Franco v. A Better Way Wholesale Autos, Inc. et al

Filing 42

ORDER granting 36 Motion for Partial Summary Judgment; denying 37 Motion for Partial Summary Judgment. See attached. JTM due on or before 05/02/2016; jury selection on 05/31/2016. ECF No. 41. Signed by Judge Vanessa L. Bryant on 03/01/2016. (Thomas, R.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

ELISA FRANCO,
Plaintiff,
v.
A BETTER WAY WHOLESALE AUTOS,
INC. and BCI FINANCIAL CORP.,
Defendants.

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CIVIL ACTION NUMBER:
3:14-CV-00422 (VLB)
March 1, 2016

MEMORANDUM OF DECISION
Plaintiff, Elisa Franco, purchased an automobile from Defendant A Better
Way Wholesale Autos., Inc. (“ABW”), and Franco and ABW entered into a formbased 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.
Defendants crossmove for summary judgment.

Plaintiff and

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.

1

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 lefthand 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
1

Defendants denied this statement without providing evidence in support
of their denial. Compare ECF No. 36-2 at ¶ 4, with ECF No. 39-1 at ¶ 4. Oddly,
Defendants’ 56(a)1 statement states the exact same information in support of
their motion for summary judgment. ECF No. 37-2 at ¶¶ 3, 8.
2

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

3

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. 3:08CV-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.

4

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 the optional
provisions selected to be included in the Financing Agreement, and the parties
agree that the Financing Agreement serves as the only possible source for the
requisite notice.
Defendants identify an xx located both to the left and top of the bounded
Notice Provision and argue that this stray mark constitutes undisputed evidence
(or at least some evidence on which a reasonable juror could find) that the Notice
Provision applied.2 ECF Nos. 37-1 at 3–5; 39 at 4. No reasonable juror could find
that a mark positioned between two provisions other than the one at issue
constitutes checking the box. The “xx” is not immediately visible because it is in
2

Defendants raise two other arguments: (1) the itemization section of the
Financing Agreement informed Franco of the VSI charge; and (2) the Notice
Provision was bolded and listed the amount that ABW would charge for VSI
insurance. ECF No. 37-1 at 4. These arguments miss the mark. The itemization
section proves only that the VSI charge was listed as the amount financed, not
that Franco had clear and specific written notice that she could have purchased
the insurance elsewhere. Further, the Notice Provision applied only if the
preceding box was checked, and the box wasn’t checked. The Notice Provision
could have been bolded, underlined, italicized, and typed in 72 font, and the
outcome would still be the same.
5

the margin between two different contractual provisions. The mark has no clear
significance and appears to be a stray mark. Was the “xx” intended to apply to
either of the two optional provisions beside which it appears? Does the “xx”
simply highlight one of the two other provisions between which it appears? Does
the “xx” have any significance at all or is it just a stray mark? These are all
questions raised by the position of the “xx”
The evidence suggests an ambiguity at most, and evidence permitting a
reasonable juror to infer the existence of an ambiguity would not be sufficient for
Defendants to prevail at trial.

TILA requires a creditor to provide a person

receiving credit with “a clear and specific statement in writing . . . stating that
[she] may choose the person through which the insurance is to be obtained.” By
definition an ambiguous provision does not constitute “a clear and specific
statement in writing,” as Defendant ABW was required to provide.
Moreover, applying state-law principles of contract interpretation, any
ambiguity would unquestionably result in a verdict in Franco’s favor. See Kramer
v. Marine Midland Bank, 559 F.Supp. 273, 284 (S.D.N.Y. 1983) (applying state
parole evidence rule to interpret financing agreement for purposes of addressing
TILA claim).

When a contract is ambiguous, courts construe the ambiguity

against the drafter. Ramirez v. Health Net of Ne., Inc., 285 Conn. 1, 14 (2008). If
the Financing Agreement contains a possible ambiguity with respect to the
applicability of the Notice Provision, the Notice Provision would not apply
because its application favors ABW.

Moreover, when a contract provision is

ambiguous, courts look to extrinsic evidence to ascertain its meaning.

6

Jay

Realty, Inc. v. Ahearn Dev. Corp., 189 Conn. 52, 56 (1983).

Franco provides

evidence that the parties did not intend for the Notice Provision to apply: one of
ABW’s finance managers admitted in sworn testimony that ABW’s customers
could not purchase VSI insurance elsewhere. ECF No. 36-3 at 4. Defendants
provide no contrary evidence. Accordingly, the Court rules as a matter of law
that no reasonable juror could find that the stray xx constitutes a “clear and
specific statement” providing Franco with notice that she “may choose the
person through which the insurance is to be obtained.”
Defendant ABW is therefore liable to Franco with respect to Franco’s TILA
claim.3 Defendant BCI, as the assignee, is also liable because the violation is
apparent on the face of the Financing Agreement.

See 15 U.S.C. § 1641(a)

(assignee liable if violation “apparent on the face of the disclosure statement”).
The Financing Agreement listed the VSI charge as an amount financed and
contained no applicable written notice as required by Section 1605. Defendants
also impliedly concede the amount of damages at issue: $2,000. Cf. Local R. Civ.
P. 7(a)(1) (“Failure to submit a memorandum in opposition to a motion may be
deemed sufficient cause to grant the motion, except where the pleadings provide
sufficient grounds to deny the motion.”). Section 1640(a)(2)(A)(i) provides that a
plaintiff is entitled to recover double the finance charge up to $2,000. The finance
charge here is $3,394.47. ECF No. 37-4 at 7. The $2,000 cap therefore applies and

3

Franco brought other state-law claims, which are not raised in either
Plaintiff or Defendants’ motions for partial summary judgment. Those claims will
be the subject of a trial scheduled for jury selection on May 31, 2016.
7

Defendants are jointly and severally liable.4 See Greenlee v. Steering Wheel, Inc.,
693 F.Supp. 1396, 1396 (D. Conn. 1988) (holding that liability of creditor and
assignee is joint and several, not separate and distinct).
Conclusion
For the foregoing reasons, the Court GRANTS Plaintiff’s motion for partial
summary judgment and DENIES Defendants’ motion for partial summary
judgment. The Court ENTERS partial summary judgment in Plaintiff’s favor with
respect to the TILA claim against both Defendants and awards her $2,000 in
damages on which Defendants jointly and severally liable.

