Filed: July 21, 2000

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 99-1944

(CA-98-61-4)

Rachel Alston,

Plaintiff - Appellant,

versus

Crown Auto, Incorporated,

Defendant - Appellee.

ORDER

The court amends its opinion filed June 28, 2000, as follows:

On the cover sheet, section 1 -- the status is changed from

“UNPUBLISHED” to “PUBLISHED.”

On the cover sheet, section 6 -- the status line is corrected

to read “Affirmed by published per curiam opinion.”

On page 2, section 1 -- the reference to use of unpublished

opinions as precedent is deleted.

For the Court - By Direction

/s/ Patricia S. Connor

Clerk
PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RACHEL ALSTON,

Plaintiff-Appellant,

v. No. 99-1944

CROWN AUTO, INCORPORATED,

Defendant-Appellee.

Appeal from the United States District Court

for the Western District of Virginia, at Danville.

Norman K. Moon, District Judge.

(CA-98-61-4)

Argued: June 9, 2000

Decided: June 28, 2000

Before LUTTIG and KING, Circuit Judges, and

Richard L. WILLIAMS, Senior United States District Judge

for the Eastern District of Virginia, sitting by designation.

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Affirmed by published per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Thomas Dean Domonoske, Chapel Hill, North Carolina,

for Appellant. James A.L. Daniel, DANIEL, VAUGHAN, MEDLEY

& SMITHERMAN, P.C., Danville, Virginia, for Appellee. ON

BRIEF: Elmer R. Woodard, Danville, Virginia, for Appellant. Robert

J. Smitherman, DANIEL, VAUGHAN, MEDLEY & SMITHERMAN, P.C., Danville, Virginia, for Appellee.

_________________________________________________________________
_________________________________________________________________

OPINION

PER CURIAM:

Rachel Alston sued Crown Auto, Inc., for various federal and state

law violations arising out of her purchase of a car from Crown Auto.

The district court granted Crown Auto's motion for summary judgment on all of Alston's claims. For the reasons that follow, we affirm.

I.

On November 28, 1997, Alston entered into a Retail Installment

Sales Contract ("RISC") with Crown Auto, to purchase a 1987 Honda

Accord for $5,281.60. Under the RISC, Alston was required to pay

a ten-percent fee for any late payments. Alston made late payments

on several occasions and was charged a ten-percent late fee. It is

undisputed that under Virginia law, Crown Auto was not permitted to

charge Alston a late fee in excess of five percent. See Va. Code § 6.1-

330.80(A) ("Any lender or seller may impose a late charge for failure

to make timely payment of any installment due on a debt . . . provided

that such late charge does not exceed five percent of the amount of

such installment payment . . .

In September 1998, Crown Auto repossessed Alston's car because

she did not have required insurance. At that time, Crown Auto gave

Alston a check for the amount in excess of five percent that she paid

in late fees, plus interest. J.A. 41-42, 53.

Alston sued Crown Auto in federal district court under the federal

Truth-in-Lending Act ("TILA") and on various state law grounds. The

district court granted Crown Auto's motion for summary judgment on

all claims. Alston now appeals.

II.

Alston argues that the district court erred when it granted summary

judgment to Crown Auto on her TILA claim. Alston contends that

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Crown Auto violated TILA when it failed to designate as a "finance

charge" an $85.00 processing fee, as required under 15 U.S.C.

§ 1638(a)(3). Under TILA, a "finance charge" includes any charges

"imposed by the creditor as an incident to the extension of credit. The

finance charge does not include charges of a type payable in a comparable cash transaction." 15 U.S.C. § 1605(a).

The district court found that Alston had produced no evidence to

prove that the $85.00 fee was incident to the extension of credit and

not charged in comparable cash transactions. The district court held

that the fee was not a "finance charge" and therefore that Crown Auto

did not violate TILA when it did not label it as such. We agree.

Crown Auto presented evidence that its general practice is to

charge both cash and credit customers an $85.00 processing fee.

