Brown v. Tenn. Title Loans, Inc.
| Decision Date | 29 November 2010 |
| Docket Number | No. E2008-01758-SC-R11-CV.,E2008-01758-SC-R11-CV. |
| Citation | 328 S.W.3d 850 |
| Parties | Dawn BROWN et al. v. TENNESSEE TITLE LOANS, INC. |
| Court | Tennessee Supreme Court |
J. Bartlett Quinn, Stephen D. Barham, and Justin L. Furrow, Chattanooga, Tennessee,for the appellant, Tennessee Title Loans, Inc.
James R. Kennamer, Chattanooga, Tennessee, for the appellees, Dawn Brown, Anne Devries, Carly Hahn, and Greg Walton.
We granted this interlocutory appeal to answer a single question of first impression: whether the Tennessee Title Pledge Act, Tenn.Code Ann. §§ 45-15-101 to -120 (2000), permits a private right of action on behalf of pledgors against title pledge lenders who allegedly charged excessive interest and prohibited fees. The trial court granted the defendant's motion to dismiss plaintiffs' Title Pledge Act allegations for failure to state a claim, and the Court of Appeals reversed. We hold that the Title Pledge Act does not expressly create an individual private right of action, and plaintiffs have not carried their burden of establishing that the legislature intended to imply such a right. Accordingly, we reverse the judgment of the Court of Appeals and reinstate the judgment of the trial court.
Dawn Brown, Anne Devries, Carly Hahn, and Greg Walton ("Plaintiffs") filed the initial complaint in this action on October 27, 2004, and then filed an amended complaint on January 31, 2005. Because the case comes to us in the posture of Tennessee Title Loans, Inc.'s ("Defendant") motion to dismiss the amended complaint for failure to state a claim, we accept the allegations of the amended complaint as true. See Leach v. Taylor, 124 S.W.3d 87, 90 (Tenn.2004). Plaintiffs brought this case as a putative class action on behalf of all those who had a title pledge loan with Defendant and paid interest or fees on that loan "within the year preceding the filing of this Complaint and thereafter." In the title pledge transaction, Defendant loaned money to each Plaintiff in exchange for a security interest in Plaintiff's motor vehicle. Each Plaintiff delivered the certificate of title for his/her vehicle to Defendant while retaining possession of the vehicle for the duration of the loan agreement. Upon paying the total amount due within a specified period of time, each Plaintiff had the right to redeem his/her vehicle title. If any Plaintiff defaulted on the loan, Defendant had the right to take possession of that Plaintiff's vehicle and to sell the vehicle after the expiration of a grace period.
The amended complaint alleged that Plaintiffs and putative class members were charged interest in excess of the statutory maximum set forth in the Tennessee Title Pledge Act ("TTPA") and/or charged fees not allowed by the TTPA. See Tenn.Code Ann. § 45-15-111(a) (2000). Specifically, Defendant allegedly charged a prohibited "redemption premium fee" for redeeming the loan, calculated based on the date the loan was paid. The amended complaint alleged a violation of the TTPA because the redemption premium fee was not allowed. See id. It also alleged a violation of the Tennessee Consumer Protection Act ("TCPA"), Tenn.Code Ann. §§ 47-18-101 to -125 (2001), because Defendant misrepresented to Plaintiffs that the redemption premium fee was lawful under the TTPA. Plaintiffs sought class certification pursuant to Tennessee Rule of Civil Procedure 23. Among their requested remedies, Plaintiffs requested rescission of the title pledge loan agreements and an award of punitive damages for Defendant's fraud.
Defendant originally moved to compel arbitration, citing identical clauses in the title pledge agreements signed by each of the Plaintiffs. The trial court granted the motion to compel arbitration. Subsequently, the trial court granted Plaintiffs' application for permission to file an interlocutory appeal, see Tenn. R.App. 9. The Court of Appeals granted Plaintiffs' request for an interlocutory appeal and ultimately reversed, holding that the arbitration clause was unconscionable and unenforceable because it reserved access to a judicial forum for Defendant but restricted Plaintiffs to arbitration. See Brown v. Tenn. Title Loans, Inc., 216 S.W.3d 780, 787 (Tenn.Ct.App.2006) (citing Taylor v. Butler, 142 S.W.3d 277 (Tenn.2004)), perm. app. denied (Feb. 26, 2007).
Defendant filed its motion to dismiss for failure to state a claim on April 26, 2007. Defendant argued that the facts alleged by Plaintiffs, including the contents of the loan agreements that Plaintiffs attached as exhibits to their pleadings, established that Defendant did not violate the TTPA by charging prohibited fees or excessive interest.
