*4 charge Credit the then calculated finance on GARWOOD, Before SMITH and EMILIO $127.38, Thus, which came to $39.95. GARZA, Judges. M. Circuit paid Edwards total on each $167.33 occasion, financing'costs or $67.33 each GARZA, Judge: EMILIO M. Circuit purchase. $100 (“Edwards”) appeals Connie Edwards the summary grant judgment district court’s $20, Using paid premi- the (“Your Credit, Credit”). in favor of Your Inc. um nonfiling under a master policy insurance alleges Edwards that Your Credit violated (the “policy”) Voyager Property and Ca- (“TILA”), Lending the Truth in Act 15 sualty Company (“Voyager”), Insurance seq., Z, §§ et Regulation U.S.C. 12 separate company, and unrelated insurance by improperly disclosing C.F.R. previously had policy provid- issued it. The premium on financing ap- her loan ed, pertinent part, it covers losses plications. She contends that Your Credit damaged sustained where Your Credit premium should have the included the through being prevented obtaining pos- charge finance rather than in the amount property enforcing session of the secured or applications, financed on the an error that rights security under agreement the allegedly resulted in the understatement of “solely as the result the failure of the charge the finance percentage and the annual duly to Insured record or file the Instrument (“APR”). Finding genuine dispute rate proper public with the officer public of- exist, fact to material reverse and re- Voyager’s agent, fice.” Consumer Insurance mand. Associates, (“CIA”), Inc. administered policy. Agree- The Administrative Services I ment Voyager between gave CIA CIA purchase Edwards financed of TV right pay, compromise, reject “sole separate on VCR two occasions and. deny any [nonfiling] such claim.” Credit, Your company. a consumer finance alleg- Your. Edwards filed a action Credit makes small class lawsuit loans consumers purchase goods TILA, to finance the of consumer at that Your had Credit violated opinion nonfiling 1. This contrasts insurance with consumer's default or other credit loss.” insurance, which, purposes 226.4(b)(5). opinion, "protect[s] creditor unambiguously Z, improperly language established that and state law2 file nonfiling premium policy due the failure to disclosing covered losses alleged purported It then the amount financed. She statement. fi- including premium policy’s language in the amount look deter- behind charge, finance Voyager rather than Credit’s' nanced mine whether and Your finance understated the Your Credit had claims had “reformed” insurance, Your had charge through and the APR. If Credit into general default either finance properly premium in the included It mutual error or fraud. concluded APR would charge, alleged that the Edwards paid for. although Voyager percent, rather than have been 263 liable, 16.8.89 which it was not no mutual error or percent. Your calculated Because Voyager had occurred because both fraud financed, finance based the amount had intended the argued improperly also it Edwards cover also insurance. The court premium interest on the when charged her judgment summary deposi- looked record premium in amount fi- included the testimony tion to determine that the 89.25 nanced. figure percent figure was an internal expected used to calculate its premised her claim on two alter- stop- profits and losses and not an informal argued that al- native theories. She first *5 agreement. Finding loss no evidence required Voyager pay though policy the figure, Your was aware the Credit of this solely as a Your for losses sustained result of rejected argument well, and statement, court failure to file Credit’s summary judgment in of granted favor Your policy the actual the did not reflect concluded that Credit. Because the court Voyager Your of Your and because Credit TILA, it not Your Credit did not violate did routinely Voyager submitted and Credit CIA) arguments that the address Your Credit’s routinely any paid claims for (through Act, McCarran-Ferguson 15 U.S.C. loss, the cause. In other no matter what 1012(b), § preempted this action. Edwards’ words, prac- argued that the claims Edwards appeal timely followed. Voyager of Your and trans- tices in- into a formed the II proper purposes of

surance method, that TILA TILA disclosure and grant review a district court’s We premium in- required that the therefore judgment New summary of de novo. See Second, Ed- charge. cluded the finance Ins. 92 York Co. v. Travelers Ins. Life Your Voyager and wards claimed that (5th Cir.1996). 336, 338 review F.3d We .also understanding pursuant had an informal of state law de district court determinations policy if which would cancel the Russell, College Regina See novo. Salve val- aggregate claims Your Credit submitted 225, 239, 1217, 1221, 111 113 499 S.Ct. U.S. aggre- percent of of the ued excess 89.25 (1991). Summary judgment is L.Ed.2d 190 fig- paid. percent gate prerhiums This 89.25 appropilate “that when the record discloses “stop- allegedly an informal served as ure genuine material fact and there is issue of risk loss provision prevented the of loss” judg moving party is entitled to that the Voyager. shifting from Your Credit to P. a matter law.” Fed. R. Civ. ment as of reasoned, shifted, having No Edwards risk 56(c). party the initial moving bears effectively pre- had retained the portions identifying those of burden or bad-debt mium as a sort of self-insurance discovery it in the pleadings and record reserve, again required Your Credit a genu believes demonstrate absence charge. it include in the finance fact, re ine material but it is not issue of nonmoving quired certify negate elements ruling on whether to Prior to Catrett, action, Corp. v. grant- party's ease. See Celotex district court suit as class 2548, 2554, 317, 325, 91 477 106 U.S. S.Ct. summary judgment ed in favor of Cred- (1986). moving policy’s party L.Ed.2d 265 Once it. The first noted that court complaint. when she filed an amended later dismissed her state law claims 432 burden, est, 1605(d)(1), § nonmoving. party “premium pay-

meets see specific forth showing genu perfecting must set facts lieu able insurance in ine upon any security required by issue trial and not rest interest otherwise allegations or plead denials contained in its creditor with in connection the transac- 56(e); ings. tion, Fed. R. Civ. P. premium Anderson v. if the does exceed the fees Inc., Liberty Lobby, 256-57, charges 477 ... U.S. which would otherwise be 2505, 2514, 1605(d)(2); § 106 S.Ct. 91 L.Ed.2d 202 payable.” 12 226.4(e)(2). Factual controversies are construed in the “If a creditor collects sim- nonmovant, light most ply favorable to the retains a fee as a sort of self-insurance parties against nonfiling both have introduced evidence not be excluded from Z, showing controversy that an charge.” Regulation actual exists. the finance Official Liquid Corp., See Little v. Air Interpretation, Supp. F.3d 12 C.F.R. Staff (en (5th Cir.1994) banc). (1995) I, (emphasis original). Understating “type finance Ill goes fraud to the heart of the con Lending cerns that actuate the Truth in Act.” Congress promote enacted TILA to Chevrolet-Geo, Inc., Gibson Bob Watson ... “informed use credit [and] ' (7th Cir.1997) (Posner, 112 F.3d awareness of the cost thereof consumers” C.J.). promote purpose “To the Act’s “assuring] meaningful disclosure of consumers, protecting court has our made credit terms so that the consumer will be comply strictly clear that creditors must compare readily able to more the various mandates the TILA and credit terms available to him.” 15 U.S.C. 479; Fairley, 1601(a); Z.” v. Chap 65 F.3d at Smith see also Beach v. Ocwen Fed. — man, (5th Bank, U.S. -, Cir.1980); 1408, 1409-10, 118 S.Ct. Inc., King, McGowan v. (1998); 140 L.Ed.2d Mourning v. Fami *6 (5th Cir.1978) Serv., (noting designed that TILA ly Inc., 356, 411 Publications U.S. through system to create 363-69, 1652, 1657-60, enforcement 93 of S.Ct. 36 L.Ed.2d private attorneys (1973); general). “[T]he Fairley Turan-Foley 318 v. ‘remedial Imports, (5th Inc., Cir.1995). general scheme of TILA is 475, designed to deter 65 F.3d 479 TILA ly illegalities only rarely which disclose, alia, are requires a uncovered lender to inter three punished, just and pieces compensate and not to of information to a borrower: the injuries financed, any borrowers for their actual charge, amount the finance and the ” particular Fairley, case.’ 65 § F.3d at APR. 15 480 See U.S.C. The APR is (quoting Corp., Williams v. Public Fin. 598 calculated to of reference the duration (5th Cir.1979)). 349, loan, F.2d terms, 356 payment and the finance 1606; § charge. See 15 U.S.C. First Acadi FDIC, (5th

ana Bank v. 833 IV F.2d 550 Cir.1987). initially Your Credit contends that charge (“McCarran

