STATE OF MISSOURI COURT OF ST. LOUIS COUNTY TWENTY-FIRST JUDICIAL CIRCUIT ERICA HOLLINS, and on behalf of all others similarly situated, Plaintiffs, v. CAPITAL SOLUTIONS INVESTMENTS, INC., d/b/a LOAN EXPRESS CO., Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 11SL-CC04216 Division: 7 JURY TRIAL DEMANDED FIRST AMENDED PETITION This First Amended Petition is being filed without leave of Court because such leave is unnecessary under Rule 55.33(a). To date, no responsive pleading has been filed, thus allowing Plaintiffs to amend as a matter of course. Plaintiff Erica Hollins, individually, and on behalf of all other similarly situated individuals described in this Petition, by and through their attorneys, brings this action against Defendant Capital Solutions Investments, Inc. (“Defendant”), as a result of Defendant’s violations of the Missouri Merchandising Practices Act (Mo.Rev.Stat. 407.010) and of the laws governing consumer installment lenders (Mo.Rev.Stat. 408.510 et seq. and 408.551-408.562), among others. GENERAL ALLEGATIONS 1. Plaintiff Erica Hollins took out a consumer installment loan from Defendant beginning in 2007. 2. Her loan was, upon information and belief, $100 at 199.71% interest. 3. Plaintiff Erica Hollins owed $155.00 in total for the loan. 1 4. Plaintiff Erica Hollins was to make 5 monthly installments of $31.00 each for the loan to be paid in full. 5. Plaintiff Erica Hollins obtained her loans from Defendant’s store location in St. Louis, Missouri. 6. Defendant provides customers a loan product that has monthly installment payments, making it an attractive option for borrowers. 7. As such, these lenders are known as consumer installment lenders and are subject to sections (Mo.Rev.Stat. 408.510 et seq. and 408.551-408.562) of Missouri law. 8. Because of the nature and structure of the loan product they offer, Defendant took little precautions in assessing people's income, creditworthiness, and ability to repay the loan. 9. Upon information and belief, Defendant routinely over loaned money to its customers to make it virtually impossible for its customers to pay the loan back. 10. Upon information and belief, Defendant never disclosed the risks of a consumer installment loan to Plaintiff, including the risk of long term debt, bankruptcy, default, garnishment, judgment, and stress. 11. While the terms of the loan allow for installment payments, one dangerous part of the consumer installment loan occurs when a customer defaults on the loan. 12. Upon information and belief, Defendant waits a significant amount of time to file for a default judgment against its customers, as it did against the Plaintiff. 13. In waiting to file for a default, Defendant continues to run interest on the debt so that the debt grows and grows. 14. This can turn small loans into large debts, an effect unanticipated by Plaintiff. 2 15. The result of this "stall tactic" is an explosion of debt that is then thrust upon the borrower. 16. Upon information and belief, this process has netted Defendant huge profits, allowed them to attempt to avoid the legislative mandate to stop charging interest at the time of default, and instead ensured that customers are trapped in Defendant’s grips for many months, or even years. 17. Upon information and belief, Defendant uses this strategy to increase profits and to enslave Plaintiff through debt. 18. Such behavior by Defendant is inconsistent with Missouri Law. ALLEGATIONS REGARDING THE BUSINESS PRACTICES OF CAPITAL SOLUTIONS INVESTMENTS, INC. 19. When dealing with Plaintiff and Class, Defendant has disregarded the Missouri statutes set forth in this Petition. 20. Although Missouri law limits when the contract percentage rate can be charged, Defendant has consistently misapplied and charged interest before judgment is taken resulting in huge debts for the consumer and illegal gains for the Defendant. 21. Defendant is a consumer installment lender as defined by Missouri law. 22. Specifically RsMO Section 408.510 states …the phrase “consumer installment loans” means secured or unsecured of any amount and payable not less than four substantially equal installments over a period of not less than one hundred twenty days. 3 23. RsMO Section 408.510 also indicates that consumer installment lenders are subject to the provisions RsMO 408.551 – 408.562. 24. Missouri rules also indicate that consumer installment lenders are limited in the amount of money and interest a consumer installment lender can collect. Section 408.553 states: Recovery Limitation. Upon default the lender shall be entitled to recover no more that the amount which the borrower would have been required to pay upon prepayment of the obligation on the date of final judgment together with interest thereafter at the simple interest equivalent of the rate provided in the contract. 25. Section 408.553 is a vitally important provision in Missouri law regarding consumer installment loans. 