Daye v. Cmty. Fin. Loan Serv. Ctrs., LLC

• Decision Date: 30 November 2017
• Docket Number: No. CIV 14–0759 JB/SCY,CIV 14–0759 JB/SCY
• Citation: 280 F.Supp.3d 1222
• Parties: Clara DAYE, On behalf of herself and all others similarly situated, Plaintiff, v. COMMUNITY FINANCIAL LOAN SERVICE CENTERS, LLC, d/b/a Speedy Loan Defendant.
• Court: U.S. District Court — District of New Mexico

280 F.Supp.3d 1222

Clara DAYE, On behalf of herself and all others similarly situated, Plaintiff,

v.COMMUNITY FINANCIAL LOAN SERVICE CENTERS, LLC, d/b/a Speedy Loan Defendant.

No. CIV 14–0759 JB/SCY

United States District Court, D. New Mexico.

Filed November 30, 2017

Charles M. Delbaum, National Consumer Law Center, Inc., Boston, Massachusetts, and Richard N. Feferman, Nicholas H. Mattison, Feferman & Warren, Albuquerque, New Mexico, Attorneys for the Plaintiffs

Donald Kochersberger, Alicia M. LaPado, Business Law Southwest, LLC, Albuquerque, New Mexico, Attorneys for the Defendant

MEMORANDUM OPINION, FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

James O. Browning, UNITED STATES DISTRICT JUDGE

THIS MATTER comes before the Court on: (i) the Plaintiff's Requested Findings of Fact and Conclusions of Law, filed May 24, 2017 (Doc. 158)("Daye's FOFs"); (ii) the Defendant's Proposed Findings of Fact and Conclusions of Law, filed May 24, 2017 (Doc. 156)("Speedy's FOFs"); and (iii) the Opposed Motion to Strike Witnesses, filed May 13, 2016 (Doc. 95)("Motion to Strike").¹ The Court held a bench trial on March 15, 2017. See Transcript of Bench Trial, held March 15, 2017 ("Tr.").² The primary issues are: (i) how much should the Plaintiffs recover on account of the misrepresentations of Defendant Community Financial Loan Service Centers, LLC, doing business as Speedy Loan, regarding the cost of its loans; and (ii) how much should the Plaintiffs recover on account of Speedy Loan's violations of New Mexico law regarding payday loans. The Court determines that Speedy Loan's misrepresentations did not damage the Plaintiffs, because those misrepresentations made Speedy Loan's loans appear more expensive than they actually were. Consequently, the named plaintiff can recover statutory damages and attorney's fees, but the unnamed plaintiffs can recover nothing. The Court also determines that Speedy Loan must return the interest and fees it collected from the Plaintiffs to the extent that it collected more than the New Mexico Small Loan Act, N.M. Stat. Ann. §§ 58–15–1 to –39, permits.

FINDINGS OF FACT

The Plaintiffs and Speedy Loan have stipulated to some facts. See Pretrial Order ¶¶ 1–53, at 8–19, filed February 15, 2017 (Doc. 144)("Pretrial Order"). The proposed findings of facts and conclusions of law submitted by the parties agree on other facts. See, e.g., Daye's FOFs ¶ 9, at 2 (alleging that Speedy Loan made 31,082 loans during the time period covered by Daye's suit); Speedy's FOFs ¶ 9, at 2 (same).³ The Court has carefully considered those stipulations and proposed findings, and it sets forth its findings ("FOFs") below.⁴

1. Speedy Loan is a Delaware LLC. See Pretrial Order ¶ 2, at 8 (stipulated fact).

2. Speedy Loan is a profitable business. See Pretrial Order ¶ 4, at 8 (stipulated fact).

3. Speedy Loan is in the business of providing short term, unsecured loans to individuals and operates twelve loan stores in New Mexico. See Daye's FOFs ¶ 7, at 2; Speedy's FOFs ¶ 1, at 1.

4. Those loans are made "in the regular course of [Speedy Loan's] trade or commerce." Pretrial Order ¶ 15, at 10 (stipulated fact).

5. "Since at least August 22, 2010, Speedy has offered a single loan product, which it calls an 'installment loan.' " Pretrial Order ¶ 12, at 9 (stipulated fact).

6. "Speedy entered into 31,082 loans in New Mexico between August 22, 2010 and August 22, 2014." Pretrial Order ¶ 13, at 10 (stipulated fact). See Daye's FOFs ¶ 9, at 2; Speedy's FOFs ¶ 2, at 1.

7. To qualify for a loan, Speedy Loan required its customers "to have a bank account from which payments could be withdrawn through electronic fund transfer."

Pretrial Order ¶ 16, at 10 (stipulated fact).

8. Speedy Loan required its customers to provide the account and routing numbers associated with such an account "[a]s part of the loan application process." Pretrial Order ¶ 17, at 10 (stipulated fact).

9. Speedy Loan required all of its customers to sign both a loan agreement and a "PPD/ACH [Prearranged Payment and Deposit/Automated Clearing House] Authorization" form. Pretrial order ¶¶ 18, 20, at 10–11 (stipulated facts). See Daye's FOFs ¶¶ 35–36, at 5.

10. All of Speedy Loan's loan agreements listed the "Total of Payments," and stated that the Total of Payments is the amount that the borrower "will have paid when [they] have made all scheduled payments." Pretrial Order ¶ 39, at 13 (stipulated fact).

