Rojas v. X Motorsport, Inc.
MEMORANDUM Opinion and Order written by the Honorable Gary Feinerman on 6/2/2017.Mailed notice.(jlj, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
X MOTORSPORT, INC.,
16 C 7283
Judge Gary Feinerman
MEMORANDUM OPINION AND ORDER
Edwin Rojas brought this suit against X Motorsport, Inc., an automobile dealership,
alleging violations of the Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., the Equal
Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq., and state law. Doc. 1. After
X Motorsport moved for summary judgment, Doc. 14, Rojas sought and was granted time to take
additional discovery, Docs. 18, 21, voluntarily dismissed his ECOA and state law claims, Docs.
34-35, and cross-moved for partial summary judgment as to liability on the TILA claim, Doc. 41.
During briefing on the cross-motions, X Motorsport moved to strike several pieces of evidence
that Rojas cited. Doc. 45. X Motorsport’s summary judgment motion is granted, Rojas’s motion
for partial summary judgment is denied, and X Motorsport’s motion to strike is denied as moot.
When considering Rojas’s summary judgment motion, the facts are considered in the
light most favorable to X Motorsport, and when considering X Motorsport’s motion, the facts are
considered in the light most favorable to Rojas. See Cogswell v. CitiFinancial Mortg. Co., 624
F.3d 395, 398 (7th Cir. 2010) (“When the district court decides cross-motions for summary
judgment … we construe all facts and inferences therefrom in favor of the party against whom
the motion under consideration is made.”) (internal quotation marks omitted). Because granting
X Motorsport’s summary judgment motion disposes of the case, the following relates the facts in
the light most favorable to Rojas. See Garofalo v. Vill. of Hazel Crest, 754 F.3d 428, 430 (7th
Cir. 2014). On summary judgment, the court must assume the truth of those facts, but does not
vouch for them. See ibid.
On January 14, 2016, Rojas agreed to purchase a used Volkswagen sedan from
X Motorsport for $29,142.67. Doc. 15 at ¶¶ 6-7; Doc. 52 at ¶¶ 6-7. The Standard Buyers Order
(“SBO”) that Rojas signed that day called for a down payment of $9,183; he paid $7,000 in cash
and signed two promissory notes, one for $1,500 due the next day and the other for $683 due two
weeks later. Doc. 15 at ¶ 8; Doc. 52 at ¶ 8. (Rojas did not make good on either note. Doc. 15 at
¶ 34; Doc. 52 at ¶ 34.) To cover the remaining $19,959.67, and at the same time he signed the
SBO, Rojas signed a retail installment sale contract (“RISC”), which required him to make 72
monthly payments of $460.34 payable to X Motorsport or its assignee. Doc. 15 at ¶ 9; Doc. 52
at ¶ 9; Doc. 54 at ¶¶ 7, 10; Doc. 54-2 at 7. The RISC identified X Motorsport as a “SellerCreditor.” Doc. 54 at ¶ 8.
The SBO contained the following clause, which conveyed that the SBO would not remain
binding if X Motorsport was unable to assign the RISC to a third-party financer:
If purchaser is buying the Vehicle in a credit sale transaction with Dealer
evidenced by a signed [RISC], this Agreement is binding when the [RISC] is
signed, but will not remain binding if a third party finance source does not
agree to purchase the [RISC] executed by Purchaser and Dealer based on this
Doc. 15 at ¶ 11; Doc. 52 at ¶ 11. The SBO also contained this clause:
If for any reason you and we do not complete the Vehicle sale and purchase,
financing is not obtained, or this Agreement is declared void, this section
applies. You will return the Vehicle to us. You will pay us on demand all
reasonable charges and expenses for any damage to the Vehicle.
Doc. 15 at ¶ 12; Doc. 52 at ¶ 12. And the SBO contained a merger clause: “[T]his Agreement …
comprises, with any [RISC], the complete and exclusive statement of the terms of the agreement
relating to the subject matters covered by this Agreement.” Doc. 54 at ¶ 6; Doc. 54-2 at 2.
