DARRIN P. GAYLES, District Judge.
THIS MATTER is before the Court on the Defendants' Joint Motion to Dismiss Plaintiff's Amended Complaint [DE 35]. Plaintiff's putative class action complaint arises from an alleged loan generation scheme for financing expensive home improvement products, such as air conditioners. According to the Amended Complaint, Defendant GreenSky, LLC ("GreenSky") arranges and brokers the loans, while Defendant Intrust Bank, N.A. ("Intrust") is the actual lender. The Amended Complaint ("complaint") alleges five causes of action: (1) violation of the Truth in Lending Act (TILA) by Intrust; (2) declaratory relief; (3) restitution and unjust enrichment; (4) violation of the Florida Credit Service Organization Act; and (5) violation of the Florida Consumer Collection Practices Act. Defendants' motion seeks to dismiss all claims pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, Defendants' motion is granted in part and denied in part and Plaintiff is granted leave to replead.
Plaintiff owns a home in Broward County, Florida, where she maintains her residence. On or about July 24, 2016, Plaintiff received an unsolicited telephone call on her cell phone from someone she believed was a salesperson for Fluid Air Concepts ("Fluid Air") concerning a "sales program" to help low income people save on energy costs. According to Plaintiff, the caller falsely told Plaintiff that she could save money by upgrading her air conditioning system using a Florida Power and Light (FPL) Program. In reality and unbeknownst to Plaintiff at the time, no such program existed. Plaintiff agreed to meet the salesperson.
On July 28, 2016, an employee or agent of Fluid Air came to Plaintiff's home. The Fluid Air salesperson "inspected" Plaintiff's air conditioning unit and represented to Plaintiff that the FPL Program would provide financial assistance to Plaintiff if she changed out her air conditioner for a new energy efficient unit. The Fluid Air representative falsely told Plaintiff that, under the FPL Program, Plaintiff would have no out-of-pocket costs when, in fact, Fluid Air intended to create a loan in Plaintiff's name to finance the purchase of the air conditioner. Plaintiff did not consent to the loan.
Under the belief that an FPL Program existed, Plaintiff signed a document titled "Agreement for Change Out in Service" ("Change Out Agreement"), which is attached to the complaint as Exhibit A.
Several days after the new air conditioning unit was installed at her home, Plaintiff received a letter from Defendant GreenSky informing Plaintiff of an $8,000.00 loan in her name.
Pursuant to the terms of the Loan Agreement, Defendant Intrust extended credit to Plaintiff in the amount of $8,000.00. The TILA disclosure in the Loan Agreement lists $8,000.00 as the "Amount Financed." The Loan Agreement also states that $8,000.00 was paid to Fluid Air. Plaintiff alleges that this representation was false because GreenSky received the $8,000.00 and paid only a portion of that to Fluid Air. Because GreenSky kept a portion of the loan proceeds, Plaintiff alleges that the "Amount Financed" set out in the TILA disclosure contained an undisclosed fee paid to GreenSky ("Credit Service Fee"). The Credit Service Fee would not have been charged in a cash only transaction. As a result, the Credit Service Fee constitutes an undisclosed finance charge.
Plaintiff alleges that the Loan Agreement appears to contemplate both a "closed-end credit transaction" and an "open-end credit transaction." The requirements for closed-end and open-end credit transactions differ. An open-end credit transaction provides for multiple purchases within a certain time period, i.e., a credit card, whereas a closed-end credit transaction involves a single extension of credit. The Loan Agreement includes a "Shopping Pass" which, according to its terms, had attributes of a credit card, including an account number, an expiration date, a bar code, and a "CVV. Number." Plaintiff maintains that, as a result of the Shopping Pass's credit-card like features,
Intrust was required to comply with the Credit Card Accountability and Disclosure Act of 2009 and it has not.
Plaintiff alleges that GreenSky acted as a credit service organization, as that term is defined in Florida's Credit Service Organization Act ("CSOA"). Specifically, GreenSky, in return for money, sold, provided, and performed the procurement and obtaining of an extension of credit for Plaintiff as a buyer. However, GreenSky has not complied with the requirements of the statute.
