                In the Missouri Court of Appeals
                                         Eastern District
                                                        DIVISION III

ERICA HOLLINS,                                                  )       No. 102093
                                                                )
           Appellant,                                           )       Appeal from the Circuit Court
                                                                )       of St. Louis County
vs.                                                             )
                                                                )       Honorable Michael D. Burton
CAPITAL SOLUTIONS INVESTMENTS I,                                )
INC., D/B/A LOAN EXPRESS CO.,                                   )
                                                                )
           Respondent.                                          )       FILED: June 2, 2015


                                                         Introduction

           Appellant Erica Hollins (“Hollins”) appeals from the judgment of the trial court granting

summary judgment in favor of Respondent Capital Solutions Investments I, Inc. (“CSI”) and

dismissing Hollins’s First Amended Petition in its entirety. Hollins’s First Amended Petition sought

to set aside a default judgment obtained by CSI in a collections action brought against Hollins. On

appeal, Hollins asserts that the trial court erred in granting CSI’s motion for summary judgment

because: (1) the trial court that entered the default judgment in the collections action lacked subject

matter jurisdiction and therefore the judgment should be set aside under Rule 74.06(b)(4); and (2) it is

no longer equitable for the judgment to remain in force because it is an illegal judgment requiring

court supervision and therefore the judgment should be set aside under Rule 74.06(b)(5).1

1
    All rule references are to Mo. R. Civ. P. (2014).
       Because the trial court had subject matter jurisdiction over the collections lawsuit filed by

CSI, the judgment entered by trial court was valid and not subject to being set aside as a void

judgment under Rule 74.06(b)(4). Furthermore, the facts in the record do not warrant the application

of Rule 74.06(b)(5) because enforcement of the default judgment is not inequitable. Finding no error,

we affirm the judgment of the trial court.

                                  Factual and Procedural Background

       In December 2006, Hollins obtained a consumer installment loan from Loan Express in the

amount of $100 and at an annual interest rate of 199.71%. Loan Express is a fictitious name

registered by CSI for its business. Hollins signed a promissory note promising to repay Loan Express

a total of $155, which was to be paid in five monthly installments of $31 each beginning on January

21, 2007. Hollins paid the first monthly installment on January 21, 2007, but made no further

payments. At the time of default, Hollins owed $124 to CSI, $69 of which was principal.

       Between February 21, 2006, and May 21, 2007, CSI attempted to contact Hollins

approximately fifty times and sent six letters to Hollins inquiring about the status of her payment on

the installment loan. When Hollins continued to fail to pay on the loan, CSI filed a collections

lawsuit (the “collections action”) against Hollins in the Associate Circuit Division of the Circuit

Court of St. Louis County on June 30, 2009. Hollins did not answer or otherwise respond to the

lawsuit. On August 11, 2009, the trial court entered a default judgment in favor of CSI and against

Hollins for $912.50 at the interest rate of 199.71% (“the 2009 default judgment”). Of that judgment,

$729.90 was interest. While that interest rate appears obscene and usurious, as noted in the

concurring opinion filed by Judge Dowd, this high rate of interest is permitted under the current

statutory scheme enacted by the legislature. In April 2010, CSI began garnishing Hollins’s wages to

satisfy the judgment.



                                                   2
         On October 20, 2011, more than two years after the entry of default judgment, Hollins filed

suit against CSI in the Circuit Court of St. Louis County. Hollins subsequently filed an amended

petition (“the First Amended Petition”) alleging three counts against CSI. Count I alleged violations

of the Missouri Merchandising Practices Act (“MMPA”), Section 407.101; Count II alleged a

violation of Section 408.553; and Count III sought relief from the 2009 default judgment under Rule

74.06(b). The common factual underpinning of each count was Hollins’s averment that CSI was

required to state how interest was calculated in its 2009 collections action petition but failed to do so.

