Whitlock v. Midwest Acceptance Corp.

• Decision Date: 16 August 1977
• Docket Number: No. 76-1147C(A).,76-1147C(A).
• Citation: 449 F. Supp. 631
• Parties: Raymond WHITLOCK, George Tree and Lily Tree v. MIDWEST ACCEPTANCE CORPORATION and Oliver Auto Sales, Inc.
• Court: U.S. District Court — Eastern District of Missouri

449 F. Supp. 631

Raymond WHITLOCK, George Tree and Lily Tree v. MIDWEST ACCEPTANCE CORPORATION and Oliver Auto Sales, Inc.

No. 76-1147C(A).

United States District Court, E. D. Missouri, E. D.

August 16, 1977.

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Bertram Cooper, Legal Services of Eastern Missouri, St. Charles, Mo., for plaintiffs.

James L. Van Dillen, Clayton, Mo., for Oliver Auto Sales, Inc.

Arthur Kreisman, St. Louis, Mo., for Midwest Acceptance Corp.

MEMORANDUM OPINION

HARPER, District Judge.

This matter is before the Court on plaintiffs' motion for summary judgment and on the separate motions of defendants, Midwest Acceptance Corporation (hereinafter referred to as MAC) and Oliver Auto Sales, Inc. (hereinafter referred to as Oliver Auto), for summary judgment in their favor.

Plaintiffs, Raymond Whitlock, George Tree and Lily Tree, brought this action seeking money damages and attorneys fees for an alleged violation of the Consumer Credit Protection Act of 1968, 12 CFR 226.1 et seq. (hereinafter referred to as Regulation Z), as promulgated by the Board of Governors of the Federal Reserve System in accordance with 15 U.S.C. § 1604. The Court has jurisdiction of this action pursuant to 15 U.S.C. § 1640(e).

From the pleadings, exhibits attached to the pleadings, admissions, and briefs submitted, the following facts have been derived: Plaintiffs are United States citizens residing in the City of St. Louis, Missouri. Defendants, MAC and Oliver Auto, are Missouri corporations existing and operating under the laws of Missouri. On December 22, 1975, plaintiffs entered into a consumer credit transaction with defendant MAC. This credit transaction, which was arranged by Oliver Auto, took place in connection with the financing of the down payment on the purchase price of a 1970 Buick automobile sold to plaintiffs by Oliver Auto. Said consumer credit transaction imposed a finance charge upon plaintiffs in the amount of $121.99, and was payable in more than four installments. A copy of a document, entitled "NOTE — LOAN STATEMENT", evidencing this transaction is attached to this Memorandum Opinion as Exhibit A to Memorandum Opinion.

The facts are not in dispute. Except for the allegation contained in paragraph 10, subparagraph c of plaintiffs' complaint (which will be dealt with later in this opinion), the merits of this case turn on whether the financing disclosures contained in the NOTE — LOAN STATEMENT comply with the requirements of the Act and Regulation Z. The parties do not contend otherwise, and agree that the NOTE — LOAN STATEMENT is a true and accurate copy of the loan disclosure document executed among them.

Rule 56 of the Federal Rules of Civil Procedure considers summary judgment and provides in part:

"(c) Motion and Proceedings Thereon. * * * The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."

According to established principle, once a motion for summary judgment is made, the Court examines the evidence, not to decide issues of fact which may be presented, but rather to determine if any real issue exists. Doza v. American National Ins. Co., 314 F.2d 230, 232 (8th Cir. 1963). As interpreted by the courts, Rule 56 places on the moving party "the burden of showing the absence of a genuine issue as to any material fact, and for these purposes the material it lodged must be viewed in the light most favorable to the opposing party." Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); Jacobson v. Maryland Casualty Co., 336 F.2d 72, 74 (8th Cir. 1964), cert. denied 379 U.S. 964, 85 S.Ct. 655, 13 L.Ed.2d 558 (1964). However, it is well settled that a general allegation in a pleading, standing by itself, is not sufficient to withstand a motion for summary judgment supported by a prima facie showing that no genuine issue of material fact exists. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Marion County Cooperative Assoc. v. Carnation Co., 214 F.2d 557, 561-62 (8th Cir. 1954); Fed.R.Civ.P. 56(e). Summary judgment is appropriate where the only issue to be resolved is the legal sufficiency of a document. Bricklayers Local Union No. 15 v. Stuart Plastering Co., 512 F.2d 1017, 1023-24 (5th Cir. 1975).

