Delorme v. Autos Inc et al

Filing 65

ORDER by Judge Daniel L. Hovland denying 30 Motion to Certify Class; denying 39 Motion to Appoint Counsel; denying 41 Motion for Summary Judgment; denying 55 Motion for Summary Judgment (CP)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
NORTHWESTERN DIVISION
Bonnie Delorme,

)
)
Plaintiff,
)
)
vs.
)
)
Autos, Inc., a North Dakota Corporation
)
d/b/a/ Global Auto; RW Enterprises, Inc., )
a North Dakota Corporation; Robert
)
Opperude, an individual; Randy Westby, an )
individual; and James Hendershot, an
)
individual,
)
)
Defendants.
)

ORDER DENYING PLAINTIFF’S
MOTION FOR CLASS
CERTIFICATION AND DENYING
PLAINTIFF’S MOTION FOR
PARTIAL SUMMARY JUDGMENT
Case No. 4:11-cv-039

Before the Court are four motions filed by the plaintiff, Bonnie Delorme. Delorme filed
motions for class certification and to certify class counsel on October 14, 2011. See Docket Nos.
30 and 39. Defendants Autos, Inc., Robert Opperude, and James Hendershot filed responses in
opposition to the motions on November 2 and December 14, 2011. See Docket Nos. 37 and 49.
Defendants RW Enterprises and Randy Westby filed responses in opposition to the motions on
November 7 and December 14, 2011. See Docket Nos. 40 and 51.
Delorme filed a “Motion for Summary Judgment on Count II, Federal Truth-In-Lending Act
Count III, North Dakota Retail Installment Sales Act” on November 22, 2011. See Docket No. 41.
The Defendants filed responses in opposition to the motion on December 16, 2011. See Docket Nos.
52 and 53. Delorme filed a reply brief on December 30, 2011. See Docket No. 58.
Delorme filed a “Motion for Summary Judgment on Count I – Usury” on December 20,
2011. See Docket No. 55. RW Enterprises and Westby filed a response in opposition to the motion

on January 13, 2012. See Docket No. 62. Delorme filed a reply brief on January 24, 2012. See
Docket No. 63.

I.

BACKGROUND
Bonnie Delorme is a member of the Turtle Mountain Band of Chippewa Indians and lives

on the Turtle Mountain Indian Reservation. On June 2, 2010, Delorme purchased a 2007 Chevrolet
from Autos, Inc. (d/b/a/ Global Auto) (“Autos, Inc.”) in Minot, North Dakota. See Docket No. 42-3.
The total price was $9,485, including a $195 “document administration fee” and a $300 “loan fee.”
Delorme paid a $1,500 down payment in two installments of $750. Delorme then borrowed $7,985
to cover the remainder of the purchase price.

The “Retail Installment Contract and Security

Agreement” (“the Contract”) between Delorme and Autos, Inc. states that the annual percentage rate
of the loan is 25%. Delorme was to repay the loan in 36 monthly installments of $317.48, due on
the 15th of each month, beginning on July 15, 2010. Delorme would have to pay a $25 late fee if
a payment was more than ten days late. On June 2, 2010, Autos, Inc. assigned its interest in
Delorme’s contract to RW Enterprises, Inc. (“RW Enterprises”). Delorme had no personal dealings
with anyone working for or representing RW Enterprises.
On October 30, 2010, Autos, Inc. repossessed Delorme’s vehicle from Delorme’s place of
work on the Turtle Mountain Indian Reservation, and towed it to Minot. Autos, Inc. did not file a
replevin action in the Tribal Court of the Turtle Mountain Indian Reservation. Delorme was not
delinquent on her monthly payments. The next day, Delorme got a ride to Minot, paid the monthly
payment, a $25 late fee and a tow fee, and retrieved the vehicle.

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On December 14, 2010, Delorme sued Autos, Inc. and Robert Opperude in Tribal Court.
Delorme requested damages on the following grounds:
A.

For damages, actual and punitive, and declaratory relief to remedy the losses
accrued to plaintiff by reason of defendants’ unlawful exercise of “self-help”
repossession within the exterior boundaries of the Turtle Mountain Indian
Reservation under the guise of fraud and deception; and without compliance
with the applicable provisions of the Tribal Constitution and Code and under
the supervision of the Turtle Mountain Tribal Court.

B.

For damages, actual and punitive, and declaratory relief to remedy the losses
accrued to plaintiff by reason of defendants’ violation of the Constitutional
rights of the Plaintiff to due process of the law.

C.

For damages, actual and punitive, to remedy the losses accrued to plaintiff
by reason of the conversion (the unlawful taking and extortionate
withholding of the use thereof) of the plaintiff’s vehicle.

D.

For damages, actual and punitive, to remedy the losses accrued to the
plaintiff by reason of Defendants’ intentional affliction of emotional and
mental distress; and

E.

For damages, actual and punitive, to remedy the losses accrued to the
plaintiff by reason of Defendants conduct which has caused Plaintiff to suffer
public humiliation and embarrassment.

See Docket No. 49-2, p. 2 (errors in original).
On May 14, 2011, the parties entered into a “Settlement, Release, and Indemnity Agreement”
providing that Delorme receive the following relief:
a.

The sum of $10,000.00 (Ten Thousand Dollars) to [Bonnie Delorme] and her
attorneys, Robert Ackre and Larry Baer;

b.

The delivery of unencumbered title to the 2007 Chevrolet . . . automobile
described in the Complaint.