Although Alston presented evidence that two cash customers negotiated with Crown Auto not to pay the processing fee, she has presented

no evidence to refute Crown Auto's position that its general practice

is to charge the $85.00 fee to all customers, credit and cash alike.

Because Crown Auto's processing fee is payable in comparable cash

transactions, we cannot conclude that the district court erred in concluding that the processing fee was not a "finance charge."1

III.

Alston also argues that the district court erred when it granted summary judgment to Crown Auto on her two state law claims, which we

address below.

A.

Alston argues that the district court erred when it concluded that

her loan from Crown Auto was not usurious. Under Virginia law, a

loan is usurious if the creditor charges an interest rate higher than that

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1 Alston also argues that she was charged two $85.00 processing fees.

We agree with the district court, however, that the $85.00 processing fee

was itemized separately on the handwritten form used during negotiations and was included in the sale price on the computer-generated form,

and she was, therefore, charged only one $85.00 processing fee.

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rate disclosed in the contract.2 Alston maintains that, because Virginia

law permits Crown Auto to charge only a five-percent late fee, and

not the ten-percent late fee that it did charge, the excess late fee

charged should be considered additional undisclosed interest. Therefore, she claims that Crown Auto actually charged her more than the

eighteen-percent interest, which it disclosed and to which she agreed.

The district court held that the late fee is a penalty that is not subject to usury, and that the Virginia statute that directly addresses

excess late fees provides the exclusive remedy under Virginia law.

We agree.

Under Virginia law, a loan that is not usurious when made cannot

be made usurious by subsequent events. See Ward's Adm'rs v. Cornett, 22 S.E. 494, 495 (Va. 1895) ("A debt to be usurious, must be so

in the beginning. It cannot be made so by subsequent events. . . . If

the obligor had paid the debt when the bond became due, he would

not have incurred, even under the literal terms of the bond, any liability to pay the illegal interest stipulated for after its maturity. Where

the debtor, by a punctual payment of the debt, may thus relieve himself and avoid the payment of the illegal interest stipulated for, it is

not usury."); see also Pollard v. Baylors, 1819 WL 897 (Va. Nov. 27)

("[A] penalty inserted in a contract, from which a party may deliver

himself, does not make the contract usurious."). Although Alston was

subject to an illegal excess late fee if she failed to make payments on

time, if she complied with her payment schedule she would not be

subject to any illegal charges or excess interest. Therefore, under Virginia law, the loan was not usurious.

Alston responds to this reasoning by quoting Garrison v. First

Federal Savings and Loan Assoc. of South Carolina, 402 S.E.2d 25

(Va. 1991), for the proposition that "any charge which cannot be attributed to either principal or to an allowed charge for collateral services

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2 Under Virginia law, a creditor cannot charge more than twelvepercent interest, see Va. Code § 6.1-330.55, unless the seller and buyer

expressly agree to a different rate, see Va. Code § 6.1-330.77 ("Any

seller of goods or services who extends credit under a closed-end installment credit plan or arrangement may impose finance charges at such rate

or rates as may be agreed upon by the seller and purchaser.").

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is considered interest" for purposes of usury.3 Accord Byrd v. Sterling

Mortgage Corp., 1994 WL 1031124 (Va. Cir. Ct. April 6, 1994)

(unreported). That is, Alston argues that under Garrison, because the

excess late fee cannot be attributed to principal or to an allowed

charge, it is necessarily interest which exceeds the interest to which

Alston agreed. However, both Garrison and Byrd address the question whether fees charged up front at the time the loan is made are

to be considered "interest" for purposes of usury. Neither case, nor

any other case Alston cites, stands for the relevant proposition that

any future disallowed fees that could come due based on events subsequent to the signing of the loan could render the loan usurious. And,

we are further convinced that excessive late fees are not to be considered in the determination whether a loan is usurious when made,

because Virginia has a statute which directly addresses excessive late

fees. See Va. Code § 6.1-330.80(C) ("Any provision for late charges

in excess of the amount permitted in this section shall be void as to

such excess but shall not otherwise affect the validity of the obligation."). This provision makes clear that the exclusive remedy is to

void the amount in excess of the allowable fee but as well that no

other obligation, including the obligation to pay the allowable late fee,

is effected.