In addition to the SBO, the RISC, and the two promissory notes, Rojas signed a “Sold
As-Is Rider,” agreeing that the sale was final and that the vehicle could not be returned for any
reason, and an “Immediate Delivery Agreement,” which allowed him to take possession of the
vehicle on the spot while specifying the circumstances under which X Motorsport could
repossess it—one of which was X Motorsport’s failure to assign the RISC to a third party. Doc.
15 at ¶¶ 13-15; Doc. 52 at ¶¶ 13-15; Doc. 54 at ¶¶ 11-12, 16.
Rojas left with the car, but on his way home it began making worrisome noises. Doc. 15
at ¶ 16; Doc. 52 at ¶ 16. He reported the problem to X Motorsport, which told him to bring the
car back. Doc. 15 at ¶ 17; Doc. 52 at ¶ 17. Over the next few days, Rojas and X Motorsport’s
finance manager, Zaia Rasho, tried unsuccessfully to arrange a time for Rojas to bring in the car.
Doc. 15 at ¶ 18; Doc. 52 at ¶ 18. Rasho then asked if Rojas whether he would prefer to “just …
give the vehicle back,” and Rojas responded, “Yeah, let me just get my money back. Let’s rip up
this contract and I’ll give you your car back … .” Doc. 15 at ¶¶ 18-19; Doc. 52 at ¶¶ 18-19.
X Motorsport agreed to allow Rojas to return the car and made arrangements for him to do so on
January 23. Doc. 15 at ¶¶ 20-21; Doc. 52 at ¶¶ 20-21.
The January 23 appointment did not go smoothly. Rojas did not have the car with him,
and he balked at receiving his refund as a check and not in cash. Doc. 15 at ¶¶ 26-27, 30-31;
Doc. 52 at ¶¶ 26-27, 30-31. Confusion ensued. Doc. 15 at ¶¶ 32-33; Doc. 52 at ¶¶ 32-33. Rojas
eventually returned the vehicle to X Motorsport on February 13, 2016, and got back his down
payment a few days later. Doc. 15 at ¶¶ 35-36; Doc. 52 at ¶¶ 35-36.
The foregoing is all undisputed. The parties dispute only whether X Motorsport secured
third-party financing for Rojas’s purchase (in other words, whether X Motorsport assigned the
RISC to a third party)—Rojas says no, and X Motorsport says yes—and, if not, whether
X Motorsport told Rojas about the rejection of his financing—Rojas says yes, and X Motorsport
says no. Doc. 15 at ¶¶ 10, 29; Doc. 52 at ¶¶ 10, 29; Doc. 54 at ¶¶ 25, 28; Doc. 57. X Motorsport
has moved to strike certain evidence adduced by Rojas that is relevant to those factual disputes.
Doc. 45. The court will assume that the challenged evidence may properly be considered and
that the facts are what Rojas contends they are, because even ceding those points to Rojas,
X Motorsport is entitled to summary judgment.
“TILA was intended to ensure that consumers are given ‘meaningful disclosure of credit
terms’ and to protect consumers from unfair credit practices.” Marr v. Bank of Am., N.A., 662
F.3d 963, 966 (7th Cir. 2011) (quoting 15 U.S.C. § 1601(a)). Toward that end, TILA requires
lenders to disclose certain information to prospective debtor-consumers prior to entering into a
financing arrangement, such as “the number, amount, and due dates or period of payments”
necessary to complete repayment, Hamm v. Ameriquest Mortg. Co., 506 F.3d 525, 528 (7th Cir.
2007) (quoting 15 U.S.C. § 1638)(a)(6)) (brackets and emphasis omitted), “any finance charges”
owed under the transaction, Rivera v. Grossinger Autoplex, Inc., 274 F.3d 1118, 1121 (7th Cir.
