Court Opinion

ID: 38454
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:08:31+00
Date Added: 2024-06-11T17:15:59.852897
License: Public Domain

United States Court of Appeals
                                                                   Fifth Circuit
                                                                  F I L E D
                      UNITED STATES COURT OF APPEALS
                           FOR THE FIFTH CIRCUIT                    May 23, 2005

                         _______________________               Charles R. Fulbruge III
                                                                       Clerk
                            Cause No. 04-31120
                             Summary Calendar
                         _______________________

                           MARYLENA BROWN,
         on behalf of herself and others similarly situated,

                                                   Plaintiff-Appellant.
                                   versus

                  PROTECTIVE LIFE INSURANCE COMPANY,

                                                    Defendant-Appellee.

             Appeal from the United States District Court
                 for the Eastern District of Louisiana
                       Civil Action No. 04-1132-S

Before JONES, BARKSDALE, and PRADO, Circuit Judges.

PER CURIAM:*

            This is an appeal from the district court’s grant of

Protective     Life   Insurance   Company’s   (“Protective”)     motion    to

dismiss for failure to state a claim.           For the reasons stated

below, we AFFIRM.

            In 1996, Marylena Brown and her now-deceased husband

bought a vehicle from Banner of New Orleans Inc. (“Banner”).               To

finance the purchase, the Browns entered into a retail installment

contract (“RIC”) and purchased credit life insurance underwritten

     *
                Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
by Protective.      The Browns financed their vehicle purchase using a

pre-computed loan1 in the amount of $23,612.58, $1,876.70 of which

was   paid     to   Protective    for   credit    life   insurance.2        Soon

thereafter, Banner assigned the RIC to Crescent Bank & Trust

(“Crescent Bank”), to which the Browns agreed.             R. 310.     Upon the

death of Brown’s husband, Protective paid the outstanding loan

amount to Crescent Bank.         Pursuant to a related suit, Brown later

received excess benefits for coverage of unearned interest.

              The instant suit is the fourth attempt of Brown’s counsel

to allege claims under the Louisiana Motor Vehicle Sales Finance

Act (“LMVSFA”), La. R.S. 6:951, et seq., against Protective.3                The

gravamen of Brown’s complaint is that Protective sold her (and her

deceased husband) excessive credit life insurance in relation to

her purchase and financing of a vehicle in 1996.            She contends that

the amount of coverage exceeded the finance amount and included

      1
              “A precomputed consumer credit transaction means a consumer credit
transaction   under which loan finance charges or credit service charges are
computed in    advance over the entire scheduled term of the transaction and
capitalized   into the face amount of the debtor’s promissory note or other
evidence of   indebtedness.” LA. R.S. 9:3516(25).
      2
            Under the credit life insurance policy, Protective agreed to pay off
all outstanding amounts due under the RIC to the beneficiary upon the death of
the insured.
      3
             See Young v. Ray Brandt Dodge, Inc., 176 F.R.D. 230 (E.D. La. 1997)
(denying counsel’s attempt to certify a class action against motor vehicle
dealers and credit insurers, including Protective for violation of the LMVSFA and
RICO); Young v. Ray Brandt Dodge, Inc., No. 96-1560 (E.D. La. Dec. 18, 1997)
(same); Dixon v. Ford Motor Credit Co., 137 F. Supp. 2d 702 (E.D. La. 2000)
(dismissing RICO claims with prejudice and dismissing LMVSFA claims without
prejudice for want of jurisdiction), aff’d, 252 F.3d 1356 (5th Cir.), cert.
denied, 122 S. Ct. 349 (2001); Brown v. Protective Life, et al., 02-0018 (E.D.
La. Nov. 22, 2002), aff’d, 353 F.3d 405 (5th Cir. 2003) (same).

                                        2
coverage for unearned interest for the term of the RIC in violation

of the LMVSFA.

