Negron v. Mallon Chevrolet Inc

Filing 49

ORDER. Memorandum of Decision finding for the plaintiff on her Truth in Lending Act claim, and for the defendant on the Connecticut Unfair Trade Practices Act claim. See attached decision. Signed by Judge Thomas P. Smith on November 30, 2011. (Slitt, M.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

MAGDALIZ L. NEGRON,
-Plaintiff

-v-

CIVIL 3:08 CV 182 (TPS)

MALLON CHEVROLET, INC.,
-Defendant

MEMORANDUM OF DECISION
For many, the experience of buying an automobile is almost
as stressful as buying a house. Buyers frequently feel confused
and overwhelmed by documents, forms, acronyms, unfamiliar terms,
the sheer magnitude of their undertaking, and an uneasy feeling
that the playing field may not be level. Nevertheless, people
need transportation and so, each day thousands, if not millions,
of such transactions take place, unremarkably. This lawsuit
arises out of the plaintiff’s purchase of a used car from the
defendant dealership on May 18, 2007.
September 28, 2010.

A bench trial was held

28 U.S.C. §636(c). The court finds for the

plaintiff on her claims under the Truth in Lending Act (TILA), 15
U.S.C. §1601 et seq., and for the defendant on plaintiff’s claims
under the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn.
Gen. Stat. §42-110a et seq.

Judgment shall enter accordingly.

Rule 52(a) of the Federal Rules of Civil Procedure governs
bench trials and requires that “the court must find the facts
specially and state its conclusions of law separately.”

The

court’s factual findings as set forth below are based on the
court’s perception of the credibility of the various witnesses
who testified at trial, the exhibits, and relevant portions of
the stipulations and depositions.

Although most of the court’s

findings are set forth in this portion of the opinion, occasionally subordinate factual findings are also made in the course of
discussing the court’s legal conclusions.

These findings are

incorporated by reference herein.
FACTS
The plaintiff is a citizen of Connecticut. On May 18, 2007,
she bought a used 2004 Chevrolet Impala from the defendant Mallon
Chevrolet, an automobile dealership located in Norwich,
Connecticut. There is no diversity jurisdiction. The plaintiff
and the defendant entered into a consumer credit transaction in
connection with this transaction. The plaintiff is a consumer and
the defendant was a creditor for purposes of the transaction. The
plaintiff signed a purchase order and retail installment contract
for the automobile. (Exhibits 3, 5)
At the time of this transaction, defendant Mallon Chevrolet
was having a “Super Sale,” in connection with which there had
been a mass mailing of advertising material to about 30 thousand
people in the area. (Frawley at 84)

To deal with the anticipated

crowds of customers, eight part-time workers (three managers and
five salespeople) were brought in to help. (Frawley 84-86)

The

defense witnesses uniformly maintain that any errors or
misstatements in the information defendant obtained from Ms.
Negron and inserted into the retail installment contract and
financing papers must have been made by these part-time
salespeople

who were brought on only temporarily to help with

the “Super Sale.”
None of the defense witnesses was able to identify any of
these temporary workers, and no records as to their duties,
identities or whereabouts were produced in discovery or
introduced by the defendant. Mallon Chevrolet thus failed to keep
records of the names of its temporary employees who prepared
important documents pertaining to consumer lending, and the
integrity of paperwork required by TILA, to say nothing of 18
U.S.C. §1014. It was Mallon’s

responsibility to do this. This is

a failing which the court is sure Mallon will not repeat in the
future, but it is not the type or kind of an “error” that
absolves Mallon of responsibility or liability for the TILA
violations in this case.
At the relevant time, plaintiff was 23 years old, resided in
her own apartment, paid her own rent, and worked part-time at a
local motel as a breakfast room attendant.

She had held the job

for about nine months, and earned around $9.25 per hour for a 25

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hour week.

She was having problems with her car, a 2000 Ford

Taurus, which required significant repairs.

She needed a more

reliable automobile. So plaintiff went to Mallon Chevrolet, and
brought her father, Victor Negron, with her for support and to
help her pick a good vehicle at a reasonable price.
The plaintiff became interested in a used 2004 Chevrolet
Impala with 41,555 miles.

The price of the car was $13,550. She

bought a 24 month service contract for $1,675 and a VIN etching
service for $159.
4239.

There was also a “dealer conveyance fee” of

State sales tax was $733.18.

