Stein v. TitleMax of Ga., Inc.

Decision Date07 July 2020
Docket NumberNo. 19-13669,19-13669
PartiesBRIAN STEIN, Plaintiff - Appellant, v. TITLEMAX OF GEORGIA, INC., Defendant - Appellee.
CourtU.S. Court of Appeals — Eleventh Circuit

[DO NOT PUBLISH]

Non-Argument Calendar

D.C. Docket No. 1:19-cv-00669-WMR

Appeal from the United States District Court for the Northern District of Georgia

Before WILLIAM PRYOR, Chief Judge, ROSENBAUM, and JILL PRYOR, Circuit Judges.

PER CURIAM:

In this case, Brian Stein alleges that TitleMax of Georgia, Inc. ("TitleMax") violated the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq., by providing inaccurate disclosures of the terms of a car-title loan. The district court dismissed Stein's complaint for failure to state a plausible claim to relief. After careful review, we affirm.

I.

On December 26, 2018, Stein borrowed $100 from TitleMax, using his car as collateral. According to the loan agreement, TitleMax also charged Stein a "lien filing fee" of $18 to record its security interest, which would "only be charged if Pawnbroker actually registers such lien," and a "pawnshop charge" of $16.51, which was based on a percentage of the principal amount advanced. He promised to repay the total amount of $134.51 within 30 days.

In the loan agreement, TitleMax disclosed the "total amount financed" ($118), the "finance charge" ($16.51), and the "annual percentage rate" (170.23%). The total amount financed was itemized to show $100 as the "[a]mount given to you directly" and $18 as the "[a]mount paid to public official for Lien Filing Fee." The agreement also advised that "[t]he truth-in-lending disclosures provided . . . assume that you will pay all amounts owing hereunder on the Maturity Date."

Five days later, Stein repaid the total amount of $134.51, including the $18 lien filing fee. At that time, TitleMax had not recorded its lien.

In February 2019, Stein filed this purported class-action lawsuit alleging that TitleMax violated the TILA by failing to accurately disclose the terms of the loan and pocketing the $18 lien filing fee. Stein claimed that, because TitleMax did not register the lien, the fee should have been included as part of the finance charge. And failing to include the fee as part of the finance charge, in Stein's view, led to two inaccuracies in the disclosures: (1) TitleMax wrote that the finance charge was $16.51, when it was really $34.51; (2) TitleMax wrote that the APR was 170.23%, when it was actually more than double that rate. The complaint further alleged, without factual support, Stein's belief that discovery would reveal "thousands" of similarly situated TitleMax customers.

Based on a magistrate judge's report and recommendation, the district court granted TitleMax's motion to dismiss the complaint under Rule 12(b)(6), Fed. R. Civ. P. The court concluded that the disclosures were accurate when made and that TitleMax's subsequent failure to pay the lien filing fee did not establish a TILA violation. Stein now appeals.

II.

We review de novo the grant of a motion to dismiss under Rule 12(b)(6), accepting the complaint's allegations as true and construing them in the light mostfavorable to the plaintiff.1 City of Miami v. Citigroup Inc., 801 F.3d 1268, 1275 (11th Cir. 2015). To survive a motion to dismiss, "[a] plaintiff must plausibly allege all the elements of the claim for relief. Conclusory allegations and legal conclusions are not sufficient; the plaintiffs must state a claim to relief that is plausible on its face." Feldman v. Am. Dawn, Inc., 849 F.3d 1333, 1339-40 (11th Cir. 2017) (citation and quotation marks omitted).

When interpreting a statute, we start with "the language of the statute itself," assuming that "Congress used the words in a statute as they are commonly and ordinarily understood." Fed. Reserve Bank of Atlanta v. Thomas, 220 F.3d 1235, 1239 (11th Cir. 2000). "[I]f the statutory language is clear, no further inquiry is appropriate." Id.

The TILA was enacted to promote the "informed use of credit" by "assur[ing] a meaningful disclosure of credit terms." 15 U.S.C. § 1601(a); Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559 (1980). Because the TILA is a remedial consumer-protection statute, we construe its provisions "liberally to best serve Congress' intent." Ellis v. Gen. Motors Acceptance Corp., 160 F.3d 703, 707 (11th Cir. 1998).

As relevant here, the TILA and its implementing regulations, see 12 C.F.R. Part 1026 ("Regulation Z"), mandate that creditors "clearly and conspicuously" disclose important terms of a consumer credit transaction, including the "finance charge" and the APR. 15 U.S.C. §§ 1631(a), 1632(a); 12 C.F.R. § 1026.18. The disclosures must also accurately reflect the terms of the agreement. 12 C.F.R. § 1026.17(c)(1) ("The disclosures shall reflect the terms of the legal obligation between the parties."); see Smith v. Chapman, 614 F.2d 968, 977 (5th Cir. 1080) ("A misleading disclosure is as much a violation of TILA as a failure to disclose at all.").2 Creditors who fail to comply with these requirements are subject to civil liability. 15 U.S.C. § 1640(a).