IT IS SO ORDERED.
________/s/______________
Hon. Vanessa L. Bryant
United States District Judge

Order dated in Hartford, Connecticut on March 1, 2016.

4

Plaintiff should move for attorney fees, with supporting documentation,
after a final judgment has been entered.
8

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Other optional Insurance Is not required to obtain credit.
Your decision to buy DI not buy other optional Insurance
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Co-Buyer Signature

THE INSURANCE INCLUDED IN THIS
CONTRACT DOES NOT PROVIDE COVERAGE FOR PERSONAL LIABILITY OR
PROPERTY DAMAGE CAUSED TO
OTHERS.

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OPTION: D You pay _ finance .charge If the Amount Financed, Item 5, Is paid In full on or before
no

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• , Year _ _ • SELLER'S INITTALS

Finance Charge begins on the date of this
contract unless the box In the next
sentence Is checked. If this box Is
checke. , [
d
] Finance Charge begins
on
and we wlll not
charge Finance Charge before this date,
even If you pay late. Regardless of whether
the box In the preceding sentence Is
checked, once Finance Charge begins,
_ .you wlll have to.pay Finance Charge on the
unpaid Amount Financed at the Annual
Percentage Rate shown above. (See also
Section 1.a. on the reverse side.)
Buyer Slgn(f-}

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Retumad Check Charge: If the cash price of the
If you make any required payment
(Including any deferred payment) more
vehicle Is ll10l9 than $50,000, you agree lo pay a
20
than 10 days late, you wlll hava to pay a x: charge of$
If any check you give
late charge as described above. If you
us la dishonored.
make any required payment (Including any
0 VENDOR'S SINGLE INTEREST INSURANCE (VSI lnsurancs):
deferred payment) late, we may also take
Hthe pracedlng box Is chlcked, we raqa111 VS! Insurance for the
the steps described In Sections 3.b.
Ir&! term of the cxmlract to protect us for loss DI damage to the
through 3.g. on the reverse side.
vahlcla (collslon, ftre, !haft). VSI lnsurancs Is for our protection.
This lnsuranca doss not protect you("fnteieS! In Iha vlifilcie. You
may chaa11 the lnsuranc1 company through which the VSI
Insurance 15 obtained. ff you elect to pun:hasa VSI Insurance
through us, the cast al this lnsul'llnca Is fi.0 • ('10
and Is
also shaNn In llem 48 al the llemlzatlon of Amount Anancsd. The
coverage ls for Iha lri'ial tann al the contract.

By signing below, you agree that we told
you what may happen If you do not.make
the first or any other required payment
(lncludlng any deferred payment) on time.

Co-Buyer Signs X - - - - - - - - -

OPTIONAL GAP CONTRACT. Agap contract (debt cancellation conlracl) Is not mqulred to obtain credit and wll not be provided u~ess you sign below and ag1111 la pay the extra charge. II you choose
to buy a gap contract. Iha charge Is &hcwm ln_ 40 af the llemlzallon al Amount Anancsd. Sea your gap contract for details an the terms and concltlons nprovides. tt Is a part al this contract.
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NO COOLING OFF PERIOD
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ii ,__ State law does not provide for a "cooling off" or cancellation period for this sale. After you sign this contract,
i ".you may only cancel It If the seller agrees or for legai cause. You carinot cancel this contract simply because
~ . you change your mind. This notice does not apply to home solicitation sales.
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.$i:the Annual Percentage Rate may be negotiable with the Seller. The Seller may assign this contract
· :and retain Its right to receive a part of the Finance Charge.
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~ HOW THIS CONTRACT CAN BE CHANGED. This contract contains eentir 1ear

~n-you and us relating lo this contract A_ny change to this contract must be In writing
Buyer Signs
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Co-Buyer Signs =x_,___________
ol lhls contract Is not vaDd, all other parts stay valid. We ma lay or refrain from enforcing any of our rights under this contract without losing them. For example, we
" !he time for making some payments without extendng the time for mal<lng othera.

must sign IL No oral changes are binding.
Mor other Important agreements.

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-,e to the terms of this contract. You confirm that before you signed t~ls contract, we gave It to you, and you were
ke It and review It. You confirm that you received a true and complelely fllled-ln copy when you signed It.
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~ THE BUYER: 1. Do not sign this contract before you r~ad It or If It contains any blank space. 2. You are
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ompletely filled-In copy of the contract Wh$n you sign It. 3. Under the law, you have the followlng rights,
er.s-. (a) To pay off In advance the full amount due -and -obtain (8 partial refund of any unearned finance
~eCleem the property If repossessed for a default; (c) to require, under certain conditions, a resale of the
ssessed.
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Co-Buyer Signs

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=X~_ _ _ _ _ _ _ _ _

Date _ __

(Assignee) under the terms ol Sallafs agreement(s) with Assignee. ·

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DEALER COPY .•