            Granting Protective’s motion to dismiss for failure to

state a claim, the district court found that the LMVSFA, which

pertains to the sale and financing of motor vehicles, does not

provide a     cause   of   action    against    insurance    companies.    The

district court also dismissed Brown’s state law tort claims for

tortious conduct and fraud under LA. REV. STAT. 22:1220, as well as

her contract claims under LA. REV. STAT. 22:658.            The district court

did not expressly dismiss Brown’s unjust enrichment claim in its

written Order and Reasons, but entered judgment dismissing Brown’s

case in its entirety.        Brown’s appeal concerns only the LMVSFA

claims and her unjust enrichment claim.

            This court reviews a district court’s grant of a Rule

12(b)(6) motion to dismiss de novo, applying the same standards as

that court.     Cornish v. Correctional Serv. Corp., 402 F.3d 545,

548-49 (5th Cir. 2005).

            First we hold that, directed solely to the sale and

financing of motor vehicles and defining the legal relationship of

the “Retail Buyer” and “Retail Seller,” the LMVSFA does not provide

a cause of action against insurance companies like Protective.

Textually,     Protective     does     not     come   within    any   of   the

financier/seller-related definitions under a plain reading of the

                                       3
LMVSFA.4   Under the LMVSFA, a “Retail Seller or Seller” is defined

as:

      a person who sells a motor vehicle to a retail buyer or
      a person who lends money to a retail buyer subject to a
      retail installment contract.

LA. R.S. 6:951(3) (emphasis added).           Protective did not “sell” a

vehicle to the Browns; Banner was the dealer-seller.                   Nor did

Protective “lend[] money” to the Browns for the purchase of the

vehicle.    As explicitly stated in the RIC:

      Dealer/Creditor: Banner of N.O. Inc.
      I have entered into a credit sale with you to finance the
      purchase of the following motor vehicle.

R. 310 (emphasis added).         Under the LMVSFA, as mirrored by the

terms of the contract, Brown entered into the credit sale agreement

to finance the vehicle purchase with Banner, making Banner (and

later Crescent Bank) Brown’s exclusive lender and creditor.

            That Protective paid the policy proceeds directly to

Crescent    Bank   does    not   change    the   explicit     creditor-debtor

relationship between Brown and Banner/Crescent Bank. Defeating her

own argument that this particular payment of proceeds brings

Protective within the purview of the LMVSFA, Brown repeatedly

recognizes that credit insurance is intended to inure to the

benefit of the creditor. Thus, Protective, as a policy provider of

      4
            Brown’s transaction is covered by the version of the LMVSFA
operative at the time of her purchase in 1996, LA. R.S. 6:951, et seq. The
statute was revised in 1999, LA. R.S. 6:969.33G, et seq., to permit recovery only
against the “extender of credit.”

                                       4
credit life insurance, properly paid the policy proceeds to the

creditor — Crescent Bank.5

            Further, Protective does not qualify as a “Sales Finance

Company” under the LMVSFA.

            As provided by the LMVSFA, a “Sales Finance Company” is:

      a person engaged, in whole or in part, in the business of
      purchasing retail installment contracts from one or more
      retail sellers or in the business of lending money on
      promissory notes . . . .

LA. R.S. 6:951(9) (emphasis added).         Not only does Protective not

qualify as a purchaser (as does Crescent Bank) or lender (as does

Banner) under the LMVSFA, but Protective’s insurance agreement with

Brown is expressly excluded from the “Sales Finance Company”

definition which excludes “the pledge of an aggregate number of

such contracts to secure a bonafide loan thereon . . . .”              Id.

            The fact that Protective’s insurance agreement was part

of or connected to Brown’s RIC does not convert Protective into a

sales finance company under the LMVSFA.           The terms of the LMVSFA

simply do not permit its extension to companies providing insurance

premiums financed “as part of the same retail installment contract

which financed the vehicle.” R. 87, 342. Protective’s underwriting

occurred apart from the transactions that established the legal

relationships    between    Brown,   Banner/Crescent      Bank   —   the   only

relationships referred to in the LMVSFA.            Perhaps it would be a

      5
            Moreover, Protective’s payment to Crescent Bank has the same effect
as if it had paid Brown, the beneficiary, directly because she would have
obligated to pay the balance owed to Crescent Bank, the holder of the RIC.

