                                                                         FILED
                                                                     Aug 19 2019, 8:39 am

                                                                         CLERK
                                                                     Indiana Supreme Court
                                                                        Court of Appeals
                                                                          and Tax Court




ATTORNEYS FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
Ronald C. Smith                                            Thomas W. Dinwiddie
Joel T. Nagle                                              Allison Wells Gritton
Stoll Keenon Ogden PLLC                                    Wooden McLaughlin LLP
Indianapolis, Indiana                                      Indianapolis, Indiana
                                                           ATTORNEYS FOR AMICUS
                                                           CURIAE THE INDIANA
                                                           BANKERS ASSOCIATION
                                                           Libby Yin Goodknight
                                                           Brett J. Ashton
                                                           Krieg DeVault LLP
                                                           Indianapolis, Indiana



                                            IN THE
    COURT OF APPEALS OF INDIANA

Webb Ford, Inc.,                                           August 19, 2019
Appellant-Petitioner,                                      Court of Appeals Case No.
                                                           18A-PL-2675
        v.                                                 Appeal from the
                                                           Marion Superior Court
Indiana Department of Financial                            The Honorable
Institutions,                                              Gary L. Miller, Judge
Appellee-Respondent                                        Trial Court Cause No.
                                                           49D03-1801-PL-2762



Vaidik, Chief Judge.




Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019                           Page 1 of 15
                                           Case Summary
[1]   This case concerns two provisions of the Indiana Uniform Consumer Credit

      Code (IUCCC): one that requires sellers to disclose finance charges to credit

      customers, Indiana Code section 24-4.5-2-301, and one that allows sellers to

      impose certain charges on credit customers “in addition to” finance charges,

      Indiana Code section 24-4.5-2-202. For a period of time, Webb Ford, a car

      dealership in Highland, imposed a finance charge on credit customers but did

      not disclose it as such. The Indiana Department of Financial Institutions (DFI)

      initiated an enforcement action against Webb Ford, but it did not treat the

      charge as an undisclosed finance charge, i.e., a violation of the disclosure

      statute. Instead, DFI treated it as an “impermissible additional charge,” i.e., a

      violation of the additional-charges statute. Webb Ford argues that a finance

      charge does not cease being a finance charge merely because it is not disclosed

      as such. We agree with Webb Ford. Accordingly, we remand this matter to

      DFI for further proceedings under the disclosure statute.



                             Facts and Procedural History
[2]   DFI regulates and supervises financial-services providers, including those who

      provide motor-vehicle financing. DFI administers the IUCCC, Indiana Code

      article 24-4.5. See Ind. Code § 24-4.5-1-201 (setting forth the purposes and

      policies of the IUCCC). Among other provisions, the IUCCC incorporates

      federal law regarding what sellers must disclose to buyers in consumer credit

      sales:

      Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019        Page 2 of 15
              The seller shall disclose to the buyer to whom credit is extended
              with respect to a consumer credit sale . . . the information
              required by the Consumer Credit Protection Act (15 U.S.C. 1601
              et seq.).


      Ind. Code § 24-4.5-2-301(2) (“the disclosure statute”).


[3]   The Truth in Lending Act (TILA) is contained in Title I of the Consumer

      Credit Protection Act. Congress passed TILA “to promote consumers’

      ‘informed use of credit’ by requiring ‘meaningful disclosure of credit terms,’ 15

      U.S.C. § 1601(a), and granted the Board [of Governors of the Federal Reserve

      System] the authority to issue regulations to achieve TILA’s purposes, §

      1604(a).” Chase Bank USA, N.A. v. McCoy, 562 U.S. 195, 198 (2011). Pursuant

      to this authority, the Board promulgated Regulation Z. Id. Regulation Z

      requires creditors to make disclosures “clearly and conspicuously in writing, in

      a form that the consumer can keep.” 12 C.F.R. § 1026.17. Required written

      disclosures include: (1) the “amount financed”; (2) an “itemization of amount

      financed”; (3) the “finance charge”; and (4) the “annual percentage rate.” 12

      C.F.R. § 1026.18(b)-(e); see also 15 U.S.C. § 1638(a). “Finance charge” is

      defined as follows:


              The finance charge is the cost of consumer credit as a dollar
              amount. It includes any charge payable directly or indirectly by
              the consumer and imposed directly or indirectly by the creditor
              as an incident to or a condition of the extension of credit. It does
              not include any charge of a type payable in a comparable cash
              transaction.




      Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019         Page 3 of 15
      12 C.F.R. § 1026.4(a); see also 15 U.S.C. § 1605(a).1 It is a violation of the

      IUCCC to “fail to make disclosures as required by” TILA and Regulation Z.

