Opinion
CIVIL. ACTION NO. 00-2949, SECTION "C" (1)
May 28, 2002
ORDER AND REASONS
Before the Court are three motions: a motion to compel arbitration of Defendants. Easy Money of Louisiana. Inc. ("Easy Money/LA"). Easy Money Holdings, Inc. ("EMH"),. Easy Money of Virginia. Inc. (Easy Money/VA"), David L. Greenberg. Tami Van Gorder, and Jerome Greenberg, see Rec. Doc. 110; a motion for summary judgment of Easy Money/LA. see Rec. Doc. Rec. Doc, 102; and a Rule 12(b)(6) motion to dismiss of Easy Money/LA, EMH, Easy Money/VA, David L. Greenberg, Van Gorder, and Jerome Greenberg, see Rec. Doc. 101. After reviewing the record, the arguments of counsel, and the relevant law, IT IS ORDERED that the motion to compel arbitration is hereby GRANTED; the motion for summary judgment is hereby partially GRANTED, partially DENIED, and partially DISMISSED as MOOT; and the Rule 12(b)(6) motion to dismiss is hereby partially DENIED and partially DISMISSED as MOOT.
I. BACKGROUND
Defendant Easy Money/LA is a licensed consumer finance company with locations throughout the State of Louisiana. In procuring its consumer finance license from Louisiana Office of Financial Institutions. Easy Money represented that it would primarily be engaged in the business of making "payday loans."
The Louisiana legislature passed the Louisiana Small Loan Act ("LSLA") for the purpose of regulating "payday loans," which are defined as "loans designed to tide consumers over until their next payday. They are normally for a term of one to two weeks and are for small dollar amounts. These loans meet a legitimate credit need for many consumers; however, they are ripe for abuse." La. R.S. § 9:3577.2 (1999). Thus, the intent of the LSLA was to "protect consumers" from such abuse. Id. The LSLA, together with the general provisions of the Louisiana Consumer Credit Law ("LCCL"), caps the fees a lender may charge for loans of $500 or less "made to a consumer and which is due and payable within thirty days or less." § 9:3577.3(2) (1999). For instance, on loans from $100.00 to $200.00, a lender may collect an origination fee of no more than $10.00, and on loans from $201.00 to $500.00, the maximum allowable origination fee is $15.00. See § 9:3577.4(2)-(3) (1999). In addition, on loans up to $200.00, the lender is entitled to assess a minimum loan finance charge of $15.00, and on loans above that amount, the lender may include a charge of $25.00 See § 9:3519 E (1999). Finally, the lender may charge a $5.00 documentation fee for each loan "as reimbursement for actual costs incurred." § 9:3530C(1) 1999. The LSLA prohibits, inter alia, prior loans made to a consumer from being "rolled over into [a] new loan far which he has applied." § 9:3577.6 (1999). Moreover, the LCCL provides that "[a]n extender of credit shall not divide a consumer credit transaction into multiple agreements for the purpose of obtaining a higher credit service charge, loan finance charge, or any other additional fee or charge permitted by [the LCCL]." § 9:3535.
The LSLA was repealed under Act 1315 of 1999, effective January 1, 2000, and replaced with the Lousiana Deferred Presentment and Small Loan Act ("LDPSLA"). § 9:3578.1, et seq. The intent of the LDPSLA is substantially similar to that of the LSLA, "to protect consumers from excessive charges" on, inter alia. small loans. § 9:3578.2. The new law, like the LSLA and LCCL, caps tees on small loans. The LDPSLA defines small loans as consumer loans of $350 or less, "made for a term of sixty days or less." § 9:3578.3(6). The LDPSLA places a fee ceiling of 16.75 percent "of the face amount of the check issued" on these loans, but the charge on loans under the new statute max not exceed $45.00. § 9:3578.4A. The new law also extends additional protections by outlawing. for example, the division of a small loan "into multiple agreements for the purpose of obtaining a higher fee or charge," § 9:3578.6A(4), and the structuring of "the repayment of a loan in such a manner as to attempt to circumvent the provisions of [the LDPSLA]," § 9:3578.6A(7).
Easy Money/LA made a series of short-term loans to Plaintiffs and, in addition to charging interest, assessed a variety of fees in the course of processing the loan applications. Plaintiffs returned repeatedly to Easy Money/LA for loans, often repaying a loan and then procuring a new one the same day. For instance, on November 6, 1999, Easy Money/LA extended to Bellizan a loan for $201 with a finance charge of $45. See Rec. Doc. 67, Easy Money/LA's Mem. in Supp. of Mot. for Summ. J. at 8. Easy Money/LA alleges that on November 19, 1999, Bellizan repaid the loan and the finance charge, then took out another loan for $201 with a finance charge of $45. See id. at 8-9. It also is uncontroverted that Bellizan repaid and procured loans in these amounts and carrying the same finance charges on December 3, 1999, and December 17, 1999. See id. In each case, loaning Bellizan $201 enabled Easy Money/LA to procure $15 extra in fees than the company would have been entitled to had it lent Bellizan only $200. See § 9:3577.4 (1999).
In 2000, Bellizan took out additional loans, for which Plaintiffs do not assert any claims here. See Rec. Doc. 6 at Ex. A. Each agreement pertaining to these loans contained a clause providing for arbitration of "any and all claims, disputes or controversies . . . that may arise out of . . . the Loan Agreement." Id.
In December 2001, Bellizan returned to Easy Money/LA and took out two more loans. See Rec. Doc. 110 at Ex. A. On December 14, 2001, Bellizan procured a loan of $225. See id. On December 28, 2001. Bellizan was loaned $208. See id. Each loan agreement contains a clause providing, in pertinent part: "Borrower agrees that any and all claims, disputes or controversies that . . . Borrower may now and in the future have against Lender, Lender's Agents, Director's, Officers and/or employees, shall be resolved [by] binding individual (and not class) arbitration. . . ." Id. (emphasis added).
