750 F. Supp. 2d 694
E.D. La.2010Background
- Cecile Carriere sued Jackson Hewitt Tax Service Inc. and related entities alleging loan brokerage, license/bond violations, and improper fees tied to refunds via RALs and other loans.
- Jackson Hewitt operated through 1040, Inc., owning 16 JHTS locations in LA/MS; plaintiff visited Covington, LA location in 2009 and had a 2008 tax return and loan brokering tied to an SBBT loan.
- Plaintiff asserts defendants brokered loans (including RALs and other loan products) without required licenses/bonds and with undisclosed fees taken from loan proceeds.
- She filed a class action in state court; case was removed to federal court under CFAA; plaintiff seeks penalties, rescission, restitution, injunctive and declaratory relief.
- Defendants moved to dismiss on multiple grounds; court grants in part and denies in part, addressing three statutes, prescription, and related remedies.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are defendants loan brokers under RS 9:3572.1? | Carriere alleges defendants obtained/arranged consumer loans and received lender fees as compensation. | Hewitt/1040 contend they are not loan brokers under 9:3572.1. | Yes; plaintiff adequately alleged loan-broker status under 9:3572.1. |
| Are defendants loan brokers under RS 51:1910? | Under 51:1910, brokers receive consideration from borrowers; fees may be undisclosed. | Fees from lenders do not show borrower-paid consideration; not loan brokers under 51:1910(a)(1). | No; 51:1910(a)(1) claims dismissed. |
| Are defendants loan brokers under RS 3574.2? | Plaintiff alleges defendants brokered loans with fees; may fall under 9:3574.2(3) if arrangement occurred with future consideration. | Plaintiff did not pay consideration or expect to pay; exclusion applies if only RAL brokering. | No; 9:3574.2(3) not satisfied; count dismissed. |
| Is the 9:3572 claim prescribed or perempted? | Claim under 9:3572 not barred; seeks damages and penalties under 9:3572.12(D). | Claim prescribed/perempted under multiple theories; limitations apply. | One-year prescriptive period (article 3492) applies to 9:3572.12(D); claim prescribed; count1 dismissed. |
| Is the rescission claim viable despite prescription issues? | Seeks rescission based on absolute nullity for unlicensed broker activities. | Argues no rescission due to other procedural/prescriptive issues. | Rescission claim survives; not dismissed at this stage. |
Key Cases Cited
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (plausibility standard for pleaded claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (fact-specific pleading required to survive motion to dismiss)
- Lormand v. U.S. Unwired, Inc., 565 F.3d 228 (5th Cir. 2009) (twin pleading standards applied in Fifth Circuit)
- Baker v. Putnal, 75 F.3d 190 (5th Cir. 1996) (prescription standards in the Fifth Circuit)
- Eastin v. Entergy Corp., 865 So.2d 49 (La. 2004) (prescription and discovery-rule analysis in Louisiana)
- Terrebonne Parish Sch. Bd. v. Mobil Oil Corp., 310 F.3d 870 (5th Cir. 2002) (duty-source approach to determine prescriptive periods)
- Fox v. Dupree, 633 So.2d 612 (La. App. 1 Cir. 1993) (one-year LUTPA-like considerations; continuing issues)