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KRAJCI v. PROVIDENT CONSUMER DISCOUNT CO.

September 28, 1981

Leonard J. KRAJCI and Renee M. Krajci
v.
PROVIDENT CONSUMER DISCOUNT CO.



The opinion of the court was delivered by: SHAPIRO

FINDINGS OF FACT AND CONCLUSIONS OF LAW

In this case tried to the court without a jury, the plaintiff borrowers contend that the defendant lender violated certain disclosure provisions of the Truth In Lending Act, 15 U.S.C. § 1601 et seq. Plaintiffs seek to recover statutory damages, attorneys fees and costs under 15 U.S.C. § 1692K.

 Plaintiffs, Leonard J. and Renee M. Krajci, and defendant, Provident Consumer Discount Co. ("Provident"), entered into a consumer loan transaction on August 16, 1978. In order to complete the transaction, plaintiffs executed several loan documents drafted by Provident. The plaintiffs have contended that Provident violated the TILA in the following respects: (1) Provident failed to disclose its security interest in the proceeds of or refunds due under the credit insurance purchased by plaintiffs; (2) Provident erroneously disclosed the charges for credit life insurance and credit accident and health insurance as part of the amount financed instead of the finance charge; (3) Provident failed to clearly and conspicuously disclose its security interest in plaintiffs' real and personal property; and (4) Provident failed to disclose the amount or method of computing the charge deducted from the rebate of the unearned finance charge credited to plaintiffs when they prepaid the loan. Provident denies these allegations and contends that plaintiffs' claims are barred by the applicable statute of limitations. Based upon the following findings of fact and conclusions of law, judgment is entered for the defendant.

 Findings of Fact

 1. Plaintiffs are Leonard J. Krajci and Renee M. Krajci, husband and wife, residing at 1822 Ruan Street, Philadelphia, Pennsylvania.

 2. Defendant Provident Consumer Discount Company is a Pennsylvania corporation conducting business at 42 South 15th Street, Philadelphia, Pennsylvania.

 3. Provident, in the ordinary course of its business, extends or offers to extend credit for which either a finance charge is or may be imposed or which is payable in more than four (4) installments.

 4. Mr. and Mrs. Krajci entered into a consumer credit transaction with Provident on August 16, 1978.

 6. At the time of the transaction on August 16, 1978, plaintiffs executed the following loan documents:

 
(a) Personal Credit Insurance Authorization
 
(b) Note, Security Agreement, and Disclosure Statement
 
(c) Credit Property Insurance Disclosure
 
(d) Judgment Note
 
(e) Mortgage
 
(f) Application for Secured Credit
 
(g) Notice of Right of Rescission

 7. Prior to the execution of the loan documents, defendant's representative reviewed with plaintiffs the terms, conditions, and options of the proposed loan contract, including all the insurance provisions thereof.

 8. Prior to the execution of the loan documents, plaintiffs executed the Personal Credit Insurance Authorization form.

 9. The Personal Credit Insurance Authorization contained the following statement in bold print:

 
CREDIT LIFE OR CREDIT ACCIDENT AND HEALTH (DISABILITY) INSURANCE IS NOT REQUIRED IN CONNECTION WITH THIS EXTENSION OF CREDIT TO YOU AND YOUR DECISION WITH REGARD TO THE PERSONAL INSURANCE WILL NOT AFFECT THE TOTAL AMOUNT OF CREDIT WHICH HAS ALREADY BEEN APPROVED FOR YOU. (emphasis supplied)

 10. The loan document provides that: "If you elect credit insurance these premiums will be added to the amount of credit approved for you.

 11. The Personal Credit Insurance Authorization also included the following statement:

 
"I have received a fully completed and executed copy of this form. I have reviewed the amount financed options set forth below and understand that if I choose an amount financed option that includes any of the insurance coverages I am authorizing the creditor to pay the insurance premiums on my behalf. I have voluntarily chosen the following amount financed option:
 
Option 4: Amount financed with credit life and A & H (disability)"

 (emphasis supplied)

 12. Prior to the execution of the loan documents, plaintiffs executed the Credit Property Insurance Disclosure form.

 13. The Credit Property Insurance Disclosure form contained the following statement:

 
I fully understand that the purchase of this insurance is voluntary and not a requirement of this transaction.

 (emphasis supplied)

 14. On the Credit Property Insurance Disclosure form, plaintiff Leonard Krajci indicated by checkmark that he had elected to purchase Credit Property Insurance.

 15. The Note, Security Agreement and Disclosure Statement contained the following provision:

 F. OPTIONAL INSURANCE:

 
1. LIFE/ACCIDENT AND HEALTH INSURANCE: Provident does not require life or accident & health insurance nor is it a factor in approval of the extension of credit. No such insurance is to be provided unless Borrower who is to be insured signs the appropriate authorization below. Any such insurance obtained by Provident at Borrower's request shall be subject to the terms and conditions of such policy. Provident is assisting Borrower in obtaining such insurance as a convenience for Borrower and Provident shall not be liable for any failure to obtain or defect in obtaining such insurance.

 16. Mr. Krajci signed subsection (a) of the above paragraph. This subsection stated "Borrower does not want credit life or ...


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