United States District Court, D. New Mexico
CLARA DAYE, On behalf of herself and all others similarly situated, Plaintiff,
COMMUNITY FINANCIAL LOAN SERVICE CENTERS, LLC, d/b/a SPEEDY LOAN Defendant.
Charles M. Delbaum National Consumer Law Center, Inc. Boston,
Massachusetts and Richard N. Feferman Nicholas H. Mattison
Feferman & Warren Albuquerque, New Mexico Attorneys for
Kochersberger Alicia M. LaPado Business Law Southwest, LLC
Albuquerque, New Mexico Attorneys for the Defendant
MEMORANDUM OPINION, FINDINGS OF FACT, CONCLUSIONS OF
LAW, AND ORDER
MATTER comes before the Court on: (i) the
Plaintiff's Requested Findings of Fact and Conclusions of
Law, filed May 24, 2017 (Doc. 158)(“Daye's
FOFs”); (ii) the Defendant's Proposed Findings of
Fact and Conclusions of Law, filed May 24, 2017 (Doc.
156)(“Speedy's FOFs”); and (iii) the Opposed
Motion to Strike Witnesses, filed May 13, 2016 (Doc.
95)(“Motion to Strike”). The Court held a bench trial
on March 15, 2017. See Transcript of Bench Trial,
held March 15, 2017 (“Tr.”). The primary
issues are: (i) how much should the Plaintiffs recover on
account of the misrepresentations of Defendant Community
Financial Loan Service Centers, LLC, doing business as Speedy
Loan, regarding the cost of its loans; and (ii) how much
should the Plaintiffs recover on account of Speedy Loan's
violations of New Mexico law regarding payday loans. The
Court determines that Speedy Loan's misrepresentations
did not damage the Plaintiffs, because those
misrepresentations made Speedy Loan's loans appear more
expensive than they actually were. Consequently, the named
plaintiff can recover statutory damages and attorney's
fees, but the unnamed plaintiffs can recover nothing. The
Court also determines that Speedy Loan must return the
interest and fees it collected from the Plaintiffs to the
extent that it collected more than the New Mexico Small Loan
Act, N.M. Stat. Ann. §§ 58-15-1 to -39, permits.
Plaintiffs and Speedy Loan have stipulated to some facts.
See Pretrial Order ¶¶ 1-53, at 8-19, filed
February 15, 2017 (Doc. 144)(“Pretrial Order”).
The proposed findings of facts and conclusions of law
submitted by the parties agree on other facts. See,
e.g., Daye's FOFs ¶ 9, at 2 (alleging that
Speedy Loan made 31, 082 loans during the time period covered
by Daye's suit); Speedy's FOFs ¶ 9, at 2
(same). The Court has carefully considered those
stipulations and proposed findings, and it sets forth its
findings (“FOFs”) below.
1. Speedy Loan is a Delaware LLC. See Pretrial Order
¶ 2, at 8 (stipulated fact).
2. Speedy Loan is a profitable business. See
Pretrial Order ¶ 4, at 8 (stipulated fact).
3. Speedy Loan is in the business of providing short term,
unsecured loans to individuals and operates twelve loan
stores in New Mexico. See Daye's FOFs ¶ 7,
at 2; Speedy's FOFs ¶ 1, at 1.
4. Those loans are made “in the regular course of
[Speedy Loan's] trade or commerce.” Pretrial Order
¶ 15, at 10 (stipulated fact).
5. “Since at least August 22, 2010, Speedy has offered
a single loan product, which it calls an ‘installment
loan.'” Pretrial Order ¶ 12, at 9 (stipulated
6. “Speedy entered into 31, 082 loans in New Mexico
between August 22, 2010 and August 22, 2014.” Pretrial
Order ¶ 13, at 10 (stipulated fact). See
Daye's FOFs ¶ 9, at 2; Speedy's FOFs ¶ 2,
7. To qualify for a loan, Speedy Loan required its customers
“to have a bank account from which payments could be
withdrawn through electronic fund transfer.” Pretrial
Order ¶ 16, at 10 (stipulated fact).
Speedy Loan required its customers to provide the account and
routing numbers associated with such an account “[a]s
part of the loan application process.” Pretrial Order
¶ 17, at 10 (stipulated fact).
Speedy Loan required all of its customers to sign both a loan
agreement and a “PPD/ACH [Prearranged Payment and
Deposit/Automated Clearing House] Authorization” form.
Pretrial order ¶¶ 18, 20, at 10-11 (stipulated
facts). See Daye's FOFs ¶¶ 35-36, at
of Speedy Loan's loan agreements listed the “Total
of Payments, ” and stated that the Total of Payments is
the amount that the borrower “will have paid when
[they] have made all scheduled payments.” Pretrial
Order ¶ 39, at 13 (stipulated fact).