      Ind. Code § 24-4.5-6-107.5(g).


[4]   In 2007, the Indiana Bureau of Motor Vehicles (BMV) began a pilot program

      that allowed car dealerships to offer registration and titling services at the time

      of the sale, thereby saving customers a trip to the BMV. Appellant’s App. Vol.

      III p. 128. The BMV allowed dealerships to charge customers a convenience

      fee for this service.2


[5]   Thereafter, Webb Ford began charging a $25.00 convenience fee to its credit

      customers for electronic titling with the BMV through a third party,

      Computerized Vehicle Registration (CVR). Webb Ford charged the $25.00

      convenience fee in addition to a $15.00 fee that went to the BMV. Appellant’s

      App. Vol. III p. 127. Webb Ford required its credit customers to use electronic

      filing because the lenders to whom Webb Ford assigned the retail installment




      1
       The IUCCC uses the term “credit service charge” instead of “finance charge.” The parties agree that
      these terms are synonymous. See Ind. Code § 24-4.5-2-109 (defining “credit service charge” in part as
      “all charges payable directly or indirectly by the buyer and imposed directly or indirectly by the seller
      as an incident to the extension of credit”). In line with the parties, we use the term “finance charge.”


      2
        Effective July 1, 2016, the General Assembly enacted Indiana Code section 9-14.1-3-3, which allows car
      dealerships to collect a convenience fee for the titles and registrations that they process and requires
      dealerships to give notice of the fee to its customers, including that the customer can go to the BMV and
      avoid the fee altogether. According to an August 30, 2016 memo from the BMV, the maximum amount of
      the fee is $15.00 for titles and $21.35 for registrations. Memo from Ind. Bureau of Motor Vehicles to Ind.
      Secretary of State Auto Dealer Servs. Div.,
      http://in.gov/sos/dealer/files/convenience%20fee%20memo.pdf (last visited Aug. 5, 2019).



      Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019                                  Page 4 of 15
      contracts required the dealership to show the assignee’s name on the title before

      they would accept the contract. Id. at 119, 127. Webb Ford, however, did not

      require its cash customers to use this service but rather gave them the option.

      Approximately 40% of Webb Ford’s cash customers opted to use electronic

      filing and pay the $25.00 convenience fee. The remaining 60% went to the

      BMV themselves, thereby avoiding the fee altogether.


[6]   For several days in December 2015 and January 2016, DFI conducted a routine

      examination of Webb Ford’s records for compliance with the IUCCC,

      including TILA and Regulation Z. In February 2016, DFI issued a Consumer

      Credit Examination Report. Appellant’s App. Vol. II pp. 29-36. In this

      examination report, DFI identified “[o]ne violation” from a transaction on July

      27, 2015, where Webb Ford did not properly disclose the $25.00 convenience

      fee on the retail installment contract. Id. at 32. According to DFI, Webb Ford

      should have disclosed the $25.00 convenience fee in the “Finance Charge” box,

      as the fee was only mandatory for credit customers and therefore was “a

      condition of the extension of credit.” Id. Although Webb Ford did not provide

      the retail installment contract from that July 27, 2015 transaction, it did provide

      another one from the same time period. According to this retail installment

      contract, Webb Ford disclosed the $25.00 convenience fee (referred to as a




      Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019        Page 5 of 15
“Filing Fee” on the contract) in the “Itemization of Amount Financed” and

“Amount Financed” boxes, not in the “Finance Charge” box:3




3
  As for Webb Ford’s alternate argument on appeal that it properly disclosed the $25.00 convenience fee in
the “Amount Financed” box because of a 2007 letter that DFI sent to the BMV, we disagree with Webb
Ford’s characterization of this letter. DFI’s 2007 letter stated that dealerships could disclose the convenience
fee in the “Amount Financed” box but only if they “assessed [the fee] to cash and credit customers alike in
the same amount.” Appellant’s App. Vol. III p. 128. Webb Ford, however, only made the fee mandatory for
its credit customers.

Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019                                 Page 6 of 15
      Appellant’s Supp. App. Vol. II p. 2.4 As a result of finding this violation, DFI

      ordered Webb Ford to conduct a “file search” to “identify and refund all

      instances where [the $25.00 convenience fee was] assessed on consumer credit

      sales since December 30, 2013.”5 Appellant’s App. Vol. II p. 32.


[7]   Thereafter, Webb Ford and DFI tried to resolve the matter informally. Webb

      Ford told DFI that by April 2016, it had discontinued its practice of “including

      the convenience fee in the Amount Financed” box and had started charging

      “both credit and cash customers alike the convenience fee charge, which

      removed it from the disclosure requirements of TILA.” Id. at 41.


