Randall S. Bragg v. Bill Heard Chevrolet, Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
_____________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 03-11384 June 25, 2004
_____________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 02-00609-CV-8-6-30 EAJ

RANDAL S. BRAGG, ROBERT I. CRABTREE, et al.,

Plaintiffs-Appellants,

versus

BILL HEARD CHEVROLET, INC. - PLANT CITY,
WFS FINANCIAL, INC., et al.,

Defendants-Appellees.

_____________________

Appeal from the United States District Court
for the Middle District of Florida
_____________________

(June 25, 2004)

Before BLACK, BARKETT and STAHL*, Circuit Judges.

STAHL, Circuit Judge:

*
Honorable Norman H. Stahl, United States Circuit Judge for the First Circuit, sitting by
designation.
 The issue before us is whether the district court correctly determined that

plaintiff-appellant Randal Bragg failed to state a claim under the Truth in Lending

Act, 15 U.S.C. § 1601, et seq. ("TILA") against defendant-appellee Bill Heard

Chevrolet Inc.-Plant City ("Bill Heard"). We hold that Bragg's complaint does

state a claim under TILA, and reverse the decision below.

I. BACKGROUND

We take the following recitation of facts from Bragg's amended complaint.

See La Grasta v. First Union Securities, Inc., 358 F.3d 840, 845 (11th Cir. 2004);

Omar v. Lindsey, 334 F.3d 1246, 1247 (11th. Cir. 2003). Bill Heard is licensed in

Florida as a motor vehicle dealer and a motor vehicle retail installment seller. On

September 28, 2001, Bragg visited Bill Heard and decided to purchase a new 2002

Chevrolet Silverado truck. As a down payment, Bragg paid six hundred dollars in

cash and traded in his 1994 Ford Escort, which Bill Heard valued at five hundred

dollars.

On that day, Bragg signed one Standard Purchase Contract ("Purchase

Contract #1") and two standard Florida Simple Interest Vehicle Retail Installment

Contracts ("RISC #1" and "RISC #2"). Bill Heard did not sign these documents.

Purchase Contract #1 listed the selling price of the truck as $19,253.34, plus a

Silencer Alarm ("SAP") for $399.00 and Vehicle Theft Registration ("VTR") for

2
$199.00.1 RISC #1 listed an annual percentage rate ("APR") of 14.65 percent, a

finance charge of $10,947.33, and amount financed of $21,158.91. RISC #2 listed

an APR of 14.50 percent, a finance charge of $10,642.05, and amount financed of

$21,158.91. Both RISCs included insurance and debt cancellation coverage

("GAP Protection") for a charge of $495.00.2 Bill Heard is listed as the "Creditor-

Seller" in the RISCs.

Bragg also signed a Bailment Agreement for Vehicle Spot Delivery

("Bailment Agreement"). This permitted Bragg to take possession of the new

vehicle immediately. The Bailment Agreement explicitly incorporated the terms

of the Purchase Contract.

On October 1, 2001, Bill Heard contacted Bragg and requested that he sign

additional documents. This time Bragg signed two new Purchase Contracts

("Purchase Contract #2" and "Purchase Contract #3") and two new RISCs ("RISC

#3" and "RISC #4"). Purchase Contract #2 listed a selling price of $18,993.00,

plus an Extended Service Contract price of $990.00, while Purchase Contract #3

1
VTR is an anti-theft etching identification program that provides insurance benefits to
customers in the event that their cars are stolen. SAP is an alarm installed on the vehicle that also
provides insurance benefits.
2
GAP protection is coverage offered to a customer in the event that the vehicle is determined
by the relevant insurance company to be a total loss as a result of theft or physical damage. It covers
the shortfall between the applicable insurance coverage and any amount still owed.

3
listed a selling price of $18,993.00. Neither of these two Purchase Contracts

contained charges for VTR and SAP. RISC #3 listed an APR of 14.89 percent, a

finance charge of $11,699.11, and an amount financed of $22,176.18, while RISC

#4 listed an APR of 14.89 percent, a finance charge of $11,102.69, and an amount

financed of $21,046.09. All four of these contracts were backdated by Bill Heard

to the date of Bragg's first visit, September 28, 2001. None of the contracts were

executed by Bill Heard.