As set out above, Plaintiff alleges five causes of action. Count I against Intrust alleges that Intrust violated TILA by: (1) failing to provide all material disclosures required by TILA, 15 U.S.C. § 1601, et seq., and Regulation Z, 12 C.F.R. § 226.18, in closed-end credit transactions and (2) failing to comply with the requirements of TILA for open-end credit transactions. Count II, against both Defendants, seeks a declaratory judgment that GreenSky has not complied with the Florida CSOA and that the Loan Agreement was never consummated and, therefore, is unenforceable. Count III is a claim for restitution and unjust enrichment against both Defendants. Count IV alleges a violation of the Florida CSOA, Fla. Stat. § 817.7001, et seq., against both Defendants. Count V, against both Defendants, claims violation of the Florida Consumer Credit Protection Act, Fla. Stat. § 559.55, et seq., ("FCCPA"). Plaintiff seeks a declaration that all extensions of credit arranged by GreenSky are void as a matter of law, statutory damages from Instrust under TILA, and actual and punitive damages under the CSOA and FCCPA. Defendants have moved to dismiss all claims.
The purpose of a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) is to test the facial sufficiency of a complaint. The rule permits dismissal of a complaint that fails to state a claim upon which relief can be granted. It should be read alongside Federal Rule of Civil Procedure 8(a)(2), which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Although a complaint challenged by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff is still obligated to provide the "grounds" for his entitlement to relief, and a "formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).
When a complaint is challenged under Rule 12(b)(6), a court will presume that all well-pleaded allegations are true and view the pleadings in the light most favorable to the plaintiff. American United Life Ins. Co. v. Martinez, 480 F.3d 1043, 1066 (11th Cir. 2007). However, once a court "identifies pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth," it must determine whether the well-pled facts "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint can only survive a 12(b)(6) motion to dismiss if it contains factual allegations that are "enough to raise a right to relief above the speculative level, on the assumption that all the [factual] allegations in the complaint are true." Twombly, 550 U.S. at 555. However, a well-pled complaint survives a motion to dismiss "even if it strikes a savvy judge that actual proof of these facts is improbable, and `that a recovery is very remote and unlikely." Twombly, 550 U.S. at 556.
As previously stated, Defendants seek to dismiss Plaintiffs entire complaint. Defendants raise three main reasons for dismissal: (1) any fee paid by Intrust to GreenSky was not charged to Plaintiff and, therefore, was not a finance charge required to be disclosed by TILA; (2) Plaintiff is subject to the terms of the Loan Agreement, which include a Kansas choice-of-law provision, the application of which requires dismissal of the two Florida statutory causes of action, the CSOA and FCCPA claims; and (3) Plaintiff's common law claims do not state claims against the Defendants. The Court will address each cause of action separately.
Plaintiffs TILA claim alleges that Intrust violated TILA in multiple ways. To the extent Intrust and Plaintiff entered into a closed-end credit transaction, Plaintiff maintains that Intrust violated TILA by (i) failing to accurately and properly disclose the annual percentage rate; (ii) failing to accurately and properly disclose the finance charge; and (iii) failing to accurately and properly disclose the amount financed. To the extent that Intrust and Plaintiff entered into an open-end credit transaction, Plaintiff maintains that Intrust violated TILA by (i) failing to comply with the underwriting requirements of TILA and (ii) failing to provide the required periodic statements required by TILA. Intrust seeks to dismiss Plaintiffs TILA claim arguing that there was no undisclosed fee that it was required to disclose to Plaintiff and that the Loan Agreement was not an open-end credit transaction. Because whether Intrust imposed an undisclosed finance charge is a question of fact, it is not appropriate to resolve on a motion to dismiss. However, the Loan Agreement, when read as a whole and in the context of the air conditioner purchase, is not an open-end credit transaction. Consequently, Plaintiffs TILA claim related to an open-end credit transaction is dismissed.
Plaintiff's complaint alleges that the TILA disclosure statement represented that $8,000.00 was paid to Fluid Air, which was materially false. Plaintiff alleges that the loan proceeds were paid to GreenSky and then GreenSky paid a portion of the proceeds to Fluid Air. Thus, Plaintiff alleges that the amount financed included the undisclosed Credit Service Fee that was paid to GreenSky for arranging the credit. As a result, the required disclosures inaccurately represented the annual percentage rate on the loan, the amount financed, and the amount of the finance charge. The complaint alleges that the Credit Service Fee would not have been charged in a cash-only transaction and, thus, it constitutes an undisclosed finance charge in violation of TILA.
