{ "id": 11917004, "name": "PREMIER FEDERAL CREDIT UNION, Plaintiff-Appellee v. DOROTHY DOUGLAS, Defendant-Appellant", "name_abbreviation": "Premier Federal Credit Union v. Douglas", "decision_date": "1996-01-02", "docket_number": "No. COA94-1001", "first_page": "341", "last_page": "346", "citations": [ { "type": "official", "cite": "121 N.C. App. 341" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "422 F.Supp. 1292", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3898301 ], "year": 1976, "pin_cites": [ { "page": "1297" } ], "opinion_index": 0, "case_paths": [ "/f-supp/422/1292-01" ] }, { "cite": "93 C 1253", "category": "reporters:state", "reporter": "Cow.", "weight": 3, "year": 1993, "opinion_index": 0 }, { "cite": "356 F.Supp. 47", "category": "reporters:federal", "reporter": "F. Supp.", "case_ids": [ 3465895 ], "weight": 4, "year": 1973, "pin_cites": [ { "page": "50" }, { "page": "50" } ], "opinion_index": 0, "case_paths": [ "/f-supp/356/0047-01" ] }, { "cite": "12 C.F.R. \u00a7 226.2", "category": "laws:admin_compilation", "reporter": "C.F.R.", "weight": 3, "year": 1994, "pin_cites": [ { "page": "(a)(20)", "parenthetical": "Regulation Z" }, { "page": "(a)(10)" }, { "page": "(a)(20)", "parenthetical": "Regulation Z" } ], "opinion_index": 0 }, { "cite": "15 U.S.C.A. \u00a7 1604", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 2, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "444 U.S. 555", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11307381 ], "weight": 4, "year": 1980, "pin_cites": [ { "page": "559" }, { "page": "27-28" }, { "page": "559-60" }, { "page": "27-28" } ], "opinion_index": 0, "case_paths": [ "/us/444/0555-01" ] }, { "cite": "15 U.S.C.A. \u00a7 1601", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 2, "pin_cites": [ { "page": "(a)" } ], "opinion_index": 0 }, { "cite": "180 S.E.2d 823", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1971, "pin_cites": [ { "page": "830" }, { "parenthetical": "quoting 6 Moore's Federal Practice (2d ed. 1971" } ], "opinion_index": 0 }, { "cite": "278 N.C. 523", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8561041 ], "year": 1971, "pin_cites": [ { "page": "534" } ], "opinion_index": 0, "case_paths": [ "/nc/278/0523-01" ] }, { "cite": "218 S.E.2d 379", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1975, "pin_cites": [ { "page": "381", "parenthetical": "quoting Kessing v. Mortgage Corp., 278 N.C. 523, 534, 180 S.E.2d 823, 830 (1971)" } ], "opinion_index": 0 }, { "cite": "288 N.C. 375", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8568529 ], "year": 1975, "pin_cites": [ { "page": "378", "parenthetical": "quoting Kessing v. Mortgage Corp., 278 N.C. 523, 534, 180 S.E.2d 823, 830 (1971)" } ], "opinion_index": 0, "case_paths": [ "/nc/288/0375-01" ] }, { "cite": "15 U.S.C.A. \u00a7\u00a7 1601-1666", "category": "laws:leg_statute", "reporter": "U.S.C.", "weight": 2, "pin_cites": [ { "parenthetical": "West 1982 & Supp. 1995" }, { "parenthetical": "West 1982 & Supp. 1995" } ], "opinion_index": 0 } ], "analysis": { "cardinality": 566, "char_count": 11319, "ocr_confidence": 0.762, "pagerank": { "raw": 2.0446031217563963e-07, "percentile": 0.7490527440016773 }, "sha256": "2db006b37549661c965a8dd042014e706fc5f8bc43662868619296c08fe9dd73", "simhash": "1:ead455751ca434e6", "word_count": 1783 }, "last_updated": "2023-07-14T20:54:48.563497+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Chief Judge ARNOLD and Judge GREENE concur." ], "parties": [ "PREMIER FEDERAL CREDIT UNION, Plaintiff-Appellee v. DOROTHY DOUGLAS, Defendant-Appellant" ], "opinions": [ { "text": "SMITH, Judge.\nIn this case of first impression, the sole issue on appeal is whether the trial court properly granted plaintiff\u2019s motion for summary judgment. Defendant argues that genuine issues of material fact exist on two pivotal aspects of its case precluding summary judgment. First, defendant asserts that an issue of fact exists as to whether the loan transaction between plaintiff Premier Federal Credit Union (Credit Union), and defendant Dorothy Douglas, was an open-end or closed-end extension of credit. The second purported issue of fact is whether the loan transaction between the parties complied with federal regulations promulgated under the Truth in Lending Act (TILA), 15 U.S.C.A. \u00a7\u00a7 1601-1666 (West 1982 & Supp. 1995). With regard to both questions, we find that genuine issues of material fact exist, and reverse the trial court\u2019s grant of summary judgment to plaintiff.\nOn 22 May 1987, defendant entered into a loan agreement with plaintiff in the amount of $9,828.24. The purpose of the loan was to provide funds for the purchase of an automobile. By the terms of the loan agreement, defendant provided plaintiff with a security interest in the automobile in exchange for the loan proceeds.\nDefendant subsequently defaulted on the loan, resulting in the repossession and sale of the automobile by plaintiff. The proceeds of the sale were credited toward the balance owed the Credit Union by defendant. However, the proceeds gleaned from the sale were insufficient to pay the balance owed by defendant on the loan. As a result, plaintiff brought a deficiency suit against defendant for $5,576.98, representing the amount outstanding on the loan after the sale of the car by the Credit Union.