Summary 2011 WY 163

Summary of Decision December 19, 2011

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Case Name:  Vogel, Administrator of the Wyoming Uniform Consumer Credit Code (WUCCC), v. Onyx Acceptance Corp.

Citation:  2011 WY 163

Docket Number: S-11-0061

URL: http://wyomcases.courts.state.wy.us/applications/oscn/DeliverDocument.asp?CiteID=464928

Appeal from the District Court of Laramie County, The Honorable Thomas T.C. Campbell, Judge

Representing Appellant (Respondent):   Gregory A. Phillips, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney General; Ryan Schelhaas, Senior Assistant Attorney General.  Argument by Mr. Schelhaas.

Representing Appellee (Petitioner):  Gregory C. Dyekman, Dray, Dyekman, Reed & Healy, P.C., Cheyenne, Wyoming; Michael H. Gottschlich, Barnes, & Thornburg, LLP, Indianapolis, Indiana.  Argument by Mr. Dyekman.

Date of Decision: December 19, 2011

Facts:  Appellee purchased contracts originally executed by automobile dealers and their customers who purchased automobiles on credit.  When Appellee purchased the contracts, the dealers assigned them to Appellee and the customers then made the payments on their contracts directly to Appellee.  Appellee offered customers the option to make payments on their contracts by phone or internet.  For customers choosing to make payments in one of those ways, Appellee charged a fee of $9.50 per phone payment and $5.00 per internet payment.  The fees were not mentioned in the credit sales contracts nor were they otherwise disclosed to customers at the time the dealer extended credit.  Customers who chose to pay Appellee by phone or internet incurred the fees after credit had been extended and after the automobile dealer had assigned the contract to Appellee.  The customers had the option not to pay by phone or internet and not to incur the fee by making their payments by regular mail or another expedited method such as Federal Express or Western Union.

In 2005, the Wyoming Division of Banking began an examination to determine whether Appellee was in compliance with the WUCCC and the WUCCC Administrator’s rules and regulations.  The Division issued a report containing its findings.  In 2006, the Division sent out a notice of intent to issue an order requiring Appellee to cease and desist from charging the payment fees to its customers.  Appellee appealed from the notice of intent.

After a hearing, the OAH concluded the fees violated the WUCCC and issued a recommended order granting summary judgment for the Division.  The Administrator issued an order consistent with the OAH’s recommendation.  Appellee sought review in the district court which, after considering the parties’ positions, concluded the fees were not covered by the WUCCC because they were voluntarily incurred by customers well after credit had been extended.  The district court entered an order reversing the OAH and the Administrator appealed to this Court.

Issues: Whether Appellee violated the WUCCC by charging customers a fee, that was not disclosed when credit was extended, for making payments by telephone or internet; and therefore, whether the OAH properly entered summary judgment for the Division.  Appellee maintains the district court correctly concluded the WUCCC does not prohibit it from charging a fee for optional payment methods it offers to its customers after credit had been extended.

Holdings:  The Court upheld the reversal of the Administrator’s order.

In an overview of the WUCCC, the Court discussed credit service charges as well as the additional, delinquency, deferral and limited default charges enumerated in the statute. Neither party asserted that the fees for payment by phone or internet were contracted for additional charges (§ 40-14-213), delinquency charges (§ 40-14-214), deferral charges (§ 40-14-215) or default charges (§ 40-14-248).  The dispute centered on whether the fees were credit service charges within the meaning of § 40-14-209(a), and in particular, whether the fees were “incident to the extension of credit” within the meaning of § 40-14-209(a)(i).

The Court concluded the phrase “incident to the extension of credit” is ambiguous. Pursuant to § 40-14-102, subsections (a) and (b)(ii) through (v), the Court was required to liberally construe the WUCCC so as to promote its underlying purposes of making credit transactions more understandable to consumers, fostering competition among creditors, making credit available to consumers at a reasonable cost, protecting consumers from unfair practices, and encouraging the development of fair and economically sound consumer credit practices.  Of equal importance, in accordance with subsection (b)(i), (vi) and (vii), the Court found it must construe the statute in a way that simplifies and brings clarity and uniformity to consumer credit law and conforms the regulation of consumer credit transactions to the policies of the federal Consumer Credit Protection Act.

Construed liberally to promote these purposes and policies of the WUCCC, the Court concluded the fees were not credit service charges within the meaning of § 40-14-209(a)(i) because they were not “imposed directly or indirectly by the seller as an incident to the extension of credit.” Furthermore, the dealer’s obligation to disclose charges “imposed as an incident to the extension of credit” could not be imposed on Appellee because the credit transaction occurred before the contract was assigned to Appellee.

The Court also held the fees at issue here are not among those most relevant to “a consumer’s initial credit decision,” and therefore not the sort of charges the legislature intended the WUCCC to address.

In summary, the Court found that Appellee did not violate the WUCCC in charging fees to consumers who opted to make payments on their consumer credit contracts by phone or internet.  The district court properly ordered summary judgment in favor of Appellee.  The case was remanded case to the district court with instructions to remand the case to the Administrator for entry of a summary judgment order for Appellee.

C.J. Kite delivered the opinion for the court.