In response, Intrust contends that there was no violation of TILA because Plaintiff was not charged, directly or indirectly, for any fees paid to GreenSky and that Plaintiff would have paid $8,000.00 for the air conditioner regardless of whether she paid cash or credit; therefore, it is not a finance charge that must be disclosed. Intrust further argues that it is clear from Plaintiffs Exhibit A, the Agreement for Change Out Service, that the cash price of the air conditioner was $8,000.00. Thus, there was no finance charge incurred by Plaintiff because the cash price and the price paid by Plaintiff were the same. Intrust also relies on the language of the Loan Agreement to establish that Plaintiff did not directly or indirectly pay a finance charge. The Loan Agreement states "Your Merchant/Provider pays transaction fees as a result of your use of the Shopping Pass or Loan. Your Merchant/Provider is prohibited from surcharging you to cover the cost of these transaction fees."
As set out above, however, Plaintiff alleges in her complaint that the $8,000.00 included an undisclosed finance charge. At the motion to dismiss stage the Court must take the allegations in the complaint as true. Simply because the Loan Agreement states that Fluid Air was prohibited from surcharging Plaintiff to cover its fees does not mean that Plaintiff was not charged. Furthermore, the Agreement for Change Out Service is not as clear as Intrust would have the Court believe. The Agreement for Change Out Service states that the "Cash Value of Equipment" is $8,000.00. Value and price are not the same thing. Moreover, all of Intrust's arguments require factual findings, which cannot be made at the motion to dismiss stage. Thus, taking the pleadings in the light most favorable to Plaintiff, Plaintiff has adequately alleged that she was charged an undisclosed finance charge in violation of TILA.
Intrust maintains that the Loan Agreement was not an open-end credit transaction and, thus, Plaintiffs TILA claims based on the requirements for open-end credit transactions must be dismissed. Under TILA, an open-end credit plan is one "under which the creditor reasonably contemplates repeated transactions, which prescribes the terms of such transactions, and which provides for a finance charge which may be computed from time to time on the outstanding unpaid balance." 15 U.S.C. § 1602(j). Intrust argues, without citing any support, that the Loan Agreement contemplated a single transaction to finance the air conditioner. In response, Plaintiff maintains that the GreenSky Shopping Pass is a credit card and, as a result, the Loan Agreement constitutes an open-end credit transaction.
While the Shopping Pass may have some of the attributes of a credit card and the Loan Agreement contains some language that could indicate an open-end credit transaction, it is clear from the face of the Loan Agreement that it was not an open-end credit transaction. Reading the Loan Agreement as a whole, it is apparent that Plaintiff was approved for $8,000.00 in credit and received that full $8,000.00 as the result of a single transaction that took place at approximately the same time that Plaintiff obtained the credit. Thus, having reached her credit limit with the single transaction, no further transactions could have been contemplated by the parties. As one court put it: "In practical terms, under an open end credit plan, there is no extension of credit simply by the issuance of the card." Goldman v. First National Bank of Chicago, 532 F.2d 10, 18 (7th Cir. 1976). That is the opposite of what happened here; here, there was an extension of credit simply with the issuance of the Shopping Pass. Plaintiff was issued the Shopping Pass at the same time that the $8,000.00 credit was extended. Consequently, Plaintiffs TILA claims based on the requirements for open-end credit transactions are dismissed with prejudice.
Plaintiff's declaratory judgment claim seeks a declaration that the extensions of credit arranged by GreenSky are void as a matter of law. Defendants move to dismiss this claim on the ground that it is duplicative of Plaintiff's Florida CSOA claim. While the claims are based on alleged violations of the same statute, Plaintiff is entitled to seek alternative relief.
A plaintiff is entitled to plead in the alternative, pursuant to Federal Rules of Civil Procedure 8(a) and (d). Further, the federal declaratory relief statute, under which Plaintiff seeks relief, permits relief "whether or not further relief is or could be sought." 28 U.S.C. § 2201. Federal Rule of Civil Procedure 57 reaffirms this, stating "[t]he existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate." While Plaintiff may not be able to obtain both legal and equitable relief, she may pursue her claim for equitable relief until she proves entitlement to legal relief. See Coastal Wellness Center, Inc. v. Progressive American Insurance Co., 2018 WL 1701995, *4 (S.D. Fla. April 4, 2018). Consequently, the motion to dismiss Plaintiff's declaratory judgment action is denied.