On October 5, Bill Heard assigned RISC #4 to Triad Financial Corporation,

and Triad issued payment to Bill Heard for $19,982.24. This RISC was the only

one signed by Bill Heard.

Central to Bragg's claims is Bill Heard's "spot delivery" procedure. Here,

we stress again that at this stage, we must accept as true the well-plead factual

allegations in Bragg’s complaint, as well as all inferences from those allegations in

the light most favorable to Bragg. La Grasta, 358 F.3d at 845; Omar, 334 F.3d at

1247. Under “spot delivery,” the customer is presented with a Purchase

Agreement, RISC, and Bailment Agreement. Bill Heard then delivers the car to

the customer "on the spot" on the same date that the customer signs the

documents, and allows him or her to take the car without the passage of title. The

customer in return typically makes a cash deposit or trades in an existing vehicle

4
as a down payment. Bragg contends that customers like him are "under the

impression they have purchased a car under certain sales and finance terms." On

occasion, Bill Heard will notify a customer that it was not able to secure the

financing rates agreed to in the documents and ask them to sign new agreements

with less favorable financing terms. If a new RISC is executed, the financing

terms are calculated from the date of actual delivery of the vehicle to the customer.

According to Bragg, Bill Heard never executes the original RISCs. Instead, it uses

the initial lower financing rates to entice the customers under a "bait and switch"

scheme. Bragg also asserts that Bill Heard requires forfeiture of the down

payment or trade-in vehicle if the customer refuses to accept the new financing

terms.3

On November 30, 2001, Bragg filed a class action suit against Bill Heard in

state court on behalf of himself and several other similarly situated customers.

The complaint set forth five counts: (1) violations of Florida’s Deceptive and

Unfair Trade Practices Act, Fl. Stat. §§ 501.201, et seq.; (2) unjust enrichment; (3)

violations of TILA and Regulation Z; (4) violations of Florida’s Motor Vehicle

3
According to Bill Heard, if financing is not obtained, the consumer has no obligation to
purchase the vehicle and instead must pay Bill Heard twenty cents for each mile driven during the
bailment agreement. In that case, it contends, a deposit or trade-in car would be returned to the
customer. If financing is obtained, the buyer receives title to the vehicle purchased and is not
responsible for any rental fees.

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Retail Sales Finance Act, Fl. Stat. §§ 520.01, et seq.; and (5) declaratory and

injunctive relief. Bragg's TILA claim asserted that Bill Heard (1) failed to make

required TILA disclosures prior to the buyer's consummation of credit terms; (2)

failed to include in the finance charge the costs of credit insurance products sold in

connection with the credit transaction, when it had failed to make the required

disclosures as a precondition to excluding those charges from the finance charge;

(3) failed to accurately disclose credit terms; (4) failed to state clearly that the

APRs in the first two RISCs were "estimates"; and (5) failed to disclose any

amounts it paid to third persons on Bragg's behalf.

Bill Heard removed the case to federal district court and on April 16, 2002,

it moved to dismiss all of Bragg's claims pursuant to Fed. R. Civ. P. 12(b)(6). On

September 1, 2002, the district court granted in part and denied in part Bill Heard's

motion to dismiss and granted Bragg leave to file an amended complaint. We

need not set forth each of the district court's dispositions in this first order.

On September 25, 2002, Bragg filed an amended complaint. In turn, Bill

Heard moved to dismiss the TILA claim, arguing that Bragg never consummated a

transaction with it in which a TILA violation occurred. On January 24, 2003, the

district court dismissed the TILA claim with prejudice and declined to exercise

supplemental jurisdiction over Bragg's remaining state law claims. It concluded

6
that Bragg never consummated either of the first two RISCs because the relevant

agreements contained an unsatisfied condition precedent: specifically, neither

party was "bound" until Bill Heard sold either of the RISCs to another lender.

