FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

SEPT 16, 2008

THOMAS K. KAHN

CLERK

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 08-12197

Non-Argument Calendar

________________________

D. C. Docket No. 07-00233-CV-W-E

BKCY No. 06-80646

In Re: BERNICE GUNN,

Debtor.

__________________________________________________________________

BERNICE GUNN, 

Plaintiff-Appellant, 

versus 

TITLE MAX OF ALABAMA, INC.,

d.b.a Title Max of Alexander City #1, 

Defendant-Appellee. 

________________________

Appeal from the United States District Court

for the Middle District of Alabama

_________________________

(September 16, 2008)
2

Before BIRCH, DUBINA and CARNES, Circuit Judges.

PER CURIAM:

Bernice Gunn appeals the district court’s judgment affirming the bankruptcy

court’s Fed. R. Civ. P. 12(b)(6) dismissal of both counts of her adversary

complaint against TitleMax of Alabama, Inc. We affirm. 

I. 

In October 2005 Gunn received a loan of $500.00 from TitleMax and

pledged the title to her car as a security. Gunn received a four-page Pawn Ticket

that contained required federal and state disclosures. It also stated that the pledger

could, by paying a “pawnshop charge” instead of any loan principal, create

deferral periods in which TitleMax would continue to hold the security and delay

the loan’s due date for thirty more days. Repayment of the loan, in the amount of

$579.95, was due on November 21, 2005. 

Between November 2005 and July 2006 there were a number of transactions

during which Gunn paid interest in the form of monthly pawnshop charges and,

apparently, some of the principal but not all of it. On July 21, 2006 Gunn paid

TitleMax interest in the amount of $63.93, and received a Customer Receipt

showing that on August 21, 2006 she would owe $399.82 plus another interest

payment in the amount of $63.93. The Customer Receipt contained no federal
 These documents are properly before us because Gunn incorporated them into her 1

complaint. See Bickley v. Caremark RX, Inc., 461 F.3d 1325, 1329 n.7 (11th Cir. 2006) (“where

the plaintiff refers to certain documents in the complaint and those documents are central to the

plaintiff’s claim, then the Court may consider the documents part of the pleading for purposes of

Rule 12(b)(6) dismissal.”) (quotation marks omitted). 

3

Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., disclosures, but stated: 

“You are only required to pay the Interest Due amount in order to extend or renew

the Pawn Ticket.” 

Gunn filed a Chapter 13 bankruptcy petition in August 2006. TitleMax then

made a claim in her bankruptcy case, asking for $463.75 and listing Gunn’s car as

collateral. Gunn responded by filing a two-count adversary complaint against

TitleMax. Count 1 alleged that each of the monthly transactions between Gunn

and TitleMax was a “Subsequent Loan Agreement” requiring new TILA

disclosures. Count 2 asked the court to recognize that TitleMax’s claim for

$463.75 was independent of the original $500.00 pawn and thus unsecured. Gunn

attached her original Pawn Ticket and her July 2006 Customer Receipt as Exhibits

B and C to the complaint.

1

TitleMax filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6),

contending that the monthly transactions between November 2005 and July 2006

were merely extensions of the original pawn agreement and thus did not require

TILA disclosures. The bankruptcy court granted TitleMax’s motion, dismissing
4

Gunn’s complaint with prejudice. The district court affirmed. Gunn timely filed a

notice of appeal to this Court. 

II. 

We review de novo the legal conclusions of the bankruptcy court. Asbestos

Settlement Trust v. City of New York (In re Celotex Corp.), 487 F.3d 1320, 1328

(11th Cir. 2007). In deciding a motion to dismiss for failure to state a claim, this

Court accepts the factual allegations in the plaintiff’s complaint and construes

them in the light most favorable to her. Young Apartments, Inc. v. Town of

Jupiter, 529 F.3d 1027, 1037 (11th Cir. 2008). However, the plaintiff’s “factual

allegations must be enough to raise a right to relief above the speculative level.”

Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S. Ct. 1955, 1965 (2007). 

This Court is “not bound to accept as true a legal conclusion couched as a factual

allegation.” Id. (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932,

2944 (1986)).

III.

Gunn contends that TitleMax violated TILA’s disclosure requirements in

connection with their July 21, 2006 transaction. TILA requires meaningful

disclosures to customers in consumer credit transactions, and in closed-end

transactions like the ones between Gunn and TitleMax, the disclosures must be
5

given before credit is extended. 15 U.S.C. § 1601(a); 15 U.S.C. § 1638(b)(1); 12

C.F.R. § 226.18. The Federal Reserve Board has promulgated Regulation Z, 12

C.F.R. § 226.1(a), to implement TILA. It has also issued Official Staff

Interpretations of Regulation Z, and the Supreme Court has instructed that these

interpretations be dispositive unless they are “demonstrably irrational.” Ford

Motor Credit Co. v. Milhollin, 444 U.S. 555, 565 (1980). Neither party disputes

the applicability or rationality of Regulation Z and its Official Staff

Interpretations.

It is undisputed that “a refinancing is a new transaction requiring new

disclosures to the consumer,” Regulation Z, 12 C.F.R. § 226.20(a), but that a mere

extension of an earlier deal, even if the terms change, does not trigger new

disclosure requirements. 12 C.F.R. Pt. 226, Supp. I at § 226.20 (“Redisclosure is

no longer required for deferrals or extensions.”). Gunn labels the July 2006

transaction a “refinancing” of her November 2005 pawn. TitleMax labels the

transaction a mere extension of the original pawn agreement.