Plaintiff alleges that Defendants were unjustly enriched when they accepted and retained charges for credit services from Plaintiff. Plaintiff maintains that Defendants were not entitled to these charges by law and that Defendants should not be permitted to retain the benefits of these illegal charges. Defendants move to dismiss this claim.
Intrust moves to dismiss the unjust enrichment claim against it on two grounds. First, Intrust argues that Plaintiff has not alleged the elements of an unjust enrichment claim. Under Florida law, a Plaintiff claiming unjust enrichment must allege: "(1) plaintiff has conferred a benefit on the defendant, who has knowledge thereof; (2) defendant voluntarily accepts and retains the benefit conferred; and (3) the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying the value thereof to the plaintiff." Hillman Construction Corp. v. Wainer, 636 So.2d 576, 577 (Fla. 4th DCA 1994). Intrust maintains that Plaintiff has failed to allege a benefit she conferred on Intrust. In fact, Intrust argues that Plaintiff received the benefit, the air conditioner, and it is inequitable for her to keep it because she has not paid for it. Plaintiff has not responded to this argument and the complaint does not allege any benefit she has conferred on Intrust. The complaint alleges that Defendants collected, accepted, and retained charges for credit services. However, there is nothing in the complaint that indicates that Plaintiff actually paid anything to Intrust, directly or indirectly. Consequently, Plaintiff has failed to adequately plead her unjust enrichment claim against Intrust.
Second, Intrust argues that Plaintiff cannot maintain her unjust enrichment claim because an express contract governs their relationship. Plaintiff maintains that, under Federal Rule of Civil Procedure 8(d)(2), she is permitted to plead in the alternative. Furthermore, unlike the cases cited by Intrust involving an express contract, Plaintiff disputes the validity of the contract between her and Intrust. Consequently, Plaintiff may plead in the alternative. However, as set out above, Plaintiff has failed to adequately plead her claim. Accordingly, the unjust enrichment claim against Intrust is dismissed with leave to replead.
GreenSky also seeks to dismiss the unjust enrichment claim against it because Plaintiff has not alleged the elements of an unjust enrichment claim. GreenSky argues that Plaintiff has not alleged any facts showing that she has conferred a benefit upon GreenSky.
Defendants seek to dismiss Plaintiff's Florida CSOA claim based on a choice of law provision in the Loan Agreement, which, in effect, designates Kansas law as the applicable law. In the alternative, Intrust argues that it is exempt from the Florida CSOA because it is a federally insured bank and GreenSky argues that it is not a Credit Service Organization under the CSOA. The Court need not address whether Kansas law applies to the Loan Agreement as to the CSOA claim because Plaintiff concedes that Intrust is exempt from the Florida CSOA and the choice of law provision does not apply to GreenSky, a non-party to the Loan Agreement. While Plaintiff concedes that Intrust is exempt from the Florida CSOA, Plaintiff argues that Intrust's liability is derivative pursuant to the FTC Holder Rule. The Court will address the claims against GreenSky first.
Plaintiff is correct that GreenSky is not a party to the Loan Agreement and, therefore, the choice of law provision in the Loan Agreement would not apply to a claim against GreenSky. See Cooper v. Meridian Yachts, Ltd., 575 F.3d 1151, 1169 (11th Cir. 2009) (generally, a choice of law clause "is a contractual right that cannot ordinarily be invoked by or against a party who did not sign the contract in which the provision appears."). However, GreenSky contends that it is not a credit service organization as that term is defined by the Florida CSOA and, thus, the Florida CSOA does not apply to it. The Florida CSOA defines a "credit service organization" as:
Fla. Stat. § 817.7001(2)(a). GreenSky argues that it does not offer or provide any of the services listed in the statute. It further argues that it does not represent buyers and does not charge buyers for services in connection with extensions of credit; instead, it represents the lenders.
