## Facts

- John and Sharon Mirabal bought a new 1971 Buick Skylark from Ed Murphy Buick-Opel, Inc. under a retail installment contract later assigned to General Motors Acceptance Corporation (GMAC).
- The contract listed a cash price of $4,497.65 and a down payment of $2,296.65 (including a $600 trade-in allowance), leaving a “total amount financed” of $2,460.00.
- The contract required physical damage insurance costing $259.00, financed as part of the transaction.
- The contract disclosed a finance charge of $511.80, an annual percentage rate (APR) of 11.08%, and a total deferred payment price of $2,971.80 payable in 36 monthly installments of $82.55.
- About one week after the sale, GMAC sent a letter stating the APR had been understated and should be corrected to 12.83%; the Mirabals disputed receiving it, and no finding was made on receipt.
- The Mirabals sued under the Truth in Lending Act (TILA) and Regulation Z, and also asserted Illinois statutory claims, alleging inaccurate and inadequate disclosures regarding the APR, insurance, and other contract terms.

## Issues

1. Whether an APR understatement of 1.75 percentage points violated TILA/Regulation Z and whether a post-transaction correction letter could eliminate liability.
2. Whether disclosures concerning required, financed physical damage insurance complied with Regulation Z.
3. Whether the contract’s presentation of default and creditor-remedy provisions satisfied Regulation Z’s requirements for clear, conspicuous, and properly grouped disclosures.
4. Whether GMAC, as assignee, was liable for disclosure violations apparent on the face of the assigned documents.
5. Whether multiple disclosure violations in a single credit sale permit multiple statutory damage awards under TILA.

## Decision

- The Seventh Circuit affirmed liability for TILA disclosure violations based on the inaccurate APR/finance charge disclosures and deficient insurance disclosures.
- The court held that the attempted post-transaction correction did not cure the failure to provide accurate mandatory disclosures before credit was extended.
- The court held GMAC liable as an assignee because the disclosure defects were apparent on the face of the documents it received.
- The court limited recovery to a single statutory damage award for the single credit transaction, rejecting multiple penalties based on multiple disclosure defects.

## Legal Principles

- TILA requires accurate disclosure of the APR and finance charge within permissible tolerances; a substantial understatement is a statutory violation.
- Required disclosures must be provided before consummation/extension of credit; later corrections do not negate liability for defective original disclosures.
- When physical damage insurance is required as a condition of credit and financed in the transaction, Regulation Z requires clear, specific disclosure of the insurance requirement and cost in the manner prescribed by the regulation.
- Required disclosures must be clear and conspicuous and presented in the manner Regulation Z requires; dispersing or obscuring material terms undermines compliance.
- Under TILA’s assignee-liability rule, an assignee is liable for violations apparent on the face of the assigned disclosure statement.
- TILA statutory damages generally permit one recovery per credit transaction, even if the disclosure statement contains multiple violations.

## Conclusion

The court treated the retail installment sale as a single credit transaction and held that materially inaccurate APR disclosures and deficient required-insurance disclosures violated TILA and Regulation Z, that a post-transaction correction attempt did not eliminate liability, that GMAC could be liable as an assignee for facial defects, and that statutory damages were limited to one award for the transaction.


Mirabal v. Gen. Motors Acceptance Corp., 537 F.2d 871 (7th Cir. 1976)