Palmucci v. General Motors Acceptance Corp., Civ. No. N-83-280 (PCD).

• Decision Date: 04 October 1985
• Docket Number: Civ. No. N-83-280 (PCD).
• Citation: 618 F. Supp. 460
• Court: U.S. District Court — District of Connecticut
• Parties: Albert PALMUCCI and Elizabeth Palmucci v. GENERAL MOTORS ACCEPTANCE CORP.

618 F. Supp. 460

Albert PALMUCCI and Elizabeth Palmucci v. GENERAL MOTORS ACCEPTANCE CORP.

Civ. No. N-83-280 (PCD).

United States District Court, D. Connecticut.

October 4, 1985.

William H. Clendenen, Jr., Clendenen & Lesser, New Haven, Conn., for plaintiffs.

Cheever Tyler, Wiggin & Dana, New Haven, Conn., for defendant.

RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

DORSEY, District Judge.

Cross-motions for summary judgment on the sole remaining count in this consumer action require analysis of the tangled web of the truth-in-lending laws, i.e., the Consumer Credit Protection Act of 1968, as amended, particularly by the Truth-in-Lending Simplification Reform Act of 1980, codified at 15 U.S.C. §§ 1601, et seq.; Federal Reserve Board Regulation Z, 12 C.F.R. § 226 Supp. 1 (Reg. Z); and the Federal Reserve Board Staff Interpretations, 12 C.F.R. § 226(a) (Commentary), revised in 1981. Plaintiffs assert that parts of the standard retail installment contract (contract) used by General Motors Acceptance Corporation (GMAC) violate various format requirements imposed by truth-in-lending regulations. For the reasons below, and cognizant that so holding creates a split of authority within this district, summary judgment shall enter for defendant.

Facts

On December 3, 1982, plaintiffs executed a retail installment contract to finance the purchase of a 1983 Chevrolet. The contract, attached as Exhibit A, was assigned to defendant, GMAC. GMAC's lien on the automobile was recorded on the vehicle's certificate of title for which plaintiffs were charged $1.00. That charge was specified on Line 4D of the "Itemization of Amount Financed" in the contract. Mr. Palmucci also agreed to purchase optional credit life and credit disability insurance offered by GMAC and he so indicated by signing his name in a separate box in the contract labeled "Optional Credit Insurance." The premium for the insurance was specifically disclosed on Line 4C of the "Itemization of Amount Financed," and was referred to in the "Optional Credit Insurance" box in which those who purchase the insurance are informed that its cost is shown on Line 4C. Neither the lien fee nor the optional insurance premium was included in the "Finance Charge." They were included in the "Amount Financed."

Discussion

The Board of Governors of the Federal Reserve System is responsible for the implementation of truth-in-lending legislation. The Board's regulations and staff interpretations translate the general goals and provisions of truth-in-lending laws into the detailed rules which govern credit transactions. Regulation Z, for example, promotes "the informed use of consumer credit by requiring disclosures about its terms and costs." 12 C.F.R. § 226.1(b). It contains numerous technical specifications for the form and content of disclosures required of creditors. Failure to comply with either the substantive or format requirements of Reg. Z subjects the creditor to various civil liabilities. 15 U.S.C. § 1640.

Subpart C of Reg. Z contains the disclosure requirements for "closed-end" credit transactions, such as the simple, fixed-term installment loan in the instant case. Extensive excerpting of ¶¶ 17 and 18, the Commentary thereto, and the references therein, will aid in the resolution of the issues raised by the pending motions.

Regulation 226.17 General disclosure requirements

(a) Form of disclosures. (1) The 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 related37 to the disclosures required under § 226.18.38 The itemization of the amount financed under § 226.18(c)(1) must be separate from the other disclosures under that section.

37 The disclosures may include an acknowledgment of receipt, the date of the transaction, and the consumer's name, address, and account number.

38 The following disclosures may be made together or separately from other required disclosures: the creditor's identity under § 226.18(a), the variable rate example under § 226.18(f)(4), insurance under § 226.18(n), and certain security interest charges under § 226.18(o).

COMMENTARY:

17(a) Form of disclosures.

Paragraph 17(a)(1).