Had CSI included such information in the collections action petition, the trial court would have

realized that CSI violated Section 408.553 by allowing interest to accrue between the time of default

on the loan and the entry of the default judgment against Hollins. Because CSI did not include the

necessary interest calculation information in its petition, Hollins alleged that CSI failed to state a

claim upon which relief could be granted. As a result, Hollins averred the trial court lacked subject

matter jurisdiction over the collections action, and that the default judgment should have been set

aside as a void judgment under Section 74.06(b)(4). In addition, Hollins argued that because the

default judgment allows recovery of an illegal judgment due to the excessive interest rate, the

judgment was “no longer equitable” and should not be enforced under Section 74.06(b)(5).

         Hollins voluntarily dismissed Count I of the First Amended Petition on January 2, 2013.

Approximately one week later, Hollins filed a motion for class certification seeking to certify a class

defined as “all people who, in Missouri, received a consumer installment loan from [CSI], and prior

to obtaining judgment, charged interest on the amount owed at the time of default.” The trial court

granted the motion and certified the class.2




2
 Because the record before us is limited to facts regarding Hollins, our opinion will refer to Hollins only and not the class
as a whole.

                                                              3
       On March 24, 2014, CSI filed a motion for summary judgment seeking dismissal of Hollins’s

First Amended Petition. In support of its motion, CSI argued that: (1) the claims raised by Hollins

were compulsory counterclaims that must have been brought by Hollins in the original collections

action; (2) Rule 74.06(b) cannot provide Hollins relief because the trial court in the collections action

had subject matter jurisdiction and twenty-six months was not a reasonable time within which to

bring a claim; and (3) Rule 74.06(d) could not provide Hollins with the relief requested because

Hollins made no allegation of extrinsic fraud.

       The trial court agreed with CSI and entered summary judgment in its favor. In its Order and

Judgment, the trial court found that the allegations in Hollins’s First Amended Petition were

compulsory counterclaims that should have been brought by Hollins in the original collections action.

The trial court then looked to Rule 74.06(b) and found that the 2009 default judgment could not be

set aside under that rule because (1) the trial court in the collections action had subject matter

jurisdiction and thus the judgment was not void; and (2) Hollins waited too long – twenty-six months

– to file her petition. Finally, the circuit court held that because Hollins did not allege extrinsic fraud,

she was not entitled to relief under Rule 74.06(d). For the same reasons the trial court dismissed

Hollins’s case, the court dismissed the claims of all class members. This appeal follows.

                                             Points on Appeal

       Hollins raises two separate, though interrelated, points on appeal. Hollins first asserts that the

trial court erred in granting CSI’s motion for summary judgment because the trial court that entered

the 2009 default judgment lacked subject matter jurisdiction, and therefore the judgment should be

set aside under Rule 74.06(b)(4). Specifically, Hollins argues that CSI failed to state a claim upon

which relief could be granted and that such failure deprived the trial court of subject matter

jurisdiction. In her second point on appeal, Hollins contends that the trial court erred in granting



                                                     4
CSI’s motion for summary judgment because equity precludes enforcement of the 2009 default

judgment which should be set aside under Rule 74.06(b)(5).

                                                  Standard of Review

         Our review of the grant of a motion for summary judgment is essentially de novo. ITT

Commercial Finance Corp. v. Mid–America Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc

1993). The criteria on appeal for testing the propriety of summary judgment are no different from

those which should be employed by the trial court to determine the propriety of initially sustaining

the motion. Id. The propriety of summary judgment is purely an issue of law. Id. Because the trial

court’s judgment is based upon the record submitted and the law, an appellate court need not defer to

the trial court’s order granting summary judgment. Id.

         To be entitled to summary judgment, the moving party must establish it is entitled to

judgment as a matter of law and that there is no genuine dispute as to the material facts. Id. at 380.

We will affirm the trial court’s grant of summary judgment if it could have been based on any ground

raised in the motion and supported by the summary judgment record. Burian v. Country Ins. and

Financial Services, 263 S.W.3d 785, 787 (Mo. App. E.D. 2008).