Each loan agreement also contained a “Payment
Schedule” and stated that the borrower promised to pay
“each installment payment as it becomes due as shown
above in the Payment Schedule.” Pretrial Order ¶
38, at 12-13 (stipulated fact).
loan agreements also provided:
On or about the day each installment payment becomes due, you
authorize us to affect [sic] one or more ACH [Automated
Clearing House] debit entries to your Account at the Bank.
You acknowledge that the account on which the Check/ACH
Authorization is drawn is a legitimate, open, and active
This document represents the final agreement between creditor
and you and may not be contradicted by evidence of any
alleged oral agreement.
Order ¶ 19, at 10 (stipulated fact).
each loan, the PPD/ACH Authorization form specified a
“schedule of automatic debits from the customer's
bank account.” Pretrial Order ¶ 20, at 11
Speedy Loan used that schedule of automatic debits to remind
employees when they should withdraw money from the
customer's bank account. See Pretrial Order
¶ 21, at 11 (stipulated fact).
Total of Payments listed in all of the loan agreements was
consistent with the schedule of automatic debits contained in
the corresponding PPD/ACH Authorization form. See
Daye's FOFs ¶ 73, at 17; Speedy's FOFs ¶
14, at 3.
976 of Speedy Loan's loan agreements, however, listed a
Total of Payments that was “lower than the sum of
payments disclosed in the Payment Schedule.” Pretrial
Order ¶ 40, at 13 (stipulated fact).
total discrepancy between the Totals of Payments and the
Payment Schedules was $783, 282.50. See Pretrial
Order ¶ 42, at 13 (stipulated fact).
Both Speedy Loan and its customers expected payments in
accordance with the loan agreement's Total of Payments
and the PPD/ACH Authorization form's schedule of
automatic debits and not in accordance with the loan
agreement's Payment Schedule. See Speedy's
FOFs ¶ 16, at 3 19. Speedy Loan “never attempted
to collect the amounts identified in the Payment Schedule,
” and instead “collected the amounts on the
PPD/ACH schedule.” Speedy's FOFs ¶ 16, at
Speedy Loan “has known of the New Mexico Small Loan
Act's provisions governing payday loans since at least
August 22, 2010.” Pretrial Order ¶ 24, at 11
Speedy Loan's employee handbook included the following
instructions as part of the process of giving a loan:
Have the customer sign the PPD/ACH Authorization and again
take it to ensure that you have it in your possession.
Remember to tell the customer that if they do not want the
payment to come out of their account on the date shown, they
must come in to the store and make the payment in cash,
before 2:30 p.m. (Central time) on the business day before
the ACH date. You may ask the customer to initial individual
items for emphasis but it is not required. The signature is
. . . .
Make copies of all of these documents, Contract, PPD/ACH
Authorization (you need the original plus two copies of this
document, original for file, one copy for the customer and
one copy for the Installment PPD/ACH binder or drawer),
disclaimer. The copies go to the customer. We keep the
originals! All Originals go in the customer file.
. . . .
Following this procedure is mandatory and will ensure that
you are operating within the limits of the Truth in Lending
Act [15 U.S.C. §§ 1601-67f] and other laws.
Loan Policy and Procedure Manual 14.23 (updated November 12,
2014)(CFSCDayeDiscovery000277)(Exhibit 50). See Tr.
at 2:22-3:23 (Mattison, Court, Kochersberger)(admitting,
without objection, the fifty exhibits specified in the
parties' amended consolidated exhibit list).
Speedy Loan required its customers, as a condition of
receiving a loan, to provide a debit authorization giving
Speedy Loan the authority to electronically transfer funds
from the customer's bank account for
“Between August 22, 2010 and August 22, 2014, 31, 074
of [Speedy Loan's] 31, 082 [New Mexico] loans charged
more than the legal fee for payday loans.” Pretrial
Order ¶ 31, at 12 (stipulated fact).
Speedy Loan “collected $7, 340, 471.14 above the legal
fee for payday loans.” Pretrial Order ¶ 32, at 12
Speedy Loan never included in its loan agreements “the
disclosures required to accompany a payday loan” under
New Mexico law. Pretrial Order ¶ 27, at 11 (stipulated
Speedy Loan frequently renewed its loans. See
Pretrial Order ¶ 34, at 12 (stipulated fact).
Speedy Loan did not afford “borrowers the right to
enter an unsecured payment plan.” Pretrial Order ¶
25, at 11 (stipulated fact).
Speedy Loan did not afford borrowers “the right to
rescind any of its loan documents.” Pretrial Order
¶ 28, at 11 (stipulated fact).
of Speedy Loan's loans had “repayment periods
exceeding 35 days.” Pretrial Order ¶ 29, at 12
189 of Speedy Loan's loans were “to be repaid in
fewer than four payments” or had a term that was
“less than 121 days.” Pretrial Order ¶ 23,
at 11 (stipulated fact).
