American Honda Finance Corp. has avoided a class-action claim that it was culpable in negligent supervision of one of its dealership partners, according to a unanimous opinion published by the Ninth Circuit Court of Appeals.
The plaintiff, Harvinder Singh, alleged that the Auburn, Wash.-based dealer Hinshaw Honda did not provide him with three add-on features that were included in the dealer addendum. After AHFC transferred the case to federal court, the plaintiff further claimed that the Torrance, Calif.-based lender was in violation of the Truth in Lending Act, alleging that the captive lender profits from dealership non-disclosures because they lead to higher car prices, which in turn lead to higher interest payments.
In addition, Singh singled out seven other Washington-based dealerships operating under the same ownership he believed engaged in similar deceptive and illegal practices within King County, Wash.
The case, however, was granted summary judgement without trial on the merits of simple contract law. “The district court [ruled] against Singh on his breach of contract claim because Singh could not show that AHFC violated any financing terms of the [retail sale installment contract], the only contract between AHFC and Singh,” Judge Ronald Gould wrote in the Ninth Circuit Court’s opinion.
Judge Gould added that AHFC was not directly involved in the allegedly deceptive practices of displaying the dealer addendum on vehicles.
“AHFC’s asserted liability is predicated on the theory that AHFC was either aware of or had a role in the dealership defendants’ unlawful conduct,” he wrote. “Because the dealership defendants neither committed a breach of contract nor violated the [Washington Consumer Protection Act], Singh’s claims against AHFC fail.”
Gould noted that AHFC could still be liable under TILA, but because Singh abandoned his claim in the appeal process, the federal statute wasn’t considered by the court.