Although the parties had not originally raised the issue, the trial court subsequently requested that the parties file supplemental briefs on the question of whether a private right of action existed under the TTPA.1 On May 19, 2008, the trial court issued an order dismissing the individual and classwide TTPA claims because the TTPA provided no private right of action. The trial court also dismissed the class allegations under the TCPA in light of this Court's holding that TCPA claims are inappropriate for class certification.2 See Walker v. Sunrise Pontiac-GMC Truck, Inc., 249 S.W.3d 301, 313 (Tenn.2008). The trial court did not dismiss the individual TCPA claims.
The trial court then granted Plaintiffs' application for permission to file an interlocutory appeal pursuant to Tennessee Rule of Appellate Procedure 9 on the issue of whether the TTPA provides a private right of action. The Court of Appeals granted Plaintiffs' application for permission to appeal and stayed proceedings in the trial court. The intermediate court then reversed the judgment of the trial court, holding that the TTPA "does create a private right of action in favor of pledgors for violations of the [TTPA] by predatory lenders." See Brown v. Tenn. Title Loans, Inc., No. E2008-01758-COA-R9-CV, 2009 WL 2213487, at *6 (Tenn.Ct.App. July 24, 2009).
A motion to dismiss a complaint for failure to state a claim filed pursuant to Tennessee Rule of Civil Procedure 12.02(6) " 'admits the truth of all of the relevant and material allegations contained in the complaint, but it asserts that the allegations fail to establish a cause of action.' " Freeman Indus., LLC v. Eastman Chem. Co., 172 S.W.3d 512, 516 (Tenn.2005) (quoting Leach, 124 S.W.3d at 90). We accept as true all factual allegations in the complaint.Id. We review de novo the trial court's legal conclusions, including the determination that the TTPA does not contain a private right of action. Tenn. R.App. P. 13(d); Stein v. Davidson Hotel Co., 945 S.W.2d 714, 716 (Tenn.1997).
Determining whether a statute creates a private right of action is a matter of statutory construction. Premium Fin. Corp. of Am. v. Crump Ins. Servs. of Memphis, Inc., 978 S.W.2d 91, 93 (Tenn.1998). Our essential duty in statutory construction is to determine and implement the legislature's intent without limiting or expanding the statute's coverage beyond what the legislature intended. Id.; Hawks v. City of Westmoreland, 960 S.W.2d 10, 16 (Tenn.1997). When the existence of a private right of action depends on the contents of the statute, "our courts are not privileged to create such a right under the guise of liberal interpretation of the statute." Premium Fin. Corp., 978 S.W.2d at 93; see Hogan v. McDaniel, 204 Tenn. 235, 319 S.W.2d 221, 223 (1958) (). The authority to create a private right of action pursuant to statute is the province of the legislature. Premium Fin. Corp., 978 S.W.2d at 93; Reed v. Alamo Rent-A-Car, Inc., 4 S.W.3d 677, 689 (Tenn.Ct.App.1999).
To determine whether the legislature intended to create a private right of action for excessive interest and prohibited fees, we begin with the express statutory language. See Ergon, Inc. v. Amoco Oil Co., 966 F.Supp. 577, 584 (W.D.Tenn.1997); Premium Fin. Corp., 978 S.W.2d at 93. Here, there is no dispute that the express language of the TTPA does not create such a right of action on behalf of a title pledgor against a title pledge lender—whether in the specific section prescribing the interest and fees that title pledge lenders may charge, Tenn.Code Ann. § 45-15-111(a), or elsewhere.3
If a statute does not expressly create a private right of action, our next inquiry is whether the legislature otherwise indicated an intention to imply such a right in the statute. Premium Fin. Corp., 978 S.W.2d at 93; Reed, 4 S.W.3d at 689. In this analysis, we look to the statutory structure and legislative history. Id. Appropriate factors to consider include (1) whether the party bringing the cause of action is an intended beneficiary within the protection of the statute, (2) whether there is any indication of legislative intent, express or implied, to create or deny the private right of action, and (3) whether implying such a remedy is consistent with the underlying purposes of the legislation.4Ergon, 966 F.Supp. at 583-84; Buckner v. Carlton, 623 S.W.2d 102, 105 (Tenn.Ct.App.1981), superseded by statute on other grounds, Act of May 24, 1984, ch. 972, 1984 Tenn. Pub. Acts 1026, as recognized in Lucas v. State, 141 S.W.3d 121, 129, 137 (Tenn.Ct.App.2004); see Premium Fin. Corp., 978 S.W.2d at 93. The burden ultimately falls on the plaintiff to establish that a private right of action exists under the statute. Premium Fin. Corp., 978 S.W.2d at 93 (citing Ergon, 966 F.Supp. at 585); Gillespie v. City of Memphis, No. W2007-01786-COA-R3-CV, 2008 WL 2331027, at *9 (Tenn.Ct.App. June 5, 2008).
The General Assembly originally enacted the TTPA in 1995, following a ...
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