                                                       Discussion

         This appeal invokes Rule 74.06 as a basis for overturning the trial court’s entry of the 2009

default judgment. Hollins’s appeal focuses on the trial court’s refusal to set aside the 2009 default

judgment under Rule 74.06. Accordingly, we limit our review and analysis to determine if Rule

74.06 provides Hollins with any basis for setting aside the judgment.3 “Rule 74.06 provides various

grounds by which a court may set aside a final judgment after a court has ruled on the merits of the

3
  In her reply brief Hollins argues that the trial court erroneously applied the compulsory counterclaim rule when it
granted summary judgment in favor of CSI. Hollins argues this erroneous application of the rule compels reversal and
remand of the trial court’s judgment. Because Hollins does not raise this issue in either of her Points Relied On, we will
not now address that issue. Rule 84.04(d); Rule 84.13. An assignment of error raised for the first time in a reply brief is
not reviewed. 66, Inc. v. Crestwood Commons Redevelopment Corp., 130 S.W.3d 573, 584 (Mo. App. E.D. 2003).


                                                             5
case.” Juenger v. Brookdale Farms, 871 S.W.2d 629, 631 (Mo. App. E.D. 1994) (internal quotations

omitted). Rule 74.06 provides, in relevant part:

       (b) Excusable Neglect--Fraud--Irregular, Void, or Satisfied Judgment. On motion
       and upon such terms as are just, the court may relieve a party or his legal
       representative from a final judgment or order for the following reasons: (1) mistake,
       inadvertence, surprise, or excusable neglect; (2) fraud (whether heretofore
       denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an
       adverse party; (3) the judgment is irregular; (4) the judgment is void; or (5) the
       judgment has been satisfied, released, or discharged, or a prior judgment upon which it
       is based has been reversed or otherwise vacated, or it is no longer equitable that the
       judgment remain in force.

Rule 74.06(b).

I.     Relief Under Rule 74.06(b)(4)

       In her first Point Relied On, Hollins invokes Rule 74.06(b)(4) which allows a court to relieve

a party from a judgment if the judgment is void. Specifically, Hollins contends that the 2009 default

judgment is void, and that the trial court erred when it refused to set aside the default judgment and

granted summary judgment in favor of CSI. Accordingly, we consider whether the 2009 default

judgment is a void judgment.

       “A judgment is ‘void’ under this rule only if the court that rendered it lacked personal or

subject matter jurisdiction or acted in a manner inconsistent with due process of law.” Forsyth Fin.

Grp., LLC v. Hayes, 351 S.W.3d 738, 740 (Mo. App. W.D. 2011). A judgment is not void merely

because it is erroneous. Id. We review de novo whether a judgment should be vacated because it is

void. Morris v. Wallach, 440 S.W.3d 571, 575 (Mo. App. E.D. 2014).

       Hollins suggests the 2009 default judgment is void because the trial court lacked subject

matter jurisdiction at the time it entered the default judgment. Specifically, Hollins claims that CSI’s

petition in the collections action did not plead certain statutorily required elements and therefore

failed to state a cause of action. By failing to state a claim upon which relief could be granted,



                                                    6
Hollins posits that CSI “robbed the trial court of subject matter jurisdiction,” thereby rendering the

2009 default judgment void. We disagree.

       While we agree that the 2009 default judgment would be a void judgment had the trial court

lacked subject matter jurisdiction when it entered the judgment, Hollins’s argument is fatally flawed

by her erroneous interpretation of subject matter jurisdiction. Subject matter jurisdiction is the

court’s authority to render a judgment in a particular category of case. Webb v. Wyciskalla, 275

S.W.3d 249, 253 (Mo. banc 2009). In Missouri, subject matter jurisdiction is governed directly by

the Missouri Constitution. Id. Article V, Section 17 describes the subject matter jurisdiction of

associate circuit judges and provides that “Associate circuit judges may hear and determine all cases,

civil or criminal and all other matters as now provided by law for magistrate or probate judges and

may be assigned such additional cases or classes of cases as may be provided by law.”

