WENDELL A. MILES, Senior Judge
In this action, plaintiff Renay Molenbeek has sued defendant West Michigan Auto Truck Outlet, Inc. ("WM Auto") for violating the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601 et seq., as well as various state laws, when it sold her a 1997 Jeep Grand Cherokee on March 21, 2000. The matter is currently before the court on cross-motions for summary judgment, namely: (1) Plaintiff's Motion for Partial Summary Judgment (docket no. 11), and (2) Defendant's Motion for Summary Judgment (docket no 12).
For the following reasons, the court (1) grants Molenbeek's motion, to the extent that it seeks a partial summary judgment that WM Auto violated the TILA, (2) denies WM Auto's motion, to the extent that it seeks dismissal of all claims on the merits, and (3) dismisses the state law claims contained in Counts Two through Six of the Complaint without prejudice.
I
WM Auto was, at all times relevant to this action, a dealer of used motor vehicles. On March 21, 2000, Renay Molenbeek went to WM Auto's place of business in Muskegon, Michigan and negotiated with the company's president, Patrick Allen, for the purchase of a 1997 Jeep Grand Cherokee. Molenbeek informed Allen that she already had credit approval for the purchase at Huntington Bank.
Molenbeek purchased the vehicle from WM Auto as part of a closed-end credit transaction. At the time she made the purchase, Molenbeek signed a number of documents, one of which was titled "Motor Vehicle Purchase Agreement." The purchase agreement provided for the purchase of the vehicle at price of $16,957.10. With the addition of title and license fees and deduction of a $500 down payment, the total amount financed for the purchase was $18,063.10. The agreement provided for 54 monthly payments of $469.55, for a total sale price of $25,855.70, including the down payment.
The purchase agreement which Molenbeek signed contained the following TILA disclosures:
Annual Percentage Rate 15.49%
Finance Charge $ 7,292.60
Amount Financed $18,063.10
Total of Payments $25,355.70
Total Sale Price $25,855.70
In addition to these TILA disclosures, the purchase agreement contained the following "notice," printed in boldface type on the same page with the TILA disclosures:
Notice to buyer: Do not sign this contract in blank. You are entitled to 1 true copy of the contract you sign without charge. Keep it to protect your legal rights.
A second page of the agreement also contained the following printed in boldface type:
Notice to buyer: Do not sign this contract in blank. You are entitled to 1 true copy of the contract you sign without charge. Keep it to protect your legal rights.
You acknowledge that you have received a copy of this agreement with all blanks filled and that you have read it and understand it.
Molenbeek's signature appears on the agreement in two places: once below the "Notice to buyer" printed on the second page of the agreement, and once below the "acknowledgment" printed on this same page. The agreement was prepared in multiple copies, one of which, intended for the purchaser, was marked "Buyer's Copy."
Before closing the transaction with Molenbeek, Allen reviewed the purchase agreement with her. However, notwithstanding the acknowledgment which Molenbeek signed, Allen failed to provided her with her copy of the purchase agreement, although he did provide her with copies of the other documents which she had signed. In an affidavit filed with the court, Allen states that it was the custom and practice of WM Auto to assemble all documents immediately after the closing of a purchase and sale, and to provide the purchaser with a copy of each document. However, Allen also states that in Molenbeek's case, without intending to do so, he failed to detach the "Buyer's Copy" of the purchase agreement from the multi-page form, and he therefore failed to include it among the documents which he provided to her after the closing. On March 22, 2000, the day following the purchase, Molenbeek's husband, Matthew Molenbeek, telephoned WM Auto and spoke with Allen. Matthew Molenbeek informed Allen that Renay Molenbeek had not received her copy of the purchase agreement. After checking the company's files, Allen informed Matthew Molenbeek that his wife's copy of the agreement was still in WM Auto's file. Allen also offered to mail the copy to Renay Molenbeek, or otherwise deliver it to her in any manner which she desired. According to Allen, Renay Molenbeek subsequently telephoned him and advised that she would pick up her copy of the purchase agreement when she came to WM Auto for service on the vehicle. She did so on March 29, 2000, eight days after completing the purchase.