An additional $95 fee was

charged for transferring the title and lien. This brought the
total cash price for the car to $16,451. The retail purchase
order indicates that the plaintiff made a cash down payment of
$250, which brought the unpaid balance of the cash price down to
$16,201.18

A “GAP INS” charge of $800 was then added to the

purchase price, bringing the balance owed to $17,001.18. The
plaintiff financed the car with Wells Fargo Auto Finance, Inc. On
a six year (72 month) payment plan, with payments of $379.58 per
month.

The annual percentage rate was 16.9%.

charge was $10,328.58.

The total finance

According to the retail purchase order,

the “Total Sale Price” for the used car was $27,579.76.
(Plaintiff’s Ex. 3)
The controversy before the court centers on the $250 “Down
payment” that is reflected on the retail purchase order and the

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retail instalment contract. Also at the center of the controversy
are other alleged misrepresentations that were purportedly made
to obtain financing for this transaction. At the outset, it
should be noted that there is no dispute that plaintiff did not
make a $250 down payment, and that the purchase order and retail
instalment contract are wrong to the extent they reflect
otherwise. The plaintiff alleges correctly that this skews the
accuracy of the sales tax computation.

The amount of sales tax

that plaintiff was charged on this fictitious down payment,
therefore, was, in reality, part of the finance charge, which
also is not disclosed in the instalment contract. The plaintiff
makes other arguments how the erroneous listing of a $250 down
payment violated TILA.
All a plaintiff need demonstrate is a single violation to be
entitled to statutory damages of up to $1,000. Statutory damages
do not increase with each additional violation that is shown.
Therefore, there is no need for the court to address each of
plaintiff’s argument and their individual factual predicates.
Here, the court finds that the listing of a $250 down payment,
which was never made, violates TILA and entitles plaintiff to an
award of statutory damages up to $1,000.

At the very least, this

resulted in plaintiff’s improperly being charged sales tax on a
sum that was never paid.

The court does not necessarily reject

plaintiff’s other TILA arguments, but simply concludes that the

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violation described above is sufficient.

Therefore, on the first

count of the second amended complaint, judgment will enter in
plaintiff’s favor for $1,000, together with costs and reasonable
attorney’s fees to be determined at a later date.
The court has considered defendant’s bona fide error
defense, but is not convinced by it. To prevail on that defense,
it must be shown that the violation was not intentional, resulted
from a bona fide error “notwithstanding the maintenance of
procedures reasonably adapted to avoid any such error.” 15 U.S.C.
1640(c).

There is no need for the court at this point to discuss

bona fides vel non, or the intent of the defendant, for, in the
court’s opinion, the defendant Mallon did not have in place
“procedures reasonably adapted to avoid any such error.” The
court disagrees with Mallon’s argument that the defense witnesses
offered credible evidence to the contrary. In the court’s view,
Mallon’s procedures at the time of its “Super Sale” were casual
and sloppy. That defendants cannot even identify the additional
sales and finance personnel who were present and participated in
this transaction alone illustrates the court’s point. These
findings should suffice.
The more troubling part of this case is plaintiff’s second
count, which arises under the Connecticut Unfair Trade Practices
Act (“CUTPA”) Conn. Gen. Stat. §42-110a et seq.

Here, plaintiff

alleges that the defendant deliberately falsified her credit

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application to create the impression that she was “in a better
financial position than she actually was.”

Plaintiff

characterizes the listing of a $250 down payment as “bogus” and
part of a scheme to defraud the financier and, presumably, the
plaintiff herself.
Plaintiff begins with the premise that “Connecticut courts
hold that a violation of TILA is a per se violation of CUTPA.”
For this proposition, plaintiff cites two cases Cheshire Mtge.
Service, Inc. v, Montez, 223 Conn. 80, 612 A.2D 1130 (1992) and
McLaughlin Ford, Inc. v. Ford Motor Co., 473 A.2d 1185. Neither
of these cases holds this, or even stands for the proposition.
Instead, the court in Cheshire Mtge. Service states that “a
violation of . . . TILA may constitute a violation of CUTPA.” 612
A.2d at 1214. (Emphasis added). Whether a particular practice
violates CUTPA is determined by analysis of the practice under
the “Cigarette Rule” Id. At 11432
The plaintiff asserts that her purchase of the used car from
Mallon Chevrolet was a fraudulent transaction. According to
plaintiff, the Mallon salesman she dealt with, Frank Williams

2

In determining whether there has been a violation of CUTPA,
Connecticut courts look to the “cigarette rule” of FTC v. Sperry
and Hutchinson Co., 405 U.S. 233, 244-45 n.5 (1972). Cheshire
Mortgage Service, Inc. v. Montes, 612 A.2d 1130, 1143 (1992). The
rule sets forth three criteria that should be considered. Since
there has been a failure of proof in this claim, it seems
unnecessary for the district court, which is entertaining the
claim only incidentally, to discuss the intricacies of the Act.
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falsified her credit application in order to get financing for
the car. Plaintiff’s credit application (Plaintiff’s Ex. C)
falsely states that she had been employed at Comfort Suites for
three years.

