"Car Buyer Challenges Disclosure of 'Etch' Product "
By Thomas B. Hudson
This case comes from a federal district court in Florida. Apparently, the judge is convinced that the plaintiff car buyer's claims should go forward because the dealership challenged all six claims of the fourth amended class action complaint and the court refused to dismiss any of the claims. There was no indication in the opinion that the court has certified the case as a class action, but the dealership will have to continue to defend the claims with at least the threat of class certification still pending.
Roy Veal filed a class action complaint against Crown Auto Dealerships, Inc., the owner of 11 dealerships, in connection with the dealerships' sale of a product known as TracGuard. One of the components of the TracGuard product was "Etch," which was described as providing a "5-year New/Used Anti-Theft $5,000 and $1,000 Benefit Recovery Guarantee." Among other things, the parties disputed whether or not the "Etch" protection should be classified as an insurance product.
Veal argued it was an insurance product and claimed that Crown failed to make adequate disclosures at the time of sale in its standard form retail installment sales contract. Veal claimed that Crown Auto did not accurately disclose the amount financed, the finance charges, and the annual percentage rate for the Etch. He also complained that the TracGuard Registration Form did not specify the amount paid for the Etch insurance and didn't name the insurer providing the coverage. Crown maintained that the Etch was a warranty and not an insurance product. Crown argued that Veal had no standing to sue because he never filed a warranty claim or had his claim denied.
The U.S. District Court for the Middle District of Florida denied Crown Auto's motion to dismiss Veal's claims. The court found that Veal state a cognizable claim by alleging that he was deceived into purchasing a product. The causal connection, according to the court, was Veal's allegation that Crown's statutory violations and deceptive practices caused him to pay for a product he was not aware of or inadequately informed of.
Since Veal filed his complaint about two years after he bought his automobile, the court said that his Truth in Lending Act claim was time barred by the statute's one-year limitations period unless Veal's claim was subject to equitable tolling. Veal alleged that the dealer included the cost of the Etch insurance in the "amount financed" instead of including it in the finance charge, without providing the necessary disclosures. The court summarily concluded that it could be "reasonable inferred" from Veal's allegations (inadequate disclosures) that he was unaware of his TILA claim within one year of buying his vehicle and this was sufficient to support a claim of equitable tolling.
Crown also sought dismissal of a claim under Florida's Motor Vehicle Retail Sales Finance Act, arguing that the Etch product was not insurance and, therefore, not subject to the MVRSFA's itemization requirement for "insurance and other benefits." The court disagreed, explicitly rejecting Crown's reliance on an opinion letter from the Florida Insurance Commissioner in this regard. The court suggested that a dispositive motion for summary judgment would be more appropriate for deciding the issue.
Finally, the court refused to dismiss Veal's claim under Florida's Unfair and Deceptive Trade Practice Act. Even though Florida requires plaintiffs to plead and prove not only that the conduct complained of was unfair and deceptive but also that he or she was aggrieved by the unfair and deceptive act, the court concluded that Veal's allegations satisfied this standard. The court also refused to dismiss unjust enrichment and restitution claims. Veal v. Crown Auto Dealerships, Inc. , 2006 WL 435693 (M.D. Fla. February 21, 2006).
Copyright © 2004 CounselorLibrary.com, LLC. All rights reserved.
This publication is designed to provide accurate and authoritative
information regarding the subject matter covered. It is provided with
the understanding that the publisher and editor are not engaged in
rendering legal counsel. If legal advice is required, the service of
a competent professional should be sought.
For more information about Thomas Hudson and Spot Delivery® go to www.spotdelivery.com or contact: tbhudson@hudco.com
Consumer Credit
Compliance Company, LLC
971 Corporate Boulevard
Suite 301
Linthicum, MD 21090
877.464.8326
410.684.6923 (fax) |
Past Issues
