IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 26, 2008
No. 07-60812 Charles R. Fulbruge III
Clerk
FANNIE ARCHER, et al.
Plaintiffs - Appellants
v.
NISSAN MOTOR ACCEPTANCE CORPORATION, et al.
Defendants - Appellees
Appeal from the United States District Court
for the Southern District of Mississippi
Before KING, HIGGINBOTHAM, and WIENER, Circuit Judges.
PATRICK E. HIGGINBOTHAM:
This case concerns the running of the limitations period governing suits
based on the Equal Credit Opportunity Act.1 Appellants contend that their suit
was not time barred because the ECOA’s two-year limitations period did not
begin to run until discovery of the alleged violations of the Act. We disagree and
hold that the ECOA’s limitations period is triggered by “the occurrence of the
violation,” not discovery of the violation.
Appellants also brought Mississippi state law claims which are governed
by the state’s general three-year statute of limitations. We find that these
claims were also time barred because, while a codified discovery rule does apply
1
15 U.S.C. § 1691.
No. 07-60812
under Mississippi law, the claims were discoverable at the time of the violation,
which for all Appellants was more than three years before suit was brought.
I
Between 1993 and 1996, Plaintiffs-Appellants, five African American car
buyers, received dealer financing from their Nissan dealerships. The dealers,
in turn, assigned the loans2 to Defendant-Appellant Nissan Motor Acceptance
Corporation pursuant to an on-going agreement between the dealers and NMAC.
Under the agreement, NMAC offered to buy any loans originated by the Nissan
dealers that it had pre-approved. To obtain pre-approval the dealers would
forward customers’ financing applications to NMAC. NMAC would then
determine, based only on the objective data in the application, the “buy rate,” the
rate at which it would offer to buy the loan from the dealer. The dealer, knowing
the rate at which it could sell the loan to NMAC, was then free to add a markup
to the buy rate to arrive at the retail rate presented to the customer. The dealer
markup was subjective, not based on objective criteria such as payment history
or debt ratio. Plaintiffs allege that the subjective markup resulted in increased
rates to African Americans as compared with similarly situated white customers
and that NMAC violated the ECOA by purchasing these loans from the dealers.
In December 2002 and more than six years after their financing
transactions, Plaintiffs brought an action alleging that NMAC violated the
ECOA through its involvement in discriminatory dealer loans. Plaintiffs also
brought claims under Mississippi state law, including fraud, negligence,
conspiracy, and violations of the Mississippi Unfair and Deceptive Acts and
Practices Act, all of which stemmed not from discrimination, but from the
2
The loans are termed retail installment contracts, which are financing contracts
between a dealer and a car buyer wherein the buyer agrees to pay the vehicle price in periodic
installments that include interest.
2
No. 07-60812
dealers’ alleged affirmative misrepresentations that the Plaintiffs were receiving
the “best rate.”
The district court granted NMAC’s motion for summary judgment on both
the ECOA and state law claims because the claims were brought well outside
their respective limitations periods and no judicially imposed equitable doctrine
such as a discovery rule saved the claims, rulings we review de novo.3
II
We hold that a discovery rule does not apply to ECOA claims. The ECOA
time prescription provides in sweeping and direct language that “[n]o action
shall be brought later than two years from the date of the occurrence of the
violation.”4 This is a statute of repose establishing with clear text a
“jurisdictional bar” under which “federal courts lack the power to extend the
period to allow for late adjudication of claims.”5 Summary judgment was
therefore appropriate because these claims expired before they were brought and
this clear statute foreclosed equitable doctrines.
We have previously found similar statutory language to constitute a
statute of repose. In Radford v. General Dynamics Corp., we held that the
ERISA limitations provision, which states “[n]o action may be commenced under
this subchapter . . . after the earlier of . . . six years after [] the date of the last
[violation],” is a statute of repose, “serving as an absolute barrier to an untimely
suit.”6 Both the ECOA and ERISA set clear outside limits, measured from the
3
Topalian v. Ehrman, 954 F.2d 1125, 1131-32 (5th Cir. 1992).
