Opinion
IP 00-1340-C-T/G
July 30, 2001
ENTRY ON SUMMARY JUDGMENT AND RELATED MOTIONS
Though this Entry is a matter of public record and is being made available to the public on the court's web site, it is not intended for commercial publication either electronically or in paper form. The reason for this caveat is to avoid adding to the research burden faced by litigants and courts. Under the law of the case doctrine, the ruling or rulings in this Entry will govern the case presently before this court. See, e.g., Tr. of Pension, Welfare, Vacation Fringe Benefit Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 468 n. 4 (7th Cir. 2000); Avitia v. Metro. Club of Chicago, Inc., 49 F.3d 1219, 1227 (7th Cir. 1995). However, a district judge's decision has no precedential authority and, therefore, is not binding on other courts, on other judges in this district, or even on other cases before the same judge. See, e.g., Howard v. Wal-Mart Stores, Inc., 160 F.3d 358, 359 (7th Cir. 1998) ("a district court's decision does not have precedential authority"); Malabarba v. Chicago Tribune Co., 149 F.3d 690, 697 (7th Cir. 1998) ("district court opinions are of little or no authoritative value"); United States v. Articles of Drug Consisting of 203 Paper Bags, 818 F.2d 569, 571 (7th Cir. 1987) ("A single district court decision . . . has little precedential effect. It is not binding on the circuit, or even on other district judges in the same district."). Consequently, though this Entry correctly disposes of the legal issues addressed, this court does not consider the discussion to be sufficiently novel or instructive to justify commercial publication of the Entry or the subsequent citation of it in other proceedings.
Mary A. Spearman brings this action against Tom Wood Pontiac-GMC, Inc. ("Tom Wood") and Charles R. Sheeks, alleging, inter alia, that Tom Wood violated the Truth In Lending Act ("TILA"), 15 U.S.C. § 1601 et seq. Both Ms. Spearman and Tom Wood move for summary judgment. Defendants Tom Wood and Sheeks move the court to strike Ms. Spearman's summary judgment motion as untimely and also move the court to reconsider its order allowing Ms. Spearman additional time within which to file her summary judgment motion. The court rules as follows.
Motion to Reconsider and Motion to Strike
Defendants move for reconsideration of the court's order allowing Plaintiff additional time within which to file a summary judgment motion. They advance three reasons why they believe reconsideration is appropriate: (1) they were not served with a copy of the motion for an extension of time; (2) the court's order granting Plaintiff additional time contravenes the parties' Scheduling Order adopted by the court and they were not allowed an opportunity to object to Plaintiff's motion; and (3) Plaintiff's request for an extension of time was made ten days after expiration of the deadline for filing summary judgment motions. In moving to strike Plaintiff's motion for summary judgment, Defendants argue said motion was filed nearly two weeks after the expiration of the deadline for filing such motions.
The court has considered the arguments made by Defendants, but concludes that reconsideration would be inappropriate. Though defense counsel may not have received a copy of the motion, Plaintiff's counsel has certified that a copy of that motion was sent by first class mail, postage pre-paid to Defendants' counsel. In addition, Plaintiff's counsel has explained that the belatedness of the motion for an extension of time was due to a good faith calendaring error. As for contravention of the Scheduling Order, whether to extend a deadline set forth in a scheduling order is within the court's discretion and the court may do so absent an opportunity for objection from the opposing party. More importantly, Defendants have shown no prejudice. Plaintiff's motion addresses the same issues and claim that are the subject of Tom Wood's own motion for summary judgment, and Defendants have had a full opportunity to respond to Plaintiff's motion. Resolution of the issues and claim that are the subject of the cross-motions for summary judgment is in the interest of "the just, speedy, and inexpensive determination" of same. See FED. R. CIV. P. 1. Accordingly, Defendants' motion to reconsider is DENIED.
Given that the court's order extending the time for Plaintiff to file her summary judgment motion has not been reconsidered, Defendants' argue in error that Plaintiff's motion for summary judgment was untimely filed. Therefore, Defendants' motion to strike is DENIED.
Summary Judgment Standard
Summary judgment is proper only if the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In determining whether a genuine issue of material fact exists, the court must view the record and all reasonable inferences in the light most favorable to the non-moving party. Nat'l Soffit Escutcheons, Inc. v. Superior Sys., Inc., 98 F.3d 262, 264 (7th Cir. 1996). No genuine issue exists if the record viewed as a whole could not lead a rational trier of fact to find for the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Ritchie v. Glidden Co., 242 F.3d 713, 720 (7th Cir. 2001).
