AI Generated Opinion Summaries

This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.

Facts

• Two former payday lenders began marketing and originating high-cost signature loans to less-educated and financially unsophisticated individuals, obscuring the details of the loans' costs. These loans had annual percentage rates (APRs) ranging from 1,147.14 to 1,500 percent and were payable biweekly over twelve months. The State sued, alleging these loans were both procedurally and substantively unconscionable under common law and violated the Unfair Practices Act (UPA) (paras 1-3).

Procedural History

• District Court: Found Defendants’ marketing and loan origination procedures unconscionable and enjoined certain practices, but declined to find the high-cost loans substantively unconscionable, attributing the responsibility to determine interest rate limits to the Legislature. Both parties appealed (para 2).

Parties' Submissions

• Plaintiff-Appellant (State): Argued that the signature loan products were both procedurally and substantively unconscionable under common law and violated the UPA. Sought restitution, civil penalties, and injunctive relief (para 9).
• Defendants-Appellees: Contended that the district court erred in determining that the loans violated Section 57-12-2(E)(1) and the common law of procedural unconscionability. They also cross-appealed the district court's decision (para 11).

Legal Issues

• Whether the Defendants' high-cost signature loans were procedurally and substantively unconscionable under common law and the UPA (paras 1-3, 9-11).

Disposition

• The Supreme Court affirmed the district court’s finding of procedural unconscionability but reversed the district court’s refusal to find the loans substantively unconscionable. It concluded that the interest rates were substantively unconscionable and violated the UPA (para 2).

Reasons

• The Supreme Court, per Justice Chávez, found substantial evidence supporting the district court’s judgment that Defendants’ loans were procedurally unconscionable and violated Section 57-12-2(E)(1). It disagreed with the district court's conclusion on substantive unconscionability, holding that courts have the responsibility to determine whether a contract results in a gross disparity between the value received by a person and the price paid, and concluded that the interest rates in this case were substantively unconscionable and violated the UPA. The Court reasoned that the loans bore interest rates that contravened the public policy of the State of New Mexico, and the interest rate term in Defendants’ signature loans was substantively unconscionable and invalid. It also upheld the permanent injunction granted against Defendants and remanded to the district court for a determination of damages in accordance with its opinion (paras 12-52).