but has refused to terminate its security interest in Mrs. Smith's home.
In September, 1986, Fidelity commenced a foreclosure proceeding against Mrs. Smith.
C. Plaintiffs Gloria Young and Tito Manor
Plaintiff Gloria Young ("Mrs. Young") is a 59 year old divorced woman who lives at 5128 Chancellor Street, Philadelphia. She first purchased the property in 1955 while still married to her ex-husband and she became the sole owner in connection with her divorce in 1961. Plaintiff Tito Manor ("Mr. Manor"), who is 23 years old, is Mrs. Young's nephew.
In early July 1986, Mr. Manor responded to an automobile advertisement placed in the Philadelphia Daily News by Samson Motors, Inc. ("Samson") which stated "no money down, no credit needed." He called and spoke with a salesman named Dave and told him he was interested in a 1979 or 1980 Oldsmobile. Mr. Manor then went to Samson's lot with his mother and stepfather. The salesman showed Mr. Manor a black and gold 1979 Oldsmobile which had a sign on the windshield stating "$ 46.00 per week, no money down." Mr. Manor paid a $ 10 deposit on that automobile and completed a credit application.
A few hours later, the salesman called Mr. Manor at home and told him that his credit had been approved. Two days later, and before Mr. Manor had returned to the lot to complete the deal, the salesman called back and told him that he would need a co-signer. Mr. Manor, who is a ROTC Marine, asked his sergeant to co-sign. His sergeant agreed, but he was rejected by Samson as a co-signor.
Mr. Manor then made arrangements for his aunt, Mrs. Young, to co-sign for him. The salesman took a credit application from her over the telephone. The credit information was telephoned to Fidelity by Samson. The salesman later called Mr. Manor and Mrs. Young back to say that the credit had gone through. He also stated that Mrs. Young should bring her deed with her to verify that she is a homeowner. He did not explain that her home would serve as security for the car loan.
On July 9, 1986, Mr. Manor and Mrs. Young went to Samson's lot. They were told that they would be taken to Fidelity "Bank." They were taken to Fidelity's office located on Castor Avenue by another Samson employee some time between 6 p.m. and 7 p.m. While at Fidelity's office, Mr. Manor learned that Samson intended to sell him a 1976 Oldsmobile instead of a 1979 Oldsmobile because he could not "afford" the later model car. He nevertheless decided to go through with the deal as he was very eager to have a car. The Fidelity representative explained that the cost of the car was $ 3,600. He told plaintiff what the monthly payments would be and that they should be made to Fidelity's West Chester Pike Office. He did not explain to plaintiffs what the interest rate or annual percentage rate was for the loan; he did not explain that there would be a mortgage on Mrs. Young's home; and he did not explain that there was a right to cancel the loan for three days. Mr. Manor felt that the Fidelity representative was rushing because of the lateness of the hour. Mr. Manor and Mrs. Young spent about one-half hour in Fidelity's office. In addition to signing various loan papers, they also both signed a check made out by Fidelity to them in the amount of $ 4,359.60. That check was then given to the Samson employee who had driven them to Fidelity. After leaving Fidelity's office, the Samson employee drove them back to Samson's lot. Mr. Manor then received the car keys and took the car with him that day.
In the loan transaction of July 9, 1986, Mrs. Young granted Fidelity a mortgage on her home. She and Mr. Manor also obliged themselves to pay a service charge of $ 544.44 on the loan. The annual percentage rate in the transaction was 33.617%. The loan is now the subject of mortgage foreclosure proceedings brought by Fidelity against Mrs. Young's home.
A trial court may enter summary judgment if, after a review of all evidentiary material in the record, there is no genuine issue as to any material facts, and the moving party is entitled to judgment as a matter of law. Bank of America Nat. Trust and Sav. Ass'n v. Hotel Rittenhouse Associates, 595 F. Supp. 800 (E.D. Pa. 1984). Where no reasonable resolution of the conflicting evidence and inferences therefrom could result in a judgment for the non-moving party, the moving party is entitled to summary judgment. Tose v. First Pennsylvania Bank, N.A., 648 F.2d 879, 883 (3d Cir. 1981), cert. denied 454 U.S. 893, 70 L. Ed. 2d 208, 102 S. Ct. 390 (1981).
The moving party must initially show an absence of a genuine issue concerning any material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). The moving party's burden may be discharged by demonstrating that there is an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 275, 106 S. Ct. 2548 (1986). Once the moving party has pointed out the absence of a dispute as to a material fact, the non-moving party must go beyond its pleadings and designate specific facts by use of affidavits, depositions, admissions or answers to interrogatories showing there is a genuine issue for trial. Celotex, at , 91 L. Ed. 2d slip op. at 274.
In this case, both parties have filed motions for summary judgment. Because I find that genuine issues of material fact do not exist in this case, summary judgment is appropriate.
A. Defendant's Summary Judgment Motion
Defendants request the court to enter summary judgment in their favor and against the plaintiffs on all claims based on alleged usury violations, including counts I (RICO), III (state usury claims), and IV (Pennsylvania Unfair Trade Practices and consumer Protection Law). Defendants claim that Pennsylvania usury law does not apply to the loans in question because state law is preempted by section 501(a)(1) of the Depository Institutions Deregulation and Monetary Control Act of 1980, 12 U.S.C. § 1735f-7 note.
Section 501(a)(1) of the Deregulation Act exempts from state usury law any qualified loan by a qualified lender. Section 501(a)(1) provides:
The provisions of the constitution or the laws of any State expressly limiting the rate or amount of interest, discount points, finance charges, or other charges which may be charged, taken, received, or reserved shall not apply to any loan, mortgage, credit sale, or advance which is --