[8]   When Webb Ford and DFI could not resolve the matter informally, DFI issued

      a Notice of Charges, Order to Cease and Desist, and Make Restitution in

      November 2016. DFI did not charge Webb Ford with violating the disclosure

      statute for not disclosing the $25.00 convenience fee in the “Finance Charge”

      box, as one might have expected it to do. Rather, DFI charged Webb Ford

      with violating a different part of the IUCCC, Indiana Code section 24-4.5-2-202

      (“the additional-charges statute), for assessing “impermissible additional




      4
       For this particular contract, Ford Motor Credit was offering a sales incentive of 0% financing for 72
      months. Appellant’s Tender of Supp. App., No. 18A-PL-2675 (May 20, 2019).
      5
        In the trial court, Webb Ford claimed that refunding the $25.00 convenience fee to all credit customers over
      a two-year period could amount to “hundreds of thousands of dollars.” Tr. p. 6. Webb Ford noted that
      other dealerships were facing “similar enforcement orders” from DFI and were “waiting in the wings . . . to
      see how this case plays out.” Id. At oral argument, Webb Ford again noted that there is “uncertainty and
      confusion within the industry” and asked us to “give clarity.” See Oral Arg. Video at 10:50, 13:01.

      Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019                                Page 7 of 15
charges” in the form of the $25.00 convenience fee. Id. at 56, 57. The

additional-charges statute provides, in pertinent part:


        In addition to the [finance] charge permitted by this chapter, a
        seller may contract for and receive any of the following
        additional charges in connection with a consumer credit sale:


                 (a) Official fees and taxes.


                 (b) Charges for insurance as described in subsection (2).


                 (c) Notwithstanding provisions of the Consumer Credit
                 Protection Act (15 U.S.C. 1601 et seq.) concerning
                 disclosure, charges for other benefits, including insurance,
                 conferred on the consumer, if the benefits are of value to
                 the consumer and if the charges are reasonable in relation
                 to the benefits, and are excluded as permissible additional
                 charges from the credit service charge. With respect to
                 any additional charge not specifically provided for in this
                 section, to be a permitted charge under this subsection the
                 seller must submit a written explanation of the charge to
                 the department indicating how the charge would be
                 assessed and the value or benefit to the consumer.
                 Supporting documents may be required by the department.
                 The department shall determine whether the charge would
                 be of benefit to the consumer and is reasonable in relation
                 to the benefits.


                 (d) A charge not to exceed twenty-five dollars ($25) for
                 each returned payment by a bank or other depository
                 institution of a dishonored check, electronic funds transfer,
                 negotiable order of withdrawal, or share draft issued by the
                 consumer.



Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019           Page 8 of 15
                       (e) Annual participation fees assessed in connection with a
                       revolving charge account. . . .


                       (f) A charge not to exceed twenty-five dollars ($25) for a
                       skip-a-payment service . . . .


                        (g) A charge not to exceed ten dollars ($10) for an optional
                       expedited payment service . . . .


                        (h) A charge for a GAP agreement, subject to subsection
                       (4).


      Ind. Code § 24-4.5-2-202(1). According to DFI, because Webb Ford did not

      “treat the $25.00 [convenience fee] as a part of the” finance charge, it

      “attempt[ed] to treat the fee as an additional charge,” but such a fee was not

      authorized pursuant to the additional-charges statute. Appellant’s App. Vol. II

      p. 32. Accordingly, DFI ordered Webb Ford to (1) “Cease and Desist charging

      a mandatory $25 electronic vehicle registration fee[] to credit customers only

      when such fees are not also charged to cash customers” and (2) “search its files

      from December 30, 2013 to the present to identify and to refund all

      impermissible additional charges that were assessed to consumer credit buyers

      but not to cash buyers.” Id. at 58.


[9]   Webb Ford sought review of DFI’s order, and DFI appointed an administrative

      law judge (ALJ). The ALJ issued her findings and conclusions in November

      2017. They provide, in part:




      Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019            Page 9 of 15
        17. The question is, then, what is the convenience charge? There
        is no question that the fee was the same amount for both credit
        and cash customers. However, the fee was optional for cash
        customers and mandatory for credit customers, therefore, leading
        to the conclusion that the fee was incidental to the extension of
        credit and thus, a finance charge.


