144 P.3d 706
DECISION POINT, INC., Appellant, v. REECE & NICHOLS REALTORS, INC., Appellee.
No. 95,543.
Supreme Court of Kansas.
October 27, 2006.
COPYRIGHT MATERIAL OMITTED
W. Joseph Hatley, of Lathrop & Gage L.C., argued the cause, and Rebecca J. King, of the same firm, was with him on the briefs for the appellant.
Loren W. Moll, of Caldwell & Moll, L.C., of Overland Park, argued the cause, and was on the brief for the appellee.
Vernon L. Jarboe and Martha A. Peterson, of Sloan, Eisenbarth, Glassman, McEntire & Jarboe, L.L.C., of Topeka, was on the brief for amicus curiae Kansas Association of Realtors.
Mark Ovington, of Shook, Hardy & Bacon, L.L.P., of Kansas City, Missouri, was on the brief for amicus curiae Individual Real Estate Agents.
Arthur E. Palmer, of Goodell, Stratton, Edmonds & Palmer, L.L.P., of Topeka, was on the brief for amicus curiae International Factoring Association.
ROSEN, J.:
Decision Point, Inc., d/b/a Commission Express (Commission Express), advanced money to two real estate agents who worked for Reece & Nichols Realtors, Inc. (Reece & Nichols) in return for the assignment of their commissions. Reece & Nichols paid the real estate agents rather than paying Commission Express directly. When the real estate agents defaulted on the agreement with Commission Express by failing to tender payment, Commission Express sued Reece & Nichols for payment of the commissions. The district court granted summary judgment to Reece & Nichols, and Commission Express appeals. We granted motions to file amicus briefs pertaining to this matter. The arguments raised in the amicus briefs were considered and are not determinative of the issues raised in this case.
Commission Express is in the business of providing cash advances to real estate agents who have commissions pending from real estate transactions. In return for the advance, Commission Express takes a percentage of the real estate commission. The percentage is based on when the real estate transaction closes. For transactions closing within 30 days, Commission Express takes 8% of the anticipated commission. For transactions scheduled to close within 31-60 days, Commission Express takes 10% of the anticipated commission, and for transactions closing in 61 to 90 days, the fee is 14% of the anticipated commission. In addition, Commission Express subtracts a 10% holdback, which is refunded to the real estate agent if the real estate agent does not default on the agreement.
Commission Express requires real estate agents to sign a Master Repurchase and Security Agreement (Agreement), which irrevocably assigns the real estate agent's rights to receive the pending commission to Commission Express and authorizes the settlement agent or real estate company to pay Commission Express directly. The real estate agent must acknowledge that the transaction is "not a loan or a consumer transaction, but the sale of a business account receivable at a discount for commercial purposes." If the assigned commission is insufficient to satisfy the obligation, the real estate agent must immediately pay the deficiency and any penalties assessed by the Agreement. If the commission is not paid because the real estate transaction fails to close, the agent is required to "repurchase the accounts receivable" for the full amount of the assigned commission. In addition, the Agreement grants Commission Express a security interest in all of the real estate agent's current and future commissions, accounts, general intangibles, contract rights, leases, chattel paper, other rights to receive money, and all cash and noncash proceeds from the foregoing items.
The litigation in this case resulted from six cash advances Commission Express extended to two different real estate agents who had contracted to sell real estate for Reece & Nichols, a real estate brokerage firm incorporated in the state of Kansas. Troy Beeman received cash advances based on the anticipated commissions for five different real estate transactions. Vicky Ashby received one cash advance based on the anticipated commission for a single real estate transaction. Ashby and Beeman each signed Commission Express's Agreement, assigning their rights in the commissions to Commission Express and authorizing Reece & Nichols to pay Commission Express directly. Ashby used the money to pay for her son's medical expenses. Beeman used the money for household expenses and gambling.
Commission Express filed the necessary documents to perfect its security interests. Commission Express also notified Reece & Nichols of Ashby's and Beeman's assignments. Nevertheless, Reece & Nichols paid the assigned commissions directly to Ashby and Beeman rather than Commission Express. Ashby and Beeman defaulted on their Agreements with Commission Express by failing to pay the commissions to Commission Express. As a result, Commission Express sued Reece & Nichols for payment.
