Cannon v. Cherry Hill 161 F.Supp.2d 362

Cannon v. Cherry Hill Toyota involves the interplay between the Truth in Lending Act, under federal law, and the New Jersey Consumer Fraud Act under state law. In Cannon, the plaintiffs were making allegations under both the New Jersey Consumer Fraud Act and the Truth in Lending Act. In brief, the allegations were that the dealership was paying money to third parties and/or taking a percentage of this money and not disclosing the appropriate amount to the consumers or the plaintiff in the case.

The plaintiffs alleged that the failure to disclose this amount either kept by the dealer or paid to the third parties constituted a violation of the Truth in Lending Act. The plaintiffs alleged that the Truth in Lending Act required the disclosure of this information, otherwise it was actionable under federal law pursuant to the Truth in Lending Act. In addition, the plaintiffs alleged that this was a required disclosure under the New Jersey Consumer Fraud Act and, as a result of the failure to disclose or inappropriate disclosure, the plaintiffs had sustained an ascertainable loss.

Ultimately, the Court held that there was a requirement under the Act to specify the amount paid to third parties and specify whether or not there was an amount paid to the selling dealership. The Court held that the amount paid to the seller dealership constituted a finance charge and, as such, required disclosure under the Truth in Lending Act. The Court, however, determined that in order for the plaintiff to claim consequential damages, there needed to be some stronger connection between the violation of the Truth in Lending Act and the damages claimed. This connection between the alleged misconduct and the damages required some detrimental reliance by the plaintiff. In this specific case, since the plaintiff did not demonstrate this detrimental reliance, the court held that the plaintiff was not entitled to any consequential damages because there were none.

In addition, the Court outlined the similar analysis under the New Jersey Consumer Fraud Act and held that the plaintiff could not demonstrate an actual or an ascertainable loss associated with the defendant’s conduct. Quite simply, the plaintiff could not sustain that there was a loss as a result of this misrepresentation or withholding of pertinent information.

The important part and significant part of this holding was that the violation of the Truth in Lending Act, although not entitling the Plaintiff to consequential damages, did entitle the Plaintiff to statutory damages.

Since there were no statutory damages available under New Jersey law under the theory of the case, the plaintiff was not entitled to an award of attorney’s fees or actual damages under the New Jersey Consumer Fraud Act and, as such, the plaintiff was only entitled to recover under the Truth in Lending Act.

However, recent developments and pertinent legal theories might hold that the plaintiff’s claims under the Consumer Fraud Act through the Truth in Contract and Warranty Act would be actionable and permit the plaintiff to recover statutory damages as well. This would be because a violation of the Truth in Lending Act as a result of a disclosure in the retail installment sales contract would raise to a violation of the New Jersey Consumer Fraud Act.