Cazzanigi v. General Elec. Credit Corp., s. 61947-6

Decision Date26 June 1997
Docket NumberNos. 61947-6,63417-3,s. 61947-6
Citation938 P.2d 819,132 Wn.2d 433
CourtWashington Supreme Court
PartiesBrad CAZZANIGI, Anthony Gonzalez and Tina Gonzalez, husband and wife, individually and on behalf of persons similarly situated, Respondents, v. GENERAL ELECTRIC CREDIT CORPORATION, a foreign corporation, a/k/a General Electric Capital Corporation, Appellant.

Evergreen Legal Services, Robert Scott, Jr., Wenatchee, amicus curiae on behalf of the Washington State Council of Seniors.

Davis, Wright & Tremaine, Stephen Rummage, Stuart Dunwoody, John Zobel, Seattle, Jeffers, Danielson, Sonn & Alyward, James Danielson, Wenatchee, for Appellant.

Davis, Arneil, Dorsey, Kight & Parlette, Robert Parlette, Wenatchee, Jane Shapira, Seattle, Lacy, Kane & Richardson, Inc., P.S., Scott M. Kane, E. Wenatchee, Anthony L. Rafel, Seattle, for Respondents.

MADSEN, Justice.

Plaintiffs claim that financing agreements into which they entered are retail installment contracts which violate the Retail Installment Sales of Goods and Services Act (RISA) under this court's holdings in Zachman v. Whirlpool Acceptance Corp., 120 Wash.2d 304, 841 P.2d 27 (1992). Although numerous issues are raised, we find that two issues are dispositive of Plaintiffs' claims and, accordingly, do not reach the remaining issues. First, we conclude that 1992 legislation deregulating service charges under RISA applies retroactively and disposes of Plaintiffs' claims that excess service charges were imposed under the financing agreements. Second, there is no This is a class action brought in January 1993 by retail buyers of consumer goods who financed their purchases through General Electric Credit Corporation (GE Capital) alleging that the financing documents, "private label" credit agreements, violate RISA, RCW 63.14. Plaintiffs also asserted claims based upon common law usury, fraud, unconstitutionality of 1993 amendments to RISA, violation of the Consumer Protection Act (CPA), and breach of contract. Among other things, they sought penalties under RISA, attorney fees and costs, damages, and injunctive and declaratory relief. The original class representatives were Brad Cazzanigi, who purchased goods from Midway Furniture (National Home Furnishings), and Anthony and Tina Gonzalez, who purchased goods from Apple Computer. An additional class representative, Candace Jones (formerly Mielke), who purchased goods from Levitz Furniture, was added when her motion to intervene was granted January 23, 1995. (The order certifying classes was entered October 5, 1995).

express or implied private cause of action under RCW 63.14.180 for nonservice charge violations of RISA.

In Zachman, this Court held that financing documents involved there, although titled "revolving charge plan agreements," were not, as a matter of law, valid revolving charge agreements. Zachman, 120 Wash.2d 304, 841 P.2d 27. Instead, the agreements were in effect retail installment contracts which violated RISA because they provided for a greater rate of service charge than allowed by statute and their disclosures regarding the cost of credit were legally insufficient. Plaintiffs argue that, like the agreements in Zachman, the agreements in this case are also effectively retail installment contracts which violate RISA.

While the appeal in Zachman was pending, the Legislature deregulated service charges under RISA, eliminating the differential between the maximum interest rates allowed for retail installment contracts, revolving charge accounts, and lender credit cards. Laws of 1992, ch. 193.

RCW 63.14.130(1), effective April 2, 1992, now provides that service charges "shall not exceed the dollar amount or rate agreed to by contract and disclosed...."

Zachman was filed in November 1992. The legislative response was almost immediate. Amendments to RISA were passed which were intended to overturn Zachman. Laws of 1993, 1st Sp. Sess., ch. 5. Shortly after this action was brought, GE Capital moved for summary judgment based upon the 1993 amendments. The trial court denied the motion by order dated January 28, 1994. In a letter opinion of the same date, the court reasoned that while the Legislature clearly intended to overturn Zachman, the amendments did not in fact do so. In light of its ruling, the court declined to reach Plaintiffs' constitutional challenges to the 1993 amendments and their argument that the amendments could not be retroactively applied.