It also states that her occupation there was as an

assistant manager. It falsely describes herself as a salaried
employee who was paid monthly, as opposed to a part-time hourly
wage-earner. It misrepresented that she had been employed there
for three years.
In reality, as plaintiff testified, she was a part-time
assistant at breakfast time, had worked there only about 8
months, and was paid $9.25 per hour for about 25 hours per week.
She was not an Assistant Manager, had not worked there three
years, was not salaried, and did not make $2,650 per month.
It is undisputed that the “Applicant’s Credit Application”
(Plaintiff’s Exhibit C), is false.

It is also undisputed, and

the court finds, that the plaintiff signed page three of the
application. Above her signature appear words acknowledging that
she has “read and agree[s] with the terms and disclosures of the
three pages of this application.” Id. At trial, plaintiff
testified that the first two pages of the application were not
attached to page three when she signed the credit application.
Her signature signifies to the contrary: she read the
application, she understood it, and she signed it.
The salesman with whom plaintiff dealt was Frank Williams.

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Mr. Williams denies supplying the false information set forth on
plaintiff’s credit application.

According to Mr. Williams, this

information is “input” by the Sales Manager and Finance Manager.
The customer usually signs this document in the business office.
Usually, according to Mr. Williams, a salesperson fills in a
handwritten credit application and transmits it to the sales
manager, who uses it to create a typed application. There is no
such handwritten document in existence here. Mr. Williams does
not know what happened to it in this case.

According to

plaintiff, Mr. Williams told her the papers would be prepared to
reflect a $250 down payment, even though she would not be
required to pay it.

According to plaintiff, Mr. Williams told

her that if the bank contacted her, she should lie and tell the
bank that she had made a $250 down payment
Mr. Williams denies that he ever told the plaintiff to
misstate her financial condition, and further denies telling her
that a fictitious $250 deposit would be reflected in the retail
instalment contract and other papers. Mr. Williams also denies
advising the plaintiff to lie about these matter if she were
contacted by the bank.
In the normal course of busines at Mallon, according to Mr.
Williams, the paperwork and credit application then would have
gone to Mallon’s business manager, Karl Frawley.

Mr. Frawley

testified that he “input” the numbers that appear on the first

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page of the credit application. Mr. Frawley’s recollection of the
transaction was cloudy at best.

He stated that it looked to him

like the $250 down payment had ben collected. He was adamant that
he did not tell Ms. Negron or her father to lie about the down
payment if contacted by a bank. It was Mr Frawley’s recollection
that this sale took place during a five day “Super Sale,” for
which several outside sales personnel and finance managers were
brought in.

It was Mr. Frawley’s belief that, to the extent

errors were made, the mistakes were attributable to these
temporary personnel. Mr. Frawley denied that the plaintiff or her
father questioned him about the $250 down payment. Mr. Frawley
also denies ever telling plaintiff to lie if contacted by the
bank, and further denies ever counseling her to give false
information on her financial statement.
The plaintiff called her father, Victor Negron, as a
corroborating witness. Mr. Negron did not remember any names and
did not know the origin of the numbers on plaintiff’s credit
application. Mr. Negron, however, remembers that he inquired of
someone about the $250 deposit and was told not to worry about
it.

Mr. Negron also testified that he was told play along with

it if the bank inquired.

From beginning to end, when plaintiff

finally drove off in her new used car, the entire transaction
took about six hours.

It is not clear how long Mr. Negron was at

Mallon Chevrolet because, he testified, he was hungry and left to

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get something to eat.

It is not clear whether he ever returned.

Thus, Mr. Negron, who was purportedly there watching out for
his daughter, left his her alone to deal with people whom he
allegedly knew had concocted a bogus $250 deposit scheme, and had
urged both his daughter and him to lie about it should the bank
call.

He purportedly left her because he was hungry, in effect

abandoning his daughter to fend alone in a den of allegedly
mendacious used car salesmen.