11. Each loan agreement also contained a "Payment Schedule" and stated that the borrower promised to pay "each installment payment as it becomes due as shown above in the Payment Schedule." Pretrial Order ¶ 38, at 12–13 (stipulated fact).

12. The loan agreements also provided:

On or about the day each installment payment becomes due, you authorize us to affect [sic] one or more ACH [Automated Clearing House] debit entries to your Account at the Bank.

You acknowledge that the account on which the Check/ACH Authorization is drawn is a legitimate, open, and active account.

This document represents the final agreement between creditor and you and may not be contradicted by evidence of any alleged oral agreement.

Pretrial Order ¶ 19, at 10 (stipulated fact).

13. For each loan, the PPD/ACH Authorization form specified a "schedule of automatic debits from the customer's bank account." Pretrial Order ¶ 20, at 11 (stipulated fact).

14. Speedy Loan used that schedule of automatic debits to remind employees when they should withdraw money from the customer's bank account. See Pretrial Order ¶ 21, at 11 (stipulated fact).

15. The Total of Payments listed in all of the loan agreements was consistent with the schedule of automatic debits contained in the corresponding PPD/ACH Authorization form. See Daye's FOFs ¶ 73, at 17; Speedy's FOFs ¶ 14, at 3.

16. 25,976 of Speedy Loan's loan agreements, however, listed a Total of Payments that was "lower than the sum of payments disclosed in the Payment Schedule." Pretrial Order ¶ 40, at 13 (stipulated fact).

17. The total discrepancy between the Totals of Payments and the Payment Schedules was $783,282.50. See Pretrial Order ¶ 42, at 13 (stipulated fact).

18. Both Speedy Loan and its customers expected payments in accordance with the loan agreement's Total of Payments and the PPD/ACH Authorization form's schedule of automatic debits and not in accordance with the loan agreement's Payment Schedule. See Speedy's FOFs ¶ 16, at 3

19. Speedy Loan "never attempted to collect the amounts identified in the Payment Schedule," and instead "collected the amounts on the PPD/ACH schedule."

Speedy's FOFs ¶ 16, at 3.⁵

20. Speedy Loan "has known of the New Mexico Small Loan Act's provisions governing payday loans since at least August 22, 2010." Pretrial Order ¶ 24, at 11 (stipulated fact).

21. Speedy Loan's employee handbook included the following instructions as part of the process of giving a loan:

Have the customer sign the PPD/ACH Authorization and again take it to ensure that you have it in your possession. Remember to tell the customer that if they do not want the payment to come out of their account on the date shown, they must come in to the store and make the payment in cash, before 2:30 p.m. (Central time) on the business day before the ACH date. You may ask the customer to initial individual items for emphasis but it is not required. The signature is sufficient.

....

Make copies of all of these documents, Contract, PPD/ACH Authorization (you need the original plus two copies of this document, original for file, one copy for the customer and one copy for the Installment PPD/ACH binder or drawer), Privacy Policy Statement, and the Installment Loan disclaimer. The copies go to the customer. We keep the originals! All Originals go in the customer file.

....

Following this procedure is mandatory and will ensure that you are operating within the limits of the Truth in Lending Act [ 15 U.S.C. §§ 1601 –67f] and other laws.

Speedy Loan Policy and Procedure Manual 14.23 (updated November 12, 2014)(CFSC_Daye_Discovery000277)(Exhibit 50). See Tr. at 2:22–3:23 (Mattison, Court, Kochersberger)(admitting, without objection, the fifty exhibits specified in the parties' amended consolidated exhibit list).

22. Speedy Loan required its customers, as a condition of receiving a loan, to provide a debit authorization giving Speedy Loan the authority to electronically transfer funds from the customer's bank account for repayment.⁶

23. "Between August 22, 2010 and August 22, 2014, 31,074 of [Speedy Loan's] 31,082 [New Mexico] loans charged more than the legal fee for payday loans." Pretrial Order ¶ 31, at 12 (stipulated fact).

24. Speedy Loan "collected $7,340,471.14 above the legal fee for payday loans." Pretrial Order ¶ 32, at 12 (stipulated fact).

25. Speedy Loan never included in its loan agreements "the disclosures required to accompany a payday loan" under New Mexico law. Pretrial Order ¶ 27, at 11 (stipulated fact).

26. Speedy Loan frequently renewed its loans. See Pretrial Order ¶ 34, at 12 (stipulated fact).

27. Speedy Loan did not afford "borrowers the right to enter an unsecured payment plan." Pretrial Order ¶ 25, at 11 (stipulated fact).

28. Speedy Loan did not afford borrowers "the right to rescind any of its loan documents." Pretrial Order ¶ 28, at 11 (stipulated fact).

29. All of Speedy Loan's loans had "repayment periods exceeding 35 days." Pretrial Order ¶ 29, at 12 (stipulated fact).

30. 12,189 of Speedy Loan's loans were "to be repaid in fewer than four payments" or had a term that was "less than 121 days." Pretrial Order ¶ 23, at 11 (stipulated fact).

31. Daye, the named plaintiff, took out four loans from Speedy Loan. See Daye's FOFs ¶ 10, at 2 ("Speedy made four loans to Ms. Daye."); Speedy's FOFs ¶ 34, at 6 ("Ms. Daye is the named Plaintiff in this case, and obtained and four loans from Speedy.").

32. To obtain those loans, Speedy Loan required Daye to authorize electronic fund transfers from her bank account for repayment of those loans. See supra FOFs ¶ 21. See also Daye's FOFs ¶ 15, at...