26. For example, Plaintiff took out a $100 loan in 2006. At the time the default judgment was entered against her in 2009, she owed approximately $1200. Defendant has been garnishing wages for the last 2 years with no end in sight since the 199.71% interest is now running on the $1200. 27. If Defendant had followed the statute, the protections for the borrower would be quite different. 28. For example, if at the time that Plaintiff defaulted, she owed Defendant $100, the results are striking. Under the statute, Defendant would have to immediately stop the interest on the debt, meaning that the default that Defendant could take would be around $100 (with the addition of court fees and costs). Once the final judgment is entered, the 199.71% interest could begin running on the debt. 4 However, rather than the Plaintiff being trapped in garnishment and debt for 2 years or more, Plaintiff’s garnishment time would be significantly reduced. 29. The results are drastically different. By failing to follow Section 408.553, a person's loan explodes into an unanticipated and unfair debt. 30. The result is that Plaintiff often has had her wages garnished for over 2 years. 31. In a nutshell, Defendant violations of Missouri law include but are limited to the following: a. Defendant never evaluated Plaintiff’s ability to repay her loans. b. Defendant failed to disclose to Plaintiff the risks of consumer installment loans, especially if she defaulted. c. Defendant failed to comply with RsMO Section 408.553. d. Defendant charged Plaintiff too much in interest. e. Defendant then sought legal remedies to obtain monies it was not owed. PARTIES 32. Capital Investment Solution, Inc., is a Missouri corporation with a principal place of business in Missouri. 33. Erica Hollins is a Missouri citizen residing at 2282 Gadbury Drive, St. Louis Missouri, 63136. 34. Ms. Hollins received a loan from Capital Investment Solution d/b/a Loan Express at a Missouri location. 5 VENUE AND JURISDICTION 35. The Circuit Court of St. Louis County has subject matter jurisdiction over this action because the actions complained of took place in St. Louis County. V.A.M.S. 407.025.1; V.A.M.S. 408.562. 36. This Court has personal jurisdiction over the Defendant because it regularly conducts business in Missouri. 37. Venue is proper in the Circuit Court of St. Louis County because the cause of action arose in St. Louis County. V.A.M.S. 407.025.1; V.A.M.S. 408.562. CLASS ACTION ALLEGATIONS 38. Plaintiffs bring this action on behalf of themselves and all others similarly situated pursuant to Missouri Revised Statute 407.025, Missouri Rule of Civil Procedure 52.08 and the other statutes and authorities referenced in this Petition. The claims asserted are brought on behalf of a statewide class of consumers. 39. The class is defined and described as follows: All people who, in Missouri, received a consumer installment loan from Defendant, and Defendant, prior to obtaining a judgment, charged interest on the amount owed at the time of default. Excluded from the proposed class are Defendant and its officers, directors, and employees, as well as employees of any of defendant’s subsidiaries, affiliates, successors or assignees. Also excluded are the 6 immediate family members of the above persons. Also excluded is any trial judge who may preside over this case. 40. The requirements for maintaining this action as a class action are satisfied, as set forth immediately below: a. The proposed class is so numerous and so geographically dispersed that the individual joinder of all absent class members is impracticable. While the exact number of absent class members is unknown to Plaintiff at this time, it is ascertainable by appropriate discovery and Plaintiff, upon information and belief, alleges that the proposed class may include thousands of members. The requirement of numerosity is therefore satisfied. b. Common questions of law or fact exist as to all proposed class members and predominate over any questions which affect only individual members of the proposed class. These common questions of law or fact include: i. Whether Defendant illegally charged interest in violation of 408.553; ii. Whether Defendant willfully violated Missouri law; iii. Whether Defendant devised a plan to delay filing for default judgments in order to make more money; iv. Whether Defendant’s actions were designed to result in lengthy or unending garnishments; v. Whether Defendant had corporate policies in requiring delay in filing judgments; 7 vi. Whether attorney’s fees should be awarded in this case; and/or vii. Whether an injunction is appropriate in this case. 41. The claims of the Plaintiff is typical of the claims of the class. Plaintiff received consumer installment loans from Defendants and entered into contracts that are the same or substantially similar to those entered into by members of the Class. 