State v. Minn. Sch. of Bus., Inc., A16-0239

• Citation: 899 N.W.2d 467
• Decision Date: 26 July 2017
• Docket Number: A16-0239
• Parties: STATE of Minnesota, Appellant, v. MINNESOTA SCHOOL OF BUSINESS, INC. d/b/a Minnesota School of Business, et al., Respondents.
• Court: Supreme Court of Minnesota (US)

899 N.W.2d 467

STATE of Minnesota, Appellant,

v.MINNESOTA SCHOOL OF BUSINESS, INC. d/b/a Minnesota School of Business, et al., Respondents.

A16-0239

Supreme Court of Minnesota.

Filed: July 26, 2017

Lori Swanson, Attorney General, Alan I. Gilbert, Solicitor General, Kathryn I. Landrum, Adam Welle, Assistant Attorneys General, Saint Paul, Minnesota, for appellant.

Joseph W. Anthony, Brooke D. Anthony, Daniel R. Hall, Amelia Selvig Hartman, Anthony Ostlund Baer & Louwagie, P.A., Minneapolis, Minnesota, for respondents.

OPINION

LILLEHAUG, Justice.

Respondents, Minnesota School of Business and Globe University (collectively, "the Schools"), made private student loans at interest rates of up to 18 percent. The State, through the Minnesota Attorney General, sought to enjoin the Schools from making these loans. Among other things, the State alleged that the Schools charged usurious interest rates and made loans without the required license. On cross-motions for summary judgment, the district court denied the State's motion in its entirety and dismissed the usury and licensing claims. On interlocutory appeal, the court of appeals affirmed the district court. Because we conclude that the Schools charged usurious interest rates and made loans without the required license, we reverse the court of appeals and remand to the district court for further proceedings consistent with this opinion.

FACTS

The Schools are for-profit corporations providing postsecondary education services and private student loans in Minnesota. The Schools offered the loans to students for a maximum of $3,000 to $7,500 per loan, usually at interest rates between 12 and 18 percent, depending on the timing and type of loan.¹ A student receiving a loan from the Schools entered into an agreement at the beginning of each academic year. The Schools never paid out money to the student; rather, the Schools' affiliated entities—EdOp Loan Servicing, LLC and Tuition Options, LLC—credited the loaned amount against the student's outstanding tuition balance at three predetermined dates during the academic year. The funds were not available to the student for any other purpose.

Interest on each loan began accruing immediately after the loan was credited against the outstanding tuition balance. The student repaid the loan according to a monthly schedule with a fixed end date by which the entirety of the loan and accrued interest had to be paid off. If the student paid off the debt early, no additional funds were available. The Schools required the student to sign a form that included an acknowledgment that the loan was not an "extension of credit under an open-end consumer credit plan." An internal procedures manual for the Schools' EdOp Loan Servicing, LLC described the loan as "a ‘hybrid’ that blends characteristics of an open-ended credit plan and closed-end installment loan."

The State, through the Attorney General, initially sued the Schools on grounds that are not now before us.² The State later filed an amended complaint that added claims against the Schools for lending without the license required by Minn. Stat. § 56.01(a) (2016) (Count 3), and charging usurious interest rates in violation of Minn. Stat. § 334.01, subd. 1 (2016) (Count 4). The State's amended complaint sought permanent statutory injunctive relief under Minn. Stat. § 8.31, subd. 3 (2016), to stop the Schools from "engaging in unlicensed and usurious lending, in violation of Minn. Stat. §§ 56.01 and 334.01."

The parties filed cross-motions for summary judgment. The State's summary judgment motion asked the district court to "enjoin Defendants' illegal lending." The State's proposed order granting summary judgment included permanent statutory injunctions against usurious and unlicensed lending. The Schools responded that their lending was not usurious under Minn. Stat. § 334.16, subd. 1 (2016), and that they were not required to obtain a license under Minn. Stat. § 56.01(a).

The district court agreed with the Schools. The court "denie[d] the State's Motion for Summary Judgment in its entirety." The court granted the Schools' motion for summary judgment regarding the State's usury and licensing claims, which the court dismissed.³

The State took an interlocutory appeal. The Schools argued that the court of appeals lacked appellate jurisdiction over an order denying summary judgment. The court of appeals determined there was jurisdiction because the district court denied a request for an injunction. State v. Minn. Sch. of Bus., Inc. , A16-0239, Order (Minn. App. filed Mar. 15, 2016).

