While a Florida Honda store technically violated state motor vehicle sales law when a customer's retail sales contract didn't indicate the deal was contingent on financing, it doesn't owe her damages, a Florida Court of Appeal panel unanimously ruled.
The customer's lawyer, Timothy Blake of Miami, said he has asked the appellate court for a rehearing and cannot discuss the case.
The dispute began when Michelle Cuello went to what was then Maroone Honda of Miami in November 2001 to buy a 2001 Honda CR-V. The store is now AutoNation Honda in Hollywood, Fla.
She signed three documents -- a retail buyer's order, a retail installment sales contract, and a bailment agreement for spot delivery -- that is, vehicle delivery before financing is approved -- and left the dealership with the CR-V. The purchase order, as well as the bailment agreement, disclosed the financing contingency; the sales contract -- which under the Truth in Lending Act is the final transaction statement and must reflect the entire deal -- did not.
When her credit application was rejected, the store notified her she could either sign a new sales contract with different terms and a higher interest rate or return the vehicle. She did neither, so the dealership repossessed the CR-V.
She sued alleging fraud, violation of Florida's Motor Vehicle Retail Sales Finance Act and consumer protection laws, and wrongful repossession but didn't include a Truth in Lending claim.
A lower-court judge ruled that the conditional language in the buyer's order and bailment agreement conflicted with the Truth in Lending Act requirement for financial disclosures and, therefore, automatically violated the state motor vehicle sales law. The judge awarded damages of about $2,300, representing any finance fees she would have been charged by reason of delinquency, an AutoNation spokesman said.
In affirming the finding of a technical violation, the Court of Appeal agreed that the dealership broke the law because the sales contract did not mention that the sale was conditioned on financing, as required by the Truth in Lending Act.
"The federal courts have held that TILA's disclosure requirements become effective at the point in the transaction at which the buyer signs a credit agreement and becomes obligated to pay on it, regardless of the level of the creditor's commitment," the panel said in an opinion by Judge Richard Suarez.
"In this case, the RISC did not contain any of the language of contingency, nor did it reference the other two documents," the decision said. "The language of the contingency set forth in the retail buyer's order and bailment agreement, not mirrored in the RISC, negated the TILA requirement of finality" because the retail sales contract did not reflect the entire deal.
Even so, the court found no basis to award damages, saying: "Unlike TILA's penalty provisions, which allow a party to collect damages for technical violations even when no actual damages have been incurred," the state law doesn't include a similar penalty provision. "Cuello paid no finance charges and no fees were charged to her," the court said.
The AutoNation spokesman said the decision means that Cuello will not be entitled to attorney fees and court costs but that the dealership can seek to recover its lawyer fees and costs.
After the decision, the Florida Automobile Dealers Association said the ruling on damages "clears up a very important statute that had been the subject of much litigation: The penalty can only be triggered if the consumer paid some kind of fee or charge as a result of a 'delinquency.'"
However, in a legal alert to its members, the association cautioned: "Cases in the future involving separate spot delivery forms where finance charges are paid could be handled differently by the courts."