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Garl v. Genesee Valley Auto Mall

United States District Court, E.D. Michigan, Southern Division

February 21, 2018

Shawn Garl and Danielle Garl, Plaintiffs,
Genesee Valley Auto Mall, Defendant.



         What 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.

         Discovery 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 7.1(f)(2).

         For the 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.


         On 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.

         O'Keefe 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, 2016. Id.

         A few 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.

         Eight 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).


         Summary 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).


         “[T]he 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.

         This 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. ...

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