       CSI filed a civil collections action against Hollins. The associate circuit judge had subject

matter jurisdiction under Article V, Section 17 to hear cases of this general nature. We recognize that

prior to Webb a defaulting party could assert that a petition failing to state a claim deprived a trial

court of subject matter jurisdiction. See AMG Franchises, Inc. v. Crack Team USA, Inc., 289 S.W.

3d 655,659 (Mo. App. E.D. 2009). However, this characterization of the issue was clarified by the

Supreme Court in Webb. Webb, 275 S.W.3d at 253-54.

       More recently, the Western District rejected strikingly similar arguments to those raised by

Hollins in this appeal. In A.D.D. v. PLE Enterprises, Inc, the Western District noted the Supreme

Court’s admonition against the overly broad use of the term subject matter jurisdiction. In holding

that challenging a default judgment for failure to state a claim does not raise an issue of the trial

court’s subject matter jurisdiction, the Western District rejected an attempt to seek relief from a

default judgment by characterizing the judgment as void under Rule 74.06(b)(4). A.D.D. v. PLE

Enterprises, Inc., 412 S.W.3d 270, 276-77 (Mo. App. W.D. 2013); see also Christianson v. Goucher,

                                                     7
414 S.W.3d 584, 591 (Mo. App. W.D. 2013)(noting its recent opinion in A.D.D. when rejecting the

argument that the failure to state a claim raises an issue of subject matter jurisdiction)). The court

explained that with Webb, “the Missouri Supreme Court clearly delineated the boundaries of subject

matter jurisdiction and strongly admonished against the overly broad use of the term subject matter

jurisdiction. Thus, after Webb, moving to set aside a judgment for failure to state a claim does not

raise an issue of the circuit court’s subject matter jurisdiction.” Id. (internal quotations omitted).

Hollins offers no other basis to support its contention that the trial court lacked subject matter

jurisdiction to enter its judgment. Nor does the record before us suggest the absence of subject matter

jurisdiction.

        Hollins correctly notes that Section 408.556 specifically instructs a lender what it must plead

in an action brought against a borrower arising from default. Hollins further argues that CSI did not

properly plead its action against Hollins because it did not state in its petition how the amount owed

to the lender was calculated. CSI disputes that its pleading was deficient. We need not evaluate the

sufficiency of CSI’s petition because even assuming, arguendo, that it failed to meet the requirements

of Section 408.556 and thus failed to state a cause of action, such failure does not deprive the trial

court of subject matter jurisdiction. See id.

        Hollins further suggests that the “heightened notice requirement” incorporated into Section

408.556 distinguishes this case from an ordinary failure to state a claim issue and thereby introduces

the issue of subject matter jurisdiction. We find this argument unavailing. First, Hollins’s authority

for this argument, Ford Motor Credit v. Updegraff, 218 S.W.3d. 617 (Mo. App. W.D. 2007), predates

the Supreme Court’s pronouncement on subject matter jurisdiction in Webb. Updegraff also predates

numerous appellate cases applying Webb and clearly holding that a failure of a petition to properly

state a cause of action does not deprive a trial court of subject matter jurisdiction. See, e.g.,

Christianson, 414 S.W.3d at 591; A.D.D., 412 S.W.3d at 276. Second, we find no legal distinction in

                                                     8
a party’s failure to plead a required element of a statutory cause of action as opposed to a common

law cause of action. We fail to see how that factual distinction somehow counters Webb and its

progeny by transforming a deficient pleading into an inquiry of subject matter jurisdiction. Nor has

Hollins offered any post-Webb judicial authority in support of its position. Were we to take Hollins’s

argument to its logical conclusion, almost any defective pleading in a statutory cause of action would

give rise to claim that the trial court lacked subject matter jurisdiction to enter a judgment on such

pleading. We acknowledge the seemingly hopeless situation in which Hollins now finds herself as a

result of the unlimited rates of interest allowed on small unsecured consumer loans. However, to

provide her the remedy she seeks under Rule 74.06(b)(4) would require us to abandon the principles

of subject matter jurisdiction to which we must adhere. We will not controvert the law to provide

Hollins the relief requested.

