                              SECOND DIVISION
                               DILLARD, P. J.,
                            REESE and BETHEL, JJ.

                   NOTICE: Motions for reconsideration must be
                   physically received in our clerk’s office within ten
                   days of the date of decision to be deemed timely filed.
                               http://www.gaappeals.us/rules


                                                                     June 27, 2017




In the Court of Appeals of Georgia
 A17A0132. CHEROKEE FUNDING LLC et al. v. RUTH et al.
 A17A0208. RUTH et al. v. CHEROKEE FUNDING LLC et al.

        REESE, Judge.

        The Appellants, Cherokee Funding LLC, Cherokee Funding II, LLC, and

Cherokee Funding III, LLC, and Reid Zeising (collectively, “Defendants”), appeal

from the trial court’s orders denying in part and granting in part their motion to

dismiss this putative class action for damages premised on violations of the Georgia

Industrial Loan Act (“GILA”),1 and the Payday Lending Act (“PLA”).2 Cross-

Appellants Kimberly Oglesby (the Plaintiff who sued individually and on behalf of

others similarly situated) and Ronald Ruth, (collectively, “Plaintiffs”), seek review



   1
       OCGA § 7-3-1 et seq.
   2
       OCGA § 16-17-1 et seq.
  of the same orders. For the reasons set forth, infra, we affirm in part and reverse in

  part.

           Viewed in favor of the Plaintiffs,3 the record shows that Ruth and Oglesby

  retained attorney Michael Hostilo4 to represent them in personal injury lawsuits after

  being involved in separate unrelated vehicle accidents. During the course of Hostilo’s

  representation, the Defendants entered into separate “funding agreements” with Ruth5

  and Oglesby6 and provided funds to them, each in a principal amount of less than

  $3,000. Ruth claims that when his personal injury lawsuit settled in February 2016,

  the Defendants sought repayment of about $84,000, which encompassed about $5,300

  in principal. Oglesby claims that she borrowed around $400 from the Defendants and,

  when her personal injury litigation was resolved in 2014, Hostilo deducted about

  $1,000 to pay the Defendants for her “loans.”




      3
          LaSonde v. Chase Mtg. Co., 259 Ga. App. 772, 774 (1) (577 SE2d 822) (2003).
      4
          Michael Hostilo is not a party to this appeal.
      5
       The record indicates that after initially receiving $1,000 from the Defendants, Ruth
entered into additional funding agreements, receiving at least another $2,300 in principal.
      6
        The record does not contain the funding agreement signed by Oglesby or any of
her requests for funding from the Defendants.

                                               2
           The Defendants moved to dismiss the complaint for failure to state a claim,

  arguing that they were not subject to the PLA or the GILA because the “funding

  agreements” at issue were not “loans,” but rather were “investments” in the Plaintiffs’

  litigation.7 After a hearing, the trial court granted in part and denied in part the

  Defendants’ motion, dismissing the GILA claims, but allowing the PLA claims to

  proceed. The Defendants filed a motion seeking a certificate of immediate review.

  The trial court certified its orders for immediate review. This Court granted the

  application for interlocutory appeal, and these appeals follow.

           This Court reviews a trial court’s ruling on a motion to dismiss de novo.8 “A

  motion to dismiss for failure to state a claim should be sustained if the allegations of

  the complaint reveal, with certainty, that the plaintiff would not be entitled to relief

  under any state of provable facts asserted in support of the complaint.”9 With these

  guiding principles in mind, we turn now to the parties’ specific claims of error.



      7
         Zeising also moved to dismiss all claims against him on the ground that he was
shielded from liability by the Georgia Limited Liability Company Act, OCGA § 14-11-100
et seq. The trial court converted Zeising’s motion to dismiss on this issue to a motion for
summary judgment. That ruling is not at issue in the instant appeal.
      8
          Houseboat Store, LLC v. Chris-Craft Corp., 302 Ga. App. 795 (692 SE2d 61)
(2010).
      9
          LaSonde, 259 Ga. App. at 774 (1) (citation omitted).

                                             3
                                    Case No. A17A0132

           1. The Defendants assert that the trial court erred in denying their motion to

  dismiss the Plaintiffs’ PLA claim, arguing that under the rule of lenity, the PLA does

  not apply because the funding agreements do not constitute “loans” that are regulated

  by the statute.10 We agree.