On January 29, 2003, Bragg filed a motion for rehearing. On February 14,

in a published opinion, the district court again held that the first two RISCs were

never consummated and hence no TILA violated occurred. Bragg v. Bill Heard

Chevrolet, Inc., 245 F.Supp.2d 1235 (M.D. Fla. 2003). The court also rejected

Bragg's renewed argument that Bill Heard failed to clearly state that the APRs in

the first two RISCs were "estimates" and thus in violation of TILA. Id. at 1238-

39.

This appeal followed.4

4
On February 7, Bragg filed a motion seeking approval to exceed the twenty-page limit for
a motion for rehearing of the January 24 order dismissing Bragg’s claims (which was docketed on
January 27) and a February 3, 2003 order striking another class member’s (John Cone) motion to
intervene in the lawsuit (which was docketed on February 5). Attached to the motion was his
proposed twenty-five page Fed. R. Civ. P. 59(e) motion for rehearing of the two orders, which the
district court did not separately docket on that date but instead forwarded to chambers. On February
11, the court granted the motion for extension of the page limit and the clerk docketed the Rule 59(e)
motion on the same day. On February 18, the district court denied Bragg’s 59(e) motion. Bragg then
moved for clarification as to whether the court, in its January 27 and February 18 orders, intended
to remand his state law claims back to state court. On February 27, the court granted the motion for
clarification and directed the clerk to remand the case to state court. On March 13, Bragg filed a
notice of appeal to challenge the January 27 dismissal and the February 5 denial of Cone’s motion
to intervene.
To be timely, a notice of appeal in a civil case must be filed no later than thirty days after
entry of the challenged order or judgment. Fed. R. App. P. 4(a)(1)(A). A motion to alter or amend
a judgment, pursuant to Fed. R. Civ. P. 59(e), filed within ten business days of the entry of the
challenged decision tolls the appeal period until the entry of the order resolving the last such motion.

7
 II. DISCUSSION

A. Applicable law

We review a district court’s dismissal for failure to state a claim de novo.

Behlen v. Merrill Lynch, 311 F.3d 1087, 1090 (11th Cir. 2002). In dismissing a

complaint, the facts alleged therein must be taken as true and the district court

must determine “beyond doubt that the plaintiff can prove no set of facts in

support of his claim which would entitle him to relief.” Conley v. Gibson, 355

U.S. 41, 45-46 (1957); Marshall County Bd. of Educ. v. Marshall County Gas

Dist., 992 F.2d 1171, 1174 (11th Cir. 1993). Contract interpretation is a question

Fed. R. App. P. 4(a)(4). The order resolving Bragg’s Rule 59(e) motion was entered on February
18; hence, if the motion tolled the appeal period, the notice of appeal challenging the January 27
dismissal order was due on March 20.
We hold that Bragg’s notice of appeal was timely. The Rule 59(e) motion, filed on February
7, was timely under Fed. R. App. P. 4(a)(4) to toll the appeal period prescribed by Fed. R. App.
4(a)(1)(A). Though the clerk did not docket the Rule 59(e) motion until February 11, Bragg
physically filed the motion on February 7, the ninth business day following the entry of the January
27 dismissal order. Several circuits have determined that pleadings should be deemed filed on the
date submitted to the clerk. See Wight v. Bankamerica Corp., 219 F.3d 79, 83 (2d Cir. 2000);
Werth v. Makita Electric Works, Ltd., 950 F.2d 643, 646-47 (10th Cir. 1991); Sierra On-Line, Inc.
v. Phoenix Software, Inc., 739 F.2d 1415, 1419-20 (9th Cir. 1984). Fed. R. Civ. P. 5(e) provides that
“filing of papers with the court as required by these rules shall be made by filing them with the clerk
of the court . . . . The clerk shall not refuse to accept for filing any paper presented for that purpose
solely because it is not presented in proper form as required by these rules or any local rules of
practices.” The clerk did not technically refuse Bragg’s noncompliant 59(e) motion for filing. In
fact, the motion bears the clerk’s stamp that it was filed on February 7. In any event, it is apparent
that here the district court excused any noncompliance with its local page limit rule and deemed the
motion timely filed. Moreover, there is no evidence that Bragg exhibited a lack of diligence in filing
his motion. In previous cases, we have been concerned that a motion to extend the appeal period
may not be construed as a notice of appeal when it evinces uncertainty as to whether the party will
in fact appeal. See e.g., Harris v. Ballard, 158 F.3d 1164, 1166 (11th Cir. 1998). That concern is
absent here.