See Docket No. 49-3.
On January 13, 2011, the plaintiff, Bonnie Delorme, filed a complaint in the state district
court of Ward County, North Dakota. See Docket No. 1-1. The complaint alleges the Defendants
3

committed usury (Count I), violated the federal Truth in Lending Act (Count II), violated North
Dakota’s Retail Installment Sales Act (Count III), violated North Dakota’s Unlawful Sales or
Advertising Practices Act (Count IV), violated the federal Fair Debt Collection Practices Act (Count
V), denied Delorme due process of law and breached the duty of good faith (Count VI), and violated
federal and state racketeer influenced and corrupt organizations laws (Counts VII and VIII). See
Docket No. 1-1. The Defendants removed the case to federal court on April 27, 2011. See Docket
No. 1. Delorme seeks to sue on her own behalf and on behalf of a class defined as “persons known
and unknown who have financed the purchase of automobiles with the financing being provided by
either Defendant Autos, Inc. or Defendant RW Enterprises, Inc., directly or indirectly, at anytime
during the four year period immediately preceding the commencement of this civil action.” See
Docket No. 1-1.
On July 8, 2011, the Court issued a scheduling order stating that “Plaintiff shall have until
September 15, 2011, to file a motion for class certification. Defendants shall have until November
15, 2011, to file a response.” See Docket No. 10 (emphasis in original). On October 14, 2011,
Delorme filed a “Motion and Brief in Support of Motion to Certify Class Action Status for Causes
of Action I, III, IV, VII, and VIII and for the Appointment of Class Counsel.” See Docket Nos. 30
and 39. Delorme contends that her proposed class meets the prerequisites of Federal Rule of Civil
Procedure 23(a) and should be certified as a class under Rule 23(b)(1) or (3).On November 2, 2011,
the Defendants filed a response in opposition to the motion. See Docket No. 37. The Defendants
contend Delorme’s motion should be declined because it is untimely. They also contend the
proposed class members cannot be readily determined to have standing, individual issues
predominate over common ones, and that a class action is not superior to other methods.

4

On November 22, 2011, Delorme filed a “Motion for Summary Judgment on Count II,
Federal Truth-in-Lending Act Count III, North Dakota Retail Installment Sales Act.” See Docket
No. 41. Delorme argues that Autos, Inc. unlawfully failed to include the $300 loan fee and $195
document administration fee when calculating the annual percentage rate, and the contract does not
state the proper annual percentage rate. RW Enterprises and Randy Westby filed a response in
opposition to the motion on December 16, 2011. See Docket No. 52. RW Enterprises and Westby
contend there are questions of fact as to whether RW Enterprises, as an assignee, can be held liable
for Autos, Inc.’s alleged Truth in Lending Act violation, whether such a violation was willful, and
whether the loan fee and document administration fee constitute “finance charges.” Autos, Inc. and
Robert Opperude filed a response in opposition to the motion on December 16, 2011. See Docket
No. 53. They contend the loan fee and document administration fee do not constitute finance
charges.
On December 20, 2011, Delorme filed a “Motion for Summary Judgment on Count I –
Usury.” See Docket No. 55. Delorme alleges the real interest rate charged by Autos, Inc. was
usurious. The Defendants filed responses in opposition to the motion on January 13, 2012. See
Docket Nos. 60 and 62. They contend that North Dakota’s statute prohibiting usury (N.D.C.C. §
47-14-09) is inapplicable because the transaction is governed by North Dakota’s Retail Installment
Sales Act (N.D.C.C. ch. 51-13).

5

II.

LEGAL DISCUSSION
A.

CLASS ACTION

Rule 23 of the Federal Rules of Civil Procedure governs a district court’s consideration of
a motion for class certification. The decision whether to certify a class action is left to the district
court’s “broad discretion.” Rattray v. Woodbury Cnty, Iowa, 614 F.3d 831, 835 (8th Cir. 2010)
(citing In re Milk Prods. Antitrust Litig., 195 F.3d 430, 436 (8th Cir. 1999); Bishop v. Comm. on
Prof'l Ethics & Conduct, 686 F.2d 1278, 1287 (8th Cir. 1982)). In determining whether to certify
a class action, “the question is not whether the plaintiff or plaintiffs have stated a cause of action or
will prevail on the merits, but rather whether the requirements of Rule 23 are met.”

Eisen v.

Carlisle & Jacquelin, 417 U.S. 156, 178 (1974) (quoting Miller v. Mackey Int’l, 452 F.2d 424, 427
(5th Cir. 1971). “[T]he court must conduct a ‘rigorous analysis’ to ensure that the prerequisites of
Rule 23 are satisfied.” Elizabeth M. v. Montenez, 458 F.3d 779, 784 (8th Cir. 2006) (quoting Gen.
Tel. Co. of the S.W. v. Falcon, 457 U.S. 147, 161 (1982)). “The district court may grant a motion
to certify a class action only if the putative class representative satisfies all four of the requirements
set forth in Federal Rule of Civil Procedure 23(a), and the class action satisfies one of the three
subsections of Federal Rule of Civil Procedure 23(b).” Rattray, 614 F.3d at 834-35 (citing Amchem
Prods., Inc. v. Windsor, 521 U.S. 591, 613-14 (1997)). The plaintiff bears the burden of satisfying
the requirement of Rule 23. Coleman v. Watt, 40 F.3d 255, 258-59 (8th Cir. 1994).
The Court notes that Delorme’s “Motion to Certify Class Action Status for Causes of Action
I, III, IV, VII, and VIII and for the Appointment of Class Counsel” was not timely filed. On July
8, 2011, Magistrate Judge Charles S. Miller, Jr. issued a scheduling order providing that Delorme
had until September 15, 2011, to file a motion for class certification. See Docket No. 10. Delorme’s

