United States District Court, E.D. Michigan, Southern Division
OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
F. COX UNITED STATES DISTRICT JUDGE
does $700 buy? For Plaintiffs, who purchased a vehicle from
Defendant, $700 bought unwanted GAP insurance and over a
years' worth of litigation. Plaintiffs allege that
Defendant violated the Truth in Lending Act (TILA) during the
transaction in two ways. First, by failing include the cost
of GAP coverage in the finance charge listed on the retail
installment sales contract. Second, by improperly backdating
a revised sales contract, thereby overstating the finance
charge by $11.94.
has concluded and Defendant has moved for summary judgment.
The Court shall decide the motion on the briefs, the issues
having been adequately presented therein. E.D. Mich. LR
reasons below, the Court shall grant in part and deny in part
the Motion for Summary Judgment. The Court shall deny the
motion as to Plaintiffs' first claim because a material
question of fact exists as to whether the GAP insurance was
compulsory, in which case it should have been included in the
finance charge. But the Court shall grant the motion as to
Plaintiffs' second claim because the finance charge was
properly calculated from the date the first contract was
signed and consummated.
January 26, 2016, Plaintiffs Shawn and Danielle Garl went to
Defendant Genesee Valley Auto Mall's dealership to
purchase a 2010 GMC Acadia. D. Garl Dep., p. 16-17. After
arriving at the dealership, they test drove the vehicle and
began discussing the transaction with salesman Derrick
O'Keefe. Id. at 18. At some point, they
discussed GAP insurance, a type of insurance that pays the
difference between the total loss price of a vehicle and the
outstanding balance on the loan. Id. at 22-23;
O'Keefe Dep., p. 15. O'Keefe represented that
Plaintiffs had to purchase GAP insurance for their loan to be
approved. D. Garl Dep., p. 23. Based on his representations,
Plaintiffs bought the insurance for $695. Def. Ex. B.
Plaintiffs did not want, and would not have purchased, GAP
insurance had they not believed it was mandatory. D. Garl
Dep., p. 25-26.
eventually presented Plaintiffs with a retail installment
sales contract, which they had to sign to complete the
transaction. Id. at 24. Plaintiffs briefly reviewed
its language before signing and initialing in the various
places O'Keefe indicated. Id. at 24-25. The
contract included forms indicating that the GAP insurance was
optional, not mandatory. Def. Ex. B. The contract's truth
in lending disclosure provided that the sale price was $27,
052.48, the amount financed was $25, 011.80, the finance
charge was $1, 940.59, and the annual percentage rate was
2.49%. Id. First payment was due on February 25,
days later, O'Keefe contacted Plaintiffs and indicated
that he needed them to resign the sales contract. O'Keefe
Dep., p. 61-62. The lender-Financial Plus Credit Union-had
asked for some minor changes to be made to the contract.
Id. at 61. First, because the original contract
designated the vehicle model with the initials
“AC”, the credit union requested that the
contract be modified to state “Acadia.”
Id. Second, the credit union asked that a section of
the contract be re-typed for legibility purposes.
Id. Nothing in the second contract changed any of
the financial terms or the payment commencement date.
Compare Def. Ex. B with Def. Ex. G.
Plaintiffs signed the contract as directed. D. Garl Dep., p.
29. Although it was signed on February 2, 2016, it was
backdated to January 26, 2016, the date Plaintiffs signed the
original contract. O'Keefe Dep., p. 66.
months later, Plaintiffs filed this action, alleging that
Defendant violated the TILA by failing to include the cost of
GAP insurance in the finance charge in the contract, 15
U.S.C. § 1638(a), and by improperly backdating the sales
contract, thereby overstating the finance charge assessed on
Plaintiffs' loan, 15 U.S.C. § 1638(a)(3) (Doc. #
16). Defendant has moved for summary judgment (Doc. # 19) and
Plaintiffs have responded (Doc. # 20).
judgment will be granted where there exists no genuine issue
of material fact. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). A genuine issue of material fact
exists where “the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.”
Id. The Court “must view the evidence, all
facts, and any inferences that may be drawn from the facts in
the light most favorable to the non-moving party.”
Skousen v. Brighton High Sch., 305 F.3d 520, 526
(6th Cir. 2002).
TILA is a remedial statute which serves two purposes: (1) to
permit an individual consumer to recover for her injuries;
and (2) to deter socially undesirable lending
practices.” Purtle v. Eldridge Auto Sales,
Inc., 91 F.3d 797, 801 (6th Cir. 1996). It
“requires creditors make certain disclosures as to the
terms of lending arrangements and provides for civil
liability for failure to comply with its provisions.”
United States v. Petroff-Kline, 557 F.3d 285, 294
(6th Cir. 2009); 15 U.S.C. § 1640(a). The Act is
strictly enforced; “once a court finds a violation of
the TILA, no matter how technical, the court has no
discretion as to the imposition of civil liability.”
Purtle, 91 F.3d at 801.
case concerns several disclosures that are required for each
consumer credit transaction: The “amount
financed” (the amount of credit of which the consumer
has actual use), 15 U.S.C. § 1638(a)(2); the
“finance charge” (the cost of consumer credit as
a dollar amount), § 1638(a)(3); 12 C.F.R. 226.4(a); and
the finance charge expressed as an “annual percentage
rate”, § 1638(a)(4). When considering whether
Defendant properly made these disclosures, the Court must
remain mindful of the regulations promulgated by the Federal
Reserve System's Board of Governors to implement the
Act's requirements. See Petroff-Kline, 557 F.3d
at 294. ...