Additionally, Easy Money/LA on at least ten different occasions made two loans in rapid succession to McMahon, see Rec. Doc. 67, Easy Money/LA's Mem. in Supp. of Mot. for Summ. J. at 5-6, which would entitle Easy Money/LA to more fees than if Easy Money/LA were to loan the money to McMahon at one time. For example, on January 10, 2000, Easy Money/LA loaned McMahon $225, which, Easy Money/LA claims, entitled the company to the statutory maximum fee of $45 under the LDPSLA. See id. at 6, 8. Easy Money/LA then loaned McMahon another $100 four days later, charging McMahon another $20 in fees, a sum to which Easy Money/LA also claimed it was entitled under the LDPSLA. See id. McMahon testified that when she had tried to take out a loan for $300, she was told by an Easy Money/LA clerk that the company would loan her only $200 in a single day and that she would have to retain for the other $100. See Rec. Doc. 82, Ex. 2 at 106-08.
In their Class Action Complaint, filed October 4, 2000, Plaintiffs seek recover. against Defendants for making the above-mentioned loans in violation of the above-mentioned state laws. See Rec. Doc. 1. In their Second Amended Class Action Complaint, filed December 31, 2001. Plaintiffs allege that all Defendants except Easy Money/LA used Easy Money/LA and, alternatively. that all Defendant used an association in fact consisting of Easy Money/LA, EMH, and Easy Money/VA (together "Easy Money association"), to procure these fees and to conspire to procure these fees in such a way as to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962. See Rec. Doc. 100 at ¶¶; 59-77.
The Court previously granted two motions that, together, dismissed Plaintiffs' § 1962(a) and (b) claims against Defendants with prejudice. See Rec. Docs. 42, 94. The Court also granted two motions to dismiss — one by EMH, Easy Money/VA, and David Greenberg, and the other by Van Gorder and Jerome Greenberg — and a motion for summary judgment by Easy Money/LA with respect to Plaintiffs' § 1962(c) and (d) claims without prejudice. Additionally, the Court granted the motions to the extent they sought dismissal of the state claims and denied Plaintiffs' motion for class certification without prejudice. See id. The Court, however, deferred the orders dismissing the §§ 1962(c) and (d) and state claims to allow Plaintiffs to file an amended complaint addressing the deficiencies that necessitated the dismissal of these claims. See id. Plaintiffs then filed their Second Amended Class Action Complaint. See Rec. Doc. 100. The instant motions were subsequently filed. See Rec. Docs. 67, 101, 102.
II. MOTION TO COMPEL ARBITRATION
A. Arbitrability of Bellizan's claims against Easy Money/LA
Defendants contend that in signing the 2001 arbitration agreements, Bellizan must arbitrate all of her claims against Defendants. The Court agrees.
For the Federal Arbitration Act, 9 U.S.C. § 1, et seq. ("FAA"). to apply to the arbitration provisions at issue, the Court "must find that the contract containing the arbitration provision "evidences a transaction involving [interstate] commerce."' In re Arbitration between Trans Chem. Ltd. v. China Nat'l Mach. Imp. Exp. Corp., 978 F. Supp. 266, 300 (S.D. Tex. 1997), aff'd per curiam, Trans Chem. Ltd. v. China Nat'l Mach. Imp. Exp. Corp., 161 F.3d 314, 319 (5th Cir. 1998) (quoting 9 U.S.C. § 2). "[T]his is not a rigorous inquiry; the contract need only be `related to' commerce to fall within the FAA." Id. (citing Del E. Webb Constr. v. Richardson Hosp. Auth., 823 F.2d 145, 147-48 (5th Cir. 1987)). "This provision extends the reach of the FAA to all contractual activity which facilitates or effects commerce even tangentially." Jones v. Tenet Health Network, Inc., No. 96-3107, 1997 U.S. Dist. LEXIS 5037, at *6 (E.D. La. Apr. 7, 1997) (citing Arce v. Cotton Club of Greenville, Inc., 883 F. Supp. 117, 119 (N.D.Miss. 1995)). In this case, David Greenberg has submitted an affidavit, in connection with a matter not at issue here, that he is a Virginia domiciliary and President and a member of the board of directors of Easy Money/LA. See Rec. Doc. 65 at Ex. B. Moreover, it is undisputed that EMH is a Virginia foreign holding company for stock including all of the stock of Easy Money/LA. Such connections are sufficient to establish the "involving commerce" requirement of 9 U.S.C. § 2.
In deciding whether arbitration is compelled under § 4 of the FAA, a well-settled two-prong inquiry guides the Court. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626-28, 105 S.Ct. 3346, 3353-55, 87 L.Ed.2d 444 (1985); Pennzoil Exploration Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1065 (5th Cir. 1998); Webb v. Investacorp, Inc., 89 F.3d 252. 257-58 (5th Cir. 1996). The first prong requires a court to determine "whether the parties agreed to arbitrate the dispute in question." Id. at 258. This prong involves two issues: 1) whether there is a valid arbitration agreement between the parties and 2) "whether the dispute in question falls within the scope of that arbitration agreement." Id. Once a court determines that the parties have satisfied the first prong, a court must then determine, under the second prong, "`whether legal constraints external to the parties' agreement foreclosed the arbitration of those claims.'" Id. quoting Mitsubishi Motors, 473 U.S. at 628, 105 S.Ct. at 33555, 87 L.Ed.2d 444).