4
15 U.S.C. § 1691e(f).
5
Davis v. Johnson, 158 F.3d 806, 810 (5th Cir. 1998) (deciding whether the
Antiterrorism and Effective Death Penalty Act limitations period is a statute of limitations or
a jurisdictional bar).
6
Radford v. Gen. Dynamics Corp., 151 F.3d 396, 400 (5th Cir. 1998) (per curiam)
(interpreting 29 U.S.C. § 1113).
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No. 07-60812
date of the violation itself, within which suit must be filed. The statutes leave
federal courts no power to extend the limitations period beyond, in the case of
the ECOA, “two years from the date of the occurrence of the violation.”
Nor is there any tension between the ECOA’s text and its legislative
history. The ECOA was amended in 1976, in part to extend the limitations
period from one to two years. The Senate report accompanying the amendment
explained: “The development and investigation of the necessary facts . . . may
require more than a year. Discriminatory practices . . . are not apparent from
the face of particular documents or contracts.”7 Congress thus sought to
accommodate aggrieved individuals by enlarging the limitations period in which
to discover unapparent violations. Such an accommodation would have been
unnecessary if Congress intended the courts to engraft equitable tolling
doctrines onto the statute.
The Supreme Court has endorsed this reading of the ECOA, stating that
a discovery rule does not apply to statutes that key the start of the limitations
period to “the date of the occurrence of the violation.” In TRW Inc. v. Andrews,8
the appellant argued that a discovery rule should apply to Fair Credit Reporting
Act claims because an early version of the statute, which started the limitations
period strictly on the “date of the occurrence of the violation,” was revised to
start the limitations period on the presumably more flexible “date on which the
liability arises.” While the Court did not sanction such an attenuated inference
of congressional intent, it nevertheless stated that if the “date of the occurrence
of the violation” language had remained in the final provision, it “would have
plainly established” that a discovery rule was inapplicable.9 That language is
7
S. REP. NO. 94-589, at 14 (1976), as reprinted in 1976 U.S.C.C.A.N. 403, 416.
8
534 U.S. 19, 32 (2001).
9
Id.
4
No. 07-60812
present in the ECOA. Plaintiffs’ ECOA claims, which were brought “later than
two years from the date of the occurrence of the violation,” are time barred.
III
The district court granted NMAC summary judgment on the state law
claims finding that they also were time barred. Plaintiffs brought a slew of state
law claims against NMAC related to the dealers’ alleged affirmative
misrepresentations that Plaintiffs were receiving the “best rate.” All of the
claims are subject to Mississippi’s general three-year statute of limitations,
which begins to run when the cause of action accrues.10 Under Mississippi law,
“a cause of action for ‘deceit accrues upon the completion of the sale induced by
such false representation, or upon the consummation of the fraud.’”11 The
parties agree that the causes of action accrued when the financing transactions
occurred. All the transactions occurred over six years before suit was brought,
are outside the general limitations period, and are barred unless a tolling
provision applies.
A
Plaintiffs contend that Mississippi’s residual discovery rule saves their
claims. It reads:
In actions for which no other period of limitation is prescribed and
which involve latent injury or disease, the cause of action does not
accrue until the plaintiff has discovered, or by reasonable
diligence should have discovered, the injury.12
10
MISS. CODE ANN. § 15-1-49(1) (“All actions for which no other period of limitation is
prescribed shall be commenced within three (3) years next after the cause of such action
accrued, and not after.”).
11
Black v. Carey Canada, Inc., 791 F.Supp. 1120, 1123 (S.D. Miss. 1990) (quoting Dunn
v. Dent, 153 So. 798, 798 (Miss. 1934)).
12
MISS. CODE ANN. § 15-1-49(2).
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No. 07-60812
The Mississippi Supreme Court has held that this discovery rule only applies if
a latent injury is present.13 To be latent, an injury must be “undiscoverable by
reasonable methods” such as “through personal observation or experience.”14
Applying this guidance, the Mississippi discovery rule does not toll the
limitations period in this case because the dealers’ allegedly fraudulent
misrepresentations that Plaintiffs were getting the “best rate” were not
undiscoverable by reasonable methods. It is true that ordinarily this
determination is a fact driven inquiry.15 Here, however, it is clear as a matter
of law that Plaintiffs were capable at the time of the transactions of ascertaining
whether a competing dealer, a bank, or a wealthy family member could beat the
financing rates pitched by the car salesmen. There is nothing latent about the
fact that a car dealer may use puffing16 to maximize profits on a car sale and a
reasonable buyer should expect to encounter such tactics in both the sale and
financing aspects of the transaction.