6

motion for class certification was filed almost one month after the deadline, October 14, 2011. See
Docket No. 30. Delorme has not provided an explanation for the late filing. The Defendants request
that the Court dismiss the motion for failure to meet the deadline. The Court, in the exercise of its
broad discretion, will consider the merits of the motion despite the late filing.
Rule 23(a) of the Federal Rules of Civil Procedure sets forth the prerequisites to a class
action. It provides:
(a)

Prerequisites. One or more members of a class may sue or be sued as
representative parties on behalf of all members only if:
(1)

the class is so numerous that joinder of all members is impracticable;

(2)

there are questions of law or fact common to the class;

(3)

the claims or defenses of the representative parties are typical of the
claims or defenses of the class; and

(4)

the representative parties will fairly and adequately protect the
interests of the class.

Fed. R. Civ. P. 23(a). “In common shorthand, the requirements for class actions under Rule 23(a)
are (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation.” Rattray,
614 F.3d at 835 (citing Amchem, 521 U.S. at 613). “Rule 23 does not set forth a mere pleading
standard. A party seeking class certification must affirmatively demonstrate his compliance with
the Rule–that is, he must be prepared to prove that there are in fact sufficiently numerous parties,
common questions of law or fact, etc.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551
(2011).
Delorme bears the burden of proving that her proposed class meets the prerequisites of Rule
23(a). Coleman, 40 F.3d at 258-59. In the brief in support of her motion, Delorme makes the
following assertions regarding the Rule 23(a) prerequisites:
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(1)

the class is so numerous that joinder of all members is impracticable because
the class consists of more than 500 members.

(2)

there are questions of both law and fact common to the class because all
members of the proposed class have purchased motor vehicles on credit from
Defendant Autos, Inc., and that credit has been indirectly provided by by
[sic] Defendant RW Enterprises, Inc., through a common scheme or devise;

(3)

the claims of the representative party is typical of the claims of the class
*

*

in every instance, the members of the class were charged an unitemized document administration fees

*

in every instance, the costs of both the loan fees charged and the
document administration fees charged were not included within the
disclosure of the cost of borrowing funds from the Defendants,
materially understating the true cost of borrowing funds from the
Defendants;

*

(4)

in every instance, the members of the members of the class were
charged loan fees

in every instance, each member’s contract provided for the
assessment of a $25.00 Late Charge upon all payments made more
than ten days late;

the representative party will fairly and adequately protect the interests of the
class.

See Docket No. 31 (errors in original). Delorme provided the following additional justifications for
granting class action status:
(A)

the class members’ interests in individually controlling the prosecution of
separate actions is minimal – all members of the class have similar interests,
while the common questions of law and fact predominate over any questions
affecting individual members only;

(B)

the extent and nature of this civil litigation concerning the facts of this case
has already been brought by the named plaintiffs and no others, and a class
action is superior to other available methods for the fair and efficient
adjudication of the controversy;

8

(C)

to conserve judicial time and resources, there exists the desirability to
concentrate the litigation of these claims in the United States District Court;

(D)

the difficulties in managing this civil action as a class action are minimal due
to the proximity of most affected parties, knowledge of the names and
addresses of each member of the class, and documentation of the nuances of
damages unique to each member of the class; and

(E)

to the best of plaintiffs’ knowledge, no other actions by individual member
of the class which plaintiffs seek to represent have, to this date, been
initiated.

See Docket No. 31.
The Defendants contend that Delorme and the proposed class members do not share
sufficiently common questions of law or fact.
Commonality requires the plaintiff to demonstrate that the class members have
suffered the same injury. This does not mean merely that they “have suffered the
same injury,” Falcon, supra, at 157 . . . . Their claims must depend upon a common
contention. . . . That common contention, moreover, must be of such a nature that it
is capable of classwide resolution–which means that determination of its truth or
falsity will resolve an issue that is central to the validity of each one of the claims in
one stroke.
Wal-Mart Stores, Inc., 131 S. Ct. at 2551.
Delorme has filed over 2,900 pages of loan documents from proposed class members. See
Docket Nos. 46 through 46-63. Even a cursory review of the loan documents reveals that not all of
the proposed class members were charged the same fees or interest rate as Delorme. Some were
charged a document administration fee of $65, some were charged a fee of $195. Some were
charged a loan fee of $200, some $300, and some no loan fee at all. Therefore, Delorme’s assertion
that “in every instance, the members of the members of the class were charged loan fees” is not
accurate. See Docket No. 31. In addition, the Court would need to engage in an examination of
each particular loan transaction to determine whether the Defendants violated state law or federal

