Opinion
File No. 1:01-CV-109
March 7, 2002
OPINION
Before this Court are cross motions for summary judgment. Plaintiffs are seeking statutory damages for Defendant's violations of the Truth in Lending Act ("TILA"). Specifically, Plaintiffs claim that by failing to provide them with copies of disclosures, Defendant has violated 15 U.S.C. § 1638 (a)(3)-(a)(6), 1638(a)(9), 1638(b)(1). Defendant's motion argues that statutory damages are not permitted for a violation of § 1638(b)(1). As explained, Plaintiffs' motion for summary judgment is DENIED, and Defendant's motion for summary judgment is GRANTED.
I.
On December 28, 2000, Plaintiff Baker signed a retail installment sales contract to purchase a car. Although Plaintiff Baker asked for a copy of the contract, Defendant refused to give Plaintiff Baker a copy of the contract at that time. A couple of weeks later. on January 11, 2001, Defendant requested that Plaintiff Baker and Plaintiff Zalewski return to sign some additional paperwork. At the dealership, Plaintiffs were informed that Plaintiff Baker would have to sign a second contract and that Plaintiff Zalewski would also have to sign the second contract. Again, both Plaintiffs asked Defendant for a copy of the signed contract, and Defendant still refused to provide them with a copy of either contract. Plaintiffs finally received a copy of the second contract several weeks later around January 29, 2001. Plaintiff Baker has never received a copy of the first contract that she signed.
II.
Summary judgment is appropriate where "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." FED.R.CIV.P. 56(c). An issue concerning a material fact is genuine if the record as a whole could lead a reasonable trier of fact to find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Under Rule 56, the court must view the evidence in the light most favorable to the nonmoving party. Adickes v. S.H. Kress Co., 398 U.S. 144, 158-59 (1970). Summary judgment is not proper if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 248. Summary judgment is proper if the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to the party's case for which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
III. A. Statutory Damages and Violations of 15 U.S.C. § 1638(b)(1)
Using Defendant's assumption that § 1638(b)(1) was violated, whether statutory damages are available for this violation is a question of statutory interpretation. To determine the meaning of a statute, the Court reviews the "`the particular statutory language at issue, as well as the language and design of the statute as a whole.'" Walker v. Bain, 257 F.3d 660, 666-67 (6th Cir. 2001) (quoting K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988)). While the literal language of the statute is important, it may not "lead to absurd results or an interpretation which is inconsistent with the intent of Congress." Id. at 667.
The key statutory language reads:
Except as otherwise provided in this section, any creditor who fails to comply with any requirement imposed under this part, including any requirement under section 1635 of this title, or part D or E of this subchapter with respect to any person is liable to such person in an amount equal to the sum of —
. . .
(2)(A)(i) in the case of an individual action twice the amount of any finance charge in connection with the transaction,
. . .
In connection with the disclosures referred to in section 1638 of this title, a creditor shall have a liability determined under paragraph (2) only for, failing to comply with the requirements of section 1635 of this title or of paragraph (2) (insofar as it requires a disclosure of the "amount financed"), (3), (4), (5),(6), or (9) of section 1638(a) of this title, or for failing to comply with disclosure requirements under State law for any term which the Board has determined to be substantially the same in meaning under section 1610(a)(2) of this title as any of the terms referred to in any of those paragraphs of section 1638(a) of this title.15 U.S.C. § 1640(a) (emphasis added).
In Brown v. Payday Check Advance, Inc., 202 F.3d 987 (7th Cir. 2000), the Seventh Circuit determined that statutory damages were not available for violations of 15 U.S.C. § 1632(a), 1638(a)(8), 1638(b)(1). Id. at 990-91. The Seventh Circuit found that:
Statutory damages are available, this final sentence says, "only for failing to comply with the requirements of section 1635 of this title or of paragraph (2) (insofar as it requires a disclosure of the `amount financed'), (3), (4), (5), (6), or (9) of section 1638(a) of this title, or for" other situations not presented by these cases. "Only," the word we have italicized, is conclusive against plaintiffs, for it confines statutory damages to a closed list. Failure to emphasize the typeface of "finance charge" and "annual percentage rate" violates § 1632(a); omission of descriptive explanations violates § 1638(a)(8); appearance of extra matter in the federal box violates § 1638(b)(1). None of these subsections is on the list of violations eligible for statutory damages.Id. at 991. A number of district courts outside the Seventh Circuit have followed the Brown decision. See Turk v. Chase Manhattan Bank USA, NA, No. OOCIV 1573CMGAY, 2001 WL 736814, at *2 (S.D.N.Y. June 11, 2001) (citing Brown and noting "[b]ecause a violation of § 1632 does not entitle plaintiffs to statutory damages under § 1640, and because plaintiffs have not alleged actual damages, they cannot state a claim."); Molenbeek v. West Mich. Auto Truck Outlet, Inc., No. 1:00-CV-286, 2001 WL 1602654, at *5 (W.D.Mich. Mar. 15, 2001) (Miles, J.) (citing Brown and denying statutory damages for a week long delay in providing a copy of TILA disclosures). See also Peter v. Vill. Imports Co., No. 01-12 DSD/JMM, 2001 WL 1640130, at *3 (D.Minn. Oct. 9, 2001) ("[Defendant]'s alleged failure to provide timely disclosures is a purported violation of 15 U.S.C. § 1638(b) for which only actual damages are available."); Tripp v. Charlie Falk Auto, No. CIV 3:OOCV512, 2001 WL 1105132, at *6 (E.D.Va. Aug. 22, 2001) ("Thus, where a dealer has violated the pre-consummation timing requirement only actual damages are available."); Nigh v. Koons Buick Pontiac GMC, Inc., 143 F. Supp.2d 535, 549 (E.D.Va. 2001) ("Koons' alleged failure to provide timely disclosures falls within the purview of 15 U.S.C. § 1638(b), for which only actual damages are available.").