Background Facts
In July 1999, Mary Spearman went to a Tom Wood dealership and discussed with a salesman the purchase of a vehicle. Within a few days of August 26, 1999, she executed a Retail Installment Contract and Security Agreement ("Contract") in connection with the purchase of the vehicle from Tom Wood. The Contract included a section entitled Truth in Lending Disclosures. Ms. Spearman was presented the Contract in quadruplicate form. One of the copies included in the form was for her. Ms. Spearman signed the Contract. Then she was given a copy of the Contract. At the time, the Contract had not yet been signed by Tom Wood as Seller. There is no indication that Ms. Spearman was advised or knew before she signed the Contract that one of the copies was intended for her to keep. Tom Wood did not give Ms. Spearman a copy of the Contract before she signed it.
Discussion
TILA was enacted "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 card practices." 15 U.S.C. § 1601(a). TILA and Regulation Z promulgated to implement TILA require a creditor to make certain written disclosures to the consumer. See 15 U.S.C. § 1638(a); 12 C.F.R. § 226.18. Regulation Z states that the disclosures are to be made "before consummation of the transaction." 12 C.F.R. § 226.17(b); see also 15 U.S.C. § 1638(b)(1) (requiring disclosures be made "before the credit is extended"). Regulation Z also provides that the disclosures shall be made "clearly and conspicuously in writing, in a form that the consumer may keep." 12 C.F.R. § 226.17(a). Because the TILA is a remedial statute, it should be construed liberally in favor of the consumer. See Ellis v. Gen. Motors Accept. Corp., 160 F.3d 703, 707 (11th Cir. 1998); Ramadan v. Chase Manhattan Corp., 156 F.3d 499, 502 (3rd Cir. 1998).
Ms. Spearman claims Tom Wood violated TILA and Regulation Z because she was not given the required disclosures in a form that she could keep before consummation of the transaction. Defendant contends that it did not violate TILA and Regulation Z because Ms. Spearman was given a copy of the Contract after she signed it and before Tom Wood signed it.
She does not allege that Tom Wood failed to make all of the disclosures required by the TILA. Nor does she allege that the form of the disclosures was improper.
In order to determine whether there has been a violation of TILA and Regulation Z as alleged by Ms. Spearman, the court must first determine when the transaction was consummated. Defendant argues that "when Spearman was provided a copy of the Contract after she executed it, she received the disclosures in writing in a form she could keep prior to the consummation of the transaction." (Mem. Supp. Mot. Partial Summ. J. Def. at 5.) Defendant, however, cites no legal authority to support its position that the transaction was not consummated until both Ms. Spearman and Tom Wood signed the contract.
"Consummation" "means the time that a consumer becomes contractually obligated on a credit transaction." 12 C.F.R. § 226.2(a)(13). State law governs the determination of when a contractual obligation is created for purposes of Regulation Z. See 12 C.F.R. Pt. 226, Supp. 1, subpt. A, § 226.2 ¶ 2(a)(3) at 318 (2001). There is authority to support Ms. Spearman's argument that under Indiana law she became contractually obligated when she signed the Contract. See Anderson v. AAMCO Dealers Adver. Pool, 678 N.E.2d 832, 837 (Ind.Ct.App. 1997); Kruse Classic Auction Co., Inc. v. Aetna Cas. Sur. Co., 511 N.E.2d 326, 328 (Ind.Ct.App. 1987). Courts in other jurisdictions are in accord. See Compton v. Altavista Motors, Inc., 121 F. Supp.2d 932, 936 (W.D.Va. 2000) (stating that credit transaction was consummated once buyer signed credit contract); Holley v. Gurnee Volkswagen Oldsmobile, Inc., No. 00 C 5316, 2001 WL 243191, at *3 (N.D.Ill. Jan. 4, 2001) (stating "[c]onsummation generally occurs at signing"); Rowland v. Magna Millikin Bank, 812 F. Supp. 875, 879 (C.D.Ill. 1992) (concluding the contract was consummated on the date the plaintiffs signed it "because that was the date [p]laintiffs contracted for financing and became bound to the credit terms."). In Anderson, the Indiana Court of Appeals wrote:
In situations where fewer than all the proposed parties execute a document, we look to the intent of the parties as determined by the language of the contract to determine who may be liable under the agreement. It should be assumed that all the parties who sign the agreement are bound by it unless it affirmatively appears that they did not intend to be bound unless others also signed.678 N.E.2d at 837 (citations omitted). Tom Wood does not dispute this legal proposition, but argues that Ms. Spearman did not intend to be bound by the Contract until after Tom Wood executed it. The evidence relied on by Defendant (see Spearman Dep. at 64-65 (stating that the Tom Wood salesman would try to find more favorable financing)) does not raise a genuine issue as to whether Ms. Spearman intended to be bound by the Contract only if Tom Wood also executed of the Contract. Therefore, the court assumes that Ms. Spearman became contractually obligated under the Contract at the time she signed it. Accordingly, the court finds that the transaction was consummated when Ms. Spearman signed the Contract.