TILA the finance the McCarran-Ferguson defines as the Act payable Act”), 1012(b), “sum all charges, directly § of or indi- 15 U.S.C. our bars consider rectly by person the to whom the credit is ation of the merits of this ease. The McCar extended, imposed directly indirectly provides: or ran Act Congress Act of “[n]o shall invalidate, the creditor incident the exten- impair, be construed to super or § 1605(a); sion of credit.” 15 any by any U.S.C. sede law enacted State for the 226.4(a). § charge A purpose regulating finance includes of of the business insur “[p]remium any or guar- other ... specifically ance unless such Act relates protecting 1012(b). antee or insurance § creditor to the of business insurance.” obligor’s or other credit McCarran-Ferguson “The Act establishes a 1605(a)(5); 226.4(b)(5). § § loss.” 12 C.F.R. form of preemption, letting inverse state law charges Some not prevail do have to be included over federal rules—’those that charge, including filing finance paid ‘specifically not ] fees do relate[ business of public perfect security officials to inter- insurance.’” NAACP v. Family American (7th something “Arizona has not commanded Cir. Ins. Mut. 1012(b)). 1992) pro- § A state law (quoting which the Federal Government seeks the MeCar- preempts a statute under at 570. The federal hibit.” Id. S.Ct. (1) does not ran Act if: the federal statute federal interest in Court also found that the insur “specifically ] the business of relate[ compatible protecting shareholders was (2) ance;” are challenged part if the acts protecting policyholders, the state interest in (3) insurance;” if the state the “business state laws and that the federal and were regu purpose a law “for the enacted ends, further elimi- enacted to serve different (4) insurance;” if application of lating Thus, impairment. nating any possible Id. “invalidate, or impair, federal statute would guidance, following Supreme Court’s we- supersede” law.3 Cochran a state See examine whether the conflict between state 1979). (5th Paco, Inc., Cir. purposes and federal law is “direct” and the undisputed “specifi not It that TILA does ques- for which the state and federal laws of insurance.” cally business relatef] tion were Id. enacted. Id. presents several state any expressing view as whether Without may alleges application laws of TILA met, prongs have been the critical other invalidate, impair, supersede. or The first in this Your Credit can issue case whether 9:3516(4) two, § La.Rev.Stat. Ann. application laws that bring forward state 9:3549, part of the Louisiana Consumer invalidate, impair, super- or of TILA Law, §§ 9:3501 et Ann. La.Rev.Stat. leading construing the mean- case sede. 9:3516(4) seq. provides that Section “invalidate, impair su- phrase premiums financed also includes “[a]mount Inc., Securities, persede” is SEC National lieu payable procured for insurance 569-70, 462-63, S.Ct. 393 U.S. security perfecting a interest otherwise re case, In that L.Ed.2d 668 SEC premiums ... quired by the creditor merger to unwind between two sought charges fees do exceed the companies on misstatements based payable.” would otherwise be Because statements, although proxy in their the state 1605(d)(2) virtually section is identical previously had au- insurance commissioner 226.4(e)(2) Z, TILA and sought to merger. The insurers thorized application fail of TILA shield, to see how arguing use Act as the MeCarran invalidate, impair, supersede it.4 preempt failure to SEC’s actions *7 Sec., 463, invalidate, U.S. at 89 S.Ct. at National 393 impair', supersede or the would NAACP, 570; (“Duplication F.2d 978 at 295 insurance commissioner’s authorization state is law] a state and federal not merger. Supreme [between refused Court conflict.”). actions, Next, provides § that noting that 9:3549 preempt to the SEC’s “[a]ny advantage of any gain or to extender impairment would be “indirect” because However, Cir.1998). proceeded recently suggested we then ex- 3. The Seventh Circuit formerly preemption prong was two the Coch- phrasing amine what of test for MeCarran Act part prong; light the revised second parts ran test as of in of United States in four is erroneous thus, Fabe, 501, essentially prongs 491, in Munich we combined Treasury Dep't U.S. v. 508 of 2202, 2208, (1993). two of the Cochran MeCarran Act and three 124 L.Ed.2d 449 113 S.Ct. Servs., preemption this test. Because resolution of issue Autry Premium 144 F.3d See v. Northwest outcome, unnecessary express we no (7th Cir.1998). is 1037, 1998 WL 237426 at *10-11 effect, any, may opinion as to what if Fabe three-part a The Seventh Circuit uses MeCarran decision in Cochran. had on our mentioning our preemption test. Id. Without Act Cochran, four-part 606 test set in F.2d own 464, out recently we stated that a state law also contends that because 4. Your Credit also insurance, 9:3516(4) preempts Act nonfiling law under the MeCarran approves § federal (1) question specifi- inquiry point. law in does not pretermit if federal our at this should (2) insurance;" cally argument of relate to "business misses the mark. Whether Credit’s "purpose nonfiling of approves was enacted for the insurance is not in the state law Louisiana insurance;” (3) question is whether the regulating question; what is in the business "invalidate, charged may impair, super- premium Credit Ed- or for which Your federal law nonfiling general default insur- Am. Reinsur- wards was for or sede” the state statute. See Munich (5th Crawford, ance. Co. 141 F.3d ance v. is provi- credit ... from such insurance or its tween the federal and state laws that the in Lending sions or sale shall not ... Truth is a law [Act] be considered as a disclosure chap- loan finance in violation of this whereas the Consumer Credit [Louisiana governs agree- ter connection with contract or the essentials of. transac Law] Smith, Corp. ment v. part.” made under this Section 9:3549 tion itself.” Reliable Credit (La.1982); meaning does not n. 2 define “such insur- 418 So.2d see also ance,” interpreted Dengel and no courts have Nat. Bank New Hibernia Or leans, part,” appears (La.Ct.App.1989) section. “This 539 So.2d (“Both agree refer to Part VI of the sides has Louisiana Consumer Louisiana Law, § requirements.”); wherein Part 9:3549 found. disclosure Kathleen M. Ov insurance, ercash, Note, Usury VI covers “credit life dis- credit and Consumer Credit insurance, Louisiana, memberment and credit health L. Rev. Law in Tulane 9:3542(A). § and accident insurance.” 1462-63 & n. 175 TILA and Since As state nonfiling types purposes insurance is not one law were enacted for different 9:3542(A), ends, phrase impairment listed serve different no direct Cavin, ap- “such insurance” 9:3549 would not See exists. also United States Hence, (5th Cir.1994) pear (holding cover insurance. simply inapplicable.5 this section strip the McCarran Act did not federal court jurisdiction prosecution over criminal regard with Our conclusions by operators mail fraud anof insurance busi 9:3516(4) §§ strengthened by and 9:3549 are though Louisiana ness even state insurance finding regard our to Your Credit’s next regulators sought also criminal convictions argument namely, Your Credit and amici — conduct). same for the Insurance Consumer Association (“CCIA”) argue Finally, that Louisiana has presents created CCIA the Loui comprehensive regulatory through scheme Unfair siana Trade Practices Law Law, (“LUTPL”),6 the Louisiana Consumer Credit 22:1211 et La.Rev.Stat. Ann. regulatory may disrupt-' seq., scheme be for our consideration. It reasons that ed TILA not preempted. may since LUTPL also cover the acts com Crawford v. American Title plained Ins. provide here and LUTPL not does (5th (“The Cir.1975) action, Act private McCarran renders cause of if TILA and its inapplicable private federal antitrust preempted, laws when cause of are not action legislation generally proscribes, permits state provide private Louisiana’s choice regulates ques remedy invalidated, otherwise the conduct in under LUTPL be tion and authorizes through impaired, superseded. recently enforcement We noted scheme of supervision.”). degree administrative Our the' to which a “precise state suggests review of Louisiana case law impaired trigger statute so as to not, fact, regulated Louisiana con McCarran-Ferguson Act is not well settled.” question. duct “The basic difference be Am. Crawford, Munich Reinsurance Co. v. *8 Orleans, Although 1094, parly brought Fiffie, neither has Inc. v. 405 So.2d 1095 La.Rev.Stat. 5. 9:3516(23)(a.)(i) attention, to our we note (La.Ct.App.1980). Accordingly, will we not con- Ann. amended Louisiana the definition of "loan effect, any, what may. sider this amendment charge” by deleting phrase finance in 1997 the have. "premium any guarantee or other or protecting against insurance the con- lender the suggests may provide 6. CCIAalso that LUTPL an sumer’s or other credit loss." 1997 La. preemption alternative basis for McCarran Act Acts 1033 1. Because Edwards her financed regulate decep- because Louisiana chosen to 1996, amendment, purchases January, if it practices. previously rejected tive trade We have effect, has apply retroactively. would if it were matter precise argument this Co., in FTC v. Dixie Finance legislative history No exists 926, (5th Cir.1983), F.2d 695 930 albeit to indicate whether amendment was intended prong pre- under second of McCarran Act to have retroactive effect. Louisiana courts have Cochran, emption test set forth 606 F.2d at indicated that the statute parties in effect the time analysis The set forth in Dixie Finance is enter into transaction is the statute case, applied equally applicable should be to determine and for the sake whether statute brevity, repeat has been violated. See Plan Inv. New we will not it.