The language relied on by the Seventh Circuit in Brown was added to TILA in 1980. Brown, 202 F.3d at 991. See also Truth in Lending Simplification and Reform Act, Pub.L. No. 96-221, § 615(b)(2), 94 Stat. 168, 181 (1980). The legislative history supporting this addition states that "[t)his bill would narrow a creditor's civil liability for statutory penalties to only those disclosures which are of central importance in understanding a credit transaction's cost or terms. It is anticipated that this will eliminate litigation which is based on violations of a purely technical nature." S. REP. No. 96-73, at 7 (1980), reprinted in 1980 U.S.C.C.A.N. 280, 285. Additionally, "[t]his section is intended to restrict the scope of creditor civil liability for statutory penalties to only those disclosures which are of material importance in credit shopping." S. REP. No. 96-73, at 17 (1980), reprinted in 1980 U.S.C.C.A.N. 280, 294.
This Court agrees with the Seventh Circuit and finds that consistent with the plain meaning of the statute, statutory damages are not available for a violation of § 1638(b). This plain meaning is supported by the legislative history, which indicates that Congress intended to limit the scope of creditor liability. Consequently, Plaintiffs are not entitled to statutory damages for a violation of 15 U.S.C. § 1638(b).
B. Violations of 15 U.S.C. § 1638(a)(3)-(a)(6), 1638(a)(9)
Next, Plaintiffs contend that even if they are not entitled to statutory damages for a violation of § 1638(b), statutory damages are permitted for violations of § 1638(a)(3)-(a)(6) and § 1638(a)(9). These sections require disclosure of the finance charge (§ 1638(a)(3)), the annual percentage rate (§ 1638(a)(4)), the total of payments (§ 1638(a)(5)), the timing and amount of periodic payments (§ 1638(a)(6)), and the existence of a security interest (§ 1638(a)(9)). Plaintiffs claim that a failure to provide them with a copy of these disclosures constitutes a complete failure to disclose and that consequently, Defendant has violated 15 U.S.C. § 1638(a)(3)-(a)(6), 1638(a)(9), which entitles Plaintiffs to statutory damages.
The Seventh Circuit in Brown rejected Plaintiff s argument. In particular, the Seventh Circuit noted:
Yet accepting this argument would destroy the point of § 1640(a). What sense would it make to omit § 1632, § 1638(a)(1), (a)(2) (in part), (a)(7), (a)(8), (a)(10), (a)(11), (a)(12), and all of § 1638(b), (c), and (d) from the candidates for statutory damages if they came in through the back door on the theory that all formal shortcomings infect the disclosures of the items that are on the list? Congress included some and excluded others; plaintiffs want us to turn this into universal inclusion, which would rewrite rather than interpret § 1640(a).
Brown, 202 F.3d at 991.
In this case, Plaintiffs have not alleged that any of the disclosures were incorrect. Instead, Plaintiffs are claiming that only permitting them to review the information before signing and not providing them with a copy afterwards is not a disclosure. Although Defendant's action in not providing Plaintiffs with a copy of their contracts at signing seems inappropriate, the Brown court's reasoning is persuasive, and on these facts, Defendant is not liable for violations of 15 U.S.C. § 1638(a)(3)-(a)(6), 1638(a)(9).
IV.
In conclusion, neither the plain meaning of 15 U.S.C. § 1640(a) nor the legislative history of this provision supports statutory damages for a violation of 15 U.S.C. § 1638(b). Additionally, Plaintiffs' argument that a failure to comply with 15 U.S.C. § 1638(b) constitutes a failure to disclose under 15 U.S.C. § 1638(a)(3)-(a)(6), 1638(a)(9) is not persuasive because as the Seventh Circuit noted, this argument essentially rewrites the statutory damages provision. Hence, Plaintiffs' motion for summary judgment is DENIED, and Defendant's motion for summary judgment is GRANTED. Accordingly, an order and judgment consistent with this opinion will be entered.
ORDER
In accordance with the opinion entered this date,
IT IS HEREBY ORDERED that Plaintiffs Wanda Baker and Scott Zalewski's motion for summary judgment
(Docket #66) is DENIED.
IT IS FURTHER ORDERED that Defendant Sunny Chevrolet Inc.'s motion for summary judgment (Docket #67) is GRANTED.
IT IS FURTHER ORDERED that JUDGMENT is entered in favor of Defendant and Plaintiffs' complaint is
DISMISSED in its entirety.