                                               *****


        20. . . . In this case, the fee was mandatory for credit customers,
        but optional for cash customers. Webb did not disclose the fee as
        a finance charge, however. Because it was required for credit
        customers, it was incidental to the extension of credit and was
        not part of the cash price. As it was not disclosed as a finance
        charge, then it must be an additional charge. Under I.C. § 24-
        4.5-2-202, a seller may contract for certain specified additional
        charges. If a charge is not listed, then the seller may ask DFI to
        approve any additional charge not specifically provided for in
        this section. In this case, there is no question that the
        convenience fee is not one of the specified charges nor was it an
        additional charge which DFI had approved.


Id. at 26-27 (emphasis added). The Members of DFI later adopted the ALJ’s

order as their final order. Id. at 19. Webb Ford then filed a petition for judicial

review. Following a hearing, the trial court affirmed DFI’s final order,

concluding that “Webb Ford has failed to meet its burden of showing it was

prejudiced by an agency decision that was arbitrary, capricious or otherwise

contrary to law.” Id. at 17.




Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019       Page 10 of 15
[10]   Webb Ford appealed the trial court’s order. The Indiana Bankers Association

       appears as amicus curiae in support of DFI. We held oral argument in this case

       on July 22, 2019.



                                   Discussion and Decision
[11]   Webb Ford challenges the trial court’s order upholding DFI’s administrative

       decision. Under Indiana’s Administrative Orders and Procedures Act, we may

       set aside an agency’s action if it is:


               (1) arbitrary, capricious, an abuse of discretion, or otherwise not
               in accordance with law; (2) contrary to constitutional right,
               power, privilege, or immunity; (3) in excess of statutory
               jurisdiction, authority, or limitations, or short of statutory right;
               (4) without observance of procedure required by law; or (5)
               unsupported by substantial evidence.


       Ind. Code § 4-21.5-5-14(d). Webb Ford bears the burden of showing us that

       DFI’s action is invalid. Id. at (a).


[12]   Our “review of agency action is intentionally limited, as we recognize an

       agency has expertise in its field and the public relies on its authority to govern

       in that area.” Moriarity v. Ind. Dep’t of Nat. Res., 113 N.E.3d 614, 619 (Ind.

       2019) (quotations omitted)). We do not try the facts de novo but rather “defer

       to the agency’s findings if they are supported by substantial evidence.” Id.

       (quotation omitted). “On the other hand, an agency’s conclusions of law are

       ordinarily reviewed de novo.” Id. (quotation omitted). While “[w]e are not

       bound by the [agency’s] conclusions of law, . . . ‘[a]n interpretation of a statute

       Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019          Page 11 of 15
       by an administrative agency charged with the duty of enforcing the statute is

       entitled to great weight, unless this interpretation would be inconsistent with

       the statute itself.’” Id. (quotations and citation omitted). “In fact, if the

       agency’s interpretation is reasonable, we stop our analysis and need not move

       forward with any other proposed interpretation.” Id. (quotation omitted).


[13]   Webb Ford concedes that the $25.00 convenience fee was a finance charge

       because it was mandatory for its credit customers but not its cash customers.6

       See Oral Arg. Video at 7:31-7:45, 9:18-9:21. Indeed, cases from other courts

       across the country hold that a charge that is mandatory for credit customers but

       not cash customers is incident to the extension of credit and therefore must be

       disclosed as a “finance charge.” See, e.g., Alston v. Crown Auto, Inc., 224 F.3d

       332, 334 (4th Cir. 2000) (holding that because the car dealership’s general

       practice was to charge a fee to both cash and credit customers, the fee was not a

       “finance charge” and therefore there was no TILA violation in failing to




       6
         As noted above, by April 2016, Webb Ford had changed its practice and was charging the convenience fee
       to both its cash and credit customers. In December 2018, after Webb Ford filed the Notice of Appeal in this
       case, DFI issued Advisory Letter 2018-02. According to this letter, car dealerships must now “present the
       convenience fee to the customer as optional.” Ind. Dep’t of Fin. Insts., General Information, Policies and
       Guidance, Advisory Letter 2018-02,
       https://www.in.gov/dfi/files/REVISED%20AL%20on%20convenience%20fee%20v2%20Dec%202018%20
       FINAL.pdf (last visited Aug. 7, 2018). As DFI explained in the letter:
              When a fee is assessed uniformly to cash and credit customers alike, (i.e. the fee is either
              required of all cash and credit customers, or is optional for all cash and credit customers) then it
              is not required to be classified as a finance charge. This means the fee is permissible as part of
              the cash price. In essence, the service and fee must be presented to all consumers in the same
              manner.
       Id. (footnotes omitted).



       Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019                                  Page 12 of 15
       disclose it as such); Compton v. Altavista Motors, Inc., 121 F. Supp. 2d 932, 937

       (W.D. Va. 2000) (holding that car dealership violated TILA by not disclosing a

       fee that was only charged to credit customers as a “finance charge”); White v.