           In reviewing the statutes at issue in this appeal, we are mindful that in

  considering the meaning of a statute, our charge as an appellate court is to “presume

  that the General Assembly meant what it said and said what it meant.”11 Toward that

  end, we must afford the statutory text its plain and ordinary meaning,12 consider the

      10
         In their appeal, the Defendants also appear to seek affirmation of the trial court’s
ruling that the GILA does not apply. It is well settled in Georgia that appellate courts are
courts of review for the correction of errors. See Alpha Nursing Svcs. v. Vickery, 319 Ga.
App. 533, 537 (3), n. 6 (732 SE2d 760) (2012) (“In order for a Georgia appellate court to
review a trial court ruling for legal error, a party must set forth in the enumeration of errors
the allegedly erroneous ruling.”); see also OCGA § 5-6-40; Court of Appeals Rule 25. In
their cross-appeal, the Plaintiffs have alleged in their enumeration of error that the trial
court erred in finding that the GILA does not apply in this action.
      11
         Deal v. Coleman, 294 Ga. 170, 172 (1) (a) (751 SE2d 337) (2013) (punctuation
and citation omitted); accord Arby’s Restaurant Group, Inc. v. McRae, 292 Ga. 243, 245
(1) (734 SE2d 55) (2012); Martinez v. State, 325 Ga. App. 267, 273 (2) (750 SE2d 504)
(2013).
      12
        Deal, 294 Ga. at 172 (1) (a) (“To that end, we must afford the statutory text its
plain and ordinary meaning.” (punctuation and citation omitted)); see State v. Able, 321
Ga. App. 632, 636 (742 SE2d 149) (2013) (“A judge is charged with interpreting the law

                                               4
  text contextually,13 read the text “in its most natural and reasonable way, as an

  ordinary speaker of the English language would,”14 and seek to “avoid a construction

  that makes some language mere surplusage.”15 Simply put, when the language of a

  statute is “plain and susceptible of only one natural and reasonable construction,

  courts must construe the statute accordingly.”16




in accordance with the original and/or plain meaning of the text at issue (and all that the
text fairly implies). . . .”).
      13
         See Arizona v. Inter Tribal Council of Arizona, Inc., ___U.S. ___, ___ (II) (B)
(133 SCt 2247, 186 LE2d 239) (2013) (“Words that can have more than one meaning are
given content, however, by their surroundings.” (punctuation omitted)); Deal, 294 Ga. at
172 (1) (a) (“[W]e must view the statutory text in the context in which it appears[.]”); see
also Tibbles v. Teachers Retirement Sys. of Ga., 297 Ga. 557, 558 (1) (775 SE2d 527)
(2015) (“The common and customary usages of the words are important, but so is their
context.” (punctuation omitted)).
      14
       Deal, 294 Ga. at 172-73 (1) (a); accord Luangkhot v. State, 292 Ga. 423, 424 (1)
(736 SE2d 397) (2013).
      15
        In the Interest of L.T., 325 Ga. App. 590, 592 (754 SE2d 380) (2014) (punctuation
omitted); accord Ga. Transmission Corp. v. Worley, 312 Ga. App. 855, 856 (720 SE2d
305) (2011).
      16
         Holcomb v. Long, 329 Ga. App. 515, 518 (1) (765 SE2d 687) (2014) (punctuation
omitted); see Deal, 294 Ga. at 173 (1) (a) (“[I]f the statutory text is clear and unambiguous,
we attribute to the statute its plain meaning, and our search for statutory meaning is at an
end.” (punctuation omitted)).

                                              5
           The PLA prohibits “making, offering, arranging, or acting as an agent in the

  making of loans of $3,000.00 or less” unless permitted under certain other federal and

  state laws, which are delineated in the PLA.17 Although the PLA does not define the

  term “loan,”18 the statute applies, by its terms, to “all transactions in which funds are

  advanced to be repaid at a later date, notwithstanding the fact that the transaction

  contains one or more other elements[.]”19

           The PLA is a criminal statute.20 Thus, under the rule of lenity, it “must be

  construed strictly against criminal liability and, if it is susceptible to more than one

  reasonable interpretation, the interpretation most favorable to the party facing




      17
           OCGA § 16-17-2 (a).
      18
           See generally OCGA §§ 16-7-1 through 16-17-10.
      19
         OCGA §§ 16-17-1 (a); 16-17-2 (b). See also Clay v. Oxendine, 285 Ga. App. 50,
51 (1) (645 SE2d 553) (2007) (Generally, a payday loan has been defined as “a loan of
short duration, typically two weeks, at an astronomical annual interest rate. Payday loans
are the current version of salary buying or wage buying. The fees, charges, and interest on
a payday loan are between 15 percent and 30 percent of the principal for a two-week loan,
constituting a pretext for usury. Because the maturity date of these loans is usually set to
coincide with the borrower’s next payday, the loans are often called payday loans.”)
(citations and punctuation omitted).
      20
           OCGA § 16-17-2 (d); see OCGA §16-17-2 (b).