Regarding the first part of the first prong of the arbitrability test, Plaintiffs assert that Bellizan was fraudulently induced to enter into the agreement to arbitrate. Where fraud is pled as a defense to arbitration, a court must decide whether the fraud claim relates to the making of the arbitration agreement itself or the contract as a whole. See R.M. Perez Assocs., Inc. v, Welch, 960 F.2d 534, 538 (5th Cir. 1992). Here, Plaintiffs do not specifically advance an allegation that the fraudulent inducement concerned the arbitration clause itself. Additionally, the affidavit of Bellizan herself submitted in support of the motion nowhere specifically alleges that she was fraudulently induced to enter the arbitration agreement rather than the agreement itself. Accordingly, the Court finds that there is a valid arbitration agreement between the parties. See Bhatia v. Johnson, 818 F.2d 418. 421-22 (5th Cir. 1987).
Additionally, the Court concludes that the dispute in question falls within the scope of that arbitration agreement. In order to decide whether Bellizan's claims are subject to arbitration, the Court must first determine whether the arbitration clauses are "narrow" or "broad." "If the clause is broad, the action should be staved and the arbitrators permitted to decide whether the dispute falls within the clause." In re Hornbeck 0ffshore Corp., 981 F.2d 752, 754 (5th Cir. 1993). "On the other hand, if the clause is narrow, the matter should not be referred to arbitration or the action staved. unless the court determines that the dispute falls within the clause." Id. "[W]henever the scope of an arbitration clause is fairly debatable or reasonably in doubt, the court should decide the question of construction in favor of arbitration." Id. at 755 (quoting Mar-Len of La., Inc. v. Parsons-Gilbane, 773 F.2d 633, 635 (5th Cir. 1985)). See also Webb, 89 F.3d at 258. "Arbitration should not be denied `unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation that would cover the dispute at issue.'" Pennzoil, 139 F.3d at 1067 (quoting Neal v. Hardee's Food Sys., Inc., 918 F.2d 34, 37 (5th Cir. 1990)).
As noted above, the 2001 arbitration agreements provide, in pertinent part: "Borrower agrees that any and all claims, disputes or controversies that . . . Borrower may now and in the future have against Lender. Lender's Agents. Directors, Officers and or employees, shall be resolved [through] binding individual (and not class) arbitration. . . ." Rec. Doc. 110 at Ex. A (emphasis added). This clause is extremely broad. "The breadth of the language clearly establishes that the arbitration clause was intended to apply to all conflicts between the parties." Cara's Notions, Inc. v. Hallmark Cards, Inc., 140 F.3d 566 (4th Cir. 1998) (contract's arbitration clause covering all claims "relating to . . . any aspects of the relationship" between the parties broad enough to cover disputes concerning prior contract). At the time of the 2001 loan agreements. Bellizan already had this suit pending regarding the earlier loans.
As to the second prong of the inquiry, the Court must determine whether "`legal constraints external to the parties' agreement foreclose the arbitration of [the] claims [here].'" Webb, 89 F.3d at 258 (quoting Mitsubishi Motors, 473 U.S. at 628, 105 S.Ct. at 33555, 87 L.Ed.2d 444).
The Court begins by considering whether Bellizan's RICO claims may be arbitrated. The Supreme Court has held that arbitration clauses may encompass federal statutory claims, and the party opposing arbitration has the burden of demonstrating that Congress intended to prohibit waiver of a judicial forum for the statutory rights. See Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 227, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987). Plaintiffs have not carried — and. indeed, cannot carry — this burden. The Supreme Court has concluded that there is "no basis for concluding that Congress intended to prevent enforcement of agreements to arbitrate RICO claims." Id. at 242, 107 S.Ct. at 2345-46, 96 L.Ed.2d 185. Accordingly, Bellizan's RICO claims are arbitrable.
The Court additionally concludes that no constraints external to the agreement in question preclude arbitration of Bellizan's state claims. The Court is unaware of any legal impediment preventing the arbitration of Bellizan's claims under any of the state laws at issue here. Cf. Defreitas v. Am. Gen. Fin., Inc., No. 01-2756, 2001 U.S. Dist. LEXIS 18076, at *8 (E.D. La. Oct. 24. 2001) (ordering arbitration of claims under Louisiana usury laws).
B. Arbitrability of Bellizan's claims against non-signatory Defendants
In certain instances, a defendant who has not signed an arbitration agreement, but against whom a claim related to the agreement is asserted, may compel arbitration against a signatory plaintiff. The Fifth Circuit has approved compelling arbitration under two circumstances under an equitable estoppel theory as set forth in MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 1999):
First equitable estoppel applies when the signatory to a written agreement containing an arbitration clause must rely on the terms of the written agreement in asserting its claims against the nonsignatory. When each of a signatory's claims against a nonsignatory makes reference to or presumes the existence of the written agreement, the signatory's claims arise out of and relate directly to the written agreement, and arbitration is appropriate. Second, application of equitable estoppel is warranted when the signatory to the contract containing an arbitration clause raises allegations of substantially interdependent and concerted misconduct by both the nonsignatory and one or more of the signatories to the contract.Grigson v. Creative Artists Agency, L.L.C., 210 F.3d 524, 527 (5th Cir. 2000).
Both circumstances counsel in favor of allowing the non-signatory Defendants to compel arbitration of claims advanced against them by Bellizan.
First, the non-signatory Defendants may compel arbitration because Bellizan's claims presume the existence of the loan agreements. Her state claims are premised on allegations that. pursuant to the agreements, Bellizan contracted with Easy Money/LA to pay usurious finance charges in violation of the LSLA and LDPSLA. Her federal claims depend, in part, on a finding that Defendants collected unlawful debts in violation of these state laws. Accordingly, the non-signatory Defendants may compel arbitration under the first equitable estoppel theory set out in Grigson.