The parties then each moved for partial summary judgment as follows: Plaintiffs moved for summary judgment that Zachman controls and GE Capital's private label financing agreements violate RISA. GE Capital sought summary judgment that Plaintiffs had no affirmative cause of action for disclosure violations, but that such violations could be asserted defensively only in an action brought by a creditor. GE Capital also sought summary judgment that to the extent Plaintiffs argued that GE Capital charged excess service charges and sought penalties under RCW 63.14.180, their claims were barred by the six-month time limit of RCW 63.14.152.

In an order dated October 7, 1994, the trial court granted both sides' motions for partial summary judgment. As explained in letter opinions of August 16, 1994, and October 7, 1994, the court ruled favorably to Plaintiffs that the agreements between Plaintiffs and GE Capital were retail installment contracts which violated RISA because the floating interest rate statutorily allowing for retail installment contracts before April 1992 was lower than the 18 percent rate charged in the GE Capital agreements. The court also ruled, however, in GE Capital's In the August 16, 1994, and the October 7, 1994, letter opinions, the court also rejected GE Capital's argument that it should be excused from any noncompliance with RISA due to a good faith failure to anticipate Zachman, and rejected its argument that RISA claims could not be brought against it because it was not a party to the original contract. The court deferred ruling on GE Capital's argument that it complied with disclosure requirements under the federal Truth in Lending Act, 15 U.S.C. § 1601 and thus it complied with RISA's disclosure requirements pursuant to RCW 63.14.151.

favor that RISA allows a private cause of action under RCW 63.14.180 only for penalties for excess service charges and not for disclosure violations. Further, the court held that the six month period in RCW 63.14.152 applied to Cazzanigi's and the Gonzalezes' claims for penalties for excess service charges and therefore, these claims were time barred.

By letter opinions dated November 17, 1994, and January 6, 1995, the trial court ruled that federal law would be used to determine what disclosures are required under the Truth in Lending Act. The court also denied Plaintiffs' motion for summary judgment on their claims under the CPA, RCW 19.86, and held that Plaintiffs Gonzalezes' CPA claims were time-barred. These rulings were embodied in orders dated December 9, 1994, and March 13, 1995.

In the meantime, in June 1994, Candace Jones (formerly Mielke) sought to intervene. She did not file a copy of her proposed complaint with the motion, but instead filed it July 11, 1994. The motion to intervene was granted January 23, 1995.

In early 1995, Jones moved for summary judgment on her claim that GE Capital had collected excess service charges under RISA (as noted, the court earlier ruled that Cazzanigi's and the Gonzalezes' claims based upon excess service charges were time-barred). GE Capital also moved for summary judgment, arguing that 1992 legislation deregulating all service charges under RISA, Laws of 1992 In a letter opinion dated April 19, 1995, the trial court concluded among other things that the legislation deregulating service charges applied only from April 2, 1992, the effective date of the legislation, and that the financing agreement Jones entered into was a retail installment contract. Accordingly the trial court granted Jones's motion for summary judgment on her RISA claims based on excess service charges for the period prior to April 2, 1992; therefore, GE Capital was liable for penalties under RCW 63.14.180 with respect to service charges paid by Jones before April 2, 1992. The court rejected GE Capital's argument that Jones's claim under RISA was untimely, reasoning that documents filed with her motion to intervene were sufficient to give notice of her claims and that the failure to file a copy of her proposed complaint with the motion did not render her motion fatally defective. Because Jones's motion was filed within six months of her final payment, her RISA claim based on excessive service charges was timely under RCW 63.14.152. The court also held that Jones's CPA claims were time-barred, and declined to reconsider several issues it had already decided. These rulings were embodied in an order dated October 5, 1995 (Jones order).

ch. 193, § 1 (RCW 63.14.130), applies to the class members' agreements even if entered into prior to enactment of the legislation. GE Capital further urged that Jones's RISA and CPA claims were time-barred.

In the meantime, the trial court also ruled on a number of issues involving class certification in a letter opinion dated September 6, 1995. An order certifying a class consisting of three subclasses was entered also on October 5, 1995. Both parties sought review of the order certifying class. However, Plaintiffs subsequently agreed with GE Capital's position that it would unduly complicate this already complex proceeding to include review of the class certification at this time, and accordingly withdrew their request for discretionary review of that order. By notation order dated February 23, 1996, the Supreme Court Commissioner Pursuant to a December 15, 1995, ruling by the Commissioner, the orders of January 28, 1994, October 7, 1994, December 9, 1994, March 13, 1995, and October 5,...

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