435 Co., Cir.1998). (5th Metropolitan v. 585, Although less. See Sabo Ins. 141 595 F.3d Life Cir.1998) (3rd 185, (finding McCarran 137 195 no split on whether the circuits .have preemption where state and Act because even preemption Act arises both McCarran same prohibit though Pennsylvania action a statute similar to federal law provide private cause of private not not state does LUTPL did contain cause action,7 action, occasion to address this no had state courts held common First, question here for two reasons. CCIA misrepresentation law actions fraud Louisiana law. Louisiana miseharacterizes ground). covered same position as adopted courts have not unified We have found no state enactment private right includes a to whether LUTPL invalidated, might impaired, supersed- be Assocs., Compare Inc. action. Herndon & such, application ed of TILA. As Gettys, (La.Ct.App. 846 659 So.2d n. 3 here, preempt McCarran Act does not TILA 1995) “commis (rejecting contention that the and we turn the merits. allega jurisdiction over sioner has exclusive practices in insurance of unfair tions

industry”) Bank Trust Co. v. and Citizens & V Inc., Agency, West Bank So.2d (same), with v. Fi (La.Ct.App.1989) Clausen A Maryland, delity Deposit 660 So.2d & Co. of The district court held that the lam (La.Ct.App.1995) (finding private no policy guage unambiguously created under where cause of action exist LUTPL It then Ed insurance. treated valid, underlying and substantive claim argument practices that the claims wards’ coverage upon which insurance could exists gen transformed the into based); see Tatum v. Colonial be also argument as (La.Ct. eral default insurance Lloyds Ins. So.2d reformed, policy had which it been stated (stating applies only App.1997) that Clausen case of valid, occur either fraud underlying substantive where no (cid:127) Finding present, neither mutual error. brought). Even if no can be insurance claim rejected argument. LUTPL, Edwards’ court under private right of action exists Voyager paying is “[i]f concluded that court the contention that Louisiana has policy for which it not against private suits claims under the allowing reasoned liable, then has a cause action misrepresentations based on fraud and these against Your Credit to recover claims. companies Louisiana is incorrect. pay a claim it not misrepresentation Voyager’s decision permits private fraud and required pay be does not constitute companies. See actions Regulation Z.” ap Lloyds, violation of TILA or On Morlte 569 So.2d v. Certified Gettys, peal, Edwards contests the district court’s (La.Ct.App.1990); see also argument should ana conclusion that her n. 2. Louisiana has So.2d at 846 Since suits, lyzed sounding reformation. She re argu prohibit seen fit to these CCIA’s her contention that Your Credit’s under LUTPL and TILA news ment that remedies policy into enough give transformed the significantly potentially differ insuring against general one default. preemption Act merit- rise McCarran Seventh, First, Fourth, remedy); Mackey Cos., private Ins. Ninth Nationwide 7. The Circuits (4th Cir.1984) (same). practice illegal both hold that if a under state The’ provides law but federal law federal Eighth McCarran Circuit has found the Act remedy, stronger Act does not the McCarran remedy preempts federal a federal law when the *9 preempt law. See v. the federal stronger, Villafane-Neriz see v. Norwest Bank Minneso Doe FDIC, 727, (1st Cir.1996) (Feder F.3d 735-36 75 (8th Cir.1997) ta, N.A., 1297, 107 F.3d 1307 Act); Deposit Home al Merchants De Insurance (RICO), adopted both while the Sixth Circuit has Co., Serv., livery 50 v. Frank B. Hall & F.3d Inc. One, Kenty positions. Compare v. Bank Colum NAACP, 1486, (9th Cir.1995) (RICO); 978 1492 (6th Cir.1996) N.A., 384, (RICO) bus, 92 F.3d 393 (holding did 295-97 Act F.2d at McCarran Cisneros, Ins. v. 52 Nationwide Mut. Co. Housing preempt application Fair Act (Fair 1351, (6th Cir.1995) Housing F.3d 1363 against redlining by companies where insurance ) . Act practice provided no state outlawed law 436 agree court

