Allen v. Beneficial Finance Company

MEMORANDUM OPINION AND ORDER ALLEN SHARP, District Judge. The Court is presented with cross-motions for summary judgment in this case. Both plaintiff and defendant state that there is no genuine issue as to any material fact raised by the complaint and that they are entitled to a judgment as a matter of law. The Court has perused the briefs filed and now agrees that there is no triable issue of material fact and that the question of damages is foreclosed by 15 U.S.C. § 1640(a)(1), and is a statutory amount. The Court assumes jurisdiction pursuant to 15 U.S.C. § 1640(e). FACTS On April 2, 1974 Dorothy C. Allen signed a note as co-borrower. Her ex-husband was named as the principal borrower. Beneficial Finance, Inc. is the creditor and the holder of the note. See exhibit A. The plaintiff also signed the Statement of Disclosure and thereon acknowledged that she received a copy of said statement of disclosure. The note of April 4, 1974 included the unpaid balance of a prior loan and the total finance charge was $714.42. On January 3,1975 the plaintiff filed a complaint alleging violations of the Truth in Lending Act and Regulation Z, 12 CFR § 226.6. Plaintiff alleged that there was one or more disclosure violations and the plaintiff prayed for the statutory penalty and attorney fees. Subsequently, both parties moved for summary judgment. Summary judgment is appropriate only when there are no disputed *1384 issues of fact and only legal issues remain. It is not sufficient to say that since both parties moved for summary judgment there are no disputed issues of fact. It is well settled that a Court’s duty to ascertain whether facts remain in contention is not obviated by cross-motions for summary judgment. Eby v. Reb Realty Co., 495 F.2d 646 (9th Cir. 1974). Also, in certain cases summary judgment is inapposite because the legal issue is so complex, difficult or insufficiently highlighted that further factual elucidation is essential for its prudently considered resolution. Id. at 649. The one fact which may be in controversy in this action is whether or not the plaintiff received a copy of the disclosure statement. However, the Court finds that the plaintiff was a comaker, and, as such, the creditor was not required to furnish her with a copy. 12 CFR § 226.6(e). 15 U.S.C. § 1631 (b). ANALYSIS The Truth in Lending Act was designed to provide for mandatory disclosure requirements upon those institutions who' extend credit to consumers. The pui'pose was to assure meaningful disclosure of the cost of credit so that consumers could compare various credit terms and avoid the uninformed use of credit. 15 U.S.C. § 1601. The Truth in Lending Act reflects a transition in Congressional policy from a philosophy of let-the-buyer-beware to one of let-the-seller-disclose. See Mourning v. Family Publications Service, Inc., 411 U.S. 356, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973). The Truth in Lending Act is a remedial statute designed as much as possible to permit borrowers to make informed judgments about the use of credit. To effectuate this congressional purpose requires that the act’s terms be liberally construed. Eby, supra, at 650; Scott v. Liberty Finance Co., 380 F.Supp. 475 (D.C.Neb.1974); Philbeck v. Timmers Chevrolet, Inc., 499 F.2d 971 (5th Cir. 1974) ; Sellers v. Wollman, 510 F.2d 119 (5th Cir. 1975). The question for the Court is whether or not the defendant’s Statement of Disclosure is in compliance with the requirements of the Truth in Lending Act and Regulation Z. 12 CFR § 226.1 et seq. FINDINGS The Court has examined the Statement of Disclosure with care and in light of the statute and regulations. The Act and Regulation Z also require that all disclosures be made in “meaningful sequence”. 15 U.S.C. § 1631; Reg. Z. A glance at the putative “disclosures” made by the defendant to plaintiff on “Exhibit A” reveals how poorly defendant has attempted to even minimally comply with the law. Examples are: (a) Defendant has combined closely together what appears to be an “Unpaid Balance-Prior Loan” with “Rebates” opposite to and to the right of the apparent new transaction. A pei’son is unable to easily determine if the transaction consists of a loan of $2484.00 or $1232.00; (b) In the apparent “new transaction” the “Precomputed Charges” is similar in amount to the “Finance Charge” leading to confusion as to which item is the real cost of credit; (c) The “Amount Financed” is separated from the “Total of Payments” by the “Precomputed Charges” causing confusion as to how one arrived at the “Amount‘Finances”; (d) The “Amount Financed” is on “line 1”, with “line 2” on the lower right hand of a separate column, leading to confusion as to the relationship between lines 1, 2 and 3 and *1385 how one arrives at the figure of “Net-Balance-Prior Loan” on line 2; (e) No total of lines 3, 4, 5, 6, 7, 8 and 9 are computed, leading to confusion of their relationship to line 1 and line 2 and when the subtraction, if it applies, occurs to reach a net balance; (f) The “Annual Percentage Rate” is below line 2, but does it apply to line 2 (“Net Balance-Prior Loan” or line 1 (“Total of Payments”) or to the “Unpaid Balance-Prior Loan” of $1232.00, found directly above the column holding the Annual Percentage Rate; (g) The “Cash or Check Delivered to Borrowers” is apparently the net proceeds to the Borrowers but is found to the far right, middle of the sheet with no explanation of just how one arrives at that figure and what happened to the amount’ of the loan, apparently $2484.00; (h) No total of the “Rebates” is computed leading to confusion of their relationship to the “Unpaid Balance-Prior Loan” and the figure of $1031.-56, “Net Balance-Prior Loan” and how the $1031.56 relates to the “Total of Payments” or the “Amount Financed”; (i) Lender says it has disbursed “the proceeds of loan for Items 2 through 9, but one is not sure from what that total is deducted or if lines 2 through 9 are to be deducted or subtracted from the “Finance Charge”, “Total of Payments” or “Net Balance-Prior Loan.” (j) One finds the “Security” description starting in the upper right hand corner of the statement with “security (cont.)” in the middle of the page and no connection between the two for continuity or for the mind to connect the two portions of the page in any meaningful sequence. It can be seen that such figures and their placement and relation to one another are not in “meaningful sequence”. Basic, sound arithmetical and subtractional columns are not used, but rather the mind and the eye must jump from one section of the statement to the other. One starts with a figure of $2484.00 on the upper left side of the statement and ends up with $453.09 on the lower right side of the statement. Between the two figures, and in the meantime, the Borrower finds she has somehow “requested and directed” the Lender to disburse money. The Court now finds that the defendant is liable under 15 U.S.C. § 1640, for failure to disclose information as required under § 1640. The lack of any meaningful sequence to the purported disclosures effectively masks any information which the Act sought to have available to the consumer. The Act is to be liberally construed in favor of the consumer. Thomas v. Myers-Dickson Furniture Co., 479 F.2d 740 (5th Cir. 1973). Therefore, the plaintiff’s motion for summary judgment is granted. The defendant’s motion for summary judgment is denied. 15 U.S.C. § 1640(a)(1) directs a statutory award of One Thousand Dollars in this case. 15 U.S.C. § 1640(a)(2), directs the awarding of costs and attorney fees for failure to disclose under the Act and Regulation Z. The Court now finds that the defendant violated the Truth in Lending Act by actions which are set out above. The Court finds that the plaintiff is a proper person to sue and recover under the act and the facts of this case. The defendant is liable to the plaintiff for the statutory amount of One Thousand Dollars ($1000.00), costs of this action and reasonable attorney fees. *1386 Ruling on the exact amount of attorney fees to be awarded will be taken under advisement until after the plaintiff has provided the Court, and filed, sufficient documentation so as to allow the Court to compute a reasonable fee. EXHIBIT A