8
of law that we review de novo. Southland Distrib. Mktg. Co., Inc. v. S & P Co.,

296 F.3d 1050, 1053 (11th Cir. 2002) (citing Gymco Constr. Co., Inc. v.

Architectural Glass and Windows, Inc., 884 F.2d 1362, 1364 (11th Cir. 1989)).

TILA's declaration of purpose states, in relevant part:

The Congress finds that economic stabilization would be enhanced
and the competition among the various financial institutions and other
firms . . . would be strengthened by the informed use of consumer
credit. The informed use of credit results from an awareness of the
cost thereof by consumers. It is the purpose of this subchapter to
assure a meaningful disclosure of credit terms so that the consumer
will be able to compare more readily the various credit terms
available to him and avoid the uninformed use of credit, and to
protect the consumer against inaccurate and unfair credit billing and
credit card practices.

15 U.S.C. § 1601(a). As a remedial statute, TILA must be construed liberally in

favor of the consumer. Ellis v. Gen. Motors Acceptance Corp., 160 F.3d 703, 707

(11th Cir. 1998); Cody v. Cmty. Loan Corp. of Richmond County, 606 F.2d 499,

505 (5th Cir. 1979).5

When a creditor sells credit property insurance in connection with a credit

transaction, TILA requires the creditor to make certain disclosures to buyers

before they become obligated on a RISC in which the creditor has excluded the

charge for such insurance from the finance charge and included it in the amount

5
In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc), we adopted as
binding precedent all decisions of the former Fifth Circuit rendered prior to October 12, 1981.

9
financed. 15 U.S.C. § 1605(c). In this case, Bragg alleged that VTR, SAP and

GAP constituted credit property insurance that was included in the amount

financed and hence triggered the TILA requirements.

The specific content and timing of the disclosures are set forth in Regulation

Z, which was adopted by the Federal Reserve Board in support of TILA. 15

U.S.C. § 1638(a); 12 C.F.R. §§ 226.2(a)(13) and 226.18; see also Ford Motor

Credit Co. v. Milhollin, 444 U.S. 555, 568 (1980) (courts must defer to the

regulations of the Federal Reserve Board when interpreting TILA). Regulation Z

requires that the creditor disclose the identity of the creditor, the amount being

financed, the annual percentage rate, the total sale price, and the total amount of

payment. 15 U.S.C. § 1638(a); 12 C.F.R. § 226.18. These disclosures must be

made “before credit is extended,” a point known as "consummation."

"'Consummation means the time that a consumer becomes contractually obligated

on a credit transaction.” 12 C.F.R. § 226.2(a)(13). We evaluate TILA transactions

from the consumer's viewpoint. Cody, 606 F.2d at 505.

Regulation Z also provides that, when determining the point at which a

consumer becomes contractually obligated to a credit agreement, state law should

govern. 12 C.F.R. § 226, Official Staff Commentary 2(a)(13). However,

"although state law is determinative of when a contractual relationship is created,

10
it has nothing whatsoever to do with how the transaction is to be characterized for

[TILA] purposes"; that question is governed by federal law. Cody, 606 F.2d at

505. Under Florida law, the interpretation of contracts is a question of law if the

contractual language is clear and unambiguous. Press v. Jordan, 670 So. 2d 1016,

1017 (Fla.App. 3 Dist. 1996).

B. Consummation theory of TILA liability

Bragg contends that the district court erred in holding that no pertinent

credit agreement was consummated. He maintains that in this case, consummation

occurred not when title to the automobile passed or when a bilateral contract was

formed, but rather when he signed the RISCs, thereby becoming obligated on the

credit agreement.

We agree that well-reasoned case law supports this interpretation. Recently,

the Fourth Circuit held that TILA can encompass unfunded financing agreements.