9

law. The Court finds by a preponderance of the evidence that Delorme has not met her burden under
Rule 23(a)(2) of showing there are questions of law or fact common to the class.
The Defendants also contend that Delorme will not fairly and adequately protect the interests
of the class. The Eighth Circuit Court of Appeals has explained:
Rule 23(a)(4) requires that “the representative parties will fairly and adequately
protect the interests of the class.” This requirement depends upon two factors: “(a)
the plaintiff’s attorney must be qualified, experienced, and generally able to conduct
the proposed litigation, and (b) the plaintiff must not have interests antagonistic to
those of the class. Eisen v. Carlisle and Jacquelin, 391 F.2d 555, 562 (2d Cir.
1968).” Wetzel v. Liberty Mutual Insurance Co., 508 F.2d 239, 247 (3rd Cir. 1975),
cert. denied, 421 U.S. 1011. Accord, [Jenson v. Continental Financial Corporation,
supra, 404 F. Supp. 806, 811 (D. Minn. 1975)].
United States Fid. & Guaranty Co. v. Lord, 585 F.2d 860, 873 (8th Cir. 1978).
The Defendants argue that Delorme’s interests are adverse to those of the class because she
owns her vehicle outright and no longer owes the Defendants for the loan. In the companion Tribal
Court action, the parties reached a settlement in which the Defendants agreed to pay Delorme
$10,000 and deliver to Delorme unencumbered title to the 2007 Chevrolet. See Docket No. 49-3.
The settlement agreement also states:
This agreement in no manner affects the claims and defenses now pending
in a separate civil action (Case No. 4:11-cv-00039) presently before the United
States District Court for the District of North Dakota, which alleges acts and subject
matter not within the jurisdiction of the Tribal Court. This agreement shall not serve
or act as a collateral estoppel, res judicata, or any admission to any of the factual or
legal questions at issue before the Federal Court civil action.
See Docket No. 49-3. This Court is not bound by this statement in the parties’ Tribal Court
settlement agreement. Delorme bears the burden of showing that she will fairly and adequately
protect the interests of the class. In the brief in support of her motion, she cursorily states, “[T]he
representative party will fairly and adequately protect the interests of the class.” The fact that

10

Delorme owns clear title to her vehicle and no longer owes money to the Defendants makes her
situation significantly different from many of the proposed class members. The Court finds by a
preponderance of the evidence that Delorme has not met her burden under Rule 23(a)(4) of showing
that she will fairly and adequately represent the interests of the class. Therefore, Delorme’s motion
for class certification and to certify class counsel is denied. In addition, the motion is denied as it
is untimely.

B.

COUNT ONE – USURY

Delorme contends the interest rate charged on her loan is usurious and in violation of
N.D.C.C. § 47-14-09, which provides, in part:
1.

Except as otherwise provided by the laws of this state, a person, either
directly or indirectly, may not take or receive, or agree to take or receive, in
money, goods, or things in action, or in any other way, any greater sum or
greater value for the loan or forbearance of money, goods, or things in action
than five and one-half percent per annum higher than the current cost of
money as reflected by the average rate of interest payable on United States
treasury bills maturing in six months in effect for North Dakota for the six
months immediately preceding the month in which the transaction occurs, as
computed and declared on the last day of each month by the state banking
commissioner, but that in any event the maximum allowable interest rate
ceiling may not be less than seven percent, and in the computation of interest
the same may not be compounded; provided, however, that a minimum
interest charge of fifteen dollars may be made. A contract may not provide
for the payment of interest on interest overdue, but this section does not
apply to a contract to pay interest at a lawful rate on interest that is overdue
at the time such contract is made. Any violation of this section is deemed
usury.

2.

This section does not apply to a:
...
e.

Loan made by a lending institution which is regulated or funded by
an agency of a state or of the federal government.
11

N.D.C.C. § 47-14-09.
The Defendants contend the transaction between Delorme and Autos, Inc. is not subject to
N.D.C.C. § 47-17-09. They argue that North Dakota’s Retail Installment Sales Act, N.D.C.C. ch.
51-13, governs the transaction. Section 51-13-01 of the North Dakota Century Code provides the
following definitions:
4.

“Finance charge” means the amount which the retail buyer contracts to pay
or pays for the privilege of purchasing the personal property to be paid for by
the buyer in installments; it does not include the amounts, if any, charged for
insurance premiums, delinquency charges, attorney's fees, court costs,
collection expenses, or official fees.

...
7.

“Official fees” means the filing or other fees required by law to be paid to a
public officer to perfect the interest or lien retained or taken by a seller under
the retail installment contract, and to file or record a release, satisfaction, or
discharge of the contract, and license, certificate of title, and registration fees
imposed by law.

...
9.

“Retail buyer” or “buyer” means a person who buys personal property from
a retail seller in a retail installment sale.

10.

“Retail installment contract” or “contract” means an agreement, entered into
in this state, pursuant to which the title to or a lien upon the personal
property, which is the subject matter of a retail installment sale, is retained
or taken by a retail seller from a retail buyer as security, in whole or in part,
for the buyer's obligation, or a contract for the bailment or leasing of personal
property by which the bailee or lessee contracts to pay as compensation for
its use a sum substantially equivalent to or in excess of its value and by
which it is agreed that the bailee or lessee is bound to become, or has the
option of becoming, the owner of the personal property upon full compliance
with the terms of the contract.

11.

“Retail installment sale” or “sale” means a sale, other than for the purpose of
resale, of personal property by a retail seller to a retail buyer for a price
payable in one or more deferred payments.

12

12.

“Retail seller” or “seller” means a person who sells personal property to a
retail buyer.

N.D.C.C. § 51-13-01. The Retail Installment Sales Act also provides:
A retail seller may contract for in a retail installment contract and charge,
receive, and collect the finance charge computed on the principal balance of the
contract or obligation from the date thereof until paid. A retail seller who complies
with the disclosure provisions of this chapter is deemed a regulated lender under
section 47-14-09.
N.D.C.C. § 51-13-03(1). The disclosure provisions of N.D.C.C. § 51-13-02(2) state:
a.

If the retail installment sale for which the retail installment contract is made
is not subject to the Truth in Lending Act [15 U.S.C. 1601-1667e], this
subsection applies. The printed portion of the contract must be in at least
eight-point type. The contract must contain printed or written in a size equal
to at least ten-point bold type:
(1)

(2)

A specific statement that liability insurance coverage for bodily
injury and property damage caused to others is not included, if that
is the case.

(3)

b.

