Tax payment agreement a consumer credit transaction

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The agreement between the taxpayer and a third-party to finance the payment of property taxes owed on his residential home was a consumer credit transaction and the taxpayer had standing to bring claims for violations of federal statutes where the terms of the agreement create a realistic danger that the party will suffer the precise type of injury the federal statutes were designed to protect against.

Background

Virginia Code § 58.1-3018 allows taxpayers to enter into agreements with third parties to finance the payment of local taxes. Under these agreements, a third party agrees to pay taxes owed to a locality on behalf of a taxpayer, and the taxpayer agrees to pay the third party in installments, with fees and interests. The terms of the agreement, including repayment periods, interest rates and other fees are prescribed by the statute.

Appellants Propel Property Tax Funding LLC and Propel Financial Services LLC entered into one such tax payment agreement with appellee Garry Curtis for the $13,734.43 he owed in residential property taxes to the city of Petersburg, Virginia. While the agreement satisfied the terms prescribed by the Virginia statute, Curtis contends that the agreement violated the Truth in Lending Act, the Electronic Funds Transfer Act and the Virginia Consumer Protection Act.

Propel moved to dismiss Curtis’s proposed class action suit, arguing that its tax payment agreements are exempt from the VCPA and are not subject to either the TILA or the EFTA because they do not constitute consumer credit transactions. The district court granted Propel’s motion to dismiss Curtis’s claims under the VCPA but denied the motion with respect to the TILA and EFTA claims. The district court then immediately certified for interlocutory review its decision that Curtis had standing to proceed on the EFTA claims and its determination that the tax payment agreements are consumer credit transactions subject to the TILA and the EFTA.

Analysis

The district court correctly determined that Curtis had standing to proceed on the EFTA claims because he alleged a substantive statutory violation that would subject him to the very risks that the EFTA intended to protect against. This constitutes a particularized injury stemming from the requirements of his own tax payment agreement.

The mere fact that Curtis has not yet made an electronic fund transfer payment or sought to cancel any preauthorized electronic fund transfer payment does not render his injury hypothetical. Assuming the allegations in the complaint are true, Curtis has satisfied the standing requirement of actual injury because the tax payment agreement required him to authorize electronic fund transfer payments and waive his right to cancel any preauthorized electronic fund transfer payments. This demonstrates that there is a realistic danger that he will sustain a direct injury sufficient to satisfy the actual injury requirement.

The district court likewise correctly determined that the tax payment agreements constitute consumer credit transactions subject to the TILA and the EFTA. The agreements are credit transactions because they provide for third-party funding of tax obligations and they are consumer transactions because they are voluntary transactions entered into for household purposes.

The fact that the financing agreed to under the tax payment agreement differs from that of a bank loan does not affect this analysis. The agreement allows Curtis to defer payment of his property taxes and creates obligations between Curtis and Propel. In this sense, it operates the same as any other third-party financing agreement covered by the TILA.

Moreover, it is hard to imagine a transaction more likely to constitute one that is primarily for personal, family or household purposes than the transaction at issue here, which involves the extension of credit to finance property taxes owed for a residential home. As such, the tax payment agreement clearly satisfies the definition of consumer transaction under the TILA.

Affirmed.

Concurring/dissenting opinion

Keenan, J., concurring in part and dissenting in part:

I concur in the majority’s affirmance of the district court’s ruling that Curtis has standing to bring claims against Propel under the EFTA. I write separately because I conclude that Curtis’s tax payment agreement with Propel does not qualify as a credit transaction under the TILA because the preexisting obligation of the taxpayer is not severed by the third-party payor’s payment, and the third-party payor does not grant any right to the taxpayer that is not already conferred by statute.

Curtis v. Propel Property Tax Funding LLC, Case No. 17-2114, Feb. 6, 2019. 4th Cir. (Duncan), Appeal from EDVA at Richmond (Gibney). Charles Kalman Seyfarth for Appellants; Thomas Dean Domonoske for Appellee. VLW 019-2-045. 25 pp.