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Gaspard v. Vanguard Acceptance Corp.
Citations: 689 So. 2d 1352; 1997 La. LEXIS 371; 1997 WL 76817Docket: No. 96-CA-1177
Court: Supreme Court of Louisiana; February 24, 1997; Louisiana; State Supreme Court
The trial court found that La. R.S. 6:960(C) of the Motor Vehicle Sales Finance Act is unconstitutional. This case involves five plaintiffs who financed automobile purchases through Pioneer Finance, which assigned promissory notes to Vanguard Acceptance Corporation, a Colorado company that initially lacked the required Louisiana sales finance license. Upon learning of this licensing requirement, Vanguard obtained a license. However, Vanguard faced penalties under La. R.S. 6:960(C) for operating without a license, which includes a $50 penalty and additional penalties equal to twice the total charges on the financed notes, along with potential attorney fees. After Vanguard was fined $40,000 by the Louisiana Motor Vehicle Commission for unlicensed activity, the plaintiffs sought penalties and attorney fees under La. R.S. 6:960(C). Vanguard then moved for summary judgment, claiming the civil penalty provision was unconstitutional. The trial court agreed, ruling that the statute violated due process by granting excessive discretion to the Commission's administrator, which could lead to arbitrary enforcement. The appellate review focuses on whether this ruling was a legal error, noting that the challenge does not contest the Commission's imposition of the $40,000 fine but rather the civil penalties available to private parties under La. R.S. 6:960(C). The trial court did not find the private right of action unconstitutional, only the broad discretion given to the administrator in enforcing penalties. The trial court declared the statute unconstitutional due to the administrator's discretion to impose a $50 fine for failing to timely purchase a license, arguing it triggers additional mandatory civil penalties. However, the court's finding was based on a misunderstanding, as the discretionary fine applies to any seller or holder who fails to purchase a license, while the penalties apply to any individual engaging in business without a license. Thus, the imposition of penalties to buyers is independent of the administrator's discretion regarding the fine. The appellate court reversed the trial court's ruling of unconstitutionality and remanded the case for further proceedings, allowing consideration of other issues raised in Vanguard’s motion for summary judgment. Additionally, the document provides definitions relevant to "sales finance company" and "retail installment contract," along with details on the penalty provisions under La. R.S. 6:960, including recent revisions to penalties for failing to purchase licenses. The appellate court chose not to address issues beyond those ruled by the trial court.