In Heinz v. Driven Auto Sales, No. ED107617, 2020 Mo. App. LEXIS 782 (Ct. App. June 16, 2020), the Missouri Court of Appeals found that a credit union was responsible for the dealer’s conduct under the FTC Holder Rule, despite an argument that the credit union could not be directly liable under the Missouri statute sued upon.
In many respects, the FTC holder rule mirrors the foregoing principles of Missouri law regarding assignee liability. The FTC holder rule provides that “any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained . . . .” 16 C.F.R. § 433.2. And like the MMPA, the FTC holder rule “exists to preserve consumer rights against holders[.]” Boulds v. Chase Auto Fin. Corp., 266 S.W.3d 847, 852 (Mo. App. E.D. 2008). From our analysis below, we reach the critical conclusion that the “subject to all claims” language from the FTC holder rule is broad and encompasses the MMPA claim at issue here. In Boulds, we found that “the liability of the holder is as broad as that of the seller under the FTC holder rule[.]” 266 S.W.3d at 852. And Missouri courts have consistently held that an assignee-holder, “by virtue of [*12] being an assignee,” may be liable on an MMPA claim regardless of whether the assignee committed fraudulent or unlawful conduct. Peel, 408 S.W.3d at 205-06 (holding that the assignee-holder of a retail installment contract from the purchase of a vehicle was liable, “by virtue of being an assignee,” for a consumer’s MMPA claim filed against the holder even if based solely on the seller’s failure to deliver title upon delivery of the vehicle); Boulds, 266 S.W.3d at 851-52 (holding, conversely, that where a consumer’s MMPA claim brought against the seller was subject to a binding arbitration agreement, the assignee-holder of the contract containing that agreement was likewise shielded from the civil suit under the MMPA). The language of our cases cannot be more explicit. “[T]his provision [the FTC holder rule] in a Retail Installment Contract puts the holder in the shoes of the seller[,]” Peel, 408 S.W.3d at 205; “the assignment of [a] sales contract [containing such language] . . . carries with it the responsibility of owning that contract[,]” id.; and “[t]he general rule is that the assignee of a non[-]negotiable obligation occupies exactly the same position with respect thereto that his assignor occupied.” Id. at 206 (citing Parkview Drugs, 250 S.W.2d at 184). While we acknowledge the line of cases relied on by First Community that have sought to restrict the types of claims and defenses to which a holder becomes subject by operation of the FTC holder rule, see, e.g., Comer v. Person Auto Sales, Inc., 368 F.Supp.2d 478, 490 (M.D.N.C. 2005) (finding that the FTC holder rule could not be used affirmatively against assignee for dealer’s fraudulent conduct where buyer failed to show that dealer’s conduct had rendered the vehicle practically worthless to him, or that contract rescission was appropriate), our cases have followed a broader interpretation of the rule. Boulds, 266 S.W.3d at 850. “[T]he FTC Holder Rule is unambiguous and, on its face, places no limitation on the types of claims or defenses that a debtor may assert against a creditor-assignee.” Beemus v. Interstate Nat’l Dealer Services, 823 A.2d 979, 984 (Pa. Super. 2003). The court in Beemus adopted this rule in accordance with the staff opinion letter issued by the FTC on September 25, 1999, which stated: “If the Commission had meant to limit recovery to claims subject to ‘rescission’ or similar remedy, it would have said so in the text of the Rule and drafted the contractual provision accordingly.” (reaffirmed by the most recently-adopted version of the FTC holder rule, 84 Fed. Reg. 18711, 18712 (May 2, 2019)). And in Boulds, we found the scope of the “claims” to which the holder is subject under the FTC holder rule to be broad and not limited to situations where the buyer could establish grounds for rescission and restitution. In Boulds, we rejected the argument that pursuant to the following language from § 408.405, an automobile purchaser could raise fraud as a defense or as a setoff but could not bring an affirmative fraud claim against the holder: “The rights of a holder or assignee of an instrument, account, contract, . . . are subject to all defenses and setoffs of the debtor arising from or out of such sale . . . as a matter of defense to or setoff against a claim by the holder or assignee, . . . .” 266 S.W.3d at 850. We explained that the phrase “only . . . as a matter of defense or setoff against a claim by the holder or assignee” in § 408.050 does “not modify the consumer’s assertion of his or her rights, rather they modify the ‘defenses and setoffs’ to which a holder’s rights are subject.” Id. We cautioned that respondent’s interpretation of § 408.405 was “troubling . . . because it betrays the wording and purpose of the statute, and because the result leaves the buyer with no recourse beyond waiting to be sued.” Id. Moreover, “[t]o limit consumer claims to only those situations where rescission of the contract is appropriate would, in many instances, confound the FTC’s goal of shifting liability for seller misconduct from the consumer to the seller or its assignee.” Beemus, 823 A.2d at 985 (citing to 40 Fed. Reg. 53506, 53523 (November 18, 1975), which discusses at length the rationale behind the FTC holder rule and the FTC’s expressed desire to “reallocat[e] the costs of seller misconduct in the consumer market,” by “compel[ling] creditors to either absorb seller misconduct costs or return them to sellers.”). So here, where Heinz pleaded that the agreement at issue contained the language required by the FTC holder rule that any assignee-holder is subject to “all claims that the consumer could assert against the seller of the vehicle,” First Community was placed in the shoes of Driven Auto and therefore is subject to the same claims that Heinz had against Driven Auto.