Additionally, the non-signatory Defendants may compel arbitration because Plaintiffs have raised allegations of substantially interdependent and concerted misconduct among Easy Money/LA and the non-signatory. Defendants in the extension of the loans to Bellizan. The Second Amended Class Action Complaint states, in pertinent part:
J. Greenberg, D. Greenberg, Van Gorder and Easy Money[/VA] organized and developed the policy for business operation and the business plan for Easy Money La. to engage in its illegal lending practices and engaged in the management of Easy Money La., and profited from the illegal lending practices of Easy Money of La. J. Greenberg, D. Greenberg, Van Gorder, Easy Money La. and EMH owned Easy Money La. and derived substantial financial benefits from the illegal lending business of Easy Money La. Through ownership, individual defendants have controlled Easy Money La., Easy Money Va. and EMH. Through ownership, Easy Money Va. has controlled Easy Money La and EMH has controlled Easy Money Va. and Easy Money La.
Rec Doc. 100 at ¶ 10.
Moreover, the Second Amended Class Action Complaint seeks recovery from all non-signatory See Defendants on all theories of liability pursuant to the loans made by Easy Money/LA to Bellizan. See ¶¶; 41-76. Accordingly, the non-signatory Defendants may compel arbitration under the second equitable estoppel theory set out in Grigson.
In light of the above analysis, Bellizan's claims against Defendants with respect to all the loans in question here are arbitrable. Thus, the motion to compel arbitration as to these claims is granted.
As the Court hereby grants the motion to compel arbitration, the motions for summary judgment on and to dismiss Bellizan's claims under Rules 56 and 12(b)(6) are dismissed as moot.
III. MCMAHON'S STATE CLAIMS
A. Standard of review
A district court can grant a motion for summary judgment only when the "`pleadings, depositions, answers to interrogatories. and admissions on file, together with the affidavits, if any. show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322. 106 S.Ct. 2548, 2552. 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find "[a] factual dispute . . . [to be] `genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party . . . [and a] fact . . . [to be] `material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510 91 L.Ed.2d 202 (1986)).
"If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial." Engstrom v. First Nat'l Bank of Eagle Lake. 47 F.3d 1459, 1462 (5th Cir. 1995) (citing Celotex, 477 U.S. at 322-24,4, 106 S.Ct. at 2552-53 91 L.Ed.2d 265 and Fed.R.Civ.P. 56 (e)). The mere argued existence of a factual dispute will not defeat an otherwise properly supported motion. See Anderson, 477 U.S. at 248, 106 S.Ct. at 2510, 91 L.Ed.2d 202. "If the evidence is merely colorable, or is not significantly probative," summary judgment is appropriate. Id. at 249-50. 106 S.Ct. at 2511, 91 L.Ed.2d 202 (citations omitted).
B. Disussion
1. Unconscionability
McMahon alleges that certain of Easy Money/LA's practices in extending loans to her were unconscionable under § 9:3551. That statute provides:
With respect to a consumer credit transaction, if the court as a matter of law finds the agreement or any clause of the agreement to have been unconscionable at any time it was made the court may refuse to enforce the agreement, or it may enforce the remainder of the agreement without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result; provided, however, for the purposes of this chapter, an agreement, clause, charge or practice expressly permitted by this chapter or any other law or regulation of this state or of the United States or subdivision of either, or an agreement, clause, charge or practice necessarily implied as being permitted by this chapter or any other law or regulation of this state or the United States or any subdivision of either is not unconscionable.
Easy Money/LA claims that its practices with respect to its loans to McMahon were not unconscionable. The Court need not reach a decision on this contention in its discussion of the claim under § 9:3551. The plain language of this section indicates that it is largely concerned with providing consumers a defense for non-payment of loans See, e.g., generally, Certified Fin., Inc. v. Bates, 97 1325 (La.App. 1 Cir., 6/29/98), 749 So.2d 687, 691. Additionally, to the extent McMahon seeks recovery based on a determination that Easy Money/LA's lending practices were unconscionable because they violate one or more of the state statutes at issue, a finding or unconscionability would not provide any basis for recovery not already afforded by violation of one of the specific provisions of the other above-mentioned state statutes. There is no indication by the legislature that it meant to provide a double recovery for a small loan lending practice in violation or a specific provision of the LCCL, LSLA, or LDPSLA and in violation of the LCCL's unconscionability section based on a violation of another provision of one of these state statutes. Accordingly, summary judgment is granted to the extent McMahon seeks recovery under § 9:3551 for violation of these state statutes.
2. Private right of action under the LDPSLA
Easy Money/LA asserts that the LDPSLA does not provide for a private cause of action for violations of its provisions. For this argument, Easy Money/LA notes that the LCCL provides for a private right of action only for violations of "this chapter," i.e., Chapter 2 of "Code Title XII — of Loan" of Title 9 of the Louisiana Revised. § 9:3552. Easy Money/LA points out that the LSLA was part of Chapter 2 and thus consumers were accorded a private right of action for violations of the LSLA by virtue of the remedial scheme of Chapter 2. See § 9:3552. Easy Money/LA argues. however, that when the LDPSLA replaced the LSLA, the new law was identified as Chapter 2-A and thus falls outside Chapter 2 and its provision of a private right of action. Moreover, Easy Money/LA points out, the intent of the LDPSLA is "to regulate . . . small loans." § 9:3578.2 Accordingly, the argument goes, the LDPSLA is a regulatory statute enforceable only by the State of Louisiana. Easy Money/LA notes in this regard that the LDPSLA authorizes the Louisiana Office of Financial Institutions ("LOFI") to "apply the provisions of Parts I, VII, VIII, IX. and X of Chapter 2 . . . for purposes of administering and regulating the activities of licensees and the provisions of this Chapter." § 9:3578.8(A). Furthermore, nowhere in the LDPSLA is a private right of action granted. For the proposition that only the LOFI may seek remedies for violations of the LDPSLA. Easy Money/LA also analogizes to, inter alia, the interpretation of the Louisiana Polygraphist Act ("LPA") in Ballaron v. Equitable Shipyards, Inc., 521 So.2d 481, 484 (La.Ct.App.), writ denied, (La. 1988). Ballaron holds that the LPA was not intended to grant a private cause to action to polygraph examinees because, in part, the stated purpose of the act was regulatory. See id.