1. Clear and conspicuous. This standard requires that disclosures be in a reasonably understandable form. For example, while the regulation requires no mathematical progression or format, the disclosures must be presented in a way that does not obscure the relationship of the terms to each other. In addition, although no minimum type size is mandated, the disclosures must be legible, whether typewritten, handwritten, or printed by computer.

2. Segregation of disclosures. The disclosures may be grouped together and segregated from other information in a variety of ways. For example, the disclosures may appear on a separate sheet of paper or may be set off from other information on the contract or other documents:

— By outlining them in a box.

— By bold print dividing lines.

— By a different color background.

— By a different type style.

3. Location. The regulation imposes no specific location requirements on the segregated disclosures. For example:

— They may appear on a disclosure statement separate from all other material.

— They may be placed on the same document with the credit contract or other information, so long as they are segregated from that information.

— They may be shown on the front or back of a document.

— They need not begin at the top of a page.

— They may be continued from one page to another.

4. Content of segregated disclosures. Footnotes 37 and 38 contain exceptions to the requirement that the disclosures under § 226.18 be segregated from material that is not directly related to those disclosures. Footnote 37 lists the items that may be added to the segregated disclosures, even though not directly related to those disclosures. Footnote 38 lists the items required under § 226.18 that may be deleted from the segregated disclosures and appear elsewhere. Any one or more of these additions or deletions may be combined and appear either together with or separate from the segregated disclosures. The itemization of the amount financed under § 226.18(c), however, must be separate from the other segregated disclosures under § 226.18.

5. Directly related. The segregated disclosures may, at the creditor's option, include any information that is directly related to those disclosures.

Regulation 226.18 Content of disclosures.

For each transaction, the creditor shall disclose the following information as applicable:

(a) Creditor. The identity of the creditor making the disclosures.

(b) Amount financed. The "amount financed," using that term, and a brief description such as "the amount of credit provided to you or on your behalf." The amount financed is calculated by:

(1) Determining the principal loan amount or the cash price (subtracting any downpayment);

(2) Adding any other amounts that are financed by the creditor and are not part of the finance charge; and

(3) Subtracting any prepaid finance charge.

(c) Itemization of amount financed.

(1) A separate written itemization of the amount financed, including:

(i) The amount of any proceeds distributed directly to the consumer.

(ii) The amount credited to the consumer's account with the creditor.

(iii) Any amounts paid to other persons by the creditor on the consumer's behalf. The creditor shall identify those persons.

(iv) The prepaid finance charge.

(2) The creditor need not comply with paragraph (c)(1) of this section if the creditor provides a statement that the consumer has the right to receive a written itemization of the amount financed, together with a space for the consumer to indicate whether it is desired, and the consumer does not request it.

(d) Finance charge. The "finance charge," using that term, and a brief description such as "the dollar amount the credit will cost you."

(e) Annual percentage rate. The "annual percentage rate," using that term, and a brief description such as "the cost of your credit as a yearly rate."

* * * * * *

(n) Insurance. The items required by § 226.4(d) in order to exclude certain insurance premiums from the finance charge.

(o) Certain security interest charges. The disclosures required by § 226.4(e) in order to exclude from the finance charge certain fees prescribed by law or certain premiums for insurance in lieu of perfecting a security interest.

COMMENTARY:

18(c) Itemization of amount financed.

1. Disclosure required. The creditor has 2 alternatives in complying with § 226.18(c):

— The creditor may inform the consumer, on the segregated disclosures, that a written itemization of the amount financed will be provided on request, furnishing the itemization only if the customer in fact requests it.

— The creditor may provide an itemization as a matter of course, without notifying the consumer of the right to receive it or waiting for a request.

Whether given as a matter of course or only on request, the itemization must be provided at the same time as the other disclosures required by § 226.18, although separate from those disclosures.

2. Additional information. Section 226.18(c) establishes only a minimum standard for the material to be included in the itemization of the amount financed. Creditors have considerable flexibility in revising or supplementing the information listed in § 226.18(c) and shown in model form H-3, although no charges are required.

18(n) Insurance.

1. Location. This disclosure may, at the creditor's option, appear apart from the other disclosures. It may appear with any other information, including the amount financed itemization, any information prescribed by state law, or other supplementary material. When this information is disclosed with the other segregated disclosures, however, no additional explanatory material

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