                                      5
different matter if Protective were both the insurer and the loan

creditor, but where, as here, Protective’s function as an insurer

is   distinct     from   Banner’s    and   Crescent      Bank’s    function   as

creditors, there is no basis for imposing creditor-liability on the

party     whose   actions   fall    squarely    within     the    “business   of

insurance.”6

             Moreover, Protective does not qualify as a “holder” of a

retail installment contract, which the LMVSFA defines as:

      the retail seller under or subject to the contract or
      another assignee entitled to enforce a retail installment
      contract against the buyer.

LA. R.S. 6:951(10).      Here, Protective is neither a “retail seller

under or subject to” the RIC.         Rather, as the assignee, Crescent

Bank was the “holder” entitled to enforce the RIC.                That being so,

Protective was also not amenable to the LMVSFA’s penalty provision,

which provides that:

      Any seller or holder, willfully violating R.S. 956 or
      R.S. 957, shall be barred from recovery of finance
      charges, delinquency or collection charge on the
      contract.

LA. R.S. 6:960(B) (emphasis added).            Thus, no textual reading of

the LMVSFA supports the conclusion that an insurance company in

      6
            See Perry v. Fidelity Union Life Ins. Co., 606 F.2d 468, 470 (5th
Cir. 1979) (stating that “[w]hen an insurance company offers premium financing
as an inducement for persons to purchase policies, it plays two distinct roles
in its relationship with the purchaser. On the one hand, the company is an
insurer, the purchaser an insured; but on the other hand, the company is a
creditor, the purchaser a debtor. The former relationship constitutes the
business of insurance, while the latter does not.”) (internal marks and citation
omitted); Cody v. Comm. Loan Corp. of Richmond Cty., 606 F.2d 499, 503 (5th Cir.
1979) (discussing Perry’s distinction between the ancillary lending activities
of an insurance company and its provision of insurance).

                                       6
Protective’s    position     constitutes     a   “seller,”   “sales   finance

company,” or “holder” thereunder.

            Nor is Protective vicariously liable under the LMVSFA,

LA. R.S. 6:950, et seq.            The language of the statute does not

support the conclusion that Banner was Protective’s licensing agent

for lending purposes.       To the contrary, Banner (and later Crescent

Bank) was Brown’s express lender-creditor. Banner did not sell the

vehicle, lend money to finance the vehicle, or assign the RIC used

to finance the vehicle on behalf of Protective.              Brown offers no

facts that could demonstrate that Banner and Protective had an

agency relationship that would render Protective liable under the

LMVSFA.

            Because the LMVSFA makes no reference to and contains no

definitional     provision    that     covers    an   insurance   company    in

Protective’s position, the statute, as the district court correctly

concluded, does not cover companies that provide credit life

insurance in relation to a vehicle financing contract.7

            Finally, we reject Brown’s contention that the district

court’s   dismissal    of    her    unjust   enrichment   claim   (which    she

intertwined with other claims in her complaint) must be reversed.

Contrary to Brown’s representations, the district court took notice

of the claim in its opinion, see R. 85, and, at the least,

      7
            Brown’s counsel made a certified admission that the LMVSFA does not
apply to Protective, specifically arguing that LA. R.S. 6:960B, the penalty
provision, may only be imposed against sellers and holders of RICs to the
exclusion of insurance companies like Protective. R. 305-08.

                                        7
Protective addressed and refuted the claim at a motions hearing,

see R. Vol. 2 at 18.     That the district court’s written reasons

lack delineation does not mean that the claim was inadequately

addressed or resolved.    If any inference is made, it is that the

district court’s written findings, when supported by the record,

are consistent with its general holding and dismissal order.          See

First Nat. Bank of Denham Springs v. Indep. Fire. Ins. Co., 934

F.2d 73, 76 (5th Cir. 1991).

          For   these   reasons,   we   AFFIRM   the   district   court’s

judgment dismissing Brown’s case for failure to state a claim.

          AFFIRMED.

                                   8