Recently, Ohio’s Ninth District Court of Appeals upheld the dismissal of a class action lawsuit against a dealer for several counts of the Ohio Consumer Sales Practices Act. The facts of the case are not unlike that in a routine lease transaction.
The plaintiff leased a vehicle and executed a lease agreement. The lease agreement included a pre-printed item indicating a lease acquisition fee and then $595. The plaintiff alleged that the dealer had violated the CSPA because he was charging a lease acquisition fee and also there was negligent misrepresentation and fraud because of the inclusion of the lease acquisition fee in the transaction. Specifically, the plaintiff alleged that Ohio Revised Code § 109:4-3-16(B)(21) did not specifically permit a lease acquisition fee because it was a charge in addition to taxes, title, registration and documentary fees – which are the only fees permitted to be charged to a consumer above the advertised price.
Plaintiff alleged because the lease acquisition fee was not contained in the advertisement for the vehicle, the dealer violated the CSPA. Put differently, the plaintiff alleged that the dealer improperly charged its retail lease customers the lease acquisition fee because it was over and above the agreed upon sales price. It must be noted that the lease agreement was a pre-printed lease agreement provided by the financial institution that provided the lease to the plaintiff. In the lease agreement entitled “Consumer Leasing Act Disclosures,” the lease agreement discloses “gross capitalized costs” and any items that are paid over the lease term. Included in the itemization of gross capital cost was the lease acquisition fee of $595. The lease acquisition fee was a pre-determined fixed charge by the leasing company (not by the dealer) and the entire fee is paid and retained by the financial institution that leased the vehicle to the plaintiff. We made a very strong argument that the lease acquisition fee, although not specifically carved out in Ohio law, specifically allows the fee to be charged since it is a fee that is disclosed to the customer prior to executing the agreement.
The Court also agreed with our argument that the advertised price of the vehicle is not “agreed upon value,” but rather is the gross capitalized cost. The lease agreement defines gross capitalized cost as the “value of a lease property plus any items that are capitalized or amortized during the lease term. These items may include taxes, insurance, service agreements and any outstanding prior credit or lease balance.” The Court agreed with our argument that the plaintiff had the opportunity to review the lease agreement and that the lease contains clear and unambiguous language as to what constitutes a gross capitalized cost of the vehicle.
Therefore, a win for the good guys.
Holiday Cheer. It is the holiday season again, and, as I have stated in the past, the best policy is not to be a “Scrooge” but remember that the dealership is responsible for the actions of its employees. Injuries or accidents that occur as a result of too much “holiday cheer” on a dealership premises or at parties that are sponsored by the dealership may become the basis for a Workers’ Compensation claim or worse. Also, accidents that occur off the premises that are directly attributable to a dealership holiday party or are caused by an employee’s over-indulgence may expose the dealership to legal liability.
As the Christmas/holiday season approaches I want to take time from the activity and busy agendas to say thank you to my valued clients for your support and business over the years.