acceleration, respectively, prior to the expiration of the thirty-day grace period required by D.C. Code § 28-3812(b)(1) and (d) (1973), and 5AA D.C.R.R. §§ 5.1, 3.10 (1970). Count VIII requests a declaratory judgment that because of defendants' aforementioned violations of the statutes governing repossession, notice, and resale plaintiffs owe nothing on defendants' counterclaim for a deficiency balance on the contract price. Having considered the memoranda, exhibits, affidavits, and the oral arguments advanced by counsel, the Court has determined that plaintiffs are entitled to partial summary judgment as to liability on all five counts involved here, and as to certain elements of damages.
SUMMARY OF UNDISPUTED MATERIAL FACTS
The plaintiffs' Statement of Material Facts Not in Dispute, plus the affidavits and exhibits submitted in support thereof, establish the following as the undisputed material facts.
On July 25, 1974, plaintiffs Jasper and Madeline Vines went to the business premises of defendants Thomasina and Kenneth Hodges, who were engaged in the sale of used cars under the trade name of Crest Auto Sales and Service, to purchase a used car. Thomasina Hodges owns the business, which Kenneth Hodges manages. Plaintiffs selected a used 1967 Cadillac, 4-door sedan DeVille. Mr. Vines paid a $100 deposit and signed a Purchase Agreement which obligated him to buy the car for $1695.00, to be paid in 14 bi-weekly payments. At that time the Official Used Car Guide of the National Automobile Dealers Association (NADA) set forth a $975 figure as the average retail price of a 1967 Cadillac 4-door sedan DeVille.
On the date of purchase plaintiffs also signed a Car Order and Bill of Sale and a separate security agreement. The blanks for payment terms and extra charges were not all filled in at the time the documents were signed. Plaintiffs also agreed on July 25 to make an additional $500 down payment the next day, and to pay an additional $158.75 for license plates and tax, and $60.00 for insurance. Both additional charges were payable 17 days later, and plaintiffs did pay those charges on or about August 10. The Car Order and Bill of Sale bore a stamped notation: "sold as is -- 100% inspection only." The latter phrase meant that defendants would perform any repairs necessary for the car to pass D.C. inspection.
On July 26, 1974, the day after purchase of the car, Mrs. Vines returned to Crest Auto Sales, paid the additional $500 down payment, and took delivery of the car. Plaintiffs received the original of the Purchase Agreement and Deposit Receipt on July 25, 1974, and a copy of the Car Order and Bill of Sale, the Dealer's Special Use Certificate for the vehicle, and an installment booklet on July 26, 1974. Plaintiffs did not sign any other contractual or disclosure documents, and they received copies of no documents.
On August 21, 1974, plaintiffs' Cadillac broke down near Richmond, Virginia. Plaintiffs left the car in Fredericksburg, and then telephoned Crest Auto. They explained the situation to defendant Kenneth Hodges, who agreed to have the car towed back to Crest Auto. He did have the car towed back, but then on August 26 attempted to impose on plaintiffs the responsibility for the breakdown of the car and the cost of repairs.
Because of the breakdown of the car and the dispute over liability for the cost of repairs, plaintiffs refused to make the first regularly scheduled payment on the car on August 23. On September 17, 1974, prior to the expiration of the 30-day grace period for late payment established by D.C. law, defendant Thomasina Hodges wrote plaintiffs, advising them that the Cadillac had been repossessed and demanding the accelerated balance of $1100 plus costs. On April 8, 1975, defendants sold the car to a third party for $1295.00.
On July 25 and 26, 1974, when defendants sold the used Cadillac to plaintiffs, defendant Kenneth Hodges and his employee John Treer were licensed as auto salesmen but not as dealers. Neither was authorized to sign invoices or retail installment contracts on behalf of defendant Thomasina Hodges, who was licensed as a car dealer.
MERITS OF THE MOTION
A. The Claim for Damages Pursuant to the Truth in Lending Act.
Section 121 of the Truth in Lending Act, 15 U.S.C. § 1631, requires creditors engaged in consumer credit transactions to disclose to the customer certain credit information prior to the making of a down payment, in accordance with regulations promulgated by the Federal Reserve Board. Failure to make disclosures entitles the customer to whom the disclosures should have been made to a civil penalty equal to double the amount of the finance charge imposed, but not less than $100 nor more than $1000, plus costs and a reasonable attorney's fee. 15 U.S.C. § 1640. In this case defendants admit that they failed to comply fully with the disclosure provisions applicable to the sale of the used Cadillac to plaintiffs. Thus the two basic issues relevant to the TILA claim are whether the sale was subject to the TILA disclosure provisions, and the amount of damages to be awarded.