Here, Crown Auto did, as required under section 6.1-330.80, void

the excess late fee and reimburse Alston. And, because Alston could

have avoided any illegal late fee by making her payments on time, we

conclude that the loan was not usurious when made.

B.

Alston also argues that Crown Auto's charge of an excessive late

fee violated the Virginia Consumer Protection Act ("VCPA"), which

makes unlawful:

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3 Alston also argues that Cornett and Pollard are too old to be applicable to current usury statutes. However, she cites no cases or specific statutory provisions that conflict with this understanding of Virginia usury

law. And Garrison itself borrows its understanding of what is interest at

the time the contract is made from general usury principles articulated in

a 1933 opinion.

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[u]sing in any contract . . . any . . . penalty clause . . . or

attempting to collect any . . . penalties which are void or

unenforceable under any otherwise applicable laws of this

Commonwealth . . . .

Va. Code § 59.1-200(13). That is, Alston argues that Crown Auto

unlawfully collected the ten-percent late fee, because the amount in

excess of five percent was void or unenforceable under Virginia law,

see Va. Code § 6.1-330.80(A).

The district court held that Alston could not show a genuine issue

of material fact because there was no evidence to indicate that the tenpercent fee was misrepresented or hidden. We agree with Alston that

there does not appear to be any requirement in section 59.1-200(13)

that the penalty be misrepresented or hidden. However, we cannot

conclude that the district court erred in granting Crown Auto's motion

for summary judgment on this claim, because Alston has presented no

evidence to indicate that she suffered a loss as a result of any violation of the VCPA.

Alston brought her VCPA claim for damages and attorneys fees

under section 59.1-204 of the statute, which reads:

Any person who suffers loss as the result of a violation of

this chapter shall be entitled to initiate an action to recover

actual damages, or $500, whichever is greater.

Va. Code § 59.1-204(A) (emphasis added). Although Alston did pay

in excess of five percent for late fees, Crown Auto reimbursed her for

the excess late fees, plus interest. Alston has not shown that she suffered a loss as the result of Crown Auto's violation of the VCPA, and

therefore, she is not entitled to initiate an action for damages under

this provision. Accordingly, we cannot conclude that the district court

erred in granting summary judgment to Crown Auto on this claim.

Alston contends that despite the plain text of the VCPA's damages

provision, under Valley Acceptance Corp. v. Glasby, 337 S.E.2d 291

(Va. 1985), she can still sue Crown Auto under the VCPA even if she

suffered no loss. In Glasby, the bank was not licensed to issue the

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type of loan it issued to the borrowers, imposed impermissible fees

and charges, and unlawfully took an interest in the borrowers' real

estate. Rather than simply awarding the borrowers damages, the court

voided the entire contract. The court also awarded attorneys fees to

the borrowers under section 59.1-204(B), which reads: "[I]n addition

to any damages awarded, such person also may be awarded reasonable attorney's fees and court costs." Although Glasby is a case in

which there were apparently no damages actually awarded, it is not

clear that the borrowers suffered no loss. The question in Glasby was

not whether a person who suffered no loss could sue for damages but

whether a mere "technical" violation of the VCPA was a sufficient

violation to support the award of attorneys fees. See id. at 297. In fact,

the Virginia Supreme Court specifically avoided the question whether

attorneys fees could be awarded when there are no actual damages

awarded. See id. at 297 n.4. Because Glasby does not directly address

the question whether someone who cannot show that they suffered

loss can initiate a suit for damages under the VCPA, we cannot overlook the plain language of section 59.1-204, which clearly precludes

Alston from filing suit.

CONCLUSION

For the reasons above, we conclude that the district court did not

err when it granted Crown Auto's motion for summary judgment on

Alston's TILA and state law claims.

AFFIRMED

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