Hathaway v. First Family Financial Services, Inc.

IN THE SUPREME COURT OF TENNESSEE
AT NASHVILLE

FILED
FOR PUBLICATION
August 30, 1999
JOE M. HATHAWAY, WILLIE M. ) Filed: August 30, 1999
HATHAWAY, and CLARA B. ) Cecil Crowson, Jr.
FULSON, ) Appellate Court Clerk
) NO. 01S01-9811-FD-00203
Plaintiffs/Respondents, )
)
v. ) Certified Questions of Law from
) the United States District Court
FIRST FAMILY FINANCIAL ) for the Middle District
SERVICES, INC., ) of Tennessee.
)
Defendant/Petitioner. ) (John T. Nixon, Judge)

For the Defendant/Petitioner: For the Plaintiffs/Respondents
Val Sanford Malcolm L. McCune
A. Scott Derrick W. Gary Blackburn
Wayne L. Robbins, Jr. Mathew R. Zenner
GULLETT, SANDFORD, BLACKBURN, SLOBEY,
ROBINSON & MARTIN, PLLC. FREEMAN & HAPPELL
Nashville, Tennessee Nashville, Tennessee

For Amicus Curiae:
Tennessee Consumer Finance Association
Robertson M. Leatherman
Sara Falkinham
ARMSTRONG, ALLEN, PREWITT, GENTRY, JOHNSTON & HOLMES
Memphis, Tennessee

OPINION

DROWOTA, J.
 Pursuant to Rule 23 of the Rules of the Supreme Court of Tennessee,1 this

Court accepted certification of the following two questions from the United States

District Court for the Middle District of Tennessee:

1. In determining the service charge that an industrial loan and
thrift company may charge under Tenn. Code Ann. § 45-5-403(1)(A)
(Supp. 1998) upon refinancing a loan, is the amount to be subtracted
from the “total amount of the loan” (as defined in § 45-5-102(17) (Supp.
1998)) the amount of the new loan that is used to pay all or a portion
of the outstanding balance of the old loan from such industrial loan and
thrift company to the borrower?

2. With respect to a violation of the limitations on loan charges
and interest rates that are imposed by the Industrial Loan and Thrift
Company Act, Tenn. Code Ann. § § 45-5-101 et seq., are a borrower’s
remedies under Tennessee law limited to those remedies prescribed
by the general statute pertaining to interest and other charges by
lenders, Tenn. Code Ann. §§ 47-14-101 et seq.?

We answer the foregoing questions in the affirmative. With respect to the first

question we hold that in determining the service charge that an industrial loan and

thrift company may lawfully impose under Tenn. Code Ann. § 45-5-403(1)(A), the

amount to be subtracted from the “total amount of the loan” (as defined in § 45-5-

102(17)) is that portion of the refinancing loan that is used to pay all or any part of the

initial loan from the industrial loan and thrift company. However, interest on the initial

loan that would have accrued after the date of the refinancing should not be included

when computing the balance outstanding on the initial loan. With respect to the

second question, we hold that a borrower’s remedies for a violation of the limitations

1
"The Supreme Court may, at its discretion, answer questions of law certified to it by the
Supreme Court of the United States, a Court of Appeals of the United States, a District Court of the
United States in Tennessee, or a United States Bankruptcy Court in Tennessee. This rule may be
invoked when the certifying court determines that, in a proceeding before it, there are questions of
law of this state which will be determinative of the cause and as to which it appears to the certifying
court there is no controlling precedent in the decisions of the Supreme Court of Tennessee.” Tenn.
Sup. Ct. R. 23, § 1.

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on loan charges and interest rates imposed by the Industrial Loan and Thrift

Company Act, Tenn. Code Ann. §§ 45-5-101, et seq., are limited to the remedies

prescribed by the general statutes pertaining to interest and other charges by

lenders, Tenn. Code Ann. §§ 47-14-101, et seq.

I.

FACTUAL AND PROCEDURAL BACKGROUND

The defendant/petitioner, First Family Financial Services, Inc., is registered

with the State of Tennessee as an “industrial loan and thrift company” as defined in

Tenn. Code Ann. § 45-5-102(8) (Supp. 1998). As such, it is in the business of

extending loans.