                                             6
  criminal liability must be adopted.”21 Further, the General Assembly lacks the power

  to “legislate the truth of the facts” and to “bind the courts by recitals of facts in a

  public statute.”22

           In the present case, the funding agreements state as follows: “[i]f Client

  complies with this funding agreements and recovers nothing from the legal claim,

  then [Defendants] shall receive nothing.” The funding agreements also contain the

  following language:

           THIS IS A NON RECOURSE TRANSACTION: This Agreement, and
           the obligation to pay, is speculative, and contingent upon the successful
           resolution of the litigation. Cherokee Funding is taking a high risk
           giving me[, the Client,] this Funding. I understand that there is a
           premium charged in doing so. I have been advised that I should not
           accept this Funding if I have any other alternative to meet my immediate
           economic needs. However, Cherokee Funding will be paid only from the
           Proceeds of the lawsuit, and agrees not to seek money from me[, the
           Client,] directly in the event the lawsuit is not successful. IF THERE IS


      21
        See Fleet Finance v. Jones, 263 Ga. 228, 231 (3) (430 SE2d 352) (1993) (citations
omitted) (interpreting OCGA § 7-4-18).
      22
         Western Sky Financial v. State of Ga., 300 Ga. 340, 345 (1) (a) (793 SE2d 357)
(2016) (citations and punctuation omitted). In that case, the Supreme Court of Georgia held
that the statement that payday lending “does not encompass loans that involve interstate
commerce” is a legislative finding of fact that was not intended to define the limits of the
PLA. Id. at 346 (1) (b).

                                              7
           NO RECOVERY OF PROCEEDS BY THE CLIENT, THEN
           CHEROKEE FUNDING SHALL RECEIVE NOTHING AND THERE
           IS NO ASSOCIATED OBLIGATION TO PAY THE AMOUNTS
           ADVANCED.


  A plain reading of the quoted portion of the funding agreements demonstrates that the

  use of the phrase “shall receive nothing” in conjunction with “no associated

  obligation to pay” means that the requirement of repayment is completely contingent

  upon the recovery of proceeds from the related legal claims. Stated another way, if

  the Plaintiffs had not prevailed in their personal injury litigation, the Defendants

  would have received nothing.

           Thus, we conclude that, based on the plain language of OCGA §§ 16-17-1 (a)

  and 16-17-2 (b), the funding agreements do not fall under the auspices of “loans”

  under the PLA. Instead of being loans that are regulated by the PLA, the funding

  agreements appear to be investment contracts.

           An “investment contract” is not statutorily defined in Georgia.23 However, the

  United States Supreme Court has devised a test to determine if “a particular scheme

      23
         See Cushing v. Cohen, 323 Ga. App. 497, 502 (1) (746 SE2d 898) (2013) (The
term “investment contract” is not comprehensively defined by the Georgia Securities Act
of 1973. The Georgia Securities Act of 1973 was repealed in its entirety and replaced with
the Georgia Uniform Securities Act of 2008.); see also OCGA § 10-5-80 (a).

                                              8
  is an investment contract[.]”24 The test is “whether the scheme involves an investment

  of money in a common enterprise with profits to come solely from the efforts of

  others.”25 The Supreme Court of Georgia has adopted this test.26

           In the present case, the funding agreements specifically state that “no part of

  the funding amount will be used to support, direct or maintain the legal claim or its

  prosecution”27 and that the agreements provide the Defendants with “a security

  interest from [the Plaintiffs].” From the language of the funding agreements, it is clear

  that the Defendants and the individual Plaintiffs are involved in a common venture,

  which is to prevail in the underlying personal injury lawsuits. However, the phrase

  indicating that the monies received is not to be used to fund the underlying personal

  injury litigation shows that the Defendants are not directly involved in the pursuit or



      24
       Securities & Exchange Comm. v. Edwards, 540 U. S. 389, 393 (II) (124 SCt 892,
157 LE2d 813) (2004) (citation omitted).
      25
        Id. (citing Securities & Exchange Comm. v. W. J. Howey Co., 328 U. S. 293, 298-
299 (66 SCt 1100, 90 LEd 1244) (1946) (punctuation omitted)).
      26
           See Hicks v. State, 315 Ga. App. 779, 781-782 (1) (728 SE2d 294) (2012).
      27
         See OCGA § 44-12-24 (“A right of action for personal torts, for legal malpractice,
or for injuries arising from fraud to the assignor may not be assigned.”); American Chain
& Cable Co. v. Brunson, 157 Ga. App. 833, 835 (278 SE2d 719) (1981) (It is
impermissible to assign a personal injury claim in Georgia.).