We with the district the substance-over-form doctrine to consum See, language policy’s unambiguously created e.g., Mourning, er finance law. 411 U.S. nonfiling policy. 26; American 26, 93 See Meyers n. S.Ct. at 1659 n. v. at 366 Georgia Sales, Inc., 511, & Gen. Ins. v. Telco Aviation Co. Dodge Clearview 539 F.2d (5th Union, 206, Cir.1976) (5th 223 F.2d 207 Cir. (“[A]ppellant’s argument 515 1955). disagree, We with the elevates form over substance in an effort argument conclusion that Edwards’ court’s transaction.”); of the credit avoid the realities in is an sounds reformation. Reformation v. Loan see also Adiel Chase Fed. Sav. & remedy equitable be used when a (11th Cir.1987) Ass’n, 1051, 810 F.2d 1053 parties express between the fails to contract Chevrolet, (same); Hickman v. Peck Cliff intent, true of mutual their either because (“The Inc., (8th Cir.1977) 44, 566 F.2d 46 See, e.g., or fraud. Richard v. Unit mistake nature, Lending] Act [Truth is remedial in Fidelity 247 La. & Guar. ed States and rather than form of the substance 288 Reformation So.2d credit transactions should be examined apply, might example, for if Your Credit it.”). Thus, arising cases under the sub- arising claim as a result of a submitted provides prop stanee-over-form doctrine general default denied analyzing er this framework case.8 might argue that claim. Your Credit then policy should be reformed because parties general intended to write a although actually policy, policy, writ as glance, argument At first Edwards’ —that ten, solely Your covered losses due Cred premi- should have disclosed to file a financing it’s failure statement. um in the finance rather than disclos- ing it in amount financed —is difficult Edwards, however, that Your contends all, comprehend. After Edwards knew Voyager deliberately Credit and structured charging nonfiling was her policy the form the in stark contrast to its insurance, if Your even Credit included advantage substance to take of consumers premium wrong category. appar- This argument mutual their benefit. Such an difficulty argument ent with Edwards’ has is akin to the substance-over-form doctrine just puzzled than more the district court in past in which tax law we look the labels the Although appeals this case. no court parties give to a structure to determine its prac- whether a creditor’s addressed claims reality. Gregory Helvering, economic v. nonfiling tices can convert insurance into 465, 469, 293 U.S. S.Ct. L.Ed. general (1935) purposes default insurance for (holding the economic sub- disclosuré, proper of TILA method state of a stance transaction rather than its form varying federal district courts have treatment); reached determines its tax Waterman on Commissioner, question. conclusions Corp. Courts that S.S. . (5th Cir.1970) (“[C]ourts applied analysis have substance-over-form look be- will beyond express yond superficial to look terms of a formalities of transac- surrounding proper tion to determine the tax treat- circumstances tend- have ment.”), Utley questions ed to grounds, prevent- overruled on other find of material fact Commissioner, (5th judgment summary n. 7 have found viola- Cir.1990). TILA, Z, Supreme many Court tions of some courts, one, eases, including applied other law.9 See Dixon v. S Loan & S state argument, (appearing policy's language 8. At oral amici CCIA behind the to Your Credit's Credit) argued of Your behalf in- to determine whether Edwards’ special general is a surance form of default insur- arguments have merit. ance, and that claims under each are differentiat- only by Assuming, ed the basis for the claim. purchase 9. Some of these cases have involved correct, arguendo, argument that CCIA's we ("PMSIs”) money security interests on consumer given policy can determine whether a should be goods, automatically perfected without general classified as ing or nonfil- default insurance See, e.g., the need to file a statement. only by looking at the lan- 302(l)(d). Although, guage By and the basis of it. claims filed under 10:9— Ann. La.RevStat. matter, therefore, argument, solely CCIA's own must look a loss due to failure *10 Keest, 1567, Inc., Jeffrey Langer Kathleen risk. See & F.Supp. Waycross, Serv. of (S.D.Ga.1990) Developments (finding in Interest Rate 1574-75 a insured created Continuing of insurer and Liberalization State 1995: to question of fact as whether “Non-Filing" material Card Laws and Insur- nonfiling in fact Latos, was labeled as Usury ance as “Interest” Under State insurance); v. Aron Johnson (1996) (“The 887, purpose 51 Bus. Law. Co., 96-C-117, WL No. son Furniture non-filing protect insurance is to lenders (order 1997) (N.D.Ill. 31, 160690, Mar. at *4 consequences failing against adverse dismiss); Kirby Heilig- denying motion to v. security by public their fil- perfect interest 2:95-CV-135PG, Meyers No. Furniture risk, very ing. This is a limited as it is 1996) (order (S.D.Miss. 31, op. slip at 2 Oct. only party secured triggered when another summary judgment TILA denying on as a result of the creditor’s priority obtains claims); Mercury Corp., Walmsley Fin. v. lien.”). to record its Full understand- failure 92-433-CIV-MARCUS, slip op. at 8-13 No. insurance, ing nonfiling comes 1993) (order (S.D.Fla. 10, denying mo Sept. analysis only from careful of UCC Article dismiss); Myers v. W.S. Badcock tion case, and, in our Louisiana’s enactment (Fla. 94-331-CA, slip op. at 4-6 Corp., No. thereof.10 22, 1995), 696 So.2d Cir.Ct. Nov. aff'd (Fla.Dist.Ct.App.1996); 783-84 Whitson Louisiana, elsewhere, steps In as two are Distribs., Furnishings Home Warehouse fully security a needed create enforceable (Ala.Cir. Inc., CV-94-177, slip op. at 10-14 First, security & interest. interest attaches 1995) (“Whitson I”), Aug. Ct. a property aff'd collateralized when debtor in the (Ala. part, relevant 709 So.2d 1153-56 agreement financing signs security a or II”). (“Whitson 1997) contrast, By courts containing description of the col- statement policy’s express looked at a have given value lateral which has been reject argu terms have tended to similar rights.’' has See La.Rev. which debtor presented by here. ments those 9-402(1). 10:9-203(1), Second, §§ Ann. Stat. See, e.g., Corp., Mitchell v. Industrial Credit (for ’security perfected our interest 1518, 1527-28, (N.D.Ala. F.Supp. copy the creditor files a purposes) when 1995); Pinkston, 183 B.R. 989-90 In re security financing agreement state- (Bankr.S.D.Ga.1995). nor Neither Mitchell appropriate public officials. ment with the ' Pinkston, however, analyzed provisions 10:9-302(1), §§ See LaRev.Stat. Ann. per Article which undercuts their of UCC definition, -303(1), -402(1), By there- -403. Mitchell, authority. F.Supp. suasive fore, a secured creditor who does not file 1531; Pinkston, B.R. at 989-90. financing statement The dis- unperfected. unperfected perfected and tinction between nonfiling generally cov- Because important secured creditors becomes solely secured creditor’s ers due to a losses 10:9-312(5), provides between statement, financing it is failure to file creditors, perfected the creditor two secured clearly such important to understand when priority.11 perfects first time receives can As have not- loss occur. commentators 10:9-312(5)(a). Be- ed, very narrow See La.Rev.Stat. nonfiling insurance covers Ann. fe) security Conflicting rank interests accord- can thus never occur file a statement PMSI, perfection. ing- filing above cases priority creditors in some in time charged debtors for insurance. filing Priority from the time a is first dates See, e.g., Myers Corp., 94- Badcock No. W.S. covering the or the time the made security collateral (Fla.Cir.Ct.1995). 331-CA, op. slip 4at perfected, first whichever is interest is earlier, provided period there is there- 9-503, exception Louisi- of UCC With filing perfec- nor is neither after there when pur- correspond to the for all ana statutes UCC tion. poses to this decision. relevant (b) security long conflicting So interests 10:9-312(5) provides: 11. Section unperfected, priority. the first attach conflicting security [Pjriority interests between Id. shall be determined accord- the same collateral following rules: *11 interest, creditors, security by because under unperfected tween two the creditor covered a 10:9-307(2), security security § first in whose interest attaches- time Your Credit’s interest 312(5)(b), priority, against § has and pur- case would have been effective 10:9— unperfeeted perfected of a financing creditor and an if filed a chaser Your Credit had creditor, priority. perfected has creditor Finally, a statement.14 Id. where debtor de- 10:9-301(l)(a). § One bankruptcy Ann. clares and Your Creditor’s se- La.Rev.Stat. final note: Article treats consumers some- cured would not have been avoidable interest differently what than commercial entities. financing if Your had filed a Credit state- important The most of these differences for ment, may loss a covered occur.15 U.S.C. 10:9-204(2), § purposes our arises 10:9-301(3). 544(a); § § La.Rev.Stat. Ann. after-acquired operation proper- limits instances, however, In other whether a loss ty goods property clauses on consumer may depends upon the facts of be covered acquired days within ten after the secured example, For Your fi- case. if Credit party gives for value the item.12 See id. purchase a on nanced a consumer whom With, previously lender discussion of Article 9 as a another secured had filed springboard, apparent nonfiling financing covering all of the it is in- statement con- (such here) goods, prior- surance as the issue Your have sumer’s Credit would may possible ity goods cover losses sustained three as. to the it financed more than ways. days elapsed If ten another secured creditor subse- had time when between quently financing covering financing filed files a statement other lender statement Credit, goods previously by purchase. financed Your and Your Credit financed 10:9-204(2). circumstances, may § such a loss be because In covered some how- 301(l)(a) ever, operation §§ combined there can no loss due to Your Cred- 10:9— -312(5) priority and accords to the creditor it’s file. Two instances failure to such occurs first, perfects security skips gets its interest and when a debtor town or thrown in jail Your priority stops paying Credit would have had save for the account. While may loss, its a financing filing failure to file statement.13 Your sustained 301(l)(a), -312(5)(a); §§ a financing pre- see also not have statement would 10:9— 92-433-CIV-MARCUS, Walmsley, skipping slip No. vented the debtor from town or (“[W]here op. hence, jail at 3 n. 1 getting another thrown the loss creditor collateral, II, occurring. filed the same See Whitson 709 So.2d defaults, Mercury posi- (noting debtor is in a worse at 1154-55 by file, by tion failure because its claim does not losses cover caused debtors that creditor.”). town). skip Again; subordinate the lien A cov- loss covered occurs may ered signs security agreement loss also occur when debtor sells when a debtor an item covering goods financed Your Credit to another with secured another lender (such sale) garage previously consumer as at a and does financed Your Credit and nei- purchaser financing inform the the item is ther files a because statement 10:9-204(2) interest, provides knowledge security 12. Section "[n]o secu- without rity after-acquired interest attaches under an personal, family, value and for his own or house- property goods clause consumer other than purposes prior purchase hold unless given security accessions when unless the [] as additional financing party secured has filed a statement acquires rights debtor them within covering goods.” such Id. days party gives ten after the secured value.” Id. goods" goods "Consumers that are "used or exemptions 15..Leaving aside household under 11 bought primarily personal, family for use 544(a), § § U.S.C. under 11 U.S.C. a trustee purposes.” § household 10:9- La.Rev.Stat. Ann. 109(1). rights hypothetical assert the of a lien credi- 10:9-301(3). § tor under Under La.RevStat. Ann. good analysis repos- 13. This assumes that if a 10:9-301(l)(b), hypothetical lien creditor sold, proceeds sessed and from its sale are prevails unperfected security over interest. satisfy obligations insufficient to the debtor's Thus, operation the combined 10:9- both creditors. 301(l)(b) U.S.C. means that Your solely sustain a loss as a result of its 10:9-307(2) provides 14. Section that "[i]n the failure to file a statement. goods, buyer case of consumer takes free of a security though perfected buys even interest if he *12 §§ unperfected. . 10:9— would be the other lender also priority over Credit -402(1), 302(1), -303(1), 10:9-312(5)(b) In such a -403. repossess can the § and under so; 10:9-312(5) case, § gives priority to because property it desires. See collateralized unperfected interest at- the creditor whose id. 10:9-204(2) ap- the taches and- .limits first plication after-acquired property clauses consumers, against Your would have Credit summary now turn to the We priority other unless the over the creditor in this case. Edwards judgment evidence from Your good debtor had financed the presents summary judgment record de the days signing the ten after se- Credit within Billeaudeaux, position of Rebecca J. Your curity creditor. agreement with the other manager Rouge, sup in Baton Credit’s -312(5)(a). 