCC then informed Troy Ford by the same computer link that it would buy the plaintiff's finance contract at a rate of 12.75%. Troy Ford agreed to finance the car for the plaintiff at a rate of 14.75%. The dealer and FMCC shared in the funds generated by the 2 percentage point difference between the "buy rate" and the finance rate actually charged the consumer. The gravamen of the plaintiff's complaint is that the failure to disclose the difference between the "buy rate" and the rate actually charged the consumer violates state and federal law.

IV. DISCUSSION

A. THE FRAUDULENT SUPPRESSION CLAIM (Count II)

The essential elements of a claim of fraudulent suppression are (1) a duty on the part of the defendant to disclose, (2) the defendant's suppression of material facts, (3) the defendant's knowledge of the facts and their materiality, (4) action by the plaintiff in reliance on the suppression, and (5) damages resulting from the reliance action. Wolff v. Allstate Life Insurance Company, 985 F.2d 1524 (11th Cir.1993) (citing Hardy v. Blue Cross & Blue Shield, 585 So.2d 29, 32 (Ala. 1991)).¹ Under Alabama law, a duty to disclose exists only if there are "confidential relations" or "particular circumstances" which give rise to an obligation to communicate. Wolff v. Allstate Life Insurance Company, 985 F.2d at 1529.

As noted above, this case turns on the question of whether there is a duty to disclose which flows from FMCC through Troy Ford to the plaintiff. The recent decision of the Alabama Court of Civil Appeals in Bramlett v. Adamson Ford, 1996 WL 730853, ___ So.2d ____ (Ala.Civ.App. Dec.20, 1996) (on application for rehearing), addresses this outcome determinative issue. The plaintiff in Bramlett purchased a Plymouth Acclaim automobile from Adamson Ford and obtained financing through FMCC. After Bramlett had selected the automobile, he was told by an agent of the dealer that Adamson would get the best financing available. The agent told Bramlett what the rate of finance would be but did not disclose the agreement with FMCC or the "buy" rate. Bramlett made inquiries of the dealer about the finance rate and was told that he was being charged a high finance rate because he was a poor credit risk. The majority of the court in Bramlett concluded that a duty to disclose the difference between the "buy rate" and the finance charge actually charged the consumer arose out of the facts of the actual transaction. As the court noted:

We hold that Bramlett's inquiry as to why the finance charge was so high is substantial evidence from which the trier of fact could infer that Adamson had a duty to disclose the full nature of Adamson's commission agreement with FMCC. A duty to disclose can arise from a request for information.

Id. at 1996 WL 730853 at *3, at ____. The court went on to conclude that FMCC, as well as the dealer, was liable because "FMCC's preparation of the loan documentation to prevent disclosure of the 3% commission raises a question of fact as to whether FMCC was a participant in the alleged suppression." Id. at 1996 WL 730853 at *4, at ____. The question of whether a dealer and/or FMCC had an absolute duty to disclose was also discussed. Two of the judges, Judge Robertson and Judge Yates, did not address the question. Three of the judges, however, reached the question and concluded that there was no such absolute duty. Judge Monroe, concurring, concluded that a duty to...