On April 21, 2000, Molenbeek filed this action against WM Auto. The first paragraph of her complaint alleges that WM Auto had engaged in "unlawful practices in connection with the sale and finance of a motor vehicle[,]" specifically, by "fail[ing] to provide [Molenbeek] with a copy of the retail installment contract at the time of execution." Complaint at 1, ¶ 1. The complaint asserts that this failure violated the TILA, a violation for which Molenbeek seeks both actual damages and statutory damages, equal to twice the amount of the finance charge, pursuant to 15 U.S.C. § 1640 (a). Molenbeek also seeks damages based on WM Auto's alleged violation of various Michigan statutes, namely the Michigan Consumer Protection Act ("MCPA"), M.C.L. § 445.901 et seq., the Michigan Motor Vehicle Installment Sales Contracts Act ("MVISCA"), M.C.L. § 556.301 et seq., the Michigan Motor Vehicle Sales Finance Act ("MVSFA"), M.C.L. § 492.101 et seq., and the Michigan Vehicle Code ("MVC"), M.C.L. § 257.1 et seq.
II
In her motion, Molenbeek asks the court to enter partial summary judgment on all issues of liability under the TILA, the MVISCA, the MVSFA, and the MCPA, based on WM Auto's failure to provide her with a copy of the purchase agreement "in the time frame required by law[.]" Plaintiff's Motion for Partial Summary Judgment, at 1. In its motion, WM Auto also seeks summary judgment on all issues of liability presented by the Complaint.
Summary judgment is proper where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Rule 56(c) also provides that a summary judgment, "interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages."
In evaluating a motion for summary judgment, the court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). The party moving for summary judgment bears the burden of establishing the non-existence of any genuine issue of material fact and may satisfy this burden by "`showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). "[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322-323. "In such a situation, there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. Only factual disputes which may have an effect on the outcome of a lawsuit under the applicable substantive law are "material."Anderson, 477 U.S. at 248.
A Truth in Lending Act Claim
In her motion, Molenbeek argues that the court should enter partial summary judgment against WM Auto for violation of the TILA, based on Allen's failure to provide her with a copy of the purchase agreement at the time of execution. For its part, in contrast, WM Auto argues that this fact alone is insufficient to establish liability.
The TILA, 15 U.S.C. § 1638(a), requires the creditor in each consumer credit transaction other than under an open end credit plan to disclose the following items, among others:
(1) the identity of the creditor;
(2) the amount financed;
(3) the finance charge;
(4) the annual percentage rate;
(5) the total of payments;
(6) the number, amount, and due dates or period of payments;
(7) the total sale price;
(8) descriptive explanations of specified terms;
(9) where the credit is secured, a statement that a security interest has been taken.
15 U.S.C. § 1638(a). Regarding the form and timing of the required disclosures,
15 U.S.C. § 1638(b) provides that the disclosures required under subsection (a) "shall be made before credit is extended." Section 1638(b) further provides, in relevant part, that the disclosures "shall be conspicuously segregated from all other items, data, or information provided in connection with a transaction[.]"
Regulation Z, the statute's implementing regulation, further specifies how the required disclosures should be made. This regulation requires the creditor to make the disclosures "clearly and conspicuously in writing, in a form that the consumer may keep." 12 C.F.R. § 226.17(a).
Regulation Z also requires the creditor to make the disclosures "before consummation of the transaction." 12 C.F.R. § 226.17(b). "Consummation" is defined as "the time that a consumer becomes contractually obligated on a credit transaction." 12 C.F.R. § 226.2(a)(13). In a virtually identical case, Polk v. Crown Auto, Inc., 221 F.3d 691 (4th Cir. 2000), a Fourth Circuit panel recently reversed a district court's entry of summary judgment in favor of an auto dealer which, like WM Auto, had failed to provide the buyer with the document containing the TILA disclosures until after both parties had already signed the agreement consummating the purchase. Following this authority, the court is constrained to conclude that Molenbeek is correct, and that WM Auto violated § 1638(b)(1) of the TILA and Regulation Z by failing to provide her with the required written disclosures until several days after consummating her purchase.
WM Auto has asserted, as an affirmative defense, that it incurs no liability under the TILA based on the "correction of errors" defense. Under § 1640(b),
A creditor or assignee has no liability under this section . . . for any failure to comply with any requirement imposed under this part . . . if within sixty days after discovering an error, . . . and prior to the institution of an action under this section or the receipt of written notice of the error from the obligor, the creditor or assignee notifies the person concerned of the error and makes whatever adjustments in the appropriate account are necessary to assure that the person will not be required to pay an amount in excess of the charge actually disclosed[.]"
Here, WM Auto undisputedly "corrected its error" of failing to provide Molenbeek with her written copy of the required disclosures by providing them at a later date. However, it is doubtful that the defense provided in § 1640(b) applies where, as here, the error is not a written or calculation error. In any event, WM Auto did not "notif[y] the person concerned of the error"; instead, Matthew Molenbeek notified WM Auto of the error. Under the circumstances, the court concludes that the "correction of errors" defense provided by § 1640(b) does not apply.