       Diamond Motors, Inc., 962 F. Supp. 867, 871 (M.D. La. 1997) (holding that

       when a fee is optional for both cash and credit customers, the fee is not incident

       to the extension of credit and therefore not a “finance charge”); see also Hook v.

       Baker, 352 F. Supp. 2d 839, 844 (S.D. Ohio 2004).


[14]   Despite its concession that the $25.00 convenience fee was a finance charge and

       therefore should have been disclosed in the “Finance Charge” box on the retail

       installment contract, Webb Ford highlights that DFI did not charge it with

       violating the disclosure statute, Section 24-4.5-2-301(2); rather, DFI charged it

       with violating the additional-charges statute, Section 24-4.5-2-202. Webb Ford

       claims that DFI “acted arbitrarily and capriciously or otherwise not in

       accordance with the law” in doing so because “if [a finance charge is] disclosed

       improperly, it’s still a finance charge” governed by the disclosure statute.

       Appellant’s Br. p. 16; Oral Arg. Video at 18:33-18:38; see also Appellant’s Br. p.

       22 (“A finance charge is a finance charge that TILA governs regardless of

       whether it was improperly disclosed in the amount-financed box or properly in

       the finance charge box.”).


[15]   DFI has offered no authority or explanation for why it chose to treat the $25.00

       convenience fee—which everyone agrees is a finance charge that should have

       been disclosed in the “Finance Charge” box—as an “impermissible additional

       charge,” other than this is how it has done things for forty years. See

       Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019        Page 13 of 15
       Appellant’s App. Vol. II p. 14. But as counsel for Webb Ford said at oral

       argument, this just “doesn’t make sense.” Oral Arg. Video 18:59.


[16]   We agree with Webb Ford. For starters, the IUCCC’s definition of finance

       charge “does not include charges as a result of . . . additional charges (IC 24-

       4.5-2-202).” I.C. § 24-4.5-2-109. Also, the additional-charges statute provides

       that “additional charges” are “[i]n addition to” finance charges. I.C. § 24-4.5-2-

       202(1). Therefore, a finance charge—again, which everyone agrees is at issue

       here—can’t also be an additional charge. Moreover, although in its brief DFI

       defended its decision to charge Webb Ford with violating the additional-charges

       statute, it changed its tune at oral argument, admitting that it could have instead

       charged Webb Ford with violating the disclosure statute because the remedies

       under both statutes are the same—a refund of the $25.00 convenience fee. Oral

       Arg. Video at 38:41. In other words, DFI’s counsel said that charging Webb

       Ford with violating the additional-charges statute was “the same thing” as

       charging it with violating the disclosure statute. Id. at 40:47. Because there is

       no authority for DFI’s practice, we hold that a finance charge does not cease

       being a finance charge just because it is not disclosed as such.


[17]   We acknowledge that this clarification might not make a practical difference in

       this case. At oral argument, DFI seemed to think that it doesn’t matter whether

       it charged Webb Ford with violating the disclosure statute or the additional-

       charges statute, because the remedies under both are the same. But Webb Ford

       says that it does matter, because if this case is treated as a disclosure violation

       only, then it is entitled to raise certain defenses under TILA, such as tolerances,

       Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019         Page 14 of 15
       bona fide error, and a shorter statute of limitation. Based on the record before

       us, we don’t know who is right; these issues haven’t been developed. See Oral

       Arg. Video 5:07-5:20 (Webb Ford’s counsel noting that these issues haven’t

       been explored). All we hold today is that a finance charge doesn’t become an

       “impermissible additional charge” when it’s not disclosed in the “Finance

       Charge” box.


[18]   Accordingly, we (1) affirm DFI’s finding that the $25.00 convenience fee was a

       finance charge and that Webb Ford failed to disclose it as such; (2) reverse

       DFI’s finding that because the fee was not disclosed in the “Finance Charge”

       box, “it must be an additional charge,” Appellant’s App. Vol. II p. 27; and (3)

       remand this matter to DFI for further proceedings under the disclosure statute,

       allowing Webb Ford to raise any applicable defenses.7


[19]   Affirmed in part, reversed in part, and remanded for further proceedings.


       Kirsch, J., and Altice, J., concur.




       7
        Webb Ford also argues on appeal that its due-process rights were violated. Given our disposition of this
       matter in Webb Ford’s favor, we need not address this issue.

       Court of Appeals of Indiana |Opinion 18A-PL-2675 | August 19, 2019                             Page 15 of 15