On the merits, the court of appeals affirmed the district court. State v. Minn. Sch. of Bus., Inc. , 885 N.W.2d 512, 514 (Minn. App. 2016). In reaching this conclusion, the court determined that Minn. Stat. § 334.16, subd. 2 (2016), which adopts the Truth-in-Lending Act ("TILA") and Regulation Z, did not incorporate any amendments to TILA or Regulation Z adopted after June 5, 1971, the effective date of the enactment of Minn. Stat. § 334.16, subd. 2. Minn. Sch. of Bus., Inc. , 885 N.W.2d at 516-18. The court concluded that, under the definitions provided by TILA and Regulation Z as of that date, the Schools' loans were open-end credit plans under Minn. Stat. § 334.16, subd. 1(a).

We granted the State's petition for review.

ANALYSIS

We begin by addressing the parties' disagreement over the standard of review. The State argues that we should review the district court's order as a summary judgment decision. The Schools argue that we should consider the order as a denial of injunctive relief.

We need not resolve the disagreement because, under either theory, we apply a de novo standard of review. The facts are undisputed and the issues before us are purely legal. We apply a de novo standard of review to statutory interpretation and the application of a statute to undisputed facts, whether in the context of summary judgment or an injunction. Anderson v. Christopherson , 816 N.W.2d 626, 630 (Minn. 2012) (applying a de novo standard of review to issues of law presented in an appeal from a summary judgment decision); Fannie Mae v. Heather Apartments Ltd. P'ship , 811 N.W.2d 596, 599 (Minn. 2012) (applying a de novo standard of review to issues of law presented in an appeal from an order for injunctive relief).

I.

We now address whether the court of appeals had appellate jurisdiction over the State's interlocutory appeal.⁴ The Attorney General is "entitled" to a statutory injunction for "violations of the law of this state respecting unfair, discriminatory, and other unlawful practices in business, commerce, or trade." Minn. Stat. § 8.31, subds. 1, 3 (2016). Under Minn. R. Civ. App. P. 103.03, "[a]n appeal may be taken to the Court of Appeals: ... (b) from an order which grants, refuses, dissolves or refuses to dissolve, an injunction."

The Schools argue that the district court's order did not deny an injunction because the State did not seek an injunction in its motion for summary judgment. Specifically, the Schools argue that the State did not allege irreparable harm, did not argue the Dahlberg factors, and did not file a separate motion for an injunction. See Dahlberg Bros., Inc. v. Ford Motor Co. , 272 Minn. 264, 137 N.W.2d 314, 321-22 (1965) (stating the factors to consider for a temporary injunction). The Schools suggest, however, that appellate jurisdiction is proper under Minn. R. Civ. App. P. 105.01, which allows appeals "in the interests of justice."

The State argues that it sought and was denied a permanent statutory injunction. The State notes that the Attorney General is authorized to seek such an injunction under Minn. Stat. § 8.31, subd. 3, which does not require a showing of irreparable harm. The State also contends that the Dahlberg factors do not apply to permanent injunctions. Finally, the State joins the Schools in suggesting that appellate jurisdiction is proper under Rule 105.01.

We conclude that it is unnecessary to rely on Rule 105.01. The court of appeals had appellate jurisdiction over the interlocutory appeal because the district court refused a permanent injunction sought by the Attorney General under Minn. Stat. § 8.31, subd. 3. Denial of that relief meant that an interlocutory appeal was available under Rule 103.03(b).

The Schools' argument that there was no showing of irreparable harm or analysis of the Dahlberg factors is unavailing in the context of a permanent injunction sought under Minn. Stat. § 8.31, subd. 3. The conditions that must be met to grant a statutory injunction are determined by the text of the statute authorizing the injunction.⁵ Here, Minn. Stat. § 8.31, subd. 3, provides, "the attorney general shall be entitled ... to sue for and have injunctive relief" upon "becoming satisfied that any of [the laws in Minn. Stat. § 8.31, subd. 1 ] has been or is being violated, or is about to be violated ." (Emphasis added). Accordingly, a permanent injunction sought under Minn. Stat. § 8.31, subd. 3, does not, by the terms of the statute, require a showing of irreparable harm, inadequacy of other remedies, consideration of equitable principles, or analysis of the Dahlberg factors. The Legislature has provided a statutory remedy that is distinct from an equitable injunction, meaning the Attorney General's burden to obtain a permanent injunction under the statute is limited to the statutory condition: proving that a listed law "has been or is being violated, or is about to be violated." The district court refused to grant a permanent injunction sought by the Attorney General under Minn. Stat. § 8.31, subd. 3, and thus that decision was appealable on an interlocutory basis under Rule 103.03(b).

The Schools' other argument—that the State's request for an injunction was invalid absent a separate motion—is also unavailing. Our precedent is directly on point. In Hursh v. Vill. of Long Lake , 247 Minn. 1, 75 N.W.2d 602, 604 (1956), we treated a district court order that granted a defendant's summary judgment motion...