Nigh v. Koons Buick Pontiac GMC, Inc., 319 F.3d 119, 123 (4th Cir. 2003), cert.

granted, Koons Buick Pontiac GMC, Inc. v. Nigh, 124 S.Ct. 1144 (2004).6

Seeking to buy a car and trade in his existing vehicle, Nigh signed a Buyer's Order

reflecting the proposed purchase and a RISC setting forth the proposed financing.

Id. at 122. As in Bragg's case, the dealer did not countersign either document;

6
The certiorari petition does not concern the consummation issue.

11
rather, it intended to sign only when a lender agreed to buy an assignment of the

installment payments owed under the RISC. Id. "The transaction's closing and

the completion of Nigh's purchase were thus left within the dealership's unilateral

control." Id.

Applying Regulation Z, the Nigh court joined others holding that

consummation can encompass unfunded financing agreements. See, e.g., Cannon

v. Metro Ford, Inc., 242 F.Supp.2d 1322, 1330 (S.D.Fla. 2002); Johnson v. Steven

Sims Subaru, Inc., 1993 WL 761231 (N.D. Ill.1993); Bryson v. Bank of New

York, 584 F.Supp. 1306 (S.D.N.Y.1984); Madewell v. Marietta Dodge, Inc., 506

F.Supp. 286 (N.D. Ga.1980); Copley v. Rona Enterprises, Inc., 423 F.Supp. 979

(S.D. Ohio 1976); see also Clark v. Troy and Nichols, Inc., 864 F.2d 1261, 1265

(5th Cir. 1989) (Thornberry, J., dissenting). We agree that this holding is

consistent with Regulation Z's exclusive reference to the consumer's commitment.

See Nigh, 319 F.3d at 124. It is also in keeping with TILA's overarching purpose

of consumer protection. See id.

[T]he point at which the consumer . . . commits himself or herself to
the purchase of credit, without regard for the degree of commitment
of the lender . . . [is the point at which] the consumer becomes
vulnerable to actual damage from the lender's inadequate or deceptive
disclosures, for at this time he or she can be contractually bound to
the terms of the lending contract at the option of the lender.

12
Bryson, 584 F.Supp. at 1317.

The district court held, however, that Bragg's obligations under the first and

second RISCs never arose because they were contingent on Bill Heard's obtaining

financing. It pointed out that the Purchase Contracts signed by Bragg set forth a

condition precedent of financing approval. Bragg, 245 F.Supp.2d at 1238 n.4.

The Purchase Contracts provided that the Seller agrees to sell the designated

vehicle "provided however, the designated financial institution approves

Purchaser's request for a loan . . ." The Purchase Contracts additionally stated,

"Neither party hereto shall be bound to the other until terms of credit have been

approved by both parties . . ." Moreover, the Bailment Agreement incorporated

the terms of the Purchase Contracts and stated that it was "pending credit approval

of buyer(s) by lending institution and completion of sales transaction."

Under Florida law, parties can condition formation of a contract on the

occurrence of an event. See, e.g., Huskamp Motor Co. v. Hebden, 104 So. 2d 96,

98 (Fla.App. 3 Dist. 1958); 777 Flagler Co. v. Amerifirst Bank, 559 So. 2d 1210,

1211 (Fla.App. 4 Dist. 1990). There was no condition precedent set forth in the

RISCs themselves. The district court held that under Florida contract law,

however, the condition of financing approval contained in the Purchase Contracts

and Bailment Agreement nonetheless was applicable. "Under Florida law, where

13
two or more documents are executed by the same parties, at or near the same time

and concerning the same transaction or subject matter, the documents are

generally construed together as a single contract." Clayton v. Howard Johnson

Franchise Systems, Inc., 954 F.2d 645, 648 (11th Cir. 1992); Quix Snaxx, Inc. v.

Sorensen, 710 So.2d 152, 153 (Fla. 3d DCA 1998).

