We know the general rule that a Missouri Merchandising Practices Act (“MMPA”) plaintiff cannot merely allege some undefined loss: the loss must be ascertainable, meaning the plaintiff must state an actual amount or a method for calculating the amount.
Now add a corollary principle: not only must the loss be ascertainable, but whatever that amount is, it must constitute a net loss when measuring the difference between the actual or reasonable value of the product or service and the amount that plaintiff paid. That’s the takeaway from Cregan v. Mortgage One Corp., No. 4:16 CV 387 RWS, 2016 WL 3072395, at *5 (E.D. Mo. June 1, 2016).
In Cregan, plaintiffs entered into a loan agreement with defendant that encumbered their real property. Id. at *1. After plaintiffs filed for bankruptcy, defendant filed a notice of claim that included a charge for $56,000 in “daily simple interest” due, and plaintiffs claimed that the charge violated the loan terms that “interest shall be compounded at 1/12th the Contract rate per month.” Id. In particular, plaintiffs alleged that defendant charged excessive interest and alleged the total loan balance, but did not allege a reasonable value of the loan or how much they had paid on the loan. Id. at *4.
Defendant moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that plaintiffs had suffered no “ascertainable loss of money or property,” which plaintiffs must show to state a claim under the MMPA. Id. at *4; see R.S.Mo. § 407.025(1). Missouri courts had previously held that “a plaintiff fails to plead an ascertainable loss of money or property when the plaintiff does not allege that they have paid more than they owe on their loan.” Id. at *4. For instance, in Freeman Health Sys. v. Wass, 124 S.W.3d 504, 508 (Mo. Ct. App. 2004), the court reasoned that plaintiff had not suffered an ascertainable loss on charges for medical services because plaintiff had not made any payments on the charges. Here, plaintiffs had made payments. Id. at *5. But the court nonetheless dismissed plaintiffs’ MMPA claims:
[T]he same principle that barred relief in Freeman applies here – the Plaintiffs have not alleged an ascertainable loss of money or property because they have not alleged that they have paid more than they owe or more than the reasonable value of the loan. . . . In fact, at best, the allegations suggest that Plaintiffs have only paid a small portion of the amount owed and are therefore “still ahead” on their loan.
Cregan v. Mortgage One Corp., No. 4:16 CV 387 RWS, 2016 WL 3072395, at *5 (E.D. Mo. June 1, 2016) (citation omitted).
In short, the court reasoned that, to state a claim under the MMPA, a plaintiff must allege that the entire commercial transaction’s harm outweighed its benefit. For example, if a company makes a loan, the loan recipient has no claim unless she has actually paid more than the reasonable value of the loan. That result is consistent with what we already know: a plaintiff cannot state an MMPA claim when something is free. But after Cregan, to state an MMPA claim, a plaintiff must also allege that, viewing the commercial transaction at issue as a whole, the plaintiff suffered an ascertainable net loss.