WM Auto has also asserted, as another affirmative defense, that it incurs no liability under the TILA based on the "bona fide error" defense. Under § 1640(c),
A creditor or assignee may not be held liable in any action brought under this section . . . for a violation of this subchapter if the creditor or assignee shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Examples of a bona fide error include, but are not limited to, clerical, calculation, computer malfunction and programming, and printing errors, except that an error of legal judgment with respect to a person's obligations under this subchapter is not a bona fide error.
Here, the affidavit of Mr. Allen provides uncontradicted evidence that WM Auto's violation of § 1638(b)(1) and Regulation Z was not intentional. However, what his affidavit does not do is to establish that the error occurred "notwithstanding the maintenance of procedures reasonably adapted to avoid any such error."
"It has been held that [§ 1640(c)] requires procedures designed to avoid and prevent errors which might slip through procedures aimed at good faith compliance, `a safety catch or rechecking mechanism.'"Gallegos v. Stokes, 593 F.2d 372, 376 (10th Cir. 1979) (citing Mirabal v. General Motors, 537 F.2d 871, 878 (7th Cir. 1976), overruled on other grounds, Brown v. Marquette Savings and Loan Ass'n, 686 F.2d 608 (7th Cir. 1982)). WM Auto has presented no evidence that it maintained any procedure or preventive mechanism for catching errors. While Allen states that it was WM Auto's custom "to assemble all documents immediately after the closing of a purchase and sale and to provide the purchaser with a copy of each document," this practice does not include a rechecking mechanism, nor does Allen's affidavit specifically indicate "the maintenance of procedures reasonably adapted" to ensuring that the buyer has reviewed the required disclosures "before credit is extended" as contemplated by § 1639(b)(1). Under the circumstances, the "bona fide error" defense is not available to WM Auto.
Although Molenbeek's motion does not raise the issue of damages, WM Auto argues that the facts of this case disclose no injury, or even inconvenience, suffered by Molenbeek. Instead, WM Auto argues, Molenbeek is seeking to obtain a windfall based on a simple, honest error. However, WM Auto need have no fear of Molenbeek obtaining a windfall, for under circumstances such as those presented here Congress has limited a plaintiff's remedy to actual damages.
While § 1640(a)(1) provides for an award of "any actual damage" sustained by the claimant as a result of the creditor's failure to comply with the TILA's disclosure requirements, awards of statutory damages as specified in § 1640(a)(2) are available only for violations of specifically enumerated sections of the statute. In this regard, § 1640(a)(2)(B) provides, in pertinent part, as follows:
In connection with the disclosures referred to in section 1638 of this title, a creditor shall have a liability determined under paragraph 2 only for failing to comply with the requirements of section 1635 of this title or of paragraph (2) (insofar as it requires a disclosure of the `amount financed'), (3), (4), (5), (6), or (9) of section 1638(a) of this title, or for failing to comply with disclosure requirements under State law for any term which the Board has determined to be substantially the same in meaning under section 1610(a)(2) of this title as any of the terms referred to in any of those paragraphs of section 1638(a) of this title.
"Section 1640(a) says that statutory damages are available `only' for violations of enumerated subsections and rules," and "omission from the list means no statutory damages." Brown v. Payday Check Advance, Inc, 202 F.3d 987, 991-92 (7th Cir. 2000). Statutory damages are therefore available only for the creditor's failure to disclose the amount financed, required by § 1638(a)(2); the finance charge, required by § 1638(a)(3); The annual percentage rate, required by § 1638(a)(4); the total of payments, required by § 1638(a)(5); the number, amount, and due dates or period of payments, required by § 1638(a)(6); or a statement that a security interest has been taken, required by § 1638(a)(9). Each of these violations relates to the substance of the disclosures. However, Molenbeek's sole complaint is not that WM Auto violated any subsection of § 1638(a), but rather that it violated the requirements of 1638(b)(1), which address not the substance of the disclosures but rather their form and timing. See Complaint at 4, § 15 (alleging that WM Auto "violated the federal Truth in Lending Act by failing and/or refusing to provide plaintiff with the disclosures required by 15 U.S.C. § 1638, before credit was extended as required by 15 U.S.C. § 1638(b)(1)) (emphasis supplied). The court has been made aware of no authority which indicates that statutory damages are available to a plaintiff for violation of the form and timing requirements of § 1638(b)(1), where the defendant contends, and the plaintiff has not disputed, that plaintiff reviewed the written disclosures before finalizing the transaction.