Both parties filed summary judgment motions. The district court granted the motion filed by Reece & Nichols, concluding that the Uniform Consumer Credit Code (UCCC) precluded the assignment of the real estate agents' earnings. Commission Express appeals the district court's decision, claiming that the district court should have applied the Uniform Commercial Code (UCC) rather than the UCCC. We granted Commission Express's motion to transfer the matter from the Court of Appeals pursuant to K.S.A. 20-3017.
The key to resolving Commission Express' appeal is determining which code applies, the UCCC or the UCC. Such a determination requires us to interpret the statutes comprising the codes. Interpretation of a statute is a question of law subject to de novo review. Gonzales v. Associates Financial Serv. Co. of Kansas, 266 Kan. 141, 148, 967 P.2d 312 (1998).
Commission Express asserts that the transactions at issue are secured transactions governed by Article 9 of the UCC. According to Commission Express, it purchased the real estate agents' accounts for a discount rather than issuing credit. The UCC broadly defines the term "account" to include "a right to payment of a monetary obligation, whether or not earned by performance ... for services rendered or to be rendered." K.S.A. 2005 Supp. 84-9-102(2)(B). K.S.A. 2005 Supp. 84-9-406(a) requires an account debtor to discharge the debt by paying the assignee, not the assignor. Commission Express claims that the UCCC does not apply because the transactions at issue are not consumer transactions.
Reece & Nichols, on the other hand, claims that the district court properly applied the UCCC because the cash advances received by Ashby and Beeman were consumer loans used for personal, family, or household purposes. Noting that the UCCC begins with the premise that consumers cannot waive or agree to forego the rights under the code, Reece & Nichols asserts that the UCC does not apply because the commissions were earnings. See K.S.A. 16a-1-107(1).
The Kansas codification of the UCCC, K.S.A. 16a-1-101 et seq., applies to all consumer credit transactions that occur in this state. K.S.A. 2005 Supp.16a-1-201(1). A consumer credit transaction occurs in this state if a signed writing evidencing the obligation is received by the creditor in this state. K.S.A. 2005 Supp.16a-1-201(1)(a). The parties do not dispute that Ashby and Beeman executed signed Agreements evidencing their obligations to Commission Express at the Commission Express office in Overland Park, Kansas. Having determined that the transactions occurred in Kansas, the next question is whether the transactions are consumer credit transactions.
A consumer credit transaction is a "consumer credit sale, consumer lease, or consumer loan or modification thereof including a refinancing consolidation, or deferral." K.S.A. 2005 Supp. 16a-1-301(15). Pursuant to K.S.A. 2005 Supp. 16a-1-301(17)(a), a consumer loan is
"a loan made by a person regularly engaged in the business of making loans in which:
"(i) The debtor is a person other than an organization;
"(ii) the debt is incurred primarily for a personal, family or household purpose;
"(iii) either the debt is payable by written agreement in more than four installments or a finance charge is made; and
"(iv) either the amount financed does not exceed $25,000 or the debt is secured by an interest in land."
Applying the UCCC's definition for consumer loan, Commission Express offers two arguments to support its claim that this case does not involve a consumer transaction. First, Commission Express argues that the real estate agents were not consumers under the UCCC. Second, Commission Express argues that the money received by the real estate agents was not used for personal, family, or household purposes.
Commission Express argues that the UCCC definition of consumer is circular because a consumer loan requires a finance charge, a finance charge requires a consumer, and a consumer is the "debtor to whom credit is granted in a consumer credit transaction." See K.S.A. 2005 Supp. 16a-1-301(13), (17), and (22). We disagree with this argument. These sections can be readily applied to the facts in this case.
The UCCC imposes five requirements for meeting the definition of a consumer loan. See K.S.A. 2005 Supp. 16a-1-301(17). First, the UCCC requires the creditor to be regularly engaged in the business of making loans. K.S.A. 2005 Supp. 16a-1-301(17)(a). The UCCC defines a loan as "the creation of debt by the lender's payment of or agreement to pay money to the debtor." K.S.A. 2005 Supp. 16a-1-301(27)(a)(i). The UCCC does not give a special definition for debt. However, the common definition is "a specific sum of money due by agreement or otherwise." Black's Law Dictionary 432 (8th ed. 2004). Although Commission Express asserts that it purchases accounts for a discount rather than making loans, it does not dispute that it is in the business of providing money to real estate agents in return for the real estate agents'...
