Supreme Court To Hear Truth in Lending Case

By Sarah Borchersen-Keto, CCH Washington Staff Writer

The Supreme Court said January 20, 2003, that it would hear a case that concerns the statutory limits on recovery for consumers under the Truth in Lending Act (TILA) of 1968. The case, Koons Buick Pontiac GMC vs. Nigh is on appeal from the Fourth Circuit Court of Appeals.

The case concerns Bradley Nigh, who sued Koons Buick Pontiac GMC of Virginia for claims under the TILA in connection with his purchase of a used 1997 Chevrolet Blazer. Koons Buick filed a counterclaim for breach of contract, and fraudulent and negligent misrepresentation. A federal appeals court upheld damages against Koons totaling $24,192, or twice Nigh's finance charges.

The Fourth Circuit Court of Appeals upheld the ruling in February 2003. The auto dealership had argued that in most cases the TILA limits damages to $1,000 when the consumer has not proven the amount of actual harm. The Fourth Circuit, however, noted that amendments to the 1968 law had in fact removed the $1,000 cap.

A source close to the case said it has "enormously broad" applications because of the credit borrowing practices in this country. He noted that there are "millions and millions and millions of transactions every year that are covered by the TILA, and they are potential grounds for a lawsuit."

Meanwhile, amicus briefs filed by the American Bankers Association and others indicate that upholding the Fourth Circuit ruling will increase the costs of borrowing because of the liability exposure, the source said.

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Posted January 23, 2004.