Plaintiffs/respondents, Joe and Willie Hathaway obtained from the defendant’s

predecessor-in-interest a loan that was secured by a lien on their home in Nashville.

On September 27, 1995, Mr. and Mrs. Hathaway refinanced their loan with First

Family Financial Services, Inc. On that day they executed, in exchange for the

second loan, a promissory note in the amount of $196,965 which included the

principal amount of the second loan plus pre-computed interest (in the amount of

$113,458.25) thereon over the 15-year life of the second loan. As of the date of the

second loan, the outstanding balance of the Hathaways’ first loan from the

defendant’s predecessor-in-interest was $76,602.85. Mr. and Mrs. Hathaway used

proceeds from the second loan to pay this outstanding balance, thereby completely

retiring the first loan.

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 The defendant imposed a service charge which was calculated by subtracting

$76,642.85, the portion of the loan that was used to retire the initial loan balance,

from $196,965, the total amount of the refinancing loan. On the remaining sum of

$120,332.14, the defendant assessed a four percent service charge of $4,812.89.

Plaintiff, Clara B. Fulson, also obtained a loan from the defendant’s

predecessor-in-interest and subsequently engaged in two refinancing transactions

with the defendant. In each of those transactions, the defendant calculated the four

percent service charge in the same previously described manner.

Thereafter, the Hathaways and Fulson filed a complaint against the defendant

in the Chancery Court for Davidson County, on behalf of themselves and “others

similarly situated,” alleging that the method used by the defendant to calculate the

four percent service charge had resulted in a charge in excess of the maximum

permitted by Tenn. Code Ann. § 45-5-403(1)(A) (Supp. 1998). As a result, the

plaintiffs sought “the full array of remedies provided in T.C.A. § 47-14-117 (1995).”

The complaint also alleged that the excessive service charge constituted fraud,

negligence, misrepresentation, unjust enrichment, and violated the Federal Truth in

Lending Act, the Federal Real Estate Settlement Procedures Act, and the Tennessee

Consumer Protection Act.

After removing the case from the Tennessee Chancery Court to the United

States District Court for the Middle District of Tennessee, the defendant filed a motion

to dismiss for failure to state a claim upon which relief could be granted. The motion

recited the following grounds in support of dismissal:

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 The service charges at issue in the Complaint are legal pursuant to the
Tennessee Industrial Loan and Thrift Companies Act. The other claims
of the Complaint - those not based on the Tennessee Industrial Loan
and Thrift Companies Act, T.C.A. §§ 45-5-101, et seq. - do not state a
claim upon which relief can be granted because the Industrial Loan and
Thrift Companies Act provides the Plaintiffs their exclusive remedy.
The claims of the Plaintiffs do not fall within the Tennessee Consumer
Protection Act. Finally, taking the allegations of the Complaint as true,
the claims under the Tennessee Consumer Protection Act, the Truth
in Lending Act, and the Real Estate Settlement Procedures Act of the
Plaintiffs Hathaway and Plaintiff Fulson relating to her June 1996 loan
are time barred.

As a result of the defendant’s motion to dismiss, the district judge entered an

order certifying to this Court the two questions previously stated, and signifying that

these questions are dispositive of the defendant’s motion to dismiss. We accepted

certification of the questions, and for the reasons hereafter explained, answer both

in the affirmative.

II.

LEGAL AUTHORITY AND ANALYSIS

A. Historical Background

Prior to 1978, Article 11, Section 7 of the Tennessee Constitution provided as

follows:

The Legislature shall fix the rate of interest, and the rate so
established shall be equal and uniform throughout the State; but the
Legislature may provide for a conventional rate of interest, not to
exceed 10 percent per annum.

This ten percent ceiling on conventional interest rates “restricted the availability

of credit during periods of inflation.” Pacific E. Corp. v. Gulf Life Holding Co., 902

S.W.2d 946, 953 (Tenn. App. 1995) (perm. app. denied July 10, 1995). To address

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this problem, the General Assembly in March of 1976 called a limited constitutional

convention aimed at modifying the constitutional restriction on interest rates. Id. at

953.

