Court Opinion

ID: 9690991
Source: CourtListenerOpinion
Date Created: 2023-08-24 19:59:28.548468+00
Date Added: 2024-06-11T09:11:00.672969
License: Public Domain

Tom Glaze, Justice, dissenting. I disagree that this is a proper class under Ark. R. Civ. P. 23. The majority correctly posits that, as a general rule, a claim for usury is determined when the “contract [is] entered into.” Ark. Const, art. 19, § 13; see also General Contract Corp. v. Duke, 223 Ark. 938, 270 S.W.2d 918 (1954) (“our cases hold that the transaction is to be judged at the time the contract is entered into, and not thereafter.”). The majority, however, mistakenly assumes that the face of the contract alone is all the evidence that is required to determine whether a usurious rate was charged at the time the contract was entered into. I find no case law to suggest this proposition. In fact, Arkansas case law indicates that, in order to determine whether a rate is usurious, the language in the contract must be read in context ofits stated terms and how allocation of payments were made pursuant to the note. See Cooprider v. Security Bank, 319 Ark. 75, 77, 890 S.W.2d 240, 242 (1994). In Cooprider, supra, this court stated: The chancellor found the renewal note usurious because the terms of the loan agreement itself were usurious. Appellants rely on Dillon v. Resolution Trust Corp., 306 Ark. 173, 811 S.W.2d 765 (1991). In Dillon, we said the test of whether the note is usurious is judged as of the time the note was made. Appellants earnestly insist that language must govern in this case. But, as always, it must be read in context, and in Dillon it is clear that by both the terns of the note and the allocation of payments made pursuant to the note, a usurious rate of interest was being collected from the borrower. That did not occur in this case. Id. (emphasis added). Stated simply, there is nothing in our case law or in article 19, section 13 that requires the examining court to only look at the face of the contract alone in determining whether a usurious interest rate was “charged.” Here, at the time the contract was entered into, the contract did reflect an APR rate that was facially usurious. However, evidence presented to the circuit court also indicated that, in a “retail installment contract with pre-computed interest,” like the contract that Harris entered into in this case, the amount of interest “reflected” on the face of the agreement, at the time the contract was formed, might not indicate the actual amount of interest “charged.” Paula McMahan, an employee of Johnson’s who was responsible for setting the in-house interest rate on the corporate computer system, testified to the following before the circuit court: Counsel: Do you know of any difference between what the APR rate shown on the contract is, is there any difference between the percentage of APR and the percentage of interest that’s charged interest rate that’s charged on any contract? Ms. McMahan: Yes, that’s what I was telling you before. Previously, Ms. McMahan had attested that the APR rate provided on the face of the “installment contract with pre-computed interest” was merely an estimate of the amount to be charged at the time the contract was entered into, and not the actual amount “charged.” Tom Garrison, an employee of the Computer Services Company, corroborated Ms. McMahan’s testimony that the “stated” interest on the contract was only an estimate of the amount to be charged at the time the contract was entered into, and the actual amount “charged” often varied. In other words, evidence before the circuit court reflected that the amount “charged” at the time of the contract could not be determined solely from the face of the purchase agreement, and that analysis is consistent with our case law.1 By the majority’s holding, our judicial hands are forever tied to the contract terms, never being permitted to consider anything beyond the face of the agreement. The superiority requirement contained in Ark. R. Civ. P. 23(b) states that a class action may be maintained if the action is “superior to other available methods for the fair and efficient adjudication of the controversy.” The superiority requirement for class certification will be satisfied if class certification is the more “efficient” way of handling the case, and it is fair to both sides. Fraley v. Williams Ford Tractor & Equip., 339 Ark. 322, 333, 5 S.W.3d 423, 430 (1999); see also Alba Conte & Herbert Newberg, Newberg on Class Actions § 4:27 (4th ed. 2002). Given this potential discrepancy between the actual interest stated and the interest ultimately charged, the circuit court would be required, with respect to every individual class member, to determine the difference between the “stated” interest rate and “charged” interest. Stated simply, the circuit court would have to perform a mathematical analysis on each and every purchase agreement in order to determine whether the interest charged was usurious. Thus, proceeding as a class action would not be an “efficient” method of handling this case. See Williamson v. Sanofi Winthrop Pharm., 347 Ark. 89, 101, 60 S.W.3d 428, 436 (2001) (because the trial court would have to hear each class member’s testimony regarding his or her understanding about which paperwork applied, as well as consider all of the evidence from each plaintiff regarding whether he or she agreed to a contract, a class action could not be superior method of handling the case). Despite the majority’s contention otherwise, our analysis does not require delving into the merits; in other words, it does not require determining what the class members ultimately will pay or have paid in interest. Rather, what the majority fails to require, and what the law does require, is that the terms of the contract be examined to reveal whether the contract obligates the borrower to pay a rate in violation of the usury provision of the constitution. The question of what the borrower is obligated to pay is not answered by looking at the face of the contract as the majority concludes. Because I would reverse on the superiority requirement, I respectfully dissent. Hannah, C.J., joins.   Harris’s own expert, Andy Terry, Ph.D., also testified regarding the APR stated on the purchase agreement. In essence, Dr. Terry’s testimony that one must “assumfe] that the customers make payments according to the contract” compels a conclusion that the stated interest rate is merely an estimate and is not necessarily equivalent to the amount “charged.”