Fielder v. Credit Acceptance Co.

Decision Date19 April 1999
Docket NumberNo. 98-3265,98-3265
Citation188 F.3d 1031
Parties(8th Cir. 1999) Marvin Fielder, et al., individually and on behalf of a class of similarly situated individuals, Plaintiffs - Appellees/ Cross - Appellants, v. Credit Acceptance Corporation, Defendant - Appellant/ Cross - Appellee o. 98-3413 Submitted:
CourtU.S. Court of Appeals — Eighth Circuit

Appeal from the United States District Court for the Western District of Missouri.

Before McMILLIAN, LOKEN, and MURPHY, Circuit Judges.

LOKEN, Circuit Judge.

Credit Acceptance Corporation ("CAC") financed used car sales in Missouri by taking assignments of retail installment purchase contracts between car dealers and purchasing consumers. If the buyer defaulted, CAC typically repossessed the vehicle, which was collateral for the defaulted loan. CAC then sold the car, applied the net sale proceeds against the defaulted loan, and sued the buyer in state court for any remaining loan deficiency. In many of those deficiency actions, the debtor failed to appear, and CAC obtained a default judgment for its claimed deficiency.

Marvin Fielder commenced this class action in a Missouri state court against CAC and a Missouri car dealer, alleging that he was charged for official fees never paid to public officials, and for post-maturity interest on his defaulted loan at a higher rate than his installment sales contract provided. Fielder's official fee overcharge claims included an alleged violation of the federal Truth in Lending Act, 15 U.S.C. 1601 et seq. Based upon that single federal question, CAC removed the entire case. See 28 U.S.C. 1441. In federal court, plaintiffs filed three amended complaints adding additional plaintiffs, additional state law claims, and additional prayers for relief. At plaintiffs' request, the district court certified two classes, an "official fee overcharge class" and an "interest overcharge class."

Plaintiffs then moved for partial summary judgment in favor of both classes. The district court denied the motion as to the official fee overcharge class, finding genuine issues of material fact as to those claims. The court granted summary judgment declaring CAC liable on many state law claims of the interest overcharge class and entered a sweeping permanent injunction requiring, inter alia, that CAC amend countless deficiency judgments previously entered by state courts against many members of that class. CAC appeals, arguing the Rooker-Feldman doctrine deprives the federal courts of jurisdiction to amend state court deficiency judgments, the Missouri consumer protection statutes in question do not authorize this class-wide relief, and the district court abused its discretion in entering the injunction. We have jurisdiction over interlocutory appeals from orders granting permanent injunctions. See 28 U.S.C. 1292(a)(1). We conclude there is no federal question jurisdiction over the interest overcharge class's claims, the Rooker-Feldman doctrine deprives the district court of jurisdiction to amend state court deficiency judgments, but the entire case. should not be remanded because of the pending Truth in Lending claims. Accordingly, we vacate the permanent injunction and remand with directions to sever the two classes so that the interest overcharge class may be remanded to state court while the district court proceeds to resolve at least the federal claims of the official fee overcharge class.

A. The Class Members' Claims.

CAC provides auto dealers a source of financing for used car purchasers with poor or limited credit histories. CAC supplies dealers with retail installment contract forms containing numerous blanks to be filled in by the dealer and the purchaser before the contract is signed. The dealer then assigns the completed contract to CAC, and CAC administers and collects the loan from the purchaser.

1. The Official Fee Overcharge Claims. The contract forms contain an "Itemization of Amount Financed" section which includes a number of blank spaces for itemizing the finance charges for a particular sale. One blank is entitled charges "To Public Officials." In plaintiff Fielder's contract, this blank was filled in with $43.60, and that amount was added to the total Amount Financed, whereas a different dealer filled in this entry in plaintiff Henderson's contract with a charge of $8.50 for "Lic, Titl, Reg, Insp Fee." The official fee overcharge class plaintiffs allege that any amounts charged for official fees in excess of $8.50 or $10.00 violate the Missouri Motor Vehicle Time Sales Act, MO. REV. STAT. ch. 365. The Truth in Lending subclass argues that these excess amounts were undisclosed finance charges and subject CAC to class action liability of "not more than the lesser of $500,000 or 1 per centum of the net worth of the creditor." 15 U.S.C. 1640(a)(2)(B). The district court concluded that genuine issues of material fact preclude summary judgment on these claims.

