A federal judge in Florida has tossed out all but one claim, that of unfair trade practices, in a lawsuit by a car buyer whose financing application was rejected after she took delivery. The plaintiff will ask for a rehearing, her attorney says.
U.S. District Judge Howell Melton found insufficient evidence to support allegations that Lou Sobh Automotive of JAX Inc. violated the Truth in Lending and Equal Credit Opportunity acts, Uniform Commercial Code and the state’s retail sales financing law.
Melton also rejected a constitutional challenge to spot deliveries.
However, the decision lets Garrietta Vereen pursue her claim that the company, which does business as Honda of the Avenues in Jacksonville, violated Florida’s deceptive trade practices law, an allegation the dealership denies.
When Vereen bought a 2005 Suzuki Forenza in March 2010, the store’s finance manager told her that a particular third-party lender would provide financing with monthly payments of $265, the decision said.
But the prospective lender declined to extend credit when it failed to receive enough information to verify Vereen’s income. The dealership then found an alternative lender whose monthly payments would be $93 higher.
Vereen rejected the alternative financing and refused to return the Forenza as the conditional sales agreement required, according to court documents.
The dealership then canceled the transaction and had the car repossessed but didn’t return her trade-in or refund her $1,000 down payment. Vereen contends that she didn’t return the car when asked because she was hospitalized.
Vereen’s suit seeks actual, punitive and statutory damages, an injunction and attorney fees.
In his decision, the judge said Honda of the Avenues was not a lender or creditor for truth-in-lending purposes, hadn’t made the final decision to deny credit, and “had never acted as a creditor to finance the sale of one of its vehicles.”
He said Vereen had a full opportunity to read all documents before signing them, understood that financing was contingent on approval by a third-party lender, and knew she had to make payments to the lender, not the dealership.
“The undisputed facts do not establish that the defendant’s intent was to bait and switch financing terms or that it necessarily would have profited in any way by doing so,” the judge said.
Nor did he accept Vereen’s argument that conditional sales unconstitutionally conflict with the Truth in Lending Act and Equal Credit Opportunity Act.
In allowing Vereen’s unfair trade practices claim to stand, Melton said there are factual questions to decide at trial, including whether the dealership told her that the transaction was final, not conditional, when she took possession of the car. Trial is also necessary to determine whether she was fully told the significance of the bailment agreement that gave the dealership the right to rescind the transaction and get back the Forenza, he said.
Plaintiff’s lawyer Raymond Ingalsbe of Palm Beach Gardens, Fla., said his client will ask the judge to rehear the case, saying dealerships can be liable for violations of federal and state consumer protection laws whether or not their customers read and understand all the documents they sign.
The dealership declined to comment on the case.