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Strauser v. RJC Investment, Inc.

Supreme Court of Montana

July 23, 2019

LISA STRAUSER, Petitioner and Appellant,
v.
RJC INVESTMENT, INC. Defendant and Appellee.

          Submitted on Briefs: July 3, 2019

          APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV 17-1894 Honorable Michael G. Moses, Presiding Judge

          For Appellant: D. Michael Eakin, Eakin, Berry & Grygiel, PLLC, Billings, Montana.

          For Appellee: Christopher T. Sweeney, Peter M. Damrow, Moulton Bellingham PC, Billings, Montana.

          OPINION

          Mike McGrath, Chief Justice.

         ¶1 Plaintiff Lisa Strauser appeals from an order of the Thirteenth Judicial District Court, Yellowstone County, granting a motion to dismiss in favor of Defendant RJC Investment, Inc. We affirm in part and reverse in part.

         ¶2 We restate the issues on appeal as follows:

1. Whether consumers have a private right of action under the 2007 version of the Montana Retail Installment Sales Act.
2. Whether the statutory provisions contained in the Montana Retail Installment Sales Act apply to a retail installment contract not enforced by the Department of Administration.

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶3 On January 15, 2009, Strauser purchased a mobile home for $50, 000 from Cherry Creek Development, Inc. (Cherry Creek) in Billings, Montana. Strauser paid $2, 500 down and financed the remainder through an Installment Sales Contract and Security Agreement (Agreement), which Cherry Creek later assigned to RJC Investment, Inc. (RJC Investment). The Agreement required Strauser to make monthly payments of $482 with a variable interest rate over a fifteen-year period and to pay a $50 late fee for any late payments. Between 2009 and 2016, Strauser alleges that RJC Investment assessed $3, 300 in late fees against her and failed to disclose the amount of the finance charge.

         ¶4 Strauser filed an action in District Court seeking a declaratory judgment pursuant to the Uniform Declaratory Judgment Act (UDJA), Title 27, chapter 8, MCA, clarifying her rights and obligations under the Agreement. Strauser further asserted that provisions of the Montana Retail Installment Sales Act (RISA), Title 31, chapter 1, part 2, MCA, (2007), barred RJC Investment from collecting fees under the Agreement because Cherry Creek and RJC Investment had violated RISA by failing to disclose the finance charge and collecting excessive late fees. RJC Investment moved to dismiss Strauser's complaint for failure to state a claim pursuant to M. R. Civ. P. 12(b)(6). On March 29, 2018, the District Court granted RJC Investment's M. R. Civ. P. 12(b)(6) motion on the basis that the 2009 version of RISA did not confer a private cause of action. Strauser appeals.

         STANDARD OF REVIEW

         ¶5 This Court reviews a district court's grant or denial of a motion to dismiss pursuant to M. R. Civ. P. 12(b)(6) de novo. Meagher v. Butte-Silver Bow City-Cty., 2007 MT 129, ¶ 13, 337 Mont. 339, 160 P.3d 552. "A district court's determination that a complaint failed to state a claim presents a conclusion of law," which this Court reviews for correctness. Renenger v. State, 2018 MT 228, ¶ 5, 392 Mont. 495, 426 P.3d 559. This Court views the complaint in the light most favorable to the non-moving party, and affirms a District Court's dismissal only where the "non-moving party would not be entitled to relief based on any set of facts that could be proven to support the claim." Renenger, ¶ 5.

         DISCUSSION

         ¶6 1. Whether consumers have a private right of action under the 2007 version of the Montana Retail Installment Sales Act.

         ¶7 On appeal, Strauser asserts six violations of RISA including that Cherry Creek and RJC Investment: (1) failed to disclose the finance charge; (2) failed to disclose the total amount of the time balance, stated as one sum in dollars and cents; (3) prematurely assessed late fees; (4) charged excessive late fees; (5) failed to disclose the number of payments; and (6) did not contain the required notice in the Agreement. Strauser argues that she has a private cause of action pursuant to RISA, § 31-1-203(2), MCA (2007), which states: "Any person violating 31-1-231 through 31-1-243, except as the result of an isolated accidental and bona fide error of computation, shall be barred from recovery of any finance, delinquency, or collection charge on the contract." We disagree. In Somers v. Cherry Creek Dev., Inc., 2019 MT 101, 395 Mont. 389, 439 P.3d 1281, this Court held that the 2009 version of RISA did not confer a private right of action. While the 2007 version of RISA controls in this case, the same analysis applies.[1]

         ¶8 "[A] party is not entitled to obtain private enforcement of a regulatory statute that is not intended by the legislature to be enforceable by private parties." Mark Ibsen, Inc. v. Caring for Montanans, Inc., 2016 MT 111, ¶ 41, 383 Mont. 346, 371 P.3d 446. In Wombold v. Assocs. Fin. Servs. Co. of Mont, Inc., 2004 MT 397, ¶ 36, 325 Mont. 290, 104 P.3d 1080, this Court developed a four-factor test (Wombold test) to determine whether a statutory scheme confers a private cause of action. Somers, ¶ 11. Consistent with this Court's analysis and application of the Wombold test in Somers, the Legislature did not intend the 2007 version of RISA to confer a private cause of action. Somers, ¶ 19. "RISA is an administrative statute authorizing the Department to enforce its provisions," not private parties. Somers, ¶ 15.

         ¶9 2. Whether the statutory provisions contained in the Montana Retail Installment Sales Act apply to a retail installment contract not enforced by the Department of Administration.

         ¶10 This Court has recently reviewed several installment contracts governing the relationship between mobile home purchasers and RJC Investment. See Kapor v. R.J.C. Inv., Inc., 2019 MT 41, 394 Mont. 311, 434 P.3d 869; Hutzenbiler v. R.J.C. Inv., Inc., 2019 MT 80, 395 Mont. 250, 439 P.3d 378; Christman v. Clause, 2019 MT 132, 396 Mont. 142; Somers. While each case presented nuanced issues, this Court has uniformly held that Article 9A of Montana's adopted version of the Uniform Commercial Code (U.C.C.) governs contracts involving secured transactions, including the present Agreement, subjecting "both the debtor and creditor parties to additional obligations and rights." Christman, ¶¶ 12-13. While the statutory provisions of the U.C.C. are not presently at issue, this Court wishes to contexrualize our prior holdings in Kapor, Hutzenbiler, Christman, and Somers, with the present facts.

         ¶11 Title 30, chapter 9A, part 6, MCA, governs default in secured transactions, and is triggered by the debtor's default. Kapor, ¶11; Hutzenbiler, ¶ 14 (citing § 30-9A-601, MCA). In the event of Strauser's default and RJC Investment's repossession and disposition of the mobile home, our holdings in Kapor, Hutzenbiler, and Christman, make clear that "termination of the security interest does not do away with the obligations of a creditor under Title 30, ...


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