The "finance charge" reflects "the dollar amount the credit will cost [the consumer]." 12 C.F.R. § 1026.18(d). In disclosing the finance charge, the creditor generally must include "all charges, payable directly or indirectly by the person to whom the credit is extended, and imposed directly or indirectly by the creditor as an incident to the extension of credit." 15 U.S.C. § 1605(a).

Certain charges need not be included in the finance charge, however, provided they are "itemized and disclosed" in accordance with Regulation Z. 15 U.S.C. § 1605(d). Among them is the following: "Fees and charges prescribed by lawwhich actually are or will be paid to public officials for determining the existence of or for perfecting or releasing or satisfying any security related to the credit transaction." 15 U.S.C. § 1605(d)(1) (emphasis added); 12 C.F.R. § 1026.4(e)(1) (providing that "[t]axes and fees prescribed by law that actually are or will be paid to public officials for determining the existence of or for perfecting, releasing, or satisfying a security interest" may be excluded from the finance charge if itemized and disclosed). The phrase "will be paid" plainly contemplates that a creditor can exclude from the finance charge a fee that will be paid after the consummation of the transaction.

When evaluating the adequacy and accuracy of disclosures under the TILA, our inquiry focuses on the time the transaction is consummated. See In re Smith, 737 F.2d 1549, 1552 (11th Cir. 1984) (stating that a TILA "violation 'occurs' when the transaction is consummated"); Nash v. First Fin. Sav. & Loan Ass'n, 703 F.2d 233, 239 (7th Cir. 1983) (stating that the adequacy and accuracy of disclosures are measured at the time of consummation). Therefore, it's generally not a TILA violation if "a disclosure becomes inaccurate because of an event that occurs after the creditor delivers the required disclosures," although new disclosures may be required in certain circumstances. 12 C.F.R. § 1026.17(e); see also 15 U.S.C. § 1634 ("If information disclosed in accordance with this part is subsequently rendered inaccurate as the result of any act, occurrence, or agreement subsequent to thedelivery of the required disclosures, the inaccuracy resulting therefrom does not constitute a violation of this part.").

III.

Here, the district court properly granted TitleMax's motion to dismiss. Accepting the complaint's allegations as true and construing them in the light most favorable to Stein, the complaint does not state a plausible TILA claim.

TitleMax's disclosures clearly, conspicuously, and accurately disclosed the terms of the loan agreement when the transaction was consummated. See 15 U.S.C. §§ 1631(a), 1632(a); 12 C.F.R. §§ 1026.17(c), 1026.18; In re Smith, 737 F.2d at 1552. In the loan agreement, Stein gave TitleMax a security interest in his car and agreed that TitleMax would record its interest with the State of Georgia, for which TitleMax charged Stein an $18 lien filing fee. That fee, which accurately reflects the amount the Georgia Department of Revenue charges to record a lien, see Recording a Lien and Security Interest on a Title, Ga. Dep't of Revenue, https://dor.georgia.gov/recording-lien-and-security-interest-title (last visited Feb. 27, 2020), was itemized and disclosed as a "lien filing fee."

This was permitted under the statute. Both the TILA and Regulation Z expressly permit creditors to exclude from the finance charge qualifying fees that "actually are or will be paid to public officials," provided the fees are "itemized and disclosed." 15 U.S.C. § 1605(d)(1) (emphasis added); 12 C.F.R. § 1026.4(e)(1). Inother words, creditors may exclude from the finance charge fees that "will be paid" after the consummation of the transaction.3 And Stein does not dispute that the lien filing fee was itemized and disclosed or that it was the type of fee that may be excluded under § 1605(d). Accordingly, TitleMax was not required to include the lien filing fee in the finance charge, or to disclose the charge as an "estimate," solely by virtue of the fact that it had not recorded the lien at that time.4

Stein contends that the disclosures were false because TitleMax did not, in fact, ever record the lien. But we generally do not look to events after the consummation of the transaction when evaluating the adequacy and accuracy of TILA disclosures. See 15 U.S.C. § 1634 ("If information disclosed in accordance with this part is subsequently rendered inaccurate as the result of any act, occurrence, or agreement subsequent to the delivery of the required disclosures, the inaccuracyresulting therefrom does not constitute a violation of this part."); In re Smith, 737 F.2d at 1552 ("The violation 'occurs' when the transaction is consummated.").

To the extent TitleMax's subsequent conduct bears on the accuracy of the disclosures, the complaint's allegations do not "allow[] ...

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