10:9-204(2), §§ the nar- Given argument Your port her that Credit’s coverage scope row in these circum- policy into the claims transformed stances, unlikely most of these 21 it is that purposes for In represent losses. the claims covered TILA proper the method of disclosure. in category, other it is im- eight claims deposition, According to Billeaudeaux’s possible to determine from Billeaudeaux’s poli under Your filed claims the Credit in claims were answers whether fact the cy September month of all of for the Finally, filed on covered based losses.17 Although Voyager paid. Billeau represent the another 20 out of 58 claims clear, testimony less than 9 of deaux’s by pol- be the losses that could not covered on may claims have been based these 58 cases, icy. skipped In some the debtor another covered losses—because secured jail; filing got town thrown financ- financing filed creditor had statement prevented statement would not have goods question, the covering the because skipping getting from town or debtor goods sold the financed to another debtor jail, thrown and so would the loss not consumer, debtor’s or because of the bankr solely Your failure result Credit’s uptcy.16 It is unclear’ whether another 29 II, file. See Whitson 709 So.2d 1154-55. were based on covered losses be claims claims, approximately In these 20 an imprecision Billeaudeaux’s cause suit in court to Your Credit filed state re- claims, indi swers. In 21 of these 29 she collateral, yet cover it nevertheless filed although collateral been cated that had Although Your a claim. have creditor, financing “pledged” another claims, fail a loss on we sustained these by had been filed the other cred statement solely see how loss occurred result _ itor. Neither Article 9 nor Louisiana’s en To we of its failure to file. summarize: as- “pledged,” term deciding per- actment uses the sumed 15.5 thereof without so assume she meant cent of claims that Your Credit filed security agreement covered; signed approxi- Voyager paid debtor had were covering good mately other creditor of the were percent most covered, likely impossible although financed it is that Your Credit had not factual financing had filed a to determine for certain on the rec- other creditor us; statement, percent now 34.5 meaning the other creditor ord before another "may” $125.49 and the emphasize the or for master between 16. We word because some fact, not, cov- of these losses been claims to and Your limits imposed by §§ ered because of limitations 204(2) 10:9- or the lesser the value collateral out- -307(2). factual As the record is attempts standing Your Credit ne- balance. to enable us to make this determina- insufficient claiming gate damaging that if it evidence outcome, tion and the issue nonessential against a debtor later recovers judgment deciding that nine we assume without these claim, previously it whom has filed a refunds filed covered losses. claims were based on par- Voyager. While laudable claim tially solving problem, Credit does not claim, example, one Your Credit sub- In allege Voyager when it that it refunds claims to a claim for account with an outstand- mitted ing wrongly a claim but does not recover files another, $0.17. balance of In money debtor. from the though $180.31 even it had a claim submitted previously judgment debt- obtained that, represent self- the claims losses based on ness relations with their insurer and us, 1605(d)(2) the evidence now before could not have interest. Because U.S.C. policy. 226.4(e)(2) been covered under the Since as premium limit the many percent of as 84.5 the claims that can excluded be Voyager paid may Your Credit filed and from the finance to the amount that policy, based on losses not covered charges to file a state- state question Edwards has created a material of ment, an *13 its if a insurer cannot raise rates insured, fact as to whether claims; only creditor files excessive it can substance, against general default.18 See by policy. Attempts cancel to a creditor Dixon, F.Supp. (finding at 1574 also delinquent appease collect accounts therefore because', question among material fact by reducing its insurer the number of claims reasons, there was no other evidence that Further, filed.19 since a rational creditor rejected the insurer evaluated or a claim canceled, does not want its insurance even nonfiling policy). made under a insurance agreement no limit where formal exists to attempts Your Credit to counter Edwards’ claims, may attempt a creditor to monitor its by submitting suggesting evidence evidence .running-afoul claims so as to avoid of its policy’s that the substance and form coincid- beyond insurer. .For losses above and summary judgment depo- ed. In his record amount, may self-interest motivate a creditor sition, McCraw, E. Tom Senior Vice Presi- attempt delinquent to to collect accounts. Operations Voyager, dent of for stated that by Voyag- Our review of the method which general Voyager does not sell default insur- er and CIA evaluated claims to determine anyone ance and that he does not know who they paid whether should be reinforces our does. McCraw noted that insurers do not question conclusion that of material fact general sell default insurance because it exists. Under Administrative Services gives attempt to lenders incentive to col- Agreement Voyager, between CIA and CIA delinquent Undercutting lect loans. right pay, had the compromise, “sole to' re- testimony very McCraw’s the fact that the ject deny any [nonfiling] such claim.” require TILA Z terms of expense While the of review of these small premiums general to include lenders de- might prohibitive, claims apparently be charge, fault in the finance see 15 designed claims give any forms were not to 1605(a)(5); 226.4(b)(5), § § U.S.C. indication of how the claimed loss was attrib- allowing premiums while them to exclude nonfiling. insurance, According utable to to the sum- nonfiling see 15 U.S.C. mary 1605(d)(2); judgment deposition 226.4(e)(2), record of Tim 12 C.F.R. create Boan, Secretary-Treasurer CIA, policies incentives for CIA re- lenders to take out viewed the claims that Your Credit submit- denominated insurance that are ted to ensure that Your (perhaps prac- complete- substance because of claims Credit had tices) ly general policies'. default filled out the claims form. Boan also Moreover, contrary occasionally two other stated factors run to that CIA audited Your testimony pol- attempt- McCraw’s Credit’s claims to ensure that it had provide icies no incentive for delinquent prior filing lenders at- ed to collect a loan tempt delinquent good Beyond to collect loans: busi- a claim. these attempts limited alleges conclusorily occasionally they 18. Your Credit up complained have called September claims for 1996 submitted Ed- they because our losses deemed excessive.... unrepresentative wards are overall its claims time, you And so when talk to them from time practices. any Your Credit did not submit evi- know, say, you it is you normal for them to 'Are support dence of its overall claims its getting your yo.ur losses down' or 'How is busi- evidence, argument. any In the absence of such going’ particular doing' or ‘How ness is this unit reject argument. we Your Credit’s They they ... are concerned don’t like to because pay any they more losses than have to .... when summary judgment deposition, In his record gets high [default real we —I don’t rate] Tony Gentry, President of stated that guess high’ good 'real is a choice of words. As get "it’s understood that if our losses out of progresses, try get the month that to an terminated; [Voyag- control that we will be acceptable level.” any longer. won’t er] write our insurance And verification, damages Boan that “we take their belief that no actual resulted or that stated proper for a that claims are submitted Zamarippa word” 'minimis."21 violation de Thus, Voyager’s reliance on Inc., CIA Sales, reason. Cy’s Car acceptance filings and CIA’s monitor (11th Cir.1982). “[T]he ‘remedial scheme of at face value of Your Credit’s averments designed generally illegali- TILA is to deter essentially gave freedom to file rarely ties uncovered which. any its claims for reason. Combined with just punished, compensate bor- misunderstanding employees’ of Article injuries any partic- rowers for their'actual ” disaster.20 recipe became Fairley, (quoting ular case.’ 65 F.3d at 480 356). Williams, Thus, 598 F.2d at while Finally, court’s the district conclu may harm that Edwards have suffered sion in this case have been influenced damages relevant to which she notion that did not suffer entitled, explained “[i]t The court would it is irrelevant harm. see U.S.C. *14 appear to the Court that Your Credit did bring to she is entitled an action. whether to by allowing keep favor her to Edwards a her Factually, genu- we conclude that another property allowing policy the to take care dispute of material ine fact exists. Some above, As the debt.” noted understat of we summary judgment deposition record testi- type a ing charge a finance “is fraud that mony attempted that Your indicates to the heart concerns that goes actuate repossess property to debtors’ when it even Gibson, in Lending Truth Act.” See the therefore, a policy; filed claim under the the (“[T]he is not issue whether policy may helped keep not have Edwards technical, these violations are or whether Moreover, property. her because Your actionable, technical violations should be premium the nonfil- included for consumer class actions be whether should financed, ing in the it insurance amount complaints discouraged, but whether claim.”). charged premium, Edwards interest “[T]he actions state a statuto these (albeit small) causing some actual mone- penalties imposed a her ry civil must be for such tary Myers, (“By regardless of the district court’s loss. at 784 violation See So.2d 20. yet to default or credit loss insurance that can purchased in argues' ingly, second half of ing the finance nonfiling. acceptance of tee or due to paid included in the finance allow at 10-11 § that a ance in default insurance in the amount under § perfecting included in finance [Alabama] "premium 1605(d)(2) 1605(d)(2) permits imagine Amicus CCIA allow the same guise obligor's claims that for the security "premium premium we question nonfiling. (“It reject See payable legislature charge because the security would be anomalous indeed for nonfiling very CCIA’s addition default or other Whitson, interest" — Congress '1605(d)(2) also covered or other could protecting same it was not premium for also charge. Section argument interest," a argument. § insurance.”). not lead to a violation of any No. creditor to type 226.4(b)(5) would 1605(d)(2) charge charge meaningless. argues prohibit charging for charging —"in default insurance be insurance in lieu of the creditor to be excluded from CV-94-177, It strains 1605(a)(5) of insurance defaults obligated would also covers losses whether explicitly require financed, credit §in for lieu that CCIA further applies only exclude render Moreover, 1605(a)(5) the insur- caused filing our belief loss” be requires Voyager Accord- because guaran- perfect- slip op. under pay fee, .nance Id. One court has dismissed a TILA the creditor mium of less than No. § 1649. Section minimis issued holder in due course $1,000 finance safe not to insurance § inclined to see cause insurance." $1,000. interest” —is clear. amount disclosed fee. § al, does not 1997). 226.4(b)(5) 226.4(b)(5) Congress which Manual 97-0026-D, insurance harbor CCIA pursuant and more Your charge by reason to See Via pretend violations of explains relies on the rely —"in ¶ recently charged Ralph Credit has not contended 2.01 language applicable will.be considered accurate against on the slip op. at 5-8 to be exclusive. purchased than ^[2] mortgage 226.18(d)(2) does not more accept lieu $10 on a Heilig-Meyers C. insurance, enacted a safe harbor $10 Clontz, Jr., credit quoted Truth-in-Lending "[c]ommon than here. TILA. CCIA’s perfecting vary guaranty in lieu of the provides that a fi- loan $5 § loss loans Even if language, (W.D.Va. 1605(d)(2) See 15 from Furniture Truth-in-Lend- Moreover, argument mentioned in of more than claim where repossession examples loans under over insurance, the actual we that this Oct. security this list $1000. Manu- U.S.C. for de if the filing were pre- be- we Z, fully developed than now including charges in amount to be a more record financed, us, if acquired a fund from have before that record indicates Badcoek Policy may; in at the the form and substance of the which it could offset bad debt losses fact, expense of its credit customers. This tactic coincide. upon interest

