Knapp v. American General Finance Inc.

111 F.Supp.2d 758 (S.D. WVa. 2000)

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Nature of the Case

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Facts

Knapp (P) sought to borrow a thousand dollars ($1000) to purchase new tires and have money for the Christmas season. P has five children, ranging in age from 7 to 20. P telephoned D and applied and got a loan approved. On November 26, 1997, P visited D's office in Charleston, where they signed numerous loan documents. The amount financed included: 1) life insurance (James Knapp) Merit Life, premium: $119.10 2) life insurance (Pamela Knapp) Merit Life, premium: $102.30 3) life insurance (joint) premium: $25.47 4) property insurance ($1700 coverage) premium: $64.13 5) non-filing insurance premium: $4.00 Total insurance $315.00 The total amount financed was $1353.83, at an annual percentage rate of 30.99%. Loan proceeds of $1,038.83 were actually paid out to P. The loan disclosure statement contained a very small print notice: INSURANCE: Credit life insurance, credit disability insurance, and/or credit involuntary unemployment insurance are not required to obtain credit and will not be provided unless you sign and agree to pay the additional cost. You understand that we and our insurance affiliate anticipate profits from the sale of credit insurance, and you consent thereto if you select such insurance. Ps signed just below under a typed-in statement: 'We want joint decreasing credit life insurance.' Down within the midst of more small print was a notice in centered caps: PERSONAL PROPERTY INSURANCE DISCLOSURE Beneath that was another diminutive statement: You are not required to purchase property insurance on your household goods to secure this loan. If you choose to have such insurance, you may obtain the insurance from anyone you want. You should consider any homeowner’s or other insurance which you may already have when deciding to purchase insurance with this loan. Once again Ps signed under a very small type statement: 'You want property insurance.' Ps also executed a separate 'Non-compulsory Insurance Voluntarily Purchased by the Applicant Schedule' for single interest property insurance, marking an 'X' next to the statement 'I do not have any valid insurance to offer the creditor.' P had prior homeowner’s insurance coverage in effect. P also signed an 'Insurance Disclosure Summary' which proclaimed in bold type: I WANT TO PURCHASE THE INSURANCE NOTED BELOW AND HAVE THE INSURANCE PREMIUM FINANCED AS PART OF MY LOAN. I FULLY UNDERSTAND THAT I DO NOT HAVE TO PURCHASE ANY OF THE FOLLOWING INSURANCE TO GET MY LOAN. The credit life, credit personal property, and two Merit L.I.F.E. Plus insurance policies, the latter for each P, are listed on this document. Pamela cannot read or write. She has trouble spelling her own name aloud, but she does know how to sign her name. Mr. P. attended school through the eighth grade, but cannot see without glasses, and he had none when he signed these documents. P testified, while he and his wife completed the loan documents, he informed the person with whom he was dealing that he couldn’t see the documents. 'And she said, ‘Well, I’ll tell you,’ and then she talked to me and I signed it.' Pamela also told 'the girl across the table' she could not read. That person said she would go over the papers and explain things. Both Ps testify they were told they had to have insurance to get the loan. The Note and Security Agreement has an 'X' typed in a box indicating: 'To secure this loan, you give to Payee a security interest under the Uniform Commercial Code in the following personal property.' No property was listed on this form in the box below. The Federal Disclosure Statement, however, lists: '2 pc fishing tackle, weed eater, fisher CD, pioneer stereo, 2 RCA 19 in TV’s.' Ps testify they never owned, nor suggested they owned, any of this property except a Pioneer stereo. They testify they were informed by D’s agent that she needed to 'put some stuff on there to make it look good so the loan will go through.' Ps were not given a copy of this document, so they never saw the putative property listing. Jennifer Mullins, an agent of D, whose name is signed on the form as witnessing it, testified that she did not witness the signing of the document, but signed as a witness sometime later and that she back-dated her signature to the date of the Ps’ loan closing. Ps fell behind in their loan payments. In November 1998, D hired Troy Mynes of Surveillance Technologies to collect or repossess the Ps'’ collateral. Mynes went to Ps’ residence numerous times to collect loan payments or the collateral. Prior to his last visit, Jennifer Mullins told him to 'Knock on the door ‘til you get them mad enough to come to the door or until they call the Police Department. . . . That way that will at least get them outside and then you can get to the property.' Ps brought this civil action alleging fraud, unconscionable agreement, unfair or deceptive acts or procedures in the sale of insurance, breach of fiduciary relationship, and breach of duty of good faith and fair dealing. Ds moved for summary judgment on all counts.