Braggs v. Jim Skinner Ford, Inc.

• Decision Date: 03 April 1981
• Docket Number: No. 79-887,79-887
• Citation: 396 So.2d 1055
• Parties: Mary BRAGGS v. JIM SKINNER FORD, INC. and Ford Motor Credit Company.
• Court: Alabama Supreme Court

Page 1055

396 So.2d 1055

Mary BRAGGS v. JIM SKINNER FORD, INC. and Ford Motor Credit Company.

No. 79-887.

Supreme Court of Alabama.

April 3, 1981.

Lloyd W. Gathings of Emond & Vines, Birmingham, for appellant.

John Martin Galese of Galese & Chambers, Birmingham, for appellee Jim Skinner Ford, Inc.

Charles Cleveland of Gordon, Cleveland & Gordon, Birmingham, for appellee Ford Motor Credit Company.

FAULKNER, Justice.

This is an appeal from an order granting a 12(b)(6) motion and a 12(c) motion. We reverse and remand.

On January 29, 1979, Mary Braggs purchased a used car from Jim Skinner Ford and entered into an installment contract with Skinner Ford for its payment. Skinner Ford assigned the contract to Ford Motor Credit Company. The total amount financed was $4,103.78, payable in 48 monthly installments at an annual percentage rate of 14.28%. Included in the total amount financed was an $81.20 processing fee. The total finance charge was $1,317.82.

On January 29, 1980, Braggs filed a complaint against Skinner Ford and FMCC alleging violations of the Truth in Lending Act and the Alabama Mini-Code, Act 2052, Acts of Alabama 1971, Vol. IV, p. 3290. Specifically, she asserted that the $81.20 processing fee was improperly included within the total amount financed, and that it should have been denominated as part of the total finance charge according to Regulation Z of the Truth in Lending Act. 15 U.S.C. §§ 1631 et seq.; 12 C.F.R. §§ 226.4, 226.5, 226.6(a) and 226.8(c). Including the $81.20 processing fee in the total amount of the finance charge, as urged by Braggs, results in the finance charge exceeding the amount authorized by the Alabama Mini-Code.

Skinner Ford filed a preanswer Rule 12(b)(6) motion to dismiss, and FMCC filed a postanswer motion to dismiss it from the Truth in Lending Act claim, or in the alternative for a judgment on the pleadings, contending that the processing fee was a fee exacted by the dealer only, and that as the dealer's assignee, it was not liable for any alleged violation for nondisclosure of that charge. FMCC and Skinner Ford also asserted that Braggs's Truth in Lending Act claim was untimely and barred because she filed her complaint on the one year anniversary date of the occurrence of the violation, allegedly exceeding the requirement of 15 U.S.C. § 1640(e), that a Truth in Lending Act violation must be brought within one year from the date of the occurrence of the violation. For purposes of TILA claims, appellees argued that the date of the violation must be included when computing timely filing, and that filing on the one year anniversary date of the occurrence is tardy because the one year requirement cannot be extended by procedural rules.

The Circuit Court of Jefferson County, without an opinion, dismissed Jim Skinner Ford, Inc., and entered judgment on the pleadings in favor of Ford Motor Credit Company. Braggs appeals from the order dismissing Skinner Ford and from the final judgment in favor of FMCC.

I

JIM SKINNER FORD, INC.

Skinner Ford's preanswer motion to dismiss alleged, inter alia:

1. The complaint fails to state a claim upon which relief can be granted.

2. The complaint shows upon its face that it was not filed in accordance with the applicable statute of limitations.

Skinner Ford argues, in brief, that Braggs failed to state a claim under the Alabama Mini-Code because she did not aver that the $81.20 processing fee was a direct or an indirect charge made as an incident to the extension of credit, inasmuch as Code 1975, § 5-19-1(1) states that the term "finance charge" "shall include all charges payable directly or indirectly by the debtor and imposed directly or indirectly by the creditor as an incident to the extension of credit...." (emphasis ours).

Braggs contends, however, that what the processing fee actually represents is at best a question of fact, making the lower court's dismissal erroneous because the complaint contains contested factual issues. She urges that if the processing fee is in fact Braggs alleged in her complaint that the processing fee charged by Skinner Ford as part of the amount financed violated the disclosure requirements of the Truth in Lending Act and Regulation Z, delineating specific sections. She averred:

charged as an incident to the extension of credit, then it should have been incorporated within the total amount of the finance charge assessed by Skinner Ford, resulting in its inclusion creating a finance charge exceeding that required by law under the Mini-Code.