42. Plaintiff will fairly and adequately represent the interests of Class. Plaintiff has no interest adverse to the interests of the members of the class. Plaintiff has retained competent attorneys who have experience in class action litigation. 43. A class action is a superior method for the fair and efficient adjudication of this controversy. The adjudication of a separate action by individual members of the class would create a risk of a) inconsistent or varying adjudications with respect to individual members of the class; or b) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. Upon information and belief, Defendant has thousands of customers in Missouri and the majority of these consumers are members of the proposed class. 44. Questions of law or fact common to the members of the class predominate over any questions affecting only individual members. There is no special interest in the members of the class individually controlling the prosecution of separate actions; the damages sustained by individual class members may be relatively small; and the expense and burden of individual litigation make it impossible for the class members individually to address the wrongs done to them. 8 45. There will be no difficulty in managing this lawsuit as a class action. Plaintiff’s attorney is involved in consumer rights litigation throughout Missouri and has experience dealing with the dynamics and procedures involved in class actions. Furthermore, Defendant transacts substantial business in the State of Missouri and will therefore not be prejudiced or inconvenienced by the maintenance of the action in this forum. COUNT I MISSOURI MERCHANDISING PRACTICES ACT 46. Plaintiff re-alleges and incorporates by reference all other paragraphs of this Complaint as if fully set forth herein. 47. This claim is brought pursuant to the Missouri Merchandising Practices Act, RsMO §407.010 et seq. 48. Plaintiff is entitled to bring this action pursuant to RsMO § 407.025.2. 49. Plaintiff entered into consumer transaction with Defendant in which the Plaintiff would pay interest and fees as a condition for obtaining a short-term loan. 50. Lending is a service. Services are included in the definition of “merchandise” under Missouri Revised Statute 407.010. 51. The Plaintiff’s loan was obtained exclusively for her personal use. 52. During the course of this transaction, Defendant engaged in unfair or deceptive trade practices including the issuing of loans induced by unlawful trade practice, deception, fraud, false pretense, mis-representation, concealment, suppression, omission of, and the knowing failure to state, material facts, including: a. Unfairly and deceptively placing Plaintiff into a loan for which Defendant never considered the ability of Plaintiff to repay; 9 b. By Defendant’s practices of: i. Running interest on the principal from the time of default in order to significantly and illegally grow the debt; ii. Then waiting to file for a default judgment; iii. Then continuing to run the interest on the debt after default so that it is impossible for Plaintiff to pay back the loan, despite the legislature’s clear efforts to prevent this result. c. Charging more interest and fees than are allowed by law; d. Designing a lending scheme with the purpose of producing long term debt; e. Charging and unconscionable interest rate; and f. Failing to disclose the risks of consumer installment loans to Plaintiff. 53. As a direct result of Defendant’s violations, Plaintiff is aggrieved and suffered ascertainable losses by, among other things: a. Being charged fees and interest on loan principal that should not have been charged; b. Paying excess interests and fees because the Defendant failed to stop running interest on the principal at the time of default; and c. Being forced into a cycle of debt and garnishment because of Defendant’s illegal interest calculations. 54. Defendant willfully and intentionally violated Missouri Revised Statute 407.010 et seq. 10 55. As a direct result of Defendant’s violations, Plaintiff is aggrieved and suffered ascertainable losses. 56. Plaintiff requests that this Court enter judgment in her favor and against Defendant as described in the “Prayer for Relief” in this Petition. COUNT II VIOLATION OF MO. REV. STAT. 408.553 (RECOVERY LIMITATION) 57. Plaintiff re-alleges and incorporates by reference all other paragraphs of this Petition, as if fully set forth herein. 58. Missouri Revised Statute 408.562 provides a private right of action for violations of 408.500 et seq. in which the court may, in its discretion, award punitive damages and may award to the prevailing party in such action attorney's fees, based on the amount of time reasonably expended, and may provide such equitable relief as it deems necessary and proper. 59. Missouri Revised Statute 408.553 requires a consumer installment lender to 1) refrain from charging interest on the principal after Plaintiff defaults; and 2) only charging the interest in the contract when the default judgment is entered. 