ST. LOUIS (Legal Newsline) – Two Missouri residents have filed suit against a litigation finance company in the U.S. District Court in the Eastern District of Missouri on April 17 over claims the defendant charged exorbitant interest rates.
The plaintiffs in the class action case are Ronald Wright and Jeremy Smith and the defendant is Oasis Legal Finance Operating Co. LLC. Similar lawsuits have been filed in Georgia and Florida, and plaintiffs in Georgia were rebuffed by that state's supreme court.
According to the new complaint, Wright was injured in an accident in 2016 and hired an attorney. He allegedly encountered troubles paying his debts and decided to negotiate with Oasis. He eventually signed a loan agreement and promissory note (LAPN) with Oasis for a principal amount of $1,100 in December 2016, the suit states.
Smith alleged he was injured in an accident in 2015 and also retained an attorney. He signed LAPNs for $1,075 and $2,100 with Oasis in 2016, the suit states.
The plaintiffs allege the loans had a more than 100 percent annual percentage rate, although the documents associated with that loan did not specify what the annual percentage rate (APR) actually was.
"An actual APR in excess of 100 percent is unconscionable, unfair and otherwise illegal. Similarly, the LAPN’s statement of the APR, which was misleading and/or absent, also is unconscionable, unfair and illegal," the suit states.
"In addition to the excessive actual APR and the misleading and/or absent stated APR, the LAPN contains numerous other procedurally and substantively unconscionable provisions that, by themselves and especially collectively, render the LAPN invalid ab initio under Missouri law."
Plaintiffs made four claims in their complaint: per se violation of the Missouri Merchandising Practices Act (MMPA), unjust enrichment, usury and constructive trust.
Representing the plaintiffs is attorney Daniel Harvath of the Harvath Law Group in Webster Creek, Missouri. The lawsuit seeks class action status, double damages and punitive damages.
Other similar cases in Georgia and Florida have resulted in wins for finance companies.
In Georgia, the state Supreme Court ruled in Ruth v. Cherokee Funding the agreements are not traditional loans and therefore not subject to interest rate laws. If the plaintiff does not recover anything in his or her case, the litigation finance company doesn't either.
In a federal case coming out of Georgia against Oasis, the U.S. Court of Appeals for the 11th Circuit heard oral arguments March 20. The plaintiff listed in that case was Lizzie Davis, who won in district court but Oasis filed an appeal in March of last year. The Georgia Supreme Court ruling should be key for Oasis.
In a supplemental document, Oasis attorneys wrote "The district court refused to enforce the agreements’ forum-selection clause after erroneously concluding that the clause contravenes Georgia public policy as stated in the Payday Lending Act. In doing so, the district court rejected Oasis’s argument that its non-recourse funding agreements are not loans governed by the PLA. Neither appellees nor the district court identified any public policy other than that stated in the PLA as a basis for invalidating the agreements’ forum-selection clause."
Attorneys for Oasis were listed as William McErlean and Christine Skoczylas of Barnes and Thornburg of Chicago.
In Florida, Ronald Taylor filed a class action lawsuit against Certified Legal Funding, a third-party litigation funder, in 2017. In August 2018, the U.S. District Court for the Middle District of Florida, Tampa Division ruled in favor of CLF, granting a motion to dismiss Taylor’s complaint.
Judge Elizabeth Kovachevich dismissed the case without prejudice, stating the investment agreements are not subject to Florida's usury laws.