In moving for summary judgment, Ms. Spearman relies heavily on Polk v. Crown Auto, Inc., 221 F.3d 691 (4th Cir. 2000), in which the court considered the meaning of Regulation Z. The Polk plaintiff had purchased a truck from defendant. Prior to the sales transaction, the defendant explained the credit terms to the plaintiff, but did not disclose them in writing in a form he could take with him. The plaintiff entered into two retail installment contracts with the defendant for the purchase of the truck. After both parties signed the contracts, which contained the credit terms, the plaintiff was given copies of them. Polk, 221 F.2d at 691. The only issue before the court was whether the seller was required to make the disclosures in writing and in a form the consumer could keep before consummation or whether the seller could make the disclosures in some form before consummation as long as the consumer later received the disclosures in writing in a form he could keep. Id. at 692. The court held that the defendant was required to make the disclosures to the consumer in writing before consummation. Id. Tom Wood correctly maintains that Polk is factually distinguishable because the defendant there conceded that it did not make the required disclosures in writing in a form the plaintiff could keep before consummation of the transaction, see id. The rule taken from the holding of Polk, however, is nevertheless applicable here.
Tom Wood cites to Janikowski v. Lynch Ford, Inc., 210 F.3d 765 (7th Cir. 2000), and Fogle v. Williams Chevrolet/Geo, Inc., No. 99 C 5960, 2000 WL 1129983 (N.D.Ill. 2000), as holding that the seller did not violate TILA where the TILA disclosures were contained in the contracts executed by the buyer. While Tom Wood's interpretation of the holdings is correct, these cases are of little guidance to the court because they do not directly address whether the disclosures were given to the consumer in writing in a form they could keep. Nor do they address the timing of the consummation of the transaction. Rowland v. Magna Millikin Bank, 812 F. Supp. 875, 879 (C.D.Ill. 1992) (holding that seller violated TILA by failing to make required disclosures as disclosures on buyer's copy of contract were blurred and illegible), also relied upon by Tom Wood, does not address whether the disclosures were given to the buyer in writing in a form he could keep.
The courts that have considered the issue have uniformly concluded that merely showing the consumer the disclosures in a contract before he or she signs the contract is insufficient; the consumer must be given a copy of the disclosures before signing the contract. See Walters v. First State Bank, 134 F. Supp.2d 778, 781-82 (W.D.Va. 2001) (holding bank violated Regulation Z where consumer was not given copy of credit contract which contained TILA disclosures until after she signed it); Holley, 2001 WL 243191, at *3 (holding plaintiff's evidence created issue of fact regarding the timing and form of disclosures where evidence showed TILA disclosures were made in the contract, but plaintiff did not receive a copy of the contract prior to execution); Lozada v. Dale Baker Oldsmobile, Inc., 197 F.R.D. 321, 337 (W.D.Mich. 2000) (holding that Regulation Z requires a copy of the disclosures be delivered to plaintiff before consummation; merely showing plaintiff the disclosures is not sufficient); Jenkins v. Landmark Mtg. Corp., 696 F. Supp. 1089, 1091 (W.D.Va. 1988) (holding consumer did not receive the disclosures in a form she could take with her where she was shown and signed disclosures at time she signed contract, but did not receive a copy of disclosures until several days later); In re Williams, 232 B.R. 629, 639-40 (Bankr.E.D.Pa.) (holding failure to provide copy of disclosures to consumer violated TILA), aff'd as corrected, 237 B.R. 590 (E.D.Pa. 1999); Shepeard v. Quality Siding Window Factory, Inc., 730 F. Supp. 1295, 1300 (D. Del. 1990) (holding consumer must be given a copy of written disclosures). Defendant's efforts to distinguish these cases is not convincing. Though the facts of each case differ somewhat from the instant case, the definitive fact remains the same: the defendant did not give the plaintiff a copy of the disclosures in writing in a form he or she could keep before consummation of the transaction.
The court denied summary judgment for the plaintiff because the defendant's evidence raised an issue of fact as to whether the transaction was in fact consummated. Id. at *3.