Daye, the named plaintiff, took out four loans from Speedy
Loan. See Daye's FOFs ¶ 10, at 2
(“Speedy made four loans to Ms. Daye.”);
Speedy's FOFs ¶ 34, at 6 (“Ms. Daye is the
named Plaintiff in this case, and obtained and four loans
obtain those loans, Speedy Loan required Daye to authorize
electronic fund transfers from her bank account for repayment
of those loans. See supra FOFs ¶ 21. See
also Daye's FOFs ¶ 15, at 3.
Speedy Loan used that authorization to withdraw money from
Daye's bank account to pay her loan. See
Pretrial Order ¶ 11, at 9 (stipulated fact).
Daye would have preferred to make her loan payments in
person, and pays her electricity, water, and car insurance
bills in person. See Tr. at 35:21-25 (Mattison,
Daye)(stating that Daye “would have gone into the store
to make [her] payments” if Speedy Loan “had given
[her] the choice of not paying by automatic
withdrawals”); id. at 36:10-15 (Mattison,
Daye)(stating that Daye pays her “electricity bill,
[her] water bill[, ] [a]lso my insurance, my vehicle
insurance bill” in person).
Daye repaid her four loans in full. See Daye's
FOFs ¶ 17, at 3; Speedy's FOFs ¶¶ 35-38,
Daye believed that the PPD/ACH Authorization forms attached
to her loan agreements “specified when [her] payments
were going to be made and how much” she had to pay. Tr.
at 44:21-24 (Kocherberger, Daye).
Daye “never paid any attention or even noticed”
the loan agreements' Payment Schedules. Tr. at 45:15-18
(Kochersberger, Daye). See Speedy's FOFs ¶
41, at 6.
Daye never expected to make the payments that those Payment
Schedules specify. See Tr. at 46:1-4 (Kochersberger,
Daye). See Speedy's FOFs ¶ 41, at 6.
“Speedy Loan never tried to collect payments [from
Daye] in accordance with” that schedule. Tr. at
46:5-7(Kochersberger, Daye). See Speedy's FOFs
¶ 40, at 6.
Speedy Loan “only took the payments that were
reflected” on Daye's PPD/ACH Authorization forms.
Tr. at 46:8-10 (Kochersberger, Daye). See
Speedy's FOFs ¶ 40, at 6.
Totals of Payments listed in the loan agreements
“match[ed] up with” the payments listed in
Daye's ACH/PPD Authorization forms. Tr. at 47:10-13
Kevin Dabney is the President of Speedy Loan Wisconsin -- a
legal entity distinct from Speedy Loan -- and he acted as a
consultant and overseer for Speedy Loan. See Tr. at
62:14-19 (Kochersberger, Dabney). See also
Daye's FOFs ¶ 6, at 2.
Speedy Loan used eCheckTrac software to generate the Payment
Schedules in its loan agreements as well as the schedules on
its PPD/ACH Authorizations forms. See Tr. at
85:16-22 (Kochersberger, Dabney); id. at 86:2-7
(Kochersberger, Dabney). See also Speedy's FOFs
¶ 11, at 2-3.
Neither Speedy Loan's customers nor New Mexico regulators
identified the discrepancies between those two sets of
schedules. See Tr. at 90:19-91:6 (Kochersberger,
State regulators regularly audited Speedy Loan, and Speedy
Loan regularly conducted internal audits. See Tr. at
75:11-77:2 (Kochersberger, Dabney); id. at
78:23-84:24 (Kochersberger, Dabney).
Speedy Loan did not use the Payment Schedules in its loan
agreements “for any purpose at all.” Tr. at
88:11-15 (Kochersberger, Dabney).
Speedy Loan's inclusion of inconsistent Payment Schedules
and Totals of Payments in some of its loan agreements was not
Luana Gaco, an unnamed class member who testified at trial,
took out eight loans from Speedy Loan, and took six of them
out between August 22, 2010 and August 22, 2014. See
Daye's FOFs ¶¶ 18-19, at 3; Speedy's FOFs
¶ 43, at 7.
Gaco believed that making payments via automatic withdrawals
was a requirement for obtaining those loans. See Tr.
at 178:6-7 (Gaco).
Speedy Loan collected money from Gaco only in accordance with
the payment schedules on her PPD/ACH Authorization Forms.
See Tr. at 183:7-15 (Kochersberger, Gaco). See
also Speedy's FOFs ¶ 54, at 8.
