Bunch v. TERPENNING
| Decision Date | 19 November 2009 |
| Docket Number | No. 106,Division No. 4.,725. Released for Publication by Order of the Court of Civil Appeals of Oklahoma,106 |
| Citation | 229 P.3d 574,2009 OK CIV APP 106 |
| Parties | Carrol L. BUNCH, Plaintiff/Appellee, v. Russell E. TERPENNING d/b/a Signature Real Estate & Finance, Golden Years Investments L.L.C., Keller Heating and Air Conditioning Inc., and Dan Keller, Defendants/Appellants. |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Michael L. Loyd, Michael L. Loyd & Associates, Bethany, OK, for Plaintiff/Appellee.
Jerome S. Sepkowitz, Derryberry & Naifeh LLP, Oklahoma City, OK, for Defendants/Appellants.
¶ 1 Russell E. Terpenning d/b/a Signature Real Estate & Finance (Terpenning) and Golden Years Investments L.L.C. (Golden Years) appeal the decision of the district court finding a loan from Terpenning to Carrol L. Bunch void pursuant to the provisions of the Oklahoma Consumer Credit Code, (Code) 14A O.S.2000 2008 §§ 1-101 through 9-903, and granting summary judgment to Bunch. Based on our review of the record on appeal and applicable law, we affirm.
¶ 2 In February 2005, Bunch contracted with Keller Heating and Air Conditioning Inc. (Keller) to improve the heating, air conditioning and hot water services of his residence in Oklahoma City. Bunch claimed he was attracted to Keller by an offer to finance the improvements he desired. The record contains a Keller flier, stating Bunch subsequently met with Keller owner Dan Keller, and, on February 15, 2005, signed a $20,000 note between himself and Terpenning, secured by a twenty-year mortgage on Bunch's residence (the Bunch Loan).
¶ 3 The note recited an annual interest rate of 15.99%, and the mortgage stated that the note provided for monthly installments of principal and interest. Four days later, Terpenning assigned the $20,000 note and mortgage to Golden Years. A February 13, 2005 e-mail between Terpenning and Dan Keller describes distribution of the loan proceeds as follows: Golden Years was to pay $15,000 for the assignment of the $20,000 note. From this $15,000 would come a $5,900 cash advance to Bunch, $495 in loan fees, $2,200 for materials for the heat and air-conditioning work, and "approximately $6,405 profit."
¶ 4 By mid-April 2005, Bunch was dissatisfied with the progress and quality of the work Keller was performing, and asked Terpenning to return the money paid to Keller so that he could secure an alternative contractor to complete the work. In July 2006, still dissatisfied, Bunch asked Terpenning to return the monthly payments he had made on the note. In March 2007, Bunch sued Terpenning and Golden Years, alleging they had violated the Code by making and attempting to collect a supervised consumer loan while not licensed in Oklahoma as supervised lenders. Bunch further alleged that Keller Inc. had breached the air-conditioning installation contact.1 Five days after Bunch filed his suit, Golden Years filed a foreclosure action against Bunch's property alleging default on the note it had purchased. The foreclosure action was consolidated with this case.
¶ 5 Bunch and Terpenning subsequently filed motions for summary judgment focusing on whether the $20,000 loan was a "supervised consumer loan" pursuant to the Code. Following these motions, the district court held that the Bunch Loan was a supervised consumer loan, and reserved the issues of damages, costs and fees for a future evidentiary hearing. The district court's subsequent judgment found that (1) Terpenning violated Section 3-502 of the Code by making a supervised consumer loan to Bunch without the appropriate licensing; (2) Golden Years violated Section 3-502 by taking assignment of, and attempting to collect the loan; and, (3) Bunch was not required to pay the remaining principal and interest on the loan pursuant to Section 5-202(2) of the Code, but could not recover any payments he had previously made. The district court dismissed Golden Years's foreclosure action. Terpenning appeals the decision that the Bunch loan was a supervised consumer loan and the consequent voiding of Bunch's obligation to repay it. Golden Years appeals the district court's dismissal of its foreclosure action.