\nDefendant counterclaimed against plaintiff, alleging plaintiff failed to disclose required financial information on the loan, thereby violating the federal Truth in Lending Act, 15 U.S.C.A. \u00a7\u00a7 1601-1666 (West 1982 & Supp. 1995). Defendant contends \u201cshe should be entitled to recoup from plaintiff all or part of [the Credit Union\u2019s] recovery in damages pursuant to TILA.\u201d Only the issues raised in defendant\u2019s counterclaim are pertinent to this appeal.\nSummary judgment is a mechanism designed to dispose of \u201c \u2018cases where there is no genuine issue of fact [and to] eliminate formal trials where only questions of law are involved.\u2019 \u201d Caldwell v. Deese, 288 N.C. 375, 378, 218 S.E.2d 379, 381 (1975) (quoting Kessing v. Mortgage Corp., 278 N.C. 523, 534, 180 S.E.2d 823, 830 (1971)). The moving party\u2019s \u201c \u2018papers are carefully scrutinized; and those of the opposing party are on the whole indulgently regarded.\u2019 \u201d Id. (quoting 6 Moore\u2019s Federal Practice (2d ed. 1971) \u00a7 56.15[8], at 2439-40). In the instant case, plaintiff has failed to establish a lack of material fact with regard to defendant\u2019s claims of plaintiff\u2019s noncompliance with TILA.\nThe Truth in Lending Act was established to ensure adequate disclosure of loan terms to consumers, in order to effectuate informed decisions regarding the cost of credit. Accordingly, the Act states:\nIt 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.\n15 U.S.C.A. \u00a7 1601(a); see also Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559, 63 L.Ed.2d 22, 27-28 (1980).\nWith this goal in mind, TILA sets forth mandatory regulations regarding loan disclosure criteria. 15 U.S.C.A. \u00a7 1601, et seq. Authority to regulate under and interpret TILA rests with the Board of Governors of the Federal Reserve System. Milhollin, 444 U.S. at 559-60, 63 L.Ed.2d at 27-28; 15 U.S.C.A. \u00a7 1604(a). Regulations promulgated by the Federal Reserve are commonly known as Regulation Z. Id. Defendant\u2019s appeal rests upon the premise that a question of fact exists as to whether plaintiff has violated TILA and Regulation Z.\nDefendant contends the loan agreement was not an \u201copen end credit plan,\u201d as defined by TILA and as argued by plaintiff. Open-end credit is defined by Regulation Z in the following manner:\n(20) Open-end credit means consumer credit extended by a creditor under a plan in which:\n(i) The creditor reasonably contemplates repeated transactions;\n(ii) The creditor may impose a finance charge from time to time on an outstanding unpaid balance; and\n(iii) The amount of credit that may be extended to the consumer during the term of the plan (up to any limit set by the creditor) is generally made available to the extent that any outstanding balance is repaid.\n12 C.F.R. \u00a7 226.2(a)(20) (1994) (Regulation Z). Thus, the quid pro quo of an open-end loan is a financing structure aligned with the above regulation.\nA loan transaction that is not open-ended is known as a \u201cclosed-end\u201d loan. Closed-end loans are defined by Regulation Z as \u201cconsumer credit other than open-end credit.\u201d 12 C.F.R. \u00a7 226.2(a)(10). Generally speaking, the central regulatory distinction between an open- and closed-end loan is the amount and character of the financial disclosures required. In Maes v. Motivation for Tomorrow, Inc., 356 F.Supp. 47 (N.D. Cal. 1973), the Court noted that\nthe term \u2018open end credit,\u2019 as it is used in these regulations, is intended to distinguish single purchase credit transactions, which are subjected to more stringent disclosure requirements, from transactions made under a revolving or continuing credit arrangement, such as under credit card or charge accounts, where such extensive disclosures are not practicable.\nId. at 50.\nIn the instant case, plaintiff alleges its loan agreement was unequivocally open-ended, and thus subject to a reduced disclosure standard under TILA. Plaintiff maintains the loan was made pursuant to an open-ended account, known as a \u201cLoanliner.\u201d Plaintiff describes a Loanliner plan as\na one-time agreement to establish a [Credit Union] member\u2019s loan account [which] may be used to access both secured and unsecured credit . . . sav[ing] loan processing time [and] repetitious loan processing steps ....\nPlaintiff maintains it made all disclosures required by law for credit extended pursuant to an open-ended loan transaction.\nIn Frost v. Central Credit Union of Illinois, No. 93 C 1253, 1993 W.L. 335796 (W.D.N.Y. 1993), the federal district court was faced with facts similar to those at hand on a motion for summary judgment. The Credit Union in Frost articulated an argument identical to the one now posited by plaintiff, that \u201cthe car loan was merely a subaccount which was part of a multifeatured open end consumer plan\u201d, i.e., a Loanliner. Id. The Credit Union in Frost asserted that, \u201cwhether it reasonably contemplated repeated transactions [pursuant to the Loanliner] is a question of fact to be decided in the context of its business and its relationship with [the Credit Union].