of Appeals Office of Appellate Courts
Swanson, Attorney General, Alan I. Gilbert, Solicitor
General, Kathryn I. Landrum, Adam Welle, Assistant Attorneys
General, Saint Paul, Minnesota, for appellant.
W. Anthony, Brooke D. Anthony, Daniel R. Hall, Amelia Selvig
Hartman, Anthony Ostlund Baer & Louwagie, P.A.,
Minneapolis, Minnesota, for respondents.
order that dismisses a claim by the Attorney General seeking
a permanent injunction under Minn. Stat. § 8.31, subd. 3
(2016), is appealable under Minn. R. Civ. App. P. 103.03(b).
open-end credit plan under Minn. Stat. § 334.16 (2016),
which incorporates the definitions in the Truth-in-Lending
Act and Regulation Z from at least 1971, provides credit on a
revolving basis. Because respondents' loans were not made
pursuant to open-end credit plans, the interest rates
respondents charged were usurious, in violation of Minn.
Stat. § 334.01, subd. 1 (2016).
Respondents made loans without the license required by Minn.
Stat. § 56.01(a) (2016).
Minnesota School of Business and Globe University
(collectively, "the Schools"), made private student
loans at interest rates of up to 18 percent. The State,
through the Minnesota Attorney General, sought to enjoin the
Schools from making these loans. Among other things, the
State alleged that the Schools charged usurious interest
rates and made loans without the required license. On
cross-motions for summary judgment, the district court denied
the State's motion in its entirety and dismissed the
usury and licensing claims. On interlocutory appeal, the
court of appeals affirmed the district court. Because we
conclude that the Schools charged usurious interest rates and
made loans without the required license, we reverse the court
of appeals and remand to the district court for further
proceedings consistent with this opinion.
Schools are for-profit corporations providing postsecondary
education services and private student loans in Minnesota.
The Schools offered the loans to students for a maximum of
$3, 000 to $7, 500 per loan, usually at interest rates
between 12 and 18 percent, depending on the timing and type
of loan. A student receiving a loan
from the Schools entered into an agreement at the beginning
of each academic year. The Schools never paid out money to
the student; rather, the Schools' affiliated
entities-EdOp Loan Servicing, LLC and Tuition Options,
LLC-credited the loaned amount against the student's
outstanding tuition balance at three predetermined dates
during the academic year. The funds were not available to the
student for any other purpose.
on each loan began accruing immediately after the loan was
credited against the outstanding tuition balance. The student
repaid the loan according to a monthly schedule with a fixed
end date by which the entirety of the loan and accrued
interest had to be paid off. If the student paid off the debt
early, no additional funds were available. The Schools
required the student to sign a form that included an
acknowledgment that the loan was not an "extension of
credit under an open-end consumer credit plan." An
internal procedures manual for the Schools' EdOp Loan
Servicing, LLC described the loan as "a 'hybrid'
that blends characteristics of an open-ended credit plan and
closed-end installment loan."
State, through the Attorney General, initially sued the
Schools on grounds that are not now before us. The State later filed an amended complaint
that added claims against the Schools for lending without the
license required by Minn. Stat. § 56.01(a) (2016) (Count
3), and charging usurious interest rates in violation of
Minn. Stat. § 334.01, subd. 1 (2016) (Count 4). The
State's amended complaint sought permanent statutory
injunctive relief under Minn. Stat. § 8.31, subd. 3
(2016), to stop the Schools from "engaging in unlicensed
and usurious lending, in violation of Minn. Stat.
§§ 56.01 and 334.01."
parties filed cross-motions for summary judgment. The
State's summary judgment motion asked the district court
to "enjoin Defendants' illegal lending." The
State's proposed order granting summary judgment included
permanent statutory injunctions against usurious and
unlicensed lending. The Schools responded that their lending
was not usurious under Minn. Stat. § 334.16, subd. 1
(2016), and that they were not required to obtain a license
under Minn. Stat. § 56.01(a).
district court agreed with the Schools. The court
"denie[d] the State's Motion for Summary Judgment in
its entirety." The court granted the Schools' motion
for summary judgment regarding the State's usury and
licensing claims, which the court dismissed.
State took an interlocutory appeal. The Schools argued that
the court of appeals lacked appellate jurisdiction over an
order denying summary judgment. The court of appeals
determined there was jurisdiction because the district court
denied a request for an injunction. State v. Minn. Sch.
of Bus., Inc., A16-0239, Order (Minn.App. filed Mar. 15,
merits, the court of appeals affirmed the district court.
State v. Minn. Sch. of Bus., Inc., 885 N.W.2d 512,
514 (Minn.App. 2016). In reaching this conclusion, the court
determined that Minn. Stat. § 334.16, subd. 2 (2016),
which adopts the Truth-in-Lending Act ("TILA") and
Regulation Z, did not incorporate any amendments to TILA or
Regulation Z adopted after June 5, 1971, the effective date
of the enactment of Minn. Stat. § 334.16, subd. 2.
Minn. Sch. of Bus., Inc., 885 N.W.2d at 516-18. The
court concluded that, under the definitions provided by TILA
and Regulation Z as of that date, the Schools' loans were
open-end credit plans under Minn. Stat. § 334.16, subd.
granted the State's ...