Tax and Consumer Litigation Clinic Wins Appellate DecisionDecember 12, 2011
In a case with far-reaching implications for New York consumers, students in Fordham Law's Tax and Consumer Litigation Clinic convinced the Appellate Division, First Department that their client can seek from the bank that owns his car loan damages due to a car dealer’s fraudulent promises.
The client, an unsophisticated and low-income consumer, alleges he was duped by Giuffre Hyundai, a Brooklyn car dealership, into a refinancing scheme that led him to purchase three cars he could not afford within nine months. As instructed by the dealership, he turned the second car over to the lender, National Cooperative Bank (NCB), only to be charged a deficiency of nearly $24,000.
With the help of the Clinic, the consumer sued Giuffre and NCB for his damages in December 2009. Clinic student Kathryn Harvey '10 drafted the complaint. NCB moved to dismiss the case, arguing that, under the federal Truth in Lending Act, it could not be held responsible for the debt since the dealer’s wrongdoing was not apparent in the loan contract. Although the Clinic opposed with a brief which David Salhanick ’10 helped draft, the trial court agreed with NCB and granted the motion to dismiss.
"The trial court’s decision eroded important consumer protections." explained Clinical Associate Professor Elizabeth Maresca, who directed the students' work with fellow Clinical Associate Professor Marcella Silverman.
The Clinic appealed to the Appellate Division, First Department. Students David Kupfer '11 and Christian Stueben '11 studied the legislative history of the relevant statutes, researched cases, and drafted the appellate briefs.
In a unanimous decision, the Appellate Division agreed with the Clinic's argument, reversing the trial court's decision to dismiss the consumer’s claims against NCB.
"This is a decision of importance for consumers in New York State," said Silverman. "As confirmed by the First Department, the holder of a loan which financed a deceptive sale cannot divorce the consumer’s duty to pay from the merchant’s wrong doing."
The Clinic and its client can now continue with the suit against not only Giuffre but also NCB.