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Independent Financial, Inc. v. Wanna

May 23, 2008; as amended July 3, 2008

INDEPENDENT FINANCIAL, INC., APPELLANT,
v.
RONALD A. WANNA, SUSAN HARJO, DEFENDANTS,
ARGENT MORTGAGE COMPANY, LLC, APPELLEE,
UNITED STATES OF AMERICA US ATTORNEY, UNITED STATES OF AMERICA, DEFENDANT, AND AMERIQUEST FUNDING II REO SUBSIDIARY, LLC, APPELLEE,
v.
RONALD WANNA, ET AL., DEFENDANTS.



Appeal from Douglas District Court; PAULA B. MARTIN, judge.

SYLLABUS BY THE COURT

1. K.S.A. 16a-5-201 of the Kansas Uniform Consumer Credit Code (KUCCC) applies only to consumers' remedies for violations by creditors. Under 16a-1-301, an assignee of a loan is not a creditor; therefore, the penalty provision of K.S.A. 16a-5-201(3), which allows a consumer to obtain a refund of twice the amount of any excess interest charged, is not an available consumer remedy against assignees.

2. K.S.A. 16a-2-301(2) clearly and unambiguously requires an assignee of a supervised loan to be licensed as a supervised lender before taking an assignment or directly collecting on such a loan and provides a 3-month grace period in which an unlicensed assignee may collect and enforce a loan if the assignee promptly applies for a license and has not had its application rejected. To permit an unlicensed lender to collect on a supervised loan absent such application would render the statute's 3-month grace period meaningless.

3. Appellate courts generally construe statutes to avoid unreasonable results and presume the legislature does not intend to enact useless or meaningless legislation.

4. To permit an unlicensed lender to collect on a supervised loan absent an application for a license would be contrary to the legislature's intent as it would deprive the State of the ability to police assignees that engage in the business of taking and collecting on assignments of supervised loans.

5. Generally, a violation of the KUCCC does not impair rights on a debt. K.S.A.16a-5-201(5). Nevertheless, the beginning clause of K.S.A. 16a-5-201, "[e]xcept as otherwise provided," contemplates that an assignee may not enforce rights on a debt when the assignee has failed to obtain a license to engage in the business of taking an assignment or collecting on a supervised loan under K.S.A. 16a-2-301.

The opinion of the court was delivered by: Caplinger, J.

Affirmed.

Before MARQUARDT, P.J., CAPLINGER and LEBEN, JJ.

Independent Financial, Inc. (IFI), appeals the district court's grant of summary judgment in favor of Argent Mortgage Company, LLC (Argent). The district court held that IFI, an unlicensed assignee of a supervised loan, had no authority to collect on the loan or enforce its terms pursuant to the provisions of the Kansas Uniform Consumer Credit Code (KUCCC), K.S.A. 16a-1-101 et seq.

Because the district court correctly interpreted K.S.A. 16a-2-301(2) to provide that IFI, as an unlicensed assignee of a supervised loan, had no authority to collect on the subject loan or enforce its terms, we affirm the summary judgment.

Factual and Procedural Background

This case arises out of a mortgage foreclosure action on a home owned by Ronald Wanna and Susan Harjo. In 1998, Wanna and Harjo took out a second mortgage on their Lawrence home from Ditech Funding Corporation (Ditech) in the amount of $85,000, with an interest rate of 13.75%. Ditech was a supervised lender in Kansas when it made this loan. At the time Wanna and Harjo executed the Ditech note and mortgage, the property was subject to a first mortgage held by Countrywide Mortgage (Countrywide).

Wanna and Harjo subsequently defaulted on their payments to Ditech. Ditech unsuccessfully attempted to settle the outstanding debt; on April 28, 2004, Ditech assigned the note and mortgage to IFI. At the time it took the assignment, IFI was not a supervised lender licensed by the State of Kansas. The Internal Revenue ...


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