924 N.W.2d 441
N.D.2019Background
- In 2007 Baker bought a used car from Global Autos and signed a buyer’s order and a retail installment contract; the buyer’s order listed a $200 “loan fee” and a $195 “document administration fee.”
- The retail installment contract’s Truth-in-Lending box listed finance charges of $1,941.61 and an amount financed of $5,470.94 (which included the loan fee and document fee), but did not separately identify the loan fee as part of the finance charge.
- The contract also provided a $25 late fee for payments more than 10 days late; N.D.C.C. § 51-13-02(2)(e) caps permissible late fees at the lesser of 10% or $10.
- Baker defaulted, the vehicle was repossessed, and she sued individually and as class representative alleging violations of the Retail Installment Sales Act (RISA) for failure to disclose finance charges and for willful violations that would nullify regulated-lender protection and expose defendants to state usury laws.
- District court found the buyer’s order and retail installment contract must be read together and concluded the fees were disclosed as part of the amount financed; it refunded excessive $25 late fees to class members but dismissed Baker’s other claims.
- Supreme Court reversed, holding the loan fee was a finance charge that was not disclosed as such in the retail installment contract, and remanded for determination of willfulness and remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the loan fee and document administration fee were required to be disclosed as finance charges under RISA | Baker: the loan fee (and any non-official portions of the document fee) are finance charges that must be included in the disclosed finance charge amount | Defendants: contemporaneous buyer’s order and contract read together disclose those fees as part of the amount financed, so separate disclosure as finance charges was not required | Court: loan fee is a finance charge and was not disclosed as such in the retail installment contract; disclosure requirement violated |
| Whether delinquency/late fees are finance charges that must be included in the finance charge disclosure | Baker: excessive late fee reflects unlawful charges and supports RISA violation | Defendants: delinquency/collection charges are explicitly excluded from the definition of finance charge and may be separately stated | Court: delinquency/collection charges are not finance charges under statute; $25 late fee violated statutory cap and was handled separately below |
| Whether failure to comply with RISA disclosure strips defendants of regulated-lender protection and exposes them to state usury laws | Baker: noncompliance is a willful violation that bars recovery of finance charges and removes regulated-lender immunity under N.D.C.C. § 51-13-07 and § 47-14-09 | Defendants: compliance exists when documents are read together; thus regulated-lender status remains | Court: because disclosure was defective, the district court erred in assuming compliance; remanded to address willfulness and remedies (including regulated-lender consequences) |
| Whether contemporaneous documents may be construed together to satisfy RISA disclosure requirements | Defendants: buyer’s order and contract are contemporaneous and may be read together to show disclosure | Baker: labeling and placement in the contract matter for required disclosure of finance charges | Court: while contemporaneous documents can be construed together, here the loan fee was included in amount financed but not disclosed as a finance charge; mere inclusion in amount financed did not satisfy the finance-charge disclosure requirement |
Key Cases Cited
- Nichols v. Goughnour, 820 N.W.2d 740 (N.D. 2012) (contemporaneously executed documents can be construed together)
- Baker v. Autos, Inc., 860 N.W.2d 788 (N.D. 2015) (prior interlocutory ruling reversing denial of class certification)
- Baker v. Autos, Inc., 902 N.W.2d 508 (N.D. 2017) (court dismissed appeal where Rule 54(b) certification was improvidently granted)
- Zajac v. Traill Cty. Water Res. Dist., 881 N.W.2d 666 (N.D. 2016) (standards for statutory interpretation)