Taylor v. Timepayment Corporation
3:18-cv-00378
| E.D. Va. | Mar 31, 2019Background
- Plaintiff John Taylor leased a heat pump from Timepayment under a written "Consumer Equipment Lease" agreement; the contract mixes lease and buyer/seller language and includes a purchase option.
- Taylor sued under the Consumer Leasing Act (CLA), Truth in Lending Act (TILA), and Virginia law (five counts), alleging inadequate disclosures, an unlawful early-termination charge, TILA disclosure violations, a Virginia UCC claim, and a Virginia usury claim.
- Timepayment moved to dismiss under Rule 12(b)(1) (lack of Article III standing) as to Counts I, II, and IV, and under Rule 12(b)(6) as to Counts III and V. The Magistrate Judge recommended dismissing Counts I, II, and IV, but allowing Counts III and V to proceed.
- Both parties objected to the R&R; the district court reviewed de novo. After the Fourth Circuit issued Curtis v. Propel (post-R&R), the court reconsidered the standing analysis for CLA disclosure claims.
- The court denied dismissal as to Count I (CLA disclosures), Count III (TILA disclosures), and Count V (Virginia usury), granted dismissal as to Counts II (CLA early termination) and IV (Virginia UCC) for lack of standing, and gave Taylor leave to amend Counts II and IV.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) CLA disclosure standing (Count I) | Taylor says Timepayment failed to disclose/segregate required CLA info (e.g., total amount due), causing obliviousness to true cost | Timepayment: any procedural disclosure defects are too abstract; Taylor lacks injury in fact | Court: denied dismissal — Taylor plausibly alleged a statutory informational injury Congress sought to prevent (Curtis and Spokeo considered) |
| 2) CLA early-termination standing (Count II) | Taylor contends early-termination terms are unreasonable and caused harm | Timepayment: alleged harm is speculative; no actual or imminent injury | Court: dismissed for lack of standing; Taylor failed to allege actual or imminent harm; leave to amend granted |
| 3) TILA credit-sale classification and disclosures (Count III) | Taylor: the agreement is a disguised credit sale and TILA disclosures (APR) were omitted | Timepayment: purchase option tied to fair market value precludes "nominal" option; thus not a credit sale and TILA inapplicable | Court: denied dismissal — on the pleadings the purchase option might require nominal consideration (e.g., a low fixed cap), so TILA claim plausibly pleaded |
| 4) Virginia usury applicability (Count V) | Taylor: if the agreement is a credit sale, Virginia usury law applies | Timepayment: usury law does not apply to leases and (it claims) not to credit sales here | Court: denied dismissal — because the Agreement may be a credit sale under TILA, Taylor plausibly states a usury claim |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (Article III standing requires a concrete and particularized injury; procedural violations may suffice in some contexts)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (three-part Article III standing test)
- Curtis v. Propel Property Tax Funding, LLC, 915 F.3d 234 (4th Cir. 2019) (statutory violations that reach the statute's purpose can be substantive and confer standing)
- Dreher v. Experian Info. Sols., Inc., 856 F.3d 337 (4th Cir. 2017) (denial of statutorily required information can be a concrete informational injury)
- Fed. Election Comm'n v. Akins, 524 U.S. 11 (1998) (deprivation of required information can constitute concrete injury)
- Summers v. Earth Island Inst., 555 U.S. 488 (2009) (procedural-right deprivation without concrete interest is insufficient for standing)
- Monitech, Inc. v. (affirming per curium), [citation="733 F. App'x 136"] (4th Cir.) (procedural CLA disclosure defects may not confer standing where no deception or obliviousness to cost is shown)