Motor vehicle lessees in Ohio are not entitled to interest on their security deposits, a three-judge panel has ruled unanimously.
As a result, the Ohio Court of Appeals has refused to reinstate a proposed class-action suit against Ford Motor Credit Co.
The state Legislature didn't intend that vehicle lessors pay lessees any 'interest or profits' earned on the security deposits, the court said in an opinion by Judge James Porter.
Michael Knight leased a new 1995 Windstar from Ed Mullinax Ford in Amherst. The lease agreement credited him with a $225 refundable security deposit, the value represented by the trade-in, the court said. Mullinax assigned the lease to Ford Credit, which listed the deposit as a liability on its books.
Knight contended that the Uniform Commercial Code requires lessors to credit lessees with any profit earned on their security deposits. He also argued that because Ford Credit paid the dealer only the actual cost of the car minus the security deposit, Ford Credit could borrow less money to finance the leases and, therefore, save interest costs.
The dealership was not sued.
The case was dismissed without trial in Cuyahoga County Court of Common Pleas.
The appeals court upheld that ruling, saying Ohio's version of the Uniform Commercial Code doesn't apply to vehicle leases. The Legislature could have imposed such an obli-gation on les-sors - but it didn't.
The court also noted that the security deposits are never actually transferred to Ford Credit and that the company earns no interest or profit on them.
'Ford Credit never received possession of the lessee's security deposit. Ford Credit's witnesses testified that, instead, such a deposit is recorded on its books only as a liability.'
Knight's lawyer, Jay Salamon of Cleveland, noted that a similar case against General Motors Acceptance Corp. is pending on appeal. He said Knight intends to ask the Ohio Supreme Court to review the decision.