Koons Buick Pontiac GMC, Inc. v. Nigh
The Supreme Court ruled that a 1995 update to the Truth in Lending Act did not remove the long-standing $1,000 cap on damages for lying about loan terms on cars and other personal property — that cap still applies, even though Congress raised the cap for home loans to $2,000.
The ruling reversed a lower court that had let a car buyer collect over $24,000 after a dealer hid a bogus $965 fee, holding instead that Congress only meant to boost damages for real-estate loans, not open the door to unlimited awards on car loans and similar consumer credit.
“It would be passing strange to read the statute to cap recovery in connection with a closed-end, real-property-secured loan at an amount substantially lower than the recovery available when a violation occurs in the context of a personal-property-secured loan”
The majority's reasoning that Congress could not have intended car-loan damages to dwarf real-estate loan damages.
How it got here: A trial court and a divided Fourth Circuit panel ruled Nigh could collect uncapped damages; the dealer asked the Supreme Court to resolve a circuit split with the Seventh Circuit.
The Case in Depth
What happened
A car buyer, Bradley Nigh, tried to buy a used truck from a dealership, Koons Buick. After the dealer couldn't find a lender and made him sign a third contract, Nigh discovered the contract secretly included an unauthorized $965 charge for a car alarm he never wanted. He sued the dealer for violating a federal law requiring accurate disclosure of loan terms.
The question before the Court
When a car buyer sues a dealer for lying about loan terms, does federal law cap the damages at $1,000, or can a jury award far more?
The Court's answer
The $1,000 cap still applies. The Court ruled that Congress's 1995 amendment to the Truth in Lending Act, which raised damages caps for real-estate-secured loans to $200/$2,000, did not remove the pre-existing $100/$1,000 cap for violations involving loans secured by personal property, like cars. Congress only meant to boost recovery for real-estate loans, and there was little sign it also intended to eliminate the cap for everything else.
Reading the statute's structure, drafting conventions, and history together, the Court concluded that the phrase "liability under this subparagraph" still limited damages for ordinary loans just as it always had, before and after the 1995 change. So the dealer's cap argument won, and the buyer's jury award of over $24,000 could not stand as an uncapped recovery.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Car buyers and other consumers who successfully sue dealers or lenders for lying about loan terms will have their damages capped at $1,000 (or $2,000 for home loans), rather than being able to collect an open-ended amount tied to their finance charge. Lenders and dealers gain more predictable exposure when they violate lending-disclosure rules on non-real-estate loans.
What changes now
The case returns to the lower courts, where damages for the car buyer must be recalculated under the $1,000 cap rather than the uncapped $24,192.80 the jury originally awarded. This is a final merits decision resolving a circuit split, so the $100/$1,000 cap on personal-property loan violations will now apply nationwide unless Congress amends the statute again.
What this does not decide
The decision does not address or change the separate $200/$2,000 cap that already applies to violations involving real-estate-secured loans, nor does it decide how damages should be calculated for open-end loans secured by real property, an issue the dissent raised but the majority treated as a side point.
Concurrences and dissents
Concurrence — Justice Stevens
Justice Stevens agreed the statute's text was actually unambiguous and would, read literally, support the dealer's uncapped-damages theory. But he argued the Court can and should use common sense and legislative history to correct what was effectively a drafting error by Congress, rather than mechanically applying canons of construction that can produce unjust results.
Concurrence — Justice Kennedy
Justice Kennedy agreed the text alone was not perfectly clear because of the conflicting $2,000 cap in the new real-estate clause, justifying the Court's look at outside interpretive sources. He emphasized this approach is consistent with cases where the Court avoids extratextual sources when a statute has only one plausible reading.
Concurrence — Justice Thomas
Justice Thomas agreed with reversing the lower court but rejected relying on inferences from congressional silence or supposedly illogical results. He argued the statute's pre-1995 text, consistent lower-court interpretation, and the narrow scope of the 1995 amendment were themselves enough to show Congress only carved out real-estate loans without changing the cap for everything else.
Dissent — Justice Scalia
“It is beyond our province to rescue Congress from its drafting errors, and to provide for what we might think is the preferred result.”Scalia's argument that the Court should not fix Congress's sloppy statutory drafting.
Justice Scalia argued that the $100/$1,000 exception, by its structural placement in the sentence, belongs only to the consumer-lease clause and never applied to the finance-charge-doubling clause for loans generally. He would have read the cap as limited to leases, leaving loan damages uncapped, and criticized the majority for rewriting the statute's structure and relying on speculative inferences from what Congress didn't say.
How the Court got there
The legal reasoning, step by step
- The Court treated interpreting a single word in the statute as a 'holistic endeavor,' meaning a term that looks ambiguous standing alone can be clarified by looking at how the same word is used throughout the rest of the law.
- It looked at standard congressional drafting conventions, under which a 'subparagraph' is a capital-letter subdivision (like (A)) while a 'clause' is a small-roman-numeral subdivision (like (i) or (ii)) — a hierarchy Congress used elsewhere in the same law.
- Because the cap language said 'liability under this subparagraph,' and prior to 1995 courts and even the dealership's own side agreed that phrase capped damages for the entire subparagraph (both the loan-doubling clause and the lease clause), the Court found the same reading should hold after the amendment.
- The Court examined the statute's history and found no sign Congress meant, in 1995, to secretly strip away the $1,000 cap for ordinary loans while only intending to raise the cap for real-estate loans — the committee report described only an increase for real-estate transactions.
- The Court reasoned it would be illogical for Congress to have left car-loan damages completely uncapped while capping real-estate loan damages at $2,000, since that would make violations involving smaller loans far more costly than violations involving larger ones.
- Concluding that Congress simply carved out a higher cap for real-estate loans without disturbing the pre-existing cap for everything else, the Court read the $100/$1,000 limit as still governing damages for loans secured by personal property.
Doctrinal impact
Cases affected by this decision
Reaffirms Mars v. Spartanburg Chrysler Plymouth, Inc. (713 F. 2d 65)
The Court relied on this prior Fourth Circuit ruling that the $100/$1,000 cap applied to the whole subparagraph before 1995.