Lizzie Davis, et al. v. Oasis Legal Finance Operating Company, LLC, et al.

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 20-11364
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D.C. Docket No. 3:17-cv-00022-DHB-BKE
LIZZIE DAVIS,
Individually and on Behalf of all Others Similarly Situated,
DENNIS GREEN,
Individually and on Behalf of all Others Similarly Situated,
JOHNNY MOODY,
Individually and on Behalf of all Others Similarly Situated,
JOHN SUBER,
Individually and on Behalf of all Others Similarly Situated,
SHIRLEY WILLIAMS,
Individually and on Behalf of all Others Similarly Situated,
PAMELA DAVIS,
Individually and on Behalf of all Others Similarly Situated,
Plaintiffs - Appellants,
versus
OASIS LEGAL FINANCE OPERATING COMPANY, LLC,
OASIS LEGAL FINANCE, LLC,
OASIS LEGAL FINANCE HOLDING COMPANY, LLC,
THL CREDIT, INC.,
Defendants - Appellees.
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________________________
Appeal from the United States District Court
for the Southern District of Georgia
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(May 20, 2021)
Before WILLIAM PRYOR, Chief Judge, LUCK, and ED CARNES, Circuit
Judges.
PER CURIAM:
This is an appeal by the plaintiffs from the district court’s judgment on the
pleadings for the defendants. The litigation arose from a “Nonrecourse Purchase
Agreement” in which the defendants purported to purchase an ownership interest
in or an amount of any proceeds the plaintiffs might recover in their individual
personal injury lawsuits against other defendants. The parties and district court are
aware of the pleading and procedural particulars, and we are writing only for them.
So we will leave out the details and focus on how we resolve the issues raised in
this appeal and the grounds for doing so.
The plaintiffs’ claims that the agreements in question violate Georgia’s
Payday Lending Act (PLA) and its Industrial Loan Act (ILA) are foreclosed by the
Georgia Supreme Court’s decision in Ruth v. Cherokee Funding, LLC, 820 S.E.2d
704 (Ga. 2018). Those are unmistakably state law issues, and the law of a state
unmistakably is what the state supreme court says it is. United States v. Davis, 875
F.3d 592, 597 (11th Cir. 2017); United States v. Howard, 742 F.3d 1334, 134 (11th
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Cir. 2014); Morrison v. Allstate Indem. Co., 228 F.3d 1255, 1266 (11th Cir. 2000).
We are bound to follow the decision in Ruth that this type of agreement in which
the repayment obligation is limited and contingent is not a loan for purposes of the
PLA or ILA. Ruth, 820 S.E.2d at 709–11. The district court did not err in granting
judgment on the pleadings in favor of the defendants on those claims.
Nor did the district court err in denying on futility grounds the plaintiffs’
motion for leave to amend their complaint. They wanted to allege that because of
the “extremely high interest rates,” the defendants “cannot lose money in the
aggregate,” hence the contingency is illusory, hence the agreements are loans,
hence they are covered by Georgia’s PLA. (Their proposed amended complaint
would have dropped the ILA count altogether.)
But, as the district court explained, whether the repayment obligation is
contingent must be examined on an individual plaintiff, agreement-by-agreement
basis. That is a truer reading of the Ruth decision than the one the plaintiffs put
forward. It is undisputed that if a particular plaintiff does not win a judgment,
obtain an award, or secure a settlement in her case, the defendants get nothing.
And, taking the plaintiffs’ aggregate view position to its logical conclusion, the
only way the defendants could lawfully enter into this type of agreement is by
ensuring that they would lose money in the aggregate, forcing them out of
business. That might please the plaintiffs or their attorneys, and it might even be
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good public policy, but it is a policy decision that will have to be made by the
Georgia Legislature or Georgia Supreme Court.
The other amendment the plaintiffs wished to make is one alleging that the
agreements violated Georgia’s prohibition on assigning personal injury claims.
They sought to add that claim even though the agreements explicitly state that the
defendants are not entitled to any control over the plaintiffs’ personal injury claims
and give the defendants an interest in only the proceeds of those claims. The
plaintiffs’ unlawful assignment argument is based entirely on American Chain &
Cable Co. v. Brunson, 278 S.E.2d 719 (Ga. Ct. App. 1981). They contend that
decision holds any agreement to loan money against the recovery from a personal
injury lawsuit is illegal. But it doesn’t hold that.
American Chain involved interest-free loans that three alleged tortfeasors in
a personal injury case made to the plaintiffs in exchange for covenants not to sue.
278 S.E.2d at 720. The loans were to be repaid only out of whatever the plaintiffs
recovered by suing the other two (non-lending) alleged tortfeasors. Id. The court
held that the loaned funds should be treated not as loans but as absolute payments
to be set off against any judgment. Id. at 722–23. The present case has nothing to
do with payments from tortfeasors to plaintiffs, much less with some tortfeasors
attempting to shift their responsibility for paying a potential judgment onto other
tortfeasors. An amendment based on the American Chain decision would have
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done the plaintiffs no good. It, like the other proffered amendment, would have
been futile.
AFFIRMED.
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