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Allen v. RJC Investment, Inc.

United States District Court, D. Montana, Billings Division

March 19, 2019




         Travis William Allen (“Allen”) brought this action under the Truth in Lending Act seeking an offset in debt and an award of finance charges and fees he paid under a contract and security agreement with Defendant RJC Investment, Inc. (“RJC”). (Doc.1.) Allen also seeks a declaratory judgment that RJC cannot judicially enforce the contract because RJC violated the Montana Mortgage Act's licensing requirements. (Doc. 1.) RJC has filed a counterclaim against Allen, seeking damages for breach of contract and attorney's fees. (Doc. 6.)

         Pending is Allen's motion for summary judgment as to all counts in his complaint. (Docs. 19.) The motion is fully briefed and ripe for decision. Having considered the parties' arguments and for the following reasons, the Court orders that Plaintiffs' motion is GRANTED in part and DENIED in part.

         I. BACKGROUND

         On June 21, 2013, Allen entered into an installment sale contract and security agreement with Cherry Creek Development, Inc. for the purchase of a mobile home. (Doc. 24 at ¶1.) Allen also executed a promissory note to pay Cherry Creek $69, 900 in accordance with the terms of the contract. (Doc. 1-2.) Cherry Creek subsequently assigned its interest in the contract and promissory note to RJC. (Doc. 24 at ¶¶ 3, 4.) Allen's monthly payment obligation under the contract was $711.00. (Doc. 14-2.) The contract also provided that a late fee of $50.00 would be assessed on any payment made five days past the due date. (Docs. 14-2, 24 at ¶ 5.) After executing the contract, Allen defaulted on his payment obligations multiple times. (Doc. 24 at ¶6.) As a result, he was charged numerous late fees in the amount of $50.00 each. (Docs. 20-1, 24 at ¶ 6.)

         On December 22, 2017, Allen brought this action against RJC asserting violations of the Truth in Lending Act (“TIL Act”). (Doc. 1.) He claims RJC violated the TIL Act by assessing premature and excessive late fees under the contract (Count I), and by failing to make required disclosures when the contract was executed (Count II). Allen also alleges the contract is not enforceable because RJC was not a licensed lender as required by the Montana Mortgage Act (Count III). Allen requests that the Court grant him recovery of all finance charges and fees paid on the contract, declare that he may offset any amount owed to RJC by the statutory damages limit of $4, 000, and declare the contract judicially unenforceable. (Doc. 1 at 6.)

         RJC filed its answer and counterclaim against Allen on February 26, 2018. (Doc. 5.) RJC denies Allen's allegations in its answer, and asserts three causes of actions against him in a counterclaim: breach of contract, breach of the implied covenant of good faith and fair dealing, and attorney's fees. Id. RJC also raises a variety of affirmative defenses. Id.

         On August 10, 2018, Allen filed a motion for summary judgment. (Doc. 17, 19.). Allen does not specify in his motion the claim(s) on which summary judgment is sought, but generally “moves the Court . . . to enter summary judgment in this matter.” (Doc. 17.) Fed.R.Civ.P. 56(a) provides that “[a] party may move for summary judgment, identifying each claim or defense - or the part of each claim or defense - on which summary judgment is sought.” Nevertheless, the Court will construe the motion as a requesting summary judgment as to all counts in Allen's complaint.


         A. Summary Judgment

         A court will grant summary judgment if the movant can show “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the initial burden to submit evidence demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         Material facts are those which may affect the outcome of the case. Anderson, 477 U.S. 242, 248 (1986). A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable fact-finder to return a verdict for the nonmoving party. Id. If the movant meets its initial responsibility, the burden shifts to the nonmoving party to establish a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).

         B. Truth in Lending Act

         Congress enacted the TIL Act to promote and achieve “the informed use of credit, ” which “results from an awareness of the costs thereof by consumers.” 15 U.S.C. § 1601. It encourages fair and transparent credit extension practices by requiring credit term disclosures and prohibiting lending abuses. Eby v. Reb Realty, Inc., 495 F.2d 646, 647 (9th Cir. 1974); 15 U.S.C. § 1601(a). Courts should liberally construe the Act in favor of consumers to implement its purpose. In re Ramsey v. Vista Mortgage Group, 176 B.R. 183, 187 (9th Cir. 1994) (citing Eby, 495 F.2d at 650).

         Although it was enacted in 1968, the TIL Act has been amended multiple times. In re Ramsey, 176 B.R. at 186. Many of the modifications to the application of the Act are reflected in “Regulation Z” and the Home Ownership and Equity Protection Act[1] (“HOEPA”). 12 C.F.R. Pt. 226; 15 U.S.C. § 1639. HOEPA amended the TIL Act to require additional disclosures for certain high-cost mortgages. 15 U.S.C. § 1639. Regulation Z was promulgated by the Board of Governors of the Federal Reserve System, the entity charged with prescribing regulations to implement the TIL Act. In re Ramsey, 176 B.R. at 186; 15 U.S.C. § 1604. The Board also published Official Staff Commentary to supplement Regulation Z and aid in its interpretation. Id. The Supreme ...

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