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Franco v. A Better Way Wholesale Autos, Inc.

United States District Court, D. Connecticut

March 1, 2016

ELISA FRANCO, Plaintiff,


Hon. Vanessa L. Bryant United States District Judge

Plaintiff, Elisa Franco, purchased an automobile from Defendant A Better Way Wholesale Autos., Inc. (“ABW”), and Franco and ABW entered into a form-based financing agreement, which ABW later assigned to Defendant BCI Financial Corp. (“BCI”). Franco thereafter brought this action seeking damages pursuant to, inter alia, the Truth in Lending Act, 15 U.S.C. § 1601, et. seq. (“TILA”). She alleged that the financing agreement did not disclose the vendor’s single interest (“VSI”) insurance as a finance charge and did not contain a written statement that she could obtain VSI insurance elsewhere. Plaintiff and Defendants crossmove for summary judgment. The issue is whether a reasonable juror could find that an unchecked provision stating “[i]f the preceding box is checked, . . . [y]ou may chose the insurance company through which the VSI insurance is obtained” constitutes “a clear and specific statement in writing . . . that the person to whom credit is extended may choose the person through which the insurance is obtained.” No reasonable juror could so find. The Court therefore enters partial summary judgment in favor of Franco.

Factual Background

The following facts, which are undisputed unless otherwise noted, are drawn from the record. In August 2013, Franco purchased a 2006 Jeep Grand Cherokee from ABW. ECF No. 36-4 at ¶ 4. To finance the purchase, Franco and ABW entered into a form-based retail installment sales contract (“Financing Agreement”). Id. at ¶ 5. The Financing Agreement included a $60 charge for VSI insurance that was disclosed as part of the amount financed, not a finance charge. ECF No. 36-4 at 3. ABW required Franco to purchase VSI insurance as a condition of financing by BCI, the assignee of the Financing Agreement.[1] ECF No. 37-3 at ¶¶ 3, 9.

The Financing Agreement contains various provisions permitting the parties to add terms by checking a corresponding box. ECF No. 36-4 at 3-6. One optional provision states:

If the preceding box is checked, we require VSI insurance for the initial term of the contract to protect us for loss or damage to the vehicle (collision, fire, theft). VSI insurance is for our protection. The insurance does not protect your interest in the vehicle. You may choose the Insurance company through which the VSI Insurance is obtained. If you elect to purchase VSI insurance through us, the cost of this insurance is $60.00 . . . .

(“Notice Provision”). Id. at 4 (attached). A small box appears in the upper left-hand margin of the Notice Provision. Id. No mark of any kind appears in that particular box. Id. An “xx” appears above and to the left of the box for the Notice Provision, in between two other text boxes, each containing provisions of the Financing Agreement unrelated to the Notice Provision. Id. The parties disagree about whether the “xx” constitutes checking the box for the Notice Provision.

Legal Analysis

Summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of proving the absence of a genuine factual dispute. See Vivenzio v. City of Syracuse, 611 F.3d 98, 106 (2d Cir. 2010). “In determining whether that burden has been met, the court is required to resolve all ambiguities and credit all factual inferences that could be drawn in favor of the party against whom summary judgment is sought.” Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). “If there is any evidence in the record that could reasonably support a jury’s verdict for the nonmoving party, summary judgment must be denied.” Am. Home Assurance Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 315-16 (2d Cir. 2006) (internal quotation marks and citation omitted).

TILA “assure[s] a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to [her] and avoid the uninformed use of credit” and “protect[s] the consumer against inaccurate and unfair credit billing and credit card practices.” 15 U.S.C. § 1601. TILA thus requires creditors to disclose all finance charges. 15 U.S.C. § 1638(a)(3). A finance charge includes, inter alia, “[c]harges or premiums for insurance, written in connection with any consumer credit transaction, against loss of or damage to property or against liability arising out of the ownership or use of property.” 15 U.S.C. § 1605(c). Charges for insurance, however, do not constitute finance charges and therefore need not be disclosed as such when:

[A] clear and specific statement in writing is furnished by the creditor to the person to whom the credit is extended, setting forth the cost of the insurance if obtained from or through the creditor, and stating that the person to whom the credit is extended may choose the person through which the insurance is to be obtained.

(“Notice Exception”). Id.; see also Velasquez v. Natalino Motors, LLC, No. 3:08-CV-1427 RNC, 2011 WL 4572060, at *4 (D. Conn. Sept. 30, 2011). Similarly, pursuant to Regulation Z implementing TILA, “a charge for insurance can be excluded from the finance charge if ‘the insurance coverage may be obtained from a person of the consumer’s choice, and this fact is disclosed.’” Velasquez, 2011 WL 4572060, at *4 (alterations omitted) (quoting 12 C.F.R. § 226.4(d)(2)(i)).

The parties agree that the charge for VSI insurance must be disclosed as a finance charge unless the Notice Exception applies. ECF Nos. 36-1 (Franco Mem.) at 7; 39 (Defs. Opp’n) at 3. The parties also agree that the charge for VSI insurance was not disclosed as a finance charge. ECF Nos. 36-2 (56(a)1 Statement) at ¶ 3; 39-1 (56(a)2 Statement) at ¶ 3. The parties further agree that the Notice Provision satisfies the Notice Exception if it is part of the Financing Agreement. ECF Nos. 36-1 (Mem.) at 5; 39 (Defs. Opp’n) at 4. The parties disagree only about whether the Financing Agreement included the Notice Provision. Id. Plaintiff argues that no reasonable juror could find the Notice Provision applicable. ECF No. 36-1 at 8-9. Defendants argue that every reasonable juror would find the provision applicable. ECF No. 37-1 at 3-5.

Whether a box has or has not been checked is ostensibly a factual question to be resolved by the trier of fact, not a question of law to be resolved by a court on summary judgment. This action, however, presents a rare exception to the rule that a question of fact may not be resolved on summary judgment because here the factual dispute isn’t genuine. The answer is so obvious that no “‘fair-minded jury could return a verdict for the [defendants] on the evidence presented.’” Rojas v. Roman Catholic Diocese of Rochester, 660 F.3d 98, 104 (2d Cir. 2011) (quoting Anderson, 477 U.S. at 248). The box simply wasn’t checked. The Notice Provision in the Financing Agreement was not one of ...

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