Gaco relied on Speedy Loan “to give [her] ACH alternate
information and [to] follow the law.” Tr. at 186:17-19
Charles Robert Foster is an unnamed class member who took out
eight loans from Speedy Loan, and he took six of those loans
out between August 22, 2010 and August 22, 2014. See
Daye's FOFs ¶ 27, at 4; Speedy's FOFs ¶ 58,
Speedy Loan told Foster that he “could come in and pay
cash, ” and that he “could come in and pay off
the money early.” Tr. at 197:24-198:3 (Kochersberger,
Foster looked to the payment schedules on his PPD/ACH
Authorization forms to determine what he was going to pay and
when his payments were due. See Tr. at 201:23-202:10
Foster never noticed the Payment Schedule on the first page
of his loan agreements. See Tr. at 202:11-13
Court will now state its conclusions of law
(“COLs”). The Court will begin by summarizing the
case's procedural history. It will then set out the law
regarding issues relevant to its analysis. The Court will
then present that analysis.
case's procedural history includes Daye's Complaint
for Damages, filed August 22, 2014 (Doc.
1)(“Complaint”); class certification,
see Memorandum Opinion and Order, 313 F.R.D. 147,
filed February 9, 2013 (Doc. 82)(“Class Certification
MOO”); and partial summary judgment, see
Memorandum Opinion and Order, 233 F.Supp.3d 946, filed
January 20, 2017 (Doc. 138)(“SJ MOO”). It also
includes a bench trial; written closing arguments,
see Plaintiff's Closing Argument at 2, filed May
24, 2017 (Doc. 159)(“Daye's Closing”); Speedy
Loan's Closing Argument at 1, filed May 24, 2017 (Doc.
157)(“Speedy's Closing”); and proposed FOFs.
August 22, 2014, Daye filed her Complaint. See
Complaint at 1. Daye asserts that Speedy Loan violated both
federal law -- specifically the Truth in Lending Act, 15
U.S.C. §§ 1601-67f (“TILA”), and the
Electronic Funds Transfer Act, 15 U.S.C. §§
1693-93r (“EFTA”) -- as well as state law --
specifically the New Mexico Unfair Practices Act, N.M. Stat.
Ann. §§ 57-12-1 to -26 (“UPA”) and the
New Mexico Small Loan Act, N.M. Stat. Ann. §§
58-15-1 to -39 (“Small Loan Act”). Complaint
¶ 7, at 2.
the Complaint, Daye asserts four distinct claims for relief.
First, Daye asserts that “[t]he payday loans made to
Ms. Daye, along with every other payday loan with like
characteristics, violated the New Mexico Small Loan
Act” such that those loans are void. Complaint ¶
75, at 13. Consequently, according to Daye, “all
borrowers who entered into void loans are entitled to the
return of all interest and other charges other than
principal, ” Complaint ¶ 76, at 13, and,
“[i]n the alternative, Speedy would be unjustly
enriched by being permitted to retain or collect amounts in
excess of the legally permitted rate [of interest], and
should be required to disgorge such amounts and be prohibited
from collecting any further unlawful amounts, ”
Complaint ¶ 77, at 13.
Second, Daye asserts a claim for TILA “statutory
damages plus costs and reasonable attorney fees.”
Complaint ¶ 79, at 13.
Third, Daye asserts a claim for EFTA “statutory damages
plus costs and reasonable attorney fees.” Complaint
¶ 81, at 14.
Fourth, Daye asserts a UPA claim for “actual damages,
trebled, including all money paid to Speedy in excess of the
principal amount loaned, plus costs and reasonable attorney
fees, ” Complaint ¶ 84, at 14, and for
“injunctive relief which enjoins Speedy from continuing
to collect unlawful amounts on its illegal payday loans,
” Complaint ¶ 85, at 15.
February 9, 2016, the Court certified a class action under
rule 23 of the Federal Rules of Civil Procedure. See
Class Certification MOO, 313 F.R.D. at 152. The class
consists of all persons who entered into a loan with Speedy
Loan between August 22, 2010, and August 22, 2014, when Daye
filed her Complaint. See Class Certification MOO,
313 F.R.D. at 152.
Court also certified four subclasses. See Class
Certification MOO, 313 F.R.D. at 174. The four subclasses are
1. The “Payday Loan Subclass” consists of all
members of the class who entered into a loan with Speedy
beginning four years prior to the filing of this action, and
EITHER (a) Speedy conditioned the loan upon repayment by
means of preauthorized debit authorization OR (b) Speedy
accepted preauthorized debit authorization and either the
loan was to be repaid in fewer than four payments, or the
term of the loan was less than 120 days. The members of the
Payday Loan Subclass assert a right to relief under the UPA
and other legal theories for Speedy's illegal payday
2. The “EFTA Subclass” consists of all members of
the class who entered into a loan with Speedy beginning one
year prior to the filing of this case, and whose loan was
conditioned upon repayment by means of preauthorized
electronic fund transfer. The ...