However, before any action had been taken by the constitutional convention,

this Court, in Cumberland Capital Corp. v. Patty, 556 S.W.2d 516 (Tenn. 1977),

applied the above-quoted version of Article 11, Section 7, and held unconstitutional

a statutory provision expressly authorizing industrial loan and thrift companies to

deduct from the face amount of loans seven and one-half percent annual interest for

the full term of the loans, if the end result was an effective rate of interest in excess

of the constitutional limit of ten percent.

This Court’s opinion in Cumberland Capital Corp. included the following

discussion of loan service charges:

1. The Legislature may not authorize a lender to arbitrarily fix a
monthly expense fee, . . . nor to charge all borrowers the maximum fee,
in addition to interest . . .

2. The lender and the borrower are free to agree upon a
reasonable service charge within the statutory limit, . . . but this
‘freedom of contract’ is limited by Article 11, Section 7 relating to
conventional interest, . . . and is further limited and governed by other
principles set forth in this sequence.

3. Service charges must bear a reasonable relation to the
expense and service of the lender . . . .
....

5. The service charge amounts to usury if exacted as additional
compensation for the use of money in attempted evasion of the
statutes against usury. . . .

6. The service charge may not include overhead expenses such
as rents, salaries, and loan losses, . . . but this does not preclude

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 charging for services directly related to the loan rendered by salaried
employees. It only excludes indirect or extraneous expense. . . .

....

We hold that any service charge in excess of the fair and
reasonable worth of expense and service attributable directly to a loan
must be treated as additional compensation to the lender and
constitutes interest. Any such excess must be added to the stated, or
resulting, amount of interest in order to determine the validity of the
charge. The excess, of course, is conventional interest.

Installment maintenance fees, as set forth in Sec. 45-2007(h)
are to be governed by the same rules.

We do not hold Sections 45-2007(i) or (p) to be unconstitutional.
We do hold, that, in order to sustain the constitutionality of these
subsections, they must be construed and interpreted as hereinabove
set forth, and not as established, uniform, fixed, rigid or arbitrary
charges, . . .”

Id. at 535 (emphasis added) (citations omitted).

On December 1, 1977, shortly after this Court rendered its decision in

Cumberland Capital Corp., the constitutional convention that had been called in

March of 1976 adopted a proposed amendment to rewrite Article 11, Section 7. This

amendment was approved by the electorate on March 7, 1978, and the governor

proclaimed it adopted on March 31, 1978. Pacific E. Corp., 902 S.W.2d at 953.

Therefore, Article 11, Section 7, as amended in 1978, is currently in effect and

provides as follows:

Sec. 7. Interest. - The General Assembly shall define and
regulate interest, and set maximum effective rates thereof.

If no applicable statute is hereafter enacted, the effective rate of
interest collected shall not exceed ten percent (10%) per annum.

All provisions of existing statutes regulating rates of interest and
other charges on loans shall remain in full force and effect until July 1,
1980, unless earlier amended or repealed.

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 As a result of this 1978 constitutional amendment, “[t]he Ninety-First General

Assembly convened in 1979 faced with the prospect of the imminent expiration of all

existing statutes governing interest rates. Accordingly, it enacted several pieces of

legislation completely reforming the statutes on interest and usury.” Pacific E. Corp.,

902 S.W.2d at 953-54 (footnote 12, describing the various laws enacted in 1979 on

the subject of interest and usury, omitted).

B. First Certified Question: Calculation of Service Charge

Included in the package of reform legislation enacted in 1979 was the

Industrial Loan and Thrift Companies Act, (“Loan and Thrift Act”), which governs the

conduct of industrial loan and thrift companies, such as the defendant in this matter.

See Tenn. Code Ann. §§ 45-5-101, et seq. The purpose of this legislation was

described as follows:

An Act to revise and restate the Industrial Loan and Thrift
Companies Act; to regulate Industrial Loan and Thrift Companies; to
define terms used herein; to set maximum effective rates of interest; to
authorize and limit the charges made by such persons; to regulate the
powers and practices of such persons; to authorize supervision and
regulation of such persons by the Commissioner of Insurance and to
provide for the powers of the Commissioner of Insurance; to establish
procedures, remedies and penalties, civil and criminal; to declare the
purposes of the Act and to provide for its construction; and to repeal
Chapter 20 of Title 45, Tenn. Code Ann. and all laws in conflict
herewith.