Pursuant to such contracts said defendants disclosed and charged plaintiff and the members of the class she represents a "processing" fee as part of the amount financed through such contracts; said defendants violated the disclosure requirements of the Truth-In-Lending Act and Regulation Z (which was promulgated by the Board of Governors of the Federal Reserve System in accordance with the Truth-In-Lending Act (15 USCA, Section 1604)). Specifically, said defendants violated requirements of 15 USCA 1631, et seq. (Truth-In-Lending Act) and Sections 226.4, 226.5, 226.6(a), and 226.8(c) of Regulation Z.

In sum, these sections require that any fees falling within the statutory definition of "finance charge" must be disclosed adequately and must not exceed the annual percentage rate provided by law. She made similar allegations in support of violations of the Alabama Mini-Code:

Processing fees of the type charged by said defendants are required to be included as part of the maximum finance charged said defendants, pursuant to the provisions of the Mini-Code (Ala.Code, Section 5-19-1), could charge plaintiff and the members of the class she represents. Said defendants did not openly include such processing fees as part of the finance charges charged plaintiff and the members of the class she represents, however, the inclusion of such processing fees as part of the finance charges charged plaintiff and the members of the class she represents by said defendants reveals that said defendants charged plaintiff and the members of the class she represents a finance charge in excess of the amount authorized by the Mini-Code (Alabama Code, Section 5-19-3). Said defendants made such excess finance charges in deliberate violation or in reckless disregard of the requirements of the Mini-Code.

She requested damages, costs plus interest, attorney's fees and a permanent injunction against further violations.

"A motion to dismiss for failure to state a claim under Rule 12(b)(6), ARCP, should seldom be granted and is properly granted only when it appears beyond doubt that the plaintiff can prove no set of facts entitling him to relief." Winn-Dixie Montgomery, Inc. v. Henderson, 371 So.2d 899, 901 (Ala.1979). Here, it does not appear beyond doubt that Braggs could not prove any set of facts entitling her to relief.

Next, the standard for granting a motion to dismiss based upon the expiration of the statute of limitations is whether the existence of the affirmative defense appears clearly on the face of the pleading. Sims v. Lewis, 374 So.2d 298 (Ala.1979); Browning v. City of Gadsden, 359 So.2d 361 (Ala.1978); Wright & Miller, Federal Practice and Procedure, Civil & 1357, at 605 (1969).

Looking at the face of the complaint, it is obvious that the statute of limitations had not expired to bar the action. Because Mary Braggs's complaint alleges some facts, albeit a generalized statement of facts, which, if proven, would support her claim for relief, and because the expiration of the statute of limitations does not appear clearly on the face of the pleading, the court erroneously granted Jim Skinner Ford, Inc.'s motion to dismiss; we reverse and remand as to this appellee.

II FORD MOTOR CREDIT COMPANY

The judgment on the pleadings rendered in favor of FMCC requires a different scope of analysis inasmuch as the content of all the pleadings, including the answer, must be considered to determine whether there is a justiciable factual dispute. Rule 12(c), ARCP; Sims v. Lewis, supra, Jones v. Alabama Power Co., 362 So.2d 235 (Ala.1978); McCullough v. Alabama By-Products Corp., 343 So.2d 508 (Ala.1977).

In this case, the pleadings consist of Braggs's complaint and FMCC's answer asserting eight defenses, including the affirmative defense that the statute of limitations barred the action. FMCC's motion to dismiss the Truth in Lending Act claim, or in the alternative for a judgment on the pleadings, was based upon two grounds: (1) the processing fee was a documentary fee not within the purview of its the assignee's duty to disclose under § 226.6 of Regulation Z; (2) the statute of limitations barred the action according to Sixth Circuit authority that the date of the alleged violation is to be included when computing whether the complaint was filed within one year.

The lower court granted FMCC a judgment on the pleadings, presumably taking into consideration all of the pleadings rather than considering just the complaint pursuant to a motion to dismiss. See e. g., Jones v. Alabama Power Co., supra. Procedurally, then, we treat this part of the case as a judgment on the pleadings, and on review we will peruse the pleadings in search of disputed facts.

First, we find that the $81.20 processing fee presents a disputed factual controversy. Braggs alleged, in her complaint, that the fee constituted part of the amount of the finance charge and was improperly denominated as part of the amount financed; thus, the actual finance charge assessed exceeded the amount permitted by law to be charged. In its answer and motion, FMCC alleged that the processing fee was not within the purview of its relationship with the customer, and thus, it could not, by law, be held liable for any TILA violation based upon that item.

A documentary fee has been defined as:

a fee retained entirely by the dealer, which is intended to cover expenses incurred by the dealer in upkeep of the car prior to sale...