Transamerica Fin. Corp. v. Superior Court
In Transamerica Fin. Corp. v. Superior Court, 158 Ariz. 115, 116, 761 P.2d 1019, 1020 (1988), the Arizona Supreme Court held that borrowers have an implied private right of action under the Consumer Loan Act. 158 Ariz. at 116, 761 P.2d at 1020.
The court traced the Act's origins, observing that as far back as 1935, it had "recognized a borrower's implied right to enforce provisions of the Small Loan Act by permitting a borrower to seek and receive relief in the courts from loans alleged to be usurious under that act." Id. at 117, 761 P.2d at 1021.
Although the Act was later amended several times, the legislature took no steps to prohibit a private right of action, indicating "a legislative intent to preserve the private right judicially recognized by the court." Id.
The court concluded:
Since 1919 Arizona's legislative policy has been to forfeit usurious small loans. In 1956 the legislature specifically stated that loans made in violation of the Consumer Loan Act were void and that a licensee had no right to collect principal, interest or other charges. Since Walker v. Peoples Finance & Thrift Co., 45 Ariz. 226, 42 P.2d 405 (1935), the common law in Arizona has recognized a private right of action to void a usurious contract. The provisions of the Consumer Loan Act are part of the loan contract by operation of law and are enforceable in a contract action between the parties. Id. at 118, 761 P.2d at 1022.
The supreme court held that the Consumer Loan Act provided an implied private right of action. 158 Ariz. at 116, 761 P.2d at 1020.
To reach this holding, the supreme court focused on the "spirit and purpose" of the loan laws, which is "to protect borrowers." Id.
Because a determination that a loan contract is void under the Act "only inures to the benefit of an individual borrower," the supreme court concluded that "a private right of action is contemplated by the legislature for enforcement of this individual right, even though other sections of the Act provide for administrative action for enforcement of its regulatory scheme." Id. at 117, 761 P.2d at 1021.