The Court rejects Easy Money/LA's arguments that no private right of action exists for violations of the LDPSLA. The Court recognizes that the LCCL expressly grants a private right of action only for violations of Chapter 2 and the LDPSLA, which does not itself grant a private right of action, is designated as Chapter 2-A. Nevertheless, such a literal statutory interpretation would undo the intent of the legislature to continue providing a private right of action for usurious acts on the part of small loan lenders. When examined in light of the LSLA, it is evident that the LDPSLA was not intended to deny private litigants a cause of action for violations of the LDPSLA's provisions in question here. First, the intent of the legislature in enacting the LDPSLA, as noted above, was virtually the same as it was when that body enacted the LSLA, a statute that unequivocally carried with it a private right of action. Had the LDPSLA been meant to strip consumers of a private right of action and hits significantly weaken the statute's enforcement, despite the intent of the new law to do virtually the same work as the LSLA. the legislature surely would have mentioned this. Yet, in this case, there was no barking dog signaling such a change. Cf. Chisom v. Roemer, 501 U.S. 380, 396, 396 n. 23, 111 S.Ct. 2354, 2364, 2364 n. 23 115 L.Ed.2d 348 (1991) (citing A. Doyle, Silver Blaze, in The Complete Sherlock Holmes 335 (1927)). The Court thus finds it appropriate to read § 9:3551's granting of a private right of action to consumers for violations of "this chapter" to include violations of Chapter 2-A as well as Chapter 2. Construing § 9:3551 in this way is appropriate because such an interpretation "`serves merely as a correction of careless language and actually gives the true intention of the legislature.'" Cf. Ex Parte Jackson, 625 So.2d 425, 428 (Ala. 1992) (quoting 2A Sutherland, Stat. Const. § 47.37 (5th ed.)). Second, in arguing that the LDPSLA is a regulatory statute and not designed to grant consumers a private cause of action, Easy Money/LA conveniently overlooks the intent of the LSLA, which also was "to regulate" the kind of loans at issue here. See 9:3577.2 (1999). Yet, private litigants were entitled to sue for violations of the LSLA. Thus, the mere expression by the legislature that its intent is to regulate in a certain area does not carry the kind of talismanic weight Easy Money/LA proposes here. Accordingly, the Court concludes that the LDPSLA was intended to grant consumers a private cause of action for violations of the statute's terms.
3. Allowable fees on McMahon's loans
Easy Money/LA asserts that the fees it charged McMahon under the loans were permitted under the LSLA and LDPSLA and that summary judgment is therefore appropriate on McMahon's state claims. The Court only partially agrees.
The Court first addresses the issue of whether Easy Money/LA's loans to McMahon were rollover loans prohibited by the LSLA or LDPSLA. Under the LSLA, "No small loan shall be repaid from the proceeds of another loan made by the same lender or an affiliated interest to the same consumer, nor shall a prior loan made to the consumer be rolled over into the new loan for which he has applied." § 9:3577.6 (1999). Pursuant to LDPSLA, "A licensee shall not . . . [r]enew or roll over a . . . small loan." § 9:3578.6A(7).
McMahon advances two primary arguments that Easy Money/LA's loans to McMahon were prohibited rollover loans. The Court rejects both contentions.
First, McMahon asserts that Easy Money/LA made rollover loans prior to the enactment of the LSLA, then continued to make rollover loans, but merely relabeled the loans "buybacks." The term "buyback," however, refers to nothing more than the procedure of a customer providing a personal check as collateral for the loan, then buying the check back by paying off the loan. See Rec. Doc. 82, Ex. 3 at 119-20. Thus, a mere buyback is not synonymous with a rollover prohibited by either the LSLA or LDPSLA.
Second, McMahon argues that even if a buyback does not constitute a rollover per se, the net effect is the same and thus is prohibited by both the LSLA and LDPSLA. For instance, on January 21, 2000, McMahon took out a $225 loan, for which a $45 fee was charged. See Rec. Doc. 67, Easy Money/LA's Mem. in Supp. of Mot. for Summ. J. at 6. She paid back the loan on February 4, 2000, then took out another $225 loan, for which a $45 fee also was charged. See id. The effect of such a transaction. McMahon contends, is the same as that of a rollover — McMahon visited Easy Money/LA on February 4, 2000. owing $225 in principal and left owing the same amount as well as $45 in fees. Although the net effect may well be the same as in a rollover transaction, the transaction described here is inapposite — McMahon did not pay $45 for the privilege of extending her original loan. She paid off the original loan by tendering to Easy Money/LA $270 from a source independent of her prior loan proceeds from Easy Money/LA, then entered into a completely new loan agreement. McMahon has presented no evidence otherwise that such an arrangement amounted to a rollover. Thus, summary judgment is appropriate on this claim.
There is evidence, however, that McMahon's loan arrangement violated the state statutes at issue in several other ways both in 1999 and 2000.
As noted above, the LCCL provides, "[a]n extender of credit shall not divide a consumer credit transaction into multiple agreements for the purpose of obtaining a higher credit service charge, loan finance charge, or any other additional fee or charge permitted by [the LCCL]." § 9:3535. There is evidence that Easy Money/LA repeatedly violated § 9:3535. As noted above, McMahon testified to the effect that when she sought to borrow $300, she was told by an Easy Money/LA clerk she could borrow only $200 at one time, but could come back after 24 hours for another $100. See Rec. Doc. 82, Ex. 2 at 106-08. There is evidence corroborating McMahon's testimony: on five separate occasions, Easy Money'LA loaned McMahon $201 on one occasion and then $100 several days later. See Rec. Doc. 67, Easy Money/LA's Mem. in Supp. of Mot. for Summ. J. at 5-6. Ignoring for a moment the restriction on such activity by § 9:3535, such a structuring of the transactions entitled Easy Money/LA to collect $75. Had Easy Money/LA loaned McMahon $301 on one occasion, however, the lender would have been able to collect $45. Thus, there is ample evidence that Easy Money/LA divided McMahon's 1999 loan transactions to collect higher fees than would have been available had it provided larger, requested sums at one time. Thus there is evidence that these transactions violated § 9:3535.