¶ 6 We review a trial court's grant of summary judgment de novo. Carmichael v. Beller, 1996 OK 48, ¶ 2, 914 P.2d 1051, 1053. On review, we examine the pleadings and evidentiary materials submitted by the parties to determine whether there exists a genuine issue of material fact. Id. This Court bears "an affirmative duty to test all evidentiary material tendered in summary process for its legal sufficiency to support the relief sought by the movant." Copeland v. The Lodge Enters., Inc., 2000 OK 36, ¶ 8, 4 P.3d 695, 699. The summary process requires that we determine whether the record reveals only undisputed material facts supporting only a single inference that favors the movant's motion for summary judgment. Id. Further, when considering a motion for summary judgment, the evidence and the inferences to be drawn from the evidence must be viewed in the light most favorable to the party opposing the motion. Hargrave v. Canadian Valley Elec. Co-op., Inc., 1990 OK 43, ¶ 14, 792 P.2d 50.
¶ 7 This case also involves a question of statutory construction. Statutory construction is a question of law which we review de novo, without deference to the lower court. Twin Hills Golf & Country Club, Inc. v. Town of Forest Park, 2005 OK 71, ¶ 5, 123 P.3d 5, 6.
¶ 8 Terpenning and Golden Years's appeals raise eleven assignments of error. However, they assert essentially three legal issues: (1) whether the Bunch Loan was a "supervised consumer loan;" (2) whether Terpenning violated the Code by making the loan; (3) and whether Golden Years violated the Code by taking assignment of the loan and/or filing the foreclosure action.
¶ 9 Terpenning's fundamental allegation of error is that the district court incorrectly found the Bunch Loan to be a "supervised loan." "(1)Unless a person is a supervised financial organization or has first obtained a license from the Administrator authorizing him to make supervised loans, he shall not engage in the business of: (a) making supervised loans...." 14A O.S.2001 § 3-502. A supervised loan is "a consumer loan in which the rate of the loan finance charge exceeds ten percent (10%) per year as determined according to the provisions on loan finance charge for consumer loans." 14A O.S.2001 § 3-501(1). Section 3-104 of the Code defines a consumer loan as:
Terpenning is not a supervised financial organization nor is he licensed to make supervised loans. Further, Terpenning does not dispute that the Bunch Loan was a consumer loan. He argues, however, that he had made only six consumer loans in 2005, and therefore was not "a person regularly engaged in the business of making loans." The record establishes that Terpenning made ten loans that would satisfy the definition in § 3-104. Nonetheless, Terpenning contends that four of those loans were not consumer loans, and should not be considered when determining if he regularly engaged in the business of making loans. Although we find nothing in the statute requiring the exclusion of non-consumer loans when determining whether a lender is regularly engaged in the business of making loans, for the purposes of this Opinion, we will treat Terpenning as having made only six qualifying loans in 2005.
¶ 10 Terpenning relies on Barnes v. Helfenbein, 1976 OK 33, 548 P.2d 1014, and Rea v. Wichita Mortg. Corp., 747 F.2d 567 (10th Cir.1984), to demonstrate that his activity did not constitute "regular engagement" in the business of making loans. Terpenning argues that his "primary business" was not making loans and that Barnes and Rea indicate that the number of loans relative to a party's other business activities is a factor in determining the regular engagement issue. We find that neither case supports this argument.2 Rea held that a lender that is not subject to regulation pursuant to the Oklahoma Savings and Loan Code of 1970, (at that time 18 O.S.1981 §§ 381.1-381.86), may nonetheless violate the supervised loan provisions of the OCCC.3 Barnes affirmed the trial court's finding that a private individual who had "made infrequent small loans in the past" was not regularly engaged in the business of making loans.4 1976 OK 33 at ¶ 2, 548 P.2d 1014.
¶ 11 A review of case law from Oklahoma and other jurisdictions reveals no case determining what number of loans constitutes regular engagement in the business of making loans.5 Bunch argues that the definition of the regular engagement in the business of making loans can be determined from the definition of the "regular extension of consumer credit" found in the Code. We find this argument persuasive.
¶ 12 The provisions of the Code are supplemented by regulations promulgated by the Oklahoma Administrator of Consumer Affairs. See 14A O.S.2001 & Supp.2003 §§ 6-103 and 6-501 through 6-510. A footnote to the regulation commonly referred to as "Regulation Z," codified at O.A.C tit. 160 ch. 45, states at Section 160:45-1-2 n. 3 ("definitions and rules of construction") that:
A person regularly extends consumer credit only if it extended credit ... more than 25...
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