Plaintiffs, however, point specifically to the markup arrangement between
NMAC and the dealers as itself being undiscoverable since neither NMAC’s buy
rate nor the markup was disclosed to car buyers. As NMAC argues, though, no
applicable federal or state law requires the dealer to disclose the price at which
13
PPG Architectural Finishes, Inc. v. Lowery, 909 So.2d 47, 50 (Miss. 2005).
Mississippi’s residual discovery rule at issue in Lowery and in this case focuses the inquiry only
on the plaintiff’s discovery of a latent injury, as compared to the state’s medical malpractice
discovery rule, MISS. CODE ANN. § 15-1-36, which inquires more comprehensively as to when
the “patient can reasonably be held to have knowledge of the injury itself, the cause of the
injury, and the causative relationship between the injury and the conduct of the medical
practitioner.” Huss v. Gayden, 991 So.2d 162, 165 (Miss. 2008) (quoting Smith v. Sanders, 485
So.2d 1051, 1052 (Miss. 1986) (emphasis omitted)).
14
Lowery, 909 So.2d at 51.
15
Huss, 991 So.2d at 166 (“Application of the discovery rule is a fact-intensive process.”)
(citation omitted).
16
See Thomas v. Miss. Valley Gas Co., 113 So.2d 535, 538 (Miss. 1959) (holding that
puffing does not give rise to fraud liability under Mississippi law).
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No. 07-60812
a financier has agreed to buy the loan and Plaintiffs were presented the legally
required total annual percentage rate.17 It is this total annual percentage rate
that Plaintiffs could have compared with other readily-available finance
providers to discover if they were indeed getting the “best rate.”
The state discovery rule aside, by their own sworn testimony, Plaintiffs
were suspicious at the time of their transactions that the rates offered by the
dealers were not the lowest financing rates available. It was at this point, well
over three years before their suit was brought, that Plaintiffs “should have
discovered by the exercise of reasonable diligence, that [they] probably ha[d] an
actionable injury.”18 Plaintiffs’ statements such as “I knew [the bank] had a
lower rate,” and “I didn’t really believe them, but you know, I went on and
accepted [the rate]” belie attempts to extend the statute of limitations on the
ground that their putative action was undiscoverable.
B
Mississippi has also codified the doctrine of fraudulent concealment, which
Plaintiffs would employ to toll the statute of limitations. The statute reads:
If a person liable to any personal action shall fraudulently conceal
the cause of action from the knowledge of the person entitled
thereto, the cause of action shall be deemed to have first accrued
at, and not before, the time at which such fraud shall be, or with
reasonable diligence might have been, first known or discovered.19
17
See Truth in Lending Act, 15 U.S.C. § 1606; Reg. Z, 12 C.F.R. § 226.18. In fact, the
Federal Reserve Board expressly rejected a regulation requiring the disclosure of dealer
participation as a separate component of the finance charge. 42 Fed. Reg. 19,124 (Apr. 12,
1977).
18
Lowery, 909 So.2d at 51(discussing recent Mississippi Supreme Court decisions that
“further erode the level of knowledge required to vest a cause of action” and trigger the
limitations period).
19
MISS. CODE ANN. § 15-1-67.
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No. 07-60812
We have previously interpreted the statute, holding “Mississippi law is
unambiguous: Plaintiffs must prove a subsequent affirmative act of fraudulent
concealment to toll the limitations.”20 Plaintiffs in this case simply fail to allege
a subsequent act of concealment separate from the alleged fraud underlying the
cause of action. The only acts of NMAC alleged by Plaintiffs relate to the
transactions themselves. Plaintiffs do not point to any acts subsequent to the
transactions and thus fail to satisfy the elements of fraudulent concealment.
Accordingly, all of Plaintiffs’ claims are time barred. AFFIRMED.
20
Ross v. Citifinancial, Inc., 344 F.3d 458, 463-64 (5th Cir. 2003).
8