In her complaint, Plaintiff alleges that "GreenSky acted as a credit service organization in its actions with [Plaintiff]" and "sold, provided and performed in return for payment of money or other valuable consideration the procurement and obtaining an extension of credit for [Plaintiff] as a buyer." [DE 31 at ¶85]. Thus, Plaintiff has pled all of the elements necessary to show that GreenSky is a credit service organization as defined by the CSOA. At the motion to dismiss stage, the Court must take these allegations as true.
Plaintiff further argues that there is no authority to support GreenSky's proposition that it is only a credit service organization if it represents the buyer and charges the buyer for its services. The only case in Florida this Court found that interprets this section of the Act is inapposite. See Dorestin v. Hollywood Imports, Inc., 45 So.3d 819, 824 (Fla. 4th DCA 2010) (finding that a car dealership which assisted its customers in obtaining financing was not a credit service organization because the customer did not pay the dealer a fee or other consideration for assistance in obtaining the financing). While GreenSky argues that Plaintiff did not pay it a fee, Plaintiff's complaint alleges that GreenSky was paid a fee, which came from Plaintiff directly or indirectly. Taking the allegations in the light most favorable to Plaintiff, Plaintiff has adequately pled that GreenSky. received a fee from Plaintiff in return for GreenSky obtaining an extension of credit on behalf of Plaintiff.
Plaintiff concedes that Intrust is a national bank and, as such, is exempt from the CSOA. However, Plaintiff maintains that Intrust has derivative liability for GreenSky's violation of the CSOA based on the terms of the Loan Agreement and the FTC Holder Rule. The Loan Agreement contains the following language, as required by the FTC Holder Rule, 16 C.F.R. § 433.2:
[DE 31-3, ¶23 (all capitals in original)]. Based on this language, Plaintiff argues that if GreenSky is liable under the CSOA, then so is Intrust. In its reply, Intrust argues that Plaintiff has not adequately pled a basis for direct liability against GreenSky and, therefore, Intrust cannot be held derivatively liable.
In Schauer v. General Motors Acceptance Corp., a Florida appellate court explained the application of the FTC Holder Rule:
819 So.2d 809, 813 (Fla. 4th DCA 2002). Based on this interpretation of the FTC Holder Rule, Plaintiff has not sufficiently pled a cause of action against Intrust for derivative liability under the FTC Holder Rule. Plaintiff has not pled that she is seeking a return of monies paid to Intrust. In fact, she has not actually pled that she has made any payments to Intrust. Thus, Plaintiff has failed to sufficiently plead a claim against Intrust based on the Florida CSOA and the FTC Holder Rule. Consequently, the claim against Intrust is dismissed without prejudice.
Lastly, Defendants seek to dismiss Plaintiff's Florida Consumer Collection Practices Act claim. Defendants again argue that the choice of law provision in the Loan Agreement, designating Kansas law, precludes this claim. However, as noted above, the choice of law provision does not apply to GreenSky. In the alternative, Defendants argue that Plaintiff has failed to plead sufficient facts to establish a violation of the FCCPA.
Under the FCCPA, a person is prohibited from claiming, attempting, or threatening "to enforce a debt when such person knows that the debt is not legitimate, or assert the existence of some other legal right when such person knows that the right does not exist." Fla. Stat. § 559.72(9). While Plaintiff alleges that GreenSky attempted to collect monies from her, the complaint does not set out any specific facts related to any collection efforts by GreenSky. Thus, the complaint alleges nothing more than a conclusion, a formulaic recitation of one of the elements of the claim. This is insufficient under Iqbal and Twombly. Accordingly, the FCCPA claim against GreenSky is dismissed without prejudice.
While the choice of law provision, if enforceable, would require dismissal with prejudice of this claim against Intrust, the Court declines to decide this issue, which has not been adequately briefed, at this stage of the proceedings. However, the claim against Intrust suffers from the same pleading deficiency as the claim against GreenSky — there are no actual facts alleged regarding attempts at collection. Consequently, the FCCPA claim against Intrust is dismissed without prejudice.
Accordingly, it is hereby
ORDERED that:
1. Defendants' Joint Motion to Dismiss Plaintiff's Amended Complaint [DE 35] is GRANTED in part and DENIED in part:
2. Plaintiff shall file a second amended complaint by
DONE AND ORDERED.
15 U.S.C. § 1605(a). Regulation Z gives examples of different types of charges that constitute finance charges, including:
12 C.F.R. § 226.4(b)(6).
