Ramadan v. Chase Manhattan Corporation

In 1980 the Truth in Lending Act (TILA) was amended to limit the liability of assignees of credit contracts for violations committed by the original creditor. The amendment provided that an assignee could only be held responsible for TILA violations committed by the original creditor if they were apparent on the face of the credit documents. Prior to the 1980 TILA amendment, the Federal Trade Commission (FTC) had enacted the holder-in-due-course rule, requiring consumer-credit contracts to include a notice stating that any assignee of the contract would be liable for all claims and defenses that the debtor could bring against the original creditor. Susanne H. Ramadan (plaintiff) purchased a used car from Bob Ciasulli, Inc. (the car dealership) through credit. The credit contract between Ramadan and the car dealership contained a notice pursuant to the FTC’s holder-in-due-course rule explaining that any assignee of the contract would be liable for all claims that Ramadan could bring against the car dealership. The contract was immediately assigned to Hyundai Motor Finance Corp. (Hyundai) (defendant). Ramadan believed that the car dealership violated the TILA by improperly retaining a portion of her payment. Ramadan filed a lawsuit against Hyundai in federal district court, seeking to hold Hyundai, as the assignee of the contract, liable for the car dealership’s alleged violation. Hyundai moved to dismiss Ramadan’s case, arguing that the notice included in the contract as required by the FTC was invalid because it was not the result of bargaining between Ramadan and the car dealership. The district court granted Hyundai’s motion and dismissed the case. Ramadan appealed.