2001) (citing 15 U.S.C. § 1638(a)(3)), and the “amount financed”—i.e., the “amount of credit of
which the consumer has actual use,” 15 U.S.C. § 1638(a)(2)(A). “[T]he disclosures must reflect
the terms of the legal obligation of the parties and must be given before the consumer becomes
contractually obligated on a credit transaction.” Janikowski v. Lynch Ford, Inc., 210 F.3d 765,
767 (7th Cir. 2000) (citation and internal quotation marks omitted).
The parties agree that the RISC disclosed all the information that TILA demands, but
Rojas contends that the disclosures were illusory—not “meaningful,” as TILA demands—
because the parties’ contract was “conditioned” on X Motorsport’s assignment of the RISC to a
third party financer. Doc. 41 at 10-11. According to Rojas, because the RISC would be void if it
were not assigned, X Motorsport’s disclosures did not meaningfully reflect the credit that was
actually available to him. Id. at 11. Rojas contends that TILA forbids this sort of “bait and
Rojas’s argument has a fatal flaw: the Seventh Circuit rejected it in Janikowski. The
plaintiff in Janikowski went to purchase a car and signed a “Vehicle Purchase Order” and a
“Retail Installment Contract” that disclosed a 5.9% interest rate. 210 F.3d at 766. The
dealership could not, however, guarantee that it would be able to find a lender willing to finance
the purchase at that rate, and the purchase order stated that “[i]f financing cannot be obtained
within 5 business days … according to the proposals in the retail installment contract … , either
Seller or Purchaser may cancel the Agreement.” Ibid. The plaintiff drove the car home, only to
learn the next day that the dealership had not secured financing at the 5.9% rate. Ibid. She
returned and signed a new set of contracts, this time agreeing to an 11.9% rate. Id. at 766-67.
The plaintiff later sued, contending that the dealership’s disclosure of the 5.9% rate was
false, and thus a TILA violation, because it was conditioned on the dealer finding a lender
willing to finance the purchase. Id. at 767. The Seventh Circuit disagreed, explaining:
Th[e] disclosure [of the 5.9% rate] reflected the terms of [the plaintiff’s] legal
obligations, as required by [TILA and its implementing regulations]. She was
not legally obligated to purchase the [car] at any rate other than 5.9%. The
next day, after [the plaintiff] learned that she had been denied financing at
5.9%, the [original] contract was canceled. She then entered into a new
contract, which disclosed an 11.9% APR. Therefore, even though [the
plaintiff] did not eventually obtain financing at 5.9%, [the defendant] did not
violate TILA because it accurately disclosed her legal obligations under the
Ibid. (citation omitted) (emphasis added). In other words, the Seventh Circuit concluded, TILA
requires only “truthful disclosures of a consumer’s legal obligations,” id. at 769, and the
presence in the contract of a condition subsequent that might later nullify those obligations does
not make those disclosures untrue or improper under TILA.
As in Janikowski, X Motorsport truthfully informed Rojas of his legal obligations under
the contract, notwithstanding the fact (as the court assumes for present purposes) that
X Motorsport later failed to find a third party financer willing to be assigned the RISC on the
terms to which X Motorsport and Rojas had agreed. The SBO disclosed the third party financing
condition to Rojas, explaining that “this Agreement is binding when the [RISC] is signed, but
will not remain binding if a third party finance source does not agree to purchase the [RISC].”
Doc. 15 at ¶ 11; Doc. 52 at ¶ 11. It also truthfully disclosed the financial terms that would
obligate him if the financing condition were met. Even assuming that X Motorsport’s failure to
assign the RISC was the exclusive reason for the contract’s cancellation—rather than the
mechanical problems Rojas experienced and his desire for a refund—those disclosures make this
case indistinguishable from Janikowski, in which the first contract disclosing the lower rate was
canceled because of the dealership’s failure to secure financing. Both there and here, the terms
of the deal and the possibility that it might be voided were disclosed.