2. The Interest Overcharge Claims. The contract forms contain blank spaces for "Annual Percentage Rate" and "Post-Maturity Interest" rate. In Fielder's contract, theAPR was 22% and the Post-Maturity rate was 9%. In Henderson's contract, the APR was 18% and the Post-Maturity rate was left blank. The district court found that CAC has sought and obtained default judgments for post-maturity interest at rates of 18-23% under contracts in which the post-maturity rate entry was 9% or left blank. The interest overcharge plaintiffs allege, and the district court agreed, that these interest overcharges violated MO. REV. STAT. 365.100, 407.020, and 408.020, giving rise to class-wide damage and equitable relief under 365.150, 407.025, and 408.562. These plaintiffs further allege, and the district court found, that CAC charged compound interest in its deficiency actions in violation of 365.100 and 408.080, calling for relief under 365.150 and 408.562. In addition, these plaintiffs allege that CAC's post-sale notices violated 408.557, that its pre-sale notices violated 400.9-504 and 9-506 of the Missouri Uniform Commercial Code, and that the deficient pre-sale notices led to pleadings in CAC's deficiency suits that violated 408.556. The district court rejected the post-sale notice claims but held that some of CAC's pre-sale notices and deficiency suit pleadings violate the Missouri UCC.

3. Relief Granted. Based upon its findings and conclusions, the district court entered an eleven-paragraph permanent injunction in favor of the interest overcharge class. We need not summarize all the terms of this lengthy injunction. CAC contends that many subparts of the injunction fail to comply with the Rule 65(d) requirement that every injunction "shall be specific in terms [and] shall describe in reasonable detail . . . the act or acts sought to be restrained."1 See generally Rhone-Poulenc Rorer Pharms., Inc. v. Marion Merrell Dow, Inc., 93 F.3d 511, 517 (8th Cir. 1996). Putting that question aside, the more narrow issue we must address, because of its profound impact. on the entire case, is the district court's jurisdiction to order the following equitable relief:

6. CAC shall move for the default judgments based on excessive post-maturity interest and compound post-maturity interest [to] be amended nunc pro tunc consistent herewith in the issuing [state] court.

B. The Rooker-Feldman Problem.

A federal court must give the same preclusive effect to a state court judgment that the judgment would be given in courts of the rendering state. See 28 U.S.C. 1738. In Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), the Supreme Court took this principle a step further and held that lower federal courts lack jurisdiction to review state court judgments. The doctrine also deprives lower federal courts of jurisdiction over claims that are "inextricably intertwined" with claims adjudicated in state court. See Feldman, 460 U.S. at 482 n.16. On the other hand, a claim -- particularly a claim under federal law -- is not precluded if it is "separable from and collateral to the merits of the state-court judgment." Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 21 (1987) (Brennan, J., concurring) (quotations and citations omitted). A claim is inextricably intertwined under Rooker-Feldman if it "succeeds only to the extent that the state court wrongly decided the issues before it [or] if the relief requested . . . would effectively reverse the state court decision or void its ruling." Charchenko v. City of Stillwater, 47 F.3d 981, 983 (8th Cir. 1995).

In this case, the district court ordered CAC to amend numerous state court judgments nunc pro tunc because those judgments were based upon excessive interest charges. In granting this relief, the court acted precisely like an appellate court, effectively reversing part of the state court decision. It does not matter for Rooker-Feldman purposes that the court accomplished its reversal indirectly, by ordering CAC to apply to the state courts for amended judgments. In Atlantic Coast Line R.R. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 287 (1970), the district court attempted to circumvent the Anti-Injunction Act, 28 U.S.C. 2283, by enjoining the party who prevailed in state court "from giving effect to or availing [itself] of the benefits of" the state-court order. The Supreme Court reversed, noting that "[i]t is settled that the prohibition of 2283 cannot be evaded by addressing the order to the parties or prohibiting utilization of the results of a completed state proceeding." The Rooker-Feldman doctrine serves comity interests like those underlying the Anti-Injunction Act. Thus, Atlantic Coast Line is controlling.2

The district court denied CAC's motion to dismiss based upon Rooker-Feldman because plaintiffs' "requests for relief do not center on the fact that the Missouri state court default judgments are inherently wrong but rather focus...

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