The CASH STORE, aka Cottonwood Financial, Ltd a Texas Limited Partnership licensed to do business in Washington State, Appellant

The CASH STORE, aka Cottonwood Financial, Ltd a Texas Limited Partnership licensed to do business in Washington State, Appellant

Under Washington law, a company in the business of making small loans may advance up to $500 on the security of a postdated check, as long as the date of the postdated check is no more than 31 days after the date of the loan. RCW (4); (3). These so-called “payday loans” may be subject to interest or fees up to 15 percent of the principal amount borrowed. RCW (2).

Court of Appeals of Washington,Division 3, Angela D. JOHNSON, a single woman, Respondent, v. No. 21435-4-III

The Cash Store, also known as Cottonwood Financial, Ltd., loaned Angela Johnson $500. In exchange, Ms. Johnson gave Cash Store a check postdated two weeks later for $575, including a $75 “Finance Charge.” Clerk’s Papers (CP) at 12. When Ms. Johnson was unable to pay the entire amount two weeks later, Cash Store offered to keep the $75 finance charge and to draw up a second loan agreement for $575 with a second postdated check due two weeks later. Ms. Johnson repeated this process 14 times over the next 7 months. Following a stop payment on the last postdated check, and alleged threats from Cash Store that it would bring criminal charges, Ms. Johnson finally paid off the loan. She then filed a complaint against Cash Store for unconscionability and violations of the Consumer Protection Act. Although the summons and complaint were served on the manager, Cash Store did not answer or appear. Consequently, Ms. Johnson obtained a default judgment. Cash Store’s motion to vacate the judgment was denied.

Johnson went to Cash Store on January 4 and requested a $250 loan

On appeal, Cash Store contends vacation of the default judgment is appropriate under CR 60(b) because it presented at least a prima facie defense to Ms. Johnson’s causes of action and its failure to respond was due to excusable neglect. Cash Store also contends the trial court erred in its computation of damages. We find that Cash Store’s failure to appear was inexcusable. Further, we find that it failed to present a strong prima facie defense to Ms. Johnson’s claims or to her request for damages. Consequently, we affirm.

Cottonwood Financial, Ltd. is a Texas limited partnership licensed to do business in Washington as The Cash Store. Ms. Johnson was a single mother working as a manager for Jack in the Box in . Because she had paid a $300 veterinarian bill for treatment of her daughter’s cat, she found that she needed additional money to pay bills that month. Ms. A Cash Store employee reportedly told her she would get a better finance rate for a $500 loan and she agreed to the greater amount. The “CONSUMER LOAN AGREEMENT” signed by Ms. Johnson set out the following disclosures: the amount paid to Ms. Johnson was $500; the annual percentage rate was percent; the finance charge was $75; the amount financed was $500; and the total payment of $575 was due two weeks later. CP at 12. Ms. Johnson’s postdated check for $575 was security for the loan. The agreement also informed her that if she paid the loan in full before the due date, she would be charged a prepayment penalty equal to the difference between the finance charge and the interest accrued through the prepayment date.

Ms. Johnson realized she would not be able to pay $575 on the date it was due. The Cash Store employee reportedly told her to come in on the due date with $575 in cash and the store would roll the loan over. On January 13, Ms. Johnson went to Cash Store with $575 in cash, an employee took her money, gave her back check this site out the postdated check, and wrote a new consumer loan agreement. Ms. Johnson signed the new agreement, wrote a new check postdated two weeks later, and the Cash Store employee handed back the $500 in cash, keeping $75. This process was repeated 14 more times, with Ms. Johnson paying $75 each time.

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