Defendants herein do not explicitly deny that the disclosure provisions of TILA applied to the transaction in question. Instead they contend that no finance charge was imposed and, indeed, that as a matter of policy defendants "never impose a finance charge."
Since these objections might be understood as an argument against treating defendants as "creditors," on the auto sale as a "consumer credit" transaction as those terms are used in the coverage provisions of TILA, the rationale for applying TILA to this transaction should be explained.
The disclosure provisions of TILA apply to "each creditor" who extends "consumer credit."
The Act defines "creditor" as "creditors who regularly extend . . . credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required."
"Credit" is defined as "The right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment."
Regulation Z elaborates on this by including within the definition of credit the right to "purchase property . . . and defer payment therefor."
"Consumer credit" is:
credit offered or extended to a natural person, in which the . . . property . . . which is the subject of the transaction is primarily for personal, family, household, or agricultural purposes and for which either a finance charge is or may be imposed or which pursuant to an agreement, is or may be payable in more than four installments.
The auto sale at issue here clearly amounted to a consumer credit transaction within the definition set forth supra, even if, as defendants claim, no finance charge was imposed. Defendants granted plaintiffs the right to purchase the used car and defer payment of the price. Thus the sale was a credit transaction. Moreover the deferral of payment amounted to a consumer credit transaction since plaintiffs are natural persons who purchased the car primarily for personal or family use, and the price was made payable in more than four deferred installments. Finally, the uncontroverted evidence of record demonstrates that defendants regularly extend consumer credit payable in more than four installments.
The credit extended was other than open end.
Therefore defendants are creditors within the meaning of TILA and were obligated to comply with the disclosure provisions of the Act when making the used car sale at issue here.
The disclosure requirements applicable to this transaction are set forth in 15 U.S.C. § 1638 and 12 C.F.R. § 226.8(a), (b) and (c). Defendants admit, and the record reflects, that they violated those requirements in the following respects: (1) not all required disclosures were made prior to consummation of the contract;
(2) not all required disclosures were made on a single document;
(3) the number, amount and due dates of payments were not clearly disclosed;
(4) the type of security interest retained by defendants, and the property subject to the security interest were not clearly described or identified;
(5) the disclosures were not made in the terminology prescribed by the Act and Regulation Z in that defendants used the term "principal balance" rather than "unpaid balance," "total cash price Balance" instead of "unpaid balance of cash price" and "cash sale price of Vehicle and Equipment" instead of "cash price";
(6) the down payment was not properly itemized as a cash down payment, and the amount of the down payment was overstated by including the amount of the governmental charges in the amount of the total down payment.
Aside from the several admitted violations, the facts demonstrate the occurrence, as a matter of law, of several additional violations. First, the various documents connected with the sale all identified Crest Auto Sales and Service as the dealer or secured party. In fact Crest Auto is not a legal entity and is simply a trade name for Thomasina Hodges.
In the Court's opinion, the defendants' failure to set forth Thomasina Hodges' name on the disclosure documents violated the provision of Regulation Z which requires that the disclosure statement "identify the creditor."
This interpretation accords with the purposes of the Act, since knowledge solely of the Crest Auto trade name would be useless to any dissatisfied customer seeking legal redress against the selling entity.
Whether additional TILA violations occurred hinges on whether a finance charge was imposed. If a finance charge was imposed, then many additional violations of the Act occurred, and the measure of damages will be affected. The principal potential ingredient of the finance charge, as contended for by plaintiffs, is the difference between the $1695 price Crest Auto charged for the used Cadillac, and the $975 price listed in the NADA Official Used Car Guide as the average retail price of that model car at the time of purchase. Plaintiffs also urge the Court to include the fees for insurance and for license tags and tax in the finance charge. Defendants, on the other hand, contend that no finance charge was imposed in this case and that they never impose a finance charge on any of their installment sales.
After due consideration of plaintiffs' contentions, the Court believes that only the $60.00 fee for insurance and the $158.75 charge for governmental charges should properly be treated as part of a finance charge without further proof. If upon the trial of this matter plaintiffs prove the market value of the Cadillac in question as of the time when they purchased it, then the difference between that amount and the cash price charged will also be includable in the finance charge.
Regulation Z specifically provides for inclusion in the finance charge of
(6) Charges or premiums for insurance written in connection with any credit transaction against loss of or damage to property . . ., unless a clear, conspicuous, and specific statement in writing is furnished by the creditor setting forth the cost of the insurance if obtained from or through the creditor and stating that the customer may choose the person through which the insurance is to be obtained (footnotes omitted).