The inference is that this testimony relates to loan transactions in 1999. As noted above, Easy Money/LA often made paired loans to McMahon totaling $301 in 1999.
The pattern continued in 2000. On five different occasions, Easy Money/LA loaned McMahon $225 on one occasion, then another $100 several days later, charging her $45 and $20 in fees respectively. See Rec. Doc. 67. Easy Money/ LA's Mem. in Supp. of Mot. for Summ. J. at 6. Assuming that the split loan was lawful. Easy Money/LA apparently would have been entitled to collect only $54.44, or 16.75 percent of $325, whereas had the lender loaned the $325 at one time to McMahon, it would have been permitted to charge no more than $45 in fees. There thus is evidence that Easy Money/LA's arrangement with McMahon violated the LDPSLA's specific provision banning such multiple agreements, see § 9:3578.6A(4), as well as the statute's more general prohibition against "[s]tructur[ing] the repayment of a loan in such a manner as to attempt to circumvent the provisions of [the LDPSLA]," § 9:3578.6A(6).
Easy Money/LA also has failed to meet its summary judgment burden under the last part of § 9:3578.6A(7), which provides, "Once a . . . small loan has been completed, a consumer may enter into a new . . . loan with the [lender]. A . . . small loan shall be considered completed when the amount advanced has been paid in full by the consumer." Section 9:3578.6A(6) further provides, "A licensee shall not . . . [s]tructured the repayment of a loan in such a manner as to attempt to circumvent the provisions of[the LCCL]." There is evidence that on five different occasions in 2000, small loans to McMahon were not "completed" under the meaning of § 9:3578.6A(7) before Easy Money/LA entered into a new loan agreement with her. On each occasion, Easy Money/LA extended a loan of $225 to McMahon, followed by another loan of $100 before McMahon had paid off the original $225 loan. See Rec. Doc. 67, Easy Money/LA's Mem. in Supp. of Mot. for Summ. J. at 6 Accordingly, summary judgment is denied on Easy Money/LA's assertion that it did not violate the terms of the final part of § 9:3578.6A(7).
In sum, for the foregoing reasons, summary judgment is denied to the extent Easy Money/LA argues that it did not violate the substantive provisions of the state statutes at issue.
4. Timeliness of McMahon's state claims
Any civil action under § 9:3552E "must be brought within sixty days of final payment of the consumer credit contract, or in the case of a revolving loan or revolving charge account, within one year of the date of the violation" of the state statutes at issue here.
Easy Money/LA argues that it is entitled to summary judgment dismissing McMahon's claims as untimely under § 9:3552E. Easy Money/LA notes first that McMahon's last loan payment was due April 28, 2000 and that she did not file suit until October 1, 2000, well after sixty days following the last of the alleged violations. See Rec. Doc. 67, Easy Money/LA's Mem. in Supp. of Mot. for Summ. J. at 20. Easy Money/LA also argues that its arrangement with McMahon did not amount to a revolving loan or revolving charge account so as to extend the limitation period to one year. The Court agrees. As a matter of law, the arrangement as to McMahon's loans do not constitute a revolving loan account.
The LCCL defines a "revolving loan account" as "an arrangement between a lender and a consumer pursuant to which:
(i) The creditor may permit the consumer to obtain consumer loan advances on a preauthorized basis;
(ii) The creditor reasonably contemplates repeated transactions;
(iii) The creditor may impose a loan finance charge from time to time on the outstanding unpaid balance of the consumers account; and
(iv) The amount of credit that may he extended to the consumer under the account, up to any limit set the creditor, is generally made available to the extent that any unpaid balance is repaid.
§ 9:3516 (30)(a).
As to the first of these requirements, Easy Money/LA argues that McMahon admitted to never having been told expressly that she was preauthorized to obtain loans. See Rec. Doc. 67. Ex. C at 141. McMahon testified elsewhere, however, to the effect that she did receive preauthorization for loans. See Rec. Doc. 82, Ex. 2 at 106-08. Specifically, McMahon stated that when she inquired about procuring a loan of $300, she was told by an Easy Money/LA clerk that she could obtain only a $200 loan on one day. but that she could "get another hundred . . . after 24 hours." Id. Drawying all inferences most favorable to McMahon, her testimony is sufficient for a reasonable finder of fact to determine that she was preauthorized for loans in 1999 and 2000.
Drawing all inferences most favorable to McMahon, evidence of the Easy Money/LA clerk's offer of the additional $100 after 24 hours also precludes summary judgment on the issue of whether Easy Money/LA reasonably contemplated repeated transactions. The inference here is that the clerk's offer of the additional $100 loan was not rhetorical. Indeed, McMahon repeatedly returned to Easy Money/LA for an additional $100 from 24 hours to six days after procuring $201 or $225 loans. See Rec. Doc. 67, Easy Money/LA's Mem. in Supp. of Mot. for Summ. J. at 5-6. Thus,. a reasonable finder of fact could determine that Easy Money/LA reasonably contemplated repeated transactions in 1999 and 2000.
The Court finds, however, that the arrangement between Bellizan and Easy Money/LA does not satisfy the third requirement in the "revolving loan account" inquiry. The loan documents establish that Easy Money/LA was not authorized to "impose a loan finance charge from time to time on the outstanding unpaid balance" of McMahon's account under § 9:3516(30)(a)(iii). The agreements do authorize Easy Money/LA to subject McMahon to a delinquency charges. Nevertheless, the LCCL's definition of "loan finance charge" specifically excludes "delinquency charges." § 9:3516(23)(a). Accordingly, the loan arrangements between Easy Money/LA and McMahon may not be characterized as a revolving loan account. As such, McMahon was not entitled to an extension of the limitation period beyond 60 days following the due date of her last loan. As McMahon filed this suit well more than 60 days following this date, the Court grants summary judgment in Easy Money/LA's favor as to these claims.