Either at the top of the contract or directly above the space reserved
for the signature of the buyer, the words “RETAIL INSTALLMENT
CONTRACT”.

The following notice: “NOTICE TO THE BUYER: 1. Do not sign
this contract before you read it or if it contains any blank space. 2.
You are entitled to a completely filled-in copy of this contract when
you sign it. 3. Under the law, you have the following rights, among
others: (a) to pay off in advance the full amount due and to obtain a
partial refund of the finance charge; (b) to redeem the property if
repossessed for a default within the time provided by law; (c) to
require, under certain conditions, a resale of the property if
repossessed. 4. If you desire to pay off in advance the full amount
due, the amount of the refund you are entitled to, if any, will be
furnished upon request.”

The seller shall deliver to the buyer a legible copy of the contract or any
other document the seller has required or requested the buyer to sign. Until
the seller does so, a buyer who has not received delivery of the personal
property has an unconditional right to cancel the contract and to receive
immediate refund of all payments made and redelivery of all goods traded in
13

to the seller on account of or in contemplation of the contract. Any
acknowledgment by the buyer of delivery of a copy of the contract must be
printed or written in a size equal to at least ten-point bold type and, if
contained in the contract, must also appear directly above the space reserved
for the buyer's signature. The buyer’s written acknowledgment of delivery
of a copy of a contract is conclusive proof of such delivery and of
compliance with this subdivision in any action or proceeding by or against
an assignee of the contract without knowledge to the contrary when the
assignee purchases the contract.
c.

The contract must contain:
(1)

The names of the seller and the buyer, the place of business of the
seller, the residence or place of business of the buyer as specified by
the buyer and a description of the personal property including its
make, year model, model and identification numbers or marks, if any,
and whether it is new or used.

(2)

The cash price of the personal property which is the subject matter of
the retail installment sale.

(3)

The amount of the buyer’s downpayment, itemizing the amounts paid
in money and in goods and containing a brief description of the
goods, if any, traded in.

(4)

The difference between paragraphs 2 and 3, which is the unpaid
balance of cash price.

(5)

The amount, if any, included for insurance, specifying the coverages.

(6)

The amount, if any, of official fees.

(7)

The amount financed, which is the sum of paragraphs 4, 5, and 6.

(8)

The amount of the finance charge, if any.

(9)

The total of payments, which is the sum of paragraphs 7 and 8,
payable by the buyer to the seller, the number of installments
required, the amount of each installment expressed in dollars, and the
due date or period thereof.

(10)

The deferred payment price, which is the sum of the amounts
determined in paragraphs 2, 5, 6, and 8.

14

...
The items need not be stated in the sequence or order set forth above;
additional items may be included to explain the calculations involved in
determining the amount to be paid by the buyer.
...
e.

A contract may provide for the payment by the buyer of a delinquency and
collection charge on each installment in default for a period of more than ten
days in an amount equal to ten percent of the delinquent installment payment
or ten dollars, whichever is less; provided, that only one such delinquency
and collection charge may be collected on each installment in addition to
interest accruing thereon.

N.D.C.C. § 51-13-02(2).
In Mandan Supply, Inc. v. Steckler, 244 N.W.2d 698 (1976), the North Dakota Supreme
Court discussed the interaction between the Retail Installment Sales Act and North Dakota’s usury
statute:
There is significant authority for the proposition that retail sales are exempt
from usury statutes because the “time-price differential” (credit service charge in
Chapter 51-13, N.D.C.C.) is not defined as “interest” within usury statutes such as
§ 47-14-09 and § 47-14-10, N.D.C.C. Cases so holding are collected in an
Annotation at 14 A.L.R.3d 1065. An excellent review of such theory is also found
in Warren, Regulation of Finance Charges in Retail Instalment Sales, 68 Yale L.J.
839 (1959). Some courts hold otherwise, however, concluding that the only
reasonable conclusion is that such finance charges are, indeed, “interest”. See, e.g.,
Rollinger v. J. C. Penney Co., 86 S.D. 154, 192 N.W.2d 699 (1971); State v. J. C.
Penney Co., 48 Wis. 2d 125, 179 N.W.2d 641 (1970).
We find it unnecessary to reach such question in this case, because we
conclude that the Legislature has provided a specific method of regulating
transactions where a bona fide retail installment sale is made to a retail buyer.
Section 1-02-07, N.D.C.C., provides:
“Particular controls general.--Whenever a general provision in a
statute shall be in conflict with a special provision in the same or in
another statute, the two shall be construed, if possible, so that effect
may be given to both provisions, but if the conflict between the two
15

provisions is irreconcilable the special provision shall prevail and
shall be construed as an exception to the general provision, unless the
general provision shall be enacted later and it shall be the manifest
legislative intent that such general provision shall prevail.”
In the instant case, we believe that the provisions of §§ 47-14-09 and 47-14-10,
N.D.C.C., are general provisions which, in the absence of specific provisions, may
be applicable to finance charges added onto the principal balance in a retail
installment sales contract. Section 47-14-09, N.D.C.C., itself states, in part, that its
limitations apply “Except as otherwise provided by the laws of this state. . . .” We
believe that Chapter 51-13, N.D.C.C., contains the special provisions which fall
within the “exception clause” of § 47-14-09, N.D.C.C.
In the instant case, both parties agree that the transaction in question was a
bona fide retail installment sale within the terms of Chapter 51-13, N.D.C.C., and
that a “retail installment contract” was entered into between Steckler and Mandan
Supply. We conclude that the special provisions of Chapter 51-13, N.D.C.C.,
relating to retail installment sales must govern a transaction such as is presented in
the instant case.
Mandan Supply, Inc., 244 N.W.2d at 702 (footnote omitted).
The undisputed evidence before the Court reveals that the transaction between Delorme and
Autos, Inc. is a retail installment sales contract. The Court finds that the contract between Delorme
and Autos, Inc. meets the disclosure requirements of N.D.C.C. § 51-13-02(2). According to the
plain language of N.D.C.C. § 51-13-01, Autos, Inc. is a regulated lender and is not subject to the
usury statute, N.D.C.C. § 47-14-09. Delorme’s motion for summary judgment on Count I (usury)
is denied and Count One is dismissed.