                                              9
the outcome of the individual Plaintiffs’ legal actions that the funding agreements

reference.

        Consequently, we find that the Defendants invested money in the outcome of

the personal injury lawsuits of the Plaintiffs, with a return on the investments that

were attributable to the efforts of others, namely the Plaintiffs and their counsel,

which is consistent with the United States Supreme Court’s broad construction of

what constitutes an investment contract.28 Applying the rule of lenity and strict

construction, we must conclude that the funding agreements at issue are not loans

and, thus, are not subject to the PLA.

        Therefore, the trial court erred in denying the Defendants’ motion to dismiss

the PLA claim.

                                 Case No. A17A0208

        2. The Plaintiffs argue that the trial court erred in granting the Defendants’

motion to dismiss claims based upon the GILA. We disagree.

        The GILA was enacted to

        provide a source of regulated loans for those who had been borrowing
        at usurious interest rates from loan sharks, street shylocks and wage

   28
        See Securities & Exchange Comm., 540 U. S. at 393 (II).

                                          10
           buyers. [The] GILA applies to all persons, defined as individuals,
           copartnerships, associations, corporations, and all other legal and
           commercial entities, engaged in the business of making loans in amounts
           of $3,000 or less, unless such persons are expressly exempted.29


  The GILA defines a “loan” as “any advance of money in an amount of $3,000.00 or

  less under a contract requiring repayment and any and all renewals or refinancing

  thereof or any part thereof.”30 As used in OCGA § 7-3-3 (4), the phrase, “requiring

  repayment” has a clear and unambiguous requirement that a loan must be repaid. This

  is bolstered by the General Assembly’s stated intent that,

           [t]he purpose of this chapter is to authorize and provide regulation of the
           business of making loans of $3,000.00 or less and to bring within the
           regulation of this chapter and within its provisions all loans of $3,000.00
           or less, whether or not made by a person organized or operating under
           the provisions and authority of some other statute, except those persons
           and loans expressly exempted by the terms of this chapter. Even though


      29
         BankWest, Inc. v. Oxendine, 266 Ga. App. 771, 772-773 (1) (598 SE2d 343)
(2004) (citations and punctuation omitted).
      30
         OCGA § 7-3-3 (4). See also Isaacson v. House, 216 Ga. 698, 702 (1) (119 SE2d
113) (1961) (The Supreme Court of Georgia has defined a loan as “the delivery by one
party to, and the receipt by another party of, a sum of money upon an agreement, express
or implied, to repay the sum with or without interest”) (citation and punctuation omitted);
see Golden Atlanta Site Dev. v. Tilson, 299 Ga. App. 646, 647-648 (1) (683 SE2d 166)
(2009).

                                               11
            authorized by other statutes of force, such loans and the persons making
            them, unless expressly exempted, shall be within the operation of this
            chapter in accordance with its terms.31


            As explained in Division 1, supra, we conclude that the funding agreements are

  investment contracts and not loans. Unlike loans, the funding agreements do not

  always require repayment. Any repayment, under the funding agreements, is

  contingent upon the direction and time frame of the Plaintiffs’ personal injury

  litigation, which may be resolved through a myriad of possible outcomes, such as

  settlement, dismissal, summary judgment, or trial.

            While the litigation funding engaged in by the Defendants, with its associated

  fees and charges, may legitimately be labeled financially insidious, it is the General

  Assembly, not this Court, which must, if it so chooses, expressly promulgate laws to

  regulate this activity.32 Because we view the funding agreements between the

  Plaintiffs and the Defendants as investment contracts, it was not error for the trial




       31
            OCGA § 7-3-2.
       32
        See Deal, 294 Ga. at 174 (1) (a), n. 11 (Policy arguments are for the legislature to
consider. It is the duty of the judiciary to “interpret the laws as they are written.”) (citation
and punctuation omitted).

                                               12
court to find that the GILA did not apply. Thus, the trial court properly dismissed the

GILA claims.

      Judgment affirmed in Case No. A17A0208. Judgment reversed in Case No.

A17A0132. Dillard, P. J., and Bethel, J., concur.




                                          13