Bragg contends that the relevant Purchase Contracts and Bailment

Agreement should not be considered along with the RISCs because they were not

"executed" within the meaning of the applicable Florida case law, as they were

never signed by Bill Heard. He also maintains that those agreements were

ambiguous, requiring construction against the drafter, Bill Heard, and precluding

its modification of the RISCs. Moreover, Bragg contends that the Bailment

Agreement is void and unenforceable under Florida law because it was not first

signed by Bill Heard, and because it contravenes public policy. See Fla. Stat. §§

520.07(1)(a) and 520.07(7).

As an initial matter, it is far from clear whether the rule of contract law

articulated in Quix Snaxx would apply to these documents. The RISCs provided

simply, "[b]y signing this contract, you choose to buy the vehicle under the

agreements on the front and back of this contract"; they did not refer explicitly to

the Purchase Contract or any other document containing a condition precedent.

14
See Quix Snaxx, 710 So.2d 153 ("Where a writing expressly refers to and

sufficiently describes another document, the other document . . . is to be

interpreted as part of the writing."). Nor did the Purchase Contracts or Bailment

Agreements reference the RISCs. See id. Moreover, the RISCs contained a

modification clause: "This contract contains the entire agreement between you and

us relating to this contract. Any change to this contract must be in writing and we

must sign it." Furthermore, as noted supra, Bill Heard did not sign the Purchase

Contracts or Bailment Agreement, leaving them technically unexecuted. We could

find no cases extending the Quix Snaxx rule to the circumstances alleged here.

We need not resolve this legal question, however. In any event, even

assuming the RISCs contained a condition precedent, the district court was

incorrect in finding that consummation occurred only upon assignment of the loan.

Under the district court’s interpretation of Florida law and Regulation Z, a creditor

could provide necessary TILA disclosures after the consumer signed a conditional

financing agreement as long as the disclosures were made sometime before the

loan was assigned. Disclosures that come after the consumer executes a RISC,

however, are likely to be of little or no value to that consumer.

Therefore, we reject the district court’s reading of Regulation Z as contrary

to the central goal of TILA, which is to provide “meaningful disclosure of credit

15
terms so that the consumer will be able to compare more readily the various credit

terms available to him.” 15 U.S.C. § 1601(a). As this court has explained,

“[w]hile it is true that the language of a statute should be interpreted according to

its ordinary, contemporary and common meaning, this plain-meaning rule should

not be applied to produce a result which is actually inconsistent with the policies

underlying the statute.” Bailey v. USC Corp., 850 F.2d 1506, 1509 (11th Cir.

1988) (emphasis added) (internal citation omitted). Given the strong remedial

purpose of TILA and continual admonitions that we construe TILA and

Regulation Z liberally in the consumer’s favor, see, e.g. Cody, 606 F.2d at 505, we

cannot accept the district court’s interpretation of Regulation Z, as it would

undermine the ability of prospective consumers of credit to weigh competing

offers.

Regardless of “the degree of commitment of the lender” contained in the

agreements’ condition precedent, Bryson, 584 F.Supp. at 1317, Bragg’s signature

on these documents rendered him contractually obligated to the purchase of credit

and thus constituted consummation for purposes of TILA disclosures. To give full

effect to TILA’s goal of providing meaningful and timely disclosure of important

credit terms, we hold that in a financing agreement containing a condition

precedent where the condition of obtaining financing is within the exclusive

16
control of the seller and third-party lender, consummation occurs when the

consumer signs the contract.

C. "Estimates theory" of TILA liability

Bragg offers another theory of Bill Heard's liability under TILA: that it

violated the statute by failing to label its credit terms in the first two RISCs as

estimates and to compute the APR accordingly. In addition, he contends that Bill

Heard violated TILA by disclosing an inaccurate APR in RISC #4, specifically by

backdating the RISC #4 to September 28, 2001, and by computing the APR and

charging interest from that date. In his reply brief, Bragg makes clear that these

arguments are intended to be alternative positions to be pursued only if this court

affirms the dismissal below. As we reverse, we need not address this theory.

III. CONCLUSION

For the reasons set forth supra, we REVERSE the district court's dismissal

of Bragg's TILA claim and REMAND for further proceedings consistent with this

opinion.

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