also increased the base computed would be for those credit custom- B ers.”). may have also Edwards been harmed because the understated and finance APR stop-loss Edwards concedes that no charge may pur- have led her to choose to provision appears policy, in the but contends goods rather than chase on credit with cash. stop-loss agreement that an informal existed Gibson, F.3d at 287. sum- Other Voyager to limit between Credit and mary testimony, judgment record aggregate the value of claims filed to 89.25 indicates that Edwards believed that she percent premiums paid. of total taking from Your Credit out non- benefitted alleged stop-loss agree contends that filing the insurance en- insurance because prevented shifting ment risk of loss from they place would not a lien on the sured that Voyager Your Credit to because en goods Finally, purchased. she sured that would suffer a loss never argues that Edwards and other consumers Therefore, policy. on the she claims balance, may, on have benefitted from Your insurance, policy is not but rather a bad-debt practices because these Credit’s claims by Voyager, which reserve held she contends *15 practices may have claims increased Your charge. in must be disclosed the finance base, capital thereby allowing Credit’s it to Z, Regulation Interpretation, 12 Official Staff loans and loans to consumers make more Supp. at 312 After poor with credit histories. noting stop-loss provision appears no in

Therefore, although policy, we believe that isolat- the district court determined dispute ed of claims filed for noncovered Edwards had failed to raise a of incidences of argument. losses not state cause action for material fact on this It found Z, stop-loss agreement violation TILA and that no informal existed magnitude improper Voyager sheer of Your Credit’s between Credit because practices genu- though claims in this case creates a even certain internal documents of dispute ine of material as to they whether and CIA indicated that desired fact practices percent aggregate those claims transformed the to limit claims to 89.25 insuring against general premiums paid profit into one default for in order to earn a themselves, purposes proper percent of its disclosure under 10.75 neither these express opinion TILA.22 We as to wheth- internal documents nor the in information summary judgment may appropriate conveyed er on them was to Your Credit. attempt attempt prod paying 22. Edwards also contends that "an to the debtor into off the repossess necessary prerequi- Moreover, the collateral is a brought legal account. Your Credit claiming nonfiling poli- site to cy.” a loss under the action debtors in 13 of the 58 claims it foregoing Given Article our discussion of September. problem 'filed for the month of The argument legally apparent it is that this is incor- attempt was not that Your Credit failed to public filings rect. financing If Your Credit examined of- repossess claim, property question filing in before statements, example, and deter- large percentage but that a of the claims subsequently mined that another creditor had policy represent that Your Credit filed under the financing covering property filed a statement possibly claims that could not be based on cov- financed, that Your Credit Your Credit suggest, ered losses. We do not solely suffered a loss as a result of its failure to merely by showing Edwards makes out a case - statement, 301(l)(a), §§ file a 10:9— generally, employ- that or some of its 312(5)(a), attempt repossess prop- and an ees, operated misunderstanding under a as to erty meaningless. argument would be Edwards’ circumstances, particular under what under Arti- factually summary is meritless as well. The might nonfiling, cle certain be due to losses so judgment record shows that Your labored long misunderstanding as the was not of such diligently payment: to secure Billeaudeaux’s de- be, effect, scope essentially as to in position belief employees that Your Credit’s establishes and, coverage provided attempted the same by telephone was as would be to contact debtors instances, many by general in went to the debtor's residence afforded default insurance. Ed- Louisi- policy, with the court that terms and under agree district We risks, anything genuine dis- ana law covered such has failed to establish a wards regard non-filing fact to whether insurance in accordance with pute of material 1605(d)(2). stop-loss agreement existed be- informal Voyager. Tim Boan Your Credit and tween “120 or testified losses could be