60. Defendant willfully and intentionally violated Missouri Revised Statute 408.553. 61. As a direct result of Defendant’s violations, Plaintiff is aggrieved and suffered ascertainable losses. 62. Plaintiff requests that the Court enter judgment in their favor and against Defendant as described in the “Prayer for Relief” in this Complaint. 11 COUNT III DECLARATORY JUDGMENT 63. All preceding paragraphs are incorporated by reference as if fully set forth herein. 64. Under 74.06(b), a Court may relieve a party from a final judgment or order for the following reasons: a. The judgment is void; or b. It is no longer equitable that the judgments remain in force. 65. Plaintiff and Class have been aggrieved by illegal judgments taken by Defendant. 66. These judgments are void as a matter of law because the method of calculation on these debts is in violation of Missouri law. Specifically, these judgments violate RsMO 408.553. 67. Also, it is no longer equitable that these judgments be enforced because: a. Money is being taken illegally from Plaintiff and Class in contravention of Missouri law; b. Plaintiff and Class are being charged fees and interest on loan principal that should not have been charged; c. Plaintiff and Class are paying excess interests and fees because the Defendant failed to stop running interest on the principal at the time of default; and d. Plaintiff and Class are being forced into a cycle of debt and garnishment because of Defendant’s illegal interest calculations. 68. These controversies are real, present and unresolved. 69. These controversies require resolution by this Court. 12 70. Plaintiff requests that this Court enter judgment in her favor and against Defendant as described in the “Prayer for Relief” in this Petition. PRAYER FOR RELIEF Plaintiff requests that the Court enter judgment in her and the Class’ favor and against Defendant as follows: a. Declaring that all judgments taken by Defendant be set aside and money obtained therefrom be returned; b. Ordering that this action be maintained as a class action pursuant to Missouri Supreme Court Rule 52.08 and Missouri Revised Statute 407.025.3 and other applicable laws and that the following class be certified: All people who, in Missouri, received a consumer installment loan from Defendant, and Defendant, prior to obtaining a judgment, charged interest on the amount owed at the time of default. c. Certifying Plaintiff as class representative and appointing Plaintiff’s counsel as counsel for Class; d. Awarding Plaintiff compensatory damages, to include any fees and interest illegally charged and further awarding any damages caused by such payments; e. Awarding Plaintiff her consequential and incidental damages; f. Awarding total damages in excess of $25,000; g. Awarding Plaintiff pre-judgment and post-judgment interest as provided by law; h. Awarding Plaintiff punitive damages as provided by law; i. Awarding Plaintiff attorney’s fees and costs as provided by law; 13 j. Imposing a constructive trust and equitable lien against all money paid by the Class to and wrongfully withheld by Defendant; k. Entering a Preliminary and Permanent Injunction prohibiting Defendant from violating RsMO 408.553; l. Awarding Plaintiff such other and further relief as may be just and proper. Respectfully submitted, CAMPBELL LAW, LLC Alicia Campbell MO59586 Campbell Law, LLC 911 Washington Ave. Suite 205 St. Louis, MO 63101 314.588.8101 office 314.588.9188 fax alicia@campbelllawllc.com CERTIFICATE OF SERVICE The undersigned hereby certifies that a true & correct copy of the foregoing was mailed and emailed to the attorney below on November 4, 2012. Michelle Drake 10 South Broadway Ste. 2000 St. Louis, MO 63102 314-345-4748 [Direct] 314-241-9090 [Main] 314-241-8624 [Fax] mmd@greensfelder.com Attorney for Defendant Alicia Campbell 14 STATE OF MISSOURI COURT OF ST. LOUIS COUNTY TWENTY-FIRST JUDICIAL CIRCUIT ERICA HOLLINS, and on behalf of all others similarly situated, Plaintiffs, v. CAPITAL SOLUTIONS INVESTMENTS, INC., d/b/a LOAN EXPRESS CO., Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 11SL-CC04216 Division: 7 JURY TRIAL DEMANDED NOTICE OF CANCELLATION OF HEARING COMES NOW, Plaintiff Erica Hollins, by and through counsel, and gives notice to counsel that the hearing regarding the Motion to Dismiss scheduled for February 24, 2012, is cancelled. Parties are still required to be present in Division 7 at 8:45am for the scheduling conference. Respectfully Submitted, _____________________ Alicia Campbell #59586 Campbell Law, LLC 911 Washington Avenue Suite 205 St. Louis, MO 63101 (314)588-9188 phone (314)588-9188 fax alicia@campbelllawllc.com CERTIFICATE OF SERVICE The undersigned hereby certifies that a true & correct copy of the foregoing was mailed and emailed to the attorney below on November 4, 2012. Michelle Drake 10 South Broadway Ste. 2000 St. Louis, MO 63102 314-345-4748 [Direct] 314-241-9090 [Main] 314-241-8624 [Fax] mmd@greensfelder.com Attorney for Defendant Alicia Campbell