       Because the trial court did not lack subject matter jurisdiction to enter the 2009 default

judgment, the default judgment was not void under Rule 74.06(b)(4). Because the 2009 default

judgment was not void, Rule 74.06(b) provided the trial court with no legal basis to set it aside. The

recent clarification of the scope and breadth of subject matter jurisdiction by the Supreme Court

compels our denial of Point One.

II.    Relief Under Rule 74.06(b)(5)

       In Point Two, Hollins contends that the 2009 default judgment may be set aside under Rule

74.06(b)(5). This subsection empowers the trial court to grant relief from the effects of a final

judgment on the ground that, “it is no longer equitable that the judgment remain in force.” As this

Court has noted,

       This component of [Rule 74.06(b)(5)] is based on traditional equity practice which
       limits its application to judgments that have a prospective effect, as contrasted to those
       that offer a present remedy for a past wrong. It addresses the situation in which a
       subsequent circumstance makes enforcement of such a judgment inequitable.


                                                    9
Juenger, 871 S.W.2d at 631.

       Again, while we are very sympathetic to Hollins’s circumstances, we find no authority

allowing us to set aside the 2009 default judgment under Rule 74.06(b)(5). Like the trial court, we

“do not cavalierly” reject Hollins’s claims as she now faces obscenely high repayment obligations

from a $100 loan. However, we cannot ignore the law that clearly limits application of Rule

74.06(b)(5) to situations where a subsequent circumstances makes enforcement of the judgment

inequitable. Hollins does not allege the occurrence of any subsequent circumstance that precludes

enforcement of the judgment on equitable grounds. Instead, Hollins directs this Court to the entry of

the 2009 default judgment and asks that we set aside the judgment because it is “based on illegal

calculations of interest.” Unfortunately for Hollins, these allegations simply do not meet the

requirements for setting aside a judgment under Rule 74.05(b)(5).

       Hollins argues that the interest award was outside of the statutory parameters given CSI’s

collections action petition. However, even if Hollins had a meritorious defense to CSI’s claim at the

time judgment was entered, an irregular or erroneous judgment is not subject to a subsequent

collateral attack. J.L.M. v. R.L.C., Jr., 132 S.W.3d 279, 284 (Mo. App. W.D. 2004). While the

amount of the default judgment seems egregious and would likely shock the conscience of the

average person, Hollins is not without fault for her precarious situation. To be sure, Hollins was not

without legal remedies to challenge the judgment sought and obtained by CSI. As the trial court

noted, Hollins could have brought her current claims as counterclaims in the action brought by CSI.

Moreover, Hollins could have filed a timely motion seeking to set aside the default judgment. Had

Hollins availed herself of those opportunities to challenge the amount of interest claimed by CSI

under the agreement, she would have obtained a massive reduction in the amount of interest

recoverable by CSI under Missouri law. Our resolution of Hollins’s second point on appeal is

dictated solely by her failure to avail herself of such remedies.

                                                   10
                        In the Missouri Court of Appeals
                                Eastern District
                                            DIVISION THREE
ERICA HOLLINS, And on Behalf of All Others            )     No. ED102093
Similarly Situated,                                   )
                                                      )     Appeal from the Circuit Court
       Appellant,                                     )     of St. Louis County
vs.                                                   )
                                                      )     Hon. Michael D. Burton
CAPITAL SOLUTIONS INVESTMENTS,                        )
INC., d/b/a LOAN EXPRESS CO.,                         )
                                                      )     Filed: June 2, 2015
       Respondent.                                    )

                                            CONCURRING OPINION

       I concur in the opinion of the court. I write separately to express my concern that Section

408.500, which was designed for unsecured loans of five hundred dollars or less, has through the

allowance of practically unlimited interest rates charged on these loans allowed the companies that

provide these loans to use the court system to collect amounts from debtors far beyond anything that

could be deemed consistent with the statute’s original purpose.