1979 Tenn. Pub. Acts 204 (emphasis added).

The scope of the Loan and Thrift Act is described in Tenn. Code Ann. § 45-5-

104 (1993 Repl.) as follows:

This chapter applies only to persons engaged in business as
industrial loan and thrift companies or industrial banks or industrial
investment companies. Neither the requirement of registration nor any

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 other provision of this chapter shall apply to any state or national bank
(other than industrial banks), any state or federal savings and loan
association, any state or federal credit union, any insurance company,
or any other person engaged in the business of making loans whose
activities in so doing are subject to supervision and regulation by a
state or federal administrative agency; nor shall the requirement of
registration or any other provision of this chapter apply to licensed
pawnbrokers or to any other person engaged in the sale of goods or
services as such.

Industrial loan and thrift companies, such as the defendant in this case, which

have registered under the Loan and Thrift Act are designated “registrants” by Tenn.

Code Ann. § 45-5-102(14) (Supp. 1998). The maximum interest rates that registrants

can charge for loans is set forth in Tenn. Code Ann. § 45-5-401 (1993 Repl.). The

maximum rates under the Loan and Thrift Act are more than twice the earlier

constitutional limit of ten percent. The Loan and Thrift Act also enabled registrants

to charge uniform fixed loan services charges, which had been previously prohibited

by the pre-1978 version of Article 11, Section 7 and this Court’s decision in

Cumberland Capital Corp.. The first certified question in this appeal involves the

statutory provision that permits the imposition of fixed loan service charges, Tenn.

Code Ann. § 45-5-403(1)(A) (Supp. 1998), which provides as follows:

Limitations on loan charges. - No registrant under this
chapter has the power to charge loan charges other than, or in
amounts greater than, the following:

(1)(A) Registrants may charge a service charge in
an amount equal to four percent (4%) of the total amount
of the loan, which charge may be deducted in advance
from the principal of the loan. This service charge shall
be in lieu of all other compensation for services,
expenses, detriments or commitments directly incident to
the loan, except those charges which are otherwise
specifically provided in this chapter. This charge is
authorized and limited on the basis that it is generally
reasonably related to the total costs and expenses which
it is designed to cover, and in order to make the amount
of such charges more certain and readily ascertainable

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 by such registrants, their borrowers and the
commissioner; and to that end, registrants shall not be
required to maintain detailed records with respect to the
services, expenses, detriments or commitments covered
thereby. This charge shall not, however, be imposed on
that portion of a loan used to pay any existing loan or part
thereof owing by the same borrower or spouse, or both,
to the same registrant or any affiliated lender.”

(Emphasis added).

Thus, under this statutory provision, the amount upon which the four percent

loan service charge can be imposed by a registrant is determined by subtracting from

the “total amount of the loan” an amount that consists of “that portion of a loan used

to pay any existing loan or part thereof owing by the same borrower . . . to the same

registrant.” The latter phrase is not defined by the Loan and Thrift Act.

The phrase “total amount of the loan” is defined at Tenn. Code Ann. § 45-5-

102(17) (Supp. 1998) as “the aggregate amount of money scheduled to be paid by

a borrower to a registrant to repay a loan, including principal and any interest

precomputed and deducted in advance.” (Emphasis added). “Principal” is separately

defined as “the total of money paid to, received by, or paid or accredited to the

account of the borrower, including loan charges as provided in § 45-5-403(1),

(2) and (3), as applicable, and including insurance charges for which the borrower

contracts to pay pursuant to § 45-5-305.” Tenn. Code Ann. § 45-5-102(13) (Supp.

1998). “Interest” is defined as

compensation for the use, detention or forbearance to collect money
over a period of time, and does not include compensation for other
purposes, including, but not limited to:

(A) Time-price differentials;
(B) Loan charges as provided in § 45-5-403; and

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 (C) Insurance charges as provided in § 45-5-305.