\u201d Id. We agree. The case here is nearly identical to Frost, except that now it is the borrower, rather than the Credit Union, arguing about whether repeated transactions were contemplated.\nDefendant admits that it entered into a previous open-ended Loanliner relationship with plaintiff in 1984. However, defendant maintains that the auto loan entered into in 1987 was not open-ended, but was a discrete one-time transaction. In support of this argument defendant has presented evidence which, if true, would indicate the term of the car loan to be nine years. Further, defendant argues that an automobile loan is not the type of transaction in which a creditor would reasonably contemplate repeated transactions with the average consumer. Vines v. Hodges, 422 F.Supp. 1292, 1297, 1298 n.10 (1976). These two assertions of fact, taken as true, necessarily raise an inference that the loan transaction at issue was not open-ended. 12 C.F.R. \u00a7 226.2(a)(20) (Regulation Z).\nPlaintiff maintains that defendant\u2019s signature on the Loanliner Advance (which constituted the car loan) settles the factual issue regarding whether repeated transactions were contemplated by the parties. Plaintiff characterizes the Advance as evidence that a subac-count of Defendant\u2019s preexisting open-ended account was being used for the car purchase by defendant.\nPlaintiff is mistaken. In Maes, the Court stated\nthat more is required to establish that a purchase is made under an \u2018open-end\u2019 credit arrangement than the recitations in the agreement .... If it were otherwise, a creditor could easily exempt what is in reality a single credit sale from the disclosures required under [Regulation Z] and thereby frustrate the Congressional purpose of providing meaningful disclosure of credit terms to the consumer merely by including such language in the agreement of sale \u2014 when in fact no continuing or revolving credit was contemplated by the parties.\n356 F.Supp. at 50. We find the Maes analysis persuasive.\nPlaintiff\u2019s motion for summary judgment is premised on the loan made to defendant operating as an open-ended credit transaction. Plaintiff states that it made all disclosures required for open-ended loans under Regulation Z. It is undisputed that other, more stringent disclosure rules apply if the transaction is closed-ended. Id. Defendant has presented evidence, which, if true, would tend to define the loan transaction between the parties as closed-ended. Further, plaintiff admits that the disclosures made were only those necessary for an open-ended account. It is thus axiomatic that plaintiff has not made the type of disclosures required for provision of closed-end credit.\nAs a result, genuine issues of material fact exist as to whether repeated credit transactions were contemplated by the parties. Equally in question is the type of credit provided defendant, closed-end or open-end; this question can only be decided by the factual \u201ccontext of the [Credit Union\u2019s] business and relationship with defendant.\u201d Frost, 1993 W.L. 335796 at *1. These questions raise multiple factual issues as to whether the Truth in Lending Act was violated.\nTherefore, we find that the trial court improvidently granted summary judgment to plaintiff, and we\nReverse and remand.\nChief Judge ARNOLD and Judge GREENE concur.", "type": "majority", "author": "SMITH, Judge." } ], "attorneys": [ "Johnson, Tanner, Cooke, Younee & Moseley, by Charles P. Younce, for plaintiff appellee.", "Central Carolina Legal Services, Inc., by Janet McAuley-Blue, for defendant appellant." ], "corrections": "", "head_matter": "PREMIER FEDERAL CREDIT UNION, Plaintiff-Appellee v. DOROTHY DOUGLAS, Defendant-Appellant\nNo. COA94-1001\n(Filed 2 January 1996)\nConsumer and Borrower Protection \u00a7 19 (NCI4th)\u2014 open- or closed-end account \u2014 compliance with Truth in Lending Act \u2014 genuine issues of fact \u2014 summary judgment improper\nThe trial court erred in granting summary judgment for plaintiff where genuine issues of material fact existed as to whether the automobile loan transaction between the parties was an open-end \u201cloanliner\u201d plan or a closed-end extension of credit and as to whether the loan transaction complied with federal regulations promulgated under the Truth in Lending Act.\nAm Jur 2d, Consumer and Borrower Protection \u00a7\u00a7 7-15, 35-38.\nAppeal by defendant from judgment entered 8 June 1994 by Judge William A. Vaden in Guilford County District Court. Heard in the Court of Appeals 16 October 1995.\nJohnson, Tanner, Cooke, Younee & Moseley, by Charles P. Younce, for plaintiff appellee.\nCentral Carolina Legal Services, Inc., by Janet McAuley-Blue, for defendant appellant." }, "file_name": "0341-01", "first_page_order": 375, "last_page_order": 380 }