A Florida dealership is not contractually required to provide financing to a customer who failed to qualify for a third-party loan, a federal judge has ruled in a spot-delivery case.
U.S. District Judge Robert Hinkle also ordered Janice Mack to return the used 2005 Avalon that she bought from Bobbin Trace Automotive LLC, which does business as Legacy Toyota in Tallahassee. She had made no payments beyond a $300 down payment in the nearly three years since the transaction.
Legacy now is seeking damages for the reduced value of the car, plus "substantial" attorney fees, said dealership lawyer Michael Coppins of Tallahassee.
Mack bought the car through a conditional sales contract. In finance and insurance, spot delivery refers to the practice of dealerships delivering cars to customers before a lender approves a loan.
When the prospective lender declined the retail installment sales contract, Legacy asked her to return the Avalon as the contract required and suggested that she pick a less expensive car, the decision said.
"Mack refused to return the vehicle and refused to consider alternative financing," Coppins said.
She didn't make the first two monthly installments after taking possession in February 2009. Afterward, she tendered monthly payments to Legacy, which returned them on the grounds that it wasn't financing the transaction.
She sued for breach of contract and violation of federal equal credit opportunity and Florida finance and consumer protection laws. Legacy filed a counterclaim to recover the Avalon.
In throwing out all of Mack's claims, Hickle said that the transaction was clearly conditional, and that "the deal was off" if financing couldn't be arranged.
"The documents include not a hint that if financing could not be arranged, Mack could keep the car, paying Legacy only in the installments that would have been due a third-party lender," he said.
Hinkle also ruled that Legacy properly exercised its right to cancel the deal and rejected allegations by Mack that "Legacy's real goal was to provide financing on worse terms."
Mack's lawyer, David Abrams of Tallahassee said the decision "is not an affirmation that the court is necessarily condoning spot deliveries." Spot deliveries are a "risky business practice," legally and fiscally, Abrams said.
It will be up to Mack to decide whether to appeal, he said.