In Poulin v. Balise Auto Sales, Inc. 2010 WL 1370862 (D.Conn.), Judge Haight dismissed a TILA claim against a car dealer and it’s finance company assignee because it failed to state a claim. The allegations were that
Balise and ACE have acted in concert in selling motor vehicles pursuant to retail installment contracts at inflated cash prices to consumers who have poor credit histories.” The conclusory allegation that Plaintiffs paid “inflated” prices for their vehicles is based upon the allegations that whereas Poulin paid $8,440 for her car, the car’s retail value was only $3,900, according to the NADA Official Used Car Guide, Eastern Edition (“NADA Guide”); and whereas Frazier paid $7,995 for her car, its retail value according to the NADA Guide was only $4,000. ¶ The theory of Plaintiffs’ case is stated in ¶ 30 of the Complaint, which alleges that the disclosures Defendants made to them at the time of the transactions violated TILA, 15 U.S.C. § 1638, “because they mischaracterized the inflated portion of the purchase price as part of the amount financed rather than as part of the finance charge, resulting in a corresponding understatement of the annual percentage rate.” Plaintiffs purport to assert this claim on their own behalf and on behalf of two classes of car purchasers: the “TILA Class,” represented by Poulin, consisting of individuals who, “subsequent to the date that is one-year prior to the commencement of this action, purchased a motor vehicle from Balise pursuant to a retail installment contract that was subsequently as-signed to ACE, at a purchase price that was at least 35% greater than the NADA Retail Value for the vehicle purchased”; and the “Connecticut Class, rep-resented by Poulin and Frazier, consisting of individuals, without regard to time limitation, who purchased motor vehicles from Balise’s Enfield dealership under the same circumstances.
Judge Haight found no TILA violation, explaining:
The specific implementation of these generalized propositions is spelled out in the Federal Reserve Board Regulations, particularly Regulation Z and its accompanying Official Staff Commentaries, quoted in Part II.D, supra. They make it apparent that not all fiscal components of a credit transaction constitute “finance charges,” Some do, some do not. The leitmotiv running through Regulation Z and its Commentary is that to qualify as a “finance charge,” a particular charge must be payable by the consumer, directly or indirectly, separately imposed by the creditor on the consumer, and which the transaction consequently requires the consumer to pay. ¶ Plaintiffs’ complaint fails to state a viable TILA claim because it does not allege or describe the existence of a separately imposed charge payable by them in connection with these credit transactions. Stripped of conclusory verbiage, Plaintiffs’ claim is that they paid more for their financed vehicles than the retail values listed for them in the NADA Guide, and that excess amount should be characterized as a hidden finance charge. This theory does not fit within TILA’s statutory and regulatory scheme, and is contrary to the spirit, if not the letter, of § Supp.I.2(i) of the Commentary. Plaintiffs’ construction of TILA would cause the statute to substantively regulate consumer credit, which is not the statute’s purpose. ¶ While the Second Circuit does not appear to have squarely addressed the concept of TILA finance charges, Plaintiffs’ focus upon the difference between the prices they paid and retail values such as those published in the NADA Guide has not found favor with courts in this district. See Frazee, 695 F.Supp. at 1408 (plaintiff’s claim “is not actionable under TILA. Any differential between the fair value of the car and its cash price is attributable to a bad bargain, or per-haps a violation of the bargain in the sale of the car, and not any hidden finance charges.”); Ringenback v. Crabtree Cadillac-Oldsmobile, Inc., 99 F.Supp.2d 199, 203 (D.Conn.2000) (Chatigny, J.) (“The court is unable to discern from the record whether the trans-action violates TILA. First, the only evidence concerning the true market value of the 1966 Oldsmobile before the court is the N.A.D.A. figure. This is not an adequate substitute for proof of the true market value of the car.”). ¶ . . . TILA delegated to the Federal Reserve Board the authority to promulgate regulations implementing the statute’s purposes and policies. I conclude that the plain meaning of Regulation Z and its accompanying Official Staff Commentaries exempts defendants’ conduct from characterization as a “finance charge” under the statutory and regulatory scheme. If cases decided in other circuits take a different view, I am not bound by them and decline to follow them.