Belyea v. GreenSky, Inc.

Background

Elizabeth Belyea, Heidi Barnes, Hazel Lodge, and David Ferguson brought a proposed class action against GreenSky of Georgia, LLC and GreenSky, LLC. They alleged violations of California lending, credit-services, and consumer-protection laws. This order addressed only GreenSky’s motion to dismiss Barnes’s claims; it did not address the separate motion to compel arbitration concerning Belyea, Lodge, and Ferguson.

Barnes alleged that in September 2016 she obtained a $7,500 loan through the GreenSky program to finance home construction. The loan had a 6.99% annual percentage rate and required 120 monthly payments. Barnes alleged that GreenSky received 9% of the loan as a merchant fee, did not disclose that fee to her, and caused her to pay more than she otherwise would have. She also alleged that GreenSky conducted the transaction without a California license or registration as a credit-services organization.

Claims and statute of limitations

Barnes asserted claims under California’s Credit Services Act, Consumer Legal Remedies Act, and Unfair Competition Law, as well as a claim for unjust enrichment or quasi-contract. GreenSky argued that the Credit Services Act, Consumer Legal Remedies Act, and unjust-enrichment claims were barred by three-year statutes of limitations.

The court rejected Barnes’s arguments that the claims were timely under continuous accrual, delayed discovery, or fraudulent concealment. Barnes had not pleaded a continuous-accrual theory in her complaint, and she had not alleged facts showing that each monthly payment was a separate violation. Her discovery-rule allegations also did not state when or how she discovered the basis for her claims. The court found that the fraudulent-concealment allegations failed for the same reason.

The court therefore dismissed Barnes’s Credit Services Act, Consumer Legal Remedies Act, and unjust-enrichment claims as barred by the three-year statute of limitations. The dismissal was with leave to amend to the extent Barnes had a good-faith basis to allege facts supporting tolling of the limitations period.

Unfair Competition Law claim

The court concluded that Barnes adequately pleaded an Unfair Competition Law claim based on alleged violations of the California Financing Law. Barnes alleged that GreenSky acted as a finance lender without a license and failed to disclose its role and the fees it charged. The court found that her allegation that the undisclosed fee caused her to pay more was sufficient, or at least that GreenSky had not shown otherwise, to allege injury under the California Financing Law.

The court also found that Barnes adequately alleged a fraudulent Unfair Competition Law claim. Her allegations identified the alleged omission—the nondisclosure of a 9% merchant fee—and plausibly supported reliance because she alleged that she paid more than she otherwise would have paid.

Standing for injunctive relief

GreenSky separately argued that Barnes lacked standing under Rule 12(b)(1) to seek injunctive relief. Standing is the constitutional requirement that a plaintiff show a concrete injury connected to the challenged conduct and likely to be remedied by the court. For an injunction against future conduct, the plaintiff must also show a real and immediate threat of being harmed again in a similar way.

The court held that Barnes had not alleged an ongoing injury sufficient to support injunctive relief. Although she alleged that she continued making monthly loan payments, she did not allege that the allegedly unlawful fee was part of those monthly payments rather than a fee assessed at the beginning of the loan. The court dismissed the Unfair Competition Law claim for lack of standing, with leave to amend if Barnes could allege an ongoing injury.

Disposition

Judge Jacquelyn Scott Corley granted in part and denied in part GreenSky’s motion to dismiss. The Credit Services Act, Consumer Legal Remedies Act, and unjust-enrichment claims were dismissed as untimely, with leave to amend to allege tolling if supported by a good-faith basis. The Unfair Competition Law claim was dismissed for lack of Article III standing, with leave to amend to allege an ongoing injury. Barnes’s amended complaint was due within 21 days.