Gunn’s argument fails because it relies on two cases that were decided

under an earlier, much friendlier set of regulations than those that existed in 2006

and on a contorted interpretation of the Alabama Pawnshop Act, Ala. Code §

5–19A–1 et seq. 
6

Gunn relies primarily on Dennis v. Handley, 453 F. Supp. 833 (N.D. Ala.

1978), and on Chapes, Ltd. v. Anderson (In re Scaife), 825 F.2d 357 (11th Cir.

1987). Both cases involved diamond rings that were pawned. In both cases,

further transactions repeatedly extended the pawns. Both courts, applying a pre1982 version of Regulation Z, found that extensions of existing pawn agreements

were refinancings and thus did require TILA disclosures. Dennis, 453 F. Supp. at

835; In re Scaife, 825 F.2d at 361. However, more than twenty years before the

transactions between Gunn and TitleMax occurred in 2005 and 2006, the Federal

Reserve Board created a new version of Regulation Z, which became mandatory in

October 1982. Compare 12 C.F.R. § 226.8(j) (1981) with 12 C.F.R. § 226.20

(2006).

The Official Staff Interpretation of the current Regulation Z states: “1981

changes: While the previous regulation treated virtually any change in terms as a

refinancing requiring new disclosures, this regulation limits refinancings to

transactions in which the entire original obligation is extinguished and replaced by

a new one. Redisclosure is no longer required for deferrals or extensions.” 12

C.F.R. Pt. 226, Supp. I at § 226.20. Thus, the law has changed in a pivotal way

since Dennis and Scaife, and the amended Regulation Z significantly narrows the

field of transactions that qualify as “refinancing.”
7

The current regulations define “refinancing” as “when an existing

obligation. . . is satisfied and replaced by a new obligation.” 12 C.F.R. §

226.20(a). The Official Staff Interpretations of the regulation note that: 

[W]hether a refinancing has occurred is determined by reference to whether

the original obligation has been satisfied or extinguished and replaced by a

new obligation.... Changes in the terms of an existing obligation, such as the

deferral of individual installments, will not constitute a refinancing unless

accomplished by the cancellation of that obligation and the substitution of a

new obligation. 

12 C.F.R. Pt. 226, Supp. I at § 226.20. Gunn contends that her original pawn was

“cancelled” or “extinguished” within the meaning of 12 C.F.R. § 226.20 and its

Official Staff Interpretation by the Alabama Pawnshop Act. Gunn argues that the

Alabama Pawnshop Act cancelled her original November 2005 pawn because, in

her view, the law “does not make any provision whatsoever for the renewal or

extension of the maturity date of the pawn transaction.” However, Gunn’s focus is

misplaced. The provisions that she cites limit the amount of permissible

pawnshop charges to 25 percent of the principal per month and grant the pledger

thirty days’ grace period beyond the original maturity date in which to redeem her

pawn. See Ala. Code §§ 5–19A–6; 5–19A–10(b); 5– 19A–7(a). None of these

sections of the Alabama Pawnshop Act prohibit pledgers and pawnbrokers from

agreeing to extensions of the original maturity date. In fact, both the original
8

Pawn Ticket given to Gunn in October 2005 and the Customer Receipt she

received in July 2006 clearly provide for extensions of the original loan. 

The $579.95 that Gunn owed TitleMax was neither “satisfied and replaced”

nor cancelled. Gunn’s Customer Receipt, received in July 2006, gives no

indication that TitleMax ever loaned Gunn any money beyond the $500.00 it had

given her in October 2005, and Gunn does not claim otherwise. Neither party

alleges that Gunn ever entirely paid the $579.95 that she owed TitleMax in

November 2005, either on her own or with refinancing assistance from TitleMax. 

Further, the receipt is divided into two categories, “Today’s Payment

Details” and “Next Payment Information.” It designates $399.82 as the “Principal

Due” in August and refers to the possibility of extending or renewing the original

Pawn Ticket. The only logical reading of the July 2006 Customer Receipt is that

the “Principal Due” of $399.82 reflects the remaining principal due from the

original loan. The Customer Receipt is not an inadequate new pawn ticket, but

instead a receipt showing that Gunn made a monthly interest payment of $63.93

and that she owed another interest payment the next month. All of this relates to

the original loan.
9

There was no satisfaction and replacement nor cancellation, and thus no

“refinancing” under TILA. No further disclosures were required. See Regulation

Z, 12 C.F.R. § 220(a). Accordingly, the facts that Gunn has pleaded do not state a

claim under TILA, and the district court properly granted TitleMax’s Rule

12(b)(6) motion to dismiss. 

IV.

Gunn contends that because the Alabama Pawnshop Act allegedly cancelled

the October 2005 pawn of her car, TitleMax’s lien on her vehicle was extinguished

and their July 2006 transaction was unsecured. 

However, the Alabama Pawnshop Act does not prohibit extensions or

renewals of an initial maturity date, and the Pawn Ticket and Customer Receipt

both allow for such extensions. Because we have concluded that the initial

$500.00 pawn was merely extended, not satisfied and replaced nor cancelled,

TitleMax’s initial lien on Gunn’s vehicle remains valid. Ala. Code § 5–19A–10(a)

(“A pawnbroker shall have a lien on the pledged goods for the money advanced

and the pawnshop charge owed.”). 

AFFIRMED.