C.

COUNT TWO – TRUTH IN LENDING ACT

Delorme alleges that the Defendants have violated the federal Truth in Lending Act, 15
U.S.C. §§ 1601-1776(e), by understating the cost of borrowing money. Delorme alleges that Autos,

16

Inc. failed to include the loan fee and document administration fee in calculating the finance charge.
She argues that the fees should be included in the finance charge, rather than the amount financed.
The United States Supreme Court has explained:
Congress enacted the Truth in Lending Act (TILA), 82 Stat. 146, in order to
promote the “informed use of credit” by consumers. 15 U.S.C. § 1601(a). To that
end, TILA’s disclosure provisions seek to ensure “meaningful disclosure of credit
terms.” Ibid. Further, Congress delegated expansive authority to the Federal
Reserve Board . . . to enact appropriate regulations to advance this purpose. §
1604(a).
Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 235 (2004).
Finance charges are regulated under Regulation Z (12 C.F.R. § 226.4), which provides, in
part:
(a)

Definition. The finance charge is the cost of consumer credit as a dollar
amount. It includes any charge payable directly or indirectly by the
consumer and imposed directly or indirectly by the creditor as an incident to
or a condition of the extension of credit. It does not include any charge of a
type payable in a comparable cash transaction.
...

(b)

Examples of finance charges. The finance charge includes the following
types of charges, except for charges specifically excluded by paragraphs (c)
through (e) of this section:
(1)

Interest, time price differential, and any amount payable under an
add-on or discount system of additional charges.

(2)

Service, transaction, activity, and carrying charges, including any
charge imposed on a checking or other transaction account to the
extent that the charge exceeds the charge for a similar account
without a credit feature.

(3)

Points, loan fees, assumption fees, finder’s fees, and similar charges.

(4)

Appraisal, investigation, and credit report fees.

...
17

(c)

Charges excluded from the finance charge. The following charges are not
finance charges:
(1)

Application fees charged to all applicants for credit, whether or not
credit is actually extended.

(2)

Charges for actual unanticipated late payment, for exceeding a credit
limit, or for delinquency, default, or a similar occurrence.

(3)

Charges imposed by a financial institution for paying items that
overdraw an account, unless the payment of such items and the
imposition of the charge were previously agreed upon in writing.

(4)

Fees charged for participation in a credit plan, whether assessed on
an annual or other periodic basis.

(5)

Seller’s points.

(6)

Interest forfeited as a result of an interest reduction required by law
on a time deposit used as security for an extension of credit.

(7)

[Certain fees related to real estate.]

(8)

Discounts offered to induce payment for a purchase by cash, check,
or other means, as provided in section 167(b) of the Act.

12 C.F.R. § 226.4 (emphasis added). In Pfennig, the Supreme Court held that Regulation Z is
binding on the courts. Pfennig, 541 U.S. at 242.

1)

AUTOS, INC., ROBERT OPPERUDE, AND JAMES HENDERSHOT

Autos, Inc., Robert Opperude, and James Hendershot contend that the loan fee and document
administration fee are excluded from the finance charge under 12 C.F.R. § 226.4(c)(1). They assert
the fees are charged to all purchasers, and are not individual to Delorme’s transaction. Robert
Opperude testified about the fees in a deposition:

18

Q.

What about loan fees? What are loan fees?

A.
Loan fees are a fee that we charge – Global Auto charges. It is for
running the office and to – to process the loan.
Q.

So cost of doing business as a lending institution?

A.

Yes.

See Docket No. 44, p. 54. Opperude testified further:
Q.
A.
out of there.

Okay. What all is in your document administration fee of 195?
That is a – whatever the license and title transfer fee would be, comes

...
Q.
How would you find out what the license fee was supposed to be for
this vehicle?
A.

It’s factored into the 195.

Q.

It’s part of the 195.

A.

Yes.

...
Q.

. . . [A] loan fee of $300. What – explain what that is.

A.
I think we talked about that. That was our loan fee that we use for –
for administrating the loan that we’re doing, for processing a loan.
See Docket No. 44, pp. 71, 73-74.
James Hendershot also testified regarding the fees:
Q.
I notice there’s a document administration fee of 195 on this form.
What is that?
A.
That’s – that’s a fee that is charged to provide title transfer and put the
car into their name and if there’s a lienholder, put the lienholder on the title.
19

Q.

And does that money go to who then?

A.

Global Auto.

Q.
Okay. And – but who – who or what does Global Auto have to pay
to accomplish this document administration process? Anybody?
A.

I’m not sure how that gets broke down. That is something that Bob

does.
Q.
Because I notice there’s other lines for the motor vehicle excise tax
and the license and title fees. They’re separate and distinct from the administration
fee you’re charging here; is that correct?
A.

Yes.

Q.

Go down a little farther, there’s a loan fee?

A.

Yes.

Q.

$300 in this case?

A.

Yes.

Q.

Who decides how much the loan fee is?

A.

Bob and I.

Q.

Is $300 typical?

A.

It’s standard.

