|A couple of months back, I used this space to scream and shout about a plaintiff’s lawyer who sued a dealer for violation of the Truth in Lending Act. The dealer defended the TILA claim, and the court concluded that the dealer’s practices did not violate the federal Act. The only problem with this decision was that the amount financed in the transaction exceeded $25,000, making the transaction exempt from TILA.|
The “amount financed” exemption isn’t the only exemption available. Transactions that are “primarily” (over 50 percent) for business or commercial purposes are also exempt from TILA. However, TILA isn’t the only consumer protection law where you’ll find such exemptions. Other federal laws sometimes carve out businesses and commercial transactions as exempt, as do some state laws. Let’s look at a state law example – this one from Ohio:
Madeline Lecso bought a vehicle from Motorcars of Toyota. Lecso used the vehicle primarily for business purposes and reported the vehicle as a deduction on her tax returns. Lecso took the car to Motorcars on several occasions for service under her warranty. Lecso claimed that Motorcars overfilled the oil on one occasion, and on another occasion charged her for brake repairs when it should have been covered by her warranty. Lecso eventually sold the vehicle, but claimed it sold for less than NADA book value due to the oil overfill. Lecso sued Motorcars for violating the Ohio Consumer Sales Practices Act, alleging, in addition, theories of negligence and fraudulent misrepresentation.
The trial court granted Motorcars’ motion for summary judgment on all three of Lecso’s claims. The Ohio Court of Appeals affirmed the trial court’s decision. The appellate court concluded that because Lesco bought and used the vehicle primarily for business purposes, she could not maintain a claim under the Ohio CSPA, which applies only to the sale of goods or services for primarily personal, family or household purposes. The appellate court also affirmed summary judgment on the negligence and misrepresentation claims based on lack of proof that Motorcars’ actions injured Lecso and that Motorcars misrepresented the nature of the brake repairs.
I frequently get calls from dealers who have been sued, asking me to come up with some brilliant, intricate and stunningly technical theory of defense. I’m not that smart, so I ask a few quick questions:
You’d be amazed how often the answers to these questions will knock the plaintiff out of court. And that’s a whole lot easier than having to think hard. ˜ADM˜
Lecso v. Toyota of Bedford, 2005 WL 3475769 (Ohio App. December 20, 2005)
Vol 3, Issue 3
Lending Tree’s most recent auto finance snapshot finds originations, amounts financed, and monthly payments all accelerated in 2018.