The sound reasoning in Lozada is particularly persuasive. The defendant argued that it complied with Regulation Z because it made the required disclosures to the plaintiffs by showing them the written disclosures. The court rejected the argument that the regulation did not require a copy of the disclosures be delivered to the plaintiffs prior to consummation. 197 F.R.D. at 337. The court first noted that Regulation Z specifically states that the disclosures were to be made "in writing, in a form that the consumer may keep." Id. at 337 (citing 12 C.F.R. § 226.17(a)(1)). The court explained:
Were the court to accept the position of [defendant] that the regulation required only that consumers be shown the disclosures before becoming contractually obligated, the phrase "in a form that the consumer may keep" would be rendered meaningless. In other words, if the regulation means no more than that disclosures be made to consumers in writing, no additional meaning would be conveyed by requiring the form be one the consumer could keep.
Id. Applying basic principles of statutory interpretation, the court concluded that the presence of the phrase "in a form that the consumer may keep" "compels a conclusion that the regulation requires actual delivery of the disclosures to the consumer." Id. The court further found that the "language of the phrase itself also suggests that delivery is required. Requiring that disclosures be made before consummation in a 'form that the consumer may keep' requires that the actual consumer involved in the transaction receive disclosures and be able to keep those disclosures before consummation." Id. Lastly, the court concluded that its interpretation of the regulation was consistent with TILA's purpose which 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.'" Id. at 338 (quoting 15 U.S.C. § 1601(a)).
This court agrees with the Lozada court's reasoning and adopts it as its own. Defendants' attempt to distinguish the instant case from Lozada on the basis of the length of time which passed between the consummation of the transaction and the delivery of the disclosures to the plaintiff is not persuasive. It is not the length of time between the two events that is determinative; rather, the critical fact in each case is that the disclosures were given to the plaintiff after consummation of the transaction. This post-consummation disclosure is what violates Regulation Z.
Tom Wood's argument that "it is not a violation of the TILA to provide written disclosures to a purchaser prior to the consummation of that transaction and to provide a copy of that written disclosure only after the purchaser executes the contract" (Mem. Supp. Mot. Partial Summ. J. Def. at 7), remains unconvincing in light of Lozada and the other decisions that have rejected similar arguments. See Walters, 134 F. Supp.2d at 781-82 (rejecting bank's argument that showing consumer the TILA disclosures on written credit contract prior to signing satisfied disclosure requirements); Lozada, 197 F.R.D. at 336-37 (rejecting same argument by creditor). The court agrees that simply showing the consumer the TILA disclosures prior to consummation of the transaction does not constitute compliance with Regulation Z.
Defendant also claims that the disclosures were given to Ms. Spearman in writing in a form she could keep prior to consummation because it made quadruplicate copies of the Contract available to her. That the Contract was presented in quadruplicate form is beside the point. Ms. Spearman had no reason to know that one copy of the Contract was hers to keep and, it is undisputed Tom Wood did not actually give Ms. Spearman a copy of the Contract before she signed it. It would be contrary to the purpose of TILA to impose a duty on the consumer to obtain the required disclosures. Cf. Mourning v. Family Pubs. Serv., Inc., 411 U.S. 356, 377 (1973) (stating that TILA "reflects a transition in congressional policy from a philosophy of 'Let the buyer beware' to one of 'Let the seller disclose.'"). And, imposition of such a duty on the consumer would conflict with the very language of Regulation Z which imposes the duty of disclosure on the creditor. See 12 C.F.R. § 226.17(a) ("The creditor shall make the disclosures required. . . ."). Moreover, even when the evidence is viewed in the light most favorable to Tom Wood, at best it would support a finding that Ms. Spearman was provided a copy of the disclosures in a form she could keep contemporaneous with the consummation of the contract. Contemporaneous disclosure, however, does not comply with Regulation Z's requirement that the disclosure be before consummation of the transaction.
The court concludes that where a contract for credit contains the required TILA disclosures, a creditor must give a copy of the contract to the consumer before the consumer signs it. This conclusion gives meaning to the language of Regulation Z and promotes the purpose of TILA. The court finds that Ms. Spearman was not given a copy of the TILA disclosures before consummation of the transaction and, therefore, concludes that Tom Wood violated Regulation Z. Accordingly, the court finds that Ms. Spearman is entitled to summary judgment on her TILA claim, and Tom Wood's motion for partial summary judgment as to that claim must be denied.
Conclusion
Ms. Spearman has established a violation of the disclosure requirements of TILA and Regulation Z. Therefore, Tom Wood's motion for partial summary judgment is DENIED, and Plaintiff's cross-motion for partial summary judgment will be GRANTED. Defendants' motion to reconsider and motion to strike are DENIED.
Defendants are ALLOWED thirty days within which to respond to the pending motions for class certification. Plaintiff is ALLOWED fifteen days after service of a response within which to reply.