"The TILA receives a hypertechnical reading[.]" Brown v. Payday Check Advance, Inc., 202 F.2d 987, 989 (7th Cir. 2000) (citation omitted).
Polk v. Crown Auto, Inc., 221 F.3d 691 (4th Cir. 2000), which supports a finding of liability under circumstances similar to those present here, does not address the issue of damages. The panel in that case simply reversed the district court's order granting summary judgment in favor of the creditor and remanded the case "for entry of judgment in favor of the plaintiff and for a determination of appropriate relief." 221 F.3d at 692. While this is not fatal to her TILA case for purposes of this motion, the court is troubled by Molenbeek's apparent assumption that she is a candidate for statutory damages. She is not.[3] Her actual damages, if any, are an issue to be addressed at a later date.
Although Molenbeek at one point nominally states that the issue of damages is not a part of her present motion, she includes in her supporting brief a footnote in which she argues that "[e]ven `technical' violations of the TILA result in mandatory civil liability[,]" and that a TILA plaintiff "need not prove that he or she has suffered actual monetary damages in order to recovery the statutory damages and attorney's fees." Brief in Support of Plaintiff's Motion for Partial Summary Judgment, at 12, n. 1 (citing Purtle v. Eldridge Auto Sales, Inc., 91 F.3d 797, 799-801 (6th Cir. 1996)). However, it is simply not true that all TILA violations result in awards of statutory damages imposed by 15 U.S.C. § 1640(a)(2).
In her Complaint, Molenbeek has requested, as part of her claim for relief, that she be awarded both actual damages pursuant to § 1640(a)(1) as well as statutory damages equal to "twice the amount of any finance charge in connection with the transaction," or $14,585.20, pursuant to § 1640(a)(2)(A)(1). WM Auto has argued that the facts of this case disclose no injury, or even inconvenience, suffered by Molenbeek. Molenbeek has made no reply to this
B State Law Claims
Molenbeek's six-count complaint includes only one federal claim, the TILA claim, but a total of five claims asserted under Michigan law. Although 28 U.S.C. § 1367(a) provides the court with supplemental jurisdiction over these state law claims, subsection (c) of § 1367 provides that a district court may decline to exercise supplemental jurisdiction over a state law claim, even where the federal claim has not been dismissed, if the state law claim "substantially predominates over the claim or claims over which the district court has original jurisdiction." 28 U.S.C. § 1367 (c)(2).
The parties have not addressed the issue of supplemental jurisdiction in their motions. However, subject matter jurisdiction is an issue that may be raised at any time, even sua sponte by the court itself. E.g., In re Millers Cove Energy Co., 128 F.3d 449, 450 (6th Cir. 1997).
Here, Molenbeek has greatly expanded what would have been a simple, straightforward federal action by asserting a kitchen-sink variety of state law claims, in an obvious attempt to assure some sort of financial recovery. At this point, it is still not even clear what, if any, damages Molenbeek suffered as a result of WM Auto's federal violation. While the court certainly cannot fault Molenbeek's strategy, the court believes that the bulk of her difficulties with WM Auto should be resolved in a state court, where they could originally have been brought and could presumably still be brought. Because Molenbeek's state law claims overwhelmingly predominate over her federal claim, a claim for which her right to any damages at all is in question, the court declines to exercise supplemental jurisdiction over Molenbeek's state law claims asserted in Counts Two through Six of the Complaint.
Under 15 U.S.C. § 1640(e), Molenbeek could have filed her TILA claim as well as her multiple state law claims in a Michigan court. See id. ("Any action under this section may be brought in any United States district court, or in any other court of competent jurisdiction"). A dismissal under § 1367 tolls the period of limitations for any of Molenbeek's state law claims while they are pending in this court and for a period of 30 days after dismissal, unless state law provides for a longer tolling period. 28 U.S.C. § 1367(d).
CONCLUSION
The court grants Molenbeek's motion for partial summary judgment, to the extent that it seeks a judgment that WM Auto violated the TILA. The court denies WM Auto's motion for summary judgment, to the extent that it seeks summary judgment in its favor on the TILA claim asserted in Count One of the Complaint. The court denies both parties' motions to the extent that they seek determinations on the merits of the state law claims asserted in Counts Two through Six of the Complaint. The court declines to exercise supplemental jurisdiction over Counts Two through Six, which are hereby dismissed without prejudice pursuant to 28 U.S.C. § 1367(c)(2).
So ordered this 15th day of March, 2001.