Tenn. Code Ann. § 45-5-102(9)(Supp. 1998).

The plaintiffs in this case do not dispute that the defendant accurately

determined the “total amount of the loan” in calculating the loan service charges.

Rather, the dispute between the parties centers around the determination of the

amount that is to be subtracted from the “total amount of the loan” which is “that

portion of a loan used to pay any existing loan or part thereof owing by the same

borrower . . . to the same registrant.” As stated above, the latter provision is not a

defined term.

According to the defendant, this phrase means that portion of the refinancing

loan used to pay the amount of the original loan that is outstanding as of the date of

the refinancing, which latter amount does not include interest on the original loan that

has not and will not accrue as a result of the refinancing transaction. The plaintiffs,

on the other hand, interpret the phrase to mean the “total amount of the loan,” as

defined in Tenn. Code Ann. § 45-5-102(17), with respect to the original loan,

determined as of the date of the refinancing. Under the plaintiffs’ interpretation, this

amount should include the interest on the original loan that would have accrued after

the date of refinancing, even though the interest never, in fact, accrues because the

original loan is retired by the refinancing loan.

The problem with the plaintiffs’ interpretation is that no portion of the

refinancing loan is used to pay such nonexistent interest. No portion of the

refinancing loan is used to pay interest on the original loan that, because of the

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refinancing, never in fact accrues. Thus, we agree with the defendant that no

subtraction is allowed under Tenn. Code Ann § 45-5-403(1)(A) (Supp. 1998), for such

nonexistent interest. Moreover, the General Assembly, having used the defined

phrase (the “total amount of the loan”) to establish the first variable, could have used

the same defined term to establish the second variable had it intended for the phrase,

“that portion of a loan used to pay any existing loan or part thereof owing by the same

borrower . . . to the same registrant” to mean the same thing. The fact that the

General Assembly did not use the same defined term demonstrates that it did not

intend for that definition to apply to establish the second variable. State v. Lewis, 958

S.W.2d 736, 739 (Tenn. 1997).

We do not regard the disputed portion of Tenn. Code Ann. § 45-5-403(1)(A)

(Supp. 1998) as ambiguous, at least not ambiguous in a manner that would justify the

plaintiffs’ proposed interpretation. Thus, we are not persuaded by the plaintiffs’

reliance on certain portions of the legislative history of the Loan and Thrift Act. As

we recently stated in Storey v. Bradford Furniture Co., Inc., 910 S.W.2d 857, 859

(Tenn. 1995):

[i]n interpreting legislative provisions, our role is ‘to ascertain and
give effect to the legislative intent without unduly restricting or
expanding a statute’s coverage beyond its intended scope.’ . . . If the
intent can be determined from the plain language of the provision read
in the context of the entire statutory scheme, we must conclude our
inquiry there. . . . If the language is ambiguous and does not yield a
clear interpretation, we may consult the legislative history for additional
interpretive guidance.

(Citations omitted).

We note, however, that even if we were to regard the disputed portion of the

statute as ambiguous, we would find more persuasive than the legislative history the

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fact that the Tennessee Department of Financial Institutions,2 which has been

responsible for enforcing the Loan and Thrift Act, has consistently applied the

defendant’s interpretation of the statute. See e.g., Covington Pike Toyota, Inc. v.

Cardwell, 829 S.W.2d 132 (Tenn. 1992).

Therefore, with respect to the first certified question, we hold that in

determining the maximum service charge that lawfully can be imposed under Tenn.

Code Ann. § 45-5-403(1)(A) (Supp. 1998), the amount to be subtracted from the

“total amount of the loan,” as defined in Tenn. Code Ann. § 45-5-102(17), is the

amount of the refinancing loan that is used to pay all or any portion of the outstanding

balance of the initial loan from the registrant to the borrower. However, interest that

had not accrued before the date of the refinancing and retirement of the initial loan

should not be included as part of the outstanding balance of the initial loan which is

subtracted from the “total amount of the loan.”

