Individual denied summary judgment on usury claims

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Where an individual sued for his alleged role in a scheme to circumvent state usury laws argued he was entitled to judgment on the usury claims because he did not personally take or receive the loan payments, and there was no allegation sufficient to pierce the corporate veil, his argument was rejected. The statute permits recovery against individuals who take and receive payments on usurious loans, even if those payments pass through corporate entities.

Background

This class action proceeding concerns a “lending scheme allegedly designed to circumvent state usury laws.” Plaintiffs, representing a class of borrowers, allege that Matt Martorello conspired with the Lac Vieux Desert Band of Chippewa Indians and various other entities and individuals to issue usurious and unlawful high-interest loans through the internet to consumers within the Commonwealth of Virginia.

Martorello has moved for summary judgment on three issues: (1) choice-of-law; (2) plaintiffs’             usury claim and (3) plaintiffs’ unjust enrichment claim.

Choice of law

The court has already held that Virginia law, not tribal law, applies to the loans in question. Martorello says that the court’s ruling on that point “renders” this point “moot.” In fact, the previous ruling is dispositive of Martorello’s motion on the merits of the question. Hence, on that question, it was denied on the merits.

Usury

Martorello argues that he “should be granted summary judgment on Plaintiffs’ usury claim because he was not the person who took or received loan payments on Plaintiffs’ loans.” Martorello’s view is that, for plaintiffs to proceed on this theory, they must plead corporate veil piercing, which they have not.

Virginia Code § 6.2-305(A) provides that, “[i]f interest in excess of that permitted by an applicable statute is paid upon any loan, the person paying may bring an action … to recover from the person taking or receiving such payments.” In another tribal lending case, the court held that the “plain reading of § 6.2-305 plausibly permits recovery against individuals who take and receive payments on usurious loans, even if those payments pass through corporate entities.” Thus, even though Martorello himself did not collect the loans, he nonetheless may be a person “receiving” payments from them.

Of course, at trial, plaintiffs would need to prove that Martorello received the payments, even if not directly. That is a question of fact that cannot be resolved at summary judgment. Accordingly, Martorello’s request for summary judgment as to plaintiffs’ usury claim is denied.

Unjust enrichment

Martorello argues that plaintiffs’ damages on this claim are limited to their statutory damages for usury. And, even if they are not, says Martorello, plaintiffs cannot make out the elements of an unjust enrichment claim. The court disagrees.

The unjust enrichment claim is not foreclosed simply because plaintiffs are also asserting a claim as to which they can recover another statutory remedy. The statute on which Martorello bases this argument says nothing about limiting recovery. Numerous courts have allowed statutory and unjust enrichment claims to proceed in a single action based on the same facts. And Martorello cites no Virginia authority to the contrary. The court located no Virginia decisional law (or even secondary sources) that support Martorello’s position.

Regarding Martorello’s alternative argument, the court already has determined that “any money paid on a void contract could constitute a benefit for the purposes of an unjust enrichment.” And there is substantial evidence in the record from which a jury reasonably could find that Martorello knew that he was receiving benefits from the usurious loans. Because a jury could reasonably find for the plaintiffs on all elements of the unjust enrichment claim, the motion for summary judgement on that count is denied.

Defendant Martorello’s motion for summary judgment denied.

Williams v. Big Picture Loans LLC, Case No. 3:17-cv-461, July 11, 2023. EDVA at Richmond (Payne). VLW 023-3-391. 12 pp.