A federal judge has thrown out most of a lawsuit, including Truth in Lending and racketeering claims, against a Maryland dealership in a dispute based on the financing of a new Chevrolet Equinox.
But U.S. District Judge Paul Grimm allowed Monica Sterling to pursue fraud and consumer-protection allegations and part of her Fair Credit Reporting Act claim against Ourisman Chevrolet of Bowie Inc. in Bowie, Md.
Sterling went to the dealership in September 2012 to trade in her 2007 TrailBlazer LT, according to the decision. She chose a new Traverse, and an Ourisman employee quoted her monthly payments of $650. A second employee explained the paperwork, asked for bank statements and a tax form, then told her the Traverse was $10,000 more than she had been quoted but that the store could sell her an Equinox for $650 a month.
She left and returned the next day with the documents. She met with the second employee, who told her the Equinox would cost $800 a month, not the $650 he had quoted her the day before. She replied she would pay only $650. A third employee later told her the store could sell her the Equinox for $650 as expected but that she had to make a $1,000 deposit and an $800 payment before the transaction was final. She signed the vehicle sales contract and other paperwork, agreeing to trade in the TrailBlazer and agreeing to the finance terms.
About two weeks later, the store told her it needed an IRS form 4506-T, which she signed. But five days later she was told that financing was denied and that she needed to return the Equinox, which she did. The store said it would mail back the deposit minus a usage charge.
Meanwhile, the dealership had sold the TrailBlazer, although Sterling was still incurring late fees for not making payments on it after she traded it in. The dealership bought the TrailBlazer back and returned it to Sterling, telling her she owned the store $1,400. She sued.
The plaintiff’s lawyer, Tyler King of Washington, D.C., said Sterling did not get her deposit back.
The dealership said in court papers that without financing, the sale was not completed. It asked the judge to dismiss all federal and state law claims. He agreed in part.
For example, the judge threw out claims under the Fair Debt Collection Practices Act and its Maryland counterpart because the dealership’s principal business is selling vehicles, not collecting debts. Similarly, he said the dealership was not a creditor under those laws.
As for the truth-in-lending claims, the judge held the suit didn’t properly assert that the contract terms were misrepresented and that the dealership failed to make required disclosures.
He threw out part of the Fair Credit Reporting Act claim because the dealership had a legitimate reason to obtain Sterling’s credit report. But he let stand an allegation under the act that the store took the “adverse action of denying credit based on either her credit report or her failure to file her tax return.”
The RICO claim, based on the Racketeer Influenced and Corrupt Organizations Act, fell short because there was no evidence that the dealership engaged in a “pattern of racketeering” or that the loan rate was unreasonable or usurious, the judge said. Also torpedoed were claims of negligence, breach of contract and violation of Maryland Motor Vehicle Administration rules.
The judge let stand a civil fraud claim, for which Sterling seeks punitive damages, and allegations under Maryland’s consumer protection statute, which allows triple damages.
Dealership lawyer Amy Leone of Rockville, Md., said the dealership will file an answer to the claims that remain and that it will deny all the allegations.
Ally Financial Inc., an original co-defendant, earlier had been dropped from the case.