C. Second Certified Question: Exclusive Remedy

With respect to the second certified question, we begin our analysis with Tenn.

Code Ann. § 45-5-404 (1993 Repl.), which is a part of the Loan and Thrift Act. This

statute provides as follows:

Remedies of borrowers - Defenses - Limitations of actions.
- The remedies of borrowers, the limitations on actions of borrowers,
the defenses available to borrowers and to registrants, and the
procedures applicable to such actions with respect to interest and loan
charges under this chapter shall be those as prescribed by the general
statute pertaining to interest and other charges by lenders and
creditors.

2
Formerly the Tennessee Department of Insurance and Banking.

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(Emphasis added). The “general statute pertaining to interest and other charges by

lenders or creditors” referred to above is Chapter 14 of Title 47 of Tennessee Code

Annotated, which is entitled “Interest Rates Generally.” Like the Loan and Thrift Act,

this legislation was also adopted as part of the reform package in 1979. See 1979

Tenn. Pub. Acts 203; Pacific E. Corp., 902 S.W.2d at 954 n.12. Therefore, the

statutes enacted in 1979, including the Loan and Thrift Act and the general statute

relating to interest, created new rights and remedies for borrowers with respect to

interest rates above ten percent annually and fixed uniform service charges.

In determining whether these statutes provide the exclusive remedies for

borrowers, we are guided by our decision in Hodges v. S.C. Toof & Co., 833 S.W.2d

896, 899 (Tenn. 1992), in which we stated:

[i]f a statute creates a new right and prescribes a remedy for its
enforcement, then the prescribed remedy is exclusive. Turner v.
Harris, 198 Tenn. 654, 664, 281 S.W.2d 661, 665 (1955); Nashville &
C.R.R. v. Sprayberry, 56 Tenn. 852, 854 (1874). However, where a
common law right exists, and a statutory remedy is subsequently
created, the statutory remedy is cumulative unless expressly stated
otherwise . . . Further, the Legislature is presumed to know the state of
the law on the subject under consideration at the time it enacts
legislation.

(Citations omitted).

We determined in Hodges that the 1986 statute creating a remedy for

retaliatory discharge was not the exclusive remedy because the right to a retaliatory

discharge cause of action had been previously recognized by this Court in 1984.

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 Applying the rationale of Hodges to the facts in this case, we conclude that the

remedies prescribed by the general statute pertaining to interest and other charges

by lenders, Tenn. Code Ann. §§ 47-14-101 et seq., constitute the exclusive remedies

for borrowers with respect to interest and loan charges under the Loan and Thrift

Act. Our conclusion is grounded upon the fact that the statutes creating both the

right and the remedies were enacted in 1979 as part of the reform package.

Moreover, the clear language of the statute indicates that the remedies are exclusive.

The statute provides that “[t]he remedies of borrowers . . . with respect to interest and

loan charges under this chapter shall be those as prescribed by the general statute

pertaining to interest and other charges by lenders or creditors.” Tenn. Code Ann.

§ 45-5-404 (1993 Repl.).

The plaintiffs’ reliance on our decision in Myint v. Allstate Ins. Co., 970 S.W.2d

920 (Tenn. 1998), is misplaced. In Myint, we concluded that a statute3 which allowed

imposition of a twenty-five percent penalty for a bad faith refusal to pay a loss claim

under an insurance contract was not the exclusive remedy for such a violation and

that the remedies of the Tennessee Consumer Protection Act also could be applied

in such a situation. Myint is distinguishable from the circumstances in this case. For

example, a right of action existed at common law for breach of contract, including

breach of an insurance contract, long before the enactment of the “bad

faith” statute. In contrast, rights and remedies with respect to fixed uniform loan

charges and interest rates in excess of ten percent were created by the General

3
Tenn. Code A nn. § 56-7-105 (1994 R epl.).

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Assembly in the same year. In addition, Myint was based partially on a provision of

the Tennessee Consumer Protection Act, which provides in pertinent part as follows:

The powers and remedies provided in this part shall be
cumulative and supplementary to all of the powers otherwise provided
by law. The invocation of one power or remedy herein shall not be
construed as excluding or prohibiting the use of any other available
remedy.

