Jesse MONTCLAIR, Plaintiff-Appellant, v. L.O.I., INC., d/b/a E-Z Money Check Cashing, Inc.; et al., Defendants-Appellees, 246 F. App'x 535

MEMORANDUM Jesse Montclair filed an action seeking damages under the Racketeering Influenced and Corrupt Organization Act (“RICO”), 18 U.S.C. §§ 1962, 1964, the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, the Truth in Lending Act, 15 U.S.C. § 1640, and Montana’s Deferred Deposit Loan Act (the “Act”), Montana Code Ann. § 31-1-702 et seq. The named defendants were L.O.I., Inc., doing business as E-Z Money Check Cashing Inc. (E-Z Money), which made a deferred deposit loan to Montclair, and Credit Service Company (Credit Service), a collection agency, to whom E-Z Money assigned Montclair’s account.

Montclair’s federal claims were based on his contention that the state court’s award of $500 in bad check damages pursuant to Montana Code Ann. § 27-1-717 was a violation of Montana law. The district court held that Credit Service’s collection of $500 in bad check charges did not violate Montana law and dismissed the action. Montclair filed a timely appeal, and we now affirm the district court’s dismissal of his action. The underlying facts are not contested and were set forth by the district court as follows: [I]n June of 2004, E-Z Money made a deferred deposit loan of $200 to Plaintiff pursuant to the Act.

In exchange for the loan, Plaintiff would be required to pay $245 to E-Z Money at a later date. As security for this loan, Plaintiff gave E-Z Money a post-dated personal check for $245. When Plaintiff was unable to make the $245 payment, E-Z Money attempted to cash Plaintiffs $245 check, but the check was dishonored for lack of sufficient funds in Plaintiffs account. E-Z Money then assigned the account to Credit Service, who filed an action in the Justice Court of Yellowstone County, Montana seeking $775 on the $200 loan.

This amount included $245 for the face value of the check, a $30 bounced check fee, and a $500 bad check penalty. The $500 bad check penalty was sought pursuant to Mont.Code Ann. § 27-1-717(3). On May 6, 2005, Credit Service was awarded default judgment. A district court’s dismissal of an action pursuant to Federal Rule of Civil Procedure 12(b)(6) is reviewed de novo. Decker v. Advantage Fund, Ltd., 362 F.3d 593, 595-96 (9th Cir.2004).

Interpretations of state law are also reviewed de novo. Rabkin v. Oregon Health Sciences Univ., 350 F.3d 967, 970 (9th Cir.2003); Goldman v. Standard Ins. Co., 341 F.3d 1023, 1026 (9th Cir.2003). The linchpin of Montclair’s complaint is his contention that Credit Service is forbidden under Montana law from collecting a bad check penalty. He recognizes that Montana Code Ann. § 27-1-717(3) provides for a bad check penalty of up to $500.

He contends, however, that Credit Service may not claim this penalty because Montana Code Ann. § 31-1-722 provides that “[i]f there are insufficient funds to pay a check on the date of presentment, a licensee may charge a fee, not to exceed $30.” It further states that the “fee charged pursuant to this subsection is a licensee’s exclusive charge for late payment,” and a “licensee may not collect damages under § 27-1-717(3) for an insufficient funds check.” Credit Service, however, is not a “licensee” under Montana law.

Montana Code Ann. § 31-1-705 provides that a “person may not engage in or offer to engage in the business of making deferred deposit loans unless licensed by the government.” However, Montana Code Ann. § 31-1-704 provides that the Act “applies to deferred deposit lenders and to persons who facilitate, enable, or act as a conduit for persons making deferred deposit loans,” but does not apply to a collection agency doing business in this state that has entered into an agreement with a deferred deposit lender for the collection of claims owed or due or asserted to be owed or due to the deferred deposit lender.

Thus, Montana law clearly differentiates collection agencies from licensees. We agree with the district court that Montclair’s assertion that Credit Service is exempt from regulation as a licensee only to the extent that it collects money actually owed the payday lender is not persuasive.

It ignores the plain language of both § 31-l-704(2)(b), which excludes from the definition of licensee collection agencies those who have “entered into an agreement with a deferred deposit lender for the collection of claims owed,” and § 21-1-722, which states only that a “licensee” may not collect bad check damages beyond a $30 late fee. Furthermore, the district court noted that “the Compiler’s Comments in the Annotation to the Montana Code state that the 2001 Montana Legislature inserted § 31-l-704(2)(

c) to exempt ‘collection agencies collecting for deferred deposit lenders from the provisions of deferred deposit loan laws.’ Montana Code Annotated Annotations 204, § 31-1-704, Vol. 7. Page 19.” Montclair’s other arguments fail in light of the statute’s clear language. We cannot conclude that it is irrational to exempt collection agencies from the limitations placed on deferred deposit lenders.

Also, we agree with the district court that “the law of assignments commonly grants an assignee greater rights than the assignor.” We decline Montclair’s request to certify the question of Montana law to the Montana Supreme Court. Even if this question were not controlled by the Act’s plain language, a subsequent contrary

interpretation of the Act by the Montana Supreme Court would not necessarily criminalize defendants’ past actions. In sum, Montclair has failed to show that Montana law forbids the collection of a bad check penalty by Credit Service as alleged in Count I, the RICO charge, or that Credit Service was not authorized to collect the bad check penalty as alleged in Count II, the Fair Debt Collection Practices charge. Our determination that Montana law does not prohibit Credit Service from collecting bad check penalties also requires the dismissal of Montclair’s RICO claim against E-Z Money.

The RICO claim alleged that the attempted collection of bad check penalties violated Montana law and constituted a pattern of racketeering activity. However, as noted by the district court, “[without a violation of the Act or the use of any other criminal means, there is no racketeering activity and the Complaint does not state a RICO claim against E-Z Money upon which relief can be granted.” For the foregoing reasons, the district court’s dismissal of Montclair’s complaint is AFFIRMED. This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. .

We note that in order to obtain a bad check penalty under the Act, an entity must file an action in a Montana court. Montana Code Ann. § 27-1-717(1). Furthermore, there is no guarantee that an award of a bad check penalty will be collected. . Montclair does not challenge on appeal the district court’s determination that Count III of his complaint did not state a Truth in Lending claim against E-Z Money. . Montclair concedes that if his federal causes of action were properly dismissed, the dismissal of his state claims was proper.