Fugate v. Jackson Hewitt Inc.

• Decision Date: 01 March 2011
• Docket Number: No. WD 72353.,WD 72353.
• Citation: 347 S.W.3d 81
• Parties: Sherita FUGATE, Appellant,v.JACKSON HEWITT, INC., Respondent.
• Court: Missouri Court of Appeals

347 S.W.3d 81

Sherita FUGATE, Appellant,
v.
JACKSON HEWITT, INC., Respondent.

No. WD 72353.

Missouri Court of Appeals, Western District.

March 1, 2011.Motion for Rehearing and/or Transfer to

Supreme Court Denied March 29, 2011. Application for Transfer Denied Oct. 4, 2011.

[347 S.W.3d 83]

Bert S. Braud, Kansas City, MO, for Appellant.Daniel B. Hodes, Charles W. German, Kansas City, MO, for Respondent.Before CYNTHIA L. MARTIN, P.J., JAMES EDWARD WELSH, and GARY D. WITT, JJ.JAMES EDWARD WELSH, Judge.

Sherita Fugate appeals the circuit court's judgment dismissing her petition for a class action complaint against the tax preparation company Jackson Hewitt, Inc. Fugate had alleged in her petition that Jackson Hewitt failed to comply with statutory requirements for credit services organizations when it obtained an income tax refund anticipation loan (“RAL”) for her. She further alleged that Jackson Hewitt's noncompliance with the credit services organizations statutes constituted a violation of the Missouri Merchandising Practices Act. The circuit court dismissed Fugate's petition on the basis that Jackson Hewitt was not a credit services organization and, therefore, was not subject to the statutory requirements for credit services organizations. Alternatively, the court concluded that dismissal was appropriate because, even if Jackson Hewitt were a credit services organization, Fugate failed to allege any actual damages that she suffered as a result of Jackson Hewitt's noncompliance with the statutory requirements. Fugate challenges these conclusions on appeal. We reverse and remand the case to the circuit court for further proceedings.

When reviewing a motion to dismiss for failure to state a claim, we treat the facts contained in the petition as true. Hamid v. Kansas City Club, 293 S.W.3d 123, 125 (Mo.App.2009). The facts, as alleged in Fugate's petition, are as follows. On January 19, 2007, Jackson Hewitt prepared Fugate's 2006 federal income tax return. At the same time, Jackson Hewitt obtained an extension of credit for her in the form of an RAL from Santa Barbara Bank & Trust (“SBBT”). The RAL was based upon Fugate's anticipated income tax refund. Fugate indirectly paid Jackson Hewitt for arranging her RAL because the principal amount of the loan included the cost of obtaining the loan. Additionally, the RAL included in its principal amount the fees Jackson Hewitt charged for the preparation and filing of Fugate's federal income tax return. Fugate's RAL agreement with SBBT ¹ indicated that Jackson Hewitt received money from SBBT in connection with the extension of credit to Fugate. Specifically, the agreement stated that SBBT “will pay compensation to” Jackson Hewitt in consideration of rights that Jackson Hewitt granted to SBBT and services that Jackson Hewitt performed on behalf of SBBT.

Fugate filed her petition for a class action against Jackson Hewitt two years after the RAL transaction. In Count I of her petition, Fugate contended that, because Jackson Hewitt obtained an extension of credit for her, Jackson Hewitt was a credit services organization pursuant to section 407.637, RSMo 2000. Fugate alleged that, as a credit services organization,

[347 S.W.3d 84]

Jackson Hewitt was required to comply with certain statutory requirements but failed to do so. In particular, Fugate alleged that Jackson Hewitt failed to register with the Director of Finance as a credit services organization as required by section 407.640, RSMo 2000; failed to obtain a surety bond or establish a surety account as required by section 407.639, RSMo 2000; failed to provide her with documents and disclosures required by section 407.641, RSMo 2000, including a statement of the buyer's rights; and failed to provide her with documents and disclosures required by section 407.642, RSMo 2000, including copies of a notice of cancellation and a contract with the necessary inclusions.

Fugate claimed that Jackson Hewitt's noncompliance with these statutes gave rise to a cause of action under section 407.644, RSMo 2000. Section 407.644.1(1) says that “[a] buyer injured by a violation of sections 407.635 to 407.644 may bring an action for the recovery of damages. The damages awarded may not be less than the amount paid by the buyer to the credit services organization, plus reasonable attorney's fees and court costs.” The statute also permits an award of punitive damages. § 407.644.1(2). Fugate alleged that Jackson Hewitt's violations damaged her and the proposed class members ² in an amount equal to all fees and charges they incurred in connection with Jackson Hewitt's arrangement of the RAL.