Tenn. Code Ann. § 47-18-112 (1995 Repl.). Though we stated in Myint that, “[e]ven

when a different code section applies and is invoked to obtain relief, the Consumer

Protection Act may also apply, assuming the act or practice in question falls within

the scope of its application,” Myint, 970 S.W.2d at 926, we did not intend to imply that

the remedies of the Tennessee Consumer Protection Act apply in every

circumstance. Where, as here, another remedy has been deemed exclusive, the

remedies afforded by the Tennessee Consumer Protection Act do not apply.

Available remedies under the general statute pertaining to interest include

making usury a defense to an action to collect a loan and recovering usurious

payments that have been made. Tenn. Code Ann. §§ 47-14-110, -111 (1995 Repl.).

In addition, it is possible to recover loan charges that are in excess of those permitted

by the Loan and Thrift Act. Tenn. Code Ann. § 47-14-114 (1995 Repl.). The

following statutory provisions afford equitable remedies relating to the imposition of

excess interest:

No person shall be entitled to an equitable remedy with respect
to usury or excess loan charges unless the person seeking such
remedy does equity by paying, or tendering into court, the principal plus
lawful interest and loan charges then due; provided, that any contract
may be reformed by suit brought in equity with respect to any regulated
loan charges, brokerage commissions, or commitment fees in excess
of those authorized by law upon cost bond or, in appropriate cases, on
pauper’s oath.

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 Where successful in the reformation of the instrument, the
complaining party shall be rewarded reasonable attorneys’ fees.

Tenn. Code Ann. § 47-14-115(b) and (c) (1995 Repl.).

When there is a deliberate violation of the provisions of the Loan and Thrift Act

regarding interest and loan charges, the following remedies are provided by the

statute:

Where, however, the court finds that the lender or creditor has
been guilty of unconscionable conduct in a transaction by taking
interest, loan charges, commitment fees, or brokerage commissions in
excess of the limitations fixed by statute, that lender or creditor shall
not be entitled to recover any interest, loan charges or commitment
fees or brokerage commissions with respect to that transaction and
shall be required to refund to the borrower or debtor any loan charges,
commitment fees, or brokerage commissions, and twice the amount of
any interest collected with respect to that transaction, and the borrower
shall be entitled to recover reasonable attorneys’ fees from the lender.

As used in this subsection, ‘unconscionable conduct’ includes,
but is not limited to, any calculated violation of statutory limitations on
interest, loan charges, commitment fees or brokerage commissions
with full awareness of those limitations.

Tenn. Code Ann. § 47-14-117(c) (1995 Repl.).

Our holding that these remedies are exclusive with respect to interest and loan

charges under the Loan and Thrift Act does not mean that registrants are not, under

any circumstances, subject to the provisions of the Tennessee Consumer Protection

Act. We decline to adopt a broad exemption. Each case must be examined on its

own facts. See Pursell v. First American Nat’l Bank, 937 S.W.2d 838, 842 (Tenn.

1996) (holding that a bank’s actions with regard to repossession of collateral did not

fall within the Tennessee Consumer Protection Act, but declining to establish a

general “banking” exemption from the Tennessee Consumer Protection Act); see

also, Turner v. E-Z Check Cashing, 35 F. Supp. 2d 1042 (M.D. Tenn. 1999).

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 In conclusion, with respect to the second certified question, we hold that the

remedies prescribed by Tenn. Code Ann. §§ 47-14-101, et seq. are the exclusive

remedies of borrowers with respect to a violation of the limitations on loan charges

and interest rates that are imposed by the Industrial Loan and Thrift Companies Act.

III.

CONCLUSION

For the reasons herein explained, we answer the questions certified by the

United States District Court for the Middle District of Tennessee in the affirmative.

The clerk will transmit this opinion in accordance with Rule 23, Section 8 of the Rules

of the Supreme Court. The costs in this Court will be taxed equally between the

plaintiffs-respondents and the defendant-petitioner.

FRANK F. DROWOTA, III,
JUSTICE

Concur:
Anderson, C.J.,
Birch, Holder, Barker, JJ.

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