Mr. Negron did not impress the

court. The court attaches no weight to Mr. Negron’s testimony.
His scant and sketchy testimony does not corroborate the
plaintiff’s allegations against Messrs. Williams, Frawley, and
Griffin.
Jessie Griffin was unavailable at the time of trial and,
therefore, his Rule 30(b)(6) deposition was admitted by agreement
of counsel. Mr. Griffin testified that a day of so after the
transaction, he discovered that the $250 down payment had not in
fact been paid. (Tr. 14).

Instead of contacting the plaintiff

and asking for the $250 down payment, Mr Griffin testified that
“instead of having the customer come back into the dealership,
{he] took the money out of the proceeds of the deal.

He never

informed the plaintiff of the purported act of generosity. (Tr.
14)

He was not the sales manager for this particular

transaction. (Tr. 20) The financial information for this sale was
probably “inputted” by the sales manager. But there is no way

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that Mr. Griffin or Mallon has the capability of going back into
the records or data base to ascertain who the sales manager was
for that particular transaction.

(Tr.21-22)

It appears to be undisputed that defendant Mallon Chevrolet
also issued a check for $275 to the plaintiff. Mr Griffin
testified that, from his examination of the file, the $275 check
was written to Magdaliz Negron “to help her with insurance.” “For
some reason,” Mr Griffin testified, “she needed an additional
$275 for her insurance.” This is not reflected in the retain
installment contract, however.

It is not reflected because,

according to Mr. Griffin, the $275 also came out of the gross
profit of the deal (Tr.33-35).

Thus, according to Mr. Griffin’s

sworn testimony there is no question that Ms. Negron agreed to
pay a $250 down payment, but when he (Griffin) discovered the
next day that she had not made the down payment, Mr. Griffin did
not bother to ask her for it.

Instead, he simply took it from

Mallon’s profit on the deal. Also, when it was discovered that
Ms. Negron needed some “help” with her insurance, Mallon
Chevrolet once again dipped into its own profit and issued Ms.
Negron a check for $275, so she could obtain automobile
insurance.(Tr. 35-40)

Mr. Griffin’s testimony did not impress

the court. It does not ring true.
What this case boils down to is a credibility contest
between the plaintiff and two men: one a used car salesman, and

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the other a used car sales manager. To argue that none of these
three witnesses has a motive to lie is absurd.

All three have a

motive, or motives to lie.3
That plaintiff has sustained her burden of showing a
violation of TILA is one thing, but proving her claim under CUTPA
is an entirely different proposition. Mallon’s breach of TILA,
and the failure of its affirmative defense of bona fide error, do
not compel the conclusion, or even reasonably suggest, that CUTPA
also was violated by Mallon. The court finds that plaintiff has
failed to sustain her burden of showing a violation of CUTPA. A
finding of a breach of CUTPA should not be made lightly, and is
not sustainable on this record.
Messrs. Williams and Frawley testified that they neither
supplied the false information in plaintiffs loan application,
nor encouraged the plaintiff to lie to the bank. This is in
direct conflict with the plaintiff’s testimony and that of her
father. The court, therefore, must make a credibility
determination. There is no magic formula from determining whom to
believe. It is the quality of testimony, rather than the number
of witnesses, that must be evaluated in deciding whom to believe.
In evaluating plaintiff’s credibility, the court considers her

3

If the Court of Appeals desires more particularized
findings as to this, or anything else, the magistrate
respectfully asks that the matter be remanded for more detailed
findings, which the magistrate will easily and gladly provide.
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testimony that she signed the credit application. Immediately
above her signature, the plaintiff acknowledge that she agreed
with the terms and conditions of the three pages of the loan
application. Thus, either plaintiff knowingly signed a false
application, or recklessly signed a document without bothering to
read the words above her signature and examine the entire
document.

Thus, by her own admission plaintiff deliberately

signed a document containing false information.
Messrs. Frawley and Williams, on the other hand, have denied
that they deliberately supplied the false information on
plaintiff’s credit application, and further deny that they ever
told the plaintiff or her father to lie in the event they were
contacted by the bank. The Mallon witnesses also have come
forward with at least a plausible explanation how the false
information may have found its way into plaintiff’s credit
application. If plaintiff herself did not supply it– which is a
possibility the court does not rule out-- then it must have been
inserted by one of the unnamed and unknown group of sales and
managerial people who were brought in temporarily to assist with
the expected Super Sale crowds.