The case before the Court is one wherein summary judgment may properly be created in favor of the defendants, MAC and Oliver Auto, since no genuine issue of any material fact exists between the parties.

It is alleged by plaintiffs that in the course of the credit transaction involved herein the defendants violated various provisions of the Act and Regulation Z. Prior to an examination of the propriety of the credit transaction the Court deems it advisable to first determine whether both defendants are subject to the provisions of the Act and Regulation Z.

For the purposes of the case at bar both MAC and Oliver Auto will be considered as "creditors" subject to the disclosure requirements of the Act and Regulation Z. Liability under these attach to "creditors, who regularly extend, or arrange for the extension of, credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required." 15 U.S.C. § 1602(f). See also, 12 CFR 226.2(s) (1976). "Arrange for the extension of credit" is a term of art defined in 12 CFR 226.2(h) (1976):

"(h) `Arrange for the extension of credit or for lease of personal property' means to provide or offer to provide consumer credit or a lease which is or will be extended by another person under a business or other relationship pursuant to which the person arranging such credit.

"(1) Receives or will receive a fee, compensation, or other consideration for such service, or

"(2) Has knowledge of the credit or lease terms and participates in the preparation of the contract documents required in connection with the extension of credit."

The status of MAC as a creditor has been established by its admission to paragraph 7 of plaintiffs' amended complaint, which paraphrases the definition contained in 15 U.S.C. § 1602(f), supra.

Despite denials in its answer, the status of Oliver Auto as a creditor under the Act and Regulation Z is established by reason of its failure to answer or object to plaintiffs' request for admissions, to-wit:

"3. That defendant, Oliver Auto Sales, Inc., in the ordinary course of business, offers to arrange or arranges consumer credit, through another person, for the sale of automobiles to its customers.

"4. That defendant, Oliver Auto Sales, Inc., arrange for the extension of credit to plaintiffs by defendant, Midwest Acceptance Corporation, Inc., in connection with sale by Oliver Auto Sales, Inc., to plaintiffs of said 1970 Buick."

Rule 36 of the Federal Rules of Civil Procedure provides that each matter of which an admission is requested is admitted unless, within a specified time, the party to whom the request is directed serves upon the requesting party a written answer or objection addressed to the matter. Further, it should be noted that where an automobile dealer participates in the preparation of loan-contract documents and has a general knowledge of the credit company's credit terms, it is an "arranger of credit" within the Truth-in-Lending Act. Gonzales v. Schmerler Ford, 397 F.Supp. 323 (N.D.Ill. 1975).

The Court next turns to the subparagraphs of plaintiffs' complaint alleging violations of the Act and Regulation Z in the various disclosures or lack thereof, contained in the NOTE — LOAN STATEMENT under consideration. In this connection, it should be noted that the express purpose of Subchapter I of the Act, Consumer Credit Cost Disclosure, is "to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit practices." 15 U.S.C. § 1601(a). See also, Joseph v. Norman's Health Club, Inc., 532 F.2d 86, 90 (8th Cir. 1976). Further, though the Act is to be liberally construed, Sellers v. Wollman, 510 F.2d 119 (5th Cir. 1975), the cause of justice would not be served were the Act enforced so as to achieve a means of harassment, oppression or unjust enrichment. Redhouse v. Quality Ford Sales, Inc., 511 F.2d 230, 237 (10th Cir. 1975).

In paragraph 10, subparagraph (a) of their amended complaint, plaintiffs allege that "defendants failed to give the disclosures required by the Act and Regulation Z in a meaningful sequence in violation of § 226.6(a) of Regulation Z."

12 CFR 226.6(a) provides in pertinent part: "The disclosures required to be given by this part shall be made clearly, conspicuously, in meaningful sequence, * *." The NOTE — LOAN STATEMENT (Exhibit A attached hereto), which evidences the transaction at issue, presents the relevant mathematical compilations in the following order: Total payments, finance charge, annual percentage rate, amount financed, disbursements and cash difference to the borrower.

It is plaintiffs' contention that, although the figures provided on the disclosure statement are in columns and have been arrived at by the addition and subtraction of different lines, there is no logical progression of figures, all with the effect that the disclosure statement is not easily comprehended. Plaintiffs suggest that in a logical, arithmetic progression the amount financed would appear first, followed by the annual percentage rate with the final figure representing the amount of total payment to be made by the credit customer.

It is, however, the opinion of the Court that the location of the various...