SeTara Tyson v. Sterling Rental
836 F.3d 571
6th Cir.2016Background
- Tyson bought a used 2006 Chevrolet Cobalt from Car Source with a $1,248 down payment and financing paperwork prepared using CAC’s CAPS software; CAPS reflected an incorrect monthly income figure.
- Car Source’s salesman (Kamil) structured loan terms (price, APR, monthly payment) using CAPS and generated a Retail Installment Contract (RIC) that automatically assigned the contract to Credit Acceptance Corporation (CAC). Tyson signed the paperwork and took delivery.
- Two days later CAC refused to pay an advance because of the income discrepancy; Car Source then presented Tyson with a changed financing arrangement requiring an extra $1,500 down payment and kept the car when she refused.
- Car Source admits it does not issue ECOA adverse-action notices; Tyson never received a written statement of reasons for the change in credit terms.
- Tyson sued under the ECOA (failure to provide adverse-action notice), Michigan statutory conversion (Mich. Comp. Laws § 600.2919a), and other state statutes; district court granted summary judgment to Tyson on ECOA, denied injunctive relief under ECOA, and dismissed statutory conversion under the economic-loss doctrine.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Car Source is a “creditor” required to give ECOA adverse-action notices | Tyson: Car Source regularly participates in and sets credit terms, so it is a creditor under §1691 and Regulation B and must give notice | Car Source: it was a middle-man; CAC was the true creditor and thus responsible for notices | Held: Car Source is a creditor (regularly participates in credit decisions and took the adverse action) and thus must provide ECOA notice |
| Whether Tyson is entitled to injunctive relief under the ECOA | Tyson: §1691e(c) expressly authorizes courts to grant equitable relief to aggrieved applicants | Car Source: regulatory language focuses on Attorney General enforcement; district court read injunctive relief as limited to government enforcement | Held: Private parties may seek injunctive relief under §1691e(c); district court’s denial reversed and remanded to decide whether injunctive relief is warranted |
| Whether failure to provide an adverse-action notice occurred and warrants summary judgment | Tyson: undisputed that Car Source never issues ECOA notices and that an adverse action occurred | Car Source: disputes factual details (e.g., accuracy of income info) but not that no notice was provided; argues immaterial or CAC’s role | Held: Summary judgment for Tyson on ECOA claim affirmed (no genuine dispute that Car Source, as creditor, failed to provide required written reasons) |
| Whether Tyson’s statutory conversion claim is barred by Michigan’s economic-loss doctrine | Tyson: §600.2919a preserves statutory conversion remedies in addition to other remedies; post-delivery repossession is not a contract risk allocable in bargaining | Car Source: conversion claim arises from the sales transaction so is barred by economic-loss doctrine | Held: Economic-loss doctrine does not bar Tyson’s statutory conversion claim; summary judgment for defendants on that claim reversed and remanded for further proceedings |
Key Cases Cited
- Treadway v. Gateway Chevrolet Oldsmobile Inc., 362 F.3d 971 (7th Cir. 2004) (middle‑men creditors that participate sufficiently in credit decisions can be subject to ECOA notice requirements)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (standard for genuine dispute at summary judgment)
- Little v. BP Exploration & Oil Co., 265 F.3d 357 (6th Cir. 2001) (de novo review of summary judgment)
- Neibarger v. Universal Coops., Inc., 486 N.W.2d 612 (Mich. 1992) (explaining Michigan’s economic-loss doctrine and its limits)
- Aroma Wines & Equip., Inc. v. Columbian Distribution Servs., Inc., 871 N.W.2d 136 (Mich. 2015) (statutory conversion under Mich. Comp. Laws § 600.2919a is a distinct cause requiring conversion to the defendant’s own use)