Walker v. College Toyota, Inc., Civ. A. No. 74-58.

• Decision Date: 09 December 1974
• Docket Number: Civ. A. No. 74-58.
• Court: U.S. District Court — Western District of Virginia
• Parties: Shelia C. WALKER, Plaintiff, v. COLLEGE TOYOTA, INC., Defendant.

399 F. Supp. 778

Shelia C. WALKER, Plaintiff, v. COLLEGE TOYOTA, INC., Defendant.

Civ. A. No. 74-58.

United States District Court, W. D. Virginia, Lynchburg Division.

December 9, 1974.

Charles M. L. Mangum, Lynchburg, Va., for plaintiff.

Robert C. Wood, III, Lynchburg, Va., for defendant.

OPINION and JUDGMENT

TURK, Chief Judge.

Plaintiff, Shelia C. Walker, has instituted this action against the defendant, College Toyota, Inc., under the Consumer Credit Protection Act, commonly known as the Truth-in Lending Act, 15 U.S.C. § 1601 et seq. (1974). In her complaint, she alleges violations of the Act and the regulations promulgated thereunder, 12 C.F.R. § 226.1 et seq. (1974). This court has jurisdiction over this suit under 15 U.S.C. § 1640(e).

Defendant, a Virginia Corporation, is a creditor as defined by 15 U.S.C. § 1602(f)¹; plaintiff is a "consumer" as defined by 15 U.S.C. § 1602(h)². The transaction in question was a "credit sale" as defined by 15 U.S.C. § 1602(g)³ and a "consumer credit transaction" as defined by 12 C.F.R. § 226.2(k)⁴. It is conceded that on or about July 11, 1973, the plaintiff entered into a consumer credit transaction with the defendant by executing a retail installment contract with the defendant. See Appendix A. This contract was executed in connection with the purchase of a Toyota automobile.

Plaintiff asserts that defendant violated the Act by failing to disclose the "deferred payment price" of the automobile, denominated as such, in violation of 12 C.F.R. § 226.8(c) (8) (ii) (Regulation Z).⁵ Because no genuine issue of material fact exists with respect to this contention, this case is appropriately before this court on a motion for summary judgment.⁶

Disclosure in a credit sale of the "deferred payment price" is specifically required not by the provisions of the Act, see 15 U.S.C. § 1638(a); but by the regulations promulgated by the Federal Reserve Board, 12 C.F.R. § 226.8(c) (8) (ii). Defendant clearly has failed to disclose the "deferred payment price" in its contract form in violation of § 226.8(c) (8) (ii). See Appendix A. Defendant asserts, however, as a defense to the imposition of the civil penalty prescribed by 15 U.S.C. § 1640(a)⁷ that even though it has failed to disclose the "deferred payment price" in violation of Regulation Z, the civil liability provision of the Act, 15 U.S.C. § 1640(a), imposes liability only for failure to disclose information required by the language of the Act itself; failure to disclose information required not by the Act itself, but only by the regulations should not result in civil liability. The dispositive issue, then, is whether civil liability under the Act attaches to a failure to disclosure information required by the regulations, but not by the Act itself.⁸

This court need not speculate as to the scope of 15 U.S.C. § 1640(a) in that defendant's argument is foreclosed by the opinion of the United States Supreme Court in Mourning v. Family Publications Services, Inc., 411 U.S. 356, 93 S. Ct. 1652, 36 L.Ed.2d 318 (1973).

In Mourning, the principal issue before the court was whether the "Four-Installment Rule"⁹ promulgated by the Board was a valid exercise of rule-making authority. The court went on however to consider and reject the creditor — respondent's argument that even if the regulation in question was valid, Section 130 of the Act, 15 U.S.C. § 1640, did not impose a civil penalty for violations of regulations which prescribe disclosures not required by the Act itself. In the context of the Mourning case, creditor — respondent argued that since 15 U.S.C. § 1631 requires the making of disclosures only when a finance charge is involved, failure to make those disclosures in a transaction not involving a finance charge, even if a violation of a valid regulation, cannot result in civil liability. Disposing of this argument, the court stated:

