Gilmore v. Pawn King, Inc.

• Decision Date: 16 September 2014
• Docket Number: No. 18848.,18848.
• Citation: 98 A.3d 808,313 Conn. 535
• Court: Connecticut Supreme Court
• Parties: Douglas GILMORE, Executor (Estate of Bess Gilmore) v. PAWN KING, INC., et al.

313 Conn. 535

98 A.3d 808

Douglas GILMORE, Executor (Estate of Bess Gilmore)

v.PAWN KING, INC., et al.

No. 18848.

Supreme Court of Connecticut.

Argued Sept. 23, 2013.

Decided Sept. 16, 2014.

Jonathan J. Klein, Bridgeport, for the appellant (plaintiff).

Robert M. Frost, Jr., Bridgeport, with whom, on the brief, was Brian E. Tims, Westport, for the appellees (defendants).

ROGERS, C.J., and PALMER, ZARELLA, EVELEIGH, McDONALD and ESPINOSA, Js.

ZARELLA, J.

The dispositive issue in the present case, which comes to us upon our acceptance of three certified questions of law from the United States District Court for the District of Connecticut pursuant to General Statutes § 51–199b (d),¹ is whether the interest rates applicable to pawnbroker repurchase agreements are governed by the pawnbroker interest rate statute, General Statutes § 21–44, or the usury statute, General Statutes § 37–4, or whether such agreements are not regulated at all. After considering the language of §§ 21–44 and 37–4, the genealogy of these statutes, and the pawnbroker statutory scheme, we conclude that the interest rates applicable to such repurchase agreements are governed by § 37–4.

The record certified by the District Court contains the following undisputed facts and procedural history. Between 2005 and 2007, the named defendant, Pawn King, Inc. (Pawn King),² entered into five separate repurchase transactions with the original plaintiff in this action, Bess Gilmore,³ pursuant to which Gilmore agreed to sell items of personal property to Pawn King in exchange for an agreed on amount, and Pawn King agreed to hold those items, subject to Gilmore's right to repurchase them. The repurchase agreements set the repurchase price as the original amount that Pawn King had paid to Gilmore for the items, plus a fee of 20 percent of that original amount for each month that Pawn King held the items. The District Court provided the following example: “Pawn King paid ... Gilmore $1500 for three items—a watch, [a] lighter and [a] bracelet.... Gilmore secured the right to repurchase those items within thirty days for $1800—the $1500 original price paid plus $300 (20 [percent] fee). Pawn King would often agree to hold the items longer than thirty days conditioned [on] ... Gilmore's payment of additional monthly fees of [20] percent.”

On June 4, 2008, Pawn King informed Gilmore that, if she did not pay two months of fees on the items that were the subject of three of the repurchase transactions, it would sell those items. On July 1, 2008, when Gilmore contacted Pawn King to arrange payment, it informed her that it had disposed of the items. She demanded that Pawn King return the property, and, when it did not, she initiated this action in the District Court, claiming, inter alia, that Pawn King's actions violated § 21–44. Gilmore alleged violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(a) and (c), and the Connecticut Unfair Trade Practices Act, General Statutes § 42–110a et seq., and also alleged conversion, statutory theft, intentional infliction of emotional distress, unjust enrichment, breach of contract, breach of an implied contract, and breach of the implied duty of good faith and fair dealing.⁴

The defendants filed a motion for summary judgment on the ground that the language of § 21–44 restricts its scope to pawnbroker loans, and, therefore, the rate limits set forth in § 21–44 do not apply to repurchase transactions. Specifically, the defendants contended that Public Acts 1997, No. 97–164, § 5 (P.A. 97–164), legislatively overruled this court's holding in Rhodes v. Hartford, 201 Conn. 89, 96–97, 513 A.2d 124 (1986), that the pre–1997 version ⁵ of § 21–44 applied to repurchase transactions, by amending the statute and deleting a key statutory term on which this court had relied in interpreting the statute. In opposition to the defendants' motion for summary judgment, the plaintiff argued that P.A. 97–164, § 5, did not change the meaning of the pre–1997 version of § 21–44, as articulated by this court in Rhodes.