       This case provides a clear example of predatory lending. The following basic facts exemplify

the situation of the class action members in this case:

       Class member, D.W., took out a $100 loan from CSI. A judgment was entered against
       him for $705.18; the garnishment is still pending. So far, $3174.81 has been collected,
       and a balance of $4105.77 remains.

       Class member, S.S., took out an $80 loan from CSI. A judgment was entered against her
       for $2137.68; the garnishment is still pending. So far, $5346.41 has been collected, and a
       balance of $19,643.48 remains.
       Class member, C.R., took out a $155 loan from CSI. A judgment was entered against her
       for $1686.93; the garnishment is still pending. So far, $9566.15 has been collected, and a
       balance of $2162.07 remains.

       Class member, C.N., took out a $155 loan from CSI. A judgment was entered against him
       for $1627.44. There is now a lien on C.N.’s property.

       Class member, S.L., took out a $360 loan from CSI. A judgment was entered against her
       for $1305.17; the garnishment is still pending. So far, $6021.80 has been collected, and a
       balance of $2182.90 remains.

       Class member, F.H., took out a $100 loan from CSI. A judgment was entered against her
       for $380.82; the garnishment is still pending. So far, $3935.54 has been collected, and a
       balance of $707.98 remains.

       Class member, B.D., took out a $200 loan from CSI. A judgment was entered against her
       for $853.05; the garnishment is still pending. So far, $4692.31 has been collected, and a
       balance of $1531.57 remains.

       Such drastic imbalances in what is borrowed, what is paid back, and what is still owed

demonstrate the inherent injustice in these lending arrangements. As shown above, a $100 loan can

quickly become a judgment worth thousands of dollars, which will be beyond the ability of many

debtors to ever pay off.

       Prior to adoption of Section 408.500, Missouri lenders making unsecured small loans under $500

could only charge borrowers either a maximum interest rate of 26.6% per annum on the unpaid principal

balance or a one-time flat fee of $10 in lieu of interest. Barry Service Agency Co. v. Manning, 891

S.W.2d 882, 891 (Mo. App. W.D. 1995). Before Section 408.500 was enacted in 1990, there were only

about ten companies in Missouri making unsecured loans, all of whom offered only very small loans and

charged the flat $10 fee. Id. In enacting Section 408.500, the General Assembly clearly desired to make

unsecured loans under $500 more available to those Missouri citizens needing them. Id. On the other

hand, it also desired to afford some regulatory protection to borrowers and to discourage so-called “loan

sharking” activities. Id. Thus, while Section 408.500 was intended to allow greater latitude and

flexibility in the rates lenders charge borrowers for unsecured loans under $500, the General Assembly

                                                   2
did not completely abandon the traditional stance of regulating those rates. Id. Had it intended for

lenders to be able to charge any interest rate they chose, Section 408.500 would have been unnecessary,

except to require that lenders register and pay a licensing fee. Barry Service Agency, Inc., 891 S.W.2d

at 891. The General Assembly did not choose that option, but instead steered a middle course between

total deregulation and absolute rate uniformity. Id. Initially, Section 408.500 included a provision that

provided:

       . . . lenders shall not charge, contract for or receive on such loans interest or any fee of
       any type or kind whatsoever which exceed the approved rate as provided in this
       subsection. Lenders shall file a rate schedule with the director who, upon review, shall
       approve rates comparable with those lawfully charged in the marketplace for similar
       loans. In determining marketplace interest rates, the director shall consider the
       appropriateness of rate requests made by lenders and rates allowed on similar loans in the
       states contiguous to Missouri. If the director takes no action upon a filed rate schedule
       within thirty days of receipt, then it shall be deemed approved as filed. The director, on
       January first and July first of each year, shall consider the filing of new interest rate
       schedules to reflect changes in the marketplace. The director may promulgate rules
       regarding the computation and payment of interest, contract statements, payment receipts
       and advertising for loans made under the provisions of this section.

