Opinion ID: 3151871
Heading Depth: 3
Heading Rank: 3

Heading: Effect of Procedural Compliance

Text: Having found that the class action lawsuit was proper, we hold that Hendrick was not entitled to judgment as a matter of law simply because the Department accepted Hendrick's closing fee registration form. Essentially, Hendrick contends its procedural compliance with the Closing Fee Statute, as interpreted by the Department and this Court in Fanning,14 effectively absolved it from any liability via the Filed Rate Doctrine,15 the Good Faith Error Defense,16 and the Safe Harbor Defense.17 Freeman does not dispute that Hendrick complied with the procedural requirements of the Closing Fee Statute.18 However, meeting these procedural 14 See Fanning v. Fritz's Pontiac-Cadillac-Buick, Inc., 322 S.C. 399, 472 S.E.2d 242 (1996) (holding, in a case pre-dating the Closing Fee Statute, Procurement Fee was not an unauthorized fee or unconscionable under the SCCPC but, rather, was an element of the negotiated price of the vehicle). 15 See Edge v. State Farm Mut. Auto. Ins. Co., 366 S.C. 511, 517, 623 S.E.2d 387, 391 (2005) (The filed rate doctrine stands for the proposition that because an administrative agency is vested with the authority to determine what rate is just and reasonable, courts should not adjudicate what a reasonable rate might be in a collateral lawsuit. (citation omitted)). 16 S.C. Code Ann. § 37-5-202(7) (2015) (A creditor may not be held liable in an action brought under this section for a violation of this title if the creditor shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. (emphasis added)). 17 S.C. Code Ann. § 37-6-506(3) (2015) (No provision of this title or of any statute to which this title refers which imposes any penalty on any creditor shall apply to any act done, or omitted to be done, in conformity with any rule or regulation so adopted, amended or repealed or in conformity with any written order, opinion, interpretation or statement of the Commission or of the administrator, notwithstanding that such rule, regulation, order, opinion, interpretation or statement may, after such act or omission, be amended, or rescinded or be determined by judicial or other authority to be erroneous or invalid for any reason.); see id. § 37-6-104(4) (Except for refund of an excess charge, no liability is imposed under this title for an act done or omitted in conformity with a rule of the administrator notwithstanding that after the act or omission the rule may be amended or repealed or be determined by judicial or other authority to be invalid for any reason.). requirements only entitled Hendrick to charge a closing fee. As testified by Danny Collins, the Department neither determines the amount of the fee nor reviews the dealer's financial records to evaluate how the amount was calculated. Notably, Collins stated that [i]t's pretty much just a registration. Moreover, the Closing Fee Statute does not require a dealer to inform the Department of the amount of its closing fee nor does it empower the Department to approve or disapprove the amount of a closing fee. Rather, as acknowledged by Collins, the Department is simply charged with the day-to-day enforcement of the procedural portions of the Closing Fee Statute. Because the Department is not vested with the authority to determine a reasonable closing fee, the Filed Rate Doctrine does not apply to bar Freeman's claim. Additionally, Hendrick does not claim that it made a bona fide error in calculating the amount of the closing fee. Furthermore, neither the Good Faith Error Defense nor the Safe Harbor Defense, codified at sections 37-5-202(7) and 37-6-506(3) respectively, provides Hendrick immunity from liability as these code sections only apply to consumer credit transactions brought under Title 37 of the SCCPC. Here, Freeman brought this action pursuant to section 56-15-40 of the Dealers Act and not under the SCCPC. Although procedural compliance with the Closing Fee Statute enabled Hendrick to charge a closing fee, it was still required to accurately assess the amount of the fee charged because, as noted in Fanning, these fees may be attacked on grounds such as claims for fraud, misrepresentation or unfair trade practices. Fanning, 322 S.C. at 404 n.8, 472 S.E.2d at 245 n.8.