In Count II of her petition, Fugate contended that Jackson Hewitt violated the Merchandising Practices Act, sections 407.010–407.130, RSMo. Section 407.644.3 provides that a violation of the credit services organization statutes is an unlawful practice under the Merchandising Practices Act, and that the violator “shall be subject to all penalties, remedies and procedures provided in sections 407.010 to 407.130.”

Jackson Hewitt moved to dismiss Fugate's petition. Following a hearing, the circuit court dismissed Fugate's petition after concluding that it failed to state a claim upon which relief could be granted. The court determined that Jackson Hewitt was not a credit services organization under Missouri law, and therefore, Fugate could not maintain a cause of action for Jackson Hewitt's alleged noncompliance with the statutory requirements for a credit services organization. The court also concluded that, even if Jackson Hewitt were a credit services organization, Fugate could not prevail because she did not allege any actual damages that she suffered due to Jackson Hewitt's failing to identify itself as a credit services organization and its failing to make the statutorily-required disclosures. Because Fugate's Merchandising Practices Act violation claim in Count II was predicated upon the successful prosecution of her claim in Count I, the court dismissed both counts of her petition. Fugate appeals.

We review a dismissal for failure to state a claim de novo. Lynch v. Lynch, 260 S.W.3d 834, 836 (Mo. banc 2008). A motion to dismiss for failure to state a claim “is solely a test of the adequacy of the plaintiff's petition.” Keveney v. Mo. Military Acad., 304 S.W.3d 98, 101 (Mo. banc 2010). We accept the plaintiff's allegations as true, and we do not attempt to weigh any of the alleged facts or judge

[347 S.W.3d 85]

their credibility or persuasiveness. Id. “The petition is reviewed in an almost academic manner, to determine if the facts alleged meet the elements of a recognized cause of action or of a cause that might be adopted in that case.” Id. In making this determination, we give the pleadings their broadest intendment and most liberal construction, and we accord the petition “ ‘all reasonable inferences deducible from the facts stated.’ ” Lakeridge Enters., Inc. v. Knox, 311 S.W.3d 268, 271 (Mo.App.2010) (citation omitted).

In her first point, Fugate claims that the dismissal was erroneous because Jackson Hewitt is a credit services organization under the plain language of the credit services organization statutes. In interpreting the credit services organization statutes to determine their applicability to Jackson Hewitt, we must “ ‘ascertain the intent of the legislature from the language used, ... give effect to that intent if possible, and ... consider the words in their plain and ordinary meaning.’ ” S. Metro. Fire Prot. Dist. v. City of Lee's Summit, 278 S.W.3d 659, 666 (Mo. banc 2009) (citation omitted). “If statutory language is not defined expressly, it is given its plain and ordinary meaning, as typically found in the dictionary.” Derousse v. State Farm Mut. Auto. Ins. Co., 298 S.W.3d 891, 895 (Mo. banc 2009).

Section 407.637.1 defines a credit services organization:

1. A credit services organization is a person who, with respect to the extension of credit by others and in return for the payment of money or other valuable consideration, provides or represents that the person can or will provide any of the following services:

(1) Improving the buyer's credit record, history or rating;

(2) Obtaining an extension of credit for a buyer; or

(3) Providing advice or assistance to a buyer with regard to subdivision (1) or (2) of this subsection.

Two of this statute's terms are further defined in section 407.635, RSMo 2000. Section 407.635(3) defines an “extension of credit” as “the right to defer payment of debt or to incur debt and defer its payment offered or granted primarily for personal family or household purposes.” Section 407.635(1) defines a “buyer” as “an individual who is solicited to purchase or who purchases the services of a credit services organization.”

In her petition, Fugate asserted that Jackson Hewitt obtained an extension of credit for her, in the form of an RAL, from SBBT. Fugate further asserted that she indirectly paid Jackson Hewitt for obtaining the RAL because the principal amount of the loan included the cost of obtaining it, and her agreement with SBBT disclosed that SBBT paid Jackson Hewitt for services that Jackson Hewitt performed in connection with Fugate's RAL.

There is no dispute that the RAL was an extension of credit, as it was a debt that Fugate incurred and deferred paying until she received her federal income tax refund. The dispute in this case is whether Fugate's allegations that she indirectly paid Jackson Hewitt because she paid SBBT for the cost of obtaining the RAL, who, in turn, paid Jackson Hewitt, were sufficient to demonstrate (1) that she was a “buyer,” and (2) that Jackson Hewitt was a “credit services organization” because it obtained the RAL for her “in return for the payment of money.” Jackson Hewitt argues that Fugate had to allege that she directly paid Jackson Hewitt for obtaining the RAL in order to satisfy the statutory definitions of a “buyer” and a “credit services organization.”...