State v. Minnesota School of Business, Inc., 072617 MNSC, A16-0239

Court:Supreme Court of Minnesota
Attorney: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, M...
Judge Panel:STRAS, J.,
Opinion Judge:LILLEHAUG, Justice.
Party Name:State of Minnesota, Appellant, v. Minnesota School of Business, Inc. d/b/a Minnesota School of Business, et al., Respondents.
Case Date:July 26, 2017
Docket Nº:A16-0239
 
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State of Minnesota, Appellant,

v.

Minnesota School of Business, Inc. d/b/a Minnesota School of Business, et al., Respondents.

No. A16-0239

Supreme Court of Minnesota

July 26, 2017

         Court of Appeals Office of Appellate Courts

          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.

         SYLLABUS

         1. An order that dismisses a claim by the Attorney General seeking a permanent injunction under Minn. Stat. § 8.31, subd. 3 (2016), is appealable under Minn. R. Civ. App. P. 103.03(b).

         2. An open-end credit plan under Minn. Stat. § 334.16 (2016), which incorporates the definitions in the Truth-in-Lending Act and Regulation Z from at least 1971, provides credit on a revolving basis. Because respondents' loans were not made pursuant to open-end credit plans, the interest rates respondents charged were usurious, in violation of Minn. Stat. § 334.01, subd. 1 (2016).

         3. Respondents made loans without the license required by Minn. Stat. § 56.01(a) (2016).

         Reversed and remanded.

          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...

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