Because the Court finds that McMahon's arrangement with Easy Money/LA did not constitute a revolving loan account, it is unnecessary to analyze whether the arrangement satisfies the fourth prong of § 9:3516 (30)(a).
Plaintiffs nevertheless argue that McMahon brings her claims under Louisiana's general usury statute, § 9:3501, which contains a one-year prescriptive period for filing suit. See Chadwick v. Menard Bros., 28 So. 933, 942 (La. 1900). Plaintiffs contend they may seek relief under § 9:3501 notwithstanding the existence of the LCCL, LSLA, and LDPSLA. For this proposition, Plaintiffs rely on Evangeline Bank Trust Co v. Guillory, 364 So.2d 220, 222-23 (La.Ct.App. 1978). In that case, the Louisiana Third Circuit Court of Appeal analyzed § 9:3501 for the purpose of computing the damages the defendant lender was entitled to after subtraction of usurious interest paid by the plaintiff. See id. Nowhere does the Evangeline Bank court address the applicable limitation period for filing suit.
Plaintiffs also impliedly argue that the 60-day limitations period applies only when civil penalties are demanded. The 60-day peremptive period of § 9:3552E applies to "[a]ny civil action." The Court notes, however, that additional procedural requirements are necessary if civil penalties are demanded. See § 9:3552A(1)(a).
Additionally, interpreting the interplay of the statutes at issue here to permit McMahon to avail herself of the one-year prescriptive period under § 9:3501 would render the 60-day peremptive period of the LCCL a nullity, thereby violating a cardinal rule of statutory interpretation. Cf. Kungys v. United States, 485 U.S. 759, 778, 108 S.Ct. 1537, 1550, 99 L.Ed.2d 839 (1988). Allowing the § 9:3501's one-year prescriptive period to cancel out § 3552E's 60-day peremptive period for filing suit also would fly in the face of the legislative intent to expediently resolve disputes concerning small loans. The 60-day limitation period "manifests the legislative intent to have claims arising out of Louisiana Consumer Credit Law dealt with quickly." Preferred Inv. Corp. v. Neucere, 592 So.2d 889, 894 (La.Ct.App. 1991).
IV. McMAHON'S RICO CLAIMS
In addition to Easy Money/LA seeking summary judgment dismissal of McMahon's RICO claim under § 1962(d), Defendants also seek dismissal McMahon's § 1962(c) and (d) claims pursuant to Rule 12(b)(6).
A. 12(b)(6) motion standard of review
When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to sale a claim upon which relief can be granted, a district court must accept the factual allegations of the complaint as true and resolve all ambiguities or doubts regarding the sufficiency of the claim in favor of the plaintiff. See Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993). Unless it appears "beyond a doubt that the plaintiff can prove no set of facts in support of his claim," the complaint should not be dismissed for failure to state a claim. U. at 284-285 (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). However, conclusory allegations or legal conclusions masquerading as factual conclusions will not defeat a motion to dismiss. See Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995) (citing Fernandez-Montes, 987 F.2d at 284).
B. § 1962(c)
Section 1962(c) provides:
It shall be unlawful for any' person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly', in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.
Defendants urge dismissal of the § 1962(c) claim on two grounds: Plaintiffs fail to allege, as required by the statute, (1) an enterprise distinct from Defendants and (2) an enterprise distinct from the pattern of predicate acts.
With respect to Defendants' first argument, the Court notes that Plaintiffs allege two enterprises: (a) Easy Money/LA and (b) the Easy Money association. The Defendants alleged to be employed by or associtated with each are Jerome Greenberg. Van Gorder, David Greenberg, Easy Money/VA, and EMH. For the proposition that these enterprises are not sufficiently distinct from the culpable persons under § 1962(d), Defendants cite St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 447(5th Cir. 2000), in primary support.
The first alleged enterprise, as understood by the Court, is Easy Money/LA, which is not, however, alleged to be a RICO person. Therefore, there is a clear distinction between the enterprise corporation and the persons and other corporations associated with it. See Cedric Kushner, Promotions, Ltd. v. King, 533 U.S. 158, 121 S.Ct. 2087, 150 L.Ed.2d 198 (2001). Defendants correctly point out that McMahon has claimed that "[t]here are no distinct corporate personalities of any of the Easy Money defendants such that all actions in Louisiana of these defendants constitute the alter ego of all named defendants." Rec. Doc. 100 at ¶ 14. Although this allegation is arguably inartfully drawn, the Court finds that it does not, at this juncture at least, erase the legal distinction between the corporation, Easy Money/LA, and the individual persons and other corporate entities alleged to be RICO persons.
In the Second Amended Class Action Complaint, the "parties" named as Defendants include Easy Money/LA. However, in the particular section dealing with § 1962(d), Easy Money/LA is not so named. See generally ¶¶; 59-77. Thus, Easy Money/LA is a Defendant in the state claims, but is not a RICO person for purposes of § 1962(d).
The second named enterprise consists of the Easy Money association, an association in fact, as noted above, among Easy Money/LA, has Money/VA, and EMH. The named RICO persons are Easy Money/VA, EMH, and the three individuals, Jerome Greenberg, Van Gorder, and David Greenberg. There is an overlap in that two of the five named RICO persons are also named as participants in the three-member association in fact. The Fifth Circuit does not hold that "any congruence between a RICO person and an association-in-fact, which constitutes a RICO enterprise, violate[s] the person/enterprise distinction." St. Paul, 224 F.3d at 446. Nevertheless, the Fifth Circuit in St. Paul did state that "[t]o get around having a corporation named as both a RICO defendant and a RICO enterprise. many plaintiffs have charged the corporation as being part of an association-in-fact enterprise and also as a RICO defendant. Courts have roundly criticized this formulation " Id. at 447 n. 16.
