- The Washington Times - Tuesday, October 5, 2004

ASSOCIATED PRESS

A Virginia man’s car-buying nightmare ended at the Supreme Court, where justices considered yesterday whether buyers are entitled to more than $1,000 in damages when they are misled about auto loans.

Most justices appeared reluctant to allow higher damages under the Truth in Lending Act, suggesting Congress never intended that.

The case involves Bradley Nigh, 27, who contends he was victimized by what he considered bait-and-switch tactics of an Alexandria car dealership, Koons Buick Pontiac GMC Inc.

Consumer groups, including the National Association of Consumer Advocates, say high awards are necessary to deter unscrupulous car dealers from engaging in shady sales tactics. Auto dealers counter that most violations of the Truth in Lending Act are technical and the result of honest mistakes.

At stake is more than $1 billion in annual damages that auto dealers and banks say they could face in litigation over car loans should the Supreme Court side with Mr. Nigh. Those costs would be passed along to consumers as higher interest rates and tougher loan terms.

Mr. Nigh put some money down on a 1997 Chevrolet Blazer, signed a sales contract and drove home the same day. The Fairfax man began to get cold feet when the car dealer told him he must put down an additional $2,000 to get a loan.

Mr. Nigh tried to back out when the dealer called him back a third time and, Mr. Nigh claimed, threatened to have him arrested for auto theft if he did not sign yet a different contract.

A jury awarded Mr. Nigh damages of $24,192.80 at trial. It accepted his argument that amendments to the 1968 Truth in Lending Act have made it silent on whether a $1,000 cap on damages applies to loans like his; therefore, he argued, it did not.

In oral arguments, the legal question focused on the meaning of the Lending Act. Justices grappled with whether it was their role to fix a sloppily drafted statute and, if so, what Congress intended when it appeared to drop the reference to a cap in subsequent amendments.

“If they made a mistake, they made a mistake,” said Justice Antonin Scalia, who agreed with Mr. Nigh’s attorney, A. Hugo Blankingship, that a strict reading of the statute would not set a $1,000 cap for car loans.

“The statute reads what it reads. It’s not my job to correct their mistakes,” Justice Scalia said.

A majority of the nine justices — David H. Souter, John Paul Stevens, Anthony M. Kennedy, Sandra Day O’Connor and Stephen G. Breyer — seemed sympathetic to the notion that a strict reading of the statute would be undesirable because it would cap damages on some loans but not others.

Prior to the 4th U.S. Circuit Court of Appeals decision in Mr. Nigh’s favor that allowed the greater consumer damages, courts had held widely that Congress intended a $1,000 limit, several of the justices said.

Justice Souter noted as an example that the Lending Act specifically sets a $2,000 cap involving larger credit deals such as mortgages, but appears to be silent on car loans in the amended law, which the justice called “cuckoo.”

LOAD COMMENTS ()

 

Click to Read More

Click to Hide