See Docket No. 53-1, p. 10.
Randy Westby testified about the fees, as well:
Q.

Are Loan Fees a form of charging interest?

A.

I don’t know.

Q.

What would you characterize a Loan Fee to be?

20

A.
Could be administration, could be a document fee, could be credit
checks, could be all kinds of things. I don’t know what this is.
Q.
Well, in this instance there’s a Document Administration Fee of $195.
And then there’s a $300 Loan Fee. Is a Loan Fee in that context an interest cost?
A.
I don’t know what that Loan Fee is for. It could be to recover some
cost involved with that loan, credit checks, et cetera.
See Docket No. 45, p. 39.
The Court finds that the record is insufficient to determine whether the loan fee and
document administration fee are excluded from the finance charge under 12 C.F.R. § 226.4(c)(1).
Opperude and Hendershot assert that all customers who received loans from Autos, Inc. were
charged the loan fee and document administration fee. It is not clear whether the fees were charged
to customers that applied for loans but were denied. Regulation Z excludes fees that are charged to
all applicants, regardless of whether credit is extended, from the finance charge. 12 C.F.R. §
226.4(c)(1). There are genuine issues of material fact in dispute as to the alleged violations of the
Truth in Lending Act. Delorme’s motion for summary judgment on Count Two as to Autos, Inc.,
Opperude, and Hendershot is denied at this stage.

2)

RW ENTERPRISES AND RANDY WESTBY

RW Enterprises and Randy Westby contend they are not liable under the Truth in Lending
Act as the assignee of the loan from Autos, Inc. to Delorme. Regarding liability of assignees, the
Act provides as follows:
Except as otherwise specifically provided in this subchapter, any civil action
for a violation of this subchapter or proceeding under section 1607 of this title which
may be brought against a creditor may be maintained against any assignee of such
creditor only if the violation for which such action or proceeding is brought is
21

apparent on the face of the disclosure statement, except where the assignment was
involuntary. For the purpose of this section, a violation apparent on the face of the
disclosure statement includes, but is not limited to (1) a disclosure which can be
determined to be incomplete or inaccurate from the face of the disclosure statement
or other documents assigned, or (2) a disclosure which does not use the terms
required to be used by this subchapter.
15 U.S.C. § 1641(a).
As outlined above, the Court cannot determine from the record whether the contract
misstates the finance charge. Further evidence is necessary to determine whether the loan fee and
document administration fee are excluded from the finance charge under Regulation Z. Therefore,
the alleged violation of the Truth in Lending Act is not apparent from the face of the document.
There are genuine issues of material fact in dispute which preclude the granting of partial summary
judgment at this stage. Delorme’s motion for summary judgment on Count Two as to RW
Enterprises and Randy Westby is also denied.

D.

COUNT THREE – RETAIL INSTALLMENT SALES ACT

Delorme contends the Defendant’s have violated North Dakota’s Retail Installment Sales
Act, N.D.C.C. ch. 51-13. Delorme argues the Defendants have violated the Act by misstating the
finance charge and charging an excessive late fee. The Retail Installment Sales Act provides, in
relevant part:
51-13-02. Requirements as to retail installment contracts.
...
2.

c.

The contract must contain:
(1)

The names of the seller and the buyer, the place of business
of the seller, the residence or place of business of the buyer as
22

specified by the buyer and a description of the personal
property including its make, year model, model and
identification numbers or marks, if any, and whether it is new
or used.
(2)

The cash price of the personal property which is the subject
matter of the retail installment sale.

(3)

The amount of the buyer’s downpayment, itemizing the
amounts paid in money and in goods and containing a brief
description of the goods, if any, traded in.

(4)

The difference between paragraphs 2 and 3, which is the
unpaid balance of cash price.

(5)

The amount, if any, included for insurance, specifying the
coverages.

(6)

The amount, if any, of official fees.

(7)

The amount financed, which is the sum of paragraphs 4, 5,
and 6.

(8)

The amount of the finance charge, if any.

(9)

The total of payments, which is the sum of paragraphs 7 and
8, payable by the buyer to the seller, the number of
installments required, the amount of each installment
expressed in dollars, and the due date or period thereof.

(10)

The deferred payment price, which is the sum of the amounts
determined in paragraphs 2, 5, 6, and 8.

...
The items need not be stated in the sequence or order set forth above;
additional items may be included to explain the calculations involved
in determining the amount to be paid by the buyer.
...
e.

A contract may provide for the payment by the buyer of a
delinquency and collection charge on each installment in default for
23

a period of more than ten days in an amount equal to ten percent of
the delinquent installment payment or ten dollars, whichever is less;
provided, that only one such delinquency and collection charge may
be collected on each installment in addition to interest accruing
thereon.
3.

If a retail installment sale is also subject to the Truth in Lending Act [15
U.S.C. 1601-1667e], the seller may, instead of complying with the disclosure
requirements of subsection 2, comply with all requirements of the Truth in
Lending Act. A seller who complies with the Truth in Lending Act still must
comply with the provisions of this section governing matters other than
disclosure.
...
51-13-03. Finance charge limitation.

1.

A retail seller may contract for in a retail installment contract and charge,
receive, and collect the finance charge computed on the principal balance of
the contract or obligation from the date thereof until paid. A retail seller who
complies with the disclosure provisions of this chapter is deemed a regulated
lender under section 47-14-09.

2.

The finance charge must be computed on the amount financed as determined
under subdivision c of subsection 2 of section 51-13-02. This finance charge
may be precomputed on the amount financed calculated on the assumption
that all scheduled payments will be paid when due and the effect of
prepayment is governed by the provisions on rebate upon prepayment.