of CIA I. percent. Although internal docu- even 140” float- bearing percent-figure ments 89.25 A. Voyager, inside CIA ed around appeals court of looked be- Nó other these to adduce evidence that has failed yond explicit terms of an insurance Your Credit. figures were communicated to according characterize its nature Credit,-also Gentiy, Tony President of Your payment claims of the insurer. summary judgment record his testified majority’s citation of other TILA cases deposition that neither he nor Your inapposite, properly for those looked eases CIA-Voy- employees were aware of internal meaning give over form to substance Finally, projections. loss ager profit and necessarily ambiguous terms “credit” and during period question, times various Thus, in the Act. the Court “creditor” Rouge filed Baton office of Your Credit Serv., Family Mourning v. Publications aggregate percent excess 89.25 93 S.Ct. 36 L.Ed.2d U.S. the dis- premiums. Accordingly, we affirm (1973), Congress had intended decided grant summary judgment with trict court’s escape not to be “creditor” merchants able to argument.23 regard to this simply by reformulating what would status be credit “install- otherwise transactions as VI 363-69, sales.” Id. at 93 S.Ct. 1652. ment reasons, foregoing the district For Also, grant summary judgment example, Joseph in favor v. Norman’s court’s Club, Inc., (8th Cir.1976), is VACATED and the case Health F.2d 86 of Your Credit *16 proceedings. case cited for its REMANDED substance-over-form appropriate Meyers analysis Dodge in both v. Clearview SMITH, Judge, E. (5th JERRY Circuit Sales, Inc., Cir.1976), 539 F.2d 515 dissenting: Chevrolet, Inc., and Hickman Peck Cliff (8th Cir.1977), health club 566 F.2d majority opinion its lynehpin of the The “ $360, memberships’ pay sold ‘lifetime an legal characterize conclusion twenty-four monthly able installments policy not unam- according to its cash, $15, of ten to a discount controlling biguous terms or to the law state percent, and sold the notes to fifteen then by performance of the application, its but companies.” 532 finance F.2d at 88. Unsur-- policy. under the Because I cannot insurer prisingly, the court to be credit found these join unprecedented application of the in this Joseph, transactions substance. See doctrine, respectfully I substance-over-form F.2d at 93-94. dissent. Here, comparable there is no need to en- agree majority