The District Court determined that the resolution of the defendants' motion for summary judgment turned on whether, in light of P.A. 97–164, § 5, § 21–44 continues to govern the rates charged by pawnbrokers in repurchase transactions. Because no appellate authority has construed § 21–44 since the 1997 amendment to that statute, and because the question is one of public importance, the District Court certified the following questions to this court: “1. Does ... § 21–44 restrict ‘rates of interest’ chargeable by a pawnbroker, or does it more generally restrict the ‘rates' chargeable for the use of money obtained from a pawnbroker in connection with a repurchase transaction?

“2. Did the Connecticut [General Assembly], in its 1997 amendment to [the pre–1997 version of] § 21–44, exempt repurchase transactions and the attendant fees charged from the limits on rates received by pawnbrokers?

“3. If so, are repurchase transactions, as described by the court in Rhodes v. [Hartford, supra, 201 Conn. at 89, 513 A.2d 124], considered loans subject to the interest rate limits imposed by ... § 37–4?”

In their brief to this court, the defendants argue that the rates imposed by pawnbrokers in connection with repurchase transactions are not regulated under either § 21–44 or § 37–4. First, the defendants contend that § 21–44 restricts only rates of interest chargeable by a pawnbroker, and, because the rates applicable to repurchase agreements are not rates of interest, such rates do not fall within the scope of the statute. Second, the defendants argue that the legislature exempted repurchase agreements from § 21–44 in P.A. 97–164, § 5, thereby overruling Rhodes. Third, the defendants assert that this court should decline to answer the third certified question because it is unnecessary to address it as it does not relate to any of the plaintiff's pending claims. If the court does address this question, however, the defendants posit that § 37–4 does not govern the rates charged in connection with repurchase agreements because (1) such agreements are not loans as contemplated by the statute, and (2) § 37–4 excludes all pawnbroker transactions.

The plaintiff responds that the rates applicable to repurchase transactions are governed by § 21–44, or, alternatively, they are governed by § 37–4. Repurchase transactions must be regulated, according to the plaintiff, because the pawnbroker statutes are remedial in nature and were intended to protect borrowers from unscrupulous lenders. With respect to the first certified question, the plaintiff contends that § 21–44 governs all rates chargeable for the use of money obtained in connection with a repurchase transaction, rather than just rates of interest. In addition, the plaintiff argues that P.A. 97–164, § 5, did not overrule Rhodes because the genealogy of the pawnbroker statutes and the legislative history do not indicate that this amendment was made in response to this court's decision in Rhodes. Moreover, the plaintiff posits that, because the legislature removed the words “directly” and “indirectly” from the pre–1997 version of § 21–44 in P.A. 97–164, § 5, the scope of § 21–44 did not change. Finally, the plaintiff claims that, if the rates that pawnbrokers charge for repurchase transactions are not governed by § 21–44, then such transactions must be governed by § 37–4.

Although we agree with the defendants that § 21–44 no longer governs the rates that pawnbrokers may charge in connection with repurchase transactions, we also agree with the plaintiff that, because § 21–44 no longer governs repurchase transactions, such transactions are governed by § 37–4. Thus, the answer to the first certified question is that § 21–44 governs rates of interest rather than the rates pawnbrokers may charge in connection with repurchase agreements. The answer to the second certified question is that the legislature exempted repurchase transactions from § 21–44 in P.A. 97–164, § 5. Finally, the answer to the third certified question is that the rates pawnbrokers may charge in connection with repurchase agreements are subject to the rate limits imposed by § 37–4.

I

We begin our analysis with the first and second certified questions, which together ask the court to decide whether § 21–44 governs the rates that pawnbrokers may charge in connection with repurchase transactions. For the reasons set forth hereinafter, we conclude that repurchase transactions are no longer included within the purview of § 21–44.

Because this court previously held in Rhodes that the pre–1997 version of § 21–44 encompassed repurchase agreements; see Rhodes v. Hartford, supra, 201 Conn. at 96–97, 513 A.2d 124; it is necessary to determine whether the legislature's amendment to the pre–1997 version of § 21–44 in P.A. 97–164, § 5, altered the scope of the statute. Although “we do not write on a clean slate” when this court previously has interpreted a statute; Kasica v. Columbia, 309 Conn. 85, 93, 70 A.3d 1 (2013); whether the legislature has changed the meaning of a statute is a matter of statutory interpretation. “When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature.... In seeking to determine that meaning, General Statutes § 1–2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.... When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common...