Opinion ID: 1060695
Heading Depth: 2
Heading Rank: 3

Heading: Second Certified Question: Exclusive Remedy

Text: With respect to the second certified question, we begin our analysis with Tenn. Code Ann. § 45-5-404 (1993 Repl.), which is a part of the Loan and Thrift Act. This statute provides as follows: Remedies of borrowersDefensesLimitations of actions. The remedies of borrowers, the limitations on actions of borrowers, the defenses available to borrowers and to registrants, and the procedures applicable to such actions with respect to interest and loan charges under this chapter shall be those as prescribed by the general statute pertaining to interest and other charges by lenders and creditors. (Emphasis added). The general statute pertaining to interest and other charges by lenders or creditors referred to above is Chapter 14 of Title 47 of Tennessee Code Annotated, which is entitled Interest Rates Generally. Like the Loan and Thrift Act, this legislation was also adopted as part of the reform package in 1979. See 1979 Tenn. Pub. Acts 203; Pacific E. Corp., 902 S.W.2d at 954 n. 12. Therefore, the statutes enacted in 1979, including the Loan and Thrift Act and the general statute relating to interest, created new rights and remedies for borrowers with respect to interest rates above ten percent annually and fixed uniform service charges. In determining whether these statutes provide the exclusive remedies for borrowers, we are guided by our decision in Hodges v. S.C. Toof & Co., 833 S.W.2d 896, 899 (Tenn.1992), in which we stated: [i]f a statute creates a new right and prescribes a remedy for its enforcement, then the prescribed remedy is exclusive. Turner v. Harris, 198 Tenn. 654, 664, 281 S.W.2d 661, 665 (1955); Nashville & C.R.R. v. Sprayberry, 56 Tenn. 852, 854 (1874). However, where a common law right exists, and a statutory remedy is subsequently created, the statutory remedy is cumulative unless expressly stated otherwise ... Further, the Legislature is presumed to know the state of the law on the subject under consideration at the time it enacts legislation. (Citations omitted). We determined in Hodges that the 1986 statute creating a remedy for retaliatory discharge was not the exclusive remedy because the right to a retaliatory discharge cause of action had been previously recognized by this Court in 1984. Applying the rationale of Hodges to the facts in this case, we conclude that the remedies prescribed by the general statute pertaining to interest and other charges by lenders, Tenn.Code Ann. §§ 47-14-101 et seq., constitute the exclusive remedies for borrowers with respect to interest and loan charges under the Loan and Thrift Act. Our conclusion is grounded upon the fact that the statutes creating both the right and the remedies were enacted in 1979 as part of the reform package. Moreover, the clear language of the statute indicates that the remedies are exclusive. The statute provides that [t]he remedies of borrowers ... with respect to interest and loan charges under this chapter shall be those as prescribed by the general statute pertaining to interest and other charges by lenders or creditors.  Tenn.Code Ann. § 45-5-404 (1993 Repl.). The plaintiffs' reliance on our decision in Myint v. Allstate Ins. Co., 970 S.W.2d 920 (Tenn.1998), is misplaced. In Myint , we concluded that a statute [3] which allowed imposition of a twenty-five percent penalty for a bad faith refusal to pay a loss claim under an insurance contract was not the exclusive remedy for such a violation and that the remedies of the Tennessee Consumer Protection Act also could be applied in such a situation. Myint is distinguishable from the circumstances in this case. For example, a right of action existed at common law for breach of contract, including breach of an insurance contract, long before the enactment of the bad faith statute. In contrast, rights and remedies with respect to fixed uniform loan charges and interest rates in excess of ten percent were created by the General Assembly in the same year. In addition, Myint was based partially on a provision of the Tennessee Consumer Protection Act, which provides in pertinent part as follows: The powers and remedies provided in this part shall be cumulative and supplementary to all of the powers otherwise provided by law. The invocation of one power or remedy herein shall not be construed as excluding or prohibiting the use of any other available remedy. Tenn.Code Ann. § 47-18-112 (1995 Repl.). Though we stated in Myint that, [e]ven when a different code section applies and is invoked to obtain relief, the Consumer Protection Act may also apply, assuming the act or practice in question falls within the scope of its application, Myint, 970 S.W.2d at 926, we did not intend to imply that the remedies of the Tennessee Consumer Protection Act apply in every circumstance. Where, as here, another remedy has been deemed exclusive, the remedies afforded by the Tennessee Consumer Protection Act do not apply. Available remedies under the general statute pertaining to interest include making usury a defense to an action to collect a loan and recovering usurious payments that have been made. Tenn.Code Ann. §§ 47-14-110, -111 (1995 Repl.). In addition, it is possible to recover loan charges that are in excess of those permitted by the Loan and Thrift Act. Tenn.Code Ann. § 47-14-114 (1995 Repl.). The following statutory provisions afford equitable remedies relating to the imposition of excess interest: No person shall be entitled to an equitable remedy with respect to usury or excess loan charges unless the person seeking such remedy does equity by paying, or tendering into court, the principal plus lawful interest and loan charges then due; provided, that any contract may be reformed by suit brought in equity with respect to any regulated loan charges, brokerage commissions, or commitment fees in excess of those authorized by law upon cost bond or, in appropriate cases, on pauper's oath. Where successful in the reformation of the instrument, the complaining party shall be rewarded reasonable attorneys' fees. Tenn.Code Ann. § 47-14-115(b) and (c) (1995 Repl.). When there is a deliberate violation of the provisions of the Loan and Thrift Act regarding interest and loan charges, the following remedies are provided by the statute: Where, however, the court finds that the lender or creditor has been guilty of unconscionable conduct in a transaction by taking interest, loan charges, commitment fees, or brokerage commissions in excess of the limitations fixed by statute, that lender or creditor shall not be entitled to recover any interest, loan charges or commitment fees or brokerage commissions with respect to that transaction and shall be required to refund to the borrower or debtor any loan charges, commitment fees, or brokerage commissions, and twice the amount of any interest collected with respect to that transaction, and the borrower shall be entitled to recover reasonable attorneys' fees from the lender. As used in this subsection, `unconscionable conduct' includes, but is not limited to, any calculated violation of statutory limitations on interest, loan charges, commitment fees or brokerage commissions with full awareness of those limitations. Tenn.Code Ann. § 47-14-117(c) (1995 Repl.). Our holding that these remedies are exclusive with respect to interest and loan charges under the Loan and Thrift Act does not mean that registrants are not, under any circumstances, subject to the provisions of the Tennessee Consumer Protection Act. We decline to adopt a broad exemption. Each case must be examined on its own facts. See Pursell v. First American Nat'l Bank, 937 S.W.2d 838, 842 (Tenn.1996) (holding that a bank's actions with regard to repossession of collateral did not fall within the Tennessee Consumer Protection Act, but declining to establish a general banking exemption from the Tennessee Consumer Protection Act); see also, Turner v. E-Z Check Cashing, 35 F.Supp.2d 1042 (M.D.Tenn.1999). In conclusion, with respect to the second certified question, we hold that the remedies prescribed by Tenn.Code Ann. §§ 47-14-101, et seq. are the exclusive remedies of borrowers with respect to a violation of the limitations on loan charges and interest rates that are imposed by the Industrial Loan and Thrift Companies Act.