"Since the civil penalty prescribed is modest and the prohibited conduct clearly set out in the regulation, we need not construe this section 15 U. S.C. § 1640 as narrowly as a criminal statute providing graver penalties, such as prison terms. . . . Congress cannot . . . be required to tailor civil penalty provisions so as to deal precisely with each step which the agency thereafter finds necessary. In light of the emphasis Congress placed on agency rulemaking and on private and administrative enforcement of the Act, we cannot conclude that Congress intended those who failed to comply with regulations to be subject to no penalty or to criminal penalties alone. . . . Imposition of the minimum sanction is proper in cases such as this, where the finance charge is non-existent or undetermined." Id. at 376, 93 S.Ct. at 1664.

For these reasons, defendant's argument cannot be sustained. In further support of its decision, this court refers to the language of 15 U.S.C. § 1604.¹⁰ That section authorizes the Board to prescribe regulations to carry out the purposes of the Act. Section 1640 prescribes liability for failure to disclose any information "required under this part Part B." When § 1604 and § 1640(a) are read together, it is clear that regulations effectuating the purposes of Part B of the Act (credit transactions), if valid under § 1604, are within the scope of § 1640(a). The court in Mourning removed any doubt on this point when it stated:

This section 15 U.S.C. § 1640 refers only to the failure to provide `information required under this part to be disclosed . . .' (Emphasis supplied). The italicized language was added to the statue to distinguish disclosure required in regard to sales transactions from that required in regard to advertising. . . . The penalty provision applies both to the failure to disclose information specifically required by the statute and to the failure to abide by regulations promulgated by the Board to govern such disclosure. Id. at 376, fn. 41, 93 S.Ct. at 1664.

For the above reasons, this court finds that the defendant has violated the Act and by so doing, has subjected itself to the civil liability prescribed by 15 U. S.C. § 1640(a).

The defendant has indicated that should this court reject its argument, it would want an opportunity to assert the statutory defenses afforded under 15 U. S.C. § 1640(c).¹¹

The case is set for trial as to these defenses on Wednesday, December 11, 1974, beginning at 9:30 A.M.

ORDER

Having previously taken under advisement defendant's, motion for summary judgment by order dated October 25, 1974, and having duly considered said motion and the briefs filed in this matter by counsel for plaintiff and defendant and now being under the opinion that it is improper to grant summary judgment for the defendant for the reasons stated in its opinion and judgment dated December 5, 1974, a copy of which is filed herewith and hereby incorporated by reference, the Court doth deny defendant's motion for summary judgment to which defendant objects and excepts.

Then came the parties in person and by counsel on December 11, 1974, and stipulated that the facts of this case are correctly recited in said order dated October 25, 1974, and that if plaintiff is entitled to recover from defendant under § 1640(a) of U.S.C.A. the liability of the defendant to the plaintiff is $1,000.00 pursuant to said section and that a reasonable and proper attorney's fee for plaintiff's attorney, Charles M. L. Mangum, is $1,500.00. The defendant not offering any other evidence, the Court doth therefore adjudge, order and decree that the plaintiff recover from the defendant the sum of $1,000.00 plus her attorney's fee in the amount of $1,500.00, interest from the date of the entry of this order, and her costs incurred in this proceeding.

The defendant having indicated its intention to file an appeal from this order, the Court doth stay this judgment for thirty (30) days in order for the defendant to perfect an appeal herein, and if such appeal is perfected by the defendant pursuant to the Federal Rules of Civil Procedure, the stay of this judgment shall continue until a final determination is rendered by the 4th Circuit Court of Appeals, provided, however, that at the time it files its notice of appeal the defendant shall enter into a bond in the amount of $250.00, without surety or other security, for the costs of the appeal.

1 15 U.S.C. § 1602(f) provides:

The term "creditor" refers only to creditors who regularly extend, or arrange for the extension of, credit for which the payment of a finance charge is required, whether in connection with loans, sales of property or services, or otherwise. The provisions of this subchapter apply to any such creditor, irrespective of his or its status as a natural person or any type of organization.

2 15 U.S.C. § 1602(h) provides:

The adjective "consumer", used with reference to a credit transaction, characterizes the...