The plaintiff testified that she

did not know who supplied the false financial data on the credit
application he signed, but the fact remains that, by signing page
three of the application, which said directly above her signature
that she had read and agrees with the three pages of the

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application, the plaintiff has cast doubt on her own character
and credibility.
The plaintiff has the burden of proving her case by a
preponderance of evidence. “The preponderance of the evidence
standard requires the party with the burden of proof to support
its position with the greater weight of the evidence.”
Neutraceutical Corp. v. Von Eeschenbach, 459 F.2d 1033 (10 Cir.
206). The court must consider the weight of the evidence.
Indeed, "weight of the evidence" is often
equated across circuits with a de novo
inquiry into the preponderance of the
evidence. See, e.g., Nutraceutical Corp. v.
Von Eschenbach, 459 F.3d 1033, 1040 (10th
Cir. 2006) ("The preponderance of the
evidence standard requires the party with the
burden of proof to support its position with
the greater weight of the evidence."); Jazz
Photo Corp. v. United States, 439 F.3d 1344,
1350 (Fed. Cir. 2006) (stating that "we have
defined preponderance of the evidence in
civil actions to mean 'the greater weight of
evidence, evidence which is more convincing
than the evidence which is offered in
opposition to it.'") (citation omitted);
Un i t e d St a t e s v . Ga r c i a -Gu i z a r , 160 F.3d 511, 523
n.9 (9th Cir. 1998) ("A preponderance of the
evidence means the greater weight of the
evidence. . . .
De La Rosa v. Holder, 598 F32 103 108 (2d Cir. 2010). Courts in
Connecticut further hold that:
“Proof by a ‘preponderance’ mean that the petitioner must
adduce evidence that makes the existence of a contested fact more
likely than not.” [citation omitted}
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In other words, the

petitioner’s proof needs only ‘tip the scale’ by the slightest
evidentiary margins.” McClenden v. Secretary of Dept. Of Health,
24 Cl.Ct. 329, 333 (1991). “[A] fact has been proved by a
preponderance of the evidence if [the trier of fact] ‘[finds]
that the scales tip, however slightly, in favor of the party with
the burden of proof, as to that fact.’” Ostrowski v. Atlantic
Mutual Insurance Companys, 968 F. 2d 171, 187 (2d Cir. 1992),
citing, Sand, Model Federal Jury Instructions ¶73.01 at 73-74
(1992). Where the scales remain perfectly balanced, the plaintiff
has failed to sustain her burden. Here, the plaintiff has not
tipped the scales of credibility in her favor, the best she can
assert is that they remain in equipoise. The same is true under
the verbal formulation discussed in De La Rosa v. Holder, 598
F.3d 103, 108 (2d Cir. 2010). The plaintiff has not proved her
CUTPA claim.

Accordingly, judgment shall enter in the

defendant’s favor on the second count of the supplemental
complaint.
Cadle v. Flanagan, 2006 WL 860063 (D.Conn. 860063, March 31,
2006) does not help the plaintiff here. In that case, which is of
dubious precedential value, since it was settled pending appeal
alleging several serious, outcome-determinative flaws in the
record4, and a generalized jury bias against the legal profession

4

This magistrate conducted several settlement conferences
during the life span of this law suit. Several occurred during
the pre-trial phase, many while trial was in progress, and
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as a whole. Moreover, as all facts and inferences in Cadle were
construed in a light least favorable to the defendant attorneys
in that case, it is not authority here, were there has been a
bench trial, and the court must find the facts.
Having prevailed on her TILA claim, the plaintiff is
entitled to an award of a reasonable attorney’s fee. Accordingly,
within 20 fays hereof plaintiff’s counsel will file a duly
supported fee application supported by affidavits delineating the
hours spent; the hourly rate customarily charged in such cases;
and other fee awards given to this attorney in Connecticut.

The

defendant shall have 20 days thereafter to present papers in
opposition to aforesaid papers. Before submitting fee papers
counsel are directed to discuss settlement of the fee issue. Any
appeal from the court’s decision herein should be timely and to
the U.S. Second Circuit Court of Appeals.
Dated at Hartford, Connecticut this

IT IS SO ORDERED
30

th

day of November,

2011.
/s/ Thomas P. Smith
Thomas P. Smith
United States Magistrate Judge

multiple conferences after the jury returned its verdict.
Unfortunately, a pre-trial settlement was not possible, and the
result was a jury verdict which, in the magistrate’s view, was
unfair.
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