## Facts

- Patrick Beaudreau bought an automobile from Larry Hill Pontiac/Oldsmobile/GMC, Inc., a dealership in Sevierville, Tennessee.
- The dealership assisted Beaudreau in obtaining purchase financing from a third-party lender (through a GMAC-related program).
- Beaudreau was told the financing would be at an annual interest rate of 13.5%, and he executed a retail installment contract at that rate.
- After the purchase, Beaudreau learned the lender had quoted the dealership a lower wholesale rate (“buy rate”) of 11.25%.
- Beaudreau alleged the dealership added 2.25 percentage points to the buy rate and kept the spread as “dealer reserve” or “dealer participation.”
- Beaudreau alleged the dealership did not disclose it would receive compensation tied to the interest rate charged on his loan.
- He filed suit as a putative class action asserting statutory claims under the Tennessee Consumer Protection Act (TCPA) and the Tennessee Trade Practices Act (TTPA), along with common-law claims including unjust enrichment, money had and received, and civil conspiracy.
- The trial court dismissed the complaint for failure to state a claim, and Beaudreau appealed.

## Issues

1. Whether a dealership’s failure to disclose that it increased the lender’s buy rate and retained the difference as dealer reserve states a claim under the Tennessee Consumer Protection Act when the buyer was accurately told the contract interest rate and agreed to it.
2. Whether the same nondisclosure supports claims under the Tennessee Trade Practices Act or common-law theories such as unjust enrichment, money had and received, or civil conspiracy.

## Decision

- The Tennessee Court of Appeals affirmed the dismissal for failure to state a claim.
- The court held that the pleaded facts did not show an unfair or deceptive act under the TCPA because Beaudreau was told the actual interest rate in his retail installment contract and agreed to pay it.
- The court concluded Tennessee law did not require the dealer to disclose the lender’s buy rate or the dealer’s share of the finance charge in this setting.
- The TTPA and common-law claims were dismissed for the same reason: the complaint alleged no actionable wrong beyond nondisclosure of the dealer’s compensation arrangement.
- With no viable individual claims, the putative class claims could not proceed.

## Legal Principles

- A TCPA omission theory requires more than silence about a seller’s profit or compensation; liability generally depends on a duty to disclose or an omission that makes what was said misleading.
- When a consumer is correctly informed of the annual percentage rate and other credit terms in the retail installment contract, nondisclosure of a lender’s buy rate and the dealer’s retention of a spread, without more, does not state a TCPA claim.
- A dealer’s receipt of dealer reserve is treated as part of the dealer’s compensation from arranging financing; absent a legal duty to disclose it, the practice does not itself create statutory liability.
- Unjust enrichment and money had and received require a showing that retaining the benefit would be unjust because of wrongful conduct; charging and collecting the disclosed, agreed-upon interest rate is not unjust on these allegations.
- Civil conspiracy requires an underlying actionable wrong; when the underlying statutory and common-law claims fail, conspiracy fails as well.

## Conclusion

Beaudreau held that a car dealer’s nondisclosure that it marked up a lender’s buy rate and kept the difference as dealer reserve does not, by itself, constitute an unfair or deceptive act under Tennessee’s consumer-protection statutes, nor does it support related common-law claims, when the buyer was accurately told the actual contract interest rate and agreed to it.


Beaudreau v. Larry Hill Pontiac, 160 S.W.3d 874 (2004)