3.

When a retail installment contract provides for unequal or irregular
installments, the finance charge must be at the effective rate provided in
subsection 1, having due regard for the schedule of installments.

4.

The finance charge must be inclusive of all charges incident to investigating
and making the contract, and for the extension of the credit provided for in
the contract and no fee, expense, or other charge whatsoever may be taken,
received, reserved, or contracted for except as provided in this section and in
subdivision e of subsection 2 of section 51-13-02 and for those items
expressly provided for in the retail installment contract as set forth in
subdivision c of subsection 2 of section 51-13-02.
...

24

51-13-07. Penalties.
Any person who willfully violates this chapter is guilty of a class A
misdemeanor. A willful violation of section 51-13-02 or 51-13-03 by any person
bars that person’s recovery of any finance charge or delinquency or collection charge
on the retail installment contract involved.

1)

AUTOS, INC., ROBERT OPPERUDE, AND JAMES HENDERSHOT

Autos, Inc., Opperude, and Hendershot contend they are not subject to the disclosure
requirements of the North Dakota Retail Installment Sales Act under N.D.C.C. § 51-13-02(3)
because they are subject to the Truth in Lending Act. As explained above, the Court cannot
determine from the current record whether Autos, Inc. is in compliance with the disclosure
requirements of the Truth in Lending Act. If Autos, Inc. is in compliance with the Truth in Lending
Act’s disclosure requirements, then it arguably need not comply with the disclosure requirements
of the Retail Installment Sales Act. Therefore, the Court denies Delorme’s motion for partial
summary judgment with respect to Count Three and the claim against Autos, Inc., Opperude, and
Hendershot.
Autos, Inc., Opperude, and Hendershot essentially concede that if the North Dakota Retail
Installment Sales Act governs, they violated N.D.C.C. § 51-13-02(2)(e) by charging an excessive
late fee. The Retail Installment Sales Act provides that a late fee can be ten percent of the
installment payment or ten dollars, whichever is less. The $25 late fee charged to Delorme violates
this provision. However, Autos, Inc., Opperude, and Hendershot argue there is a disputed issue of
fact as to whether they willfully violated the statute. The Retail Sales Installment Act’s penalty
provision, N.D.C.C. § 51-13-07, applies only to willful violations of the statute. Delorme argues

25

the undisputed evidence reveals the Defendants chose to charge a late fee and arbitrarily decided on
an amount of $25. The Court finds that summary judgment is not appropriate at this stage as there
are genuine issues of material fact in dispute as to whether willful violations of the statute occurred.

2)

RW ENTERPRISES AND RANDY WESTBY

RW Enterprises contend it is not subject to the Retail Installment Sales Act. RW Enterprises
is not considered to be a “retail seller” because it did not sell the vehicle to Delorme. N.D.C.C. §
51-13-01(12). RW Enterprises is the “holder” of the contract, which is defined as “the seller of the
personal property under or subject to the contract, or, if the contract is purchased by a financing
agency or other assignee, the financing agency or other assignee.” N.D.C.C. § 51-13-01(6). The
relevant disclosure requirements of N.D.C.C. § 51-13-02 refer to the seller, not the holder.
Robert Opperude testified regarding Autos, Inc.’s agreement with RW Enterprises:
Q.

Let’s look at this agreement. What does it require RW Enterprises to

do?
...
A.

To buy the contract.

Q.
And in consideration for buying that contract what does RW
Enterprises receive?
A.

Fifteen percent of the – of the principal balance.

Q.
I think there’s a better way to describe that other than 15 percent of
your principal balance.
A.

Well –

Q.

A rate of return of 15 percent on the monies advanced.

26

A.

Correct. Yes.

...
Q.

In conjunction with that what is Global Auto required to do?

A.

To collect the payments, responsible for the vehicle.

...
Q.
And if one of these payments are in default to you as Global Auto,
you still make your monthly payment to RW Enterprises.
A.

Yes.

See Docket No. 44, pp. 52-53, 58.
The record reveals that RW Enterprises and Westby had no role in determining the interest
rate to be charged, disclosing the finance charge, or charging late fees. These actions were taken
by Autos, Inc. as the retail seller. No provision of the North Dakota Retail Installment Sales Act
provides for RW Enterprise’s liability for their actions as the holder. The Court finds, as a matter
of law, that RW Enterprises and Westby are not subject to the relevant disclosure and late fee
provisions of N.D.C.C. § 51-13-02. Therefore, Delorme’s motion for partial summary judgement
on the Retail Installment Sales Act claim against RW Enterprises and Westby is denied and the
claim is dismissed.

IV.

CONCLUSION
The Court has carefully considered the entire record, the parties’ briefs, and relevant case

law. Delorme’s “Motion to Certify Class Action Status for Causes of Action I, III, IV, VII, and VIII
and for the Appointment of Class Counsel” (Docket Nos. 30 and 39) is DENIED. The motion was

27

untimely and is also denied on its merits. Delorme’s “Motion for Summary Judgment on Count I
– Usury” (Docket No. 55) is DENIED and Count One is DISMISSED. Delorme’s “Motion for
Summary Judgment on Count II, Federal Truth-In-Lending Act Count III, North Dakota Retail
Installment Sales Act” (Docket No. 41) is DENIED. However, Delorme’s claims as to RW
Enterprises and Randy Westby as set forth in Count III are dismissed as a matter of law.
IT IS SO ORDERED.
Dated this 8th day of May, 2012.
/s/ Daniel L. Hovland
Daniel L. Hovland, District Judge
United States District Court

28