Rojas identifies four grounds for distinguishing Janikowski, all unpersuasive. He
principally contends that the merger clause in Rojas’s SBO somehow changes the equation, by
“exclud[ing] any other document that purport[s] to contradict” the disclosures in the RISC. Doc.
51 at 2. It is unclear whether the SBO’s merger clause makes this case different than Janikowski;
that case makes no mention, one way or the other, of whether either contract there contained a
merger clause. Id. at 4 (conceding that “the Janikowski opinion does not indicate whether any of
the contractual documents contained a merger clause”). But even if there were no merger clause
in Janikowski, its absence there would be an immaterial distinction. Just as the Seventh Circuit
read the purchase order and the retail installment contract in Janikowski as part of a single,
overarching agreement between the parties, so, too, the SBO and the RISC here form a single
agreement. The SBO’s merger clause incorporates the RISC by reference. Doc. 54-2 at 2
(stating that “this Agreement … comprises, with any retail installment sale contract, the
complete and exclusive statement of the terms of the agreement”) (emphasis added). And
regardless, “Illinois law mandates that when,” as here, “different instruments are executed
together as part of one transaction or agreement, they are to be read together and construed as
constituting but a single instrument,” with or without a merger clause. IFC Credit Corp. v.
Burton Indus., Inc., 536 F.3d 610, 614 (7th Cir. 2008). So the SBO’s merger clause simply acts
to re-create the circumstances in Janikowski: an agreement conditioned on future financing. The
merger clause means that the SBO language conditioning the deal on assignment and the
financial terms disclosed in the RISC must be read together, and when read together they are
indistinguishable from the agreement that the Seventh Circuit held satisfied TILA in Janikowski.
Rojas’s other asserted distinctions fare no better. The fact that the plaintiff in Janikowski
subsequently entered a second contract with different terms, Doc. 51 at 1, is immaterial; the key
point is that the first Janikowski contract, like Rojas’s contract, was conditional but truthful.
Rojas’s assertion that the Janikowski parties “believed that contract consummation occurred, if at
all, at time of assignment,” rather than at signing, id. at 2, is unsupported by Janikowski and, in
any event, irrelevant; no matter when the parties’ contract was consummated, the TILA
disclosures would still have been made beforehand, as required. And Janikowski’s rejection of
the plaintiff’s alternative argument that the disclosures needed to be labeled “estimates” to be
truthful, ibid., has no bearing on this case.
Rojas cites out-of-circuit cases that arguably support his position, see Bragg v. Bill Heard
Chevrolet, Inc., 374 F.3d 1060 (11th Cir. 2004); Salvagne v. Fairfield Ford, Inc., 794
F. Supp. 2d 827 (S.D. Ohio 2010); Patton v. Jeff Wyler Eastgate, Inc., 608 F. Supp. 2d 907 (S.D.
Ohio 2007), and at the motion hearing, he mounted a spirited argument that Janikowski was
wrongly decided and the product of “groupthink.” From a district court’s perspective, all that
need be said is that Janikowski is binding and that it squarely forecloses Rojas’s claim. See
Williams v. Amazon.com, Inc., 312 F.R.D. 497, 500 (N.D. Ill. 2015) (“[T]his court is obligated to
follow Seventh Circuit precedent … .”). If Rojas would like a court to change Seventh Circuit
law, he will have to pursue that course on appeal.
Because the court grants X Motorsport’s summary judgment motion, it follows that
Rojas’s cross-motion for partial summary judgment fails. And because X Motorsport can prevail
even if the evidence it moved to strike is considered, the motion to strike is denied as moot.
For the foregoing reasons, X Motorsport’s summary judgment motion is granted, Rojas’s
motion for partial summary judgment is denied, and X Motorsport’s motion to strike is denied as
moot. Judgment will be entered in favor of X Motorsport and against Rojas.
June 2, 2017
United States District Judge
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