## Facts

- Georgia enforcement officials investigated multiple consumer cash-advance businesses after complaints of excessive charges and abusive collections.
- The Industrial Loan Commissioner previously found the operators were engaged in illegal payday lending and issued a cease-and-desist order.
- After prior enforcement actions and statutory amendments targeting “rent-a-bank” payday lending, the operators adopted a “sale/leaseback” model.
- Under the “sale/leaseback” model, customers purportedly sold personal property to the business for cash and simultaneously leased it back, making payments to retain or recover the property.
- The state filed a civil enforcement action alleging the “sale/leaseback” transactions were a sham masking payday loans in violation of Georgia’s anti–payday lending statute and the Georgia Industrial Loan Act (GILA).
- The trial court granted partial summary judgment on liability, struck the defendants’ jury demand, and held certain corporate officers individually liable.

## Issues

1. Whether the “sale/leaseback” transactions, viewed under their economic reality and surrounding circumstances, were illegal payday loans as a matter of law under Georgia’s anti–payday lending statute and GILA.
2. Whether defendants were entitled to a jury trial in the state’s civil enforcement action where the court resolved liability on summary judgment.
3. Whether corporate officers could be held individually liable for statutory violations arising from the scheme.

## Decision

- Affirmed the trial court’s partial summary judgment that the “sale/leaseback” transactions were illegal payday loans as a matter of law.
- Affirmed the order striking the jury demand.
- Affirmed the imposition of individual liability on corporate officers tied to designing, directing, and continuing the unlawful model.

## Legal Principles

- Courts determine whether a transaction is payday lending by examining substance over form, including the totality of the circumstances and economic reality, rather than contractual labels.
- A purported sale-and-leaseback may be treated as a disguised loan where the cash advanced and repayment obligations function as a short-term, high-charge cash advance.
- Summary judgment is proper when no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law.
- In state regulatory enforcement litigation resolved on summary judgment, defendants are not entitled to a jury trial on issues for which no material fact dispute exists.
- Corporate officers may be individually liable when they direct, participate in, or cooperate in unlawful acts carried out through corporate entities.

## Conclusion

The court held that the defendants’ “sale/leaseback” transactions were sham arrangements constituting illegal payday loans under Georgia law, upheld summary judgment and the striking of the jury demand, and permitted individual liability for corporate officers who actively orchestrated and maintained the unlawful scheme.


Clay v. Oxendine, 285 Ga. App. 50, 645 S.E.2d 553 (Ga. Ct. App. 2007)