This murky area is made murkier by the recent Supreme Court decision in King. In that case, King was alleged to be the RICO person and Don King Productions the alleged RICO enterprise. See King, 533 U.S. at 160, 121 S.Ct. at 2089, 150 L.Ed.2d 198. The court concluded that King, even though he was the president and sole shareholder of Don King Productions, was separate enough from the corporation he controlled to fulfill the person/enterprise distinction. See id. at 166, 121 S.Ct. at 2092-93, 150 L.Ed.2d 198. The Supreme Court distinguished this, however, from the "quite different circumstances" of when a corporation is alleged to be the person and the same corporation, together with its employees and agent, is alleged be the enterprise. As for the latter, the high court expressly had no opinion beyond noting the distinction. Id. at 164, 121 S.Ct. 2091, 150 L.Ed.2d 198.
Considering that this is a motion to dismiss and that the Court must resolve all ambiguities and doubts in favor of the plaintiff, and considering the fluctuating and complex jurisprudence in this area of the law, the second enterprise alleged in this case survives the motion to dismiss.
The Court tums now to the second of these grounds for dismissal. Defendants argue that McMahon's § 1962(c) claim should be dismissed because the enterprises alleged do not exist as entities separate and apart from the activity in which they engage. See Atkinson v. Anadarko Bank Trust Co., 808 F.2d 438, 441 (5th Cir. 1987) (per curiam). Defendants contend that Plaintiff have alleged no facts suggesting that the enterprises existed or exist separate and apart from their business of providing the challenged payday loans and that dismissal therefore is proper. See Rec. Doc. 101 at 8-11. The Court disagrees.
First, Atkinson did not involve the distinction between the enterprise and the predicate acts. It concerned whether the defendant bank was a distinct RICO person separate and apart from the named enterprise, which was an association in fact of the bank, its holding company, and three of its employees. See 808 F.2d 438.
Secondly, Plaintiffs do allege the existence of separate corporate entities, with different purposes, and separate individuals with different roles and responsibilities within those entities. All are engaged in one fashion or another with the "business of making payday loans." Rec. Doc. 100 at ¶ 5. While Plaintiffs appear to allege that the only purpose of these entities was to engage in illegal acts, see, e.g., id. at ¶¶; 6-8, hence blurring the lines between the existence of the enterprise and its criminal conduct, the Court finds a distinction nonetheless. Unlike a group of individuals who associate in fact to rob a series of banks. this case involves distinct corporate entities as the association in fact that exist independently of the allegedly illegal conduct in which they are engaged. The Court is mindful again of the most recent pronouncement by the Supreme Court in this area. Referring to the history of RICO, the court noted "the need to protect the public from those who would run `organization[s] in a manner detrimental to the public interest.'" King, 533 U.S. at 165, 121 S.Ct. at 2093, 150 L.Ed.2d 198 (quoting S. Rep. No. 91-617, at 82 (1969)). Also, "Congress `did nothing to indicate that an enterprise consisting of a group of individuals was not covered by RICO if the purpose of the enterprise was exclusively criminal[.]'" Id. (quoting United States v. Turkette, 452 U.S. 576, 581, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981)).
Although the above-mentioned state claims are time-barred under the LCCL's 60-day peremptive period, and although the RICO claims are based on the activity alleged to have violated the state statutes at issue, the RICO claims are not time-barred. See Agency Holding Corp. v. Malley-Duff Assocs., Inc., 483 U.S. 143, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987) (establishing four-year statute of limitations for RICO actions).
C. § 1962(d)
Finally, Easy Money/LA's motion for summary judgment and Defendants' motion to dismiss seek dismissal of McMahon's § 1962(d) claim. Section 1962(d) provides: "It shallbe unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section."
Defendants argue that a claim may not be made under § 1962(d) absent a viable claim under §§ 1962(a), (b), or (c). See Rec. Docs. 67, 101. Defendants argue also that the § 1962(d) claim must be dismissed because Plaintiffs have alleged that Defendants are alter egos, see Rec. Doc. 100 at ¶ 14, i.e., a single entity, which, by definition, cannot conspire with itself for purposes of RICO. See St. Paul, 224 F.3d at 447.
First, McMahon need not establish a viable claim under §§ 1962(a)-(c) to maintain her claim under § 1962(d). To prove the existence of a conspiracy under § 1962(d), "no actual acts of racketeering need occur; there need only exist a conspiracy to perform the necessary acts plus some overt action by one of the conspirators in furtherance of the conspiracy." United States v. Phillips, 664 F.2d 971, 1038 (Former 5th Cir. 1981), overruled on other grounds by United States v. Huntress, 956 F.2d 1309 (5th Cir. 1992). Thus, the Rule 56 and 12 (b)(6) motions to dismiss McMahon's § 1962(d) claim on this ground are denied.
Second, as noted above, their inartful pleading notwithstanding. Plaintiffs have satisfactorily alleged a distinction among the RICO Defendants. Accordingly, the Court rejects Defendants' argument that the allegations as pled are not covered by § 1962(d).
V. CONCLUSION
For the foregoing reasons,
IT IS ORDERED that:
(1) Defendants' Motion to Compel Arbitration is hereby GRANTED;
(2) the Motion for Summary Judgment of Easy Money of Louisiana, Inc., is hereby partially GRANTED, partially DENIED, and partially DISMISSED as MOOT; and
(3) the Rule 12(b)(6) Motion to Dismiss of Easy Money of Louisiana, Inc., Easy Money Holdings. Inc., Easy Money of Virginia. Inc., David L. Greenberg, Tami Van Gorder, and Jerome Greenberg is hereby partially DENIED and partially DISMISSED as MOOT.