Belyea v. GreenSky, Inc.

Background

David Ferguson and Heidi Barnes alleged that GreenSky, Inc., GreenSky of Georgia, LLC, and GreenSky, LLC violated California’s Credit Services Act, Consumers Legal Remedies Act, Unfair Competition Law, and rules against unjust enrichment. They alleged that GreenSky brokers consumer loans for home-improvement, home-repair, and healthcare costs; charges merchants a fee averaging 7 percent of the loan amount; does not disclose the fee to consumers; and receives incentive payments from bank partners. The case began as a putative class action filed by Elizabeth Belyea. After earlier proceedings, Barnes and Ferguson were the only remaining named plaintiffs.

GreenSky moved for partial judgment on the pleadings under Federal Rule of Civil Procedure 12(c). That motion applies a standard similar to a motion to dismiss for failure to state a claim: the court generally accepts well-pleaded allegations as true and asks whether the moving party is entitled to judgment based on the pleadings.

Consumers Legal Remedies Act

The court dismissed the Consumers Legal Remedies Act claim without leave to amend. The court held that the Act covers transactions involving tangible goods or qualifying services, but California law treats loans as outside those categories. GreenSky’s loan-brokerage, loan-application, lender-selection, and related activities were ancillary—meaning supplemental or subordinate—to the loan itself. The court concluded that GreenSky provided no standalone service unrelated to obtaining or servicing the loan, and that the fee would not have been charged if the loan did not exist. Because the court accepted plaintiffs’ characterization of GreenSky’s conduct and found the legal defect could not be fixed through amendment, it dismissed the claim without leave to amend.

Unfair Competition Law

The court addressed several theories under California’s Unfair Competition Law, which prohibits unlawful, unfair, or fraudulent business practices.

The court held that plaintiffs adequately alleged, at the pleading stage, that GreenSky was a “finance lender” under the California Financing Law. The court reasoned that the statutory definition includes a person engaged in the business of making consumer loans and does not limit that phrase to directly lending money or taking security for a loan. The court therefore did not dismiss the Unfair Competition Law theory on the ground that GreenSky was not a finance lender.

Plaintiffs said GreenSky violated California Financial Code section 22320.5, which regulates delinquency fees. Plaintiffs stated they would not pursue relief based on that provision. The court dismissed that theory with prejudice, and the conclusion described the dismissal as without leave to amend.

The court dismissed with leave to amend the theory that GreenSky violated California Financial Code section 22309, which concerns charges received in advance. Plaintiffs alleged that GreenSky assessed a merchant fee when each loan originated, but they did not allege when GreenSky actually received the fee. The court held that this missing allegation prevented it from determining whether section 22309 applied. The court stated that, if plaintiffs amended the claim, it would not consider another motion on that issue until summary judgment.

The court denied GreenSky’s motion to dismiss the Unfair Competition Law claim seeking monetary restitution. The denial was without prejudice to GreenSky making the same argument at summary judgment. Although the Unfair Competition Law generally provides equitable remedies and plaintiffs must show that they lack an adequate legal remedy, the court found it premature to decide whether the Credit Services Act supplied an adequate legal remedy. GreenSky expressly reserved its argument that the Credit Services Act does not apply to its conduct.

The court also allowed plaintiffs’ request for prospective injunctive relief under the Unfair Competition Law to survive GreenSky’s argument that damages would be adequate. The court concluded that damages may not be enough to deter an alleged unlawful practice from continuing.

Unjust Enrichment

The court denied GreenSky’s request for judgment on the unjust-enrichment claim based on the alleged failure to plead an inadequate legal remedy. The denial was without prejudice. For the same reason discussed regarding monetary restitution under the Unfair Competition Law, the court found it premature to decide whether the Credit Services Act provided an adequate legal remedy. The court also noted that even if plaintiffs had an adequate legal remedy, dismissal or remand on that ground would be without prejudice.

Ferguson’s Standing to Seek an Injunction

GreenSky separately argued that Ferguson lacked Article III standing—a constitutional requirement that a plaintiff show a concrete injury or a sufficiently likely future injury—to seek injunctive relief. Ferguson alleged that he made his final loan payment on November 6, 2018, and did not allege that he intended to obtain another GreenSky loan or make future home repairs. The court held that he had not alleged a sufficient likelihood that GreenSky would specifically harm him again, rather than harm the public generally.

The court granted GreenSky’s motion as to Ferguson’s request for injunctive relief, with leave to amend. This ruling concerned Ferguson’s standing to pursue that relief, not the merits of the alleged unlawful conduct.

Disposition

The court granted in part and denied in part GreenSky’s motion for partial judgment on the pleadings. The Credit Services Act claim remained pending. The unjust-enrichment claim remained pending. The Unfair Competition Law claim remained pending for equitable restitution, disgorgement, and injunctive relief except for the specific theories dismissed above. The court ordered that any amended complaint be filed by January 4, 2024. Judge Jacquelyn Scott Corley’s order disposed of docket number 206.