Multiple Contracts, Repossessed Vehicle, But Still No Apparent Legal Violations
Leticia Nevarez read a Spanish language advertisement in April 2001 published by O'Connor Chevrolet Inc. In the ad, O'Connor offered to sell a car to anyone, regardless of credit history. In response, Nevarez called O'Connor and asked to speak with a Spanish-speaking representative. Nevarez spoke with O'Connor employee Juan Soto and provided him with her social security number. Soto accessed her credit report and determined that Nevarez could obtain financing of up to $25,000 to buy a car with a maximum $5,000 down payment.
Several weeks later, Nevarez and her husband, Jesus, met with Soto to select a vehicle. They ultimately settled on a 1999 Mercury Mountaineer. An O'Connor employee then told Leticia that O'Connor could not finance her, but that it might finance her husband if he applied. Based on Jesus' credit report, O'Connor and Jesus entered into a retail installment sales contract for the purchase of the Mountaineer.
O'Connor submitted the contract to several sales finance companies, including Household Automotive Finance and Evergreen Finance Company. Caryl O'Connor, owner of O'Connor Chevrolet, worked in the same building as Evergreen, had an interest in Evergreen, and approved all of Evergreen's financing deals. Household apparently conditionally approved financing, but O'Connor never told this to the Nevarezes. Instead, the dealership told them that it had not obtained financing for Jesus and that they would have to return to the dealership for Jesus to sign a new contract with a co-signer.
The Nevarezes returned on May 19, 2001. They brought Laticia's brother-in-law, Juan Huerta, with them to co-sign the contract, but Soto told them that they no longer needed a co-signer because Evergreen agreed to finance the purchase if the Nevarezes provided an additional $3,000 for the down payment. Soto had the Nevarezes sign a new contract that changed certain credit terms of the May 5 contract, including an increased down payment, a charge for GAP insurance, a wage assignment provision, and a slight increase in the annual percentage rate. The May 19 contract also included $1,495 for a service contract and $50 for a document fee, both of which were included in the May 5 contract.
The May 19 contract contained a provision stating that failure to maintain insurance on the vehicle would constitute a default under the contract, allowing the holder to take immediate possession of the vehicle. Sometime after the purchase, Evergreen contacted Leticia and advised her that she lacked appropriate insurance for the vehicle. Leticia denied this, but Evergreen repossessed the vehicle. The Nevarezes later sued O'Connor and Evergreen, alleging a variety of claims. O'Connor and Evergreen moved for summary judgment.
The U.S. District Court for the Northern District of Illinois granted the defendants' motion with respect to the Nevarezes' claim that O'Connor failed to inform them of other potential sources of financing and that the terms of the contract would have been more favorable if Huerta had been used as a co-signer. The court found both claims speculative and, therefore, not actionable under the Illinois Consumer Fraud Act, which requires proof of actual damages.
Similarly, the court found that O'Connor's assertion that the Nevarezes were receiving "the best [APR] rate available" was a statement of opinion and was therefore not actionable. With respect to O'Connor's failure to inform the Nevarezes of their right to the return of their down payment before signing the May 19 contract, the court found that failure to disclose law is not an omission of fact and is not actionable under the ICFA.
The Nevarezes claimed that O'Connor's failure to translate certain contract provisions into Spanish amounted to concealment and, therefore, an omission under the ICFA. The court rejected this argument, finding that failure to translate a document does not amount to an omission of a material fact. The court responded as follows:
In the absence of any Illinois authority supporting [the Nevarezes'] position, the court cannot accept [their] argument that the failure to translate a document (which may or may not be a violation of Section 2N, an issue which has not yet been decided) also creates a separate violation of the ICFA in the form of a failure to disclose all of the information set out in that document. … In short, [the Nevarezes] cannot bring a separate claim under ICFA Section 2 for omission of a material fact simply because the document in which the information was disclosed was not translated.
Thus, the court rejected the somewhat novel "failure to disclose" theory, which was separate from any duty to provide a Spanish translation of the documents. The court also found the following purported omissions not material: O'Connor's failure to tell the Nevarezes that it was retaining a portion of several fees; O'Connor's failure to disclose that the $50 documentary fee was retained by the dealership, and O'Connor's failure to disclose that Caryl O'Connor was the owner of both the car dealership and the finance company.
Finally, the court addressed the Nevarezes' claim that Evergreen wrongfully repossessed their vehicle. The undisputed evidence established that Evergreen was advised by the Nevarezes' insurance company on numerous occasions that their insurance policy had been cancelled as of October 9, 2001 for non-payment. Because the insurance company had repeated confirmation of a lapse in the Nevarezes' insurance, the court found that Evergreen rightfully repossessed the vehicle. The court could find no law that prevents a finance company from checking with the borrower's insurance company to make sure that insurance coverage is current.
The dealership may not have done everything right in this case, but, based on the claims asserted by the plaintiffs, the court could find no wrong under the law. Nevarez v. O'Connor Chevrolet , 2006 WL 861166 (N.D. Ill. March 29, 2006). Copyright © 2004 CounselorLibrary.com, LLC. All rights reserved.
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