I with the that insurance searching “in lieu of’ in a purchased filing under U.S.C. substance-over-form gage 1605(d)(2) analysis, ambiguity for there is no that needs cannot risks that would cover hand, arisen, Joseph, In creditor’s failure resolution. on the other not have for the agree, expressed Congress I cannot that this concern in the terms to file.1 Dictionary Cf., e.g., to establish the 23. Because Edwards has failed Webster’s Third New Int’l (1986) (defining dispute genuine of" as "in the of material fact on "in lieu existence of; of”); legal argument, place instead American Aviation & Gen. we do not reach the difficult Union, Georgia shifting Telco question of whether risk- under a master Ins. Co. (5th Cir.1955) (pre-TILAnon-filing poli- policy by is determined reference "solely policies cy failure [creditor’s] issued under covers losses the master file”). policy. master statute, interpreted rulemaking- insurance contract is ac delegation in the siana cording principles. See history, contract capability, legislative and in the Battig v. Accident & Indem. hyper- in- a the term “credit” not be used Hartford (5th Cir.1979). law 608 F.2d 119 Louisiana coverage. sense to restrict the TILA’s formal 363-69, provides that Mourning, 411 93 S.Ct. U.S. essence, Congress knowingly intent, left a parties’ by 1652. In as reflected by regulators statutory policy, interstice to be filled the extent words of the determines coverage. See id. at 93 S.Ct. 1652. intent is to be deter- courts. Such plain, ordi- mined in accordance with the statute, regulation, The and Louisiana nary, popular language sense of impression a court’s of the “eco- law—not policy, in the the words have used unless disposi- dictate our nomic realities” —must in- acquired meaning.... a technical An sure, To does not define tion. be statute given surance contract should not be “insurance,”2 give but that does not us carte interpretation enlarge or re- would to create a new rule of law under blanche provisions beyond strict its what reason- by which insurance is characterized its ably contemplated by or which its terms fact-intensive, terms but substance-over- lead to an conclusion. If the would absurd analysis that form cannot be resolved on language in an insurance contract is clear summary judgment. unambiguous, agreement must be Rather, the directs us silence the statute case, In enforced as written. such regulations applicable to the and to the back- meaning parties and intent of the ground Supreme of state common law. The sought written contract must within the be Court has often remarked that courts must four corners of the instrument and cannot meaning look to the established of common explained by parol or contradicted evi- interpreting Fur- law terms when statutes.3 [Tjhe ... dence. use of extrinsic evidence thermore, Regulation provides Z that other- proper only ambigu- where a contract is meanings wise undefined terms “have the ous after an of the four cor- examination given to them state law or contract.” 12 ners of the instrument. 226.2(b)(3) (1998). rights and Highlands Foley, Underwriters Ins. Co. v. obligations parties policy, under this Cir.1997) (La.App. 1st So.2d and the characterization of that (citations omitted).4 else, non-filing something insurance or de- unambiguously This insurance contract de- upon controlling pend state law. scope coverage. By plain fines the of its terms, agreement insures losses B. *17 “solely incurred as the result of the failure law, governs Louisiana duly Under the Insured to record or file.” Under arrangement law, policy, accordingly, between Your policy Credit Louisiana is non- Voyager non-filing filing A and is insurance. Loui insurance.5 also, may properly e.g., Again, 2. I note that we decide what 4. See La. Civ. Code Ann. art. 2046 (West 1987) (stating that qualifies pur- "when the words of a sort of insurance as insurance is, explicit contract are clear and and lead to no filing.” may lieu of That de- chased “in consequences, interpretation absurd no further may cide what sort of risks be covered aby intent”); may parties' be made in of the search policy statutory in order to fall within the terms. Assoc., 551, Heinhuis v. Venture 959 F.2d goes beyond statutory interpret- It far our role as (5th Cir.1992) (holding applying that a "court ers, however, when we a matter define as interpret policy Louisiana law should a accord- policy federal law which risks the covers. ing plain meaning to its and not distort its mean- ing ambiguity”). to introduce an See, Wells, 482, e.g., United States v. 519 U.S. 3. 921, 927, (1997) (cit- 117 S.Ct. 137 L.Ed.2d 107 filed, may It be that Darden, ing Nationwide Mut. Ins. Co. v. 503 U.S. paid, scope coverage. claims not within the of the 318, 322, 1344, (1992) That, however, 112 S.Ct. 117 L.Ed.2d 581 properly subject is not of this (citing Community Creative Non-Violence v. bogus under the suit TILA. If claims were filed Reid, 730, 739-40, paid, Voyager 490 U.S. 109 S.Ct. and not sue to (1989))). policy. L.Ed.2d 811 enforce the terms of the only exceptional Furthermore, applied not matter whether circumstances— it does presented here. circumstances unlike those implicit explicit or contract included permitted, provision: Insurers are stop-loss An individual’s chosen form will not be set law, liability to limit their under Louisiana Indeed, lightly. aside it been said their _ conditions on impose reasonable “lawyers who do not know’that sometimes conflict obligations, long so as those do not controls, practicing not be form should law.” Scarborough public policy. with law or See (quoting Id. at 4-34 Paul, Feder Studies (5th v. Travelers Ins. (1937)). Thus, n. where al Taxation Cir.1983). “genuine multiple-party there is a transac which is com tion with economic substance short, insur- In the characterization of this regula pelled encouraged or business or directly by Louisi- policy controlled ance is realities, tory tax-independent is imbued’with law, only ana under which the covers considerations, shaped solely by and is not A by failure to file. federal losses caused meaningless tax-avoidance features by holding to the court should not interfere attached, hon- labels the Government should contrary. rights or the allocation of and duties effectu parties.” Lyon ated Frank Co. v. II. States, 584-85, 435 U.S. 98 S.Ct. United Similarly, 55 L.Ed.2d 550 when appropriate ap- if it is sometimes Even illegal pur corporation a is not used for an analysis to charac- ply a substance-over-form pierced only it pose, its veil will be where is TILA, under the the form of terize insurance ego alter of its shareholders. sham is the policy is not at odds with its substance. Fidelity Deposit Co. v. Commercial & Rather, pat- and the the form Consultants, Inc., 274-5 keep- performance thereunder are in Cas. tern of Cir.1992). (5th pierce veils and look Courts practices, rather legitimate business with they “substance” when to transactions’ will sort of sham to which courts than the legal are de convinced formalities substance, assign consequences based consequence, solely to void of real used avoid- than form. Substance-over-form rather liability. tax or other inapplicable on these facts. legitimate business reason for There is principle a doc substance-over-form beyond the Voyager’s payment of claims prohibits taxpayers from trine of tax law that investigating policy: The cost of terms of the avoiding consequences the tax of a transac greater have been far those claims would something it is by disguising it as tion paid. I- of the claims As far as than the value Thus, example, taxpayer not. where aware, perfectly am common 2.5 purchased with an interest rate of bonds pay, legitimate practice for an insurer percent purchase and financed that dispute, always than claims outside rather at a rate of 3.5 debt to the bond issuer scope coverage. policy specifical- This percent, Supreme Court found the trans ly provided that the insurer retained the “sham,” solely crafted as a tax action to be reject, deny” right “pay, compromise, Knetsch v. avoidance scheme. See United pay a any claim. An insurer choose to 361, 366, States, 364 U.S. 81 S.Ct. *18 reason, with or without an claim was economic L.Ed.2d 128 There The TILA not evaluation of its merit. does engage in the transaction —no reason duty investigate. impose on insurers a profit, chance for other than tax-avoidance— legitimate business reason— looked to substance There is and the Court therefore any purported desire to skirt The search for substance outside rather than form. non-fil- analogized practice TILA —to characterize the as has been over form ing rather than as default. corporate 1 Boris I. insurance piercing of veil. See claims, Although Voyager might pay small Lokken, Federal Bittker and Lawrence every that it would there is reason to believe Income, of Estates Gifts Taxation ed.1989). ¶ (2d and, appropriate' circum- 4.3.3, investigate In 4-34 n. 36 either at stances, involving any case, pay refuse to claims respective doctrines are given bottom summary market will bear money. Where the significant The amount line, naturally achieve this bot- will creditors judgment consistent with this conclusion. charges. inclusion of various Therefore, tom line coverage risk aris- policy’s pay astronomi- will continue ... to And debtors ing “solely a result from -the failure as believe prices cal for cash. While formality, has real empty not an file” is improvidently, and certain debtors--act generally appropri- Even it substance. were n certain may privately condemn analysis while we apply a ate to substance-over-form with the tempting individuals policy creditors for policies, to characterize rates, money high as a quick purports lure remain what at issue here would cannot law and economics we filing. matter of both purchased in lieu of to be: insurance taking place. prevent these transactions III. policy implications of- Finally, I note the IV. improper application unprecedented

this The of the substance-over-form doctrine. majority unambiguous disregards encourage litigation, for majority’s rule will language plain of this insurance and its may properly read this decision plaintiffs requires It under Louisiana law. effect pattern performance will holding that a scope and to characterize the federal court trump plain provisions in deter- contractual policy according to coverage of an insurance obligations. mining parties’-rights and Once performance parties thereunder. filed, majority’s litigation fact- result, such interpreta- contract As a it transforms most, all, analysis will allow intensive question of law—into a quintessential tion —a summary judgment. plaintiffs survive always allow question of fact that will almost summary plaintiffs industrious to survive Furthermore, effectively imposing a join judgment. I cannot this un- Because duty investigate dispute potentially respectfully precedented departure, I dis- claims, hamper bogus this rule will the free sent. functioning in- of the insurance and efficient essence, duty investigate dustry. In issuing poli- hinder insurers from small

will

cies, likely value of asserted where investiga- likely cost of

will be less than the is, calcu-

tion. That a rational insurer should upon the settlement value

late its rates based

of claims: their dollar amount or the cost them, is-lower.

disputing whichever -Under rule, incur insurers must instead disputing potentially

pass all on the cost claims,

illegitimate even where its settlement disputing the cost of it.

value is less than Moreover, majority’s rule will do noth- COMPANY, AMERICAN RIVER TRANS True, help such debtors as Edwards. al., Plaintiffs, et non-filing premi- the inclusion financed the effec- ums the amount raises Company; American River Trans Tulane underlying principal. tive interest rate on the Inc.; Fleeting; Shipyard, New Orleans high price But if the market will bear such a Company; Midland Archer Daniels will; money, apparently which it there is Plaintiffs-Appellees, every reason to believe that creditors will price. continue to Whether' *19 portion price included some of the total disclosed)

(and SS, engines, KALIAKRA her on one line rather than anoth- KAVO tackle, appurtenances, etc., largely er is irrelevant to the bottom debtor’s rem, al., Defendants, pays line: the loan. et amount he for the