       Then, in 2001, Section 408.500 was amended and all of the above language was removed so that

now the only limit on interest rates is found in Section 408.100, which provides, in pertinent part, “. . .

any person, firm, or corporation may charge, contract for and receive interest on the unpaid principal

balance at rates agreed to by the parties.”

       Of course, lenders are entitled to recover interest on these loans. However, the only current limit

on the amount of this interest is that the parties must agree to a rate. As a practical matter, this means

there is no limit on the interest rate that can be charged. The debtor in these types of situations has

absolutely zero power to negotiate a reasonable interest rate; instead, such debtors will pay whatever

amount the lender decides to charge.

       As a result, I believe Section 408.500 has through amendment and through the unregulated

nature of the marketplace been gutted of its original intended purpose, which was to make these small

                                                    3
loans more available to consumers to help them through a temporary financial difficulty. Currently, a

person, who seeks relief in the form of a loan under Section 408.500, assumes a small debt that, in a

relatively short period of time, can become an insurmountable debt. I recognize the debtors bear

responsibility for defaulting on these loans, failing to appear to answer the petitions of the lenders, and

for failing to timely file motions to set aside default judgments taken against them. However, as can be

seen at the beginning of this concurrence, the amount the lenders are collecting or are attempting to

collect on these types of loans shocks the conscience.

       Erica Hollins is the main representative of the class whose case was examined the closest by the

majority and the trial court. As noted by Hollins in her brief, she took out a $100 loan from CSI on

December 21, 2006. Then she defaulted in early 2007 when she owed $69 in principal. CSI began

charging interest on the loan immediately after Hollins defaulted. However, CSI did not pursue legal

action until it filed its petition in June of 2009, over two years later. At the time Hollins filed her brief,

she had paid $3,592.35 on a $100 loan.

       CSI’s petition for breach of contract against Hollins states, in pertinent part “there is now due

thereon the principal sum of $124.00, plus interest thereon at the rate of 199.71% per annum from May

21, 2007, the date of default, which up to the time of this petition amount to $688.25, plus attorney’s

fees of $18.60 and late fees of $40.00.”

       Subsequently, the trial court entered its default judgment awarding CSI $124.00 in principal,

$40.00 in late fees, $18.60 in attorney’s fees, and $729.90 in interest, for a total judgment of $912.50.

After the judgment was entered, CSI began garnishing Hollins’ wages. I believe the trial court’s

judgment violates the statutory limitation on prejudgment interest. Section 408.553 provides: “Upon

default the lender shall be entitled to recover no more than the amount which the borrower would have

been required to pay upon prepayment of the obligation on the date of final judgment together with



                                                      4
interest thereafter at the simple interest equivalent of the rate provided in the contract” (emphasis

added). This statute indicates interest on these types of loans does not begin to accrue until the date of a

“final judgment” and then only at the “simple interest equivalent of the rate provided in the contract.”

Therefore, the trial court’s judgment, which includes $729.90 in interest from the date the debtor

defaulted until the date of the default judgment is in violation of the statute.

         Had Hollins or any similarly situated class member filed a timely motion to set aside the default

judgment taken against them on these grounds, such motion could have been successful under Rule

74.05(d).1 However, that did not happen.

         Instead, these judgments are now being attacked in a class action for lacking subject matter

jurisdiction. I agree with Judge Odenwald’s majority opinion that the judgments are not void for lack of

personal or subject matter jurisdiction. Further, based on the facts of this case, the judgments are not

void for being entered in a manner inconsistent with due process of law.

         Thus, at this stage of the case, there is no remedy for this injustice. The legislature ought to

examine Section 408.500 and related statutes and return them to their original purpose of allowing small

loans at manageable interest rates to aid our fellow citizens in managing the obligations of their daily

lives.




                                                       ROBERT G. DOWD, JR., Judge




1
 Even if such a motion had been successful, the debtors still may have ended up owing insurmountable amounts of post-
judgment interest because, as noted above, the legislature has effectively not put any other limits on the amounts of interest
allowed to be collected on these types of loans.

                                                               5
