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United States Court of Appeals, Second Circuit.

ELISA FRANCO, Plaintiff-Appellee, v. A BETTER WAY WHOLESALE AUTOS, INC., BCI FINANCIAL CORP., Defendants-Appellants.


Decided: May 18, 2017

Present: JOHN M. WALKER, JR., DEBRA ANN LIVINGSTON, GERARD E. LYNCH, Circuit Judges. For Plaintiff-Appellee: BRIAN L. BROMBERG (Jonathan A. R. Miller, on the brief), Bromberg Law Office, P.C., New York, NY Daniel S. Blinn, Consumer Law Group, LLC, Rocky Hill, CT For Defendants-Appellants: KENNETH A. VOTRE, Votre & Associates, P.C., Ridgefield, CT

Defendants-Appellants A Better Way Wholesale Autos, Inc. and BCI Financial Corp. (“Defendants”) appeal from a judgment of the district court entered May 12, 2016, granting summary judgment to Plaintiff-Appellee Elisa Franco (“Franco”) on her claim brought under the Truth in Lending Act, 15 U.S.C. § 1601, et seq. (“TILA”), and awarding her $2,000 in statutory damages, and from a May 31, 2016 order of the district court awarding $15,358.43 in costs and attorney's fees. We assume the parties' familiarity with the underlying facts, the procedural history of the case, and the issues on appeal.

We review the grant of summary judgment de novo, construing the facts in the light most favorable to the non-moving party, and resolving all ambiguities—and drawing all reasonable inferences—against the movant. Aulicino v. N.Y.C. Dep't of Homeless Servs., 580 F.3d 73, 79–80 (2d Cir. 2009). In so doing, we ask “not whether the evidence unmistakably favors one side or the other[,] but whether a fair-minded jury could return a verdict for the [non-moving party] on the evidence presented.” Rojas v. Roman Catholic Diocese of Rochester, 660 F.3d 98, 104 (2d Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). We review the award of costs and attorney's fees, by contrast, for abuse of discretion. 16 Casa Duse, LLC v. Merkin, 791 F.3d 247, 254 (2d Cir. 2015).

The TILA requires that property insurance charges and premiums be disclosed to the borrower as part of the “finance charge,” 15 U.S.C. § 1605(a), i.e., “the cost of consumer credit,” 12 C.F.R. § 226.4(a), as opposed to the total amount financed, i.e., the amount of credit available for “actual use,” 15 U.S.C. § 1638(a)(2)(A); see also Bragg v. Bill Heard Chevrolet, Inc., 374 F.3d 1060, 1065 (11th Cir. 2004); Hicks v. Star Imps., Inc., 5 F. App'x 222, 224 (4th Cir. 2001). The requirement does not apply, however, where the creditor provides (1) “a clear and specific statement in writing,” which (2) “set[s] forth the cost of the insurance if obtained from or through the creditor,” and (3) “stat[es] that the person to whom the credit is extended may choose the person through which the insurance is to be obtained.” 15 U.S.C. § 1605(c). Here, the parties do not contest that these requirements apply to the vendor's single interest (“VSI”) insurance premium at issue here, and that the premium is listed as part of the amount financed, rather than as a finance charge, in Franco's financing agreement (the “Agreement”).

Defendants' principal argument on appeal is that the district court improperly resolved an issue of material fact when it concluded that the Agreement did not provide notice of the premium sufficient to render it compliant with the TILA. This contention is meritless. The provision of the Agreement that Defendants allege provides the required notice—a provision that is enclosed in a box separate from the remainder of the Agreement—is entitled “Vendor's Single Interest Insurance (VSI Insurance).” App'x at 32. The first sentence of the provision states: “If the preceding box is checked, we require VSI insurance for the initial term of the contract to protect us for loss or damages to the vehicle (collision, fire, theft).” Id. The checkbox is not checked. While there is a “XX” indicator in the same general vicinity of the provision, see id., it is insufficiently close to the checkbox for a reasonable juror to conclude that the “XX” indicated that the provision was in force. And, even if a reasonable juror could conclude that it was ambiguous whether the “XX” referred to the checkbox at issue, the provision would still, in that case, not constitute the “clear and specific statement in writing” required by the TILA. 15 U.S.C. § 1605(c) (emphasis added); cf. Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 235 (2004) (noting that “TILA's disclosure provisions seek to ensure ‘meaningful disclosure of credit terms' ” (quoting 15 U.S.C. § 1601(a)).

Defendants nonetheless maintain that, even if unchecked, the provision provides sufficient notice under the TILA because it clearly indicates that VSI insurance is required, the premium amount, and that Franco can “choose the insurance company through which the VSI insurance is obtained.” App'x at 32. As an initial matter, it is unreasonable to assume that a borrower would read the unchecked provision of the Agreement, such that the provision's contents can be deemed clear notice. In any event, the first clause of the provision provides that “[i]f this preceding box is checked, we require VSI insurance,” id., strongly suggesting that the remainder of the provision—which only describes aspects of the VSI insurance referenced in the first clause—is similarly conditioned.1 Accordingly, the district court properly determined that no reasonable juror could conclude that the provision at issue provides sufficient notice under the TILA, such that summary judgment was warranted.

As to the district court's award of $15,358.43 in costs and attorney's fees, Defendants argue—for the first time on appeal—that the extent of their violation of the TILA remains an issue of material fact, implying that the district court also improperly awarded $2000 in statutory damages. Defendants do not explain, however, given that Franco prevailed on summary judgment, how her TILA claim was not “entirely successful,” id. at 111, such that the fee award amount was improper,2 see Hensley v. Eckerhart, 461 U.S. 424, 436 (1983) (explaining that “the most critical factor” in the award of attorney's fees “is the degree of success obtained”). Further, the award of $2,000 in statutory damages was appropriate given the TILA authorizes the recovery of double the finance charge, up to $2,000, see 15 U.S.C. § 1640(a)(2)(A)(i) (2015); Koons Buick Pontiac GMC, Inc. v. Nigh, 543 US. 50, 59–60 (2004), and the parties do not dispute that the finance charge in the Agreement was $3,394.47. We accordingly affirm the district court's award of costs and attorney's fees.

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We have considered Defendants' remaining arguments and find them to be without merit. Accordingly, we AFFIRM the judgment and order of the district court.


Catherine O'Hagan Wolfe, Clerk


1.   Even if Franco was aware that she was required to purchase VSI insurance by virtue of its inclusion in the itemized amount financed, it does not follow that the provision itself provided clear written notice of her right to, for example, purchase the insurance elsewhere given both the conditional language of the provision and the fact that it cannot reasonably be assumed that a borrower in Franco's circumstances would read an unchecked provision.

2.   Defendants have abandoned their contention that the attorney's fees are excessive and improperly reflect time spent on claims that have been voluntarily withdrawn. See LNC Invs., Inc. v. Nat'l Westminster Bank, 308 F.3d 169, 176 n.8 (2d Cir. 2002).

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